H. Rept. 105-843 - 105th Congress (1997-1998)
January 02, 1999, As Reported by the Government Reform Committee

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House Report 105-843 - ACTIVITIES of the HOUSE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT ONE HUNDRED FIFTH CONGRESS FIRST AND SECOND SESSIONS 1997-1998 (Pursuant to House Rule XI, 1(d))




[House Report 105-843]
[From the U.S. Government Printing Office]




                                                 Union Calendar No. 484

-----------------------------------------------------------------------
105th Congress                                                   Report
  2d Session            HOUSE OF REPRESENTATIVES                105-843

_______________________________________________________________________



                               ACTIVITIES

                                 of the

                     HOUSE COMMITTEE ON GOVERNMENT

                          REFORM AND OVERSIGHT

                       ONE HUNDRED FIFTH CONGRESS

                       FIRST AND SECOND SESSIONS

                               1997-1998

                   (Pursuant to House Rule XI, 1(d))

                                     

<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>

                                     

January 2, 1999.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                               --------

                    U.S. GOVERNMENT PRINTING OFFICE                    
53-106 CC                  WASHINGTON : 1999




              COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT

                     DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
J. DENNIS HASTERT, Illinois          TOM LANTOS, California
CONSTANCE A. MORELLA, Maryland       ROBERT E. WISE, Jr., West Virginia
CHRISTOPHER SHAYS, Connecticut       MAJOR R. OWENS, New York
STEVEN H. SCHIFF, New Mexico \10\    EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California          PAUL E. KANJORSKI, Pennsylvania
ILEANA ROS-LEHTINEN, Florida         GARY A. CONDIT, California
JOHN M. McHUGH, New York             COLLIN C. PETERSON, Minnesota \3\
STEPHEN HORN, California             CAROLYN B. MALONEY, New York
JOHN L. MICA, Florida                THOMAS M. BARRETT, Wisconsin
THOMAS M. DAVIS III, Virginia        ELEANOR HOLMES NORTON, Washington, 
DAVID M. McINTOSH, Indiana               DC
MARK E. SOUDER, Indiana              CHAKA FATTAH, Pennsylvania
JOE SCARBOROUGH, Florida             TIM HOLDEN, Pennsylvania \7\
JOHN B. SHADEGG, Arizona             ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
MARSHALL ``MARK'' SANFORD, South     ROD R. BLAGOJEVICH, Illinois
    Carolina                         DANNY K. DAVIS, Illinois \4\
ROBERT L. EHRLICH, Jr., MARYLAND     JOHN F. TIERNEY, Massachusetts \4\
    \5\                              JIM TURNER, Texas \4\
KEVIN BRADY, Texas \2\               THOMAS H. ALLEN, Maine \4\
JOHN E. SUNUNU, New Hampshire        HAROLD E. FORD, Jr., Tennessee \8\
PETE SESSIONS, Texas                             ------
MICHAEL PAPPAS, New Jersey           BERNARD SANDERS, Vermont 
VINCE SNOWBARGER, Kansas                 (Independent)
BOB BARR, Georgia \1\
ROB PORTMAN, Ohio \6\
DAN MILLER, Florida \9\
RON LEWIS, Kentucky \11\

                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
           David A. Kass, Deputy Counsel and Parliamentarian
                      Carla J. Martin, Chief Clerk
                 Phil Schiliro, Minority Staff Director

----------
\1\ Elected to committee January 21, 1997 (H.Res. 32).
\2\ Resigned from committee February 5, 1997 by communication to the 
Speaker.
\3\ Resigned from committee February 5, 1997 by communication to the 
Speaker.
\4\ Elected to committee February 5, 1997 (H.Res. 36).
\5\ Resigned from committee March 19, 1997 by communication to the 
Speaker.
\6\ Elected to committee April 9, 1997 (H.Res. 108). Resigned from 
committee November 13, 1997 by communication to the Speaker.
\7\ Resigned from committee April 17, 1997 by communication to the 
Speaker.
\8\ Elected to committee April 17, 1997 (H.Res. 120).
\9\ Elected to committee November 13, 1997 (H.Res. 331).
\10\ Deceased March 25, 1998.
\11\ Elected to committee May 13, 1998 (H.Res. 429).




                         LETTER OF TRANSMITTAL

                              ----------                              

                                  House of Representatives,
                                   Washington, DC, January 2, 1999.
Hon. Jeff Trandahl,
Clerk of the House of Representatives
Washington, DC.
    Dear Mr. Trandahl: I am pleased to submit the enclosed 
report entitled, ``Activities of the House Committee on 
Government Reform and Oversight, 105th Congress, First and 
Second Sessions.''
    This report follows the committee's past practice of 
publishing its activities report annually as an interim report 
at the end of each first session of a Congress and as a 
separate final report at the end of a full Congress.
    The present report includes matters required by Rule XI, 
1(d) to be reported to the House not later than January 2, 
1999, on the activities of the committee and in carrying out 
its duty under Rule X to ``review and study, on a continuing 
basis, the application, administration, execution, and 
effectiveness'' of laws whose subject matter is within the 
jurisdiction of the committee.
    The present report describes fully the committee's 
jurisdiction and organization, and details its activities. Of 
particular note, in a productive Congress, are committee 
efforts in the following areas: the year 2000 computer crisis 
(Y2K); the Federal Employees Health Benefits Program; the 
Persian Gulf war veterans illness; oversight and implementation 
of the Results Act; the investigation of political fundraising 
improprieties; and, review of the Food and Drug Administration 
and its regulations respecting terminally ill patients and 
their ability to access desired treatments.
            Sincerely yours,
                                               Dan Burton, Chairman




                            C O N T E N T S

                              ----------                              
                                                                   Page
Part One. General statement of organization and activities.......     1
  I. Jurisdiction, authority, powers, duties.....................     1
 II. Historical background.......................................     9
III. Organization................................................    15
        A. Subcommittees.........................................    15
        B. Rules of the Committee on Government Reform and 
            Oversight............................................    16
 IV. Activities, 105th Congress..................................    25
        A. Investigative reports.................................    25
        B. Legislation...........................................    26
        C. Reorganization plans..................................    37
        D. Committee prints......................................    38
        E. Committee action on reports of the Comptroller General    38
Part Two. Report of committee activities.........................    41

                 I. Matters of Interest, Full Committee

        A. General...............................................    41
              1. Oversight Plans of the Committees of the U.S. 
                House of Representatives.........................    41
              2. Views and Estimates for Fiscal Year 1999........    44
              3. Investigations..................................    44
                  a. Oversight of Implementation of the 
                      Government Performance and Results Act of 
                      1993.......................................    44
                  b. Review of the Federal Government Acquisition 
                      Strategy Regarding the Federal 
                      Telecommunications System 2001 Program.....    45
                  c. The Committee's Investigation of Political 
                      Fundraising Improprieties and Possible 
                      Violations of Law..........................    46
                  d. The Committee's Oversight of the Department 
                      of Justice Campaign Finance Investigation..    50
                  e. Review of the Food and Drug Administration 
                      and its Regulations and Activities 
                      Respecting Terminally Ill Patients and 
                      their Ability to Access Desired Treatments.    53
                  f. Review of the Food and Drug Administration's 
                      Human Subject Protection Guidelines, 
                      Informed Consent Documents, and the Use of 
                      Children and Patients with Mental Illness 
                      in Clinical Trials.........................    54
                  g. Inquiry into Complementary and Alternative 
                      Medicine Cancer Research at the National 
                      Institutes of Health.......................    55
                  h. Review of the Food and Drug Administration's 
                      Proposed Changes to Structure/Function 
                      Rules and Regulations Relating to the 
                      Dietary Supplements and Health Education 
                      Act........................................    57
                  i. Elimination of Section 1555 of the Federal 
                      Acquisition Streamlining Act of 1994 [FASA] 
                      (Public Law 103-355).......................    57
                  j. The Sale of Body Parts by the People's 
                      Republic of China..........................    57
              4. Legislation.....................................    58
                  1. H.R. 1553, a bill to amend the President 
                      John F. Kennedy Assassination Records 
                      Collection Act of 1992.....................    58
                  2. H.R. 1836, the Federal Employees Health Care 
                      Protection Act of 1997.....................    59
                  3. H.R. 3166, the Federal Employees Health Care 
                      Freedom of Choice Act......................    59
                  4. H.R. 2883, the Government Performance and 
                      Results Act Technical Amendments...........    60
                  5. Cost Accounting Standards in the Federal 
                      Employees Health Benefits Program..........    63
                  6. S. 1364, the Federal Reports Elimination Act 
                      of 1998, Public Law 105-362................    64
                  7. H.R. 1057, a bill to designate the building 
                      in Indianapolis, Indiana, which houses the 
                      operations of the Indianapolis Main Post 
                      Office as the Andrew Jacobs, Jr., Post 
                      Office Building............................    64
                  8. H.R. 1058, a bill to designate the facility 
                      of the U.S. Postal Service under 
                      construction at 150 West Margaret Drive in 
                      Terre Haute, Indiana, as the John T. Myers 
                      Post Office Building.......................    64
                  9. H.R. 3630, a bill to designate the facility 
                      of the U.S. Postal Service located at 9719 
                      Candelaria Road, NE, in Albuquerque, New 
                      Mexico, and known as the Eldorado Station 
                      Post Office as the Steve Schiff Post Office    65

                           II. Investigations
             a. investigations resulting in formal reports

Full Committee...................................................    67
      1. ``Investigation of Political Fundraising Improprieties 
          and Possible Violations of Law,'' House Report No. 105-
          829, September 17, 1998, Sixth Report of the Committee 
          on Government Reform and Oversight, Together with 
          Additional and Minority Views..........................    67
      2. ``Contempt of Congress--Refusal of Attorney General 
          Janet Reno to Produce Documents Subpoenaed by the 
          Government Reform and Oversight Committee,'' House 
          Report No. 105-728, September 17, 1998.................    68
Subcommittee on Government Management, Information, and 
  Technology, Hon. Stephen Horn, Chairman........................    69
      1. ``A Citizen's Guide on Using the Freedom of Information 
          Act and the Privacy Act of 1974 to Request Government 
          Records,'' House Report No. 105-37, March 20, 1997, 
          First Report by the Committee on Government Reform and 
          Oversight..............................................    69
      2. ``Making the Federal Government Accountable: Enforcing 
          the Mandate for Effective Financial Management,'' House 
          Report No. 105-664, July 31, 1998, Third Report by the 
          Committee on Government Reform and Oversight, Together 
          with Additional Views..................................    69
      3. ``The Year 2000 Problem,'' House Report No. 105-827, 
          October 28, 1998, Fourth Report by the Committee on 
          Government Reform and Oversight, Together with 
          Additional Views.......................................    74
Subcommittee on Human Resources, Hon. Christopher Shays, Chairman    77
      1. ``Gulf War Veterans' Illnesses: VA, DOD Continue to 
          Resist Strong Evidence Linking Toxic Causes to Chronic 
          Health Effects,'' House Report No. 105-388, November 7, 
          1997, Second Report by the Committee on Government 
          Reform and Oversight, Together with Additional Views...    77
      2. ``Hepatitis C: Silent Epidemic, Mute Public Health 
          Response,'' House Report No. 105-820, October 15, 1998, 
          Seventh Report by the Committee on Government Reform 
          and Oversight..........................................    82
      3. ``Medicare Home Health Services: No Surety in the Fight 
          Against Fraud and Waste,'' House Report No. 105-820, 
          October 15, 1998, Eighth Report by the Committee on 
          Government Reform and Oversight........................    83
Subcommittee on National Economic Growth, Natural Resources, and 
  Regulatory Affairs, Hon. David M. McIntosh, Chairman...........    83
      1. ``Investigation of the Conversion of the $1.7 Million 
          Centralized White House Computer System, Known as the 
          White House Database, and Related Matters,'' House 
          Report 105-828, October 30, 1998, Fifth Report by the 
          Committee on Government Reform and Oversight, Together 
          with Minority and Supplemental Views...................    83

                        b. other investigations

Subcommittee on the Census.......................................    85
      1. Reviewing the Short and Long Form Questionnaires........    85
      2. Statistical Issues in Conducting and Adjusting the 
          Decennial Census.......................................    88
      3. Examining the Dress Rehearsals with Regard to Oversight 
          of the 2000 Census.....................................    91
      4. Reviewing the 1990 Census to Improve the 2000 Census....    93
      5. Status of Dual Track Preparations for the 2000 Census...    96
      6. Community Based Approaches for a Better Enumeration.....    97
Subcommittee on the Civil Service................................   102
      1. Impact of the President's FY-1998 Budget on Federal 
          Employees..............................................   102
      2. Federal Hiring from the Welfare Rolls...................   105
      3. Assisting the District of Columbia with it's Pension 
          Liabilities............................................   108
      4. Review of Federal Employees Group Life Insurance [FEGLI] 
          Program................................................   112
      5. Erroneous Enrollments in the Federal Retirement System..   114
      6. Employment Discrimination in the Federal Workplace......   117
      7. Employment Discrimination in the Pursuit of Diversity...   122
      8. Oversight of Contracting Out Practices..................   125
      9. Review of Premiums Under the Federal Employees Health 
          Benefits Program [FEHBP]...............................   128
      10. Suspension of Affirmative Action at the IRS............   129
      11. The Merits of Holding a CSRS to FERS Open Season.......   131
      12. Medical Savings Accounts [MSAs] in the FEHBP...........   133
      13. FEHBP: Program Guidance for 1999.......................   135
      14. Long Term Care Insurance for Federal Employees.........   136
      15. Review of the Federal Employees Health Benefits Program 
          [FEHBP] as a Possible Complement to Military Health 
          Care...................................................   141
      16. Civil Service Reform Issues............................   143
      17. FEHBP Premium Increases for 1999.......................   149
      18. Cost Accounting Standards..............................   151
      19. Improper Release of Confidential Information on a 
          Federal Employee.......................................   151
Subcommittee on the District of Columbia.........................   152
      1. Blue Plains Wastewater Treatment Plant..................   152
      2. Public Law 104-8, District of Columbia Financial 
          Responsibility and Management Assistance Authority 
          (D.C. Control Board)...................................   153
      3. D.C. Metropolitan Police Department and the Booz-Allen 
          Memorandum of Understanding............................   154
      4. District of Columbia Public School 1997 Repair Program 
          and Facilities Master Plan.............................   155
      5. Management Reform--Cost, Savings, Net...................   156
      6. Fiscal Year 1997 District of Columbia Audit Report and 
          CFO Oversight..........................................   156
      7. District of Columbia Public School Census and Enrollment 
          Oversight..............................................   157
      8. Oversight on the Academic Plan for the District of 
          Columbia Public Schools................................   157
      9. District of Columbia Metropolitan Police Department 
          Oversight and Federal Law Enforcement Assistance.......   158
      10. New Washington Convention Center.......................   158
      11. Status of District of Columbia Public School Readiness 
          for the 1998-1999 School Year..........................   159
      12. District of Columbia Y2K Compliance Challenges.........   159
Subcommittee on Government Management, Information, and 
  Technology.....................................................   161
      1. GAO High-Risk Series....................................   161
      2. Year 2000 Computer Date Problem.........................   162
      3. Implementation of the Government Performance and Results 
          Act....................................................   166
      4. Internal Revenue Service Management.....................   171
      5. Debt Collection.........................................   173
      6. Federal Measures of Race and Ethnicity..................   178
      7. The Post FTS-2000 Telecommunications Contract...........   180
      8. White House Management Issues...........................   181
      9. Executive Branch Information Dissemination..............   181
      10. The Medicare Transaction System........................   182
      11. Total Quality Management...............................   183
      12. Electronic Funds Transfer..............................   184
      13. Inspectors General.....................................   185
      14. Performance-Based Organizations........................   186
      15. Governors Island.......................................   188
      16. Government Sponsored Enterprises.......................   189
      17. Metropolitan Statistical Areas.........................   191
      18. Statistical Proposals..................................   192
      19. Defense Surplus Equipment..............................   194
      20. U.S. Customs Service...................................   195
      21. U.S. Forest Service....................................   198
      22. Clinger-Cohen Act......................................   200
      23. Management Practices in State and Local Governments....   202
      24. Federal Advisory Committee Act.........................   203
      25. The Federal Election Commission........................   207
      26. Office of Workers' Compensation........................   209
      27. H.R. 1966, the Special Government Employee Act of 1997.   210
Subcommittee on Human Resources..................................   210
      1. Food and Drug Administration [FDA] Steps Against the 
          Health Threat Posed by ``Mad Cow Disease'' and Other 
          Transmissible Spongiform Encephalopathies [TSEs].......   210
      2. The Need for Better Focus in the Rural Health Clinic 
          Program................................................   211
      3. Cabinet Department and Agency Oversight.................   212
      4. Oversight of the Department of Health and Human 
          Services' Healthy Start Program........................   214
      5. Nursing Home Fraud......................................   214
      6. Fixing the Consumer Price Index [CPI]...................   215
      7. Bio-Ethics and Informed Consent.........................   215
      8. Analysis of the Medicare Transaction System [MTS].......   216
      9. Food and Drug Administration's [FDA] Enforcement of 
          Blood Safety Regulations...............................   216
      10. Reducing Education Mandates............................   217
      11. Restructuring the Department of Veterans Affair [VA] 
          Medical Services.......................................   218
      12. Pfiesteria and Public Health...........................   218
      13. Job Corps..............................................   219
      14. Privatization of Child Support Enforcement Services....   219
      15. Department of Labor Enforcement of the Employee 
          Retirement Income Security Act [ERISA] and the Limited 
          Scope Audit Exemption..................................   220
      16. Department of Health and Human Services, Administration 
          for Children and Families, ``Early Head Start: Linking 
          Early Childhood Programs to Success''..................   220
      17. Department of Labor, Bureau of Labor Statistics, 
          ``Fixing the Consumer Price Index''....................   221
      18. AIDS: Availability, Cost and Access to Long-Term 
          Treatment Options......................................   221
      19. Gulf War Veterans' Illnesses: The Research Agenda......   222
      20. Department of Health and Human Services ``Oversight of 
          the National Organ Procurement and Transplantation 
          Network''..............................................   222
      21. The Complexity of the Medicare program: The Evolution 
          of the Program, the Effects of Complexity, and Impact 
          on Waste, Fraud and Abuse..............................   223
      22. Department of Health and Human Services, ``Public 
          Health 2000: Immune Globulin Shortages--Causes and 
          Cures''................................................   223
      23. Vulnerabilities in the Department of Housing and Urban 
          Development [HUD]'s Procurement and Contracting 
          Practices..............................................   224
      24. National Institutes of Health, ``Institutional Review 
          Boards: A System in Jeopardy''.........................   224
      25. Department of Labor, Employment and Training 
          Administration, ``Job Corps: An Examination of the 
          Program and Operational Components''...................   225
      26. Food and Drug Administration ``Blood Safety: Minimizing 
          Plasma Product Risks''.................................   225
      27. Restructuring the Department of Veterans Affairs [VA] 
          Medical Services.......................................   225
      28. Department of Labor, Employment and Training 
          Administration, ``Employment and Training in the 
          Welfare-to-Work Environment''..........................   226
      29. Department of Education, ``An Examination of Federal 
          Regulations and School Districts''.....................   226
Subcommittee on National Economic Growth, Natural Resources, and 
  Regulatory Affairs.............................................   226
      1. Investigation of the White House Database...............   226
      2. Investigation of the Misuse of Statistics by the 
          Department of Energy...................................   227
      3. Investigation of OIRA's Review of NAAQS Rules...........   227
      4. Securities and Exchange Commission......................   227
      5. Oversight of the U.S. Army Corps of Engineers Wetlands 
          Programs...............................................   229
      6. Oversight of the Security and Exchange Commission's 
          ``Disclosure of Accounting Policies for Derivative 
          Financial Instruments and Derivative Commodity 
          Instruments''..........................................   232
      7. EPA's Particulate and Ozone Rulemaking..................   235
      8. GAO Findings on Superfund Cleanup.......................   240
      9. Office of Management and Budget's ``Report to Congress 
          on the Costs and Benefits of Federal Regulations''.....   244
      10. EPA's Strategic Plan...................................   245
      11. Oversight of EPA and the Regulatory Process............   247
      12. Brookhaven National Laboratory.........................   248
      13. Investigation of President Clinton's Executive Order 
          13083, ``Federalism''..................................   251
      14. Investigation of Paperwork and Regulatory 
          Accomplishments by the Office of Management and 
          Budget's Office of Information and Regulatory Affairs..   252
      15. The Congressional Review Act...........................   255
      16. Investigation of the White House Initiative on Global 
          Climate Change and the Kyoto Protocol..................   259
      17. Hearings on the Kyoto Protocol.........................   261
      18. Investigation of the OIRA's Review of NAAQS Rules......   268
      19. Oversight of the National Highway Traffic Safety 
          Administration's Proposed Rule, ``State-Issued Driver's 
          Licenses and Comparable Identification Documents''.....   268
      20. Oversight of the Patent and Trademark Office's Proposed 
          Consolidation/Relocation...............................   270
      21. The Noxious Nine: The Worst Clinton Regulations of 1997   270
      22. Oversight of the Department of Transportation's 
          ``Proposed Statement of Enforcement Policy on Unfair 
          Exclusionary Conduct by Airlines''.....................   273
      23. Securities and Exchange Commission's Travel Oversight..   274
Subcommittee on National Security, International Affairs, and 
  Criminal Justice...............................................   276
      1. National Drug Control Policy............................   276
      2. Immigration and Naturalization Service's Program 
          Citizenship USA........................................   297
      3. Department of Defense Inventory Management..............   301
      4. Combating Terrorism.....................................   306
      5. Oversight of the National Aeronautics and Space 
          Administration.........................................   326
      6. Oversight of the Census Bureau and Census 2000..........   328
Subcommittee on the Postal Service...............................   331
      1. General Oversight of the U.S. Postal Service: The 
          Inspector General of the Postal Service and the Board 
          of Governors...........................................   331
      2. General Oversight of the U.S. Postal Service: The 
          General Accounting Office and the Postmaster General...   334
      3. U.S. Postal Service: Little Progress Made in Addressing 
          Persistent Labor-Management Problems...................   337
      4. International Mail Market...............................   343
      5. Electronic Commerce.....................................   344
      6. Outsourcing.............................................   344
      7. Investigation of the Postmaster General: For Knowingly 
          Participating as a Government Officer or Employee in 
          Which he had a Financial Interest......................   345
      8. General Oversight of the U.S. Postal Service: The 
          Inspector General, U.S. Postal Service; the General 
          Accounting Office; the Postmaster General and Chief 
          Executive Officer......................................   346
      9. Oversight of Labor Management Issues....................   350
      10. Electronic Postal Diversion............................   350
      11. ``u.s.'' Domain Space..................................   351

                            III. Legislation

                            a. new measures

Subcommittee on the Civil Service................................   353
      1. H.R. 240, Veterans Employment Opportunities Act of 1997.   353
      2. H.R. 1316, to amend Chapter 87 of Title 5, United States 
          Code, with respect to the order of precedence to be 
          applied in the payment of life insurance benefits......   355
      3. H.R. 1836, Federal Employees Health Care Protection Act 
          of 1997................................................   356
      4. H.R. 2675, the Federal Employees Life Insurance 
          Improvement Act........................................   357
      5. H.J. Res. 56, celebrating the end of slavery in the 
          United States..........................................   358
      6. H. Con. Res. 95, recognizing and commending American 
          airmen held as political prisoners at the Buchenwald 
          concentration camp during World War II for their 
          service, bravery, and fortitude........................   358
      7. H. Con. Res. 109, recognizing the many talents of the 
          actor Jimmy Stewart and honoring the contributions he 
          made to the Nation.....................................   359
      8. H.R. 2526, to amend Title 5, United States Code, to make 
          the percentage limitations on individual contributions 
          to the Thrift Savings Plan more consistent with the 
          dollar amount limitation on elective deferrals, and for 
          other purposes.........................................   359
      9. H.R. 2566, the Civil Service Retirement System Actuarial 
          Redeposit Act of 1998..................................   359
      10. H.R. 2943, to amend Title 5, United States Code, to 
          increase the amount of leave time available to a 
          Federal employee in any year in connection with serving 
          as an organ donor, and for other purposes..............   360
      11. H.R. 3249, the Federal Retirement Coverage Corrections 
          Act....................................................   360
      12. H.R. 4259, the Haskell Indian Nations University and 
          Southwestern Indian Polytechnic Institute 
          Administrative Systems Act of 1998.....................   365
      13. H.R. 4280, to provide for greater access to child care 
          services for Federal employees.........................   366
      14. S. 1021, the Veterans Employment Opportunities Act of 
          1998...................................................   366
      15. H. Con. Res. 302, recognizing the importance of 
          children and families in the United States and 
          expressing support for the goals of National KidsDay 
          and National Family Month..............................   366
      16. H. Res. 520, congratulating Mark McGwire of the St. 
          Louis Cardinals for breaking the Major League Baseball 
          single season home run record..........................   367
      17. H. Res. 536, congratulating Sammy Sosa of the Chicago 
          Cubs for tying the current major league record for home 
          runs in one season.....................................   367
      18. H. Res. 590, recognizing and honoring Hunter Scott for 
          his efforts to honor the memory of the captain and crew 
          of the U.S.S. Indianapolis and for the outstanding 
          example he has set for the young people of the United 
          States.................................................   367
      19. S. Con. Res. 83, remembering the life of George 
          Washington and his contributions to the Nation.........   368
Subcommittee on the District of Columbia.........................   368
      1. H.R. 514, to permit the waiver of District of Columbia 
          residency requirements for certain employees of the 
          Office of Inspector General of the District of 
          Columbia, and for other purposes.......................   368
      2. H.R. 2015, the Balanced Budget Act of 1997..............   369
      3. H.R. 3025, to amend the Federal charter for Group 
          Hospitalization and Medical Services, Inc., and for 
          other purposes.........................................   373
      4. H.R. 1963, mark-up on the National Capital 
          Revitalization and Self-Government Improvement Act of 
          1997...................................................   373
      5. Mark-up on H.R. 4523; H.R. 4566; and H.R. 4568..........   374
      6. H.R. 513, to exempt certain contracts entered into by 
          the government of the District of Columbia from review 
          by the council of the District of Columbia.............   374
      7. H.R. 4237, to amend the District of Columbia Convention 
          Center and Sports Arena Authorization Act of 1995 to 
          revise the revenues and activities covered under such 
          act, and for other purposes............................   374
Subcommittee on Government Management, Information, and 
  Technology.....................................................   374
      1. H.R. 173, authorization to donate surplus law 
          enforcement canines to their handlers..................   374
      2. H.R. 680, transfer of surplus personal property for 
          donation to nonprofit providers of necessaries to 
          impoverished families and individuals..................   375
      3. H.R. 930, Travel and Transportation Reform Act of 1997..   376
      4. H.R. 404, to authorize the transfer to State and local 
          governments of certain surplus property for use for law 
          enforcement and public safety purposes.................   377
      5. H.R. 52, Fair Health Information Practices Act of 1997..   378
      6. H.R. 1962, Presidential and Executive Office Financial 
          Accountability Act of 1997.............................   379
      7. H.R. 716, Freedom from Government Competition Act of 
          1997...................................................   380
      8. H.R. 2508, A bill to provide for the conveyance of 
          Federal land in San Joaquin County, California, to the 
          City of Tracy, California..............................   381
      9. H.R. 2635, the Human Rights Information Act.............   381
      10. H.R. 2883, the Government Performance and Results Act 
          Technical Amendments of 1998...........................   382
      11. H.R. 2958, Quality Child Care for Federal Employees Act   382
      12. H.R. 2977, the Federal Advisory Committee Act 
          Amendments of 1997.....................................   383
      13. H.R. 3900, the Consumer Health and Research Technology 
          [CHART] Protection Act; and H.R. 52, the Fair Health 
          Information Practices Act of 1997......................   383
      14. H.R. 4007 and S. 1379, the Nazi War Crimes Disclosure 
          Act....................................................   384
      15. H.R. 4243, Government Waste, Fraud, and Error Reduction 
          Act of 1998............................................   385
      16. H.R. 4244, Federal Procurement System Performance 
          Measurement and Acquisition Workforce Training Act of 
          1998...................................................   385
      17. H.R. 4620, the Statistical Consolidation Act of 1998...   386
      18. S.J. Res. 58, recognizing the accomplishments of the 
          Offices of the Inspectors General......................   387
Subcommittee on Human Resources..................................   388
      1. H.R. 399, the Subsidy Termination for Overdue Payments 
          [STOP] Act.............................................   388
Subcommittee on National Security, International Affairs, and 
  Criminal Justice...............................................   388
      1. H.R. 956, Drug Free Communities Act of 1997.............   388
      2. H.R. 2610/H.R. 4328, Reauthorization of the Office of 
          National Drug Control Policy...........................   390
      3. H.R. 3310, the Small Business Paperwork Reduction Act 
          Amendments of 1998.....................................   393
      4. H.R. 1704, the Congressional Office of Regulatory 
          Analysis Creation Act..................................   394
Subcommittee on the Postal Service...............................   395
      1. H.R. 22, the Postal Reform Act of 1997..................   395
      2. H.R. 282, to designate the United States Post Office 
          building located at 153 East 110th Street, New York, 
          New York, as the ``Oscar Garcia Rivera Post Office 
          Building''.............................................   398
      3. H.R. 499, to designate the facility of the United States 
          Postal Service under construction at 7411 Barlite 
          Boulevard in San Antonio, Texas, as the ``Frank M. 
          Tejada Post Office Building''..........................   399
      4. H.R. 681, to designate the United States Post Office 
          building located at 313 East Broadway in Glendale, 
          California, as the ``Carlos J. Moorehead Post Office 
          Building''.............................................   399
      5. H.R. 1057, to designate the building in Indianapolis, 
          Indiana, which houses the operations of the Circle City 
          Station Post Office as the ``Andrew Jacobs, Jr. Post 
          Office Building''......................................   400
      6. H.R. 1058, to designate the facility of the United 
          States Postal Service under construction at 150 West 
          Margaret Drive in Terre Haute, Indiana as the ``John T. 
          Myers Post Office Building''...........................   400
      7. H.R. 1231, the ``Post Office Relocation Act of 1997''...   401
      8. H.R. 1254, to designate the United States Post Office 
          building located at Bennett and Kansas Avenue in 
          Springfield, Missouri, as the ``John N. Griesemer Post 
          Office Building''......................................   401
      9. H.R. 1585, to allow postal patrons to contribute to 
          funding for breast cancer research through the 
          voluntary purchase of certain specially issued U.S. 
          postage stamps.........................................   402
      10. H.R. 2013, to designate the facility of the United 
          States Postal Service located at 551 Kingstown Road in 
          South Kingston, Rhode Island, as the ``David B. 
          Champagne Post Office Building''.......................   403
      11. H.R. 2015, Balanced Budget Act of 1997 (also known as 
          the Budget Reconciliation bill)........................   403
      12. H.R. 2129, to designate the United States Post Office 
          located at 150 North 3rd Street in Steubenville, Ohio, 
          as the ``Douglas Applegate Post Office''...............   404
      13. H.R. 2378 (S. 1023), making appropriations for the 
          Treasury Department, the U.S. Postal Service, the 
          Executive Office of the President, and certain 
          independent agencies, for the fiscal year ending 
          September 30, 1998, and for other purposes.............   405
      14. H.R. 2564, to designate the United States Post Office 
          located at 450 North Centre Street in Pottsville, 
          Pennsylvania, as the ``Peter J. McCloskey Postal 
          Facility''.............................................   406
      15. S. 1378, a bill to extend the authorization of use of 
          official mail in the location and recovery of missing 
          children, and for other purposes.......................   406
      16. H.R. 2348, to redesignate the Federal building located 
          at 701 South Santa Fe Avenue in Compton, California, 
          and known as the Compton Main Post Office, as the 
          ``Mervyn Dymally Post Office Building''................   407
      17. H.R. 2349, a bill to redesignate the Federal building 
          located at 10301 South Compton Avenue, in Los Angeles, 
          California, and known as the Watts Finance Office, as 
          the ``Augustus F. Hawkins Post Office Building''.......   408
      18. H.R. 2623, to designate the United States Post Office 
          located at 1625 Highway 603, Kiln, Mississippi as the 
          ``Ray J. Favre Post Office Building''..................   408
      19. H.R. 2766, to designate the United States Post Office 
          located at 215 East Jackson Street in Painesville, 
          Ohio, as the ``Karl Bernal Post Office Building''......   409
      20. H.R. 2773, to designate the facility of the United 
          States Postal Service located at 3750 North Kedzie 
          Avenue in Chicago, Illinois, as the ``Daniel J. Doffyn 
          Post Office Building''.................................   410
      21. H.R. 2798, to redesignate the building of the United 
          States Postal Service located at 2419 West Monroe 
          Street, in Chicago, Illinois, as the ``Nancy B. 
          Jefferson Post Office Building''.......................   410
      22. H.R. 2799, to redesignate the building of the United 
          States Postal Service located at 324 South Laramie 
          Street, In Chicago, Illinois, as the ``Reverent Milton 
          R. Brunson Post Office Building''......................   411
      23. H.R. 2836, to designate the building of the United 
          States Postal Service located at 180 East Kellogg 
          Boulevard in Saint Paul, Minnesota, as the ``Eugene J. 
          McCarthy Post Office Building''........................   412
      24. H.R. 3120, to designate the United States Post Office 
          located at 95 West 100 South Street in Provo, Utah, as 
          the ``Howard C. Nielson Post Office Building''.........   413
      25. H.R. 3167, to designate the United States Post Office 
          located at 297 Larkfield Road in East Northport, New 
          York, as the ``Jerome Anthony Ambro, Jr., Post Office 
          Building''.............................................   414
      26. H.R. 3630, to redesignate the facility of the United 
          States Postal Service located at 9719 Candelaria Road 
          N.E. in Albuquerque, New Mexico, as the ``Steven Schiff 
          Post Office''..........................................   414
      27. H.R. 3725, to make the Occupational Safety and Health 
          Act of 1970 applicable to the U.S. Postal Service in 
          the same manner as any other employee..................   415
      28. H.R. 3808, to designate the United States Post Office 
          located at 47526 Clipper Drive in Plymouth, Michigan as 
          the ``Carl D. Pursell Post Office''....................   417
      29. H.R. 3810, to designate the United States Post Office 
          located at 202 Center Street in Garwood, New Jersey as 
          the ``James T. Leonard, Sr. Post Office''..............   417
      30. H.R. 3846, to designate the post office located at 203 
          West Paige Street, in Tompkinsville, Kentucky, as the 
          ``Tim Lee Carter Post Office Building''................   418
      31. H.R. 3939, to designate the United States Postal 
          Service building located at 658 63rd Street, 
          Philadelphia, Pennsylvania, as the ``Edgar C. Campbell, 
          Sr., Post Office Building..............................   419
      32. H.R. 3999, to designate the United States Postal 
          Service building located at 5209 Greene Street, 
          Philadelphia, Pennsylvania as the ``David P. 
          Richardson, Jr., Post Office Building''................   419
      33. H.R. 4000, to designate the United States Postal 
          Service building located at 400 Edgmont Avenue, 
          Chester, Pennsylvania, as the ``Thomas P. Foglietta 
          Post Office Building''.................................   420
      34. H.R. 4001, to designate the United States Postal 
          Service building located at 2601 North 16th Street, 
          Philadelphia, Pennsylvania, as the ``Roxanne H. Jones 
          Post Office Building''.................................   421
      35. H.R. 4002, to designate the United States Postal 
          Service building located at 5300 West Jefferson Street, 
          Philadelphia, Pennsylvania, as the ``Freeman Hankins 
          Post Office Building''.................................   422
      36. H.R. 4003, to designate the United States Postal 
          Service building located at 2037 Chestnut Street, 
          Pennsylvania, as the Max Weiner Post Office Building''.   422
      37. H.R. 4052, to establish designations for United States 
          Postal Service buildings located in Coconut Grove, Opa 
          Locka, Carol City, and Miami, Florida..................   423
      38. H.R. 4516, to designate the United States Postal 
          Service building located at 11550 Livingston Road, In 
          Oxon Hill, Maryland, as the ``Jacob Joseph Chestnut 
          Post Office Building''.................................   424
      39. H.R. 4616, to designate the United States Post Office 
          located at 3813 Main Street in East Chicago, Indiana, 
          as the ``Corporal Harold Gomez Post Office''...........   425
      40. S. 916, to designate the United States Post Office 
          building located at 750 Highway 28 East in 
          Taylorsville, Mississippi, as the ``Blaine H. Eaton 
          Post Office Building''.................................   425
      41. S. 985, to designate the United States Post Office 
          located at 194 Ward Street in Paterson, New Jersey, as 
          the ``Larry Doby Post Office''.........................   426
      42. S. 1298, to designate a Federal building located in 
          Florence, Alabama, as the ``Justice John McKinley 
          Federal Building''.....................................   427
      43. S. 2370, designate the facility of the United States 
          Postal Service located at Tall Timbers Village Square, 
          United States Highway 19 South, in Thomasville, 
          Georgia, shall be known and designated as the 
          Lieutenant Henry O. Flipper Station....................   427

           b. review of laws within committee's jurisdiction

Full Committee...................................................   428
Subcommittee on the Census.......................................   435
Subcommittee on the Civil Service................................   438
Subcommittee on the District of Columbia.........................   445
Subcommittee on Human Resources..................................   505
Subcommittee on National Economic Growth, Natural Resources, and 
  Regulatory Affairs.............................................   507
Subcommittee on the Postal Service...............................   507

                      IV. Other Current Activities

                  a. general accounting office reports

Full Committee...................................................   511
Subcommittee on the Census.......................................   520
Subcommittee on the Civil Service................................   525
Subcommittee on the District of Columbia.........................   553
Subcommittee on Government Management, Information, and 
  Technology.....................................................   559
Subcommittee on Human Resources..................................   587
Subcommittee on National Economic Growth, Natural Resources, and 
  Regulatory Affairs.............................................   601
Subcommittee on National Security, International Affairs, and 
  Criminal Justice...............................................   638
Subcommittee on the Postal Service...............................   643

                     b. other reports or statements

Subcommittee on Human Resources..................................   657

         V. Prior Activities of Current or Continuing Interest

Subcommittee on the Census.......................................   659
Subcommittee on the District of Columbia.........................   659
Subcommittee on Human Resources..................................   659
Subcommittee on National Security, International Affairs, and 
  Criminal Justice...............................................   661
Subcommittee on the Postal Service...............................   662

               VII. Views of the Ranking Minority Member

Views of Hon. Henry A. Waxman....................................   663




                                                 Union Calendar No. 484

105th Congress                                                   Report
  2d Session            HOUSE OF REPRESENTATIVES                105-843

=======================================================================



 
  ACTIVITIES OF THE HOUSE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT

                                _______
                                

January 2, 1999.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______


  Mr. Burton, from the Committee on Government Reform and Oversight, 
                        submitted the following

                                 REPORT

  FINAL REPORT ON THE ACTIVITIES OF THE HOUSE COMMITTEE ON GOVERNMENT 
  REFORM AND OVERSIGHT, 105TH CONGRESS, 1ST AND 2D SESSIONS, 1997 AND 
                                  1998

       PART ONE. GENERAL STATEMENT OF ORGANIZATION AND ACTIVITIES

             I. Jurisdiction, Authority, Powers, and Duties

    The Rules of the House of Representatives provide for 
election by the House, at the commencement of each Congress, of 
19 named standing committees, 1 of which is the Committee on 
Government Reform and Oversight.\1\ Pursuant to House 
Resolutions 12 and 13 (adopted January 7, 1997), and House 
Resolution 14 (adopted January 7, 1997), establishing the 
membership at 41. Subsequent membership was set at 42 pursuant 
to House Resolution 32 (adopted January 21, 1997), membership 
was decreased to 40 pursuant to communication to the Speaker on 
February 5, 1997, House Resolution 36 (adopted February 5, 
1997) filled the vacancies of the membership, on March 19, 
1997, membership was decreased to 43 pursuant to communication 
to the Speaker, House Resolution 108 (adopted April 9, 1997) 
increased the membership to 44, on April 17, 1997, membership 
was decreased to 43 pursuant to communica- 
tion to the Speaker, membership increased to 44 pursuant to 
House Resolution 120 on April 17, 1997, membership was 
decreased to 43 pursuant to communication to the Speaker on 
November 13, 1997, and on November 13, 1997, membership was 
increased to 44 pursuant to House Resolution 331. The death of 
a member on March 25, 1998, decreased membership to 43. 
Membership increased to 44 pursuant to House Resolution 429 on 
May 13, 1998.
---------------------------------------------------------------------------
    \1\ Rule X.
---------------------------------------------------------------------------
    Rule X sets forth the committee's jurisdiction, functions, 
and responsibilities as follows:

                                 RULE X

         Establishment and Jurisdiction of Standing Committees

                 THE COMMITTEES AND THEIR JURISDICTION

    1. There shall be in the House the following standing 
committees, each of which shall have the jurisdiction and 
related functions assigned to it by this clause and clauses 2, 
3, and 4; and all bills, resolutions, and other matters 
relating to subjects within the jurisdiction of any standing 
committee as listed in this clause shall (in accordance with 
and subject to clause 5) be referred to such committees, as 
follows:

           *       *       *       *       *       *       *


            (g) Committee on Government Reform and Oversight

    (1) The Federal Civil Service, including intergovernmental 
personnel; the status of officers and employees of the United 
States, including their compensation, classification, and 
retirement.
    (2) Measures relating to the municipal affairs of the 
District of Columbia in general, other than appropriations.
    (3) Federal paperwork reduction.
    (4) Budget and accounting measures, other than 
appropriations.
    (5) Holidays and celebrations.
    (6) The overall economy and efficiency of Government 
operations and activities, including Federal procurement.
    (7) National archives.
    (8) Population and demography generally, including the 
Census.
    (9) Postal service generally, including the transportation 
of the mails.
    (10) Public information and records.
    (11) Relationship of the Federal Government to the States 
and municipalities generally.
    (12) Reorganizations in the executive branch of the 
Government.
    In addition to its legislative jurisdiction under the 
preceding provisions of this paragraph (and its oversight 
functions under clause 2(b) (1) and (2)), the committee shall 
have the function of performing the activities and conducting 
the studies which are provided for in clause 4(c).

           *       *       *       *       *       *       *


                   GENERAL OVERSIGHT RESPONSIBILITIES

    2. (a) In order to assist the House in--
          (1) its analysis, appraisal, and evaluation of (A) 
        the application, administration, execution, and 
        effectiveness of the laws enacted by the Congress, or 
        (B) conditions and circumstances which may indicate the 
        necessity or desirability of enacting new or additional 
        legislation, and
          (2) its formulation, consideration, and enactment of 
        such modifications of or changes in those laws, and of 
        such additional legislation, as may be necessary or 
        appropriate,
the various standing committees shall have oversight 
responsibilities as provided in paragraph (b).
    (b)(1) Each standing committee (other than the Committee on 
Appropriations and the Committee on the Budget) shall review 
and study, on a continuing basis, the application, 
administration, execution, and effectiveness of those laws, or 
parts of laws, the subject matter of which is within the 
jurisdiction of that committee, and the organization and 
operation of the Federal agencies and entities having 
responsibilities in or for the administration and execution 
thereof, in order to determine whether such laws and the 
programs thereunder are being implemented and carried out in 
accordance with the intent of the Congress and whether such 
programs should be continued, curtailed, or eliminated. In 
addition, each such committee shall review and study any 
conditions or circumstances which may indicate the necessity or 
desirability of enacting new or additional legislation within 
the jurisdiction of that committee (whether or not any bill or 
resolution has been introduced with respect thereto) and shall 
on a continuing basis undertake future research and forecasting 
on matters within the jurisdiction of that committee. Each such 
committee having more than twenty members shall establish an 
oversight subcommittee, or require its subcommittees, if any, 
to conduct oversight in the area of their respective 
jurisdiction, to assist in carrying out its responsibilities 
under this subparagraph. The establishment of oversight 
subcommittees shall in no way limit the responsibility of the 
subcommittee with legislative jurisdiction from carrying out 
their oversight responsibilities.
    (2) The Committee on Government Reform and Oversight shall 
review and study, on a continuing basis, the operation of 
Government activities at all levels with a view to determining 
their economy and efficiency.

           *       *       *       *       *       *       *

    (c) Each standing committee of the House shall have the 
function of reviewing and studying on a continuing basis the 
impact or probable impact of tax policies affecting subjects 
within its jurisdiction as described in clauses 1 and 3.

           *       *       *       *       *       *       *


                   ADDITIONAL FUNCTIONS OF COMMITTEES

    4. * * *
    (c)(1) The Committee on Government Reform and Oversight 
shall have the general function of--
          (A) receiving and examining reports of the 
        Comptroller General of the United States and of 
        submitting such recommendations to the House as it 
        deems necessary or desirable in connection with the 
        subject matter of such reports;
          (B) evaluating the effects of laws enacted to 
        reorganize the legislative and executive branches of 
        the Government; and
          (C) studying intergovernmental relationships between 
        the United States and the States, and municipalities, 
        and between the United States and international 
        organizations of which the United States is a member.
    (2) In addition to its duties under subparagraph (1), the 
Committee on Government Reform and Oversight may at any time 
conduct investigations of any matter without regard to the 
provisions of clause 1, 2, or 3 (or this clause) conferring 
jurisdiction over such matter upon another standing committee. 
The committee's findings and recommendations in any such 
investigation shall be made available to the other standing 
committee or committees having jurisdiction over the matter 
involved (and included in the report of any such other 
committee when required by clause 2(1)(3) of Rule XI).

           *       *       *       *       *       *       *

    Rule XI provides authority for investigations and studies, 
as follows:

                                RULE XI

              Rules of Procedure for Committees in General

    1. * * *
    (b) Each committee is authorized at any time to consider 
such investigations and studies as it may consider necessary or 
appropriate in the exercise of its responsibilities under Rule 
X, and (subject to the adoption of expense resolutions as 
required by clause 5) to incur expenses (including travel 
expenses) in connection therewith.

           *       *       *       *       *       *       *

    (d) Each committee shall submit to the House, not later 
than January 2 of each odd-numbered year, a report on the 
activities of that committee under this rule and Rule X during 
the Congress ending at noon on January 3 of such year.

           *       *       *       *       *       *       *


                            COMMITTEE RULES                            

           *       *       *       *       *       *       *


Power to sit and act; subpoena power

    (m)(1) For the purpose of carrying out any of its functions 
and duties under this rule and Rule X (including any matters 
referred to it under clause 5 of Rule X), any committee, or any 
subcommittee thereof, is authorized (subject to subparagraph 
(2)(A) of this paragraph)--
          (A) to sit and act at such times and places within 
        the United States, whether the House is in session, has 
        recessed, or has adjourned, and to hold such hearings, 
        and
          (B) to require, by subpoena or otherwise, the 
        attendance and testimony of such witnesses and the 
        production of such books, records, correspondence, 
        memorandums, papers, and documents as it deems 
        necessary.
The chairman of the committee, or any member designated by such 
chairman, may administer oaths to any witness.
    (2)(A) A subpoena may be authorized and issued by a 
committee or subcommittee under subparagraph (1)(B) in the 
conduct of any investigation or series of investigations or 
activities, only when authorized by a majority of the members 
voting, a majority being present. The power to authorize and 
issue subpoenas under subparagraph (1)(B) may be delegated to 
the chairman of the committee pursuant to such rules and under 
such limitations as the committee may prescribe. Authorized 
subpoenas shall be signed by the chairman of the committee or 
by any member designated by the committee.
    (B) Compliance with any subpoena issued by a committee or 
subcommittee under subparagraph (1)(B) may be enforced only as 
authorized or directed by the House.

Use of committee funds for travel

    (n)(1) Funds authorized for a committee under clause 5 are 
for expenses incurred in the committee's activities; however, 
local currencies owned by the United States shall be made 
available to the committee and its employees engaged in 
carrying out their official duties outside the United States, 
its territories or possessions. No appropriated funds, 
including those authorized under clause 5, shall be expended 
for the purpose of defraying expenses of members of the 
committee or its employees in any country where local 
currencies are available for this purpose; and the following 
conditions shall apply with respect to travel outside the 
United States or its territories or possessions:
          (A) No Member or employee of the committee shall 
        receive or expend local currencies for subsistence in 
        any country for any day at a rate in excess of the 
        maximum per diem set forth in applicable Federal law, 
        or if the Member or employee is reimbursed for any 
        expenses for such day, then the lesser of the per diem 
        or the actual, unreimbursed expenses (other than for 
        transportation) incurred by the Member or employee 
        during that day.
          (B) Each Member or employee of the committee shall 
        make to the chairman of the committee an itemized 
        report showing the dates each country was visited, the 
        amount of per diem furnished, the cost of 
        transportation furnished, any funds expended for any 
        other official purpose and shall summarize in these 
        categories the total foreign currencies and/or 
        appropriated funds expended. All such individual 
        reports shall be filed no later than sixty days 
        following the completion of travel with the chairman of 
        the committee for use in complying with reporting 
        requirements in applicable Federal law and shall be 
        open for public inspection.
    (2) In carrying out the committee's activities outside of 
the United States in any country where local currencies are 
unavailable, a member or employee of the committee may not 
receive reimbursement for expenses (other than for 
transportation) in excess of the maximum per diem set forth in 
applicable Federal law, or if the member or employee is 
reimbursed for any expenses for such day, then the lesser of 
the per diem or the actual, unreimbursed expenses (other than 
for transportation) incurred, by the member or employee during 
any day.
    (3) A member or employee of a committee may not receive 
reimbursement for the cost of any transportation in connection 
with travel outside the United States unless the member or 
employee has actually paid for the transportation.
    (4) The restrictions respecting travel outside of the 
United States set forth in subparagraphs (2) and (3) shall also 
apply to travel outside of the United States by Members, 
officers, and employees of the House authorized under clause 8 
of rule I, clause 1(b) of this rule, or any other provision of 
these Rules of the House of Representatives.
    (5) No local currencies owned by the United States may be 
made available under this paragraph for the use outside of the 
United States for defraying the expenses of a member of any 
committee after--
          (A) the date of the general election of Members in 
        which the Member has not been elected to the succeeding 
        Congress; or
          (B) in the case of a Member who is not a candidate in 
        such general election, the earlier of the date of such 
        general election or the adjournment sine die of the 
        last regular session of the Congress.
The committee also exercises authority under a number of 
congressional mandates.\2\
---------------------------------------------------------------------------
    \2\ For legislation imposing duties specifically on the committee, 
see, for example, sec. 203(e)(6) of the Federal Property and 
Administrative Services Act of 1949 (40 U.S.C. 484(6)(e)), relating to 
negotiated disposal of Federal surplus property. It requires that, with 
limited exceptions, explanatory statements be sent ``to the appropriate 
committees of the Congress'' in advance of negotiated disposal under 
the Act. It covers disposal of all real and personal property whose 
estimated fair market is over $15,000 in the case of personal property 
and over $100,000 in the case of real property. The current language 
stems from a 1988 amendment (Public Law 100-612), which retained the 
explanatory statement requirement but changed the dollar value 
thresholds, which theretofore had been $1,000 for both personal 
property and real property. The House and Senate Government Operations 
Committees are expressly identified as the appropriate panels in House 
Report 1763, 85th Congress, which accompanied the measure that 
contained the 1958 amendment. See also GSA's Federal Property 
Management Regulations at 41 CFR-47.304-12(d).
    [N. B. The further examples given in the original footnote text 
cover sections (section 414 of the 1969 Housing Act and section 304 of 
the Intergovernmental Cooperation Act) have been repealed. The 
reference to sections 191-194 of title 2, U.S. Code, does not deem 
pertinent here.]
---------------------------------------------------------------------------

                           5 U.S.C. Sec. 2954

            Information to committees of Congress on request

    An Executive agency, on request of the Committee on 
Government Operations of the House of Representatives or of any 
seven members thereof, or on request of the Committee on 
Government Operations of the Senate, or any five members 
thereof, shall submit any information requested of it relating 
to any matter within the jurisdiction of the committee.

                          18 U.S.C. Sec. 1505

Obstruction of proceedings before departments, agencies, and committees

    Whoever, with intent to avoid, evade, prevent, or obstruct 
compliance, in whole or in part, with any civil investigation 
demand duly and properly made under the Antitrust Civil Process 
Act, willfully withholds, misrepresents, removes from any 
place, conceals, covers up, destroys, mutilates, alters, or by 
other means falsifies any documentary material, answers to 
written interrogatories, or oral testimony, which is the 
subject of such demand; or attempts to do so or solicits 
another to do so; or
    Whoever corruptly, or by threats or force, or by any 
threatening letter or communication influences, obstructs, or 
impedes or endeavors to influence, obstruct, or impede the due 
and proper administration of the law under which any pending 
proceeding is being had before any department or agency of the 
United States, or the due and proper exercise of the power of 
inquiry under which any inquiry or investigation is being had 
by either House, or any committee of either House or any joint 
committee of the Congress--
    Shall be fined not more than $5,000 or imprisoned not more 
than five years, or both.

                           31 U.S.C. Sec. 712

                 Investigating the use of public money

    The Comptroller General shall--

           *       *       *       *       *       *       *

    (3) analyze expenditures of each executive agency the 
Comptroller General believes will help Congress decide whether 
public money has been used and expended economically and 
efficiently;
    (4) make an investigation and report ordered by either 
House of Congress or a committee of Congress having 
jurisdiction over revenue, appropriations, or expenditures; and
    (5) give a committee of Congress having jurisdiction over 
revenue, appropriations, or expenditures the help and 
information the committee requests.

                           31 U.S.C. Sec. 719

Comptroller General reports

           *       *       *       *       *       *       *


    (e) The Comptroller General shall report on analyses 
carried out under section 712(3) of this title to the 
Committees on Governmental Affairs and Appropriations of the 
Senate, the Committee on Government Operations and 
Appropriations of the House, and the committees with 
jurisdiction over legislation related to the operation of each 
executive agency.\3\
---------------------------------------------------------------------------
    \3\ For other requirements which relate to General Accounting 
Office reports to Congress and which affect the committee, see secs. 
232 and 236 of the Legislative Reorganization Act of 1970 (Public Law 
91-510).
                       II. Historical Background

    The committee was initially named the ``Committee on 
Expenditures in the Executive Departments.'' Its antecedents 
are summarized in Cannon's Precedents of the House of 
Representatives, vol. VII, sec. 2041, p. 831 (1935), as 
follows:
          This committee was created, December 5, 1927, by the 
        consolidation of the eleven Committees on Expenditures 
        in the various Departments of the Government, the 
        earliest of which has been in existence since 1816. As 
        adopted in 1816, the rule did not include the 
        committees for the Departments of Interior, Justice, 
        Agriculture, Commerce, and Labor. The committees for 
        these Departments date, respectively, from 1860, 1874, 
        1889, 1905 and 1913.
    The resolution providing for the adoption of the rules of 
the 70th Congress discontinued the several committees on 
expenditures and transferred their functions to the newly 
created Committee on Expenditures in the Executive Departments:
          On March 17, 1928, the jurisdiction of the committee 
        was further enlarged by the adoption of a resolution, 
        reported from the Committee on Rules, including within 
        its jurisdiction the independent establishments and 
        commissions of the Government.\4\
---------------------------------------------------------------------------
    \4\ Examples of the wide-ranging scope of the committee's 
jurisdiction may be found in Cannon's Precedents, supra VII, secs. 
2042-2046, pp. 831-833 (1935).
---------------------------------------------------------------------------
    From 1928 until January 2, 1947, when the Legislative 
Reorganization Act of 1946 became effective, the committee's 
jurisdiction was set forth in Rule XI, 34, of the House Rules 
then in force (H. Doc. 810, 78th Cong., 2d Sess. (1945)), as 
follows:

                    POWERS AND DUTIES OF COMMITTEES                    

           *       *       *       *       *       *       *


    34. The examination of the account and expenditures of the 
several departments, independent establishments, and 
commissions of the Government, and the manner of keeping the 
same; the economy, justness, and correctness of such 
expenditures; their conformity with appropriation laws; the 
proper application of public moneys; the security of the 
Government against unjust and extravagant demands; 
retrenchment; and enforcement of the payment of moneys due the 
United States; the economy and accountability of public 
officers; the abolishment of useless offices, shall all be 
subjects within the jurisdiction of the Committee on 
Expenditures in the Executive Departments.
    The Legislative Reorganization Act of 1946, section 121(b), 
as adopted in paragraphs (a), (b), and (c) of Rule XI, 8, of 
later Rules of the House (XI, 9, the 93d Congress), provided:

                   COMMITTEE ON GOVERNMENT OPERATIONS

    (a) Budget and accounting measures, other than 
appropriations.
    (b) Reorganizations in the executive branch of Government.
    (c) Such committee shall have the duty of--
          (1) receiving and examining reports of the 
        Comptroller General of the United States and of 
        submitting such recommendations to the House as it 
        deems necessary or desirable in connection with the 
        subject matter of such reports;
          (2) studying the operation of Government activities 
        at all levels with a view to determining the economy 
        and efficiency;
          (3) evaluating the effects of laws enacted to 
        reorganize the legislative and executive branches of 
        the Government;
          (4) studying intergovernmental relationships between 
        the United States and the States and municipalities, 
        and between the United States and international 
        organizations of which the United States is a member.
          (d) For the purpose of performing such duties the 
        committee, or any subcommittee thereof when authorized 
        by the committee, is authorized to sit, hold hearings, 
        and act at such times and places within the United 
        States, whether or not the House is in session, is in 
        recess, or has adjourned, to require by subpoena or 
        otherwise the attendance of such witnesses and the 
        production of such papers, documents, and books, and to 
        take such testimony as it deems necessary. Subpoenas 
        may be issued under the signature of the chairman of 
        the committee or of any subcommittee, or by any member 
        designated by any such chairman, and may be served by 
        any person designated by any such chairman or 
        member.\5\
---------------------------------------------------------------------------
    \5\ Paragraph (d) was adopted by the House Feb. 10, 1947.
---------------------------------------------------------------------------
    Rule X, 1(h), of later Rules of the House, effective 
January 3, 1975 (H. Res. 988, 93d Congress), added the 
additional jurisdiction of general revenue sharing (formerly 
within the jurisdiction of the Committee on Ways and Means), 
and the National Archives (formerly within the jurisdiction of 
the Committee on Post Office and Civil Service).
    Rule X, 1(j)(6), of later Rules of the House listed the 
additional jurisdiction of measures providing for off-budget 
treatment of Federal agencies or programs, which was added by 
sec. 225 of Public Law 99-177, the Balanced Budget and 
Emergency Deficit Control Act of 1985 (December 12, 1985).
    The 1946 Act contained the following proviso:
          Provided: That unless otherwise provided herein, any 
        matter within the jurisdiction of a standing committee 
        prior to January 2, 1947, shall remain subject to the 
        jurisdiction of that committee or of the consolidated 
        committee succeeding to the jurisdiction of that 
        committee.
This proviso was omitted from the Rules of the House adopted 
January 3, 1954.\6\
---------------------------------------------------------------------------
    \6\ H. Res. 5, 83d Cong. (99 Cong. Rec. 15). Cf. rules in H. Doc. 
562, 82d Congress, 2d session p. 328 and in H. Doc. 739, 81st Congress, 
2d session, p. 326.
---------------------------------------------------------------------------
    Under the Constitution (Art. I, sec. 5, cl. 2), ``Each 
House may determine the Rules of its Proceedings.'' Omission of 
the proviso made no substantive change, since the scope of the 
committee's jurisdiction prior to January 2, 1947, was embraced 
within the committee's jurisdiction as stated in existing rules 
and precedents.
    The committee's membership, which was fixed at 21 when it 
was consolidated on December 5, 1927, was increased to 25 when 
the Legislative Reorganization Act of 1946 became effective on 
January 2, 1947. In 1951, the committee's membership was 
increased to 27.\7\ From 1953 until January 1963, the 
committee's membership remained at 30.\8\
---------------------------------------------------------------------------
    \7\ H. Res. 60, 83d Congress, 1st session (97 Cong. Rec. 194).
    \8\ H. Res. 98, 83d Cong. (99 Cong. Rec. 436); H. Res. 94, 84th 
Cong. (101 Cong. Rec. 484); H. Res. 89, 85th Cong. (103 Cong. Rec. 
412); H. Res. 120, 86th Cong. (105 Cong. Rec. 841); H. Res. 137, 87th 
Cong. (107 Cong. Rec. 1677).
---------------------------------------------------------------------------
    Pursuant to H. Res. 108, 88th Congress, adopted January 17, 
1963, the committee was enlarged to 31 members. In the 89th 
Congress the membership of the committee was increased to 34 
through passage of H. Res. 114, January 14, 1965. The committee 
membership in the 90th and 91st Congresses of 35 was first 
established by H. Res. 128, 90th Congress, approved January 16, 
1967. The committee membership in the 92d Congress of 39 was 
established by H. Res. 192, approved February 4, 1971. It was 
raised to 41 by H. Res. 158, adopted January 24, 1973. The 
committee membership of 42 was established by H. Res. 1238, 
adopted July 17, 1974. It was increased to 43 by H. Res. 76 and 
101, adopted January 20 and 28, 1975. Membership was maintained 
at 43 in the 95th Congress by H. Res. 117 and 118, adopted 
January 19, 1977. The committee membership was set at 39 in the 
96th Congress by H. Res. 62 and 63, adopted January 24, 1979. 
The committee membership was set at 40 in the 97th Congress by 
H. Res. 44 and 45, adopted January 28, 1981. The committee size 
was increased to 41 by the adoption of H. Res. 370 on February 
24, 1982. Pursuant to House Res. 26 and 27, adopted January 6, 
1983, the committee membership for the 98th Congress was set at 
39.
    In the 99th Congress, the membership of the committee was 
set at 39, pursuant to House Res. 34 and 35, adopted January 
30, 1985.
    In the 100th Congress, the membership of the committee was 
set at 39, pursuant to House Res. 45 and 54, adopted January 21 
and 22, 1987, respectively.
    The committee membership in the 101st Congress was 
established at 39 by H. Res. 29 and H. Res. 45, adopted January 
19 and 20, 1989. In the 102d Congress, the membership of the 
committee was set at 41, pursuant to H. Res. 43, 44, and 45, 
adopted January 24, 1991. The committee membership was set at 
42 in the 103d Congress by adoption of H. Res. 8 and 9 on 
January 5, 1993; H. Res. 34 on January 21, 1993; H. Res. 67 on 
February 4, 1993; and H. Res. 92 and 93 on February 18, 1993. 
The membership was increased to 44 by the adoption of H. Res. 
185 on May 26, 1993 and H. Res. 219 on July 21, 1993. Beginning 
September 28, 1949, the moneys appropriated to the committee 
were, by House resolution in each session of Congress, 
available for expenses incurred in conducting studies and 
investigations authorized under Rule XI, whether made within or 
without the United States.\9\ In the 103d Congress, these 
matters are covered in paragraph (b) of clause 1 of Rule XI, as 
set forth above and by clause 5 of Rule XI. The funds for the 
committee's studies and oversight function during the first 
session of the 103d Congress were provided by H. Res. 107 
adopted March 30, 1993 (H. Rept. 103-38).
---------------------------------------------------------------------------
    \9\ See items under (1) in footnote 3, of the final calendar of the 
committee for the 93d Congress (Dec. 31, 1974).
---------------------------------------------------------------------------
    The committee's name was changed to ``Committee on 
Government Operations'' by House resolution adopted July 3, 
1952.\10\ The Congressional Record indicates the reasons 
underlying that change in name were, in part, as follows: \11\
---------------------------------------------------------------------------
    \10\ H. Res. 647, 82d Cong. (98 Cong. Rec. 9217). The Senate had 
made a similar change of name on Mar. 3, 1952, after conference between 
the chairman of the House and Senate Committees on Expenditures in the 
Executive Departments to ensure both Houses would adopt the change in 
name. S. Res. 280, 82d Cong. (98 Cong. Rec. 1701-1702). See also S. 
Rept. No. 1231, 80th Congress, 2d Session, p. 3 (May 3, 1948).
    \11\ Letter of Feb. 19, 1952, from the chairman, Senate Committee 
on Expenditures in the Executive Departments, Senator McCellan to 
Senator Hayden (98 Cong. Rec. 1702).
---------------------------------------------------------------------------
          This committee is proposing the indicated change in 
        the present title, in view of the fact that it is 
        misleading and the committees' functions and duties are 
        generally misunderstood by the public.

           *       *       *       *       *       *       *

    In suggesting the proposed change the committee based its 
decision on what it considers to be the major or primary 
function of the committee under the prescribed duties assigned 
to it to study ``the operations of Government activities at all 
levels with a view to determining its economy and efficiency.'' 
It was the unanimous view of the members of the committee that 
the proposed new title would be more accurate in defining the 
purposes for which the committee was created and in clearly 
establishing the major purpose it serves.
    On January 4, 1995, the 104th Congress opened with a 
Republican majority for the first time in forty years. The 
shift in power from Democrats to Republicans has resulted in a 
realignment of the legislative priorities and committee 
structure of the House of Representatives. Perhaps more than 
any other committee, the Government Reform and Oversight 
Committee embodies the changes taking place in the House of 
Representatives. The committee itself was created by 
consolidating three committees into one, resulting in budget 
and staff cuts of nearly 50 percent. The committees that were 
merged include the Committee on Government Operations, the 
Committee on the Post Office and Civil Service, and the 
Committee on the District of Columbia.
    In order to fulfill the Republican Contract with America, 
the committee held a record number of hearings and mark-ups, 
and members cast more votes during this 100 day period than in 
any of the previous committees' histories. Over the course of 
the first session, 295 bills and resolutions were referred to 
the committee and its subcommittees, and 180 hearings and mark-
ups were held. Five of these measures have been signed into 
law.
    In addition to its greatly expanded legislative 
jurisdiction, the Government Reform and Oversight Committee 
serves as the chief investigative committee of the House, with 
the authority to conduct governmentwide oversight. Because the 
committee only authorizes money for a small number of Federal 
agencies and programs, it is able to review government 
activities with an independent eye.
    The 105th Congress and the Committee on Government Reform 
and Oversight under the leadership of Chairman Dan Burton (R-
IN) enjoyed a productive year as Congress continued to move 
closer to its goals established with the Contract of America to 
seek to achieve a smaller, smarter, and more efficient common 
sense government.
    In addition to the committee's oversight responsibilities, 
the Government Reform and Oversight Committee has pursued an 
active, ambitious agenda throughout the 105th Congress with its 
ongoing investigation of suspected illegal activities during 
the 1996 elections. The committee and its eight subcommittees 
conducted 252 hearings during the 105th Congress. Hearings 
covered the following diverse range of subjects: the year 2000 
computer crisis; the Federal Employees Health Benefits Program; 
the Persian Gulf war veterans illnesses; oversight and 
implementation of the Results Act; the investigation of 
political fundraising improprieties; and the review of the Food 
and Drug Administration and its regulations respecting 
terminally ill patients and their ability to access desired 
treatments. The committee staff developed a web site 
(www.house.gov/reform) to post up-to-minute witness testimonies 
and reports for quick availability.

                           III. Organization

                         A. SUBCOMMITTEES \12\

    In the 104th Congress, significant steps were taken to 
reduce the number of committees, subcommittees, and the number 
of congressional staff. As a result, the Congress eliminated 
the District of Columbia Committee and the Post Office and 
Civil Service Committee. The jurisdiction of these committees 
were merged into the Government Operations Committee and its 
name was changed to the Committee on Government Reform and 
Oversight.
---------------------------------------------------------------------------
    \12\ The chairman and the ranking minority member of the committee 
are ex-officio members of all subcommittees on which they do not hold a 
regular assignment (Committee Rule 9).
---------------------------------------------------------------------------
    In order to perform its functions and to carry out its 
duties as fully and as effectively as possible, the committee 
under the leadership of its chairman, the Honorable Dan Burton 
of Indiana, at the beginning of the 105th Congress, established 
seven standing subcommittees, which cover the entire field of 
executive expenditures and operations. On November 13, 1997, 
the U.S. House of Representatives passed House Resolution 326, 
authorizing the Committee on Government Reform and Oversight to 
establish an eighth subcommittee to accomodate the need for 
extensive oversight over the census. The names, chairpersons, 
and members of these subcommittees are as follows:
          SUBCOMMITTEE ON THE CENSUS, Dan Miller, Chairman; 
        members: Thomas M. Davis, John B. Shadegg, Vince 
        Snowbarger, Ron Lewis, Carolyn B. Maloney, Rod R. 
        Blagojevich, and Danny K. Davis.
          SUBCOMMITTEE ON THE CIVIL SERVICE, John L. Mica, 
        Chairman; members: Michael Pappas, Constance A. 
        Morella, Christopher Cox, Pete Sessions, Elijah E. 
        Cummings, Eleanor Holmes Norton, and Harold E. Ford, 
        Jr.
          SUBCOMMITTEE ON THE DISTRICT OF COLUMBIA, Thomas M. 
        Davis, Chairman; members: Constance A. Morella, Ileana 
        Ros-Lehtinen, Stephen Horn, Eleanor Holmes Norton, and 
        Thomas H. Allen.
          SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, 
        AND TECHNOLOGY, Stephen Horn, Chairman; members: Pete 
        Sessions, Thomas M. Davis, Joe Scarborough, Marshall 
        ``Mark'' Sanford, John E. Sununu, Ron Lewis, Dennis J. 
        Kucinich, Paul E. Kanjorski, Major R. Owens, Carolyn B. 
        Maloney, and Jim Turner.
          SUBCOMMITTEE ON HUMAN RESOURCES, Christopher Shays, 
        Chairman; members: Vince Snowbarger, Benjamin A. 
        Gilman, David M. McIntosh, Mark E. Souder, Michael 
        Pappas, (vacancy), Edolphus Towns, Thomas H. Allen, Tom 
        Lantos, Bernard Sanders, Thomas M. Barrett, and Dennis 
        J. Kucinich.
          SUBCOMMITTEE ON NATIONAL ECONOMIC GROWTH, NATURAL 
        RESOURCES, AND REGULATORY AFFAIRS, David M. McIntosh, 
        Chairman; members: John E. Sununu, J. Dennis Hastert, 
        Joe Scarborough, John B. Shadegg, Steven C. LaTourette, 
        Vince Snowbarger, Bob Barr, Pete Sessions, John F. 
        Tierney, Bernard Sanders, Harold E. Ford, Jr., Paul E. 
        Kanjorski, Gary A. Condit, Dennis J. Kucinich, and 
        (vacancy).
          SUBCOMMITTEE ON NATIONAL SECURITY, INTERNATIONAL 
        AFFAIRS, AND CRIMINAL JUSTICE, J. Dennis Hastert, 
        Chairman; members: Mark E. Souder, Christopher Shays, 
        Ileana Ros-Lehtinen, John M. McHugh, John L. Mica, John 
        B. Shadegg, Steven C. LaTourette, Bob Barr, (vacancy), 
        Thomas M. Barrett, Tom Lantos, Robert E. Wise, Jr., 
        Gary A. Condit, Rod R. Blagojevich, Jim Turner, Elijah 
        E. Cummings, and John F. Tierney.
          SUBCOMMITTEE ON THE POSTAL SERVICE, John M. McHugh, 
        Chairman; members: Marshall ``Mark'' Sanford, Benjamin 
        A. Gilman, Steven C. LaTourette, Pete Sessions, Chaka 
        Fattah, Major R. Owens, and Danny K. Davis.

      B. RULES OF THE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT

    Rule XI, 1(a)(1) of the House of Representatives provides:

          The Rules of the House are the rules of its 
        committees and subcommittees so far as applicable, 
        except that a motion to recess from day to day, and a 
        motion to dispense with the first reading (in full) of 
        a bill or resolution, if printed copies are available, 
        are nondebatable motions of high privilege in 
        committees and subcommittees.

    Rule XI, 2(a) of the House of Representatives provides, in 
part:

          Each standing committee of the House shall adopt 
        written rules governing its procedures.

    In accordance with the foregoing, the Committee on 
Government Reform and Oversight, on February 12, 1997, adopted 
the rules of the committee. The rules read as follows:

                     Rule 1.--Application of Rules

    Except where the terms ``full committee'' and 
``subcommittee'' are specifically referred to, the following 
rules shall apply to the Committee on Government Reform and 
Oversight and its subcommittees as well as to the respective 
chairmen.
        [See House Rule XI, 1.]

                           Rule 2.--Meetings

    The regular meetings of the full committee shall be held on 
the second Tuesday of each month at 10 a.m., when the House is 
in session. The chairman is authorized to dispense with a 
regular meeting or to change the date thereof, and to call and 
convene additional meetings, when circumstances warrant. A 
special meeting of the committee may be requested by members of 
the committee following the provisions of House Rule XI, 2(c)2. 
Subcommittees shall meet at the call of the subcommittee 
chairmen. Every member of the committee or the appropriate 
subcommittee, unless prevented by unusual circumstances, shall 
be provided with a memorandum at least three calendar days 
before each meeting or hearing explaining (1) the purpose of 
the meeting or hearing; and (2) the names, titles, background 
and reasons for appearance of any witnesses. The ranking 
minority member shall be responsible for providing the same 
information on witnesses whom the minority may request.
        [See House Rule XI, 2(b).]

                            Rule 3.--Quorums

    A majority of the members of the committee shall form a 
quorum, except that two members shall constitute a quorum for 
taking testimony and receiving evidence, and one-third of the 
members shall form a quorum for taking any action other than 
the reporting of a measure or recommendation. If the chairman 
is not present at any meeting of the committee or subcommittee, 
the ranking member of the majority party on the committee or 
subcommittee who is present shall preside at that meeting.
        [See House Rule XI, 2(h).]

                       Rule 4.--Committee Reports

    Bills and resolutions approved by the committee shall be 
reported by the chairman following House Rule XI, 2(l).
    Every investigative report shall be approved by a majority 
vote of the committee at a meeting at which a quorum is 
present. Supplemental, minority, or additional views may be 
filed following House Rule XI, 2(l)(5). The time allowed for 
filing such views shall be three calendar days, beginning on 
the day of notice but excluding Saturday, Sundays, and legal 
holidays (unless the House is in session on such a day), unless 
the committee agrees to a different time, but agreement on a 
shorter time shall require the concurrence of each member 
seeking to file such views. A proposed report shall not be 
considered in subcommittee or full committee unless the 
proposed report has been available to the members of such 
subcommittee or full committee for at least three calendar days 
(excluding Saturdays, Sundays, and legal holidays) before 
consideration of such proposed report in subcommittee or full 
committee. An investigative report or oversight report will be 
considered as read if available, to the members, at least 24 
hours before consideration, excluding Saturdays, Sundays and 
legal holidays unless the House is in session on such days. If 
hearings have been held on the matter reported upon, every 
reasonable effort shall be made to have such hearings available 
to the members of the subcommittee or full committee before the 
consideration of the proposed report in such subcommittee or 
full committee. An investigative or oversight report may be 
filed after sine die adjournment of the last regular session of 
the Congress, provided that if a member gives timely notice of 
intention to file supplemental, minority or additional views, 
that member shall be entitled to not less than seven calendar 
days in which to submit such views for inclusion with the 
report.
    Only those reports approved by a majority vote of the 
committee may be ordered printed, unless otherwise required by 
the Rules of the House of Representatives.

                          Rule 5.--Proxy Votes

    In accordance with the Rules of the House of 
Representatives, members may not vote by proxy on any measure 
or matter before the committee or any subcommittee.
        [See House Rule XI, 2(f).]

                          Rule 6.--Roll Calls

    A roll call of the members may be had upon the request of 
any member upon approval of a one-fifth vote.
        [See House Rule XI, 2(e).]

                  Rule 7.--Record of Committee Actions

    The committee staff shall maintain in the committee offices 
a complete record of committee actions from the current 
Congress including a record of the rollcall votes taken at 
committee business meetings. The original records, or true 
copies thereof, as appropriate, shall be available for public 
inspection whenever the committee offices are open for public 
business. The staff shall assure that such original records are 
preserved with no unauthorized alteration, additions, or 
defacement.
        [See House Rule XI, 2(e).]

                   Rule 8.--Subcommittees; Referrals

    There shall be seven subcommittees with appropriate party 
ratios that shall have fixed jurisdictions. Bills, resolutions, 
and other matters shall be referred by the chairman to 
subcommittees within two weeks for consideration or 
investigation in accordance with their fixed jurisdictions. 
Where the subject matter of the referral involves the 
jurisdiction of more than one subcommittee or does not fall 
within any previously assigned jurisdiction, the chairman shall 
refer the matter as he may deem advisable. Bills, resolutions, 
and other matters referred to subcommittees may be reassigned 
by the chairman when, in his judgement, the subcommittee is not 
able to complete its work or cannot reach agreement therein. In 
a subcommittee having an even number of members, if there is a 
tie vote with all members voting on any measure, the measure 
shall be placed on the agenda for full committee consideration 
as if it had been ordered reported by the subcommittee without 
recommendation. This provision shall not preclude further 
action on the measure by the subcommittee.
        [See House Rule XI, 1(a)(2).]

                      Rule 9.--Ex Officio Members

    The chairman and the ranking minority member of the 
committee shall be ex officio members of all subcommittees. 
They are authorized to vote on subcommittee matters; but, 
unless they are regular members of the subcommittee, they shall 
not be counted in determining a subcommittee quorum other than 
a quorum for taking testimony.

                            Rule 10.--Staff

    Except as otherwise provided by House Rule XI, 5 and 6, the 
chairman of the full committee shall have the authority to hire 
and discharge employees of the professional and clerical staff 
of the full committee and of subcommittees.

                       Rule 11.--Staff Direction

    Except as otherwise provided by House Rule XI, 5 and 6, the 
staff of the committee shall be subject to the direction of the 
chairman of the full committee and shall perform such duties as 
he may assign.

                 Rule 12.--Hearing Dates and Witnesses

    The chairman of the full committee will announce the date, 
place, and subject matter of all hearings at least one week 
before the commencement of any hearings, unless he determines, 
with the concurrence of the ranking minority member, or the 
committee determines by a vote, that there is good cause to 
begin such hearings sooner. So that the chairman of the full 
committee may coordinate the committee facilities and hearings 
plans, each subcommittee chairman shall notify him of any 
hearing plans at least two weeks before the date of 
commencement of hearings, including the date, place, subject 
matter, and the names of witnesses, willing and unwilling, who 
would be called to testify, including, to the extent he is 
advised thereof, witnesses whom the minority members may 
request. The minority members shall supply the names of 
witnesses they intend to call to the chairman of the full 
committee or subcommittee at the earliest possible date. 
Witnesses appearing before the committee shall so far as 
practicable, submit written statements at least 24 hours before 
their appearance and, when appearing in a non-governmental 
capacity, provide a curriculum vitae and a listing of any 
Federal Government grants and contracts received in the 
previous fiscal year.
        [See House Rules XI, 2(g)(3), (g)(4), (j) and (k).]

                        Rule 13.--Open Meetings

    Meetings for the transaction of business and hearings of 
the committee shall be open to the public or closed in 
accordance with Rule XI of the House of Representatives.
        [See House Rules XI, 2 (g) and (k).]

                       Rule 14.--Five-Minute Rule

    (1) A committee member may question a witness only when 
recognized by the chairman for that purpose. In accordance with 
House Rule XI, 2(j)(2), each committee member may request up to 
five minutes to question a witness until each member who so 
desires has had such opportunity. Until all such requests have 
been satisfied, the chairman shall, so far as practicable, 
recognize alternately based on seniority of those majority and 
minority members present at the time the hearing was called to 
order and others based on their arrival at the hearing. After 
that, additional time may be extended at the direction of the 
chairman.
    (2) The chairman, with the concurrence of the ranking 
minority member, or the committee by motion, may permit an 
equal number of majority and minority members to question a 
witness for a specified, total period that is equal for each 
side and not longer than thirty minutes for each side.
    (3) The chairman, with the concurrence of the ranking 
minority member, or the committee by motion, may permit 
committee staff of the majority and minority to question a 
witness for a specified, total period that is equal for each 
side and not longer than thirty minutes for each side.
    (4) Nothing in paragraph (2) or (3) affects the rights of a 
Member (other than a Member designated under paragraph (2)) to 
question a witness for 5 minutes in accordance with paragraph 
(1) after the questioning permitted under paragraph (2) or (3). 
In any extended questioning permitted under paragraph (2) or 
(3), the chairman shall determine how to allocate the time 
permitted for extended questioning by majority members or 
majority committee staff and the ranking minority member shall 
determine how to allocate the time permitted for extended 
questioning by minority members or minority committee staff. 
The chairman or the ranking minority member, as applicable, may 
allocate the time for any extended questioning permitted to 
staff under paragraph (3) to members.

              Rule 15.--Investigative Hearings; Procedure

    Investigative hearings shall be conducted according to the 
procedures in House Rule XI, 2(k). All questions put to 
witnesses before the committee shall be relevant to the subject 
matter before the committee for consideration, and the chairman 
shall rule on the relevance of any questions put to the 
witnesses.

                     Rule 16.--Stenographic Record

    A stenographic record of all testimony shall be kept of 
public hearings and shall be made available on such conditions 
as the chairman may prescribe.

                  Rule 17.--TV, Radio, and Photographs

    An open meeting or hearing of the committee or a 
subcommittee may be covered, in whole or in part, by television 
broadcast, radio broadcast, and still photography, or by any 
such methods of coverage, unless closed subject to the 
provisions of House Rule XI, 3.

                Rule 18.--Additional Duties of Chairman

    The chairman of the full committee shall:
          (a) Make available to other committees the findings 
        and recommendations resulting from the investigations 
        of the committee or its subcommittees as required by 
        House Rule X, 4(c)(2);
          (b) Direct such review and studies on the impact or 
        probable impact of tax policies affecting subjects 
        within the committee's jurisdiction as required by 
        House Rule X, 2(c);
          (c) Submit to the Committee on the Budget views and 
        estimates required by House Rule X, 4(g), and to file 
        reports with the House as required by the Congressional 
        Budget Act;
          (d) Authorize and issue subpoenas as provided in 
        House Rule XI, clause 2(m), in the conduct of any 
        investigation or activity or series of investigations 
        or activities within the jurisdiction of the committee;
          (e) Prepare, after consultation with subcommittee 
        chairmen and the minority, a budget for the committee 
        which shall include an adequate budget for the 
        subcommittees to discharge their responsibilities;
          (f) Make any necessary technical and conforming 
        changes to legislation reported by the committee upon 
        unanimous consent; and
          (g) Will designate a vice chairman from the majority 
        party.

                     Rule 19.--Commemorative Stamps

    The committee has adopted the policy that the determination 
of the subject matter of commemorative stamps properly is for 
consideration by the Postmaster General and that the committee 
will not give consideration to legislative proposals for the 
issuance of commemorative stamps. It is suggested that 
recommendations for the issuance of commemorative stamps be 
submitted to the Postmaster General.

               Rule 20.--Interrogatories and Depositions

    The chairman, upon consultation with the ranking minority 
member, may order the taking of interrogatories or depositions, 
under oath and pursuant to notice or subpoena. Such 
authorization may occur on a case-by-case basis, or by 
instructions to take a series of interrogatories or 
depositions. Notices for the taking of depositions shall 
specify the date, time, and place of examination. Answers to 
interrogatories shall be answered fully in writing under oath 
and depositions shall be taken under oath administered by a 
member or a person otherwise authorized by law to administer 
oaths. Consultation with the ranking minority member shall 
include three business day's written notice before any 
deposition is taken. All members shall also receive three 
business day's written notice that a deposition has been 
scheduled.
    The committee shall not initiate contempt proceedings based 
on the failure of a witness to appear at a deposition unless 
the deposition notice was accompanied by a committee subpoena 
issued by the chairman.
    Witnesses may be accompanied at a deposition by counsel to 
advise them of their rights. No one may be present at 
depositions except members, committee staff designated by the 
chairman or ranking minority member, an official reporter, the 
witness, and the witness's counsel. Observers or counsel for 
other persons or for agencies under investigation may not 
attend.
    A deposition shall be conducted by any member or committee 
staff attorney designated by the chairman or ranking minority 
member. When depositions are conducted by committee staff 
attorneys, there shall be no more than two committee staff 
attorneys of the committee permitted to question a witness per 
round. One of the committee staff attorneys shall be designated 
by the chairman and the other shall be designated by the 
ranking minority member. Other committee staff members 
designated by the chairman or the ranking minority member may 
attend, but are not permitted to pose questions to the witness.
    Questions in the deposition shall be propounded in rounds. 
Each round of questioning shall last one hour. A member or 
committee staff attorney designated by the chairman shall ask 
questions first, and the member or committee staff attorney 
designated by the ranking minority member shall ask questions 
second. Thereafter, the member or committee staff designated by 
the chairman and the member or committee staff attorney 
designated by the ranking minority member shall ask questions 
in alternating rounds, until each side has had the opportunity 
to pose all questions to the witness.
    An objection by the witness as to the form of a question 
shall be noted for the record. If a witness objects to a 
question and refuses to answer, the member or committee staff 
attorney may proceed with the deposition, or may obtain, at 
that time or a subsequent time, a ruling on the objection by 
telephone or otherwise from the chairman or a member designated 
chairman. The committee shall not initiate procedures leading 
to contempt proceedings based on a refusal to answer a question 
at a deposition unless the witness refuses to testify after an 
objection of the witness has been overruled and after the 
witness has been ordered by the chairman or a member designated 
by the chairman to answer the question. Overruled objections 
shall be preserved for committee consideration within the 
meaning of clause 2(k)(8) of House Rule XI.
    Committee staff shall insure that the testimony is either 
transcribed or electronically recorded, or both. If a witness's 
testimony is transcribed, the witness or the witness's counsel 
shall be afforded an opportunity to review a copy. No later 
than five days thereafter, the witness may submit suggested 
changes to the chairman. Committee staff may make any 
typographical and technical changes requested by the witness. 
Substantive changes, modifications, clarifications, or 
amendments to the deposition transcript submitted by the 
witness must be accompanied by a letter requesting the changes 
and a statement of the witness's reasons for each proposed 
change. A letter requesting any substantive changes, 
modifications, clarifications, or amendments must be signed by 
the witness. Any substantive changes, modifications, 
clarifications, or amendments shall be included as an appendix 
to the transcript conditioned upon the witness signing the 
transcript.
    The individual administering the oath, if other than a 
member, shall certify on the transcript that the witness was 
duly sworn. The transcriber shall certify that the transcript 
is a true record of the testimony and the transcript shall be 
filed, together with any electronic recording, with the clerk 
of the committee in Washington, DC. Interrogatories and 
depositions shall be considered to have been taken in 
Washington, DC, as well as at the location actually taken once 
filed there with the clerk of the committee for the committee's 
use. The chairman and the ranking minority member shall be 
provided with a copy of the transcripts of the deposition at 
the same time.
    All depositions and interrogatories received pursuant to 
this rule shall be considered as taken in executive session.
    A witness shall not be required to testify unless the 
witness has been provided with a copy of the committee's rules.
    This rule is applicable to the committee's investigation of 
political fundraising improprieties and possible violations of 
law, and is effective upon adoption of a resolution, in the 
House of Representatives, providing the committee with special 
investigative authorities.

   Rule 21.--Letters Rogatory and International Government Assistance

    The chairman, after consultation with the ranking minority 
member, may obtain testimony and evidence in other countries 
through letters rogatory and other means of international 
government cooperation and assistance. This rule is applicable 
to the committee's investigation of political fundraising 
improprieties and possible violations of law, and is effective 
upon adoption of a resolution, in the House of Representatives, 
providing the committee with special investigative authorities.
                     IV. Activities, 105th Congress

                                SUMMARY

    1. In the 105th Congress, the committee approved and 
submitted to the House of Representatives 9 investigative 
reports. In addition, the committee issued 8 committee prints.
    2. In the 105th Congress, 458 bills and resolutions were 
referred to the committee and studied. Of these, the committee 
reported 53. In addition, 12 Memorials, 2 Petitions, and 7 
Presidential messages were referred to the committee.
    3. Pursuant to its duty of studying reports of the 
Comptroller General, the Congress officially received 1,410 
such reports during the 105th Congress, and the committee 
studied 95. In addition, 1,587 Executive Communications were 
referred to the committee under clause 2 of Rule XXIV of the 
House of Representatives.
    4. The full committee met 48 days during the 105th Congress 
while the subcommittees met a total of 305 days in public 
hearings, markups, and meetings.
    The significant actions taken by the committee with respect 
to these and a considerable number of other matters are 
discussed in detail below.

                        A. INVESTIGATIVE REPORTS

    During the 105th Congress, the Committee on Government 
Reform and Oversight approved and submitted to the Congress 9 
reports of an investigative nature.
    For convenience, the published reports are listed here with 
the names of the originating subcommittees. A more detailed 
discussion of the material will be found in part two below in 
the breakdown of the committee's activities by subcommittee:
          First Report (H. Rept. 105-37): ``A Citizen's Guide 
        on Using the Freedom of Information Act and the Privacy 
        Act of 1974 to Request Government Records.'' 
        (Subcommittee on Government Management, Information, 
        and Technology)
          Second Report (H. Rept. 105-388): ``Gulf War 
        Veterans' Illnesses: VA, DOD Continue to Resist Strong 
        Evidence Linking Toxic Causes to Chronic Health 
        Effects.'' * (Subcommittee on Human Resources)
---------------------------------------------------------------------------
    * Denotes report accompanied by additional, dissenting, minority, 
separate, or supplemental views.
---------------------------------------------------------------------------
          Third Report (H. Rept. 105-664): ``Making the Federal 
        Government Accountable: Enforcing the Mandate for 
        Effective Financial Management.'' * (Subcommittee on 
        Government Management, Information, and Technology)
          Report (H. Rept. 105-728): ``Contempt of Congress--
        Refusal of Attorney General Janet Reno to Produce 
        Documents Subpoenaed by the Government Reform and 
        Oversight Committee.'' * (Full Committee)
          Fourth Report (H. Rept. 105-827): ``The Year 2000 
        Problem.'' * (Subcommittee on Government Management, 
        Information, and Technology)
---------------------------------------------------------------------------
    * Denotes report accompanied by additional, dissenting, minority, 
separate, or supplemental views.
---------------------------------------------------------------------------
          Fifth Report (H. Rept. 105-828): ``Investigation of 
        the Conversion of the $1.7 Million Centralized White 
        House Computer System, Known as the White House 
        Database, and Related Matters.'' * (National Economic 
        Growth, Natural Resources, and Regulatory Affairs 
        Subcommittee)
          Sixth Report (H. Rept. 105-829): ``Investigation of 
        Political Fundraising Improprieties and Possible 
        Violations of Law.'' * (Full Committee)
          Seventh Report (H. Rept. 105-820): ``Hepatitis C: 
        Silent Epidemic, Mute Public Health Response.'' 
        (Subcommittee on Human Resources)
          Eighth Report (H. Rept. 105-821): ``Medicare Home 
        Health Services: No Surety in the Fight Against Fraud 
        and Waste.'' (Subcommittee on Human Resources)

                             B. LEGISLATION

    The legislative jurisdiction of the Committee on Government 
Reform and Oversight covers a wide range of important 
governmental operations. In accordance with jurisdiction 
assumed from the former Committee on Government Operations, the 
committee receives all budget and accounting measures other 
than appropriations; all measures relating to the overall 
economy and efficiency of Government operations and activities, 
including Federal procurement, intergovernmental relationships, 
general revenue sharing (the latter subject was formerly within 
the jurisdiction of the Committee on Ways and Means), and the 
National Archives (formerly within the jurisdiction of the 
Committee on Post Office and Civil Service); all reorganization 
plans and bills providing for the establishment of new 
departments in the executive branch such as the Department of 
Energy and the Department of Education; and most other 
reorganization legislation, examples of which are legislation 
to reorganize the intelligence community, international trade, 
and regulatory agencies. Other legislation includes debt 
collection and proposals relating to delinquent payments and 
paperwork reduction. It also receives legislation dealing with 
the General Services Administration, including the Federal 
Property and Administrative Services Act of 1949 and special 
bills authorizing the Administrator of General Services to make 
specific transfers of property, plus legislation dealing with 
the General Accounting Office, the Office of Management and 
Budget, the Administrative Expenses Act, the Travel Expenses 
Act, the Employment Act of 1946, and the Javits-Wagner-O'Day 
Act relating to the sale of products and services of blind and 
other handicapped persons. In addition, the committee has 
jurisdiction over the Freedom of Information provisions of the 
Administrative Procedure Act, the Privacy Act, the Government 
in the Sunshine Act, and the Federal Advisory Committee as well 
as the Inspector General Act.
    Rule X, 2(b) of the standing Rules of the House, requires 
the committee to see and review the administration of all laws 
in the legislative jurisdiction, and Rule XI, 1(d) requires 
that the committee report to the House thereon by the end of 
each Congress. The present report outlines the extent and 
nature of the committee and subcommittee activities 
constituting the review.
    During the 105th Congress, the committee studied 458 bills 
and resolutions referred to it and reported 53 to the House. 
The measures reported or ordered reported are discussed more 
fully in part two below. However, they are listed with the name 
of the subcommittee that initially considered them:
          H.R. 173, a bill to amend the Federal Property and 
        Administrative Services Act of 1949, to authorize 
        donation of surplus Federal Law Enforcement canines to 
        their handlers. (Subcommittee on Government Management, 
        Information, and Technology; passed House amended; 
        passed Senate June 26, 1997; Public Law 105-27.)
          H.R. 240, to amend Title 5, United States Code, to 
        provide that consideration may not be denied to 
        preference eligibles applying for certain positions in 
        the competitive service, and for other purposes. 
        (Subcommittee on the Civil Service; H. Rept. 105-40, 
        Pt.1; passed House amended on April 9, 1997; received 
        in Senate on April 10, 1997; referred to Senate 
        Committee on Governmental Affairs.)
          H.R. 282, to designate the United States Post Office 
        building located at 153 East 110th Street, New York, 
        New York, as the ``Oscar Garcia Rivera Post Office 
        Building.'' (Subcommittee on the Postal Service; passed 
        House October 21, 1997; passed Senate November 9, 1997; 
        Public Law 105-87.)
          H.R. 404, to amend the Federal Property and 
        Administrative Services Act of 1949 to authorize the 
        transfer to State and local governments of certain 
        surplus property for use for law enforcement of public 
        safety purposes. (Subcommittee on Government 
        Management, Information, and Technology; passed House 
        amended November 4, 1997; received in the Senate and 
        referred to Senate Governmental Affairs Committee on 
        November 13, 1997.)
          H.R. 514, to permit the waiver of District of 
        Columbia residency requirements for certain employees 
        of the Office of the Inspector General of the District 
        of Columbia, and for other purposes. (Subcommittee on 
        the District of Columbia, H. Rept. 105-29; Public Law 
        105-7.)
          H.R. 680, a bill to amend the Federal Property and 
        Administrative Services Act of 1949, to authorize the 
        transfer to States of surplus personal property for 
        donation to nonprofit providers of necessaries to 
        impoverished families and individuals. (Subcommittee on 
        Government Management, Information, and Technology; 
        passed House amended April 29, 1997; Roll Call Vote 
        418-0; passed Senate amended on July 9, 1997, and the 
        House agreed to these amendments on September 18, 1997; 
        Public Law 105-50.)
          H.R. 681, to designate the United States Post Office 
        building located at 313 East Broadway in Glendale, 
        California, as the ``Carlos J. Moorhead Post Office 
        Building.'' (Subcommittee on the Postal Service; passed 
        House October 21, 1997; passed Senate November 9, 1997; 
        Public Law 105-88.)
          H.R. 930, Travel and Transportation Reform Act of 
        1997. (Subcommittee on Government Management, 
        Information, and Technology; passed House amended April 
        16, 1997; received in the Senate and referred to the 
        Committee on Governmental Affairs; Public Law 105-264.)
          H.R. 956, to amend the National Narcotics Leadership 
        Act of 1988 to establish a program to support and 
        encourage local communities that first demonstrate a 
        comprehensive, long-term commitment to reduce substance 
        abuse among youth, and for other purposes. 
        (Subcommittee on National Security, International 
        Affairs, and Criminal Justice; H. Rept. 105-105, Pt I; 
        passed House amended May 22, 1997; Roll Call Vote 420-
        1; passed Senate; Public Law 105-20.)
          H.R. 1057, to designate the building in Indianapolis, 
        Indiana, which houses the operations of the Circle City 
        Station Post Office as the ``Andrew Jacobs, Jr. Post 
        Office Building.'' (Subcommittee on the Postal Service; 
        passed House amended June 17, 1997; Roll Call Vote 413-
        0; passed Senate November 9, 1997; Public Law 105-90.)
          H.R. 1058, to designate the facility of the United 
        States Postal Service under construction at 150 West 
        Margaret Drive in Terre Haute, Indiana, as the ``John 
        T. Myers Post Office Building.'' (Subcommittee on the 
        Postal Service; passed House June 17, 1997; Roll Call 
        Vote 416-0; passed Senate November 9, 1997; Public Law 
        105-91.)
          H.R. 1316, to amend chapter 87 of Title 5, United 
        States Code, with respect to the order of precedence to 
        be applied in the payment of life insurance benefits. 
        (Subcommittee on the Civil Service; H. Rept. 105-134; 
        passed House amended on June 24, 1997; received and 
        referred to the Senate Governmental Affairs Committee 
        on June 25, 1997; Public Law 105-205.)
          H.R. 1553, to amend the President John F. Kennedy 
        Assassination Records Collection Act of 1992 to extend 
        the authorization of the Assassination Records Review 
        Board until September 30, 1998. (Subcommittee on 
        National Security, International Affairs, and Criminal 
        Justice; H. Rept. 105-138, Pt. I; passed House June 23, 
        1997; passed Senate June 27, 1997; Public Law 105-25.)
          H.R. 1704, to establish a Congressional Office of 
        Regulatory Analysis. (Subcommittee on National Economic 
        Growth, Natural Resources, and Regulatory Affairs; H. 
        Rept. 105-441, Pt. II.)
          H.R. 1836, to amend chapter 89 of Title 5, United 
        States Code, to improve administration of sanctions 
        against unfit health care providers under the Federal 
        Employees Health Benefits Program, and for other 
        purposes. (Subcommittee on the Civil Service; H. Rept. 
        105-374; passed House amended on November 4, 1997 under 
        suspension of the rules; received and referred to the 
        Senate Committee on Governmental Affairs on November 5, 
        1997; Public Law 105-266.)
          H.R. 1962, to provide for the appointment of a Chief 
        Financial Officer and Deputy Chief Financial Officer in 
        the Executive Office of the President. (Subcommittee on 
        Government Management, Information, and Technology; H. 
        Rept. 105-331; passed House amended on October 21, 
        1997; Roll Call Vote 413-3; received in the Senate and 
        referred to the Committee on Governmental Affairs on 
        October 22, 1997.)
          H.R. 2013 (S. 973), to designate the facility of the 
        United States Postal Service located at 551 Kingstown 
        Road in South Kingstown, Rhode Island, as the ``David 
        B. Champagne Post Office Building.'' (Subcommittee on 
        the Postal Service; passed House October 21, 1997; 
        passed Senate October 24, 1997; Public Law 105-70.)
          H.R. 2129, to designate the United States Post Office 
        located at 150 North 3rd Street in Steubenville, Ohio, 
        as the ``Douglas Applegate Post Office.'' (Subcommittee 
        on the Postal Service; passed House October 21, 1997; 
        passed Senate November 9, 1997; Public Law 105-97.)
          H.R. 2508, to provide for the conveyance of Federal 
        land in San Joaquin County, California, to the City of 
        Tracy, California. (Subcommittee on Government 
        Management, Information, and Technology; passed House 
        September 14, 1998; referred to Senate Committee on 
        Governmental Affairs.)
          H.R. 2526, to amend Title 5, United States Code, to 
        make the percentage limitations on individual 
        contributions to the Thrift Savings Plan more 
        consistent with the dollar amount limitation on 
        elective deferrals, and for other purposes. 
        (Subcommittee on Civil Service; H. Rept. 105-809.)
          H.R. 2564, to designate the United States Post Office 
        located at 450 North Centre Street in Pottsville, 
        Pennsylvania, as the ``Peter J. McCloskey Facility.'' 
        (Subcommittee on the Postal Service; passed House 
        October 21, 1997; passed Senate November 9, 1997; 
        Public Law 105-99.)
          H.R. 2566, to amend Title 5, United States Code, to 
        expand the class of individuals under the Civil Service 
        Retirement Systems eligible to elect the option under 
        which the deposit which is normally required in 
        connection with a refund previously taken may instead 
        be made up through an actuarially equivalent annuity 
        reduction. (Subcommittee on Civil Service; no written 
        report.)
          H.R. 2610, to amend the National Narcotics Leadership 
        Act of 1988 to extend the authorization for the Office 
        of National Drug Control Policy until September 30, 
        1999, to expand the responsibilities and powers of the 
        Director of the Office of National Drug Control Policy, 
        and for other purposes. (Subcommittee on National 
        Security, International Affairs and Criminal Justice; 
        passed House amended under suspension of rules on 
        October 21, 1997; received and referred to the Senate 
        Committee on the Judiciary; reported with amendment 
        November 6, 1997; no written report.)
          H.R. 2623, to designate the United States Post Office 
        located at 16250 Highway 603 in Kiln, Mississippi, as 
        the Ray J. Favre Post Office Building. (Subcommittee on 
        Postal Service; passed House September 9, 1998; 
        reported to Senate by Senate Committee on Governmental 
        Affairs September 25, 1998; no written report.)
          H.R. 2675, to require that the Office of Personnel 
        Management submit proposed legislation under which 
        group universal life insurance and group variable 
        universal life insurance would be available under 
        chapter 87 of Title 5, United States Code, and for 
        other purposes. (Subcommittee on the Civil Service; H. 
        Rept. 105-373; passed House amended on November 4, 1997 
        under suspension of the rules; received in the Senate 
        and referred to the Committee on Governmental Affairs 
        on November 5, 1997; Public Law 105-311.)
          H.R. 2766, to designate the United States Post Office 
        located at 215 East Jackson Street in Painesville, 
        Ohio, as the Karl Bernal Post Office Building. 
        (Subcommittee on Postal Service; passed House February 
        24, 1998; reported to Senate by Senate Committee on 
        Governmental Affairs April 21, 1998; no written report 
        filed.)
          H.R. 2773, to designate the facility of the United 
        States Postal Service located at 3750 North Kedzie 
        Avenue in Chicago, Illinois, as the Daniel J. Doffyn 
        Post Office Building. (Subcommittee on Postal Service; 
        passed House February 24, 1998; reported to Senate by 
        Senate Committee on Governmental Affairs April 21, 
        1998; no written report filed.)
          H.R. 2798, to redesignate the building of the United 
        States Postal Service located at 2419 West Monroe 
        Street in Chicago, Illinois, as the Nancy B. Jefferson 
        Post Office Building. (Subcommittee on Postal Service; 
        passed House June 3, 1998; reported to Senate by Senate 
        Committee on Governmental Affairs September 25, 1998; 
        no written report filed.)
          H.R. 2799, to designate the building of the United 
        States Postal Service located at 324 South Laramie 
        Street, in Chicago, Illinois, as the Reverend Milton R. 
        Brunson Post Office Building. (Subcommittee on Postal 
        Service; passed House June 3, 1998; reported to Senate 
        by Senate Committee on Governmental Affairs September 
        25, 1998; no written report filed.)
          H.R. 2836, to designate the building of the United 
        States Postal Service located at 180 East Kellogg 
        Boulevard in Saint Paul, Minnesota, as the Eugene J. 
        McCarthy Post Office Building. (Subcommittee on Postal 
        Service; passed House February 24, 1998; reported to 
        Senate by Senate Committee on Governmental Affairs 
        April 21, 1998; no written report filed.)
          H.R. 2883, to amend provisions of law enacted by the 
        Government Performance and Results Act of 1993 to 
        improve Federal agency strategic plans and performance 
        reports. (Subcommittee on Government Management, 
        Information, and Technology; reported amended by roll 
        call vote (21-12) March 5, 1998; H. Rept. 105-429; 
        passed House (242-168) March 12, 1998; referred to 
        Senate Committee on Governmental Affairs.)
          H.R. 2943, to amend Title 5, United States Code, to 
        increase the amount of leave time available to a 
        Federal employee in any year in connection with serving 
        as an organ donor, and for other purposes. 
        (Subcommittee on Civil Service; reported July 23, 1998; 
        H. Rept. 105-752; passed House October 5, 1998.)
          H.R. 3120, to designate the United States Post Office 
        located at 95 West 100 South Street in Provo, Utah, as 
        the Howard C. Nielson Post Office Building. 
        (Subcommittee on Postal Service; passed House February 
        24, 1998; reported to Senate by Senate Committee on 
        Governmental Affairs April 21, 1998; no written report 
        filed.)
          H.R. 3249, to provide for the recertification of 
        certain retirement coverage errors affecting Federal 
        employees, and for other purposes. (Subcommittee on 
        Civil Service; reported amended July 14, 1998; H. Rept. 
        105-625, Pt. I; Committee on Ways and Means H. Rept. 
        105-625, Pt. II July 20, 1998; passed House July 20, 
        1998.)
          H.R. 3310, to amend chapter 35 of Title 44, United 
        States Code, for the purpose of facilitating compliance 
        by small businesses with certain Federal paperwork 
        requirements, and to establish a task force to examine 
        the feasibility of streamlining paperwork requirements 
        applicable to small businesses. (Subcommittee on 
        National Economic Growth, Natural Resources, and 
        Regulatory Affairs; reported amended March 19, 1998; H. 
        Rept. 105-462, Pt. I; passed House (267-140) March 26, 
        1998; referred to Senate Committee on Governmental 
        Affairs April 2, 1998.)
          H.R. 3630, to redesignate the facility of the United 
        States Postal Service located at 9719 Candelaria Road 
        NE in Albuquerque, New Mexico, as the Steven Schiff 
        Post Office. (Subcommittee on Postal Service; passed 
        House (391-0) June 3, 1998; reported to Senate by 
        Senate Committee on Governmental Affairs September 25, 
        1998; no written report filed.)
          H.R. 3725, to make the Occupational Safety and Health 
        Act of 1970 applicable to the United States Postal 
        Service in the same manner as any other employer. 
        (Subcommittee on Postal Service; reported to House July 
        23, 1998; no written report filed.)
          H.R. 3808, to designate the United States Post Office 
        located at 47526 Clipper Drive in Plymouth, Michigan, 
        as the Carl D. Pursell Post Office. (Subcommittee on 
        Postal Service; passed House (389-0) June 3, 1998; 
        reported to Senate by Senate Committee on Governmental 
        Affairs September 25, 1998; no written report filed.)
          H.R. 3810, to designate the United States Post Office 
        located at 202 Center Street in Garwood, New Jersey, as 
        the James T. Leonard, Sr. Post Office. (Subcommittee on 
        Postal Service; passed House September 9, 1998; 
        reported to Senate by Senate Committee on Governmental 
        Affairs September 25, 1998; no written report filed.)
          H.R. 3939, to designate the United States Postal 
        Service building located at 658 63rd Street, 
        Philadelphia, Pennsylvania, as the Edgar C. Campbell, 
        Sr. Post Office Building. (Subcommittee on Postal 
        Service; passed House September 9, 1998; reported to 
        Senate by Senate Committee on Governmental Affairs 
        September 25, 1998; no written report filed.)
          H.R. 3999, to designate the United States Postal 
        Service building located at 5209 Greene Street, 
        Philadelphia, Pennsylvania, as the David P. Richardson, 
        Jr. Post Office Building. (Subcommittee on Postal 
        Service; passed House September 9, 1998; reported to 
        Senate by Senate Committee on Governmental Affairs 
        September 25, 1998; no written report filed.)
          H.R. 4000, to designate the United States Postal 
        Service building located at 400 Edgmont Avenue, 
        Chester, Pennsylvania, as the Thomas P. Foglietta Post 
        Office Building. (Subcommittee on Postal Service; 
        passed House October 5, 1998; received in Senate 
        October 6, 1998.)
          H.R. 4001, to designate the United States Postal 
        Service building located at 2601 North 16th Street, 
        Philadelphia, Pennsylvania, as the Roxanne H. Jones 
        Post Office Building. (Subcommittee on Postal Service; 
        passed House October 5, 1998; received in Senate 
        October 6, 1998.)
          H.R. 4002, to designate the United States Postal 
        Service building located at 5300 West Jefferson Street, 
        Philadelphia, Pennsylvania, as the Freeman Hankins Post 
        Office Building. (Subcommittee on Postal Service; 
        passed House September 15, 1998; referred to Senate 
        Committee on Governmental Affairs September 16, 1998.)
          H.R. 4003, to designate the United States Postal 
        Service building located at 2037 Chestnut Street, 
        Philadelphia, Pennsylvania, as the Max Weiner Post 
        Office Building. (Subcommittee on Postal Service; 
        passed House September 15, 1998; referred to Senate 
        Committee on Governmental Affairs September 16, 1998.)
          H.R. 4052, to establish designations for United 
        States Postal Service buildings located in Coconut 
        Grove, Opa Locka, Carol City, and Miami, Florida. 
        (Subcommittee on Postal Service; passed House October 
        9, 1998; received in Senate October 9, 1998.)
          H.R. 4243, to reduce waste, fraud, and error in 
        Government programs by making improvements with respect 
        to Federal management and debt collection practices, 
        Federal payment systems, and Federal benefit programs, 
        and for other purposes. (Subcommittee on Government 
        Management, Information, and Technology; passed House 
        October 14, 1998; received in Senate October 15, 1998.)
          H.R. 4244, to amend the Office of Federal Procurement 
        Policy Act (41 U.S.C. 401 et seq.) to provide for 
        measurement of the performance of the Federal 
        procurement system, to enhance the training of the 
        acquisition workforce, and for other purposes. 
        (Subcommittee on Government Management, Information, 
        and Technology; reported amended July 23, 1998.)
          H.R. 4259, to allow Haskell Indian Nations University 
        and the Southwestern Indian Polytechnic Institute each 
        to conduct a demonstration project to test the 
        feasibility and desirability of new personnel 
        management policies and procedures, and for other 
        purposes. (Full Committee; reported (20-16) July 23, 
        1998; H. Rept. 105-700, Pt. I; passed House October 6, 
        1998; passed Senate October 14, 1998; Public Law 105-
        337.)
          H.R. 4280, to provide for greater access to child 
        care services for Federal employees. (Subcommittee on 
        Civil Service; reported amended October 1, 1998 H. 
        Rept. 105-756, Pt. I; passed House October 5, 1998; 
        received in Senate October 6, 1998.)
          H.J. Res. 56 (S.J. Res. 11), Celebrating the end of 
        slavery in the United States. (Subcommittee on the 
        Civil Service; passed House June 17, 1997; Roll Call 
        Vote 419-0; received in Senate on June 18, 1997.)
          S. 916, to designate the United States Post Office 
        building located at 750 Highway 28 East in 
        Taylorsville, Mississippi, as the Blaine H. Eaton Post 
        Office Building. (Subcommittee on Postal Service; 
        passed House February 24, 1998; Public Law 105-161.)
          S. 985, to designate the United States Post Office 
        located at 194 Ward Street in Patterson, New Jersey, as 
        the Larry Doby Post Office. (Subcommittee on Postal 
        Service; passed House February 24, 1998; Public Law 
        105-162.)

                        OTHER LEGISLATIVE ACTION

    The following bills were referred to the Committee on 
Government Reform and Oversight. After analysis by committee 
staff members the committee was discharged from further 
consideration, and therefore, the bills were not reported. 
Latest action is shown:
          H.R. 497, to repeal the Federal charter of Group 
        Hospitalization and Medical Services, Inc., and for 
        other purposes. (Subcommittee on the District of 
        Columbia; passed House under suspension of the rules; 
        Roll Call Vote 417-0; passed Senate with amendments on 
        November 8, 1997.)
          H.R. 499, to designate the facility of the United 
        States Postal Service under construction at 7411 
        Barlite Boulevard in San Antonio, Texas, as the ``Frank 
        M. Tejeda Post Office Building.'' (Passed House 400-0; 
        passed Senate; Public Law 105-4.)
          H.R. 513, to exempt certain contracts entered into by 
        the government of the District of Columbia from review 
        by the Council of the District of Columbia. 
        (Subcommittee on the District of Columbia; passed House 
        under suspension of rules; Roll Call Vote 390-7 on 
        March 6, 1997; received in the Senate and referred to 
        Senate Committee on Governmental Affairs on March 6, 
        1997.)
          H.R. 633, to amend the Foreign Service Act of 1980 to 
        provide that the annuities of certain special agents 
        and security personnel of the Department of State be 
        computed in the same way as applies generally with 
        respect to Federal law enforcement officers, and for 
        other purposes. (Subcommittee on Civil Service; passed 
        House October 5, 1998; passed Senate October 20, 1998; 
        Public Law 105-382.)
          H.R. 852 (H. Res. 88), to amend chapter 35 of Title 
        44, United States Code, popularly known as the 
        Paperwork Reduction Act, to minimize the burden of 
        Federal paperwork demands upon small businesses, 
        educational and nonprofit institutions, Federal 
        contractors, State and local governments, and other 
        persons through the sponsorship and use of alternative 
        information technologies. (Subcommittee on National 
        Economic Growth, Natural Resources, and Regulatory 
        Affairs; H. Rept. 105-7, Pt. 1; passed House; received 
        in the Senate.)
          H.R. 892, to redesignate the Federal building located 
        at 223 Sharkey Street in Clarksdale, Mississippi, as 
        the Aaron Henry United States Post Office. 
        (Subcommittee on Postal Service; rereferred to House 
        Committee on Transportation and Infrastructure April 
        24, 1997.)
          H.R. 1003, to clarify Federal law with respect to 
        restricting the use of Federal funds in support of 
        assisted suicide. (Subcommittee on Human Resources; 
        passed amended; passed Senate; Public Law 105-12.)
          H.R. 1254, to designate the United States Post Office 
        building located at Bennett and Kansas Avenue in 
        Springfield, Missouri, as the ``John N. Griesemer Post 
        Office Building.'' (Subcommittee on the Postal Service; 
        passed House amended September 16, 1997; passed Senate 
        November 13, 1997; Public Law 105-131.)
          H.R. 1585, to allow postal patrons to contribute to 
        funding for breast cancer research through the 
        voluntary purchases of certain specially issued United 
        States postage stamps. (Subcommittee on the Postal 
        Service; passed House amended; passed Senate July 24, 
        1997; Public Law 105-41.)
          H.R. 1778, to reform the Department of Defense. (H. 
        Rept. 105-133, Pt. I.)
          H.R. 2348, to redesignate the Federal building 
        located at 701 South Santa Fe Avenue in Compton, 
        California, and known as the Compton Main Post Office, 
        as the Mervyn Dymally Post Office Building. 
        (Subcommittee on the Postal Service; passed House 
        October 7, 1998; received in Senate October 8, 1998.)
          H.R. 2349, to redesignate the Federal building 
        located at 10301 South Compton Avenue, in Los Angeles, 
        California, and known as the Watts Finance Office, as 
        the Augustus F. Hawkins Post Office Building. 
        (Subcommittee on the Postal Service; passed House 
        October 12, 1998; received in Senate October 13, 1998.)
          H.R. 2366, to transfer to the Secretary of 
        Agriculture the authority to conduct the census of 
        agriculture, and for other purposes. (Subcommittee on 
        National Security, International Affairs, and Criminal 
        Justice; passed House October 21, 1997; passed Senate 
        November 10, 1997; Public Law 105-113.)
          H.R. 2676, to amend the Internal Revenue Code of 1986 
        to restructure and reform the Internal Revenue Service, 
        and for other purposes.
          H.R. 2977, to amend the Federal Advisory Committee 
        Act to clarify public disclosure requirements that are 
        applicable to the National Academy of Sciences and the 
        National Academy of Public Administration. 
        (Subcommittee on Government Management, Information, 
        and Technology; passed the House November 9, 1997; 
        passed Senate November 13, 1997; Public Law 105-153.)
          H.R. 3025 (H.R. 497), to repeal the Federal charter 
        of Group Hospitalization and Medical Services, Inc., 
        and for other purposes. (Subcommittee on the District 
        of Columbia; passed House November 13, 1997; passed 
        Senate November 13, 1997; Public Law 105-149.)
          H.R. 3167, to designate the United States Post Office 
        located at 297 Larkfield Road in East Northport, New 
        York, as the Jerome Anthony Ambro, Jr. Post Office 
        Building. (Subcommittee on Postal Service; passed House 
        September 9, 1998; referred to Senate Committee on 
        Governmental affairs September 10, 1998.)
          H.R. 3829, to amend the Central Intelligence Agency 
        Act of 1949 to provide a process for agency employees 
        to submit urgent concerns to Congress, and for other 
        purposes. (Subcommittee on Government Management, 
        Information, and Technology; placed on Union Calendar, 
        Calendar No. 468, October 20, 1998.)
          H.R. 3864, to designate the post office located at 
        203 West Paige Street, in Tompkinsville, Kentucky, as 
        the Tim Lee Carter Post Office Building. (Subcommittee 
        on Postal Service; passed House September 9, 1998; 
        referred to Senate Committee on Governmental Affairs 
        September 10, 1998.)
          H.R. 4237, to amend the District of Columbia 
        Convention Center and Sports Arena Authorization Act of 
        1995 to revise the revenues and activities covered 
        under such Act, and for other purposes. (Discharged 
        July 30, 1998; passed House July 30, 1998; passed 
        Senate July 31, 1998; Public Law 105-227.)
          H.R. 4250, to provide new patient protections under 
        group health plans. (Committee waived jurisdiction July 
        21, 1998; passed House (216-210) July 24, 1998; tabled 
        in Senate (50-47) October 9, 1998.)
          H.R. 4516, to designate the United States Postal 
        Service building located at 11550 Livingston Road, in 
        Oxon Hill, Maryland, as the Jacob Joseph Chestnut Post 
        Office Building. (Subcommittee on Postal Service; 
        passed House October 9, 1998; received in Senate 
        October 10, 1998.)
          H.R. 4550, to provide for programs to facilitate a 
        significant reduction in the incidence and prevalence 
        of substance abuse through reducing the demand for 
        illegal drugs and the inappropriate use of legal drugs. 
        (Subcommittee on National Security, International 
        Affairs, and Criminal Justice; passed House (396-9) 
        September 16, 1998; received in Senate September 17, 
        1998.)
          H.R. 4566, to make technical and clarifying 
        amendments to the National Capital Revitalization and 
        Self-Government Improvement Act of 1997. (Subcommittee 
        on District of Columbia; passed House October 10, 1998; 
        passed Senate October 14, 1998; Public Law 105-274.)
          H.R. 4614, to provide for the conveyance of Federal 
        land in New Castle, New Hampshire, to the town of New 
        Castle, New Hampshire, and to require the release of 
        certain restrictions with respect to land in such town. 
        (Subcommittee on Government Management, Information, 
        and Technology; failed House (230-168) October 5, 
        1998.)
          H.R. 4616, to designate the United States Post Office 
        located at 3813 Main Street in East Chicago, Indiana, 
        as the Corporal Harold Gomez Post Office. (Subcommittee 
        on Postal Service; passed House October 7, 1998; 
        received in Senate October 8, 1998.)
          H.R. 4857, to reduce waste, fraud, and error in 
        Government programs by making improvements with respect 
        to Federal management and debt collection practices, 
        Federal payment systems, Federal benefit programs, and 
        for other purposes. (See H.R. 4243; Committee 
        discharged October 20, 1998; passed House October 20, 
        1998; received in Senate October 21, 1998.)
          H. Res. 183, honoring the life of Betty Shabazz. 
        (Subcommittee on Civil Service; Committee discharged 
        July 31, 1997; agreed to by House July 31, 1998.)
          H. Res. 431, disapproving the manner in which 
        Representative Burton has conducted the Committee on 
        Government Reform and Oversights' investigation of 
        political fund-raising improprieties and possible 
        violations of law. (Considered as privileged matter May 
        14, 1998; tabled by House (223-196) May 14, 1998).
          H. Res. 440, expressing the sense of Congress that 
        the Committee on Government Reform and Oversight should 
        confer immunity from prosecution for information and 
        testimony concerning illegal foreign fundraising 
        activities. (Agreed to by House (402-0) May 19, 1998.)
          H. Res. 447, expressing the sense of the House of 
        Representatives regarding financial management by 
        Federal agencies. (Subcommittee on Government 
        Management, Information, and Technology; agreed to by 
        House (415-0) June 9, 1998.)
          H. Res. 452, expressing the sense of the House of 
        Representatives that the Board of Governors of the 
        United States Postal Service should reject the 
        recommended decision issued by the Postal Rate 
        Commission on May 11, 1998, to the extent that it 
        provides for any increase in postage rates. 
        (Subcommittee on Postal Service; agreed to by House 
        (393-12) June 22, 1998.)
          H. Res. 520, congratulating Mark McGwire of the St. 
        Louis Cardinals for breaking the Major League Baseball 
        single-season home run record. (Committee discharged 
        September 15, 1998; agreed to by House September 15, 
        1998.)
          H. Res. 536, congratulating Sammy Sosa of the Chicago 
        Cubs for tying the current major league record for home 
        runs in one season. (Committee discharged September 15, 
        1998; agreed to by House September 15, 1998.)
          H. Res. 590, recognizing and honoring Hunter Scott 
        for his efforts to honor the memory of the captain and 
        crew of the U.S.S. Indianapolis and for the outstanding 
        example he has set for the young people of the United 
        States. (Subcommittee on Civil Service; agreed to by 
        House October 10, 1998.)
          H. Con. Res. 61, honoring the lifetime achievements 
        of Jackie Robinson. (Subcommittee on the Civil Service; 
        passed House under suspension of rules; passed Senate.)
          H. Con. Res. 95, recognizing and commending American 
        airmen held as political prisoners at the Buchenwald 
        concentration camp during World War II for their 
        service, bravery, and fortitude. (Subcommittee on the 
        Civil Service; passed House on September 16, 1997, 
        under suspension of the rules; received and referred to 
        the Senate Committee on the Judiciary on September 17, 
        1997.)
          H. Con. Res. 102, Expressing the sense of the 
        Congress that the cost of government spending and 
        regulatory programs should be reduced so that American 
        families will be able to keep more of what they earn. 
        (Passed Housed under suspension of rules; Roll Call 
        Vote 386-20; received in the Senate on June 25, 1997.)
          H. Con. Res. 109, recognizing the many talents of the 
        actor Jimmy Stewart and honoring the contributions he 
        made to the Nation. (Passed House on September 16, 
        1997, under suspension of the rules; received and 
        referred to the Senate Committee on the Judiciary on 
        September 17, 1997.)
          H. Con. Res. 302, recognizing the importance of 
        children and families in the United States and 
        expressing support for the goals of National Kids Day 
        and National Family Month. (Subcommittee on Civil 
        Service; passed House October 8, 1998; received in 
        Senate October 9, 1998.)
          S. 314, to provide a process for identifying the 
        functions of the Federal Government that are not 
        inherently governmental functions, and for other 
        purposes. (Subcommittee on Government Management, 
        Information, and Technology; passed House October 5, 
        1998; Public Law 105-270.)
          S. 1364, to eliminate unnecessary and wasteful 
        Federal reports. (Passed House amended (390-19) October 
        13, 1998; passed Senate amended October 21, 1998; 
        Public Law 105-362.)
          S. 1378, to extend the authorization of use of 
        official mail in the location and recovery of missing 
        children, and for other purposes. (Subcommittee on the 
        Postal Service; passed Senate November 5, 1997; passed 
        House on November 12, 1997; Public Law 105-126.)
          S. 2071, to extend a quarterly financial report 
        program administered by the Secretary of Commerce. 
        (Committee discharged September 28, 1998; passed House 
        September 28, 1998; Public Law 105-252.)
          S.J. Res. 58, recognizing the accomplishments of 
        Inspectors General since their creation in 1978 in 
        preventing and detecting waste, fraud, abuse, and 
        mismanagement, and in promoting economy, efficiency, 
        and effectiveness in the Federal Government. 
        (Subcommittee on Civil Service; passed House October 
        10, 1998; Public Law 105-349.)
          S. Con. Res. 83, remembering the life of George 
        Washington and his contributions to the Nation. 
        (Subcommittee on Civil Service; passed House October 
        15, 1998.)

                        C. REORGANIZATION PLANS

    The most recent authority of the President to transmit 
reorganization plans to Congress was reestablished by Public 
Law 98-614. Approved November 8, 1984, this authority expired 
on December 31, 1984. Legislation extending executive 
reorganization authority was not enacted during the 105th 
Congress.

                          D. COMMITTEE PRINTS

    Eight committee prints, resulting from work by the 
committee staff, were issued during the 105th Congress, as 
follows:
          ``Rules of the Committee on Government Reform and 
        Oversight, House of Representatives, Together with 
        Selected Rules of the House of Representatives 
        (Including Clause 2 of House Rule XI) and Selected 
        Statutes of Interest.'' (Full Committee.) (February 
        1997.)
          ``Title 5, United States Code: Government 
        Organization and Employees'' (Subcommittee on Civil 
        Service.) (February 1997.)
          ``Oversight Plans for all House Committees with 
        Accompanying Recommendations by the Committee on 
        Government Reform and Oversight, House of 
        Representatives (Required by Clause 2 of House Rule 
        XI).'' (Full Committee.) (March 1997.)
          ``Rules of the Committee on Government Reform and 
        Oversight, House of Representatives, Together with 
        Selected Rules of the House of Representatives 
        (Including Clause 2 of House Rule XI) and Selected 
        Statutes of Interest.'' (Full Committee.) (June 1997.)
          ``Title 13, United States Code--Census.'' (Full 
        Committee.) (January 1998.)
          ``Interim Report of the Activities of the Committee 
        on Government Reform and Oversight, First Session.'' 
        (Full Committee.) (March 1998.)
          ``Rules of the Committee on Government Reform and 
        Oversight, House of Representatives, Together with 
        Selected Rules of the House of Representatives 
        (Including Clause 2 of House Rule XI) and Selected 
        Statutes of Interest.'' (Full Committee.) (June 1998.)
          ``Title 39, United States Code--U.S. Postal Service 
        and Selected Additional Provisions of Law.'' 
        (Subcommittee on the Postal Service.) (December 1998.)

       E. COMMITTEE ACTION ON REPORTS OF THE COMPTROLLER GENERAL

    Rule X, 4(c)(1)(A), of the rules of the House, imposes the 
duty upon this committee to receive and examine reports of the 
Comptroller General referred to and to make such 
recommendations to the House as it deems necessary or desirable 
in connection with the subject matter of the reports.
    In discharging this responsibility, each report of the 
Comptroller General received by the committee is studied and 
analyzed by the staff and referred to a subcommittee for 
action. Furthermore, in implementation of section 236 of the 
Legislative Reorganization Act of 1970, the committee regularly 
receives GAO reports that are not addressed to Congress but 
contain recommendations to heads of the Federal agencies. The 
committee received a total of 1,410 such GAO reports to Federal 
agencies or other committees and Members within the legislative 
branch.
    Periodic reports are received from the subcommittees on 
actions taken with respect to individual reports, and monthly 
reports are made to the chairman as to reports received. During 
the session, the committees used the reports to further 
specific investigations and reviews. In most cases, additional 
information concerning the findings and recommendations of the 
Comptroller General was requested and received from the 
administrative agency involved, as well as from the General 
Accounting Office. More specific information on the actions 
taken appears in part two below.
    Complete files are maintained by the committee on all 
Comptroller General's reports received. Detailed records are 
kept showing the subcommittee to which the report is referred, 
the date of referral, and the subsequent action taken.
    The committee will review all of the Comptroller General's 
reports received during the Congress in the light of additional 
information obtained and actions taken by the subcommittees, 
and determinations will be made whether specific 
recommendations to the House are necessary or desirable under 
Rule X.
                PART TWO. REPORT OF COMMITTEE ACTIVITIES

                 I. Matters of Interest, Full Committee

                               A. GENERAL

1. Oversight Plans of the Committees of the U.S. House of 
        Representatives.
    The 104th Congress adopted a new Rule that provides for 
each standing committee of the House to formally adopt 
oversight plans at the beginning of each year. Specifically, 
the Rule states in part:

          Rule X, clause (2)(d)(1). Not later than February 15 
        of the first session of a Congress, each standing 
        committee of the House shall, in a meeting that is open 
        to the public and with a quorum present, adopt its 
        oversight plans for that Congress. Such plans shall be 
        submitted simultaneously to the Committee on Government 
        Reform and Oversight and to the Committee on House 
        Oversight.

    On March 31, 1997, Committee Chairman Dan Burton submitted 
the oversight plans of each House committee together with 
recommendations to ensure the most effective coordination of 
such plans.

  RECOMMENDATIONS OF THE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT

             Oversight Plans of the Committees of the House

    Congressional oversight, as envisioned by the majority 
leadership of the House, is ultimately about the public 
interest, the liberty of citizens, and the taxpayers' dollars. 
The ability, and duty, of popularly-elected representatives to 
oversee the executive branch is a fundamental component of the 
system of checks and balances established by the founding 
fathers. The Rules of the House of Representatives ensure 
Congress' responsibility to the public in this regard. Pursuant 
to House Rule X, clause 2(b)(1), each standing committee of the 
House ``shall review and study, on a continuing basis, the 
application, administration, execution, and effectiveness of 
those laws, or parts of laws, the subject matter of which is 
within the jurisdiction of the committee and the organization 
and operation of the Federal agencies and entities having 
responsibilities in or for the administration and execution 
thereof, in order to determine whether such laws and the 
programs thereunder are being implemented and carried out in 
accordance with the intent of the Congress and whether such 
programs should be continued, curtailed, or eliminated.''
    Congressional oversight in the 105th Congress should focus 
on three fundamental efforts:
          (1) Review the implementation by the Executive Branch 
        of recent policy changes enacted by Congress to assess 
        their effectiveness. Congress enacted significant 
        reform legislation in the 104th Congress. These reforms 
        include the termination of 270 useless Federal 
        programs, offices, agencies and projects, and the 
        privatization of four major government programs. Other 
        reform efforts, such as the Unfunded Federal Mandates 
        Reform Act, the Federal Acquisition Reform Act, the 
        Line-Item Veto Act, the Paperwork Reduction Act, the 
        Debt Collection Improvement Act, and the Information 
        Technology Management Reform Act, will enhance 
        management practices governmentwide, and help reduce 
        unnecessary burdens placed upon State and local 
        governments. Still other legislative reforms make 
        improvements in specific programs areas. These include 
        the enactment of comprehensive welfare reform, 
        telecommunications reform, and lawsuit abuse reform. 
        Many of these reforms have already resulted in major 
        cost savings and improvements in the efficiency of the 
        Federal Government. But they will need continued 
        monitoring and oversight by the Congress to ensure 
        their success as effective legislative changes. In 
        their oversight plans for the 105th Congress, House 
        committees recognize the importance of their 
        responsibility to oversee the implementation of recent 
        legislative reforms. The Government Reform and 
        Oversight Committee recommends that committees fully 
        utilize the auditing and oversight services of the 
        General Accounting Office, the Congressional Research 
        Service, and agency Inspectors General to augment their 
        efforts to oversee implementation of these critical 
        legislative reforms.
          (2) Review existing Government programs in order to 
        inform the public and build a compelling case for 
        further change and reform. While the legislative 
        successes of the 104th Congress are laudable, many 
        other opportunities for streamlining, improving 
        efficiency, and reducing costs to the American taxpayer 
        exist. The following committee oversight plans reveal 
        priority areas for programmatic and agency reform 
        efforts in the 105th Congress, including: fundamental 
        reform of the tax code; structural reform of the 
        Internal Revenue Service; Medicare reform; reform of 
        the Immigration and Naturalization Service; reform of 
        the General Services Administration; reform/
        restructuring of the Commerce Department, State 
        Department, Labor Department, and Department of Housing 
        and Urban Development; reform of the National Park 
        Service; deregulation of electric utilities; and, 
        reform of the U.S. intelligence community. All but a 
        small handful of House committees have incorporated 
        into their oversight plans their intentions with regard 
        to the GPRA, or Results Act. This important act 
        codifies the fundamental way Congress and the executive 
        branches should be assessing Federal Government 
        missions and activities. The Government Reform and 
        Oversight Committee recommends that each committee take 
        full advantage of the House Leadership's current 
        efforts to coordinate agency and program review as 
        legislated by the Government Performance and Results 
        Act of 1993. This includes reaching out to our minority 
        counterparts as well as the Senate.
          (3) Review Government programs to root out waste, 
        fraud and abuse, thereby maximizing accountability in 
        the Federal Government to the public. The merits of 
        Federal programs and activities are, of course, subject 
        to intense debate--particularly in times of budget 
        deficits and keen competition for limited Federal 
        resources. However, the importance of efficient, 
        effective, and honest management is not a debatable 
        issue. Fraud, waste, abuse, and mismanagement serve no 
        legitimate constituency or political interest. They 
        cheat both the taxpayers and the intended beneficiaries 
        of the programs and activities they affect. They also 
        undermine the confidence of the American people in the 
        capacity and will of the Federal Government to perform 
        its functions effectively. The Government Reform and 
        Oversight Committee recommends that committees 
        carefully review the findings in (1) the General 
        Accounting Office's ``High Risk List'' of 25 Federal 
        programs at risk for serious fraud, waste, and abuse; 
        (2) agency Inspector General semi-annual and annual 
        reports to Congress; and (3) the Government Reform and 
        Oversight Committee September 1996 Report entitled 
        ``Federal Government Management: Examining Government 
        Performance As We Near the Next Century.'' These 
        documents are an important source of serious problems 
        currently existing in the Federal Government that need 
        immediate attention by Congress.
    Collectively, the committee oversight plans cover a wide 
array of Federal programs and management issues. The challenges 
of dealing with the serious, pervasive problems that continue 
to impede effective management and efficient program delivery 
is formidable.
    A major breakthrough in prospects for improving Federal 
management, as well as congressional oversight of Federal 
programs, has been provided by two recent laws: the Chief 
Financial Officers Act and Government Performance and Results 
Act. Together, these acts provide a framework necessary to help 
achieve improved government accountability and stewardship and 
to lower costs by focusing on results. The Congress framed it 
this way: Set goals, operate programs, and measure results 
using reliable financial and management information.
    While these acts are still in the process of being 
implemented, efforts already completed or underway in response 
to both acts offer committees a valuable source of information 
and insight into the management problems and issues. These 
include issues that impact individual programs, as well as 
those that cut across agency programs and organizational 
boundaries.
    The committees of the House should: (1) conduct oversight 
to ensure that these statutes are being aggressively 
implemented, and (2) use the information produced by the 
implementation of these statutes and the General Accounting 
Office's [GAO] high risk list to assess the management 
weaknesses in the agencies within their jurisdiction.
2. Views and Estimates for Fiscal Year 1999.
    On March 24, 1998, pursuant to section 301(d) of the 
Congressional Budget and Impoundment Control Act of 1974, as 
amended by the Balanced Budget and Emergency Deficit Control 
Act of 1985, the committee submitted its views and estimates to 
the Committee on the Budget on matters that were included in 
the President's fiscal year 1999 budget within the committee's 
jurisdiction.
3. Investigations.
    a. Oversight of Implementation of the Government 
Performance and Results Act of 1993.--The Government 
Performance and Results Act (Results Act) is designed to 
provide policymakers and the public with systematic, reliable 
information about where Federal programs and activities are 
going, how they will get there, and how we will know when they 
have arrived. This is to be accomplished through agency reports 
to Congress providing strategic and performance planning. The 
act will only succeed if Congress then uses the information to 
better inform authorizing and budgetary decisionmaking.
    As described in the section on ``Review of Laws Within the 
Committee's Jurisdiction,'' the Government Reform and Oversight 
Committee has worked closely with the House Republican 
leadership during 1997 to educate and involve all congressional 
committees in the successful implementation of the Results Act. 
Part of that educational process has included two full 
committee hearings highlighting the potential of the act as a 
tool for more productive oversight and ultimately, better 
informed policy decisions.
    The first hearing, entitled ``The Government Performance 
and Results Act: Sensible Government for the Next Century,'' 
was held on February 12, and was chaired by Dan Burton. In his 
opening statement, Chairman Burton stressed the practical 
elements of the Act--setting performance goals and linking 
budget to performance--as such elements are often applied in 
private sector businesses. The chairman hoped that the hearing 
would signal to the administration and the American public the 
importance of using the Results Act to make sure citizens are 
getting what they expect and pay for from Federal programs.
    The lead witness, Majority Leader Dick Armey, testified 
regarding the importance the House Republican leadership places 
on the Results Act. He spoke of the opportunity the act 
presents for Democrats, Republicans and those in the executive 
branch to work together to improve the way Washington works--to 
alleviate waste, inefficiencies, ineffectiveness, fraud, and 
bad management. The majority leader stressed that for the act 
to be successful, each congressional committee and each elected 
representative must devote more attention to agencies' major 
plans and objectives, and show a new willingness to reexamine 
pet projects with an ear toward objective, credible information 
about the results of these programs. He concluded his prepared 
testimony by reiterating a point Chairman Burton had made about 
the Results Act's similarity to processes widely used by 
private businesses to enhance efficiency and effectiveness.
    The second panel of witnesses included James Hinchman, 
Acting Comptroller General of the General Accounting Office 
[GAO], and John Koskinen, Deputy Director for Management, 
Office of Management and Budget [OMB]. Mr. Hinchman testified 
that GAO had made three important conclusions as a result of 
examining management issues throughout the Federal Government. 
The first is that the Federal Government is rift with 
management problems. The second is that Congress has put in 
place a sound statutory framework for addressing such 
management problems, including the Chief Financial Officers 
Act, the Paperwork Reduction Act, the Clinger-Cohen Act, and as 
cornerstone, the Results Act. And the third conclusion of the 
GAO is that Congress has an important role to play in the 
implementation of the Results Act, beginning with consultations 
with the agencies on their strategic plans. Mr. Hinchman also 
stressed the important role of congressional oversight hearings 
to improve management in Federal agencies.
    Mr. Koskinen, the last witness for this hearing, testified 
on behalf of OMB that the agencies had been encouraged to 
consult with Congress on their strategic plans for over a year 
(although at the time of the hearing, no consultations had 
occurred). He discussed OMB's guidance which had been issued 18 
months earlier on the preparation and submission of strategic 
plans. He indicated his belief that the draft agency strategic 
plans OMB had reviewed allowed them to conclude that the final 
plans due in the fall of 1997 would be useful and informative 
strategic plans.
    Another Results Act hearing entitled, ``The Results Act: 
Are We Getting Results?'' was held on October 30. Chairman 
Burton opened the hearing by expressing his disappointment in 
the dismal lack of compliance found in the agency draft 
strategic plans, and his greater disappointment that it 
appeared the final plans were only marginally improved over the 
drafts.
    For the second time, the lead witness was Majority Leader 
Armey, who was only able to give part of his testimony before 
being called to vote. His written statement reflected on a year 
of hard work that Congress and the executive branch agencies 
had dedicated to the implementation of the Results Act and the 
lessons we were learning from the experience.
    Others scheduled to testify included Franklin Raines, 
Director, Office of Management and Budget, James Hinchman, 
Acting Comptroller General, General Accounting Office, and the 
Honorable Maurice McTigue, distinguished visiting scholar, 
Center for Market Processes at George Mason University.
    b. Review of the Federal Government's Acquisition Strategy 
Regarding the Federal Telecommunications System 2001 Program.--
The Federal Telecommunications System 2000 [FTS 2000] is the 
Government's current long distance telecommunications service. 
The multi billion dollar program provides telecommunications 
services to approximately 1.7 million users across the Federal 
Government. The FTS program was largely successful leveraging 
the emerging competition in the long distance markets to save 
billions of dollars over the General Services Administration's 
[GSA] prior Federal Telecommunications Service network. The 
current FTS 2000 contracts were awarded in 1988, will expire in 
December 1998, with the awarding of the FTS2001 contracts 
anticipated in December 1998.
    The telecommunications industry has changed dramatically 
since the initial contracts were awarded: the array of 
available commercial services is broader; the number of service 
providers has increased; and the availability and nature of the 
underlying technologies themselves continue to change. The 
Government's needs for communications services has changed as 
well, for more advanced data and video services outdistancing 
growth in basic voice communication services. It is imperative 
that the FTS2001 program embrace an acquisition strategy that 
is based on commercial practices which maximizes the use of 
commercially available services to meet agency needs while 
following an appropriate strategy for managing complex 
Government operations.
    The committee's monitoring the development of the FTS2001 
procurement will ensure that the Federal Government receives 
the most technically effective and cost efficient 
telecommunications services. The Government and more 
importantly the taxpayer will be able to take maximum advantage 
of the economies associated with increasing competition in the 
new telecommunications environment. Through a combination of 
the best prices and excellent service quality the executive 
agencies will be able to do their jobs of serving the citizens 
more efficiently and effectively.
    The General Services Administration worked closely with the 
interagency group and a broad cross section of industry 
preparing an acquisition strategy. Initial proposals failed to 
take full advantage of telecommunications reform along with 
today's rapidly changing landscape of advancing technologies, 
new services, and emerging service providers. Working closely 
with this committee, GSA ultimately developed a proposal that 
addressed many of the issues raised by the Committee on 
Government Reform and Oversight and others which will enable 
the Government to take full advantage of the rapid changes in 
the telecommunications service environment. This procurement 
will make maximum use of commercial services and practices in 
designing solutions to the Government's requirements. It will 
also enable the Government to leverage its position as the 
country's largest user of telecommunications services to obtain 
the best prices for the taxpayers. GSA is proceeding with this 
FTS2001 acquisition strategy, which should be fully in place by 
the end of the calendar year.
    The committee held two hearings entitled, ``Federal 
Telecommunications System Acquisition Strategy,'' on March 6, 
1997, and ``Federal Telecommunications System Acquisition 
Strategy: An Industry Perspective,'' on March 12, 1997.
    c. The Committee's Investigation of Political Fundraising 
Improprieties and Possible Violations of Law.--At the beginning 
of the 105th Congress, the committee undertook a major 
investigation into political fundraising improprieties and 
possible violations of law relating predominantly to the 1992 
and 1996 elections. In the closing months of the 1996 campaign, 
there were numerous revelations about foreign money coming into 
the U.S. political system. The initial allegations concerned 
possible illegal fundraising conducted by Democratic National 
Committee [DNC] Finance Vice-Chair John Huang and Presidential 
appointee Charlie Trie, both long time friends of President 
Clinton. However, as the committee carried on its 
investigation, it uncovered evidence of serious illegalities in 
the 1992 and 1996 Presidential campaigns that involved a wide 
range of individuals, as well as foreign money from South 
America and Asia. During its investigation, the committee 
issued over 700 subpoenas, deposed over 130 witnesses, and held 
15 hearings. While the committee did uncover evidence of 
serious wrongdoing by a number of individuals involved in the 
1996 campaign, it was frustrated in its efforts to uncover the 
whole truth by persistent stonewalling. One hundred twenty 
witnesses either fled the country, refused to be interviewed, 
or invoked their fifth amendment privileges when contacted by 
the committee. A number of these individuals were close 
associates of the President, such as John Huang, Charlie Trie, 
Mark Middleton, and Webb Hubbell. In addition, the White House 
and DNC attempted to frustrate the committee's investigation 
through delayed responses to the committee's inquiries.
    In October 1998, the committee issued an interim report 
containing its conclusions to date regarding the investigation. 
Due to the unprecedented stonewalling faced by the committee, 
it was unable to complete the investigation and issue a final 
report. While the committee did not make any final conclusions 
about the precise role or actions of senior White House and DNC 
officials, including the President and Vice-President, in the 
campaign finance scandal, it will continue to explore their 
actions. The high level of suspicion surrounding the 
President's actions in the 1996 campaign has been noted by 
others. Federal Bureau of Investigation Director Louis Freeh 
and the former Justice Department Task Force Chief Prosecutor, 
Charles La Bella, already have told the Attorney General that 
the actions of those at the highest levels of the White House 
and DNC necessitate the appointment of an independent counsel 
under the mandatory provisions of the independent counsel law. 
Some have suggested that there might be a larger conspiracy to 
violate numerous election laws which necessitates an 
independent counsel.
    The committee's investigation largely focused on the 
political fundraising activities of John Huang, Yah Lin 
``Charlie'' Trie, Johnny Chung, and the Sioeng family. In the 
case of Ted Sioeng, he gave to Republicans as well as 
Democrats, and these Republican ties were investigated. Each of 
these individuals was involved in contributing or soliciting 
large amounts of money for the Democratic party between 1994 
and 1996. In addition, each had unusual access to the White 
House and to President Clinton personally. The committee 
uncovered millions of dollars worth of illegal or improper 
contributions that were made during the 1996 election. It also 
discovered a disturbing pattern of conduct by which individuals 
giving illegal and improper contributions were rewarded with 
unusual access to the President and the administration by the 
DNC and the Clinton White House.
    The investigation of the campaign finance scandal was 
designed in part to ensure that political parties follow the 
campaign finance laws that are currently in place. Federal 
election laws are designed so that those who are involved in 
the process of funding our election system are citizens or 
residents with a stake in the United States' system of 
democratic government. Federal laws are also designed to 
provide full disclosure to the American people about who is 
funding candidates for public office. U.S. election laws do not 
allow for contributions from foreign sources. When the laws 
governing our elections are broken, the very system designed to 
govern our free elections is threatened. If money is given 
illegally, that can, in and of itself, change the outcome in 
any given election. That is why tracking the huge infusion of 
foreign money from, among other sources, those with Communist 
Chinese Government ties, and determining how and why this was 
done, is so important.
    Masking donations through conduit donors is one way in 
which the true source of funds can be hidden, thereby 
increasing the influence of either a foreign or illegal source 
of money. Using conduit contributions also allows a single 
individual to make more hard dollar contributions than they 
would otherwise be allowed to make under law. An individual can 
give up to $20,000 in ``hard money'' to a party committee. When 
an individual provides conduit funds to a new individual who 
has not previously donated, that first $20,000 contributed by 
that conduit donor will also be counted as ``hard money'' 
donations. It should be noted that throughout the 1996 
campaign, there was a big push to obtain more hard money. Memos 
authored by White House Deputy Chief of Staff Harold Ickes, who 
coordinated the campaign, raised the issue of a shortage of 
``hard money'' throughout the 1996 campaign season.
    The committee has tracked hundreds of thousands of dollars 
in conduit contributions and learned that many illegal conduit 
funds have yet to be returned by the DNC and other Democratic 
entities. Now that it has been clearly established that much of 
the millions of dollars in illegal contributions came from 
foreign bank accounts or conduits, the troubling question 
persists: Were foreign sources of any kind buying access to the 
White House and trying to influence the 1996 elections?
    To date, the President, White House officials and DNC 
officials all claim no prior knowledge of the massive amount of 
illegal foreign money raised by John Huang, Charlie Trie, 
Johnny Chung, their associates and others. However, senior 
White House and DNC officials were all part of a reckless 
fundraising scheme which involved providing extensive 
opportunities for large DNC donors to gain access to the 
President and senior administration officials. White House 
perks such as Lincoln Bedroom overnights, White House coffees, 
Air Force One trips and Kennedy Center tickets, also were 
provided to donors and their friends. A number of the 
individuals who received the perks and White House VIP 
treatment, were later deemed inappropriate. These included 
individuals such as a drug dealer, an arms merchant, and many 
foreign nationals with unknown agendas.
    Over the past 2 years, the millions of dollars in illegal 
foreign money that went to the DNC and other Democratic 
entities have been traced to a small number of key figures, 
namely John Huang, Charlie Trie, Johnny Chung, and Ted Sioeng. 
These individuals were provided unique access to the White 
House and senior administration officials. They also used their 
access to bring their foreign business associates to the White 
House and DNC functions. Even though many of these foreign 
nationals were not eligible to contribute, they funneled money 
into the coffers of the DNC. As the committee has continued its 
investigation, more information about the foreign ties of key 
DNC fundraisers have come to light. For example, Johnny Chung's 
confession that tens of thousands of dollars which he 
contributed were given to him from a Chinese Government source 
was ultimately not surprising. Indeed, some at the DNC had 
suspected he was doing this. The connections with foreign 
campaign money and foreign business associates also is apparent 
with Charlie Trie and his associate Antonio Pan, John Huang, 
and the Riady family, Ted Sioeng and his foreign associates, as 
well as others. As the committee continues to follow the money 
trail and push for foreign cooperation and an end to the 
stonewalling by dozens of key witnesses, it is very likely more 
foreign ties will be discovered.
    Finally, the committee believes that the House's 
investigation continues to provide additional support to the 
issues as set out by the Senate Governmental Affairs majority 
report on ``The China Plan.'' The illegal foreign money 
solicited by these individuals is doubly suspect because of 
their extensive ties to the People's Republic of China. The 
original--but as yet unidentified--sources of these funds were 
traced to bank accounts in Hong Kong, Macau, and Indonesia. As 
the Senate Governmental Affairs Committee Final Report on 
campaign finance noted, ``officials at the highest levels of 
the Chinese government approved of efforts to increase the 
PRC's involvement in the U.S. political process. There are 
indications that the plan or parts of the plan and possibly 
related PRC activities were implemented covertly in this 
country.'' Since the Senate issued its report in March 1998, 
the committee has developed a more extensive record on the key 
fundraising figures and their foreign ties. Finally, in 
addition to the Asian sources of foreign money, the committee 
has also identified South American foreign money that first 
came into the DNC coffers in 1992, as well as funds from a 
German national which were largely ignored by the FEC.
    Throughout the course of the investigation, the committee 
uncovered significant new facts and made that evidence public. 
Frequently, because of the lack of cooperation from witnesses 
who either pled the fifth amendment or fled the country, these 
facts could be uncovered only through bank and telephone 
records. For example the committee uncovered the following 
facts:
        
 Yah Lin ``Charlie'' Trie carried out a scheme 
        by which he funneled $35,000 of money from Asia into 
        the coffers of the DNC, using his sister and her 
        boyfriend to make illegal conduit contributions.
        
 Trie also distributed at least $200,000 in 
        travelers checks from Indonesia across the United 
        States. A total of $50,000 of this Indonesian money was 
        used to make illegal contributions to the DNC.
        
 The committee's interim report determined 
        that, despite having returned $3.4 million in 
        questionable contributions connected to Charlie Trie, 
        John Huang, and Johnny Chung, the DNC had failed to 
        return an additional $1.8 million in clearly illegal 
        and highly-suspect contributions connected to these 
        same individuals.
        
 The committee released information showing 
        that $45,000 in contributions to the DNC from Lippo 
        Group subsidiaries in 1992, directly from Indonesia.
        
 One Clinton administration official checked 
        the amount of political contributions made by potential 
        appointees to government boards before allowing their 
        appointment. This same official, who processed Charlie 
        Trie's appointment to a high-level trade commission, 
        stated that Trie was a ``must appointment'' whose name 
        had come ``directly from the highest levels of the 
        White House.''
        
 The committee immunized witnesses and received 
        testimony that Johnny Chung formed fraudulent 
        partnerships in the United States with Chinese 
        officials to help them obtain visas to come to the 
        United States for DNC fundraisers and to pursue other 
        ventures.
        
 Chung brought a high-level delegation from a 
        Chinese Government-owned oil company to the Treasury 
        Department to seek low interest government loans.
    d. The Committee's Oversight of the Department of Justice 
Campaign Finance Investigation.--The committee's investigation 
of the campaign finance scandal also led it to conduct vigorous 
oversight of the Justice Department's parallel investigation. 
The committee became troubled in December 1997, when it learned 
that the Director of the FBI had recommended that the Attorney 
General seek the appointment of an independent counsel to 
investigate the campaign finance scandal, and that the Attorney 
General had rejected that advice. The committee sought the 
memorandum in which Director Freeh outlined his views to 
Attorney General Reno, but the Attorney General refused to 
produce the memorandum. In July 1998, the committee learned 
that the Attorney General's hand-picked head of the Justice 
Department task force investigating the campaign finance 
scandal, Charles La Bella, had also recommended that the 
Attorney General appoint an independent counsel. Like she had 
with Director Freeh's recommendation, Ms. Reno ignored the 
advice of Mr. La Bella, and refused to seek an independent 
counsel.
    The committee was troubled to hear that the Attorney 
General had refused to follow the recommendation of her two 
closest advisors regarding the campaign finance scandal. 
Accordingly, the committee decided to see for itself the 
recommendation of those advisors to determine whether Ms. Reno 
was properly carrying out her duties. On July 24, 1998, the 
chairman issued a subpoena to the Attorney General for the 
memoranda prepared by Director Freeh and Mr. La Bella. The 
Attorney General refused to comply with the committee's 
subpoena, and refused to offer any justification for failing to 
produce the memoranda to the committee. Accordingly, on August 
6, 1998, the committee voted to cite the Attorney General for 
Contempt of Congress, and provided to the full House a report 
detailing the Attorney General's failure to produce the 
subpoenaed documents.
Conduit Payments to the Democratic National Committee, October 9, 1997.
    At the committee's first hearing, the committee received 
testimony from three witnesses: Manlin Foung, Joseph Landon, 
and David Wang. These three witnesses offered testimony 
regarding the illegal fundraising activities of Yah Lin 
``Charlie'' Trie, a major fundraiser for the Democratic 
National Committee, and a close friend of President Clinton. 
All three testified that they had been used by Mr. Trie to 
provide conduit contributions to the DNC.
White House Compliance with Committee Subpoenas, November 6-7, 1997.
    The committee received testimony from a number of witnesses 
at the White House Counsel's office regarding the White House's 
failure to comply with committee subpoenas. The committee heard 
from Charles F.C. Ruff, White House Counsel; Cheryl Mills, 
Deputy White House Counsel; Lanny Breuer, Special Counsel; and 
Dimitri Nionakis, Associate White House Counsel. The witnesses 
were questioned regarding the failure of the White House to 
comply with committee subpoenas for records, including the 
videotapes of DNC fundraisers taken by the White House 
Communications Agency.
Johnny Chung: His Unusual Access to the White House, His Political 
        Contributions and Related Matters, November 13-14, 1997.
    At this hearing, the committee received testimony from 
Brooke Darby, executive assistant at the National Security 
Council; Robert Suettinger, former director of Asian Affairs at 
the National Security Council; Nancy Hernreich, Deputy 
Assistant to the President for Appointments and Scheduling; 
Kelly Crawford, former staff assistant to Ms. Hernreich; and 
Carol Khare, the former assistant to the chairman at the DNC. 
These witnesses were questioned about the frequent visits of 
Johnny Chung to the White House, despite the fact that the 
White House staff had been warned that Mr. Chung was viewed as 
a ``hustler.''
    The committee also received testimony from Maggie Williams, 
the former Chief of Staff to the First Lady. Ms. Williams was 
questioned regarding her role in receiving a $50,000 
contribution from Mr. Chung.
The Current Implementation of the Independent Counsel Act, December 9-
        10, 1997.
    In late November 1997, the committee learned that FBI 
Director Louis Freeh had recommended that the Attorney General 
appoint an independent counsel to appoint the campaign 
fundraising scandal. However, Attorney General Reno refused to 
heed the advice of Mr. Freeh. Because of the concern that the 
Attorney General was disregarding the advice of one of her most 
senior advisors, the committee called this hearing. FBI 
Director Freeh and Attorney General Reno were questioned 
regarding the Attorney General's refusal to appoint an 
independent counsel for the campaign finance investigation.
    The committee also explored the implementation of the 
Independent Counsel Act by hearing testimony from Independent 
Counsel Donald Smaltz. Mr. Smaltz offered extensive testimony 
regarding his investigation of former Agriculture Secretary 
Mike Espy, and the troubling ways in which the Department of 
Justice had hindered his investigation.
The Department of Interior's Denial of the Wisconsin Chippewa's Casino 
        Applications, January 21-22, 28-29, 1998.
    During these 4 days of hearings, the committee investigated 
the way in which the Department of Interior handled the 
application of the Wisconsin Chippewa Indians' application to 
open a casino in Hudson, WI. The witnesses called by the 
committee presented evidence that strongly suggested that 
Secretary Babbitt improperly denied the Wisconsin Chippewa's 
application to open a casino. The committee also heard evidence 
suggesting that Secretary Babbitt may have been influenced in 
his decision by political contributions made to the DNC by the 
opponents of the Chippewa application. These allegations are 
currently being investigated in greater detail by Independent 
Counsel Carol Elder Bruce.
FEC Enforcement Actions: Foreign Campaign Contributions and Other FECA 
        Violations, March 31, 1998.
    This hearing allowed the committee to investigate the 
manner in which the Federal Election Commission is enforcing 
Federal election laws. The main area of inquiry at this hearing 
was the FEC investigation of the cases of Thomas Kramer, a 
German national who gave substantial contributions to both 
Republicans and Democrats, and Howard Glicken, a prominent DNC 
fundraiser. Documents indicated that the FEC failed to 
recommend criminal prosecution of Mr. Glicken in part because 
he was a friend of Vice President Gore. The committee asked the 
witnesses, FEC staff responsible for investigating the case, 
why the FEC failed to seek criminal prosecution of the 
witnesses. However, the committee failed to receive any 
extensive assurances that improper factors did not play a role 
in the FEC's decision to treat Mr. Glicken in a lenient 
fashion.
Venezuelan Money and the Presidential Election, April 30, 1998.
    The committee uncovered evidence that the Democratic 
National Committee had received substantial illegal 
contributions from a powerful Venezuelan banking family. At 
this hearing, it heard first from Jorge Castro Barredo, a 
member of the Venezuelan banking family who had been convicted 
for bank fraud. Mr. Castro informed the committee that he and 
his aunt had been directed by Charles Intriago, a prominent 
Democratic fundraiser in Florida, to funnel $50,000 to 
Democratic organizations, using Venezuelan money provided by 
his grandfather.
    A second panel comprised of Joseph Dawson and Richard 
Preiss, two assistant District Attorneys in the Manhattan 
District Attorney's office. Mr. Dawson and Mr. Preiss testified 
regarding the fact that they referred the Castro case to the 
Department of Justice for prosecution. Messrs. Dawson and 
Preiss informed the committee that they viewed the case as a 
clear-cut violation of campaign finance laws, and accordingly, 
that they were surprised when the Department of Justice dropped 
the prosecution of the case.
The Need for an Independent Counsel in the Campaign Finance 
        Investigation, August 4, 1998.
    In late July 1998, the committee learned that the chief of 
the Justice Department task force investigating the campaign 
finance scandal, Charles La Bella, had informed the Attorney 
General that the independent counsel law and the facts of the 
campaign finance investigation required her to appoint an 
independent counsel. However, again, the Attorney General 
refused to do so. Accordingly, the committee held this hearing 
to investigate whether or not Attorney General Reno was 
following the law.
    The committee received testimony from FBI Director Louis 
Freeh, Task Force Chief Prosecutor Charles La Bella, and the 
Task Force's chief investigator, James DeSarno. Each of the 
witnesses informed the committee that they believed that the 
appointment of an independent counsel was required in the 
campaign finance investigation.
    e. Review of the Food and Drug Administration and its 
Regulations and Activities Respecting Terminally Ill Patients 
and their Ability to Access Desired Treatments.--The committee 
initiated an inquiry into issues and problems related to access 
to alternative medical treatment for Americans and into the 
Food and Drug Administration process of allowing access to 
experimental therapies. The current medical model is not 
sufficiently meeting the needs of millions of Americans who 
have serious and life threatening illnesses. Many of these 
patients and their health care providers have sought access to 
complementary and alternative therapies to incorporate 
appropriate therapies into their treatment plan. The Food and 
Drug Administration [FDA] regulates access to experimental 
treatments including those that are considered complementary or 
alternative. The FDA's current system of determining access is 
replete with flaws, creates a culture of intimidation and 
sometimes harassment against those who conduct clinical 
research in complementary and alternative therapies and those 
who wish to access experimental treatments. In testimony and 
evidence presented to the committee, it was learned that there 
still exists a bias within the FDA structure toward 
complementary and alternative medicine research. Clinical 
researchers attempting to work within the FDA guidelines were 
repeatedly presented with bureaucratic roadblocks. Patients who 
wished to participate in existing protocols or who wished to be 
included through the ``Single Patient Use'' or ``Treatment 
IND'' process were often required to mount exhaustive battles 
in order to gain access to therapies that they and their health 
care providers had deemed appropriate. At a time when they are 
dealing with serious and life threatening illnesses, patients 
and family members should be treated with compassion and 
consideration; instead, they often are faced with a daunting 
bureaucracy and road blocks. If a patient does not have the 
financial resources, family support, and the physical energy to 
take a stand and fight the FDA, they are denied access to the 
treatment of their choice and often face serious health 
consequences as a result. In essence, the Federal Government is 
deciding who will receive treatment and who will not--denying 
Americans the most basic of their rights--freedom of choice.
    Developing a treatment plan for someone with a serious or 
life threatening illness is a matter of weighing the benefits 
and risks of various treatments. This process should look at 
the evidence of current treatment options as well as therapies 
currently under investigation. The treatment plan is typically 
an evolving plan, an initial treatment choice may not meet with 
desired results or the patient may not tolerate the side 
effects, thus other treatment options are sought. It has often 
been these patients--those whose treatment plan has exhausted 
the conventional treatment choices--who have faced battles with 
the FDA over access to alternative therapies. And for some 
diseases, including cancers, almost all treatment options are 
experimental. When faced with choosing between highly-toxic 
treatments that may not offer a cure anyway, some patients opt 
for an alternative approach. The ultimate choice of what 
treatment plan to follow should be made by the patient and 
family--not by the Federal Government.
    Benefits.--The American public has clearly shown their 
interest in complementary and alternative therapies. Several 
surveys indicate that at least 30 to 45 percent of Americans 
have adopted an integrated approach to health care--
complementing the conventional medical model with such things 
as manipulative therapies, nutritional approaches to improving 
health including herbal products and dietary supplements, 
spirituality as a part of healing, mind-body approaches, 
homeopathy, acupuncture, Qi gong and other energy medicines. 
Additionally, there are times that Americans chose an 
alternative to the current medical model. The committee's 
investigation into patient access to alternative therapies has 
created an opportunity to lay all the issues involving 
complementary and alternative medicine, research, and patients 
access to care on the table and to move forward in finding 
viable solutions to improving access to therapies under 
investigation for those with serious and life threatening 
illnesses. One potential solution to access issues under 
consideration is H.R. 746, the Access to Medical Treatment Act.
    Hearings.--The committee held 2 days of hearings entitled, 
``Patient Access to Alternative Treatments: Beyond the FDA,'' 
on February 4 and 12, 1998.
    f. Review of the Food and Drug Administrations' Human 
Subject Protection Guidelines, Informed Consent Documents, and 
the Use of Children and Patients with Mental Illness in 
Clinical Trials.--The committee investigated human subject 
protection guidelines for FDA-regulated clinical trials. The 
committee is concerned about the ethics of the ``washout'' 
period and placebo controls in clinical trials for serious and 
life threatening illnesses. Double-blind, placebo controlled 
trials are the gold-standard in clinical research. There is 
growing concern that this approach may not be safe for certain 
illnesses. There is also concern that patients who agree to 
participate in clinical trials are not fully informed, or do 
not fully comprehend the risks involved in participation. There 
is also concern that minor children and patients with mental 
illnesses are participating in clinical trials without adequate 
safeguards in the informed consent process. The committee is 
disturbed by recent reports of minors being used as subjects in 
research projects on fenfluramine--after the FDA banned its use 
because of the risk of heart-valve damage. The FDA appears to 
have failed to ensure the safety of human subjects in these 
protocols by not verifying that their Advisory was implemented 
and research protocols discontinued.
    Benefits.--Dr. Michael Friedman, Acting Commissioner for 
the Food and Drug Administration testified that there are 
clearly a number of situations where a placebo-controlled trial 
is inappropriate and is not ethical. Further investigation into 
the fenfluramine trial was promised. The committee continues to 
look at the risks and benefits of placebo-controlled trials and 
comparative trials in serious and life threatening illnesses. 
The committee also continues to investigate informed consent 
and patient protection in human subject trials.
    Hearings.--The committee held a hearing entitled, 
``Clinical Trial Subjects: Adequate FDA Protections?'' on April 
22, 1998.
    g. Inquiry into Complementary and Alternative Medicine 
Cancer Research at the National Institutes of Health.--In the 
25 years since President Richard Nixon declared the war on 
cancer, cancer has been winning the battles. One in three 
Americans will get cancer and one in four will die from it. 
More than one-half million Americans will die from cancer this 
year. The U.S. Government has poured billions of dollars each 
year into research at the National Cancer Institute to find 
cures for the many forms of cancer that strike our citizens. 
While there have been advances in treating cancer, and more on 
the horizon, the American public has been subjected to 
Government press releases and banner headlines lauding a 
reduction in cancer deaths and treatments that cure cancer. The 
much acclaimed reduction in cancer deaths is actually less than 
1 percent with the leading cause of cancer death (lung cancer) 
on the rise. The anti-angiogensis cancer cure much acclaimed 
and praised by Government leaders is a study in mice that is 
years away from human studies and the NCI has yet to replicate 
these promising results. We, as yet, have no cure for cancer. 
Just as there is more than one type of cancer, there has to be 
more than one type of approach to treating cancer. There are 
several philosophies of medicine, the most predominant in the 
United States currently is allopathic medicine also known as 
conventional or Western medicine. There are other systems or 
philosophies of medicine and healing. They include traditional 
systems such as Native American, Tibetan, Ayurveda, Traditional 
Oriental Medicine, and Unani. Other systems also include 
naturopathy, chiropractics, homeopathy, antrophosophically 
extended medicine, and environmental medicine. In a previous 
hearing, the committee heard sworn testimony from many patients 
about their success with alternative approaches to treating 
cancer. Further inquiry was initiated to determine the amount 
and focus of research currently underway in complementary and 
alternative [CAM] treatments for cancer. Dr. Richard Klausner, 
Director, National Cancer Institute provided testimony to the 
committee in which he stated that the basic tenet at the 
National Institutes of Health is to employ rigorous 
methodologies to research conclusions based on evidence and not 
on belief. He further stated that the NCI is supporting about 
$16 million in CAM-related research in cancer. Currently funded 
projects are examining the effects of dietary interventions and 
treatments in prevention; the therapeutic effects of vitamins 
and minerals; and studies in stress and pain management to 
enhance the quality of life of cancer patients, in addition to 
the question about the length of survival, as well as projects 
to look at the natural inhibitors of carcinogenesis. He stated 
that those committed to eradicating cancer had at least two 
reasons to be open to the evaluation of nontraditional 
therapies: ``First, we will not be successful in alleviating 
cancer unless we are open to new ideas. We have learned through 
history that anecdotes and folk traditions have often guided us 
to real and effective therapies. Second, . . . many people 
avail themselves of complementary and alternative medicine, and 
those people reasonably ask who is providing the evidence as to 
whether they help, whether they do not do any good, or even 
whether they harm.'' He further testified that the relationship 
between the complementary and alternative medicine community 
and the NCI has been ``distant at best,'' but that he felt that 
improvement is being made in this relationship.
    Dr. Wayne Jonas, Director, Office of Alternative Medicine, 
National Institutes of Health testified that cancer is one of 
the most devastating conditions faced by Americans today. He 
stated that unconventional approaches abound and are 
extensively used by the public, but there is very little 
research and few guidelines to assist the public in making 
informed, evidence-based choices about their use. He stated 
that the purpose of the Office of Alternative Medicine was to 
facilitate research for discovering what is safe and effective 
in unconventional medicine and provide that information to the 
public. Further testimony was received from patients who have 
opted for an alternative medicine approach for their cancer, 
from physicians who have incorporated complementary and 
alternative therapies into their practice in treating cancer 
after being dissatisfied with the chemotherapy/radiation 
approach, and from cancer research experts.
    Benefits.--The National Cancer Institute has agreed to 
cooperate with the Office of Alternative Medicine in improving 
complementary and alternative medicine [CAM] research in 
cancer. A Cancer Advisory Panel on Complementary and 
Alternative Medicine is in development, the NCI has appointed 
liaison within their institute to coordinate all complementary 
and alternative medicine research issues, all information on 
alternative medicine was removed from the NCI web site as it 
was deemed overly judgmental; the PDQ editorial review board 
will be supplemented with alternative medicine experts; the NCI 
has promised to quickly develop CAM information that treats 
complementary and alternative medicine dispassionately and 
fairly; and the NCI has promised to quickly offer expanded 
research opportunities for CAM investigators. The Office of 
Alternative Medicine is moving forward with the recommendations 
of the Practice Outcomes Monitoring and Evaluation System in 
developing mechanisms to assist the NIH in evaluating claims of 
efficacy in CAM. Chairman Burton will be drafting legislation 
to require at least one representative of the CAM community on 
the President's Cancer Advisory Panel.
    Hearings.--The committee held a hearing entitled, ``Solving 
the Cancer Crisis: Comprehensive Research, Coordination and 
Care,'' on July 31, 1998.
    h. Review of the Food and Drug Administration's Proposed 
Changes to Structure/Function Rules and Regulations Relating to 
the Dietary Supplements and Health Education Act [DSHEA].--On 
June 22, 1998, the FDA published nine Interim Final Rules. The 
committee has initiated dialog with the FDA regarding these 
proposed rules and DSHEA, which Congress intended to be a 
meaningful alternative to the agency's overly restrictive 
health claims review procedure and standard. The committee has 
concerns that FDA has exceeded its authority by forbidding 
specific health claims that accurately represented published 
statements of Federal Government health agencies as well as 
restricting the flow of information to the public about dietary 
supplements.
    Benefits.--This investigation will continue in the 106th 
Congress and will provide an opportunity to resolve issues with 
the FDA and dietary supplement regulation.
    Hearings.--None.
    i. Elimination of Section 1555 of the Federal Acquisition 
Streamlining Act of 1994 [FASA] (Public Law 103-355).--The 
committee strongly supported the complete repeal of Section 
1555 of FASA. This measure was repealed, as part of the House 
and Senate Treasury Postal Appropriations Conference Report, 
which was signed into law on October 19, 1997.
    The cooperative purchasing program would have allowed State 
and local governments to buy a wide array of goods and services 
off the Federal supply schedule administered by the General 
Services Administration. The committee believes that this is a 
serious threat to the Nation's small business community.
    The committee did seek to craft new legislation, submitting 
legislative language that would have only allowed information 
technology products [IT] to be sold to State and local entities 
off the Federal supply schedule.
    This new legislative language was opposed by many who felt 
that this would somehow set a precedent and allow other goods 
and services to be purchased off the Federal supply schedule as 
a result. However, the narrowly crafted IT language was 
specific to one industry and would not have set a precedent.
    j. Joint Hearing: Committee on Government Reform and 
Oversight and the Committee on International Relations 
regarding ``The Sale of Body Parts by the People's Republic of 
China.''--On June 4, 1998, the committees heard testimony from 
witnesses regarding the trafficking of human organs from 
executed Chinese prisoners. Witnesses included: Congresswoman 
Linda Smith; Mr. Harry Wu, the Laogai Research Foundation; Mr. 
Wei Jingsheng, Center for the Study of Human Rights; Dr. 
Tsuyoshi Awaya, Sociology of Medical Law Office, Tokuyama 
University; Dr. Phaibul Jitpraphai, Faculty of Medicine, 
Siriraj Hospital; and Mr. Somporn Lorgeranon, an organ 
transplant recipient.
    Testimony included compelling evidence from witnesses who 
had first-hand knowledge of how the transplantation system 
works. The committees also heard from Congresswoman Linda Smith 
who testified about the administration's failure to act on 
previous reports despite repeated congressional efforts. 
However, the State Department failed to provide a witness for 
the joint hearing to report to the committees on the 
administration's efforts to gather information on this practice 
and explain the administration's position.
    On June 11, 1998, the committees again heard from a number 
of highly credible witnesses who testified about the disturbing 
practice of human organ trafficking of executed Chinese 
prisoners. Witnesses were highlighted by: ``Witness X,'' a 
former Chinese prison official; Mr. Harry Wu, the Laogai 
Research Foundation; John Shattuck, Assistant Secretary of 
State for Democracy, Human Rights and Labor Bureau; Howard 
Lange, Acting Deputy Assistant Secretary of State and China 
Desk Director; Mr. T. Kumar, Amnesty International; and 
Professor David J. Rothman, Columbia University.
    The second joint hearing further examined this disturbing 
practice and heard from new witnesses with first-hand knowledge 
of the organ transplantation system. With the testimony of 
``Witness X,'' the committees broke new ground on this 
investigation as the former Chinese prison official provided 
new evidence of prison practices that he personally observed. 
Finally, the committees were able to question State Department 
officials regarding the Administration's response to these 
issues and ask that they be raised at every appropriate 
opportunity with the People's Republic of China.
4. Legislation.

              Committee on Government Reform and Oversight

1. H.R. 1553, A bill to amend the President John F. Kennedy 
        Assassination Records Collection Act of 1992 to extend the 
        authorization of the Assassination Records Review Board until 
        September 30, 1998.
    a. Report Number and Date.--House Report 105-138, Part 1, 
June 19, 1997.
    b. Summary of Measure.--H.R. 1553 extended for 1 year the 
authorization of the Assassination Records Review Board, in 
order to allow the Board to finish reviewing and publicly 
releasing the Federal Government's records, and other records, 
relating to the assassination of President John F. Kennedy, and 
to issue its final report. H.R. 1553 extended the Review 
Board's September 30, 1997, termination date to September 30, 
1998. This legislation authorized $1.6 million in fiscal year 
1998 for the Assassination Records Review Board.
    c. Legislative History/Status.--H.R. 1553 was introduced by 
Chairman Dan Burton on May 8, 1997, and referred to the 
Committee on Government Reform and Oversight. On May 13, 1997, 
H.R. 1553 was referred to the Subcommittee on National 
Security, International Affairs, and Criminal Justice. The 
subcommittee favorably reported H.R. 1553 by voice vote on June 
4, 1997, to the Committee on Government Reform and Oversight. 
On June 11, 1997, the committee favorably reported H.R. 1553 to 
the House of Representatives by voice vote. The bill passed the 
House under suspension of the rules on June 23, 1997. On June 
25, 1997 the Senate passed H.R. 1553 without amendment by 
unanimous consent. The bill was signed by the President on July 
3, 1997, becoming Public Law 105-25.
    d. Hearings.--The Subcommittee on National Security, 
International Affairs, and Criminal Justice held a hearing on 
H.R. 1553 on June 4, 1997. The following witnesses testified 
before the subcommittee: Representative Louis Stokes; 
Assassination Records Review Board Chair John R. Tunheim; 
Steven D. Tilley, Chief of the Access and Freedom of 
Information Staff and Chief of the John F. Kennedy 
Assassination Records Collection at the National Archives and 
Records Administration; author Max Holland; and Bruce 
Hitchcock, a Government and U.S. History Teacher from 
Noblesville, IN.
    Subcommittee Chairman Dennis Hastert's opening statement 
expressed support for H.R. 1553. Ranking Minority Member Thomas 
Barrett also supported the bill.
    All of the witnesses supported the bill. They said that the 
Review Board needs to finish its task of making the 
government's Kennedy assassination records public, and that 
this would furthermore help to restore citizens' trust in 
government. Review Board Chair John Tunheim said that the 
Review Board needed 1 additional year to finish reviewing 
records from various Federal agencies.
2. H.R. 1836, The Federal Employees Health Care Protection Act of 1997.
    a. Report Number and Date.--House Report 105-374, November 
4, 1997.
    b. Summary of Measure.--H.R. 1836 was introduced by Mr. 
Burton to strengthen the integrity and standards of the Federal 
Employees Health Benefits Program and allow it to maintain its 
reputation as a high quality and cost-effective program. H.R. 
1836 amends chapter 89 of Title 5, United States Code, to 
improve administration of sanctions against unfit health care 
providers under the FEHB program, and for other purposes. 
Section 2 strengthens the Office of Personnel Management's 
ability to bar or sanction unethical health providers. Section 
3 makes technical changes regarding national plans and it 
expands a preemption of State and local authority to regulate 
health care plans that provide coverage under FEHB. Section 4 
allows retired employees of the Federal Deposit Insurance 
Corporation and the Federal Reserve Board access to the FEHB 
program. Section 6 establishes the rules under which a health 
care plan sponsored by an employee organization may reenter the 
FEHB program after previously discontinuing its membership. 
Section 7 permits agencies to increase the maximum physicians 
comparability allowance Federal agencies may pay from $20,000 
to $30,000 per year. Section 8 states that plans are allowed to 
permit direct access and payments to licensed health care 
providers, even when such arrangements are not required by law.
    c. Legislative History/Status.--H.R. 1836 was signed into 
Public Law 105-266 by President Clinton on October 19, 1998.
3. H.R. 3166, the Federal Employee Health Care Freedom of Choice Act.
    a. Report Number and Date.--H.R. 3166 was introduced by 
Congressman Dan Burton and Congressman Bill Archer.
    b. Summary of Measure.--This legislation would require the 
Office of Personnel and Management [OPM] to ensure that high 
deductible plans are available to all FEHB program enrollees, 
including active workers, dependents, and annuitants at the 
beginning of the 1999 FEHB program contract year. OPM would 
also be required to make information available to eligible 
individuals about the availability of and rules regarding 
participation in high deductible health plans available under 
the FEHB program. There is no numerical limitation on the 
number of individuals eligible to enroll in high deductible 
health plans and participate in MSAs.
    Annual deductible limits are identical to those currently 
in law for the private market MSAs: $1,500-$2,250 for 
individual coverage with an annual out-of-pocket cap on 
expenses of $3,000, and $3,000-$4,500 for family coverage with 
an annual out-of-pocket on expenses of no more than $5,500. 
Contributions made to an MSA and any interest on the account 
will build up tax-free.
    c. Legislative History/Status.--H.R. 3166 was referred to 
the Committee on Government and Oversight and the Committee on 
Ways and Means.
    An improved version of H.R. 3166 was drafted for the 
purposes of inclusion into H.R. 4250, the ``Patient Protection 
Act of 1998.'' This version (Title VI in H.R. 4250) 
incorporates changes made to the Health Insurance Portability 
and Protection Act as it relates to medical savings accounts 
[MSAs] and changes the government and individual contribution 
formulas to the high deductible plans and MSAs. Title VI would 
require OPM to ensure that high deductible plans are available 
at the beginning of the 2000 FEHB program contract year.
    Title VI was not included in the final version of H.R. 
4250, which was passed by the House on July 25, 1998.
4. H.R. 2883, the Government Performance and Results Act Technical 
        Amendments.
    a. Report Number and Date.--House Report No. 105-429, March 
10, 1998.
    b. Summary of Measure.--H.R. 2883 amends the Government 
Performance and Results Act of 1993 to require Federal agencies 
to add details about overlapping programs, major management 
problems, and reliability of data sources to their 5-year 
strategic plans and re-submit them by the end of September 
1998. The bill also requires agency Inspectors General, (or 
comparable officials if the agency has no Inspector General), 
to assess and report to Congress on the reliability and 
integrity of agency performance plans and reports. Under the 
legislation, the Office of Management and Budget must submit 
governmentwide performance reports.
    c. Legislative History/Status.--H.R. 2883 was introduced on 
November 7, 1997 by the chairman of the Government Reform and 
Oversight Committee, the Honorable Dan Burton. The bill was 
referred to the Government Reform and Oversight Committee, and 
by the committee to the Subcommittee on Government Information, 
Management, and Technology. On March 4, 1998, the measure was 
ordered favorably reported to the full committee by a voice 
vote. On March 5, 1998, the full committee met and the bill was 
approved by a vote of 21 to 12. On March 12, 1998, the Whole 
House voted favorably to pass H.R. 2883 by a vote of 242 to 
168. The Senate did not take up the legislation.
    d. Hearings and Committee Actions.--On February 12, 1998, 
the Subcommittee on Government Management, Information, and 
Technology held formal hearings on H.R. 2883. Witnesses at the 
hearing were: Chris Mihm, Assistant Director, Federal 
Management and Workforce Issues of the General Government 
Division, U.S. General Accounting Office [GAO]; Professor 
Robert M. Grant, School of Business Administration, Georgetown 
University; the Honorable Maurice P. McTigue, distinguished 
visiting scholar, Center for Market Processes, George Mason 
University; and the honorable G. Edward DeSeve, Acting Deputy 
Director, Office of Management and Budget.
    Chris Mihm testified that, according to GAO's review, the 
agencies' final strategic plans are minimally compliant with 
the six statutory requirements of the Results Act, but are 
sorely deficient in several areas of critical importance. In 
his words:

        . . . [A]lthough agency plans include the basic 
        legislative requirements, I think there can be little 
        argument that substantive challenges remain. In our 
        view, among the most pressing challenges are: first, 
        the need to better articulate a strategic direction; 
        second improve the coordination of crosscutting program 
        efforts; and, third, build reliable data systems and 
        analytic capacity.
        . . . [T]he strategic plans often lacked clear 
        articulations of agencies' strategic directions; in 
        short, a sense of what the agencies were trying to 
        achieve and how they proposed to do it. Many agency 
        goals were not results oriented. The plans often did 
        not show clear linkages among planning elements, such 
        as goals and strategies. And, furthermore, the plans 
        frequently had incomplete and underdeveloped 
        strategies.

    Mr. Grant testified that private sector firms do not do 
strategic planning just for the sake of creating strategic 
plans. ``The reason why companies do it is in order to improve 
the quality of their decision-making and, through that, to 
enhance their performance,'' he stated. He discussed four ways 
in which strategic planning can enhance performance of an 
organization. First, it forces establishing a consensus 
regarding medium and long-term goals and how the goals are to 
be achieved. Second, it forces top management focus on long-
term performance rather than on day-to-day operational issues 
that occupy much of their time. Third, it creates a dialog 
within the organization between people at different levels, 
departments, and divisions of the organization. Finally, 
strategic planning establishes a structure within which 
objectives can be agreed and in which performance can be 
reviewed to the extent objectives are achieved.
    Mr. Grant also spoke about general trends taking place with 
regard to private sector strategic planning. One trend is that 
strategic plans have become less focused on detailed decisions 
about resource allocation, and much more upon establishing the 
overall direction and clear performance targets. He indicated 
that one effect of that close emphasis on linking strategic 
planning with performance targets has been that financial 
planning has become much more closely integrated in the 
strategic planning process. Another trend he said was that 
there is much greater involvement of top management along with 
a recognition that the responsibility for strategic management 
lies with top management.
    Mr. McTigue based his testimony on his experiences having 
been an elected representative of the Parliament of New Zealand 
and having spent a period of time as a cabinet minister in the 
Government of New Zealand during a time when that country was 
undergoing major changes as a result of management reforms 
similar to the Results Act. He said that the major winners of 
the Results Act process are the Members of Congress, whom it 
empowers with information regarding what it is that the 
executive branch is doing and how successfully it is doing 
those things. Without this information, he said, Congress 
cannot exercise the authority that is vested in it to oversee, 
on behalf of taxpayers, the activities of the executive branch.
    With regard to Congress' efforts to ensure quality 
strategic plans, Mr. McTigue stressed that we have to be very 
careful in accepting plans that are not up to standard. The 
risk, he stated, ``is that you set a precedent by a laissez-
faire attitude that will make it acceptable for plans in the 
future to be submitted that don't meet those standards.''
    On behalf of the Office of Management and Budget [OMB], Mr. 
DeSeve testified regarding his opposition to H.R. 2883. His 
concern is that enactment of this legislation could impede 
successful implementation of the performance planning efforts 
under the Results Act. Under the act, agencies are to submit 
annual performance plans which provide much more detail about 
how the agencies plans to meet its mission and goals as stated 
in the strategic plans.
    According to Mr. DeSeve, the requirements of H.R. 2883 
would be too burdensome and the net results of having to 
concurrently prepare revised strategic plans, revised 
performance plans for fiscal year 1999, and initial performance 
plans for fiscal year 2000 ``would be to substantially diminish 
the quality of all three.'' Instead, Mr. DeSeve is not opposed 
to individual agencies deciding on their own to revise their 
plans. ``To be clear,'' he said, ``agencies that believe it is 
advantageous to resubmit their strategic plans can and should 
do so.''
    Asked to respond to the point made by Mr. DeSeve that 
agencies should decide whether to resubmit their plans, Mr. 
McTigue pointed out that he would not advocate this course of 
action. Accountability, he explained, ``means that somebody 
else can look at your actions and decide whether or not they 
meet the standard required.''
    Mr. DeSeve explained that revisions to the act should wait 
until authorizers and appropriators are more engaged in using 
the plans. Representative Sessions, who was chairing the 
subcommittee hearing, then submitted a letter for the record 
addressed to full committee Chairman Dan Burton from the 
following Members of Congress: Majority Leader Armey, Senate 
Republican Policy Chairman Larry Craig, Budget Committee 
Chairman John Kasich, Judiciary Committee Chairman Henry Hyde, 
International Relations Chairman Ben Gilman, Science Committee 
Chairman Jim Sensenbrenner, Committee Chairman Tom Bliley, 
Veterans Affairs Chairman Bob Stump, Small Business Committee 
Chairman Jim Talent, and Education and Workforce Committee 
Chairman Bill Goodling. The members in this letter voiced their 
support for agencies to resubmit their strategic plans by 
September 30, 1998, rather than waiting 3 years for improved 
plans.
    Implying again that H.R. 2883's mandate would be too 
burdensome, Mr. DeSeve expressed concern that the directive for 
agencies to revise their strategic plans was too generalized. 
He said that while Congress might intend for agencies to ``look 
at those very specific elements in the plan that are 
troublesome and revise them,'' agencies would not get that same 
message. However, GAO and congressional assessments of the 
agency strategic plans are very specific about the weaknesses 
within each agency plan. H.R. 2883 is also specific about 
requiring agencies to address three fundamental, but not 
statutorily-required elements: longstanding management 
problems, cross-cutting functions, and data capacity and 
integrity.

5. Cost Accounting Standards [CAS] in the Federal Employees Health 
        Benefits Program.

    The Government Reform and Oversight Committee examined the 
application of the Cost Accounting Standards to carrier 
contracts in the Federal Employees Health Benefits [FEHB] 
Program. The committee was concerned that continued application 
of the CAS would run a real risk of increasing costs to the 
FEHB program and would result in program disruption if the 
impracticability of applying the CAS forced the withdrawal of 
plans from the FEHB program.
    After failing to convince the CS Board to grant a delay in 
applying the CAS, the Office of Personnel Management [OPM] 
directed the FEHB experience-rated carriers to commence all 
necessary adjustments to their accounting procedures and 
practices in order to conform to the requirements of 48 CFR 
Part 30 and 48 CFR Chapter 99. This was imposed even though OPM 
informed the committee in a letter dated June 30, 1998 that, as 
a general matter, they are satisfied with the cost accounting 
information provided by the FEHB carriers, and they have 
sufficient regulatory authority to ensure that audits are 
conducted appropriately.
    However, Blue Cross Blue Shield Association [BCBSA], the 
largest carrier in the FEHB program, raised concerns with the 
difficulties of implementation of the CAS on the FEHB program 
plan contracts. Application was deemed to be extremely complex, 
time consuming and economically unfeasible.
    As a result of extensive meetings with BCBSA, OPM, and OMB, 
the committee was convinced that the wisest course for Congress 
was to take legislative action. This would ensure the continued 
stability of the FEHB program and the continued health care 
coverage of Federal employees. Under section 518 of the 
Treasury and General Government Appropriation, 1999, the cost 
accounting standards promulgated under section 28 of the Office 
of Federal Procurement Policy Act shall not apply with respect 
to a contract under the FEHB program. In no way does this 
provision limit or restrict OPM's authorities with respect to 
audits, oversight or program administration. OPM will continue 
to have the regulatory flexibility to adapt certain principles 
of the CAS.
6. S. 1364, The Federal Reports Elimination Act of 1998, Public Law 
        105-362.
    a. Report Number and Date.--Senate Report 105-187, May 11, 
1998 accompanies the bill. A report was not filed with the 
House.
    b. Summary of Measure.--The purpose of S. 1364 is to 
eliminate or modify 187 congressionally mandated Federal agency 
reports that are redundant, obsolete, or otherwise unnecessary.
    c. Legislative History/Status.--S. 1364 was introduced on 
November 4, 1997 by Senators Levin and McCain. The Senate 
Committee on Governmental Affairs marked up the bill on March 
10, 1998 and favorably reported it to the full Senate by voice 
vote. The full Senate passed the bill, as amended, on June 10, 
1998. On October 13, 1998 the House passed the amended bill 
under suspension of the rules. On October 21, 1998, the House 
agreed to the Senate amendment to the House amendment and the 
Senate agreed to the House amendment with amendment. The bill 
was presented to the President on November 4, 1998 and signed 
into law.
    d. Hearings and Committee Actions.--On June 18, 1998, 
Government Reform and Oversight Committee Chairman Dan Burton 
and Ranking Member Henry Waxman circulated the Senate bill to 
all House committee chairmen and ranking members. The committee 
chairs and ranking members were asked to review the reports on 
the list and indicate any objections to elimination or 
modification of the reports under their jurisdiction. One 
hundred percent of committees responded and the Senate list of 
187 reports was reduced to 132 reports.
7. H.R. 1057, A bill to designate the building in Indianapolis, 
        Indiana, which houses the operations of the Indianapolis Main 
        Post Office as the ``Andrew Jacobs, Jr. Post Office Building''.
    a. Report Number and Date.--None.
    b. Summary of Measure.--H.R. 1057 named the Main Post 
Office in Indianapolis, IN, the ``Andrew Jacobs, Jr. Post 
Office Building.'' Andrew Jacobs, Jr., was a Member of Congress 
from Indianapolis, IN, from 1965 to 1973 and from 1975 to 1997.
    c. Legislative History/Status.--Signed into law on November 
19, 1997, Public Law 105-90. On March 2, 1998, Chairman Dan 
Burton spoke at the dedication ceremony in Indianapolis, IN, 
for the Andrew Jacobs, Jr., Post Office Building.
    d. Hearings.--None.
8. H.R. 1058, A bill to designate the facility of the U.S. Postal 
        Service under construction at 150 West Margaret Drive in Terre 
        Haute, Indiana, as the ``John T. Myers Post Office Building.''
    a. Report Number and Date.--None.
    b. Summary of Measure.--H.R. 1058 named the Postal 
Service's new processing and distribution facility at 150 West 
Margaret Drive in Terre Haute, IN, the ``John T. Myers Post 
Office Building.'' This facility was under construction at the 
time that H.R. 1058 was introduced in the House (March 13, 
1997); the facility has since been completed.
    c. Legislative History/Status.--H.R. 1058 was signed into 
law on November 19, 1997, Public Law 105-91. Chairman Burton 
sent a letter that was read at the October 17, 1998, dedication 
ceremony in Terre Haute, IN, for the John T. Myers Post Office 
Building.
    d. Hearings.--None.
9. H.R. 3630, A bill to designate the facility of the United States 
        Postal Service located at 9719 Candelaria Road N.E. in 
        Albuquerque, New Mexico, and known as the Eldorado Station Post 
        Office, as the ``Steve Schiff Post Office.''
    a. Report Number and Date.--None.
    b. Summary of Measure.--H.R. 3630 renamed the Eldorado 
Station Post Office at 9719 Candelaria Road N.E. in 
Albuquerque, NM, the ``Steve Schiff Post Office.''
    c. Legislative History/Status.--Signed into law on October 
21, 1998, as part of H.R. 3630, the fiscal year 1999 Omnibus 
Appropriations Act, Public Law 105-277.
    d. Hearings.--None.
                           II. Investigations

             A. INVESTIGATIONS RESULTING IN FORMAL REPORTS

              Committee on Government Reform and Oversight

                       Hon. Dan Burton, Chairman

1. ``Interim Report on the Investigation of Political Fundraising 
        Improprieties and Possible Violations of Law,'' House Report 
        105-829, November 5, 199, Sixth Report of the Committee on 
        Government Reform and Oversight, together with Additional and 
        Minority Views.
    a. Summary.--Since January 1997, the committee has been 
conducting an investigation of campaign fundraising 
improprieties relating to the 1992 and 1996 Federal elections. 
The committee's investigation has focused on numerous instances 
where foreign money was directed into American political 
campaigns.
    This report detailed the committee's work to date, and 
contained a number of new facts uncovered through the 
committee's work. For example, the report detailed hundreds of 
thousands dollars in illegal contributions made to the 
Democratic National Committee that were still being held and 
used by the DNC. The report contained extensive summaries of 
the committee's investigations of the central figures in the 
campaign finance scandal, including John Huang, Charlie Trie, 
Johnny Chung, and Ted Sioeng. The report also contained 
descriptions of the committee's investigations into the Hudson 
casino matter, FEC oversight of the campaign finance scandal, 
and illegal Venezuelan political contributions.
    b. Benefits.--The committee's investigation into political 
fundraising improprieties uncovered a number of illegal schemes 
to direct illegal political contributions into Federal 
elections. Because of the committee's investigation, 
prosecutors at the Department of Justice and the Office of 
Independent Counsel investigated or pursued criminal charges 
against a number of individuals. The committee's investigation 
also brought much-needed attention to the inadequate manner in 
which many of our existing election laws are enforced.
    c. Hearings.--The committee held the following hearings 
entitled, ``Conduit Payments to the Democratic National 
Committee,'' on October 9, 1997; ``White House Compliance with 
Committee Subpoenas,'' on November 6-7, 1997; ``Johnny Chung: 
His Unusual Access to the White House, His Political 
Contributions and Related Matters,'' on November 13-14, 1997; 
``The Current Implementation of the Independent Counsel Act,'' 
on December 9-10, 1997; ``The Department of Interior's Denial 
of the Wisconsin Chippewa's Casino Applications,'' on January 
21-22, 28-29, 1998; ``FEC Enforcement Actions: Foreign Campaign 
Contributions and Other FECA Violations,'' on March 31, 1998; 
``Venezuelan Money and the Presidential Election,'' on April 
30, 1998; and ``The Need for an Independent Counsel in the 
Campaign Finance Investigation,'' on August 4, 1998.
2. ``Report on Contempt of Congress Regarding the Refusal of Attorney 
        General Janet Reno to Produce Documents Subpoenaed by the 
        Government Reform and Oversight Committee,'' House Report 105-
        728, September 17, 1998.
    a. Summary.--The committee's investigation of the campaign 
finance scandal also led it to conduct vigorous oversight of 
the Justice Department's parallel investigation. The committee 
became troubled in December 1997, when it learned that the 
Director of the FBI had recommended that the Attorney General 
seek the appointment of an independent counsel to investigate 
the campaign finance scandal, and that the Attorney General had 
rejected that advice. The committee sought the memorandum in 
which Director Freeh outlined his views to Attorney General 
Reno, but the Attorney General refused to produce the 
memorandum. In July 1998, the committee learned that the hand-
picked head of the Justice Department task force investigating 
the campaign finance scandal, Charles La Bella, had also 
recommended that the Attorney General appoint an independent 
counsel. Like she had with Director Freeh's recommendation, Ms. 
Reno ignored the advice of Mr. La Bella, and refused to seek an 
independent counsel.
    The committee was troubled to hear that the Attorney 
General had refused to follow the recommendation of her two 
closest advisors regarding the campaign finance scandal. 
Accordingly, the committee decided that, under these 
extraordinary circumstances, it must review this memoranda for 
itself to determine whether Ms. Reno was properly carrying out 
her duties. On July 24, 1998, Chairman Burton issued a subpoena 
to the Attorney General for the memoranda prepared by Director 
Freeh and Mr. La Bella. The Attorney General refused to comply 
with the committee's subpoena, and refused to offer any legal 
justification for failing to produce the memoranda to the 
committee. Accordingly, on August 6, 1998, the committee voted 
to cite the Attorney General for contempt of Congress, and 
provided to the full House a report detailing the Attorney 
General's failure to produce the subpoenaed documents.
    b. Benefits.--The committee's contempt proceedings against 
the Attorney General were a necessary step to enforce a valid 
congressional subpoena.
    c. Hearings.--In addition to addressing the campaign 
finance investigation, the following hearings also addressed 
issues relating to the Contempt proceedings against the 
Attorney General: ``The Current Implementation of the 
Independent Counsel Act,'' on December 9-10, 1997; and, ``The 
Need for an Independent Counsel in the Campaign Finance 
Investigation,'' on August 4, 1998.

   Subcommittee on Government Management, Information, and Technology

                      Hon. Stephen Horn, Chairman

1. ``A Citizen's Guide on Using the Freedom of Information Act and The 
        Privacy Act of 1974 to request Government Records,'' House 
        Report No. 105-37, March 20, 1997, First Report by the 
        Committee on Government Reform and Oversight.
    a. Summary.--The Freedom of Information Act [FOIA], enacted 
in 1966, presumes those records of the executive branch of the 
U.S. Government are accessible to the public. The Privacy Act 
of 1974 is a companion to FOIA and regulates Government agency 
record-keeping and disclosure practices. The Freedom of 
Information Act provides that citizens have access to Federal 
Government files with certain restrictions. The Privacy Act 
provides certain safeguards for individuals against an invasion 
of privacy by Federal agencies and permits them to see most 
records pertaining to them maintained by the Federal 
Government.
    A Citizen's Guide on Using the Freedom of Information Act 
and Privacy Act of 1974 to Request Government Records, House 
Report 105-37, dated March 20, 1997, and issued by the House 
Committee on Government Reform and Oversight, explains how to 
use the two laws and serves as a guide to obtaining information 
from Federal agencies. The complete texts of the Freedom of 
Information Act, as amended (5 U.S.C. 552), and the Privacy 
Act, as amended (5 U.S.C. 552a), are reprinted in the committee 
report.
    b. Benefits.--Federal agencies use the Citizen's Guide in 
training programs for Government employees who are responsible 
for administering the Freedom of Information Act and the 
Privacy Act of 1974. The Guide enables those who are unfamiliar 
with the laws to understand the process and to make requests. 
In addition, the complete text of each law is included in an 
appendix. The Government Printing Office and Federal agencies 
subject to the Freedom of Information Act and the Privacy Act 
of 1974, distribute this report widely. The availability of 
these acts to all Americans allows executive branch information 
to be widely available.
    c. Hearings.--The subcommittee held a hearing entitled, 
``The Electronic Freedom of Information Act,'' on June 9, 1998.
2. ``Making the Federal Government Accountable: Enforcing the Mandate 
        for Effective Financial Management,'' House Report No. 105-664, 
        July 31, 1998, Third Report by the Committee on Government 
        Reform and Oversight, Together with Additional Views.
    a. Summary.--In a series of hearings held in 1998, the 
subcommittee highlighted the fact that billions of dollars of 
taxpayer money are lost each year to fraud, waste, abuse, and 
mismanagement in hundreds of Federal programs. One of the root 
causes of this loss is inadequate financial management. 
Financial systems and practices in the executive branch of the 
Federal Government are ineffective and fail to provide 
complete, consistent, reliable, and timely information. On 
March 31, 1998, the General Accounting Office released the 
first-ever audit report on the financial status of the entire 
Federal Government. For the first time, a concise accounting of 
the myriad problems faced by the Federal Government was made 
available.
    With this information in hand, the subcommittee held 
hearings to review the results of the audit of the Federal 
Government's consolidated financial statements. The 
subcommittee's review focused on the inability of the Federal 
Government to provide reliable financial information to the 
Congress, agency decisionmakers, and the American people. The 
hearings also considered actions needed to address financial 
management problems.
    In addition to the hearings, Representative Stephen Horn 
(R-CA) issued an evaluation of the consolidated financial 
statements and agency reports in the form of a report card. The 
evaluation noted that only 2 of the 24 agencies earned a clean 
financial statement. Many financial statements were determined 
by the General Accounting Office to be unauditable. The report 
card illustrated the need for dramatic improvement in Federal 
financial systems.
    On tax day (April 15) 1998, the subcommittee conducted a 
hearing on financial management at the Internal Revenue 
Service. In fiscal year 1997, for the first time since its 
statements were first audited in fiscal year 1992, the IRS 
received a clean opinion on its financial statements covering 
the collection and refunds of taxes. However, from the audit 
report and hearing discussions, the subcommittee discovered 
significant weaknesses in internal controls and areas of 
noncompliance with laws and regulations. The subcommittee 
focused on actions IRS is taking to resolve long standing 
financial management problems and the progress--if any--it has 
made to reform these practices. The scope of the hearing 
included an overview of suggested reform plans made by the 
recently designated Commissioner of IRS, Charles O. Rossotti.
    The subcommittee held a hearing on financial management at 
the Department of Defense on April 16, 1998. The GAO, DOD 
Inspector General, and Defense audit agencies have long 
reported problems in DOD's financial management systems and 
practices. Each year numerous reports are issued with virtually 
the same problems as the prior year. DOD's reported financial 
management problems include inadequate control over assets such 
as real property, capital leases, construction in process, and 
inventories, as well as instances of noncompliance with laws 
and regulations. These problems resulted in the Inspector 
General's inability to render an opinion on DOD's financial 
statements for fiscal year 1997. At the hearing, GAO emphasized 
that it disclaimed an opinion on the Consolidated 
Governmentwide Financial Statements of the Federal Government 
largely due to DOD's inability to provide complete and 
verifiable information on its finances. The subcommittee 
focused on actions DOD is taking to resolve long standing 
problems with their financial management systems. As a result, 
the subcommittee established that action is needed from the top 
management levels at DOD to ensure that the problems are 
resolved.
    The subcommittee also held a hearing focusing on financial 
management at the Social Security Administration. For fiscal 
year 1997, SSA earned an unqualified ``clean'' opinion on its 
financial statements for the fourth consecutive year. The 
auditors reported no material weaknesses in SSA's internal 
controls. The audit report noted, however, two instances of 
noncompliance with laws and regulations. SSA published its 
financial statements and the related audit report in its 
``accountability report'' on November 21, 1997--more than 3 
months early (SSA was one of the few agencies to issue its 
report prior to the March 1, 1998 due date). At the hearing, 
the subcommittee focused on the progressive actions SSA has 
taken to achieve ``clean'' opinions and sought recommendations 
from SSA to share how those successes were achieved. As the 
subcommittee has discovered in oversight hearings on the status 
of the Federal Government's progress dealing with the year 2000 
problem, the Social Security Administration is a top notch 
agency and a leader in tackling management issues.
    The subcommittee held a hearing on financial management at 
the Health Care Financing Administration. The Health Care 
Financing Administration [HCFA], which accounts for more than 
18 percent of all Federal outlays and pays for one third of 
health care throughout the United States, has failed to provide 
timely or reliable financial information. The first financial 
audit of HCFA, covering its fiscal year 1996 financial 
statements, resulted in a disclaimer of opinion. At the 
hearing, witnesses described problems that included 
insufficient documentation maintained by contractors who 
process the payment of Medicare claims for HCFA; material 
weaknesses in internal controls over HCFA operations; and 
material non-compliance with laws and regulations. Excessive 
Medicare payments are estimated at $20.3 billion--or 11 percent 
of fee for service payments made--for fiscal year 1997.
    The subcommittee also held a hearing on proposals to 
improve Federal financial management. At this hearing, the 
subcommittee explored legislative options for improving 
compliance with Federal financial management legislation, 
including the Chief Financial Officers Act of 1990, the 
Government Management Reform Act of 1994, and the Federal 
Financial Management Improvement Act of 1996. The House of 
Representatives unanimously passed House Resolution 447 to 
express the sense that ``financial management [at] all too many 
Federal agencies ha[s] failed; and therefore, Congress must 
impose consequences on Federal agencies that fail their annual 
financial audits and conduct more vigorous oversight to ensure 
that Federal agencies do not waste the tax dollars of the 
people of the United States.''
    Based on the investigation and oversight hearings conducted 
by the subcommittee, as well as on the governmentwide audit 
conducted by the GAO, the committee approved ``Making the 
Federal Government Accountable: Enforcing the Mandate for 
Effective Financial Management.'' In this report, the Committee 
on Government Reform and Oversight issued six findings:
    1. There are material deficiencies in Federal financial 
information. These problems included the Federal Government's 
inability to:
          
 properly account for and report on billions 
        of dollars of property, equipment, materials, and 
        supplies;
          
 properly estimate the cost of most Federal 
        credit programs and related loans receivable and loan 
        guarantee liabilities;
          
 estimate and report material amounts of 
        environmental and disposal liabilities and related 
        costs;
          
 determine the amount of various reported 
        liabilities, including post-retirement health benefits 
        for military and Federal civilian employees, veterans 
        compensation benefits, accounts payable, and other 
        liabilities;
          
 accurately report major portions of the net 
        costs of government operations;
          
 determine the full extent of improper 
        payments that occur in major programs and that are 
        estimated to involve billions of dollars annually;
          
 properly account for billions of dollars of 
        basic transactions, especially those between government 
        entities;
          
 ensure that the information in the 
        consolidated financial statements is consistent with 
        agencies' financial statements;
          
 ensure that all disbursements are properly 
        recorded; and
          
 effectively reconcile the change in net 
        position reported in the financial statements with 
        budget results.
    2. There are material control weaknesses in Federal 
financial systems.
    3. There is pervasive noncompliance with laws and 
regulations.
    4. The year 2000 computing crisis poses a significant 
threat to Federal financial systems.
    5. The role of the Inspector General in improving Federal 
financial management can be strengthened.
    6. Greater financial management leadership is needed.
    Based on these findings, the committee made four 
recommendations:
    1. Require agencies to be accountable to Congress and the 
President through regular oversight.
    2. Provide incentives to agencies to have effective 
financial management.
    3. Strengthen the ability of the Inspector General to carry 
out their management oversight responsibilities.
    4. Strengthen the President's role as Chief Executive 
Officer of the executive branch by establishing an Office of 
Management.
    b. Benefits.--In response to the series of hearings 
discussed above, House Resolution 447 was introduced on May 21, 
1998. The House resolution expressed the sense of Congress that 
the audit demonstrated serious concerns with financial 
management by the majority of Federal agencies and current 
efforts with respect to financial management at all too many 
Federal agencies had failed and therefore Congress must impose 
consequences on Federal agencies that fail their audits. Prior 
to the unanimous passage of the House resolution on June 9, 
1998, the President issued a May 26, 1998, memorandum to the 
heads of executive departments and agencies outlining actions 
to ``further improved financial management.'' The Presidential 
directive required action to improve Federal financial 
management and stipulated goals and guidelines. In addition, a 
task force was developed by the Chief Financial Officers 
Council, with representation from the Office of Management and 
Budget, the General Accounting Office, as well as the 
Subcommittee on Government Management, Information, and 
Technology, to periodically meet and follow the Federal 
agencies' progress in improving their financial management.
    Consistent with the findings of the oversight hearings and 
the House Resolution, the President's memorandum recognized 
that ``there are several areas in which agencies must focus 
additional attention. Financial auditors reported accounting 
system weaknesses and problems with fundamental accounting 
practices across the Federal Government.'' The memorandum took 
several significant steps toward tightening the 
administration's leadership in correcting the management 
problems that were the subject of the subcommittee's oversight 
hearings. Specifically, the President's memorandum directed:

          1. The Office of Management and Budget (OMB) shall 
        identify agencies subject to reporting under this 
        memorandum and monitor agency progress towards the 
        [administration's] goal of obtaining an unqualified 
        audit opinion in the F[iscal] Y[ear] 1999 consolidated 
        Federal Government financial statements.
          2. The head of each agency identified by the OMB 
        shall submit to the OMB a plan, including milestones, 
        for resolving by September 30, 1999, financial 
        reporting deficiencies identified by the auditors. The 
        initial plan was due to the OMB by July 31, 1998.
          3. The head of each agency submitting a plan shall 
        provide quarterly reports to the OMB, starting on 
        September 30, 1998, describing progress in meeting the 
        milestones in their action plan. The head of each 
        affected agency shall report to the OMB any impediments 
        that would impact the government-wide goal.
          4. The OMB shall provide periodic reports to the Vice 
        President on the agency submissions and government-wide 
        actions taken to obtain an unqualified opinion the 
        Government's F[iscal] Y[ear] 1999 financial statements.

    In addition to the President's memorandum, the 
administration has accelerated the timeframes in which Federal 
agencies are required to submit financial information to the 
Financial Management Service of the Department of the Treasury.
    c. Hearings.--The subcommittee conducted six oversight 
hearings focusing on the status of financial management in the 
executive branch of the Federal Government: (1) ``Federal 
Consolidated Financial Statements: Can the Federal Government 
Balance It's Books?,'' on April 1, 1998; (2) ``Oversight of the 
Internal Revenue Service: The Commissioner Reports to 
Congress.'' on April 15, 1998; (3) ``Department of Defense 
Financial Management: Serious Problems Still Persist,'' on 
April 16, 1998; (4) ``Oversight of Financial Management 
Practices at the Social Security Administration,'' on April 17, 
1998; and (5) ``Oversight of Financial Management Practices at 
the Health Care Financing Administration,'' on April 24, 1998; 
and (6) ``Making the Federal Government Accountable: 
Legislative Options to Improve Financial Management,'' on June 
18, 1998.
3. ``The Year 2000 Problem,'' House Report No. 105-827, October 26, 
        1998, Fourth Report by the Committee on Government Reform and 
        Oversight, Together with Additional Views.
    a. Summary.--The subcommittee convened an oversight hearing 
on April 16, 1996 to examine whether computers throughout the 
Federal Government, the United States, and the world would be 
able to handle the transition from the year 1999 to the year 
2000. The subcommittee continued this investigation throughout 
the 105th Congress. The committee report is based on the 
subcommittee's investigation.
    The year 2000 problem could result in a stunning array of 
technological failures. Air traffic could be delayed or even 
grounded; telephone service could be interrupted; breakdowns in 
the production and distribution of electricity could bring 
widespread power failures; automatic teller machines might 
malfunction; traffic lights could stop working; timeclocks at 
factories might malfunction. Government payments, including 
checks from the Internal Revenue Service, the Treasury, and the 
Veterans Benefits Administration, could be interrupted; 
military technology, including the Global Positioning Satellite 
System, could malfunction. Closer to home, devices with a 
timing function, including microwave ovens, personal computers, 
video cassette recorders, and climate control systems could all 
falter or even shut down entirely.
    For Federal computers, the year 2000 problem could affect 
everything from Social Security and Veterans' benefit payments 
to missile maintenance systems, from the Federal Aviation 
Administration to the Internal Revenue Service. There are at 
least 7,000 mission critical computer systems (those systems 
essential to the performance of important governmental 
functions) in the executive branch of the Federal Government.
    The committee report contained nine major oversight 
findings:
    1. The Federal Government is not on track to complete 
necessary year 2000 preparations before January 1, 2000.
    2. Some State and local governments are lagging in year 
2000 repairs and in many cases lack reliable information on 
their year 2000 status.
    3. The year 2000 status of basic infrastructure services, 
including electricity, telecommunications, and water, is 
largely unknown.
    4. Embedded microchips are difficult to find, difficult to 
test, and can lead to unforeseen failures.
    5. Strong leadership from senior management is necessary to 
address the year 2000 problem.
    6. Organizations are dependent on the year 2000 
preparedness of their data exchange partners.
    7. Data exchanges, testing, and contingency planning have 
received far too little attention.
    8. Fear of legal liability has made some organizations 
reluctant to share the year 2000 status of their products and 
internal systems with other businesses and data exchange 
partners.
    9. Resource problems center around hiring and retaining 
skilled workers and attaining the needed funding to perform the 
year 2000 fixes.
    Based on these findings, the committee made five 
recommendations:
    1. The President and the executive branch of the U.S. 
Government must approach the year 2000 problem with greater 
urgency.
    2. Public and private organizations as well as Federal, 
State, and local governments must all work in partnership to 
prepare for the date change.
    3. Congress and the President should establish Federal 
liability protection for organizations that share information 
in order to facilitate year 2000 repairs.
    4. Year 2000 problem managers should develop goals that are 
linked to readiness measures.
    5. Citizens should demand information on year 2000 
readiness from their State and local governments, their utility 
companies, and other organizations upon which they are 
dependent.
    As Chief Executive, the President must play an active 
leadership role in moving the Nation forward on the year 2000 
problem. In July 1997, the chairman and ranking member of the 
subcommittee, together with the chairwoman and ranking member 
of the Technology Subcommittee of the House Committee on 
Science, formally asked the President to use the ``bully 
pulpit,'' as Theodore Roosevelt called it, to explain the 
problem to the American people. They also recommended that he 
appoint a senior administration official as coordinator for the 
national year 2000 effort.
    The President has still not implemented the first 
recommendation: to explain the year 2000 problem to the 
American people. In July 1998, he addressed some of the members 
of the National Academy of Sciences, but this issue calls for 
high-profile leadership. The President has been urged to speak 
in a ``fireside chat'' environment, similar to the approach of 
President Franklin D. Roosevelt in the 1930's. The appointment 
of a full-time coordinator to pull together the pieces of the 
administration's effort took place in February 1998, when he 
designated John Koskinen, a retired Office of Management and 
Budget official, as Assistant to the President. Mr. Koskinen 
did not take office until March 1998.
    Despite this belated step in the right direction, many 
Federal agencies are simply not moving quickly enough to be 
year 2000 compliant by January 1, 2000. As noted above, the 
subcommittee has prodded executive branch agencies to action by 
grading them on their year 2000 efforts. The grades are based 
on an analysis of the quarterly reports from the agencies 
themselves as well as follow-up investigative work by the staff 
of the subcommittee and the General Accounting Office, the 
fiscal and program auditors for the legislative branch. Each 
report card has revealed a disturbing lack of progress within 
the executive branch. Overall, the Administration has received 
a grade of ``F'' and ``D'' in the last two quarters, 
respectively.
    The subcommittee has concentrated not just on Federal 
computer systems and the effect their failure would have on the 
delivery of services, but also on the leadership role that the 
Government plays throughout society. For example, the 
Securities and Exchange Commission and the Federal 
Communications Commission have important oversight and 
leadership functions in segments of the private sector. At a 
higher level, the President can voice priorities for society as 
a whole. Oversight of this leadership element of the Federal 
year 2000 effort is central to the subcommittee's investigation 
and to this report.
    b. Benefits.--This committee report and all of the 
activities on which it is based were directed at gathering and 
disseminating information on the year 2000 problem. The benefit 
of inspiring organizations to learn about the problem and to 
take it seriously is self-evident: more repairs will be done, 
fewer failures after January 1, 2000 will result. Furthermore, 
serious action now, including serious attention from Federal 
officials, will serve to reduce the panic that this problem 
encourages.
    The key to fixing the year 2000 problem is leadership. The 
year 2000 problem requires one of the most massive and 
coordinated repair efforts in human history. Progress has been 
made, but much remains to be done. Urgency is required to get 
the job done on time. Priorities must be set and resources must 
be allocated. This can be done only if top management (in 
government, the private sector, and non-profit organizations 
alike) is fully informed and willing to make the tough choices 
necessary.
    Furthermore, the year 2000 problem is going to be expensive 
to the taxpayers, but how expensive depends on how quickly 
officials step up to the problem. Administration cost estimates 
have reached $5.4 billion, and figures in this range have been 
deemed far too low by a variety of experts. The ultimate cost 
depends to a great extent on how early and how efficiently the 
Government can address the problem. The costs associated with 
fixing this labor-intensive problem will rise significantly as 
the date change nears. Furthermore, failure to repair computers 
before the date change will bring a variety of costs of untold 
proportions. It is therefore critical that the fixes are made 
and made early. Effective efforts to expedite this process will 
save the taxpayers considerable amounts of money.
    Potentially even more significant than the financial toll 
of a delayed response to the year 2000 problem is the danger of 
failure. It is very difficult to determine the exact 
consequences of inaccurate date computations in most computer 
programs. Despite this, or perhaps because of it, preparations 
for the date change are crucial. Failure to make the necessary 
fixes puts citizens at risk of everything from late Social 
Security checks to unsafe travel conditions.
    c. Hearings.--The Subcommittee on Government Management, 
Information, and Technology held 16 hearings on the Year 2000 
problem in the 105th Congress: (1) ``Will Federal Computers Be 
Ready for the Year 2000?'' February 24, 1997; (2) ``Year 2000 
Risks: What Are the Consequences of Information Technology 
Failure?'' March 20, 1997, held jointly with the House Science 
Subcommittee on Technology; (3) ``Will Federal Government 
Computers be Ready for the Year 2000?'' July 10, 1997, held 
jointly with the House Science Subcommittee on Technology; (4) 
``Russia's Year 2000 Problem,'' held in Beverly Hills, CA on 
October 17, 1997; (5) ``FAA at Risk: Year 2000 Impact on the 
Air Traffic Control System,'' held jointly with the House 
Science Subcommittee on Technology on February 4, 1998; (6) 
``Oversight of the Federal Government's Year 2000 Efforts,'' 
held jointly with the House Science Subcommittee on Technology 
on March 18, 1998; (7) ``Status Update on the Year 2000 
Problem,'' June 10, 1998; (8) ``Year 2000: Biggest Problems and 
Proposed Solutions,'' June 22, 1998; (9) ``Oversight of the 
Year 2000 Problem: Lessons to Be Learned from State and Local 
Experiences,'' field hearing in New York, NY on August 13, 
1998; (10) ``Oversight of the Year 2000 Problem: Lessons to Be 
Learned from State and Local Experiences,'' field hearing in 
Mesquite, TX (a suburb of Dallas) on August 17, 1998; (11) 
``Oversight of the Year 2000 Problem: Lessons to Be Learned 
from State and Local Experiences,'' field hearing in New 
Orleans, LA on August 19, 1998; (12) ``Oversight of the Year 
2000 Problem: Lessons to Be Learned from State and Local 
Experiences,'' field hearing in Lakewood, OH (a suburb of 
Cleveland) on September 1, 1998; (13) ``Oversight of the Year 
2000 Problem: Lessons to Be Learned from State and Local 
Experiences,'' field hearing in Indianapolis, IN on September 
2, 1998; (14) ``Oversight of the Year 2000 Problem: Lessons to 
Be Learned from State and Local Experiences,'' field hearing in 
Palatine, IL (a suburb of Chicago) on September 3, 1998; (15) 
``Y2K: What Every Consumer Should Know to Prepare for the Year 
2000 Problem,'' held jointly with the House Science 
Subcommittee on Technology on September 24, 1998; (16) ``Y2K: 
Will We Get There On Time?'' held jointly with the Committee on 
Transportation and Infrastructure and the House Science 
Subcommittee on Technology on September 29, 1998.

                    Subcommittee on Human Resources

                    Hon. Christopher Shays, Chairman

1. ``Gulf War Veterans' Illnesses: VA, DOD Continue to Resist Strong 
        Evidence Linking Toxic Causes to Chronic Health Effects,'' 
        House Report 105-388. November 7, 1997. Second Report by the 
        Committee on Government Reform and Oversight, Together with 
        Additional Views.
    a. Summary.--Since February 1996, the Subcommittee on Human 
Resources has been conducting an oversight investigation into 
the illnesses reported by an estimated 100,000 Gulf war 
veterans, and the response to veterans' health complaints by 
the departments of Veterans Affairs [VA] and Defense [DOD]. The 
investigation resulted in a report approved by the subcommittee 
on October 31, 1997, and the Committee on Government Reform and 
Oversight on November 7, 1997.
    Responding to requests of veterans, the subcommittee 
initiated a far-reaching oversight investigation into the 
clusters of symptoms and debilitating maladies known 
collectively as the ``Gulf War Syndrome.'' The subcommittee 
sought to ensure sick Gulf war veterans were being properly 
diagnosed, treated, and compensated for service-connected 
disabilities, despite official denials and scientific 
uncertainty regarding the exact causes of their ailments. The 
subcommittee also sought to determine whether the Gulf war 
research agenda was properly focused on the most likely, not 
just the most convenient, hypotheses to explain Gulf war 
illnesses.
    The subcommittee investigation and hearings found that the 
VA and DOD had not listened to veterans since the Gulf war 
ended in 1991. Veterans suspected and reported exposure to 
toxic agents in the Gulf war theater--to chemical and 
biological warfare agents, environmental hazards, and 
experimental drugs and vaccines. Any one, or any combination, 
of these toxins may have produced the illnesses among some 
veterans. Yet, the VA and DOD ignored veterans' concerns, 
continued to maintain there were no toxic exposures and 
therefore no health effects, and attributed any illnesses to 
battlefield stress.
    It was the consistent pressure from this subcommittee, and 
other House and Senate panels, that forced the Pentagon to 
acknowledge a ``watershed event''--the probable exposure to 
United States troops to chemical weapons fallout at Khamisiyah, 
Iraq. With that first admission, the three pillars of 
Government denial--no credible detections, no exposures, no 
health effects--began to crumble. The number of U.S. troops 
presumed exposed grew rapidly from the 400 announced in June 
1996 to nearly 100,000 announced in July 1997.
    This revelation and other credible chemical detections, 
along with private research which probed the parallels between 
Gulf war illnesses and known effects of chemical poisoning, 
suggested a significant role for toxins in causing, triggering 
or amplifying neurological damage and producing delayed and/or 
chronic symptoms in many veterans.
    The subcommittee believes current approaches by the VA and 
DOD to research, diagnosis and treatment of Gulf veterans are 
flawed and unlikely to yield answers to veterans' ailments in 
the foreseeable, or even far distant, future.
    Six years and hundreds of millions of dollars have been 
spent by the VA and DOD in an effort to determine the causes of 
the illnesses besetting Gulf war veterans. When asked what 
progress has been made healing sick Gulf veterans, VA and DOD 
cannot respond. When asked, are sick veterans any better off 
today than when they were first examined, VA and DOD are 
silent. Millions of research dollars have been thrown at the 
problem without answers or accountability.
    Government delays and denials for 6 years are symptomatic 
of a system content to presume the Gulf war produced no delayed 
casualties, and determined to shift the burden of proof onto 
sick veterans to overcome that presumption. That task has been 
made difficult, if not impossible, because most of the medical 
records needed to prove toxic causation are missing, destroyed 
or inadequate. Nevertheless, VA and DOD insist upon reaping the 
benefit of any doubts created by the absence of those records.
    The subcommittee believes the current presumptions about 
neurotoxic causes and effects should be reversed and the 
benefit of any doubt should inure to the sick veteran.
    Finally, the subcommittee reluctantly concluded that 
responsibility for Gulf war illnesses, especially the research 
agenda, must be placed in more responsive and expert hands, 
independent of the VA and DOD.
    The committee report contained 18 major oversight findings:
Diagnosis
    1. VA and DOD did not listen to sick Gulf war veterans as 
to possible causes of their illnesses.
    2. The presence of a variety of toxic agents in the Gulf 
war theater strongly suggests exposures have a role in causing, 
triggering or amplifying subsequent service-connected 
illnesses.
    3. Gulf war troops were not trained to protect themselves 
from the effects of exposure to depleted uranium dust and 
particles.
    4. Pyridostigmine bromide [PB] can have serious side 
effects and interactions when taken in combination with other 
drugs, vaccines, chemical exposures, heat and/or exercise.
    5. VA and DOD health registry diagnostic protocols relied 
on the unfounded conclusion there were no chemical, biological 
or other toxic exposures to United States troops in the Gulf 
war theater.
    6. VA and DOD health registry diagnosis protocols continue 
to be based on the unwarranted conclusion that, unless there is 
an immediate and acute reaction, exposures to chemical weapons 
and other toxins do not cause delayed or chronic symptoms.
    7. Prematurely ruling out toxic exposures as causative, VA 
and DOD doctors relied on diagnoses of somatoform disorder and 
Post-Traumatic-Stress-Disorder [PTSD] to explain Gulf war 
veterans' illnesses.
    8. There is no credible evidence that stress or PTSD causes 
the illnesses reported by many Gulf war veterans.
    9. Accurate diagnosis of veterans' illnesses remains 
difficult due to inadequate or missing personal medical 
records, missing toxic detection logs, and unreleased 
classified documents.
    10. Accurate diagnosis of veterans' illnesses was also 
hampered by the VA's lack of medical expertise in toxicology 
and environmental medicine.
    11. Exposures to low levels of chemical warfare agents and 
other toxins can cause delayed, chronic health effects.
Treatment
    12. Neither the VA nor the DOD has systematically attempted 
to determine whether sick Gulf war veterans are any better or 
worse today than when they first reported symptoms.
    13. Treatment of sick Gulf war veterans by VA and DOD to 
date has largely focused on stress and PTSD.
Compensation
    14. Compensation ratings for sick veterans are minimized 
due to inadequate personal medical records, missing toxic 
detection logs, and unreleased classified documents which could 
help veterans establish service-connection of post-war 
disabilities.
    15. Compensation ratings are also minimized by over-
reliance on somatoform disorder and PTSD as the basis of 
disability claims.
Research
    16. Federal research strategy has been blind to promising 
hypotheses due to reliance on unfounded DOD conclusions 
regarding chemical exposures.
    17. Institutional and methodological constraints make it 
unlikely the current research structure will find the causes 
and effective treatments for Gulf war veterans' illnesses in 
the short term.
    18. The FDA was passive in granting and failing to enforce 
the conditions of waiver to permit use of PB by DOD.
    Based upon the subcommittee investigation and findings, the 
report made the following detailed recommendations:
Diagnosis
    1. Congress should enact a Gulf war toxic exposure act 
establishing the presumption, as a matter of law, that veterans 
were exposed to hazardous materials known to have been present 
in the Gulf war theater.
    2. The VA should contract with an independent scientific 
body composed of non-government scientific experts 
representing, at a minimum, the disciplines of toxicology, 
immunology, microbiology, molecular biology, genetics, 
biochemistry, chemistry, epidemiology, medicine and public 
health for the purpose of identifying those diseases and 
illnesses associated in peer-reviewed literature with singular, 
sustained, or combined exposures to the hazardous materials to 
which Gulf war veterans are presumed to have been exposed.
    3. The VA Gulf War Registry and the DOD Comprehensive 
Clinical Evaluation Program should be re-evaluated by an 
independent scientific body which shall make specific 
recommendations to change both programs from crude research 
tools into effective clinical diagnosis and outcomes monitoring 
efforts.
    4. The VA should refer all Phase II Registry examinations 
to Gulf war referral centers.
    5. The VA should add toxicological and environmental 
medicine expertise to the staff resources dedicated to Gulf war 
illnesses.
    6. DOD and VA should make every effort to find, and where 
necessary re-create through veterans' testimony, individual 
Gulf war medical records to reflect vaccines administered, PB 
use, and exposure to DU, pesticides and other hazardous 
materials.
    7. The President should order an intensified effort to 
declassify Gulf war documents in any way related to Gulf war 
veterans' illnesses and should personally certify to the 
appropriate committees of Congress when he deems 
declassification of such documents to be against the national 
interest.
    8. DOD failure to adhere to recordkeeping requirements or 
clinical protocols under an informed consent waiver should 
result in the presumption of service-connection for any 
subsequent illness(es) suffered by service personnel to whom 
the drug or protocol was administered.
Treatment
    9. VA and DOD should systematically and effectively monitor 
the clinical progress of Gulf war veterans to determine the 
most effective treatments.
    10. VA and DOD clinicians should be encouraged to pursue, 
and be trained in, new treatment approaches to suspected 
neurotoxic exposure effects.
    11. The diagnoses for somatoform disorders and Post-
Traumatic-Stress-Disorder [PTSD] should be refined to insure 
that physiological causes are not overlooked.
Compensation
    12. Denials of Gulf war veterans' compensation claims 
attributable in any way to missing medical records should be 
reviewed and veterans given the benefit of any doubt regarding 
the presumptive role of toxic exposure in causing post-war 
illnesses and disability.
    13. For purposes of compensation determinations, 
disabilities associated with presumed exposures should be 
deemed service-connected without any limitation as to time.
Research
    14. Congress should create or designate an agency 
independent from the departments of Defense and Veterans 
Affairs as the lead Federal agency responsible for coordination 
of all research into Gulf war veterans' illnesses and 
allocation of all research funds.
    15. The lead Federal agency on Gulf war veterans' illnesses 
should focus research on the evaluation and treatment of the 
common spectrum of neuroimmunological disorders known as Gulf 
War Syndrome, multiple chemical sensitivity, chronic fatigue 
syndrome and fibromyalgia.
    16. DOD and VA medical systems should augment research and 
clinical capabilities with regard to women's health issues and 
the health effects of combat service on women's health.
    17. VA, in collaboration with NIH, CDC, FDA and other 
public health agencies should establish an interdisciplinary 
research and clinical program on the identification, prevention 
and treatment of environmentally induced neuropathies.
    18. FDA should grant a waiver of informed consent 
requirements for the use of experimental or investigational 
drugs by DOD only upon receipt of a Presidential finding of 
efficacy and need.
    b. Benefits.--Recommendations based on the subcommittee's 
investigation into Gulf war veterans' illnesses, if 
implemented, should help veterans receive the answers they 
deserve as to why they are sick and what can be done to make 
them healthy again. Such a successful effort could return 
veterans to full and productive lives, enabling them to better 
support themselves and their families. These veterans, a 
product of the all-volunteer U.S. military, put their lives on 
the line while serving their country in time of war. Failure to 
care for these veterans could have serious implications for 
military recruitment programs in the future. Recommendations, 
if implemented, would also provide: greater focus and better 
coordination of research into Gulf war illnesses; faster and 
more meaningful research results with available dollars; a 
stronger sense of urgency and responsibility by the Federal 
Government to meet the medical and compensation needs of Gulf 
war veterans.
    c. Hearings.--The subcommittee convened the following 
oversight hearings on Gulf war veterans' illnesses in 1997: 
``Gulf War Syndrome: To Examine New Studies Suggesting Links 
Between Gulf Service and Higher Rates of Illnesses,'' January 
21, 1997; ``Status of the Department of Veterans Affairs to 
Identify Gulf War Syndrome,'' April 24, 1997; ``Oversight of 
NIH and FDA: Bioethics and the Adequacy of Informed Consent,'' 
May 8, 1997; ``Status of Efforts to Identify Persian Gulf War 
Syndrome: Recent GAO Findings,'' June 24, 1997; and ``Gulf War 
Syndrome: Multiple Toxic Exposures,'' June 26, 1997. (In the 
104th Congress, the subcommittee convened the following 
hearings: ``The Status of Efforts of Identify Persian Gulf War 
Syndrome,'' March 11 and 28, June 25, and September 19, 1996; 
and ``Persian Gulf Veterans' Illnesses,'' December 10 and 11, 
1996.)
    Witnesses at these hearings included: Gulf war veterans; 
representatives from veterans service organization; officials 
from the VA, DOD, CIA, FDA, NIH, EPA and Presidential Advisory 
Committee on GW Veterans' Illnesses; GAO investigators; 
physicians; private researchers from neurology, pharmacology, 
toxicology, psychiatry, microbiology, molecular biology, 
environmental medicine, biochemistry, physics, nuclear 
medicine, immunology, epidemiology, and bioethics; and chemical 
and biological weapons experts.
2. ``Hepatitis C: Silent Epidemic, Mute Public Health Response,'' House 
        Report No. 105-820, October 15, 1998, Seventh Report by the 
        Committee on Government Reform and Oversight.
    a. Summary.--According to the Centers for Disease Control 
and Prevention [CDC], more than 4 million people in the United 
States are infected by Hepatitis C virus [HCV], and many are 
unaware of their illness. HCV is responsible for an estimated 
8,000 to 10,000 U.S. deaths annually. That number is expected 
to triple in the next 10 to 20 years unless more effective 
prevention and treatment programs are developed. HCV is now the 
leading reason for liver transplants in the United States.
    People at risk include: everyone who had a blood 
transfusion, or used plasma derived therapies prior to 1990; 
intravenous drug users; hemodialysis patients; people with 
tattoos; and those with multiple sexual partners.
    HCV, discovered in the early 1970's, causes inflammation of 
the liver, cirrhosis, and is linked to increases in hepatic 
cancers. It was 1990 before a test for specific antibodies to 
HCV became available. Most people infected by HCV do not have 
symptoms. If symptoms are present, they may be mild and flu-
like, including nausea, fatigue, loss of appetite, fever, 
headaches, and abdominal pain.
    In testimony before the subcommittee in 1995 on blood 
safety, HHS Secretary Donna Shalala stated the Department's 
Blood Safety Committee would give the highest priority to the 
issue of notification to those exposed to HCV through blood and 
blood products prior to 1990. However, in testimony before the 
subcommittee on September 9, 1998, the Acting Commissioner of 
the Food and Drug Administration testified that not one 
recipient (of the more than 1.1 million individuals at risk) 
has received a letter informing him or her of possible 
infection.
    To date, public education on prevention and treatment of 
HCV has been undertaken by private organizations, not by HHS.
    The subcommittee report found: that the Federal response to 
the Hepatitis C epidemic has lacked focus and energy, that the 
proposed HCV lookback is too limited, and that private 
organizations, with some Federal assistance, have taken the 
lead in HCV public education efforts.
    The subcommittee report recommended: that the Secretary of 
HHS take the lead in coordinating the Federal public health 
response to the Hepatitis C epidemic, including implementation 
of a research plan; that the Department of Defense test 
recruits, active duty personnel and those about to be 
discharged for Hepatitis C infection; that the Department of 
Veterans Affairs conduct additional studies of the prevalence 
of HCV in veterans populations and that Federal educational 
campaigns on HCV infection should be launched immediately.
    b. Benefits.--To ensure that HHS undertakes public 
education campaigns to make 4 million Americans aware of their 
infection with HCV and to ensure that HHS oversees ``lookback'' 
notification efforts to reach 1.1 million Americans who 
received potentially HCV-infected blood and blood products.
    c. Hearings.--``Public Health 2000: Hepatitis C--The Silent 
Epidemic,'' March 5, 1998.
3. ``Medicare Home Health Services: No Surety in the Fight Against 
        Fraud and Waste,'' House Report No. 105-821, October 15, 1998, 
        Eighth Report by the Committee on Government Reform and 
        Oversight.
    a. Summary.--The subcommittee report found that recent 
actions by the Health Care Financing Administration [HCFA] to 
address well documented problems of fraud and abuse in the 
Medicare home health program have been flawed. Despite a 4 
month moratorium on enrollment of new home health providers, 
and the unanticipated postponement of the surety bond 
requirement, there has been little progress in implementing 
legislative or regulatory solutions to address the program's 
longstanding vulnerabilities.
    b. Benefits.--The report documents the subcommittee's 
recommendations that HCFA focus existing resources on 
established program integrity efforts, and use existing 
statutory and regulatory authority to require surety bonds or 
other limited financial guarantees from providers who pose a 
threat to the Medicare program. Greater focus by HCFA on the 
program's vulnerabilities will strengthen the program, help 
curtail inappropriate payments and contribute to the long-term 
preservation of the Medicare Trust Fund.
    c. Hearings.--``Medicare Home Health Agencies: Still No 
Surety Against Fraud and Abuse,'' July 22, 1998.

   Subcommittee on National Economic Growth, Natural Resources, and 
                           Regulatory Affairs

                    Hon. David M. McIntosh, Chairman

1. ``Investigation of the Conversion of the $1.7 Million Centralized 
        White House Computer System, Known as the White House Database, 
        and Related Matters,'' House Report 105-828, October 30, 1998, 
        Fifth Report by the Committee on Government Reform and 
        Oversight, Together with Minority and Supplemental Views.
    a. Summary.--The subcommittee completed its investigation 
of the misuse of the White House Database for unauthorized 
purposes. This investigation was a part of the Committee on 
Government Reform and Oversight's investigation of campaign 
fundraising abuses. Chairman William F. Clinger originally 
referred this matter to the subcommittee in June 1996 during 
the 104th Congress. That referral was reaffirmed by Chairman 
Dan Burton at the beginning of the 105th Congress and later 
ratified in writing on July 17, 1997.
    After a review of more than 40,000 documents and 
interviewing more than 40 witnesses, the subcommittee uncovered 
evidence that White House staff knowingly and willfully 
provided fundraisers at the Democratic National Committee [DNC] 
with proprietary data from the White House Database to assist 
them in their fundraising. The subcommittee found that DNC 
fundraisers called staff in the White House Social Office and 
Political Affairs Office for information on prior attendance by 
DNC contributors to ensure that contributors did not receive 
excess White House invitations. By knowing whether a person had 
recently attended a White House event, the fundraisers were 
able to identify other contributors to reward with such 
invitations. This scheme was devised in a meeting in March 1995 
among DNC Finance Chairman Truman Arnold, then-Deputy Chief of 
Staff Erskine Bowles, and Social Secretary Ann Stock. This 
sharing of information with the DNC is not only contrary to 
White House policy but also represents the conversion of 
government property to the benefit of the DNC in violation of 
18 U.S.C. Sec. 641.
    The subcommittee also found evidence that the White House 
Database and other resources were converted to the use of the 
DNC and the Clinton/Gore campaign. Deputy Director and Chief of 
Staff of Presidential Personnel Marsha Scott wrote several 
memoranda in which she announced her plans to help the DNC 
develop its databases using official resources, including data 
from the White House Database, her plans to help manage the 
Clinton/Gore campaign's data clean-up from the White House, and 
her efforts to use the White House Database to ``recreate the 
campaign structure'' and identify the potential financial and 
political leaders for the 1996 campaign. The use of the 
Database in this manner also represents an unlawful conversion 
of government property.
    The subcommittee found evidence that the President and the 
First Lady were aware of and involved in these efforts. There 
were numerous documents showing that the President and the 
First Lady had asked Marsha Scott to create the Database. The 
First Lady had received a hands-on demonstration of the 
Database. According to some documents, the President and the 
First Lady intended to view data on a regular basis. Most 
significantly, one document expressly indicated that the 
President wanted to integrate the White House Database with the 
DNC database. The evidence clearly documents a close connection 
between the President and the Database.
    The subcommittee also uncovered evidence that White House 
staff provided other lists of names and addresses to the DNC 
and the Clinton/Gore campaign. These lists included White House 
Calligraphers' lists for various White House events in December 
1994, which also included the President's Yale Dinner. The 
White House withheld from the subcommittee the attendance lists 
from that event, claiming that the event was the personal 
private event of the President. White House staff also 
transmitted the entire 1994 White House Holiday Card list to 
the DNC and the 1993 White House Holiday Card list to the 
Clinton/Gore campaign. The knowing transfer of these lists to 
the DNC and the Clinton/Gore campaign also constitutes a 
conversion of government property in violation of 18 U.S.C. 
Sec. 641.
    Finally, the subcommittee found substantial and credible 
evidence that the Deputy Counsel to the President Cheryl Mills 
lied to the Committee on Government Reform and Oversight in 
November 1997 regarding the decision in September 1996 to 
withhold documents responsive to the subcommittee's requests 
for documents. That decision, involving both Ms. Mills and 
then-White House Counsel Jack Quinn, was made 6 weeks before 
the 1996 election and resulted in the withholding of documents 
that implicated the President and the First Lady in wrongdoing. 
Every witness in a position to know the nature of the documents 
contradicted Ms. Mills's testimony that the documents were not 
responsive. On September 17, 1998, Chairman McIntosh referred 
the subcommittee's evidence regarding these matters to the 
Department of Justice for further investigation and appropriate 
prosecution.
    b. Benefits.--The theft of government property is a serious 
matter. The subcommittee's investigation found that the 
taxpayers contributed $1.7 million to pay for the development 
of the White House Database. The use of the database to benefit 
the DNC and the Clinton/Gore campaign represents a conversion 
of at least some portion of that $1.7 million to the DNC and 
the Clinton/Gore campaign. Moreover, those organizations 
received valuable property of the government--lists of the 
names and addresses of individuals that were important to the 
President. The exposure of this evidence and the possible 
prosecution for theft or for perjury and obstruction of the 
investigation of such a theft should act as a deterrent to 
future similar conduct.
    c. Hearings.--On November 6 and 7, 1997, the subcommittee's 
investigation figured prominently in the hearings of the 
Committee on Government Reform and Oversight. The hearing was 
entitled, ``White House Compliance With Committee Subpoenas,'' 
Hearings Before the House Committee on Government Reform and 
Oversight, 105th Congress, 1st Session (1997).
    On April 1, 1998, the subcommittee also held a hearing in 
Executive Session to receive the testimony of Marsha Scott, 
following her refusal to answer questions under oath in a staff 
deposition pursuant to a lawful subpoena.
    On September 10, 1996, during the 104th Congress, the 
subcommittee held a hearing entitled, ``The Propriety of the 
Taxpayer-Funded White House Data Base,'' Hearing before the 
Subcommittee on National Economic Growth, Natural Resources, 
and Regulatory Affairs, 104th Congress, 2nd Session (1996).

                        B. OTHER INVESTIGATIONS

                       Subcommittee on the Census

1. Reviewing the Short and Long Form Questionnaires.

    a. Summary.--Large amounts of Federal money are distributed 
on the basis of information gathered by the Census Bureau in 
the decennial census. The Census Bureau collects this 
information through the short and long form questionnaires in a 
decennial census. The short form questionnaire consists of 
seven questions and is distributed to every household in the 
United States. The long form questionnaire consists of 52 
questions and is distributed to 1 out of 6 city style addresses 
and approximately 1 out of every 2 rural style addresses. There 
have been serious concerns raised about the long form 
questionnaire. Some of the concerns surrounding the long form 
questionnaire center around the length of the questionnaire, 
the intrusiveness and the effect it has on response rates. The 
Bureau itself is researching replacing the long form 
questionnaire with the American Community Survey for the 2010 
census.
    b. Benefits.--This oversight provided the subcommittee with 
extensive information about the beliefs of various groups with 
regard to the census long form questionnaire. The groups 
represented were given the forum necessary to express their 
views and interest in the collection of information they deemed 
vital to their cause. The subcommittee decided to hold a panel 
discussion to provide a forum for various groups to discuss the 
advantages and disadvantages of the long form questionnaire.
    c. Hearings.--A hearing entitled ``Oversight of the 2000 
Census: Reviewing the Long and Short Form Questionnaires'' was 
held on May 21, 1998. Witnesses included: Hon. Constance A. 
Morella; Hon. Charles T. Canady; Mr. James B. Hubbard, director 
of economics, American Legion; Professor Wen Yen Chen, 
president, Formosan Association for Public Affairs; Mr. David 
Clawson, program director, American Association of State 
Highway and Transportation Officials; Mr. Marlo Lewis, vice 
president for policy, Competitive Enterprise Institute; Ms. 
Helen Samhan, vice president, Arab American Institute and Mr. 
David Crowe, staff vice president, Housing Policy, National 
Association of Home Builders.
    Subcommittee Chairman Miller expressed the concerns 
surrounding the use of the long form questionnaire. These 
concerns center around the intrusive nature of the long form as 
well as the impact on response rates. The difference in 
response rates between the short form and long form in 1990 
grew to 4\1/2\ percent. Chairman Miller reported that response 
rates are critical in order to achieve the most accurate census 
possible.
    Mrs. Maloney stated that according to the Congressional 
Research Service, some $200 billion are distributed each year 
based on information gathered by the Census Bureau. Mrs. 
Maloney also stated that the census gives us the data we need 
for planning and providing for the needs of our country.
    Mrs. Morella discussed some of the uses of information 
gathered by the long form questionnaire and that second to the 
national government, local governments are the biggest users of 
this information. Mrs. Morella also highlighted the fact that 
in addition to the public sector, the private sector is a 
definite beneficiary of information gathered from the long form 
census questionnaire; and stated that the private sector could 
not replicate the information gathered by the long form 
questionnaire. Congresswoman Morella reported that the long 
form census questionnaire planned for the 2000 decennial census 
has been streamlined and is shorter than the form in the 1980 
and 1990 census. Mrs. Morella also discussed her proposed 
legislation, House Concurrent Resolution 246, which would 
express the sense of Congress that socioeconomic and 
demographic data should be collected by the Census Bureau 
through the long form questionnaire in the 2000 decennial 
census.
    Congressman Canady discussed in detail the provisions of 
his proposed legislation, H.R. 2081, known as the Family 
Caregiver's Enumeration Act. This legislation would require the 
Census Bureau to identify family caregivers in 2000 through the 
long form questionnaire. Mr. Canady explained that caregivers 
are individuals who provide care for chronically ill or 
disabled loved ones free of charge. Mr. Canady told the 
subcommittee that nearly 2 percent of our Nation needs help in 
performing activities daily, and that caregiver's perform this 
essential assistance. Mr. Canady reported that this information 
is necessary to provide the services needed by caregivers.
    Mr. Hubbard, Director of Economics, American Legion, 
reported the Department of Veterans Affairs budget is 
approximately $43 billion. Mr. Hubbard also stated that 
virtually all of these moneys are allocated based on where 
American veterans live. The only way the Federal Government 
collects this information is through the census long form 
questionnaire. In addition, hospitals and other veteran 
services are allocated based on the population of veterans in 
each State. Mr. Hubbard informed the subcommittee that the 
American Legion is committed to assisting the Census Bureau in 
its efforts to complete a full and accurate count of the 
population in the 2000 decennial census.
    Mr. Chen, president, Formosan Association for Public 
Affairs, reported that there are between 400,000 and 500,000 
people of Taiwanese decent living in the United States. Mr. 
Chen explained that his campaign is directed at convincing the 
Census Bureau to include Taiwanese as an option under the race 
question for the 2000 decennial census. The Census Bureau 
provided Mr. Chen with 3 reasons for not including Taiwanese as 
a race: Department of State requested Taiwanese not be included 
as a race in fear it may cause diplomatic problems with the 
People's Republic of China; space constraints; and may confuse 
respondents. Mr. Chen disputed all of these reasons in his 
testimony.
    Mr. David Clawson, program director, American Association 
of State Highway and Transportation Officials, testified at the 
hearing that information gathered by the Census Bureau on the 
long form census questionnaire is very useful to the State 
Highway and Transportation Departments. Such information 
gathered provides information on place of work, means of travel 
to and from work, time of departure, et cetera. Mr. Clawson 
stated that this information is a major resource in identifying 
commuting patterns in our country. Mr. Clawson further 
testified that without this information collected on the long 
form questionnaire, the country would suffer a significant loss 
of data that would affect compliance with various Federal 
legislation.
    Mr. Marlo Lewis, vice president for policy, Competitive 
Enterprise Institute, stated that he believes the long form 
questionnaire should be phased out by the year 2010. He 
believes the Census Bureau should return to the constitutional 
purpose of the census, which is counting the citizens of this 
country for the apportionment of the House of Representatives. 
Mr. Lewis stated that the long form questionnaire is intrusive 
and violates a person's privacy. Mr. Lewis also stated that 
people have grown increasingly unwilling to complete census 
questionnaires. Mr. Lewis also stated that the long form 
questionnaire encourages government intervention into the 
economy of this Nation.
    Ms. Helen Samhan, vice president, Arab American Institute, 
discussed her support for the continued measurement of 
ethnicity in the decennial census. Ms. Samhan stated that 
school systems, social service agencies, as well as local 
governments rely on data on ancestry gathered by the Census 
Bureau. Ms. Samhan also stated that Federal courts require 
collection of ancestry data to battle cases of discrimination 
based on national origin.
    Mr. David Crowe, staff vice president for the National 
Association of Home Builders, stated his support and the 
support of the organizations he represents of the collection of 
information by the census long form questionnaire. Mr. Crowe 
stated that the decennial census is the most cost effective way 
to collect socioeconomic and demographic information. Mr. Crowe 
reported that approximately $170 billion is distributed based 
on information gathered by the decennial census. Mr. Crowe also 
reported that there is presently no other reliable means of 
collecting such information.

2. Statistical Issues in Conducting and Adjusting the Decennial Census.

    a. Summary.--We continue to investigate problems associated 
with the statistical process of adjusting the decennial census. 
Given the failed attempt to adjust the 1990 decennial census, 
there is much to be concerned about regarding a statistically 
adjusted census in the year 2000. The statistical plan for 
adjusting the population counts in the 2000 census largely 
mirror the ineffective technique used in 1990. Given the stakes 
related to the outcome of the census (apportionment of seats in 
the House of Representatives, number of Electoral College 
votes, and the distribution of Federal dollars) ensuring a fair 
and accurate census is of critical importance.
    b. Benefits.--This oversight provided by the subcommittee 
is critical to a full understanding of the complexities 
inherent in both conducting and adjusting the decennial census.
    c. Hearings.--A hearing entitled ``Oversight of the 2000 
Census: Serious Problems With Statistical Adjustment Remain,'' 
was held on September 17, 1998. The witnesses were: Dr. Leo 
Breiman, professor of statistics, University of California, 
Berkeley; Dr. Donald Ylvisaker, professor of statistics, 
University of California, Los Angeles; Dr. Larry Brown, 
professor of statistics, Wharton School of Business, University 
of Pennsylvania; Dr. Robert Koyak, assistant professor of 
operations research, Naval Postgraduate School; Dr. Martin 
Wells, professor of economic and social statistics, Cornell 
University; Dr. Steven Fienberg, professor of statistics, 
Carnegie Mellon University; Dr. Eugene Ericksen, professor of 
statistics, Temple University; Dr. Barbara Everett Bryant, 
adjunct research scientists, University of Michigan.
    Chairman Miller opened the hearing by expressing concern 
regarding the plan to undertake the largest statistical 
experiment in history to conduct our 2000 census. He pointed 
out that the census is an extremely complicated process with 
3,600 parts. A failure in one of these parts could spell 
disaster for the entire process. Mr. Miller also pointed out 
that the professional associations, like the American 
Statistical Association, have not endorsed the specific 
sampling plan as proposed by the Census Bureau. Rather, they 
have endorsed the concept of sampling and its general 
usefulness. This is a far cry from endorsing the specific plan. 
The chairman urged more testing and design specification for 
the census. Just like we test drugs before they are made 
publicly available, or test new designs before building them 
into airplanes, we need further testing and research on 
improving the census.
    Mrs. Maloney opened her statement by urging Chairman Miller 
to hold additional hearings on alternative counting 
methodologies for the census. She felt the subcommittee should 
reach out to organizations like La Raza, the National League of 
Cities, and the NAACP in order to better understand the 
problems associated with the undercount.
    Professor Leo Breiman undertook an indepth study of the 
1990 statistical adjustment process. He concluded that at least 
70 percent of the initial estimate of the national undercount 
was due to data errors. The Census Bureau, according to 
Professor Breiman, reduced their undercount estimates from 5.3 
million people to 2.3 million people--a reduction of 57 
percent. He concluded that there are too many errors and the 
particular method used in both 1990 and proposed for 2000 are 
too prone to error to successfully correct the undercount.
    Professor Donald Ylvisaker also pointed out the problems 
associated with the 1990 census adjustment, and he too felt 
that the plan for the year 2000 will be susceptible to those 
negative outcomes.'' Although the sample size nationwide for 
the 2000 census is considerably larger than 1990, the fact that 
each State and the District of Columbia must be estimated 
separately, severely restricts the ability of the Census Bureau 
to make accurate adjustments. He is also concerned with the 
fact that both the census and the follow-up survey will miss 
people. In statistical terms, this is called ``correlation 
bias''; in real terms it means that the plan cannot and will 
not count or be able to estimate each person in the country.
    Professor Robert Koyak called the plan for census 2000 a 
``risky gambit.'' He testified that the survey portion of the 
plan (the ICM or Integrated Coverage Measurement) will reflect 
errors in the process itself as opposed to the number of people 
missed by the census. He also addressed the problems inherent 
to the adjustment process. The ``sampling plan'' is not simply 
a matter of selecting a random sample and counting who lives 
there. The plan is complicated by many different variables. For 
instance, thousands of families move between the time the 
census is taken and the time the coverage survey takes place. 
It is very difficult to handle these cases. Any errors made in 
the coverage survey are magnified to the national level. He 
concluded that there is no evidence that the problems 
associated with the 1990 plan are resolved in terms of what is 
being planned for census 2000.
    Professor Larry Brown pointed out that the statistical 
adjustment process that the Census Bureau attempted in 1990 and 
has plans for in the year 2000 are trying to correct extremely 
small errors. The median change in terms of the proportional 
share between States was 0.008--extremely small. He also 
expressed concern about the lack of completeness of the plans 
for census 2000. The dress rehearsals are not simply a last 
minute test of the procedure, rather they serve as a dry run 
for some of the untested or undecided portions of the plan. He 
concluded by urging the Census Bureau to use the remaining 18 
months before the census to concentrate on methods of counting 
100 percent of the population.
    Professor Marty Wells also testified with regard to the 
problems associated with a statistically adjusted census count. 
He reiterated the point that it is not the census counts that 
are important in terms of dividing up seats in the House of 
Representatives and Federal dollars, rather the proportional 
share of the population is the key. Like the other experts, 
Professor Wells also pointed to the experience with the 1990 
adjustment process and the errors encountered by the Census 
Bureau. Processing errors in the 1990 PES accounted for 
millions of errors in the final estimates. The plan for 2000 
does not correct for this problem, indeed the Bureau made the 
survey 5 times as large and they plan to do it in a fraction of 
the time. Thus, processing errors will likely be more 
significant in the 2000 census. Professor Wells also addressed 
the misconception that the American Statistical Association had 
given its ``stamp of approval'' on the plan for adjusting the 
census. Rather, the Association defended the use of statistical 
sampling in a generic sense. The ASA even acknowledges that it 
takes no position one way or the other in terms of the specific 
plan for statistically adjusting the census.
    Dr. Barbara Bryant testified that the censuses of 1980 and 
1990 pushed the envelope in terms of counting the number of 
people in a traditional headcount census. She felt that a 
statistically adjusted census would solve the differential 
undercount. She also felt that spending more money on a 
traditional headcount would not solve the problems inherent 
with this method. She stressed the idea that small errors in a 
survey type coverage measurement cancel out at higher levels of 
geography.
    Dr. Ericksen also argued that using statistical techniques 
is an appropriate method for taking a census in the modern age. 
The lack of response, high levels of mobility, and numerous 
non-traditional living arrangements all make it difficult to 
count each and every person in the country. Census Bureau 
statisticians are among the most competent in the Nation and 
they are able to use the sampling technique to provide better 
counts of the population. He concluded that a census with a 
statistical correction (the ICM) would be more accurate than 
one without.
    Dr. Fienberg testified that the Census Bureau staff is well 
suited to conduct a census with statistical sampling. He 
stressed the idea that a traditional headcount can do no better 
than it did in 1980 or 1990. There were millions of errors in 
both of those censuses. He felt that using a coverage survey 
provided a reasonable method of correcting errors in the 
census. He conceded that there are many methodological issues 
that need to be resolved, but he also felt the basis on which 
these methods rest were scientifically sound.

3. Examining the Dress Rehearsals with Regard to Oversight of the 2000 
        Census.

    a. Summary.--The Census Bureau is charged with conducting 
the decennial census, which is one of the most extensive data 
collection programs in the Nation. The information gathered 
during a census is used not only to determine the population 
count, but is used for allocating seats in the House of 
Representatives, distributing billions of dollars in Federal 
funding, redistricting within the States, and providing the 
base figures for many other statistical measurements which 
reflect the composition of our country. Because of the volume 
and critical nature of a census, a dress rehearsal of the 
entire operation precedes the official census-taking activities 
to review the methodologies. Since the 1930s, the Census Bureau 
has been selecting cities which reflect the various demographic 
compositions around the country, usually including a 
combination of heavily populated and rural areas. While 
examining the operational plan in motion, a dress rehearsal 
provides an opportunity for the Census Bureau to correct any 
flaws and assess major risks which may be detrimental to the 
successful execution of the overall proposed plan. In the 
context of a census, the dress rehearsal is a demonstration 
which may indicate areas that require extra attention.
    The Census Bureau's plan for the 2000 census includes the 
use of sampling and statistical estimation, which was initially 
proposed to be tested at each dress rehearsal site. Since 
preparations for the 2000 census began, sampling was to be used 
on a Nationwide basis. In December 1997, this caused major 
congressional concern after a report from the Commerce 
Department Inspector General's Office was issued which raised 
serious questions about the timeliness and efficiency of the 
2000 census design. Adding to this apprehension was a report 
submitted by the GAO in July 1997, which stated that the 2000 
census was at risk of failure. The basis of the report was 
formulated from observing the Bureau's plans and procedures for 
the dress rehearsals, and interviewing Bureau headquarters and 
regional offices located at the selected rehearsal sites. Based 
on these reports and the fundamental question of the legality 
of the Bureau's initial 2000 operational plan, a compromise 
between the administration and Congress was reached in the 
fiscal year 1998 Appropriations, Public Law 105-119, 111 Stat. 
2483, Sec. 209 (j), which provided for dual-track testing at 
the dress rehearsal sites. It was agreed that the Bureau would 
use sampling and statistical estimation methods in only one 
city, Sacramento, CA. At the second site, Menominee, WI, 
including the Menominee American Indian Reservation, the Bureau 
would conduct a full enumeration with sampling used only to 
improve the accuracy of the final population count. At the 
third and final site, Columbia, SC, the Bureau was to hire 
enumerators to follow up on all non-responding households, in 
the tradition of a full enumeration as they did in 1990. In 
March 1998, the GAO issued another report which reviewed the 
progress of the dress rehearsals entitled ``2000 Census: 
Preparations for Dress Rehearsal Leave Many Unanswered 
Questions.''
    b. Benefits.--The execution of the dress rehearsals is 
directly related to the level of preparation that the Bureau 
has attained for the 2000 census. Whether or not they manage to 
perform the basic fundamental procedures that are associated 
with the decennial is vital to the ultimate success of accurate 
counts in 2000. Locating serious problems in the dress 
rehearsals provides an advantage for the Bureau in that they 
may make any corrections before the actual census is taken. 
Together with GAO evaluations and subcommittee oversight, the 
risk of a failed census can be avoided.
    c. Hearings.--A hearing entitled ``Oversight of the 2000 
Census: Putting the Dress Rehearsals in Perspective'' was held 
on March 26, 1998. This oversight inquiry into the progress of 
the dress rehearsals opened with Chairman Miller who expressed 
concern that the Census Bureau and the Department of Commerce 
have repeatedly ignored warnings from the Office of the 
Inspector General and the GAO that the census plan is in 
disarray, and headed toward failure. The chairman stated that 
Congress is not to blame for any problems the dress rehearsals 
may have had due to funding delays, rather, the real problems 
are with the operational designs developed by the Bureau. Mr. 
Miller explained five key questions that the subcommittee would 
be focusing on to guide their oversight responsibilities, and 
expects that the dress rehearsals will answer: (1) Has the 
census design been properly researched and evaluated, (2) can 
the newly developed academic theories be adequately tested in 
real-world conditions with convincing results, (3) can they be 
executed in an extremely tight timeframe under the unforeseen 
difficulties, (4) is the public aware of all procedures planned 
for the decennial, and (5) what will be done to correct major 
problems that are discovered?
    Mrs. Maloney, the ranking minority member, purported that 
the dress rehearsals encountered problems due to funding 
constraints which caused a 14 day delay. She also stated that 
it is time for the GAO to stop assessing the risks involved 
with the census design and work on offering solutions.
    Testifying before the subcommittee was L. Nye Stevens, 
Director, Federal Management and Workforce Issues, General 
Government Division, who was accompanied by J. Christopher 
Mihm, Associate Director, Federal Management and Workforce 
Issues, and James Burow, Assistant Director.
    In order to address the issues raised by the GAO report, 
officials from the Census Bureau also testified. These 
officials included James F. Holmes, Acting Director, Bureau of 
the Census, who was accompanied by John H. Thompson, Associate 
Director for the Decennial Census, Bureau of the Census, and 
Paula J. Schneider, Principal Associate Director for Programs, 
Bureau of the Census.
    Mr. Stevens testified that the dress rehearsals, which were 
originally intended to demonstrate and fine-tune census 
operations, left a large number of questions unresolved. The 
address lists that were developed for the dress rehearsals 
contained a large number of errors, and were not an improvement 
over 1990. The Master Address File [MAF] is the cornerstone of 
an accurate census, regardless if it is one using sampling and 
statistical estimation or not. Mr. Stevens noted that the 
address list development including lists from the Postal 
Service combined with lists from the 1990 census, and then 
reviewed by local governments for verification, was not 
successful in completing accurate final lists. The Bureau 
decided to change the sequence of completing address lists for 
the 2000 census by physically canvassing areas of the country 
to try and achieve the 99 percent accuracy that they need, a 
process that would not be tested in the dress rehearsal. Mr. 
Burow noted that after the initial combination of the two lists 
and local communities reviewed the outcome, the significant 
amount of errors motivated re-engineering the sequence.
    Mr. Stevens contended that problems with local partnership 
programs stemmed from the Bureau policy that local promotion 
efforts were not eligible for funding. One key problem was 
noted with the Complete Count Committees [CCC], which consist 
of elected business, community, social service, and religious 
leaders. Many of these committees had not been set up in 
jurisdictions where the dress rehearsals were being held. Those 
committees that were set up felt that the Bureau did not set 
clear expectations, nor provided adequate guidance. Further 
problems associated with the dress rehearsals included 
staffing, and implementation of sampling and statistical 
estimation. The GAO was also seriously concerned with potential 
time constraints where insufficient time was allotted to 
complete the Integrated Coverage Measurement [ICM] operation.
    Mr. Holmes testified that the dual-track agreement from 
fiscal year 1998 appropriations added complications in the 
dress rehearsal plans. To accommodate this agreement, the 
Bureau chose three comprehensive sites to conduct the dress 
rehearsals. Mr. Holmes noted delays in the dress rehearsals 
because of moving the start date from April 4 to April 18. Mr. 
Holmes also attributed the delays to problems with the address 
list, and the late delivery of local lists and maps. The 
newness of the automated systems which are still being 
developed was a significant problem in accomplishing an 
accurate address list. Mr. Holmes dually noted that the three 
sites were not a test between different methodologies, rather a 
demonstration of how each census design will perform.

4. Reviewing the 1990 Census to Improve the 2000 Census.

    a. Summary.--The 1990 census had a slightly higher 
undercount rate than the 1980 census. A Post-Enumeration Survey 
[PES] was conducted in an attempt to provide data to correct 
this undercount. However, the Secretary of Commerce decided 
that the numbers provided by the PES were not accurate enough 
to be used to adjust the census. In an attempt to contain costs 
and increase accuracy in the 2000 census, the Census Bureau 
designed a plan including statistical sampling. Proponents of 
the plan argue it is the only way to reduce an undercount, 
while opponents claim that the results of the sampling plan 
will be as inaccurate as the numbers rejected following the 
1990 census.
    b. Benefits.--The hearing was an effort to study the 
complexities surrounding the taking of the 1990 census, and the 
reasons why a statistical adjustment was not made following the 
1990 census. The hearing highlighted the problems surrounding 
the 1990 census. It also provided a forum to discuss the 
statistical problems inherent with trying to adjust the census 
number to reduce the undercount.
    c. Hearings.--A hearing entitled ``Oversight of the 2000 
Census: Revisiting the 1990 Census,'' was held on May 5, 1998. 
The subcommittee heard from six witnesses. The first panel 
consisted of Hon. Thomas C. Sawyer, and Hon. Thomas E. Petri. 
Representatives Sawyer and Petri discussed their involvement in 
the 1990 census as members of the Subcommittee on the Census. 
The second panel consisted of Philip Stark, professor of 
statistics, University of California, Berkeley; Kenneth Darga, 
Ph.D., demographer, Department of Management and Budget, State 
of Michigan; and Jerry Coffey, Ph.D., mathematical 
statistician. Wade Henderson, executive director of the 
Leadership Conference on Civil Rights was on the third panel. 
The statisticians on the second panel concentrated on the 
statistical complexities of conducting a survey to adjust 
census numbers, while the final witness emphasized the 
importance of using sampling to reduce the undercount.
    Chairman Miller opened the hearing by warning that the 
sampling plan proposed by the Census Bureau for 2000 is a risky 
endeavor and one that is heading toward failure. He noted that 
the General Accounting Office has provided reports that the 
risk of a failed census has increased. The chairman stressed 
that the census is fundamental to our elected, democratic form 
of government and if the census cannot be trusted, skepticism 
would increase. Mr. Miller pointed out that the adjustment 
proposed for 1990 was too inaccurate to be implemented and he 
was concerned that the Bureau's decision to count only 90 
percent of the population would leave the American people with 
no fall back position. He recognized that there were problems 
in 1990 and that it is important to address those problems and 
do a better job in 2000.
    Chairman Miller discussed the guidelines used by Secretary 
Mosbacher following the 1990 census to evaluate whether 
adjustment should have been implemented and the chairman stated 
that those guidelines should be used again in 2000. 
Specifically, Mr. Miller was concerned that like 1990, the 
adjusted numbers may not be proven to be more accurate at the 
national, State and local levels than the original numbers, and 
that an adjustment could have a negative effect on future 
censuses by reducing participation. Furthermore, he was 
concerned that after an individual takes the time to return a 
census questionnaire, statistics may require that person's 
count to be deleted.
    Ranking Member Carolyn Maloney asked the witnesses to 
address how Congress can make sure that the same mistakes from 
1990 are not made again in 2000. She felt that the actual 
headcount, without the use of statistical sampling, could not 
be reflective of the actual population of the United States. 
Mrs. Maloney was concerned that people seemed to be saying that 
since the plan to adjust the census in 1990 was not perfect, 
that nothing should be done in 2000. She said an inaccurate 
census would be an embarrassment for Congress and a travesty 
for the country. Mrs. Maloney noted that the National Academy 
Sciences and the Census Bureau claimed sampling was more 
accurate and less costly than an actual headcount of the 
population.
    Representative Sawyer discussed the problems with the 1990 
census that he observed as the former chairman of the 
Subcommittee on the Census. He noted the mail response rate was 
65 percent instead of the estimated 70 percent. Mr. Sawyer said 
that this higher work load for door-to-door follow-up resulted 
in a follow-up period that was over budget and twice as long as 
planned. It created problems maintaining a qualified workforce 
and resulted in poorer quality data and a high undercount rate. 
Mr. Sawyer felt that the 1990 census problems were a result of 
using an outmoded design and that there was no choice but to 
turn to a sampling plan to reduce the undercount. He ended by 
stating that he hoped the subcommittee would work together with 
the Census Bureau to ensure an accurate count.
    Representative Petri voiced his concern that the Bureau's 
sampling plan could be found to be unconstitutional, thereby 
causing chaos for the country because there would be no census 
number to use for reapportionment. He also felt that the use of 
sampling would cause individual participation to plummet. Mr. 
Petri felt that if the Bureau insisted on using sampling, then 
it was necessary to conduct a complete census before 
adjustment, so there would be a census to count on in case of a 
court challenge. He emphasized the importance of counting 
everyone, including Americans who live outside the United 
States. Mr. Petri pointed out that his State of Wisconsin had 
the highest participation in 1990 and he felt that many of the 
efforts made by State and local governments in Wisconsin to 
promote the census could be used in 2000.
    Philip Stark testified that adjusting the 1990 census using 
sampling did not work because of statistical bias. Statistical 
bias is not an intentional skewing of results, but errors 
resulting naturally from bad data, processing errors and wrong 
assumptions. Mr. Stark stated that since both the 1990 model 
and the 2000 model are based on the same statistical methods, 
the problems of 1990 would be repeated in 2000. In fact, he 
noted that taking a bigger sample, as proposed for the 2000 
census, could make bias even worse.
    Kenneth Darga testified that the Post-Enumeration Survey 
[PES], which was designed to identify the undercount in 1990 
was not effective. He stated that while this method seemed to 
identify individuals missed by the original census count, it 
did not because the Bureau's effort to measure a small 
component of the population--such as people missed by the 
census--is very sensitive to extremely small sources of 
measurement error. He stated the Census Bureau's proposed 
adjustment for undercount reflected these measurement errors, 
including survey matching errors, misreporting of usual 
residence, and unreliable interviews more than the actual 
undercount. Mr. Darga testified that, as a result, the Bureau's 
effort to solve an undercount of 2 percent of the population 
would destroy the reliability of the census for every user of 
census data.
    Mr. Coffey testified regarding both the failed attempt to 
adjust the population counts in the 1990 census and the 
similarities between the failed 1990 plan and the current plan 
for census 2000. A great deal of research, from both inside and 
outside the Census Bureau, concentrated on the attempted 
adjustment in 1990. All who looked at the results agreed that a 
significant portion of the measured undercount from the Post 
Enumeration Survey [PES] was attributable to statistical bias 
which comes from bad data, processing errors, et cetera. Mr. 
Coffey also expressed a great deal of concern regarding the 
plan to only count 90 percent of the population. He felt that 
this would be detrimental both in terms of the accuracy of the 
census and for continuity of the quality of data from the 
Census Bureau. Mr. Coffey concluded that while the Census 
Bureau may have made some improvements on the statistical 
methods utilized in 1990, the basic plan for statistical 
adjustment remains the same. That is, there will be errors, 
mismeasurement, and bias.
    Wade Henderson, executive director, Leadership Conference 
on Civil Rights, stated that the census was one of the highest 
priorities of the civil rights community. He felt that an 
accurate census ensures equal representation and equal access 
to governmental resources. Mr. Henderson was disturbed by the 
high differential undercount rates for racial and ethnic 
minorities, and particularly worried about the undercount of 
children. He felt that the American population has become too 
diverse to accurately count with a traditional method. Mr. 
Henderson strongly supports the Census Bureau's statistical 
methodology for 2000, and recommends that it complement methods 
to count everyone directly.

5. Status of Dual Track Preparations for the 2000 Census.

    a. Summary.--The U.S. District Court for the District of 
Columbia held that the Census Bureau's statistical sampling 
plan violates the Census Act, 13 U.S.C. Sec. 195. The court 
ordered, ``that the defendants are permanently enjoined from 
using any form of statistical sampling, including their program 
for nonresponse follow-up and Integrated Coverage Measurement, 
to determine the population for purposes of congressional 
apportionment.''
    In light of this court decision, it is more important than 
ever that the Census Bureau be prepared to conduct the census 
without the use of statistical sampling. Because the Commerce 
Department indicated that it would continue to prepare for a 
sampled census, the subcommittee continues to be concerned that 
the Census Bureau has not been preparing adequately for a 
traditional full enumeration.
    b. Benefits.--The hearing offered a forum for the 
subcommittee to express its concern that the Bureau did not 
seem to be preparing for a census without sampling. It allowed 
the subcommittee to receive a commitment from the Department of 
Commerce and the Census Bureau that it will be prepared to 
conduct a non-sampled census, should the Supreme Court agree 
with the lower court's ruling that sampled numbers cannot be 
used for congressional apportionment.
    c. Hearings.--A hearing titled: ``Oversight of the 2000 
Census: Review of Census Bureau Planning and Preparations in 
Response to the Federal Court Ruling that Sampling Is 
Illegal,'' was held on September 9, 1998. The subcommittee 
heard from Robert J. Shapiro, Undersecretary for Economic 
Affairs, U.S. Department of Commerce, and James F. Holmes, 
Acting Director, U.S. Bureau of the Census regarding the Census 
Bureau's plan for the 2000 census.
    Chairman Miller stressed that the 2000 census is still at 
serious risk because the administration is still preparing for 
a sampled census, despite Congress' objections and a Federal 
three-judge panel which held the plan to be illegal. Mr. Miller 
noted that he hoped that the hearing would mark the beginning 
of a new commitment by all parties to work together to reduce 
the undercount. He encouraged the administration to show how it 
has been preparing to conduct a full count census and 
demonstrate a commitment to a legal census.
    Ranking Member Maloney stated her concern that there are 
not viable alternatives to a sampled census. She did not 
support using the Postal Service to play a larger role in the 
census or the use of administrative records. Mrs. Maloney was 
concerned that the hearing would focus too much on unviable 
suggestions, instead of ideas to improve the census.
    Undersecretary Shapiro stated the commitment of the 
Commerce Department and the Census Bureau was to conduct an 
accurate, fair and cost-effective census in 2000. He noted that 
he believes that a sampled census is needed for the 2000 
census. Mr. Shapiro stated that the Department of Commerce may 
ask the administration to request a supplemental appropriation 
to cover additional fiscal year 1999 costs if the Bureau has to 
use a traditional design for the 2000 census. He stated that 
any interruption in funding would put the census at grave risk 
and a continuing resolution would undermine the viability of 
the census, whichever method is used.
    Mr. Holmes opened by assuring the subcommittee that the 
Bureau is on track to conduct a census without sampling, 
despite his belief that a sampled census would be more 
accurate. He pointed out that many of the planning activities 
are components of either a census with or without sampling. Mr. 
Holmes stated that the Bureau has 20 chartered groups to 
address the issues concerning programs and operations that 
might be components of a census without sampling. He said that 
these groups would prepare operational analysis between mid-
September and mid-October. These analysis would be used to 
prepare a complete development plan for a non-sampled census by 
November. Mr. Holmes also stressed that any delay in funding 
for fiscal year 1999 would put the census at risk.

6. Community Based Approaches for a Better Enumeration.

    a. Summary.--In order to achieve the best enumeration 
possible, local officials and community leaders must work in 
conjunction with the Census Bureau in order to locate each 
person to be counted in the 2000 census. The Census Bureau 
currently has partnership programs which link local Bureau 
liaisons with community organizations and officials who strive 
to target areas in their communities which have a history of 
being undercounted. There are specific programs which are 
presented nationwide, where each will be implemented in cities 
across the country. The ``Be Counted'' National campaign will 
provide questionnaires at sites such as community centers, 
large apartment buildings, post offices, grocery stores, etc. 
At these public centers, the questionnaires will be available 
in a myriad of languages: Spanish, Cantonese, Mien, Vietnamese, 
Russian, and Chinese. Along with this program, the Bureau will 
provide Questionnaire Assistance Centers [QAC] to help 
residents fill out their questionnaires.
    Another program vital to the promotion and outreach 
conducted by the Bureau includes the Complete Count Committees 
[CCC]. A CCC is a voluntary working group composed of 
influential governmental officials, community, business, media, 
and religious leaders. One of their main functions is to create 
public awareness of how important it is to be counted in the 
census, as well as a civic duty to return questionnaires. These 
individuals will work together in their specific communities to 
try and reach every person so that they may be counted in the 
census.
    The Bureau has also invited local and tribal governments to 
participate in Local Update of Census Addresses [LUCA]. LUCA is 
a partnership program which provides an opportunity for local 
governments to review lists from the Master Address File [MAF]. 
A local representative will then have the chance to input 
regarding the completeness and accuracy of the MAF. 
Participation in LUCA is on a local voluntary basis, and 
communities are encouraged to take advantage of the review 
process.
    Previously, the Census Bureau has relied on Public Service 
Announcements to advertise the decennial census, however, in 
2000 the Bureau will use paid promotion. The Bureau has hired a 
full service ad agency to buy radio, television, and print 
media spots to serve as major media outlet resources.
    b. Benefits.--Successful implementation of these programs 
is vital to the enumeration of each city and locality, and the 
Bureau must work closely with communities to ensure that proper 
hiring and techniques will be incorporated. Several of these 
programs were used during the dress rehearsals and the 
subcommittee is reviewing the results by specifically focusing 
on the programs which were instituted. The subcommittee 
maintains that it is imperative to establish and develop 
relationships between the local Census Bureau liaisons and 
local communities in order to achieve the most accurate counts 
possible.
    c. Hearings.--A field hearing entitled, ``Oversight of the 
2000 Census: Community Based Approaches for a Better 
Enumeration,'' was held on December 10, 1998, in Miami, FL. 
Witnesses included The Honorable Carrie Meek, Mr. Mark 
Schlakman, special counsel to Governor Lawton Chiles, State of 
Florida, Senator Gwen Margolis, chairperson of the Board, Board 
County Commissioners, Ms. Kelly C. Mallette, policy advisor, 
Office of Mayor Joe Carollo, Mr. Merrett R. Stierheim, county 
manager, Miami-Dade County, Mr. John Stokesberry, director, 
Area Alliance for Aging, Ms. Opal Jones, chief of staff, 
Commissioner Betty Ferguson, Dr. Dario Moreno, assoc. 
professor, Department of Political Science, Florida 
International University, Ms. Marleine Bastien, L.C.S.W., 
Commission on the Census 2000, Haitian-American Grassroots 
Coalition, Ms. Lynn Summers, executive director, Community 
Partnership for the Homeless.
    Congresswoman Carrie Meek began by commending Chairman 
Miller for bringing the subcommittee to Miami, and that holding 
field hearings around the country can help raise awareness of 
the upcoming census and the difficulties facing various 
communities. Ms. Meek stated that in the 1990 census, the 
highest miscalculations in the State of Florida occurred in the 
Miami-Dade County area. A disproportionate number of those not 
counted were people of color. Ms. Meek also pointed out that 
her community missed out on billions of dollars in Federal 
funding that would have gone to programs for schools, to build 
roads and low-income housing--all for a better quality of life 
for local residents. Ms. Meek finished her statement by 
touching on a bill which she recently introduced. This 
legislation will help citizens who receive welfare benefits, 
food stamps, housing or health care assistance, et cetera, from 
losing any of these benefits if they were to be hired by the 
Census Bureau as enumerators.
    Mr. Schlakman testified that the 1990 census failed to 
recognize more than a quarter of a million people in Florida. 
As a result, when Federal funds were appropriated, these people 
were ignored. He voiced concerns that the State of Florida may 
be subject to the same undercounts in 2000, and the Census 
Bureau must do a better job. Community leadership teams and 
Bureau staff should reflect the communities that must be 
counted, especially those which historically have a low mail-
response rate. Public awareness campaigns must involve minority 
and multi-lingual media outlets, community newspapers, the 
internet, billboards, churches and other resources. Mr. 
Schlakman noted the primary concern is attaining the most 
accurate count possible.
    State Senator Gwen Margolis spoke on behalf of Mayor Alex 
Penelas, and testified that nearly half of the total population 
of Miami-Dade County area were born in another country, and the 
city represents one of the most ethnically diverse regions in 
the United States. Unfortunately, the city also presents most 
of the problems which the Census Bureau enumerators face in 
locating and counting multi-ethnic communities. She stated that 
all four congressional districts in the area ranked among the 
top 50 districts which went undercounted in the 1990 census. 
Ms. Margolis stated that the city cannot continue to be 
shortchanged by undercounts where Federal aid is concerned. Ms. 
Margolis referred to the recommendations submitted in her 
written testimony concerning ways to improve the accuracy of 
census counts for the Miami area. The suggestions included 
greater use of current administrative records such as drivers' 
licenses, school enrollment records, real property records, and 
vital statistics to determine the existence of additional 
addresses, especially informal housing units, and housing in 
nonresidential structures. During the hearing, Ms. Margolis 
specifically stated that it would be possible to account for 
some households through the use of power and telephone company 
records, and the number of homeless registered for school 
through the Dade County School Board. Additional 
recommendations in Ms. Margolis' written testimony entail 
marketing the census by involving local firms, churches, and 
other groups to target hard-to-count areas, mail census 
questionnaires in languages other than English to locations 
based on consultation with local officials, send follow-up 
enumerators more frequently and at more varied times, and 
continue to work closely with local governments in updating the 
Master Address File [MAF]. Aside from these efforts to improve 
the accuracy of the upcoming census, Ms. Margolis, on behalf of 
Mayor Penelas, is in strong support of employing the use of 
statistical sampling.
    Ms. Mallette testified on behalf of Mayor Joe Corollo and 
stated that poverty is one of the foremost factors which result 
in undercounts of the Miami-Dade area. Overcrowded housing, 
homelessness, and linguistic isolation also present problems 
where individuals and families will fall through the cracks 
when the census is taken. Ms. Mallette also stated that over 90 
percent of the population are of minority backgrounds, with 
over 60 percent Hispanic, and almost 30 percent black. Within 
these groups, other ethnicities are mostly represented by 
Cubans, Nicaraguans, Dominicans, Puerto Ricans, and other 
immigrant groups from the Caribbean Basin nations. Afro-
Americans and Haitians represent the largest groups among the 
black population. The ethnic make-up of this particular city is 
largely due to Miami's position as an international gateway, 
where almost 30 percent of the residents have entered the 
United States since 1980. According to Ms. Mallette, increasing 
immigration and economic distress suggests that the undercounts 
will still be higher than the average city in the year 2000. 
Ms. Mallette strongly supports the use of statistical methods 
to alleviate the possibility of undercounts for the city of 
Miami.
    Mr. Stierheim, county manager, also testified that Miami-
Dade County has been consistently undercounted. Mr. Stierheim 
noted that Miami is an extraordinarily diverse community, where 
many people may go unnoticed when census counts are taken. The 
witness reiterated the suggestions made by State Senator 
Margolis in her written testimony, and stressed the importance 
of enumerators who speak the predominant language of the 
particular neighborhoods that they are assigned. He also 
advised strong involvement with local governments in order to 
facilitate maintenance and updates to the address listings 
handled by the Bureau. Also, Mr. Stierheim mentioned that the 
county was not adverse to appropriating funds for census 
efforts.
    Ms. Opal Jones testified that efforts for the 2000 census 
should be geared toward techniques that would meet the 
constitution's mandate, and provide for as accurate a census 
count as possible. Ms. Jones specifically testified to the 
extent of the undercount, the need for more aggressive outreach 
efforts, the use of statistical sampling, and the importance of 
adequate funding for the county. According to Ms. Jones' 
written statement, she supports the use of administrative 
records, such as IRS records and drivers' licenses, to serve as 
a system of checks and balances, but feels that these resources 
are not entirely accurate. The witness testified that if 
perpetuated, the differential undercount will have long-term 
negative effects on minorities. She also stated that the 
average citizen in her neighborhood is not aware of the census, 
therefore a high profile public process is essential. Ms. Jones 
recommends that the Census Bureau focus on face-to-face contact 
with targeted groups in the local area who will stress the 
notion of confidentiality with census information.
    Mr. John Stokesberry, a representative of the aging 
community, commented on a myriad of reasons why the elderly 
fail to be counted. Those circumstances exist in cases where 
two older individuals, who are not married, are living together 
and do not want to disclose this information. Other frequent 
scenarios revolve around elder who immigrate and live in a 
residence with restrictions on the number of allowed persons, 
where the result is family members or relations who may go 
undocumented. Often, elders live in small efficiencies attached 
to a house--the efficiency was constructed without a license or 
permit which the elders may not have a mailing address. Other 
problems have surfaced because of elders living in unlicensed 
Adult Living Facilities [ALF], or living in trailer parks that 
census forms may never reach. Mr. Stokesberry voiced concerns 
about the Census Bureau hiring needs, where elders would be 
employed as enumerators for these specific communities. There 
is fear that if elders are hired, many who receive Social 
Security benefits or Federal pensions may lose a portion of 
their monthly payments. Mr. Stokesberry voiced strong support 
of legislation introduced by Congresswoman Carrie Meek, which 
seeks to prevent any loss of Federal benefits while hired as a 
temporary enumerator for the Census Bureau.
    Dr. Dario Moreno also testified concerning the challenges 
Miami presents to the Bureau in terms of getting accurate 
counts. Rapid urban growth, poverty, and growing immigration 
are the main problems the Bureau must face, and those which 
have contributed to undercounts of the past. Dr. Moreno 
testified that no other major metropolitan area in the United 
States has been as radically affected by immigration. 
Political, social, and economic unrest in the Caribbean and 
Latin America have had a direct impact on the city, as Miami 
provides a haven for these troubled foreigners. Other factors 
which contribute to the undercount are the large percentage of 
the foreign-born elderly, who often isolate themselves and are 
apprehensive about filling out a questionnaire form. Dr. Moreno 
urged the Census Bureau to reach out to newly arrived 
immigrants by working with local churches and community 
organizations, and stressed the need for strong partnership 
with State and local governments. He also encouraged the 
Complete Count Committees to work with the Bureau to raise 
awareness about the census.
    Ms. Marleine Bastien, a representative of the Haitian 
community, stated that more than 1 million Haitian-Americans 
reside in the United States. The Haitian community in south 
Florida is estimated at 450,000, with over half living in 
Miami-Dade County. Although most are successfully integrated 
within their communities, many are unemployed and do not speak 
English. This can be attributed to the large amount of 
undocumented individuals, as well as discrimination based on 
origin. Improving the counts for Haitians involve dealing with 
many issues such as most Haitian immigrants fear government 
officials, unofficial immigration status, housing arrangements, 
lack of communication and information about the census. Ms. 
Bastien provided several useful recommendations for improving 
Haitian population counts: 1) Recruit census-takers who speak 
Creole and are sensitive to the specific needs of the Haitian-
American community; 2) provide census questionnaires in the 
dominant languages of the communities; and, 3) use Haitian 
radio and television programs along with newspapers for 
advertising the 2000 census.
    Ms. Lynn Summers, a representative of the homeless 
community, testified that the methodology currently instituted, 
periodic headcounts with an added multiplier, do not produce 
sufficient results to accurately reflect the number of persons 
with no usual residence in the Miami-Dade area. Ms. Summers 
stated that her opinion is based on research over the past 3 
years, and diligent work to locate all of the homeless in the 
area.

                   Subcommittee on the Civil Service

1. Impact of the President's FY-1998 Budget on Federal Employees.

    a. Summary.--President Clinton's proposed Federal budget 
for fiscal year 1998 recommended reductions in spending of 
$6.252 billion from accounts used to pay Federal employees and 
retirees. The President's recommendations would have required 
Federal agencies to pay an additional 1.5 percent of employees' 
salaries to the Civil Service Retirement and Disability Fund 
[CSRDF], a change that would have provided $621 million in 
savings the first year and almost $3 billion over the 5-year 
budget cycle. The President also recommended that Federal 
employees in both the Civil Service Retirement System [CSRS] 
and the Federal Employees Retirement System [FERS] pay an 
additional one half of 1 percent (0.5 percent) toward their 
retirements. This increased payroll deduction was recommended 
to be deferred and phased in, so that employees would face an 
increase of 0.25 percent beginning January 1999, 0.15 percent 
beginning January 2000, and 0.10 percent, beginning in January 
2001. In addition to these increases affecting current 
employees, the President proposed to delay the cost of living 
adjustment paid to Federal civilian annuitants each year from 
January to April. This reduction in payments to Federal 
retirees would have saved $278 million in fiscal year 1998, and 
was projected to achieve $1.5 billion in reduced benefits 
during the period ending in fiscal year 2002.
    b. Benefits.--This investigation provided an opportunity to 
review the President's budget proposals affecting Federal 
employees and retirees in light of the savings targeted to be 
achieved through changes in pay and benefits. These 
deliberations provided a basis for Congress to reject the 
administration's proposed delay in Federal retirees' cost of 
living adjustments when it enacted the Balanced Budget 
Enforcement Act of 1997. They also opened the door to exploring 
options to ensure more equitable treatment of Postal Service 
employees and FERS employees, whose retirement programs are 
currently funded on a ``full normal cost'' basis. The 
investigation underscored the need to modify the formula used 
to calculate the Government's share of the FEHB premiums. The 
formula was subsequently changed in the Balanced Budget 
Enforcement Act of 1997.
    c. Hearings.--A hearing entitled, ``The President's 1998 
Budget: Civil Service Impacts'' was held on February 13, 1997. 
The hearing provided an opportunity to review consequences of 
current strategies for funding Federal pensions, to assess the 
different effects of the changes on different Federal 
retirement systems, and to identify the consequences on 
different employees and agencies as they are affected by the 
changes.
    Mr. Mica noted that the administration had submitted 
similar proposals for each of the 2 previous fiscal years, and 
that none of these proposals had been enacted during that 
period. He observed that Federal agencies would have to reduce 
their current spending by $3 billion to comply with these 
increased payments into retirement systems, and that Federal 
jobs might have to be eliminated to pay for these expenditures. 
Mr. Mica also noted that the administration's proposal would 
have allowed the current formula for calculating Federal 
employees' health insurance premiums to shift from a 
calculation based on the former ``Big Six'' plans to an average 
based on the five largest plans remaining in the program. This 
shift would have led to higher insurance premiums for Federal 
employees, and Mr. Mica proposed to address this issue in a 
subsequent hearing. Mr. Mica stressed the importance of 
achieving the overall savings, noting that the Budget Committee 
has acted to realize savings from these programs when the 
subcommittee could not enact its own solutions in previous 
years.
    Mrs. Morella noted that she had introduced H. Con. Res. 13, 
expressing the sense of the Congress that annuitants' cost of 
living adjustments should be paid in January, consistent with 
the payment of COLAs to Social Security beneficiaries and 
military retired pay.
    Mr. Robert Tobias, national president of the National 
Treasury Employees Union, recommended that the subcommittee 
write to the chairman of the Committee on the Budget to request 
that the subcommittee be assigned a savings target of zero for 
this budget resolution. He asked that the increased retirement 
fund contributions from both employees and agencies be denied 
by the subcommittee.
    Mr. Michael Styles, national president of the Federal 
Managers Association, asserted that the Congress and the 
administration have failed to provide pay and benefits 
consistent with the Federal Employees Pay Comparability Act. He 
observed that he had completed an assignment with a Navy 
contractor, and that private firms' employees were paid 
substantially more than public employees performing the same 
work. He claimed that the Federal workforce has continued to 
perform at solid levels, even in the face of continued 
pressures to reduce the workforce and to convert work to 
commercial firms through contracts. He concluded that these 
approaches have demoralizing effects on the Federal workforce, 
and should be resisted.
    Mr. Charles Jackson, president of the National Association 
of Retired Federal Employees, expressed disappointment with the 
President's proposal to delay annual cost of living adjustments 
to Federal annuitants. He claimed that the Civil Service 
Retirement and Disability Fund is able to pay current 
obligations, and reported that most large and medium employers 
in the private sector pay full retirement costs of their 
employees, where Federal employees pay 25 percent of their 
retirement costs. He contrasted the President's proposal to 
delay the COLA to Federal civilian annuitants, but not the 
COLAs associated with Social Security beneficiaries and 
military retired pay. He also noted that the President's 
proposal to allow the statutory modification of the Federal 
Employee Health Benefit Premium increase to take effect would 
result in a substantial price increase for Federal annuitants, 
an increase that would be difficult to absorb in light of the 
COLA delay.
    Mr. James Cunningham, national president of the National 
Federation of Federal Employees, expressed severe 
disappointment with the President's budget. He claimed that 
Federal employees should receive a 6.6 percent increase instead 
of the 2.8 percent that the President proposed. He observed 
that the increased pay to employees will increase the 
compensation costs of Federal agencies, and generate pressure 
for other spending cuts that might impede agencies' operations. 
He questioned the propriety of the administration's championing 
of its workforce reductions, and emphasized that his 
organization was interested in the National Partnership 
Council's work only to the extent that it contributed to more 
effective agency performance.
    Mr. Mica stressed that the subcommittee would be required 
to achieve savings in the entitlement programs under the budget 
resolution, and noted the political difficulties of achieving 
fair distribution of the responsibilities for reaching the 
budget targets. Both Mr. Styles and Mr. Jackson recommended 
that the tax cuts proposed for working Americans be used as a 
source of savings, rather than reducing the burdens that the 
retirement system places on tax revenues. Mr. Jackson indicated 
an interest in reviewing savings achieved through a Medical 
Savings Account pilot program authorized under the Kennedy-
Kassebaum Act of 1996. He recognized the desire to curb 
increases in medical costs, but preferred to see results of the 
pilot before endorsing any particular proposal to limit the 
growth of benefits.
    Mr. Styles and Mr. Tobias recommended achieving savings by 
reducing the contractor workforce. Mr. Styles claimed that 
there are no accurate reports of the number of employees 
working for agencies through contracts, and that Federal 
contracting costs, at $108 billion, now exceed the $103 billion 
Federal payroll. As a result, he argued, the Federal Government 
has not truly shrunk, but we have shifted to paying for these 
functions through contracts rather than through direct 
employment costs.
    Mr. Mica provided a copy of a letter from Office of 
Personnel Management Director James B. King acknowledging that, 
if his proposal to cap the Federal payment for health insurance 
premiums at a fixed dollar amount had been adopted, Federal 
employees would have saved $820 million in health insurance 
premiums during the past 2 years. This would have averaged $200 
per enrollee in the FEHBP. He also demonstrated that the amount 
of money needed to pay Federal annuities is growing annually. 
Whereas Civil Service retirement outlays from the Treasury 
exceeded receipts by $24 billion in 1992, this year the 
retirement accounts will require $30 billion in support from 
the taxpayers. This shortfall is projected to increase to $107 
billion per year within 20 years, and continue to grow for the 
foreseeable future. Mr. Mica commented that he considered 
singling out Federal civilian retirees for the delayed COLA was 
blatantly unfair, and sought the panel's suggestions for 
options to address the Budget Committee's targets.
    Mr. Hugh Bates, president of the National Association of 
Postmasters of the United States, observed that the Postal 
Service had achieved an operating surplus of $1.8 billion 
during the previous year, and endorsed efforts to balance the 
Federal budget. He opposed the COLA delay that would affect 
only Federal civilian annuitants.
    Mr. William Brennan, president of the National League of 
Postmasters, testified that the League also opposes requiring 
Federal employees and annuitants to assist efforts to balance 
the budget. He noted that the Postal Service already pays a per 
capita share of Federal retirement programs that is larger than 
other Federal agencies, because the Postal Service is required 
by law to make payments that are not required of other 
agencies. Mr. Mica observed that, where the Postal Service 
currently provides 54 percent of the cash in the Federal 
retirement funds, by 2015 the Postal Service will provide 81 
percent of this funding. He noted that, since Postal employees 
must already pay the full normal costs of their retirement, as 
calculated by the Office of Personnel Management, postal 
employees already pay a fair share toward retirement benefits, 
and that the President's proposal could be considered unfair to 
them.

2. Federal Hiring From the Welfare Rolls.

    a. Summary.--Although the Federal Workforce Restructuring 
Act of 1994 directed the reduction of 272,900 Federal employees 
by 2000, President Clinton announced a program to hire 10,000 
people off the welfare rolls into the Federal workforce. The 
President announced this effort as part of a program to ease 
the impact of welfare reform laws enacted in 1996. A hearing 
was called to develop an understanding of the administration's 
strategy for accomplishing this hiring initiative in a manner 
consistent with the workforce reduction targets, the variety of 
protections and reinstatement eligibility provided to Federal 
employees facing reductions-in-force, veterans' preference, and 
merit system principles. The hearing provided an opportunity 
for the subcommittee to review the administration's approach to 
hiring people currently benefiting from welfare into Federal 
employment. The administration articulated its reasons for 
believing that this could be accomplished consistent with merit 
system principles and veterans preference by relying upon 
normal turnover, targeting opportunities in entry level and 
temporary positions, and by using several excepted service 
hiring authorities that are available (albeit rarely used) to 
facilitate hiring in positions intended as training 
assignments. Employee organizations provided insight about the 
adverse effects on Federal employees who consider this 
initiative particularly ill-timed in light of their agencies' 
workforce reduction efforts. Private scholars and analysts were 
afforded an ability to demonstrate that different approaches 
are working more effectively in several States than the targets 
indicated by the administration.
    b. Benefits.--The subcommittee gained clear understanding 
of the effects on the working poor of providing a preference 
for welfare recipients, as proposed in legislation introduced 
by Representative Eddie Bernice Johnson (H.R. 1066, the Federal 
Jobs Opportunity Act).
    c. Hearings.--A hearing entitled, ``Federal Hiring from the 
Welfare Rolls'' was held on April 24, 1997. Mr. Mica noted that 
Federal agencies have vast experience in welfare-to-work 
programs, but much of that experience has resulted in little 
success. Instead, State programs (such as Wisconsin's and 
Oregon's) have reduced welfare case loads substantially in ways 
that could make the Federal endeavor irrelevant to former 
welfare dependents' needs. He also noted that thousands of 
Federal employees have been separated involuntarily as part of 
downsizing and the administration's efforts to reinvent 
government. Those former employees have retention rights that 
would provide eligibility to return to agencies that have 
positions available. He noted that the Department of Defense 
had borne the lion's share of these reductions, and that it 
faced additional reductions in the President's budget proposal.
    Mr. Koskinen, Deputy Director for Management, Office of 
Management and Budget, reported that more than 2.8 million 
people were removed from welfare rolls, a 20 percent reduction 
from the numbers on welfare rolls in 1993. He estimated that 
current economic growth creates about 200,000 jobs each month. 
The President had asked corporate America to include welfare 
recipients among the workers who join the workforce during this 
expansion. In response to a request from the President, 
agencies had, during a 30-day period, assembled plans and 
identified appropriate positions that would be included in the 
President's initiative. The target of 10,000 positions reflects 
a proportionate share based on the Federal portion of the 
national workforce. Even during a general workforce reduction, 
Federal agencies hired 58,000 permanent and 140,000 temporary 
employees in 1996, so Mr. Koskinen viewed this target as within 
reason for a 3-year period. He believed that the targets could 
be realized without preferences or any set-asides for welfare 
applicants. Agencies would not create special jobs for these 
applicants, and they would have to pass any tests or meet 
appropriate qualifications, just as any other Federal employee.
    Mr. King, Director, Office of Personnel Management, 
described the interagency efforts used to develop and implement 
the administration's initiative. The Office of Personnel 
Management has provided written guidelines to agencies that 
describe optional hiring procedures available under current 
law. Most of the effort will involve providing additional 
information about opportunities in the Federal sector in new 
formats and in a more timely manner. OPM has established a 
target of 25 positions. The Bureau of the Census, which will 
soon begin hiring in preparation for the 2000 Census, has 
committed to hire nearly 4,000 welfare recipients, or 40 
percent of the governmentwide target. Most of the positions 
would be temporary, and provide introductory work experience 
during planning stages of the operation. Mr. King stressed that 
this initiative is not directed at career positions, but at 
providing entry-level opportunities. He reaffirmed his belief 
that the objectives could be accomplished consistent with merit 
system principles and veterans preference. In response to 
questions, Mr. King confirmed that employees hired as a result 
of this initiative would not get benefits other than those 
available to similarly-situated Federal employees.
    Ms. Disney, Deputy Assistant Secretary (Civilian 
Personnel), Department of Defense, reported that the Department 
of Defense continues to hire about 20,000 civilians each year 
for permanent positions, and another 23,000 temporary 
positions, even while planning to eliminate an additional 
90,000 positions during the next 3 years. Defense expects to be 
able to fill about 2,900 of these positions with current 
welfare recipients during the 3-year period. It will use a 
variety of wage-grade, temporary, and nonappropriated fund 
opportunities to accomplish this hiring goal.
    Mr. Brickhouse, Assistant Secretary for Human Resources, 
Department of Veterans Affairs, described the Department of 
Veterans Affairs' efforts to hire 800 applicants from the 
welfare rolls during the next 2 years. He noted that most of 
the opportunities would be in GS-1 and GS-2 positions that are 
temporary, but could provide important initial experience. He 
noted that in these positions, annual turnover rates average 
almost 20 percent. He stressed that the Department's targeted 
recruitment efforts would pay particular attention to veterans, 
and mentioned programs that are already in place to assist 
veterans in conversion to civilian employment. He affirmed that 
this target could be achieved without compromising veterans 
preference and while adhering to re-employment opportunities 
for former Federal employees.
    Mr. Hantzis, national executive director, National 
Federation of Federal Employees, reported that Federal 
employees are concerned about the manner in which the 
President's plan is being implemented. He noted that OPM 
figures indicated that Federal agencies currently employ 677 
persons in GS-1 and GS-2 positions, and, because OPM does not 
maintain a governmentwide re-employment priority list, it is 
difficult to know how many people remain on re-employment 
lists. The Department of Defense's ``stopper'' list includes 
21,000 RIF'd DOD employees. He expressed concern that 
advantages given to temporary hires under this initiative might 
place current temporary employees at an additional 
disadvantage. He noted that many National Federation of Federal 
Employees had described this initiative as ``outrageous.''
    Mr. Rector, senior policy analyst, welfare and family 
issues, the Heritage Foundation, described the policy as, at 
best irrelevant, and at worst a very foolish policy that has 
nothing to do with reducing welfare dependence. He noted that 
the administration had failed to consult with States that had 
implemented successful programs when it developed its 
initiative. He described this effort as ``more a press release 
than an actual mechanism for helping the poor.'' He noted that 
Wisconsin's welfare case load had dropped by 55 percent in the 
previous 4 years. By instituting effective work requirements, 
and counseling applicants about the dangers of welfare 
dependence, initial applications drop. Both Wisconsin and 
Oregon use ``pay for performance'' programs through which 
welfare recipients must work to earn their benefits. When such 
requirements are enforced, welfare recipients often find 
better-paying jobs. Rather than radical increases in poverty, 
States administering work-based programs have experienced 
substantial economic growth and increased self-sufficiency 
among former welfare dependents. These programs have 
contributed most to the 20 percent drop in welfare caseloads 
during the past 2 years, the biggest drop since the Korean war. 
He noted that child care has not proven to be a substantial 
obstacle, and that the funds freed from the reduced caseload 
provide ample resources for supporting child care initiatives, 
if necessary. Although funding for day care has gone up in 
Wisconsin, for example, it still amounts to less than 5 percent 
of the savings from the initiative. He emphasized that the most 
important step in the program is the follow-up; making certain 
that, once involved in work, the recipient remains in a 
position to earn any benefits that are acquired. Most 
employment will inevitably come from the private sector.
    Mr. Riccio, Manpower Development Research Corp., described 
welfare recipients as a diverse group, but generally a group 
that is lacking in traditional employment skills. Nonetheless, 
most welfare recipients have some work history, and nearly all 
are capable of securing and maintaining employment. However, 
not even the most successful welfare-to-work programs have 
developed effective strategies to counter the high turnover 
rates in positions occupied by welfare recipients in their 
first employment. Of California welfare recipients who left 
jobs, 41 percent reported quitting to seek better employment 
opportunities than the low-paid entry positions.
    Mr. Tetro, president, Training and Development Corp., 
stressed the importance of providing initial opportunities in 
our society. He noted the importance of the Wisconsin example 
cited in Mr. Rector's testimony, in major part because it is a 
common sense approach. He concluded that the most important 
strategy in combating welfare dependence is guiding people into 
work, then providing effective support when they are there. Mr. 
Tetro explained that he agreed with the Heritage Foundation 
testimony about the importance of monitoring the effectiveness 
of training programs. Most have not worked well, and most are 
pre-occupied with preserving bureaucratic procedures rather 
than with finding solutions to peoples' problems. He indicated 
that he had successfully restructured job training programs in 
Richmond, and agreed with Mr. Rector that they had not been as 
successful in Maine, a difference that he attributed to Maine 
being ``one of those States that has left the responsibility 
for welfare reform in the hands of the welfare bureaucracy.''
    Mrs. Eddie Bernice Johnson of Texas testified that she had 
introduced legislation that would provide a 3 percent addition 
to the test scores of applicants for Federal employment who 
were seeking jobs while on welfare rolls. She believes that 
this advantage would provide additional incentives to employing 
agencies to take the chance on reaching beyond the normal 
applicant pool. She added that initial employment efforts had 
failed before because of the difficulties of getting to work in 
low-wage positions. She noted that her bill was structured to 
avoid giving advantages over people who faced RIF situations. 
In response to Mr. Cummings question, however, she conceded 
that, as written, her bill would provide an advantage to 
welfare recipients over those whom he termed the ``working 
poor.'' She emphasized the importance of the first experience, 
of getting one's foot in the door.

3. Assisting the District of Columbia with It's Pension Liabilities.

    a. Summary.--As part of its proposal to rescue the District 
of Columbia government from a looming financial crisis, the 
administration proposed to have the Federal Government assume 
the liabilities of the District's defined benefit pension 
programs covering police, fire fighters, and teachers. Although 
these retirement programs are partially funded through accounts 
managed by the District of Columbia Retirement Board, the 
President proposed to have the Federal treasury seize most of 
the assets managed by the Retirement Board, in return for 
basing future pension payments on the ``full faith and credit'' 
of the U.S. Government. The seized assets would be depleted to 
pay benefits to annuitants during the transition. A hearing was 
called to examine the funding assumptions that supported this 
proposal and to compare them to the operation of Federal 
retirement programs.
    Defined benefit pension programs often promise generous 
benefits, but when governments rely upon the ``full faith and 
credit'' of future taxpayers to fund the pension obligations, 
they depend upon the willingness of future legislators to fund 
those obligations. In a March 27, 1997 memorandum, the 
Congressional Budget Office [CBO] described this as comparable 
to saving for college by placing IOUs in a cookie jar. Relying 
on nonmarketable securities to ``fund'' Federal pensions 
promotes a false sense of security since, as CBO testified, 
``Those Federal securities are merely the promise of the 
Federal Government to itself. The left pocket owes the right 
pocket, but the combined trouser assets are exactly zero.'' By 
contrast with the mostly unfunded Federal Civil Service 
Retirement System, the DC Retirement Board oversees investments 
in tangible assets currently valued at nearly 50 percent of 
actuarial liabilities. The unfunded half of the District's 
retirement liabilities can be traced back to the unfunded 
liabilities transferred to the District when Congress enacted 
home rule. The District government has had to rely on annual 
tax revenues to meet its growing pension obligations, currently 
amounting to $307 million per year. As a local jurisdiction, 
the District has great difficulty raising tax revenues to meet 
those obligations.
    b. Benefits.--This investigation provided an opportunity 
for the subcommittee to examine the President's proposal to 
deal with the District of Columbia's pension obligations as 
part of his program for the District's economic relief. The 
President proposed to assume the District's current pension 
liabilities and to use DC Retirement Fund cash assets to pay 
pension obligations until the assets are depleted. The 
Congressional Budget Office provided valuable testimony 
demonstrating the future liabilities incurred as a result of 
different approaches to financing pension benefits, and 
concluded that the ``pay-as-you-go'' approach used for the 
District's retirement systems and the Federal employees' 
retirement programs is unsustainable in the long run. This 
hearing supported subcommittee efforts to propose different 
funding mechanisms to address pension obligations facing the 
District government in light of the $35 billion long-term costs 
that will result from the President's proposal to assume the 
District's current pension liabilities.
    c. Hearings.--A hearing entitled, ``D.C. Retirement System: 
Coping with Unfunded Liabilities'' was held on April 29, 1997. 
At the hearing Subcommittee Chairman Mica recognized that the 
District needs relief from its mounting pension obligations, 
but he observed two fatal flaws in the President's proposal. 
First, by assuming the District's pension debts, the Federal 
Government incurs significant new long term obligations. These 
outlays are offset in the short term by enabling the U.S. 
Treasury to raid over $3.5 billion of hard assets from the 
District Retirement Board. Second, when those future 
obligations come due, the District's employees would join 
Federal employees at the mercy of the annual appropriations 
process. Where the District's unfunded accrued actuarial 
liability is $4.8 billion, the future obligations owed to 
Federal annuitants amount to more than $900 billion, of which 
only $380 billion is ``funded'' but with nonmarketable 
certificates of indebtedness. Within 20 years, the cost of 
redeeming the pension promises in the Federal cookie jar will 
surpass $100 billion annually. In 2041, those annual pension 
shortfalls are projected to exceed $220 billion. Mr. Mica 
foresees Federal pensions as becoming more vulnerable 
throughout that period in the absence of an adequate funding 
mechanism.
    Ms. Norton of the District of Columbia cited additional CBO 
memoranda demonstrating that the District's unfunded liability 
for these pensions compounds its operational difficulties, 
especially with regard to efforts to limit tax increases and to 
borrow funds when needed. She noted that, in 2004, the annual 
$52 million Federal payment to these systems will be completed, 
and that the District's obligations to address future funding 
would intensify. She acknowledged the challenges of the funding 
mechanism, but contended that these problems could imperil the 
overall proposal for the District's recovery.
    Mr. G. Edward DeSeve, Comptroller, Office of Management and 
Budget commented that the proposal to address the District's 
pension funding needed to be assessed in light of other efforts 
to reduce spending in the District government's budget. He 
traced these unfunded liabilities to the transition to home 
rule, and emphasized the congressional responsibility for the 
obligations accumulated before 1980. He noted that the 
President's plan would result in no net increase in Federal 
spending until the Retirement Board's assets were expended, 
sometime early in the next century.
    Mr. Anthony Williams, Chief Financial Officer, District of 
Columbia government, stressed the importance of resolving 
questions related to pension funding because of their effects 
in restricting the District's operating options. He noted that 
the President's recovery plan integrates efforts at economic 
development and improved cost controls with the funding changes 
proposed here. He conceded imperfections in the plan, but noted 
that these difficulties are very similar to the challenges 
faced in funding Federal employees' pensions.
    Mr. James Blum, Deputy Director, Congressional Budget 
Office, observed that the President's proposal takes advantage 
of the cash-based Federal accounting system to delay 
recognition of the assumption of the District's unfunded 
liabilities. He noted that the assumption would subject 
District pensioners to the same political risks now faced by 
Federal annuitants. He agreed that the unfunded liability could 
be resolved by extending the annual payment more than 30 years 
until the current obligations were redeemed, but noted that the 
pressures associated with other--equally unfunded--systems 
(Social Security, Medicare, Medicaid) would increase the 
difficulties of pursuing such a course. He also noted that 
switching the pension systems to defined contribution systems 
could reduce anticipated political risks of the current system. 
In responding to questions, Mr. Blum estimated that the annual 
increase in Federal spending attributable to the unfunded 
liability inherited as a result of this proposal would be about 
$700 million. Although such obligations pose no insurmountable 
difficulty in the short run, Mr. Blum observed that they are 
unsustainable in the long run.
    In response to questions, Mr. DeSeve conceded that there 
were alternative approaches to funding future liabilities for 
pension benefits, but claimed that the principal should be that 
the District provide for its employees' benefits. This proposal 
would freeze the current liabilities, and new proposals to 
address future coverage would be formulated consistent with the 
District's ability to pay. That ability would be enhanced by 
having the Federal treasury assume the current actuarial 
obligations. He also noted that the legislation created a new 
trustee for the retirement funds to enable the Secretary of the 
Treasury to manage the assets assumed under the bill.
    Under questioning from Ms. Norton, Mr. Blum acknowledged 
that these obligations would eventually face taxpayers, the 
questions center on the timing and the amount. He indicated 
that the least costly solution would be payment of the 
obligations when they are incurred, and that deferring them 
would inevitably increase the costs. He emphasized that the 
result of this proposal would be annual payments of $700 
million to $800 million annually, merely to meet current 
pension payments.
    Ms. Betty Ann Kane, chairman, Legislative Committee and 
Trustee, District of Columbia Retirement Board, reported that 
the accounting firm, Bear Stearns, had commended the Retirement 
Board's administration of the funds entrusted to it. In 1996, 
the Board realized a 14.1 percent rate of return on its 
investments, exceeding both the actuarially-assumed rates and 
its own targets. She noted that the Congress had acknowledged 
the actuarial shortcomings of the funds transferred to the 
District in 1980. She also noted that, for District employees 
hired after October 1996, a defined contribution program has 
been instituted to limit future obligations. She noted that the 
President's plan would have the system revert to the 
financially unsound basis that the Congress had rejected in 
1979. The Board's accountants, Milliman and Robertson, estimate 
that the $700 million annual costs would continue for 20 years 
after liquidation of the Board's assets, for a net long-term 
cost of at least $14 billion. She observed that the preferred 
solution would be for increased funding in the short term, but 
that Congress had previously rejected increasing the annual 
payment from $52 million to $104 million. She questioned 
whether the Congress would be willing to meet the projected 
$700 million annual costs in 10 years.
    Mr. Ron Robertson, chairman, Metropolitan Police Labor 
Committee, Fraternal Order of Police, testified that the 
Fraternal Order of Police favors retention of all current 
benefits without reduction, but expressed reservations about 
the funding mechanism in the President's plan. He recommended a 
funding strategy that would amortize payments proportionally 
over a 30 year period.
    Mr. Tippett, chairman, pension committee, Fire Fighters 
Association of the District of Columbia, contended that the 
President's plan was a bad deal for the fire fighters, and 
recommended that Congress consider the background that led to 
the current difficulties. He counseled against another deferral 
of these obligations. He reported that the method that the 
administration had chosen to implement the plan had created 
uncertainty and confusion in the affected workforce.
    Mr. James Baxter, treasurer, Washington Teachers Union, 
testified that the Washington Teachers Union supported the 
President's plan.

4. Review of Federal Employees Group Life Insurance [FEGLI] Program.

    a. Summary.--Chapter 87 of Title 5 establishes a group life 
insurance program for Federal employees. The subcommittee 
recognized that life insurance is an important component in 
employees' financial planning. Accordingly, it conducted the 
most extensive review of the benefits available under the 
program in over 40 years and compared those benefits to options 
offered by private sector employers.
    The FEGLI program began in 1954 as a one-size-fits all 
approach. But it has evolved to permit enrollees to now choose: 
basic life insurance, six levels of additional life insurance, 
family insurance, and three options with respect to post-
retirement basic insurance, plus accelerated payment options 
for the terminally ill. The basic insurance and all of the 
options, however, are built on term insurance. Close to 90 
percent of the eligible Federal workforce has consistently 
participated in the FEGLI program, attesting to its popularity. 
OPM has held only six open enrollment periods in the history of 
FEGLI, two of which have been held since 1993. These open 
seasons were offered in response to significant program 
developments. MetLife has been the primary insurance carrier 
for the FEGLI program since its inception in 1954.
    b. Benefits.--The subcommittee's examination of FEGLI 
revealed a consensus that employees should have more choice in 
the selection of life insurance options and produced a number 
of recommendations for improvements that were incorporated in 
H.R. 2675, the Federal Employees Life Insurance Improvement 
Act. These recommendations included offering employees group 
universal or group variable universal life insurance options, 
additional voluntary accidental death and dismemberment 
insurance, more coverage for spouses and family members, and 
increased coverage during retirement. H.R. 2675 is described 
more fully in Section III. A. 4. (Subcommittee on the Civil 
Service).
    c. Hearings.--``Federal Employees Group Life Insurance: 
Could We Do Better?'' was held on April 30, 1997. The hearing 
was called to review operations of the Federal Employees Group 
Life Insurance [FEGLI] program and to ensure that Federal 
employees are receiving adequate coverage at a reasonable cost. 
FEGLI provides basic life insurance for 2.5 million Federal 
employees and 1.5 million retirees, with employees paying two-
thirds of costs and agencies paying one-third. Optional 
insurance is available above the basic coverage, with employees 
bearing full responsibility for the costs of additional 
coverage. The Office of Personnel Management [OPM] conducts the 
program for Federal agencies, with Metropolitan Life Insurance 
Co. (MetLife) processing claims. It is reimbursed for all 
claims by the Federal Government.
    Mr. William E. Flynn, Associate Director for Retirement and 
Insurance, Office of Personnel Management, testified that the 
FEGLI program was instituted in 1954, and has been a ``one size 
fits all'' program. It has developed to include optional 
benefits, including coverage for spouses and dependents, 
incremental coverage in six levels, and coverage during 
retirement as well as accelerated coverage for the terminally 
ill. OPM has conducted six open seasons to enable enrollment 
after initial hiring, two of those open seasons have occurred 
since 1993. That open season resulted in coverage expanding 
from 88.4 to 89.9 percent of the Federal workforce. A 1995 open 
season was conducted following passage of the Living Benefits 
Act, and 1301 applications for benefits have been approved 
under that program. He reported that the Civil Service 
Commission had initiated the contract with MetLife, and that 
contract had been sustained since the program began. MetLife 
incurred some risk at the outset of the program because the 
fund had no reserves. Today, the fund has accumulated a balance 
that would probably cover all claims. OPM saw no need for a 
basic restructuring of the program.
    Mr. Flynn acknowledged that the MetLife contract is renewed 
annually through negotiations with OPM. Mr. Mica observed that 
between 1994 and 1995, the administrative expenses charged to 
the program jumped from $6.6 million to $9.2 million. Mr. Flynn 
responded that the OPM Inspector General was nearing completion 
of an audit of those expenditures, and he attributed some of 
these costs to the open season conducted that year. These 
administrative expenses, including OPM and MetLife costs, 
amount to six-tenths of 1 percent of the total program costs. 
The planning necessary to address concerns about how they would 
be used. Mr. Flynn conceded that there is no record of MetLife 
having experienced a loss in this program, even though it 
nominally bears risk associated with the payment of benefits. 
He noted that the ``risk'' charge (about $850,000 annually) was 
waived after the reserve fund had reached adequate levels. He 
also acknowledged that all except about $50 million of the 
$17.4 billion reserve fund balance is invested in nonmarketable 
U.S. Treasury securities. This allocation of reserve funds is 
consistent with the original statute.
    Under questioning, Mr. Flynn acknowledged that there had 
been no recompetition of the contract in 43 years, but claimed 
that, in this case, ``doing better'' ``can only mean we can 
operate more efficiently administratively.'' He observed that 
MetLife currently receives good reviews from program users. He 
reported that OPM has an initiative under way to review the 
benefit design of this program, perhaps to include universal 
life insurance or variable universal life insurance, which 
would add a cash value component to the current term insurance 
benefits.
    Ms. Margery Brittain, vice president, Group National 
Accounts, Metropolitan Life Insurance Co., reported that 
MetLife had been selected at the start of the FEGLI program 
because it was the largest group life insurance carrier at the 
time. It currently maintains that status, with more than $1 
trillion in group life insurance coverage in force. She noted 
that the company pays 85,000 FEGLI claims annually, and that 
these claims total approximately $1.6 billion. Administrative 
expenses amounted to 0.6 percent of claims in fiscal year 1996. 
She testified that the design of the FEGLI program is generally 
consistent with life insurance benefits provided by other large 
employers, with the exception that most employers pay the full 
cost of basic life insurance for their employees. Many private 
sector firms provide group universal life insurance as optional 
coverage. Open enrollment periods are rare in private sector 
programs. Most private employers also select only one carrier 
to administer their life insurance coverage.
    Mr. Barnett I. Chepenik, president, Lincoln Financial 
Group, Inc., Chepenik and Associates, compared the FEGLI 
benefit with private sector programs and noted that the 
tendency of private employers to design flexible benefit 
packages for employees limited the base of employers that could 
be used for analysis. He noted that Federal employees under age 
45 receive a basic benefit that is greater than a year's 
salary, a benefit that is rare in the private sector. He noted 
that private employers negotiate more frequently to provide 
open seasons that would enable employees to elect optional 
coverage. He found the dependent benefit comparable to private 
sector options, but asserted that the opportunity for a 
competitive offering of additional benefits was feasible. In 
terms of post-retirement benefits, FEGLI is competitive with 
private sector benefits. He reported that private employers 
offer both group universal and variable life insurance 
products, and that these tend to be fully-funded by employees. 
He noted that group conversion is a significant expense to 
employees, but indicated that this cost is exacerbated because 
this course of action is highly influenced by adverse selection 
factors.

5. Erroneous Enrollments in the Federal Retirement System.

    a. Summary.--Although the Civil Service Retirement System 
[CSRS] was closed to new enrollment effective December 31, 
1983, agencies subsequently enrolled additional employees in 
CSRS mistakenly. Under current law, when the Office of 
Personnel Management [OPM] learns about such mistakes in 
retirement coverage, employees are converted to the proper 
retirement coverage enrollment. The law provides no option to 
employees in defining proper retirement coverage, and the 
correction of these errors has consequences for the employees' 
Federal, State, and (in some cases) local tax payments, for 
eligibility for benefits under the Social Security System, and 
with regard to retirement benefits.
    b. Benefits.--This investigation provided the subcommittee 
with extensive information about difficulties that affect 
several thousand Federal employees, former employees, 
annuitants, and survivors as a result of mistakes made by 
agencies during the transition to a new retirement system. The 
subcommittee demonstrated that the Congress and the Office of 
Personnel Management had been aware of the problem for more 
than 7 years, but that no effective remedy had been enacted to 
ease the costs borne by people who were the innocent victims of 
their agencies' errors. The investigation provided a record to 
support legislation that the chairman and ranking member have 
described as an immediate priority for the next session.
    c. Hearings.--A hearing entitled, ``Agency Mistakes in 
Federal Retirement--Who Pays The Price?'' was held on July 31, 
1997. Witness included Mr. Alan White, Office of the Inspector 
General, Department of Defense; Mr. David Mangam, Army War 
College; Mr. John Gabrielli, Internal Revenue Service; Mr. E. 
Barry Schrum, Department of Energy; Mr. William E. Flynn, 
Associate Director, Retirement and Insurance Service, Office of 
Personnel Management; Ms. Sarah Hall Ingram, Associate Chief 
Counsel, Employee Benefits/Exempt Organizations, Internal 
Revenue Service; Ms. Diane Disney, Deputy Assistant Secretary 
(Civilian Personnel), Department of Defense; and, Ms. Linda 
Oakey-Hemphill, Agency Retirement Counselor, Department of the 
Treasury.
    At the hearing Subcommittee Chairman Mica reported that the 
problems associated with retirement system enrollment mistakes 
had been brought to Congress' attention in 1989 by the Federal 
Retirement Thrift Investment Board, but that the congressional 
response in 1990 indicated that employees who believed that 
they were harmed by these errors should sue for relief under 
the Federal Tort Claims Act. In notifying Federal employees of 
these errors, OPM had provided little or no assistance. 
Witnesses testified that they had received no accounting of the 
funds transferred out of their Civil Service Retirement and 
Disability Fund [CSRDF] accounts. OPM's indifference to the 
plight of Federal employees was highlighted through samples of 
letters that had been mailed to affected employees.
    Mr. Cummings observed that life does not have dress 
rehearsals, and that when people are deprived through no fault 
of their own of things that they deserved, Government has a 
responsibility to remedy the problem if the Government made the 
mistake.
    Mr. Pappas expressed his concern that the testimony 
presented at the hearing indicated a lack of accountability 
within the system established to manage the Federal retirement 
program.
    Mrs. Morella observed that these involuntary corrections 
are especially troubling for employees who rejected the 
opportunity to transfer into FERS when that system was 
established in 1987.
    Mr. Alan White reported that he was hired by the Department 
of the Air Force as a criminal investigator in August 1984, and 
had remained in CSRS through his transfer to the Inspector 
General's office in the Department of Defense. The mistake in 
his retirement enrollment was detected when he requested an 
estimate of the cost of buying CSRS credit for his military 
service (an option that is not available under FERS). His 
personnel office changed his retirement enrollment to FERS on 
February 28, 1996, retroactive to his entry on duty in 1984. He 
learned about the change by mail on a Saturday, when his leave 
and earnings statement reported a drop in his CSRS account from 
$51,000 to $103. His personnel office did not notify him of the 
change until April, and both his agency and OPM proved 
unresponsive in providing guidance.
    Mr. White read a statement from Mrs. Deborah Monroe, a GS-7 
program assistant in the Chicago office of the Department of 
Housing and Urban Development who had been in the CSRS since 
August 1983 and was involuntarily converted to FERS in 1995. 
She reported that both her agency and OPM told her that nothing 
could be done to correct her situation.
    Mr. David Mangam of the Army War College had completed a 
military career when he accepted an overseas limited 
appointment from the Department of Defense in 1983. In 1984, he 
gained a career-conditional appointment at the Army War 
College, and was enrolled in CSRS when hired. He indicated that 
he would not have accepted the position unless he was able to 
benefit from the coverage of the CSRS, because he was 
interested in converting his military service under that 
system. The agency changed his enrollment in November 1996 and 
OPM's review fully supported the agency's action. He reported 
that the complete transition between the systems would require 
257 pay periods--or nearly 10 years. He estimated that the 
mistake would cost him $30,000 per year, assuming retirement 
after 35 years of service. He also reported suffering 
aggravation of a diabetic condition that his doctors associated 
with the stress of the transition.
    Mr. John Gabrielli of the Internal Revenue Service's 
Buffalo, NY, office reported that he began service as a 
temporary appointee and was converted to career-conditional 
status in September 1984, at which time he was enrolled in 
CSRS. He was provided an opportunity to enroll in FERS during 
1987, but rejected it. He and four other employees were 
notified of the enrollment error on April 13, 1993, and were 
adjusted to FERS coverage, effective in May 1991. He reported 
that he still had not received notice of what credit he would 
receive for funds transferred from his CSRS account to his 
Social Security account, and whether he would receive a refund 
of any differences. He noted that the National Treasury 
Employees Union had assisted efforts to get appropriations 
language requiring OPM to address the issue, but that OPM had 
not provided a solution to date.
    Mr. E. Barry Schrum is a criminal investigator with the 
Department of Energy's Office of Inspector General. He was 
hired in December 1984 and enrolled in the CSRS under law 
enforcement retirement provisions. He, too, had been provided 
opportunity to elect FERS coverage in 1987, but chose to remain 
in CSRS. The Department's OIG personnel office informed him of 
the mistaken enrollment in April 1996 and notified that he 
would be retroactively changed to FERS enrollment. That change 
was made effective in a June 25, 1996, memorandum. He testified 
that he was informed at that time that he would be able to make 
retroactive contributions to the TSP, and that he would have to 
remain continuously employed in the Federal service for 8 years 
to make up the back contributions to the TSP. He recommended 
legislation that would require the agencies that made the 
mistakes to make employees whole, and submitted a letter from 
the Department of Energy attorney which claimed that the 
Department lacks the authority to compensate employees for 
these errors under current law.
    Under questioning, all of the employee witnesses asserted 
that they had little support from their agencies and virtually 
none from OPM. Two of the witnesses are parties to class action 
litigation, filed July 28, 1997, after completing 
administrative review through their agencies and having an 
initial claim from Mr. White denied by the Merit Systems 
Protection Board. They reported extensive legal fees associated 
with the litigation and the administrative reviews. Mr. 
Gabrielli reported that he lacked the means to pursue 
resolution of his case through an attorney, and that he was 
assisted by his union.
    Mr. William E. Flynn of the Office of Personnel Management 
noted that the resolution of this problem would require actions 
of OPM, the Thrift Investment Board, the Internal Revenue 
Service, the Social Security Administration, and the Treasury 
Department. He reported that these agencies are conducting 
discussions, but that they had not agreed on a solution to the 
problems associated with enrollment errors. He added that a 
comprehensive solution is desirable to address concerns of 
employees, former employees, annuitants, and survivors who have 
been affected by these concerns. Under questioning from 
Representatives Mica and Cummings, Mr. Flynn agreed to submit a 
proposal to resolve these problems to the subcommittee no later 
than September 10, 1997. Mr. Flynn admitted that OPM has no 
idea of the number of individuals affected by these enrollment 
errors, and that he could not estimate the cost of correcting 
the errors throughout the Federal service.
    Ms. Sarah Hall Ingram of the Internal Revenue Service 
admitted that the range of legal and tax policy questions 
associated with correcting these errors in retirement coverage 
were complicated and unclear. The IRS administers and collects 
the FICA taxes paid to the Social Security system, and private 
employers are normally required to deposit these in a timely 
manner. Federal employers are subject to nearly identical 
requirements for payment of these taxes. Few of these 
procedures, however, are intended for situations where mistakes 
in calculating the tax obligation require correction years 
after the tax should have been paid. She also noted that the 
Internal Revenue Code restricts the amount that an employee can 
contribute to a tax-deferred retirement account, and that such 
limits might have to be amended as part of any resolution of 
these issues.
    Ms. Diane Disney reported that the Department of Defense 
had found as many as 3,100 employees of the approximately 
170,000 hired between 1984 and 1986 who might have been placed 
into wrong retirement systems. In reviewing those records, many 
of the CSRS classifications were correct because of previous 
Federal service, but she conceded that the Defense Finance and 
Accounting Service is in the process of correcting 500 
employees' records. She noted the difficulties of correcting 
mistakes that are now more than 10 years old, and that some of 
the options essential to make employees whole are not 
authorized by current law.
    Ms. Linda Oakey-Hemphill of the Department of the Treasury 
described extensive interagency negotiations to attempt 
resolution of the issues, and reported that such concerns had 
been raised as early as 1987. She noted that the automated 
information available in personnel systems is not adequate to 
identify the enrollment errors, and does not provide adequate 
guidance for resolution of the cases. She reported that the 
Department of the Treasury had corrected as many as 600 cases 
since 1992, but could not estimate the number of additional 
errors that could remain in the system.

6. Employment Discrimination in the Federal Workplace.

    a. Summary.--Employment discrimination in the Federal 
workforce is a serious and continuing concern of the Congress. 
The subcommittee has received numerous reports of 
discriminatory practices by Federal agencies, as well as 
extensive information that demonstrates that the appeals 
procedures intended to resolve allegations of employment 
discrimination are not working. Data compiled by the Equal 
Employment Opportunity Commission and provided to the 
subcommittee indicate that, among non-Postal Federal agencies, 
complaints about employment discrimination have been filed at 
increasing rates since 1993. EEOC data indicated that white 
employees are filing more cases alleging race discrimination, 
and that age discrimination and religious discrimination cases 
are being filed more frequently. Filings of new cases increased 
even though the portion of complaints that are sustained after 
investigation has declined. The subcommittee received testimony 
in 1995 that reported that Federal employees file grievances at 
a rate five times higher than comparable private sector 
employees. Other testimony claimed that many Federal employees 
file grievances as a method of deterring Federal managers from 
acting to address performance problems among employees.
    b. Benefits.--The investigation provided an opportunity to 
document deficiencies in appeals processes from the perspective 
of Federal employees with Federal discrimination complaints. 
The subcommittee received impassioned testimony alleging 
mistreatment from Federal managers, describing apparent 
conflicts of interests as agencies investigate charges leveled 
against senior managers by employees, and reinforced 
information about delays averaging more than 2 years facing 
employees who work through the EEOC procedures. Representative 
Martinez was provided an opportunity to explain his bill, the 
Federal Employees' Fairness Act (H.R. 2441), that would address 
some deficiencies in these procedures.
    c. Hearings.--A hearing entitled, ``Employment 
Discrimination in the Federal Workplace, Part I'' was held on 
September 10, 1997. The hearing provided an opportunity to 
receive statements from three panels of witnesses to describe 
difficulties that they have encountered in working with the 
dispute resolution procedures available to Federal employees. 
Witnesses on the first panel included the Hon. Albert Wynn of 
Maryland, the Hon. Steny Hoyer of Maryland, and the Hon. 
Matthew Martinez of California. The second panel consisted of 
Mr. Oscar Eason, president, Blacks in Government; Mr. A. 
Baltazar Baca, president, National IMAGE, Inc.; Mr. Thomas 
Tsai, chairman, Federal Asian-Pacific-American Council; and Ms. 
Dorothy Nelms, president, Federally Employed Women. The third 
panel included Mr. Howard L. Wallace, author, Federal 
Plantation: Affirmative Inaction Within Our Federal Government; 
Mr. Lawrence Lucas, Coalition of Federal Employees at the 
Department of Agriculture; Ms. Romella Arnold, National 
Association for the Advancement of Black Federal Employees; Ms. 
LaVerne Cox, Library of Congress Class Action Plaintiffs; and 
Mr. Sam Wright, Federal Aviation Administration employee.
    In his opening statement Subcommittee Chairman Mica 
emphasized that there is no place for discrimination in the 
Federal workplace, and affirmed his commitment to improving the 
appeals procedures available to Federal employees. He noted 
that his efforts to reform the procedures were defeated in the 
previous Congress, but observed that the testimony heard in 
this session demonstrated beyond a doubt that those procedures 
desperately need reform.
    Mr. Cummings reported that the Equal Employment Opportunity 
Commission is aware of difficulties in its Federal case 
processing procedures, and that the agency is developing 
recommendations to revise those procedures within the limits of 
its administrative discretion. He added that he was also 
concerned about reports from the Merit Systems Protection Board 
that indicated that minorities remain concentrated in lower 
grades of the Federal workforce, and that Federal agencies do 
not adequately understand that employment discrimination 
affects every aspect of the employee's life.
    Ms. Norton claimed that the EEOC's jurisdiction has been 
expanded by the Civil Rights Act of 1991 and the Americans With 
Disabilities Act, and questioned whether the Commission has 
resources adequate to perform the associated responsibilities. 
She indicated dissatisfaction with the budget levels proposed 
by the President. She interpreted statistics available to her 
as showing relative stability, and noted that the statistics 
weren't where she had wanted them in the first place. She 
hypothesized that the combination of buyouts, early 
retirements, and optional retirements used to achieve 
downsizing should have resulted in more opportunities for 
minorities to advance within the Federal workforce. She 
believes that the current system of addressing employee 
disputes, which includes investigations by agencies of charges 
filed against them, involves an inherent conflict of interest.
    Mr. Barrett described employment discrimination charges 
filed against senior officials of the Internal Revenue 
Service's [IRS] Milwaukee District Office. Even after the 
charges were confirmed by an EEOC administrative judge, the 
District Director announced that the discriminating supervisors 
would be allowed to retire ``with dignity'' rather than be 
disciplined. The victim of the illegal activities, however, 
continues to work, and has claimed retaliation in regard to the 
agency's response to her successful claims.
    Mr. Wynn described the problem of employment discrimination 
in the Federal workplace as a ``long-festering sore.'' He has 
concluded, after receiving complaints from numerous agencies, 
that the problem is systemic rather than a series of isolated 
incidents. He argued that the Federal service lacks diversity 
at the GS-13 to GS-15 senior management level. He considers the 
Federal experience to include ``a chronic pattern of abuse, 
misuse, and manipulation of personnel laws.'' In particular, he 
claimed that minority employees frequently receive arbitrary 
personnel evaluations, and that complaints often result in 
retaliation. He also claimed that the EEO process is under 
funded and ineffective.
    Mr. Hoyer asserted that Congress has a moral and legal 
responsibility to ensure that Federal workplaces recognize 
discrimination as both immoral and contrary to principles of 
sound management. He conceded that there are invalid charges in 
the system, but claimed that the vast majority of these claims 
merit redress.
    Mr. Martinez reported that he had previously served as 
chair of a subcommittee overseeing the EEOC. In hearings across 
the country, he reported numerous accounts of charges that had 
been rejected when agencies reviewed their own operations, only 
to have courts overturn the nondiscrimination findings when 
cases were taken to judicial channels. He contended that few 
employees have the resources to take agencies to court. He 
believes that the Federal Employee Fairness Act, which he had 
reintroduced, provided a suitable vehicle for streamlining the 
appeals process. He argued that administrative remedies are 
inadequate to address the problems that he has seen in the 
dispute resolution process. He noted that the Office of 
Management and Budget projected that his bill would save $25 
million. He noted that his bill would remove EEO jurisdiction 
that currently rests within agencies.
    Mr. Eason claimed that African Americans are being 
discriminated against in Federal employment, and that this 
discrimination has resulted in a decline in the percentage of 
African American men in Federal employment. (EEOC data indicate 
that the percentage of black men in the Federal workforce has 
declined from 8.41 percent in 1987 to 8.04 percent in 1996. 
Black men constitute 4.9 percent of the Civilian Labor Force.) 
He alleged that the process for addressing discrimination 
complaints has not been effective, but claimed that this 
process was the primary method of securing senior executive 
service promotions for minority employees.
    Mr. Baca testified that Hispanic Americans are the fastest 
growing minority in the United States, but the only minority 
group that is under represented in the Federal workforce. He 
asserted that downsizing should not be used as a pretext for 
discrimination. He noted that Hispanic employees have 
successfully sued the Federal Bureau of Investigation, and that 
similar suits are pending against other agencies, including the 
Postal Service. He noted that the Bureau of Land Management has 
been successful in its efforts to recruit Hispanic employees. 
He agreed that many of the problems could be addressed by 
improving the appeals procedures available to employees. He 
argued that effective enforcement of current laws is necessary 
to progress.
    Mr. Tsai alleged that discrimination has impaired the 
morale of Asian-Pacific-Americans, and contended that the two 
types of discrimination that are most commonly encountered by 
Asian Americans are nonselection and ``work environment 
harassment.'' He recommended revising the ``EEO program plan of 
each agency with specific goals to meet the needs and have the 
management involved in development of the program plan.'' He 
further asserted that managers should be held accountable for 
new efforts to achieve a diverse workforce.
    Ms. Nelms asserted that the Federal Government, as the 
largest employer in the country, ``has failed to establish a 
model workplace, and has allowed discrimination to continue 
rampant.'' She reported that 72 percent of federally-employed 
women are in jobs rated between GS-1 and GS-8.5. Women comprise 
42 percent of the GS-9 to 12 Federal workforce, 25 percent of 
its GS-13 to 15 workforce, and 19 percent of the Senior 
Executive Service. She claimed that federally employed women 
are subjected to both sexual harassment and sex discrimination. 
She praised cultural diversity efforts at different agencies, 
but asserted that the time needed to process complaints is too 
long, and that employees need additional training in the rights 
and obligations of Federal employees and agencies under the 
law.
    Mr. Wallace claimed that systemic discrimination is rampant 
throughout the Federal sector. He asserted that, at every 
agency that he examined, minorities are the last hired and 
first fired, disciplined more often and more severely, and 
given much smaller awards. He agreed that the EEO process is 
broken, in part because ``there is no incentive for managers to 
negotiate in good faith.'' He added, ``Most EEO officers, 
counselors, and other EEO personnel are part of the problem. 
They are rewarded for discouraging employees from filing and 
making the process so difficult to understand that many 
complainants withdraw . . . out of frustration. Findings of 
discrimination are virtually nonexistent, yet billions are 
being wasted on processing paper work that amounts to . . . an 
exercise in futility.'' He recommended immediate dismissal for 
the most egregious managers, and a ``three-strikes-and-you're 
out'' law for repeat discriminators. He agreed that EEO 
processing should be removed from agencies and placed within 
the jurisdiction of the EEOC.
    Mr. Lucas contended that the President's initiative on race 
cannot proceed until he has confronted discrimination in the 
Federal agencies. He asserted that the Department's proposal 
would ``grandfather'' county employees who have a history of 
discrimination and sexism into the Department. He noted that 
Secretary Glickman's Civil Rights Action Team [CRAT] had 
submitted 92 recommendations to address the problems at the 
Department of Agriculture, but Mr. Lucas described the 
Secretary's ``zero tolerance of discrimination'' initiative as 
a ``paper tiger.'' He commented, ``You all have created this 
dinosaur at the other end of Pennsylvania Avenue, and you are 
responsible for . . . the racism and sexism that exists in 
these Federal bureaucracies.''
    Ms. Arnold opened by announcing that her organization's 
first choice as a witness, a senior employee with the 
Department of the Interior, had been informed that ``her career 
would be over'' if she testified. Ms. Arnold appeared even 
though she feared reprisals as a result of testimony that she 
would provide. She commented that the Department has been the 
subject of numerous hearings and reports over the years, all 
indicating that the Department's employment practices 
systematically excluded African Americans as a class, and that 
the Department is ill-prepared to enter a more diverse century. 
She noted that blacks are 6.1 percent of the Department's 
employees, but 10.4 percent of the Civilian Labor Force. 
Interior has only four black males among its 365 attorneys. She 
recounted a history of incidents of inequitable treatment, 
including more than 700 discrimination complaints filed in 
1996. She noted that the Department averages 565 days to 
process such cases, more than three times the 180 day statutory 
limit.
    Ms. Cox reported that the Library of Congress had been in 
the process of resolving the Cook class action lawsuit since 
1975. Although the EEOC had found no discrimination in 1981, 
the U.S. District Court ruled in favor of the plaintiffs, and 
awarded $8.5 million in damages. She claimed that the Library 
continues to resist implementation of the Cook settlement, but 
information provided from the Library indicated that the 
Library was in compliance with the terms of the settlement. The 
class action plaintiffs had withdrawn four of five outstanding 
complaints in court action the previous week.
    Mr. Wright reported that he has been employed by the 
Federal Aviation Administration since 1976, and involved in the 
EEO process since 1977. He contended that executive branch 
agencies fail to obey the law with regard to discrimination 
complaints, and that they are unwilling to investigate 
seriously claims of wrong-doing. When appellate agencies rule 
against Federal agencies, the agencies fail to take appropriate 
corrective actions. Federal officials, he alleged, incur no 
sanctions when found responsible for discrimination. He 
asserted that the Department of Justice and their agencies work 
to defend managers who are accused of discrimination. He 
described the nondisclosure clauses frequently included in 
settlement of discrimination complaints as ``depriving 
employees of their first amendment rights.'' He recommended 
that the EEOC be granted the same adjudicatory powers over 
agencies as the Merit Systems Protection Board. He concluded 
that additional laws defining discrimination are unnecessary; 
the challenge is to get the agencies to comply with laws 
already on the books.

7. Employment Discrimination in the Pursuit of Diversity.

    a. Summary.--Federal agencies have devoted more than 30 
years to efforts to eliminate illegal discrimination from 
Federal workplaces. Although agencies devote millions of 
dollars annually to training in the requirements of fair 
employment laws and other civil rights and diversity 
initiatives, the subcommittee has learned that complaints of 
employment discrimination based on race, gender, age, 
ethnicity, and related causes have increased in the past 5 
years. The subcommittee has learned that at least one agency 
advertises positions for ``unqualified applicants . . . .'' The 
rise in the number of complaints filed, however, is not 
consistent with the decline in the number of cases where 
discrimination is found. Statistics provided by the Equal 
Employment Opportunity Commission indicated that the portion of 
cases where discrimination is found has declined, whether this 
is reflected in settlements with corrective actions and/or 
agency and appeals decisions. This investigation brought to 
light cases where agencies are responsible for unlawful 
discrimination.
    b. Benefits.--The investigation augmented the 
subcommittee's record on employment discrimination in the 
Federal workforce by demonstrating the adverse consequences of 
diversity programs at several agencies. A hearing provided 
evidence that the Forest Service's hiring practices included 
advertising developmental assignments that sought ``unqualified 
applicants'' for firefighter positions. It also provided an 
alternative perspective from scholars who conclude that the 
implementation of proportional goals inevitably conflicts with 
both merit principles and the free choices of individual 
applicants and employees. The subcommittee had the opportunity 
to review the intentions and effects of Representative Canady's 
bill (H.R. 1909) that would eliminate race and gender 
preferences in Federal employment and set asides in Federal 
procurement.
    c. Hearings.--A hearing entitled, ``Employment 
Discrimination in the Federal Workplace, Part II'' was held on 
September 25, 1997. In efforts to implement diversity programs, 
agencies have been faced with claims of discrimination from 
employees who believe that merit staffing procedures have been 
violated. Witnesses testified that they continued to encounter 
agency resistance and bureaucratic delays after successfully 
prosecuting discrimination claims in Federal courts. Three 
panels of witnesses included the Hon. Charles Canady of 
Florida, the Hon. Wally Herger of California, Ms. Lynn Cole, 
attorney, Mr. Angelo Troncoso, Internal Revenue Service, Mr. 
Edward Drury, Federal Aviation Administration, Mr. Ronald 
Stewart, Deputy Chief for Programs and Legislation, U.S. Forest 
Service, Mr. G. Jerry Shaw, general counsel, Senior Executives 
Association, and Mr. John Fonte, adjunct scholar, American 
Enterprise Institute.
    Subcommittee Chairman Mica noted that abuses of equal 
employment opportunity requirements can often be traced to 
excessive efforts to implement ``diversity'' programs, often 
through numerical goals or quotas. He emphasized that the 
Federal affirmative employment program was intended to work in 
the context of a merit system, not in conflict with it. He 
asserted, ``Affirmative action in the Federal Government should 
never have been about anything other than hiring the most 
qualified employees.'' He indicated that he and Mr. Cummings 
would be working with agency heads to address some of the more 
egregious complaints raised during the subcommittee's hearings 
on this topic. He also reported his intention to develop 
appropriate legislative measures for passage by the 
subcommittee in 1998.
    Mr. Herger reported that his office had encountered 
numerous incidents of discrimination practiced by the U.S. 
Forest Service in his district. He submitted documents 
advertising positions open only to applicants who do not meet 
minimum qualifications as well as a memorandum indicating that 
the Forest Service failed to fill firefighting positions when 
it could not get a sufficiently ``diverse'' pool of applicants, 
thus increasing risks of forest fires in communities adjacent 
to the forests where more than 800,000 acres burned last 
summer. Additional documentation showed that the Forest Service 
had received legal advice that these practices were in 
violation of the law, but continued them anyway.
    Mrs. Morella agreed that she found the Forest Service's 
actions in these instances to be simply outrageous.
    Mr. Canady reported that the Judiciary Committee's 
Subcommittee on the Constitution, which he chairs, has held 
nine hearings on Federal affirmative employment programs, and 
concluded that ``it has become increasingly clear that it is 
exceptionally difficult to defend, as a matter of legal or 
moral principle, the government practice of granting 
preferences on the basis of race or sex.'' He recognized that 
the United States has a history of unequal practices, but noted 
that the Nation has made great strides toward overcoming 
racism, and contended that ``the answer . . . is not to be 
found in Federal policies that classify, sort, and divide the 
American people on the basis of their race and gender.'' He 
contended that, rather than end affirmative action, his 
proposed legislation would reaffirm the original purpose of 
affirmative action as an initiative based on outreach and 
recruitment, coupled with nondiscrimination in selection and 
contract awards.
    Ms. Norton argued that the Supreme Court has already 
addressed Mr. Canady's concerns, that the President's ``mend 
it, don't end it'' approach has weakened affirmative action, 
and that many of the problems being addressed in this hearing 
are actionable under Title VII of the Civil Rights Act. Mr. 
Canady reported that, in spite of these remedies, Federal 
agencies continue to hire and promote, and award contracts 
based on quotas, and that we should establish solid 
nondiscriminatory policies as the legal standard, rather than 
rely on the courts to act for the Congress.
    Ms. Cole reported that her clients have increasingly 
concluded that personnel decisions within their agencies are 
being made on bases other than merit, and that the remedies 
available through EEOC procedures are inadequate to resolve 
their growing dis-satisfactions within the system. In response 
to questions, she indicated that when agencies face 
discrimination complaints, they act both as adjudicators and 
those accused, inevitably resulting in conflicts of interests. 
She advocated a stronger role for mediation within the EEO 
process. Mr. Troncoso, one of Ms. Cole's clients, is a Cuban-
born immigrant who was denied promotions by the Internal 
Revenue Service [IRS] on three occasions, even though he was 
rated well-qualified every time and was the highest-rated 
applicant on two occasions. His efforts to seek redress through 
the agency's personnel procedures were rebuffed within 
personnel offices, which he characterized as defensive of 
management. He expressed concern that, even though he intended 
to make the IRS a career, he would experience retaliation as a 
result of this testimony. Mr. Drury is an air traffic control 
manager with the Federal Aviation Administration. After 26 
years of service, he was removed from his position as an 
airport tower manager as a result of pressures generated by the 
National Black Coalition of Federal Aviation Employees. He 
subsequently filed complaints through the Department of 
Transportation, but that case was not considered on its merits. 
He reported that it required 2 additional years to get his case 
to trial, where the Government's litigation strategy appeared 
to be to defeat him on legal technicalities rather than address 
the merits of the case. When the jury heard the evidence, it 
awarded $500,000 in punitive damages, an amount subsequently 
reduced by the judge to the $300,000 statutory ceiling. He 
noted that a subsequent complaint that addressed retaliation 
concerns was pending within the EEOC, and had been there for 
725 days.
    Mr. Stewart claimed that his experience as a regional 
forester in California had provided first-hand perspective 
about the ways in which discrimination undermines agency 
morale, and asserted that the Chief (Michael Dombek) had taken 
significant initiatives to eliminate discrimination in the 
Forest Service. He also noted the importance that Secretary of 
Agriculture Dan Glickman attaches to implementing his Civil 
Rights Action Team's recommendations. He noted a 37 percent 
reduction in open EEO cases as an indicator of the success of 
these efforts.
    Mr. Shaw predicted that promotions within the Federal 
service are likely to become increasingly contentious as 
downsizing continues. He reported substantial increases in the 
numbers of minorities and women holding positions in the Senior 
Executive Service, even in the face of the administration's 
efforts to reduce both SES and GS-13 to GS-15 positions. He 
reported that a 1992 survey of Senior Executive Association 
members found that 92 percent believed that employees abuse the 
complaints procedures to intimidate managers and agencies from 
taking actions against poor performers. Further, 56 percent of 
his members believe that non-legitimate complaints are filed in 
ways that deter the filing of well-founded grievances. He 
concluded that managers have little grounds for confidence in 
the current EEO system. Even when agencies settle cases, they 
do not reflect intentional discriminatory actions. He 
recommended that employees should be required to make stronger 
cases before having them processed, and that once complaints 
are recognized as meritorious, they should be heard by a single 
outside agency.
    Mr. Fonte argued that two visions of civil rights are in 
conflict. The traditional equal opportunity principles 
enshrined in civil rights laws and merit system principles have 
a different philosophical and legal foundation than the 
diversity principles being promoted recently. The diversity 
agenda, he demonstrated, rests on a theory of proportional 
representation that was rejected at the founding of the 
republic and has proved disastrous in any country that has 
attempted to implement it. He cited studies of people 
distributed in different occupations with different racial, 
ethnic, and gender compositions. Distributions reflected chosen 
avenues of opportunity rather than the result of discriminatory 
actions. He forecast that increased efforts to promote 
proportionalism would only increase dissatisfaction, because 
such a result can be realized only through heavy regulation in 
a command economy. He asserted, ``We will never arrive at a 
right percentage for all groups in all positions and at the 
same time remain a free society.'' In response to questions, he 
cited reports that, rather than an effort to redress historical 
discrimination, 75 percent of recent immigrants are eligible 
for preference programs. The difficulty with diversity programs 
is that, once numbers are defined, they trump all other 
factors, especially merit.

8. Oversight of Contracting Out Practices.

    a. Summary.--The subcommittee conducted this investigation 
to provide additional information and to address changes since 
two previous hearings on contracting out that were conducted in 
1995. In 1996, the Office of Management and Budget [OMB] 
published a revision of OMB Circular A-76, the policy document 
that establishes standards for conducting cost comparisons in 
Federal agencies. Although the subcommittee has heard charges 
that agencies have reduced budgets and converted numerous 
functions to contract in order to redesign processes and save 
money, OMB reported that the Government's expenditures on 
contracting decreased to $111.7 billion in 1996, or $2.4 
billion below 1995 levels. A hearing provided an opportunity 
for employee organizations to voice concerns about contracting 
practices.
    b. Benefits.--The investigation provided an opportunity for 
the Office of Management and Budget and Defense agencies, which 
have the greatest experience managing competition for 
government services, to introduce recent data that documents 
the reduction in service contracting since GAO's last report in 
1997. They entered into the record data demonstrating that 30 
percent aggregate savings have been realized over a 10-year 
period from contracting for services. The long-term data 
provide a useful contrast to the anecdotal evidence that 
frequently shapes the discussion.
    c. Hearings.--A hearing entitled, ``Contracting Out--
Successes and Failures'' was held October 1, 1997. This hearing 
fulfilled the chairman's commitment to employee organizations 
that they would have an opportunity to describe some of the 
difficulties that they have encountered in dealing with 
contractors who perform services for Federal agencies. 
Witnesses included Mr. Christopher Donellan, legislative 
director, National Association of Government Employees, Mr. 
James Cunningham, national president, National Federation of 
Federal Employees, Ms. Patricia Armstrong, chapter president, 
Federal Managers Association, Cherry Point, NC, Mr. G. Edward 
DeSeve, Acting Deputy Director for Management, Office of 
Management and Budget, Mr. John Goodman, Deputy Undersecretary, 
Department of Defense, and Mr. Samuel Kleinman, Center for 
Naval Analyses.
    Ms. Norton alleged that service contracting is driven by 
cost concerns alone, without adequate attention to the quality 
of work being performed. She has introduced legislation that 
would require cost comparisons, claiming that a 1994 General 
Accounting Office report concluded that agencies do not 
consistently save when they convert to contract. She has also 
sponsored legislation that would require OMB to develop an 
inventory of the number of people employed by service 
contractors, so that we could know whether, in converting 
employees, the number of people required to perform the work 
actually increased. She further proposed legislation that would 
reduce by $5.7 billion the amount of service contracting done 
by Federal agencies annually. The revenues would be directed to 
pay increases for civil servants.
    Mr. Donellan claimed that contracting out of services 
inevitably reduces support, and accused contractors of poor 
performance and dishonest practices. He cited the example of a 
laundry services contractor at Ft. Leonard Wood, MO, who 
allegedly abandoned the installation owing employees $23,000 in 
back pay and with utility bills unpaid. The company also failed 
to pay employees taxes before declaring bankruptcy. Although 
the Department of Labor will intervene, employees are slated to 
receive only 22 cents on the dollar owed to them.
    Mr. Cunningham asserted that any contracting out should be 
done only if all Circular A-76 procedures are followed, only if 
it can be demonstrated that there will be no decline in work 
quality, that a significant cost savings will be realized 
through the life of the contract, and that the contractor will 
be monitored extensively to prevent abuses. He reported that 
members' requests for assistance in addressing issues related 
to contracting have increased tenfold in the past year, notably 
within the Department of Defense. He cited an example of a 
service contract for maintenance of Navy airplanes that 
purportedly places limits on the amount of rust required to be 
removed from bolts on airplanes, resulting in contractors' work 
failing to pass quality inspections. Federal employees wind up 
having to complete the work.
    Ms. Armstrong reported that Congress wants to contract out 
$1 billion of the Navy work currently performed at the Cherry 
Point, NC, depot. She averred that under the revised Circular 
A-76, Federal managers have lost discretion to supplement their 
efforts with Federal employees; complete functions must be 
contracted. She noted that the Department of the Navy has 
40,000 positions currently under review, and plans to review 
80,000 positions over the next 5 years. Savings of $1.4 billion 
that will result from these cost comparisons have already been 
projected into future agency budgets. She also claimed that the 
Department of Defense is not able to monitor contracts 
adequately, resulting in overpayments and duplicate payments 
that are costly to taxpayers. She also observed that contract 
employees are allowed to strike, an option that is not 
available to Government employees. She cited a recent strike 
against the McDonnell-Douglas aircraft manufacturing division 
as one where contractor strikes allegedly affected Federal 
operations. She contended that competition, rather than 
contracting, is the key to savings, and that Federal employees 
have competed successfully for major contract awards.
    Mr. DeSeve testified that the administration is 
incorporating competition into budget as part of its efforts to 
improve service delivery. Contracting is merely one element of 
the endeavor to improve the business practices of Government 
agencies to achieve effective operations in the context of a 
balanced budget. He stated that the goal is not simply to 
contract for more services, but to optimize the use of both 
private and public resources by selecting the most cost-
effective providers. He declared, ``We have no evidence that 
suggests that contractors are reducing their costs or otherwise 
developing an unfair competitive advantage by reducing pay and 
benefits to their employees.'' He cited the Clinger-Cohen Act 
as one of the legislative improvements that enable agencies to 
make more effective and efficient use of the marketplace. He 
noted that the administration opposed the Freedom from 
Government Competition Act (H.R. 716), which it views as 
unnecessarily restricting Federal employees from competing when 
contracts are under consideration. He also opposed H.R. 885, 
which would prohibit agencies from contracting when Federal 
employees can provide services at a lower cost, describing the 
bill as ``unnecessary and administratively burdensome.'' He 
opposed legislation that would reduce contracting funds to pay 
for a Federal employee pay increase, commenting, ``Reducing 
contract dollars without regard to the disruption of service 
requirements or the competitive costs of services could lead to 
significant inefficiencies and limit an agency's ability to 
respond to changing conditions, emergencies, and other 
requirements.''
    Mr. Goodman affirmed that the Department of Defense must 
improve the performance and reduce the costs of support 
provided to the Nation's fighting forces. The Quadrennial 
Defense Review forecast that the Nation is likely to require 
more agile fighting forces in the future, and that maintaining 
those forces will require increased capital expenditures on 
weapons systems. In the absence of funding increases, 
productivity efficiencies are essential. Contracting is merely 
one element of a broad array of efforts to achieve that 
objective. He noted improvements in the Defense Logistics 
Agency's efforts to provide more direct shipments of goods 
acquired from private manufacturers, resulting in substantial 
improvements in force readiness. He described the Department's 
approach as ``a clear and measured approach of introducing 
competition into our support activities,'' rather than 
wholesale outsourcing. The Department saves more than $1.5 
billion annually as a result of 2,000 competitions conducted 
between 1978 and 1994, and claimed that competitions reduce 
costs by an average of 30 percent, regardless of whether 
private contractors or public employees win. Half of the 
competitions did not result in outsourcing. He noted that the 
General Accounting Office had confirmed these findings in a 
March 1997 report. He noted several recent competitions that 
did bring functions in-house after contractors lost to teams of 
Federal employees. He emphasized the continuing partnership 
with the Department's workforce, and described placement 
efforts associated with workforce reductions.
    Mr. Kleinman noted that the Defense Department's review of 
competitions showed that savings averaged 20 percent when 
functions are retained in-house, and 40 percent when they are 
converted to private contractors. These figures include the 3 
to 10 percent of costs required to monitor contractors' 
performance. He attributed these savings to the efficiencies 
resulting from competition. Although Federal employees have 
right of first refusal to positions with contractors, most 
prefer to remain with the Government, and only 3 percent accept 
contractors' offers of employment. He refuted assertions that 
costs increase after contracts are awarded, noting that the 
functions are subject to recompetition, and that there are 
always additional bidders eager for the business if costs rise. 
He acknowledged a couple of defaults, but reported that in most 
cases costs were contained and quality maintained.
    In response to questions, Mr. DeSeve emphasized that the 
important information needed to assess performance is data 
about the costs of production and the level of services 
provided. He asserted that he does not need to know the number 
of employees working on any particular contract, and that he 
would not have any use for the information if it were 
collected. He pointed out that, in many cases, the important 
factor is the method of providing services, a concern that 
frequently requires differing technologies rather than 
additional people. He noted that, when OPM eliminated its 
training workforce, it resulted in no significant change in 
training for Federal employees. He also observed that the 
change to contract investigations has resulted in sustained 
quality and the creation of a successful new business.

9. Review of Premiums Under the Federal Employees Health Benefits 
        Program [FEHBP].

    a. Summary.--Approximately 9 million Federal employees and 
retirees and their dependents obtain health insurance through 
the FEHBP. Following 5 years of relative stability in FEHBP 
premiums, including 2 years in which average premiums declined, 
OPM announced that 1998 premiums would increase by an average 
of 8.5 percent. The subcommittee conducted an investigation to 
examine the factors contributing to these increases.
    The subcommittee's examination revealed that the 8.5 
percent average premium increase masked wide variations in 
individual plan experiences. The employees' share of the 
premium increased, on average, by 15.4 percent. While premiums 
for a number of plans remained unchanged or actually decreased, 
the total premium for two employee-organization plans rose over 
20 percent, causing the employees' share to soar as much as 75 
percent.
    b. Benefits.--The subcommittee determined that the 
increases generally reflected rising health care costs and 
decreased plan reserves. Although the most recent Government 
mandates did not appear to add appreciably to the 1998 
increases, the subcommittee was warned that government-imposed 
mandates drive up costs and can contribute to significant 
increases in future premiums. For example, Blue Cross-Blue 
Shield testified that the cumulative effect of the 27 mandates 
imposed by OPM since 1990 was to increase its 1998 premiums by 
about $100 million. Likewise, the subcommittee learned that 
Maryland-based HMOs have been placed at a competitive 
disadvantage in the National Capital Area because State-
mandated benefits have driven up their premiums. The increased 
costs caused by mandates are, of course, borne by the employees 
and retirees who participate in the FEHBP and by the taxpayers. 
The subcommittee was also cautioned against overregulation of 
FEHBP premiums.
    The subcommittee's investigation also demonstrated that 
employees would have paid less for health insurance if either 
the ``Fair Share Formula,'' enacted in the Balanced Budget Act 
of 1997, or the ``Fixed Dollar Formula'' proposed by 
Subcommittee Chairman Mica in 1995 had been in effect. Under 
the ``Fair Share Formula,'' the average employees' share would 
have risen by 10 percent rather than 15.4 percent; the increase 
under the ``Fixed Dollar Formula'' would have been only 11.6 
percent.
    c. Hearings.--A hearing entitled, ``FEHB Rate Hikes--What's 
Behind Them'' was held October 8, 1997.

10. Suspension of Affirmative Action at the IRS.

    a. Summary.--In a May 1997, decision in Byrd v. Rubin, a 
U.S. District Court for the Western District of Louisiana ruled 
that the Internal Revenue Service's affirmative employment 
program was unconstitutional because it could not meet the 
strict scrutiny standards that the Supreme Court determined to 
be appropriate in Adarand Construction v. Pena. Rather than 
contest the Byrd case on its merits, the Government settled the 
case with Mr. Byrd and his three fellow plaintiffs. As was 
reported in previous subcommittee hearings on employment 
discrimination, that settlement included a nondisclosure 
agreement which cloaked the terms of the settlement from 
congressional oversight. The Department of Justice secured a 
modification of the settlement agreement that permitted 
informing Congress of the terms of the settlement, but 
redacting the amount of compensation paid to the litigants. On 
August 19, 2 days before the settlement agreement was signed, 
acting IRS Commissioner Michael Dolan issued a memorandum 
suspending two elements of employees' performance appraisals 
and two elements of the agency's business plan so that those 
elements could be revised to comply with constitutional 
requirements. On September 22, IRS' National Personnel 
Director, Mr. James O'Malley (who accompanied Mr. Fowler to the 
hearing) issued a memorandum revising the standards that had 
been suspended the previous month.
    The IRS had been identified in both of the subcommittee's 
previous hearings on employment discrimination in the Federal 
workforce. Although the Office of Personnel Management has 
responsibility for governmentwide personnel policies, the IRS 
testified that it had not consulted with OPM in acting to 
address its affirmative employment program. IRS also stated 
that it had consulted with the Department of Justice, which 
issued guidance to Federal agencies on compliance with Adarand 
on February 29, 1996. Justice not only had initiated legal 
guidance in the area, but it would also have responsibility for 
defending any modified standards in subsequent litigation. IRS 
reported that its workforce is 67 percent female and 35 percent 
minority, so continued application of affirmative employment 
standards raised questions about whether the agency was 
applying ``diversity'' criteria improperly.
    b. Benefits.--This investigation continued the 
subcommittee's efforts to understand the full effects of race 
and gender preferences in Federal human resource management 
operations. The IRS faces continuing scrutiny because of abuses 
of taxpayers and employees documented in recent reports, and 
reflects several challenges facing all Federal agencies in 
their efforts to ``mend'' affirmative employment practices 
consistent with the Department of Justice's guidelines issued 
after the Adarand v. Pena decision. The hearing provided the 
foundation for additional oversight activities that will be 
continued in the next session.
    c. Hearings.--A hearing entitled, ``IRS' Suspension of Its 
Affirmative Action Program'' was held on October 28, 1997. The 
witness testifying at the hearing was Mr. Charles D. Fowler, 
National Director, Equal Employment Opportunity and Diversity 
Program, Internal Revenue Service.
    Subcommittee Chairman Mica affirmed in his opening 
statement that the subcommittee has a responsibility to ensure 
that important issues of public policy are not being decided 
through settlement agreements that are not subject to 
congressional review. He also emphasized the importance of 
ensuring that every Federal employee is hired, evaluated, and 
terminated on an equitable basis.
    Mr. Cummings was reassured by the IRS' implementation of 
revised performance elements and its renewal of its commitment 
to affirmative action.
    Ms. Norton stressed the importance of implementing 
affirmative action programs consistent with the law, and 
observed that Title VII of the Civil Rights Act of 1964 favors 
settlements over litigation. She believes that consistency is 
important so that agencies are not vulnerable to litigation 
based on any perceived inconsistencies.
    Mr. Charles Fowler, who was accompanied by Mr. Dennis 
Ferrara of the General Counsel's office and Mr. James O'Malley, 
the IRS' National Personnel Director, had emphasized the 
principle of equitable treatment for all employees as a way of 
doing business since assuming his responsibilities (within 6 
weeks before this hearing). He claimed that the Service remains 
committed to both its diversity program and the concept of 
equitable treatment of all its employees. In response to 
questions, he expressed hope that the revised standards would 
encourage agency managers not to undertake actions that might 
be in violation of the law. The September 22, 1997, memo 
eliminated language included in previous standards that might 
have been interpreted as approving numerical targets. He added 
that the performance elements in place are temporary and 
subject to revision as the agency develops better ways to 
describe its managers' appropriate responsibilities.
    Mr. Fowler asserted that the agency has no numerical goals 
at present, and even the document on managing the workforce 
that had been a source of concern in the Byrd case, ERR-16, 
concentrated on positions of national level. Mr. Fowler 
indicated that outreach strategies would be used to address 
concerns about the diversity of upper management in the agency.
    Mr. Cummings indicated that he had encountered criticisms 
that the IRS was acting without adequate explanation of its 
decisions in selecting personnel for ``acting'' and 
``developmental'' assignments. These are opportunities that 
employees consider important in terms of career development. 
Mr. Fowler responded that review of these selections is an 
important element of his efforts in this position. He also 
added that he would make appropriate contacts with OPM and EEOC 
to endeavor to develop a consistent strategy to the concerns 
raised about these programs.

11. The Merits of Holding a CSRS to FERS Open Season.

    a. Summary.--The Treasury-Postal and General Government 
Appropriations Act of 1997 (Public Law 105-61) included a 
provision that would have allowed civil servants enrolled in 
the Civil Service Retirement System [CSRS] to switch their 
enrollment to the Federal Employees Retirement System [FERS]. 
Section 642 of the law would have authorized an open season 
between July 1 and December 31, 1998. This provision, however, 
was the subject of an item veto exercised by President Clinton 
on October 16, 1997. Mr. Mica reported that the item, with 
costs estimated at $2.1 billion over 5 years, was the single 
largest item veto exercised by the President to date. In 
vetoing this provision, the President had noted that the 
provision was introduced by the Senate during conference, and 
that the measure had not had adequate opportunity for hearings 
and public discussion.
    b. Benefits.--This investigation provided an opportunity 
for the subcommittee to review the President's use of the item 
veto on the measure having the largest cost and potential 
impact on Federal employees. It enabled a comparison of 
different bases of estimating the cost of this action, and 
dispelled impressions that an open season allowing for 
additional numbers of employees to shift from CSRS to FERS 
might provide a method of reducing the Government's long-term 
pension obligations under the older Federal retirement system.
    c. Hearings.--A hearing entitled, ``CSRS-FERS Open Season--
What are the Merits?'' was held on November 5, 1997. Witnesses 
included William E. Flynn, Associate Director, Retirement and 
Insurance Services, Office of Personnel Management, Michael 
Brostek, Associate Director, Federal Workforce and Management 
Issues, General Accounting Office, and Paul Van de Water, 
Assistant Director, Budget Analysis Division, Congressional 
Budget Office.
    As chairman of the authorizing subcommittee, Mr. Mica 
called the hearing to examine the merits of the issue and 
consider the appropriateness of enacting separate authorizing 
legislation. Federal employees had an opportunity to switch 
their enrollment into the newer retirement system when FERS was 
established in 1987. At the time, only 4 percent of the 
eligible employees took advantage of the open season to switch 
enrollment, although the Congressional Budget Office had 
estimated that approximately 10 percent of CSRS employees would 
do so. With 10 years' experience in the Thrift Savings Plan, 
supporters of the open season believe that a different dynamic 
might affect employees' decisions about retirement enrollment. 
Mr. Mica noted that the unfunded liability of the Civil Service 
Retirement and Disability Fund had increased during the 
previous 2 years, and that those obligations now constitute the 
fourth largest government debt being transferred to future 
generations. He also noted that, in light of the difficulties 
that the Office of Personnel Management [OPM] encountered 
managing the previous transition, and the importance of 
correcting enrollment mistakes already in the system, that the 
agency might have difficulty administering another open season.
    Mr. William E. Flynn of OPM testified that the 
administration had estimated that approximately 5 percent of 
the eligible employees, or about 60,000 individuals, would 
switch if an open season were held during 1998. He indicated 
that employees interested in switching might delay normal 
retirements to gain exemption from Government pension offset 
and windfall elimination provisions of Social Security law, and 
that agencies with unique demographic mixes might experience 
some human resource management challenges as a consequence of 
the new incentives that would be provided to employees. He 
estimated that the transfers would reduce the CSRDF's net 
actuarial unfunded liability by less than $2 billion, but when 
added costs for FERS funding and Thrift Savings Plan [TSP] 
contributions are included, the result would probably increase 
the long term costs to the Government. He stressed that many 
factors could affect individual decisions about retirement 
system enrollment, so that there are no sure methods of 
projecting the level of interest in such an open season.
    Mr. Michael Brostek of the General Accounting Office noted 
that participation in the TSP has risen substantially since its 
inception, and that more than half of lower-graded employees 
and nearly all higher-grade employees now participate. By 
transferring from CSRS to FERS, employees would become eligible 
for matching funds for current contributions, a factor that 
could increase incentives to enter the newer system at 
considerable cost to the Government. Agencies' retirement costs 
would increase for each employee who transferred to FERS. GAO 
provided estimates that the additional costs of such transfers 
could be projected at a rate of $32 million per year for each 1 
percent of the Federal workforce that switched to the newer 
system.
    Mr. Paul Van de Water of the Congressional Budget Office 
[CBO] reported that his agency had estimated that only 1 
percent of the CSRS employees would switch to the new system if 
provided another open season. This projection was based upon 
previous experience, adjusted for the reduced portion of the 
Federal workforce that remains in CSRS. CBO projected that 
these switches would raise net Federal costs by $250 million 
over the next 10 years, with most of the additional expense 
attributable to increased agency payments to the TSP accounts 
of employees. He indicated that employees who had already 
reached the maximum CSRS benefit would benefit from such a 
switch, as would employees with minimal CSRS coverage who would 
desire to avoid public pension offset provisions of the Social 
Security law. Both groups would impose additional costs on the 
Government.
    Mr. Brostek indicated that differences between the cost of 
living adjustment provisions in CSRS and FERS contribute to the 
continuing escalation of CSRS projected costs. Mr. Van de Water 
emphasized that, despite differences in details, all three 
projections indicated that the open season would cost 
Government in the aggregate. He added, that when each of the 
estimating models use comparable assumptions to project future 
costs, they reach similar conclusions. Given the difficulties 
of projecting switch rates, these variations are inevitable.

12. Medical Savings Accounts [MSAs] in the FEHBP.

    a. Summary.--The subcommittee examined adding Medical 
Savings Accounts [MSAs] as another option for Federal employees 
in the FEHB Program. In 1997 and 1998, Federal employees 
experienced back to back increases in their share of health 
care premiums of 12.5 percent and an estimated 7.4 percent, 
respectively. Such premium hikes make it increasingly difficult 
for many Federal employees and annuitants to obtain affordable 
health care.
    MSAs offer the promise of providing a low cost option that 
places the power to make health care decisions in the hands of 
patients and their doctors rather than insurance companies or 
government bureaucrats. MSAs combine a savings account to cover 
out-of-pocket medical expenses, such as routine and preventive 
care, with a higher deductible insurance plan to cover major 
medical expenses. MSAs also have the additional benefit of 
being completely portable. In contrast to standard employer-
paid health insurance, MSAs follow the individual regardless of 
changes in his employment status. In addition, funds in MSA 
accounts can be used to purchase medical insurance during 
lapses in employment. MSAs also promote increased personal 
savings. If an individual does not have to spend their MSA 
assets on medical expenses, those funds remain available for 
future medical expenses or their retirement savings.
    b. Benefits.--The subcommittee's examination of MSAs in the 
FEHB revealed widespread support for offering Federal employees 
the MSA option as part of their FEHB coverage. The approval was 
reflected in the testimony of several witnesses at the 
subcommittee's field hearing on the subject. Offering support 
for the inclusion of the MSA option in the FEHB were members of 
the political, legal, medical, financial, and marketing 
communities. These hearings also were helpful to the 
subcommittee in developing and reviewing MSA proposals in 
consultation with the Republican health care task force.
    c. Hearings.--A field hearing, ``Medical Savings Accounts 
[MSAs] in the FEHBP'' was held in Ft. Monmouth, NJ, on March 9, 
1998. The hearing was called to examine the possibility of 
offering MSAs to those Federal employees who participate in the 
FEHB Program.
    Mayor Bret Schundler of Jersey City, NJ, described his 
city's experience with MSAs. In 1994, Jersey City offered MSAs 
to its managers, becoming the first governmental entity in the 
United States to make them available to its employees. Jersey 
City set out to prove that MSAs would be less expensive than 
traditional low-deductible indemnity plans, while providing 
superior health coverage for employees. He testified that 4 
years later, he is confident that MSAs were successful, both in 
terms of cost concerns and employee satisfaction. Mayor 
Schundler also testified that Jersey City did not experience 
adverse selection among the segment of the workforce eligible 
for MSAs. However, Jersey City's overall workforce, including 
those not eligible for MSAs is disproportionately older, and 
therefore more expensive to insure as an isolated group than as 
part of a larger pool. As a result, he was forced to place his 
entire workforce, including the segment eligible for MSAs, in 
the New Jersey State health insurance program, which does not 
offer MSAs. Mayor Schundler testified that, based on his 
experience with MSAs, he will work to persuade the State to 
offer them through its program.
    Three physicians also testified in support of MSAs at the 
hearing. They all emphasized that MSAs offer patients the most 
control over their own health care decisions and the selection 
of their own doctors. Both Drs. Alieta Eck, a physician as well 
as a health care consumer, and Sidney Goldfarb, a urologist in 
private practice, stressed that MSAs promote preventive care 
and early detection, where greater impact can be made on health 
care. Dr. Goldfarb also testified that he chose an MSA for his 
own family's personal health care insurance because he was able 
to save a net of 75 percent of his health insurance premium. 
Dr. Joseph Cauda, a surgeon, observed that MSAs would aid lower 
income families in gaining access to better and more complete 
health care.
    Ms. Madeline Cosman testified as to the legal benefits of 
MSAs. Ms. Cosman, an attorney, has been practicing medical law 
for 33 years. Ms. Cosman stated that among the major legal 
advantages to MSAs were the avoidance of capitation, the 
avoidance of community ratings, the avoidance of violating 
confidentiality, and the avoidance of any third party 
definition of medically-necessary treatment. Advantages like 
these, according to Ms. Cosman, allow a person of any age or 
any degree of health to earn a fair amount of money if they do 
not use the entire amount in their MSA, as is the case with 
IRAs. Ms. Cosman went on to note that even a person who is ill 
with a serious chronic disease, while perhaps not able to turn 
a profit, would likely come out ahead financially under an MSA 
by not having to pay the copayments which are customary in 
first dollar indemnity plans.
    Mr. William Raab, vice president of marketing, Anthem 
Health and Life Insurance Co., which introduced their MSA 
product to their sales force in March 1997, testified that MSA 
sales have risen steadily for his company. He added that the 
tax advantages offered by MSAs have helped to make consumers 
receptive.
    Ms. Janine Kenna, the associate manager for product 
development at Merill Lynch, testified that the MSA concept is 
one of the most exciting and innovating developments in recent 
years from both the health policy and savings perspective. She 
added that her clients have informed her that the two most 
important factors that led them to establish MSAs were the 
ability to control their choice of doctors and the ability to 
use funds that are not used for medical expenses to supplement 
their retirement savings. In a March 17, 1998 letter to the 
subcommittee, Ms. Kenna pointed out that the average age of 
Merill Lynch MSA account holders is 46, and that the highest 
account holder age concentration is between 46 and 50 years 
old, which includes 19 percent of the total client base. The 
next highest account holder age concentration is the 51-55 age 
range, which includes 17 percent of account holders. These 
statistics seem to rebut the adverse selection argument, which 
holds that MSA accounts are only being taken on by the young 
and healthy.
    Two individuals representing the National Association of 
Retired Federal Employees [NARFE], testified. Both reaffirmed 
NARFE's opposition to MSAs in the FEHB. Mr. Benjamin Collier 
asserted that NARFE's opposition stems from the fear that MSAs 
will attract only the healthy persons. He speculated that their 
defection from other FEHB plans could possibly force insurance 
carriers to cut benefits, raise premiums, or both. Mr. Frank 
Bee, legislative director, New Jersey Federation of NARFE, said 
he could see no benefit to be gained by introducing MSAs into 
the FEHB because most people are content with their FEHB plans.

13. FEHBP: Program Guidance for 1999.

    a. Summary.--OPM administers the FEHBP, negotiating rates 
and benefit packages with participating carriers and providers. 
Each year it issues a ``call letter'' that outlines its 
objectives for the next contract year, including benefits or 
coverages it will require of all carriers. OPM's policies 
obviously can affect the premiums for FEHBP plans. In light of 
the dramatic increases in FEHBP premiums for 1998, the 
subcommittee examined the policies OPM proposed for 1999.
    b. Benefits.--The subcommittee's examination disclosed that 
OPM's mandates have imposed significant costs on FEHBP carriers 
for very little benefit and have reduced the flexibility 
carriers need to develop innovative benefit designs that 
provide quality health care coverage at reasonable prices.
    c. Hearings.--A hearing entitled, ``Federal Employee Health 
Benefits: OPM Program Guidance for 1999,'' was held on March 
17, 1998. Witnesses at the hearing were William E. Flynn, III, 
Associate Director of Retirement and Insurance Services, OPM; 
Stephen W. Gammarino, senior vice president, Federal Employee 
Program, BlueCross BlueShield Association; and Walton J. 
Francis, a consultant and author of the ``Checkbook's Guide to 
Health Insurance Plans for Federal Employees.''
    Subcommittee Chairman Mica emphasized that the FEHBP, which 
is often cited as a model employer-sponsored health benefits 
program, succeeds because of its market orientation. The 
program relies on the market forces of competition and consumer 
choice to ensure both competitive premiums and quality 
coverage. He pointed out that in recent years OPM has used its 
call letter to mandate specific benefits and, in the view of 
many, has been standardizing FEHBP benefits. He also pointed 
out that the President has directed OPM to implement certain 
provisions of the so-called patient's bill of rights in the 
FEHBP. These developments, he said, are of great concern to the 
subcommittee.
    Mr. Flynn testified that OPM's mandates have added little 
to the program's cost. The FEHBP, he also testified, was 
already in substantial compliance with the President's 
``patient's bill of rights'' and, therefore, anticipated that 
implementing it would not greatly increase premiums. However, 
he also testified that implementing that program would cost 
$32.5 million per year, more than half of which, $17.5 million, 
is attributable to its information disclosure requirements. The 
rest is divided about equally between requirements for 
continuity of coverage and access to specialists. In addition, 
he testified that OPM would require plans to cover 
pharmacotherapy benefits as a general medical benefit, which he 
estimated would cost between $8-10 million.
    Mr. Gammarino testified that BlueCross BlueShield plans 
cover about 3.6 million lives under 1.9 million contracts. He 
expressed concern over the information disclosure requirements 
OPM will require, noting that they were drawn to address 
problems created by products involving tightly-controlled 
networks of providers, such as HMOs. On the other hand, 
BlueCross BlueShield's network is very large, including more 
than 400,000 providers. He pointed out that collecting such 
information as languages spoken, office hours, and 
accessibility to the handicapped on so many providers would be 
costly and nearly impossible to keep current. Moreover, it 
would add little value since consumers can already obtain that 
information quickly and efficiently by directly contacting 
specific practitioners in the company's directory they may be 
interested in. Mr. Gammarino also stated that OPM's increased 
mandates and regulation of FEHBP plans threaten the very 
attributes that make the FEHBP so successful because they 
reduce flexibility, increase costs, and reduce competition. He 
pointed out that OPM and congressional mandates through the 
1990's have added about $100 million per year to BlueCross 
BlueShield's program costs. In his view, the long-range 
integrity and stability of the FEHBP depend upon allowing 
carriers to offer enrollees a variety of genuinely different 
products to choose from and providing a level playing field for 
all competitors.
    Mr. Francis testified that one of the strengths of the 
FEHBP is that it allows consumers real choices between plans 
with different benefits. He contrasted the FEHBP to some plans, 
notably the CALPERS program in California, in which benefits 
are standardized. Such standardization, he argues, eliminates a 
major dimension of consumer choice. Mr. Francis stated that the 
FEHBP is preeminent in providing good information to consumers 
because OPM has insisted that brochures are written in plain 
English and the information is provided in consistent formats. 
In his view, while some additional important information could 
be provided, such as numbers of participating providers in the 
case of HMOs, it is also possible to overload consumers with 
information of little value. He also expressed concern that the 
President's ``patient's bill of rights'' is not very carefully 
constructed. While it contains some excellent standards, he 
believes others, such as the 90-day continuity rule, will 
create incalculable problems in the real world. He also stated 
that requiring information on handicap accessibility could lead 
to some very costly requirements. However, he believed OPM 
would interpret the ``patient's bill of rights'' responsibly. 
Mr. Francis also identified innovations the FEHBP could accept 
in the future. These included permitting military retirees and 
military families to enroll, allowing more national fee-for-
service plans to compete, and adding medical savings accounts.

14. Long Term Care Insurance for Federal Employees.

    a. Summary.--Long-term care [LTC] refers to a broad range 
of supportive, medical, personal, and social services for 
individuals who are limited in their ability to function 
independently on a daily basis. Long-term services can be 
provided in a nursing home, an assisted living facility, the 
community or in the home. Increased life expectancy and the 
aging of the baby boom generation (people born between 1946 and 
1964) will bring rapid growth in the number of people at risk 
of needing LTC.
    Most people believe that they are covered for long-term 
care by their health care plans, disability insurance, or by 
Medicare. Unfortunately, many learn the hard way--when they or 
a family member needs care--that they are not sufficiently 
covered and must pay for long-term care on their own. According 
to the American Council of Life Insurance Policy Research 
Department, by 2030, the average annual cost of a nursing home 
stay will increase from $40,000 today to more than $97,000 (in 
1997 dollars).
    Employer-based plans represent the fastest growing market 
for long-term care insurance. These plans are generally 
available to the employer's employees, their spouses, parents, 
parents-in-law, and retirees on a beneficiary-pay-all basis.
    Federal employees have expressed a significant interest in 
being offered an option to purchase long-term care insurance. 
In one of its routine customer feedback surveys randomly 
distributed to Federal employees from January through March 
1997, the Office of Personnel Management [OPM] included 
questions regarding long-term care insurance. In response to 
the survey, approximately 86 percent of Federal employees 
expressed an interest in long-term care insurance.
    Chairman Mica conducted a hearing on the issue of providing 
long-term care insurance as an employee benefit. The purpose of 
the hearing was to collect information on long-term care 
insurance, examine how private sector employers are addressing 
their employees' long-term care needs, and to make an informed 
decision about how to give Federal employees access to this 
benefit.
    Subsequent to the hearing, Chairman Mica introduced H.R. 
4401, the Civil Service Long-Term Care Insurance Benefit Act. 
This legislation directs OPM to establish and administer a 
program through which Federal employees and annuitants may 
purchase group or individual long-term care insurance for 
themselves, their spouses, and any other eligible relative 
beginning January 2000.
    b. Benefits.--Long-term care is expensive. The vast 
majority of families are unprepared to shoulder the cost of 
long-term care, deplete hard-earned assets, and eventually 
depend on Medicaid to pay the costs of long term care. Long-
term care insurance provides protection from these catastrophic 
financial risks and reduces reliance on Medicaid. As a 
significant employer in America, the Federal Government can 
reach over 2.8 million workers and an additional 2.1 million 
retirees and survivors. Competition among carriers, group 
discounts, and volumes of sales will keep premiums affordable 
for Federal employees. Additionally, by offering long-term care 
insurance to individuals in their working years, the Federal 
Government can help encourage the purchase of this product at 
younger ages, when premiums are lower.
    c. Hearings.--On March 26, 1998, Chairman Mica conducted a 
hearing entitled, ``Long-Term Care Insurance as an Employment 
Benefit'' to examine the feasibility of offering long-term care 
insurance to Federal employees. The chairman stated that making 
affordable long-term insurance available to Federal employees 
would help Federal employees plan for financing long-term care 
services and to avoid severe financial hardships in their 
future. The chairman also noted that offering this employment 
benefit would keep the government competitive with private-
sector compensation practices.
    Two panels presented testimony to the subcommittee. The 
first panel consisted of representatives from the industry, the 
National Association of Retired Federal Employees [NARFE], and 
the Employee Benefit Research Institute [EBRI].
    David Martin testified on behalf of the American Council of 
Life Insurance [ACLI]. Mr. Martin stated that by the year 2030, 
it is estimated that the number of elderly persons will double 
from 35 million to nearly 70 million. He further noted that the 
elderly population is most likely to need long term care 
services.
    Mr. Martin also testified that private long-term care 
insurance can play an important role in financing long-term 
care and providing for a secure retirement. He stressed that 
relying on savings to pay for long-term care needs is not a 
financially feasible option for most middle-income Americans.
    Data that he presented to the committee revealed that 
lifetime assets needed at age 85 to pay for 2 years of nursing 
home care with an inflation protection of 5 percent for a 45 
year old today would be $489,446 (2030 dollars). In contrast, 
if that same 45 year old purchased private long-term care 
insurance such person would contribute about $417 in annual 
premiums and a lifetime value of premiums of $57,907. Lifetime 
savings from long-term care insurance would be $431,539.
    Mr. Martin also presented a chart that showed that a 2-year 
policy for an individual between the ages of 45-49 would cost 
approximately $500 annually or $19 per pay period. A 5-year 
policy would cost about $734 annually or $28 per pay period.
    Further, Mr. Martin's written testimony referred to an ACLI 
study that showed that private insurance can also address the 
Nation's long-term care needs in the future. For example, if 
workers between the age of 34 to 52 purchased long-term care 
insurance, the share of nursing home expenditures paid for by 
private insurance could increase from 3 percent today to 29 
percent in 2030. Accordingly, the Medicaid program could save 
$28 billion (in 1996 dollars) or 21 percent of total Medicaid 
nursing home expenditures. Similarly, about 40 percent of 
individual ``out of pocket'' nursing home costs could be saved 
by the increased ownership of long-term care insurance.
    Testifying on behalf of the Health Insurance Association of 
America [HIAA], Mr. David Brenerman stated that long-term care 
is the largest unfunded liability facing Americans today. Mr. 
Brenerman told the committee that annual nursing home costs 
average over $41,000 today and are estimated to increase to 
about $100,000 (in 1996 dollars) by the year 2030. He noted 
that rather than pooling risks, the current system for long-
term care places each household on its own to deplete its 
household resources at which time Medicaid then becomes the 
payer of last resort.
    However, Mr. Brenerman did state that the long-term care 
insurance market is growing. Of particular significance, Mr. 
Brenerman noted that the employer-sponsored market comprises 
about 14 percent of the approximately 5 million long-term care 
insurance policies that have been sold.
    Mr. Brenerman emphasized that offering Federal employees 
long-term care insurance would signal Federal Government 
support for encouraging personal responsibility and planning 
for long-term care through avenues such as long-term care 
insurance. Additionally, he noted that the sheer size of the 
Federal Government would assure an immediate and heightened 
awareness of long-term care financing issues among working 
adults. Mr. Brenerman stressed that since the Federal active 
employee population is large and considered to be a relatively 
young and healthy group, the administrative and marketing costs 
would be less, premiums lower, and underwriting minimized.
    Paul Fronstin testified on behalf of the Employee Benefit 
Research Institute [EBRI]. Mr. Fronstin reiterated that 
increased life expectancy and the aging of the baby boom 
generation will bring rapid growth in the number of people at 
risk of needing long-term care [LTC]. Mr. Fronstin stated that 
although the chances of having extended long-term care needs 
are small, the cost of such needs are extremely high. He noted 
that only a small portion of those who can afford long-term 
care insurance have purchased it. Further, he emphasized that 
others may lack information on the probability of needing long-
term care, may mistakenly believe that they are already covered 
by Medicare, self-insurance or disability insurance, or are 
relying on Medicaid to cover long-term care.
    Mr. Fronstin noted that individually purchased long-term 
care insurance as well as employment-based plans will increase. 
However, he stressed that barriers to expansion exist. 
According to Mr. Fronstin, the largest barrier to the expansion 
of the long-term care insurance market is the lack of public 
readiness to use assets to insure against the relatively low 
probability of need. He emphasized that public education is 
very much needed.
    Charles Jackson testified on behalf of the National 
Association of Retired Federal Employees [NARFE]. Mr. Jackson 
cited a statistic showing that half of all women and a third of 
men over 65 years of age are likely to spend some time in a 
nursing home at a cost of over $40,000 a year. He noted that 
based on these statistics NARFE members have an interest in 
long-term care insurance.
    Mr. Jackson stressed that long-term care insurance must be 
available to Federal annuitants as well as active employees. 
Further, he stated that long-term care insurance offered to 
Federal employees must provide cheaper premiums and better 
coverage than employees or annuitants could buy on their own.
    Mr. Jackson also emphasized that insurance carriers must 
have reasonable standards for making enrollees eligible for 
long-term care benefits, include flexibility, provide plan 
portability, and ensure that enough individuals enroll in a 
plan to provide a satisfactory risk pool.
    Mr. Jackson also expressed concern that cognitive disorders 
such as Alzheimer's disease are excluded in coverage. However, 
in response to a question later posed regarding this matter, 
Mr. Brenerman stated that about 80 percent of long-term care 
insurance policies cover cognitive impairment, including 
Alzheimer's disease.
    The second panel consisted of Ed Flynn testifying on behalf 
of the Office of Personnel Management [OPM] and Bob Williams 
testifying for the Department of Health & Human Services [HHS].
    Mr. Flynn stated that one of OPM's strategic goals is the 
establishment of a modernized performance-oriented total 
compensation system that includes a competitive benefits 
package for Federal employees. He stated that the idea of a 
Federal employee long-term care program should be revisited as 
part of this effort.
    Mr. Flynn also testified that OPM was engaged in two 
ongoing studies regarding long-term care insurance, one of 
which commenced in 1995, and the other in 1996. Under 
questioning by Chairman Mica, Mr. Flynn could not give an exact 
date of when these studies would be completed and the results 
available. However, he did anticipate that results would be 
accessible sometime in 1998. Mr. Williams later responded that 
findings from the other study should be available during the 
fall or winter. However, he noted that such findings must be 
cleared by the Office of Management and Budget prior to their 
release.
    Chairman Mica also asked Mr. Flynn whether it would be 
possible to establish a competitive long-term care insurance 
program for Federal employees within 6 months to a year. Mr. 
Flynn responded that the chairman's timetable was not 
unrealistic. When further questioned as to whether OPM could 
make this benefit option available to Federal employees by 
December 31, 1999, Mr. Flynn said that OPM would move forward 
with such a proposal if agreement was reached between Congress 
and the administration. However, he stressed while OPM 
recognizes the importance of providing for long-term care needs 
of individuals, OPM would have to review a specific proposal 
before taking a position on it.
    Mr. Williams said that HHS believes that policymakers must 
begin planning for the social and economic implications of 
population aging, particularly the increased demand for long-
term assistance for those with chronic illness and disability. 
He noted that long-term care can be a significant economic and 
emotional burden. He further stated that long-term care 
insurance can help protect against the high cost of nursing 
home care. Additionally, he stressed that long-term care 
insurance can help middle-income elders with long-term care 
needs remain at home by making their own money go further.
    Mr. Williams stated that HHS believes that employer-
sponsored long-term care insurance is the best vehicle for 
making high-quality coverage more affordable. He noted that 
such plans encourage people to enroll at younger ages when 
premiums are lower. Also Mr. Williams said that employer-
sponsored long-term care insurance is typically 15 percent less 
than coverage purchased on an individual basis.
    Finally, in response to a question posed by Chairman Mica, 
Mr. Williams stated that offering long-term care insurance to 
Federal employees as a benefit is an appropriate role for the 
Federal Government.

15. Review of the Federal Employees Health Benefits Program [FEHBP] as 
        a Possible Complement to Military Health Care.

    a. Summary.--Because of numerous problems in the military 
health care system, including TRICARE (a component of the 
current military health care system), many have urged that 
military retirees and military families should be allowed to 
enroll in the Federal Employees Health Benefits Program 
[FEHBP].
    The FEHBP provides voluntary health insurance coverage for 
over 9 million Federal Government employees, annuitants, and 
their dependents. More than 85 percent of Federal employees 
participate in FEHBP. It is a market-based program in which 285 
health insurance carriers and HMOs compete for business. 
Participating carriers must offer group rates, provide 
reasonable policy coverage, and meet various requirements for 
financial solvency. Each plan must take any eligible employee 
without regard to a preexisting condition. The total annual 
cost of the program was approximately $16.3 billion in fiscal 
year 1997, of which $12.1 billion was paid by the government 
and $4.2 billion by enrollees.
    The Federal Government and enrollees share FEHBP premiums 
according to a statutory formula. The Federal share of the 
FEHBP premium is set at 72 percent of the weighted average of 
all plans (separate calculations are performed for self alone 
and self and family enrollments). However, the government share 
cannot exceed 75 percent of any particular plan's premium.
    The FEHBP option is not currently available to military 
retirees, their families, or to the families of active duty 
personnel. Beneficiaries of the military health care system are 
eligible to receive medical care at military facilities. 
However, depending on the level of demand and ready access to 
facilities, this care is not always assured. Moreover, 
Medicare-eligible retirees are effectively excluded from the 
military health care system.
    The military health system has been expected to fulfill two 
objectives that are, at times incompatible: providing medical 
services and support to the armed forces in combat, and caring 
for active duty personnel and their families, military retirees 
and their dependents, and survivors in peacetime and war. In 
fiscal year 1997, the military health care system offered 
health care coverage to about 8.2 million people, more than 
half of whom are retirees and their dependents and survivors, 
at a cost of $15.6 billion.
    As resources and space permit, all Department of Defense 
[DOD] beneficiaries are eligible for care at military 
facilities. Active duty personnel are given first-priority 
access to military facilities, followed by their family members 
and then retirees and their families. This space-available 
care, however, varies from comprehensive inpatient and 
outpatient care at medical centers and larger hospitals to only 
outpatient services at smaller facilities. Further, the past 
decade has witnessed substantial active duty force and 
infrastructure reductions, a 15 percent decrease in medical 
personnel strength, and the closing of one-third of all 
military hospitals.
    b. Benefits.--The subcommittee's examination of the FEHBP 
as a complement to military health care revealed widespread 
support for authorizing Nationwide access to the FEHBP for 
military retirees, their families, and the families of active 
duty personnel. The subcommittee was able to draw on evidence 
presented at this hearing in developing and evaluating a number 
of such proposals, including the limited demonstration project 
established in the Defense Authorization Act for Fiscal Year 
1999.
    c. Hearings.--``FEHB Program as a Complement to Military 
Health Care'' was held on April 28, 1998. The hearing was 
called to examine proposals that would extend the FEHBP to 
active duty dependents, as well as to retirees and their 
families.
    Several Members of Congress testified at this hearing. 
Representative Cliff Stearns (FL) testified that he was in 
favor of authorizing the Secretary of Defense to conduct a 
demonstration project to provide covered beneficiaries under 
the military health care system with the option to enroll in 
the FEHBP. Representative James P. Moran (VA) stated that he 
was in favor of granting Medicare eligible military retirees 
the option of participating in the FEHBP. Representative 
William ``Mac'' Thornberry (TX) testified that he favors 
Medicare subvention, as well as opening the FEHBP on a 
demonstration basis. Representative J.C. Watts (OK) advocated 
offering military retirees the option of selecting FEHBP for 
their health care coverage through a controlled, 5-year 
demonstration project in which eligibility would be limited to 
Medicare eligible retirees for the first 2 years of the program 
and costs would be capped.
    Mrs. Sydney Tally Hickey, associate director, Government 
Relations, National Military Family Association, testified that 
it is time to relieve DOD of trying to provide both a peacetime 
health care benefit and to meet its readiness mission. She 
attributed many of TRICARE's defects to the fact that it is a 
remnant of President Clinton's failed national health care plan 
that cannot be expected to function properly in the absence of 
the other components of that program that were to supplement 
it. Ms. Hickey emphasized that DOD should concentrate on the 
readiness mission it alone can provide, and leave peacetime 
health care to the well-proven FEHBP.
    Dr. Barbara Glacel, the wife of a senior ranking active 
duty officer, testified that access to quality care under the 
current military health care system, even for someone with her 
experience and the rank of her husband factored in, was 
extremely difficult to obtain. Dr. Glacel, who was diagnosed 
with breast cancer in December 1996, spoke of her difficulties 
in obtaining quality care under the TRICARE system. Dr. Glacel 
told the subcommittee that although TRICARE promised specialty 
care within 28 days of a routine consultation, one of her 
referrals to orthopedic surgery took 47 days. Dr. Glacel also 
testified about the onerous amount of paperwork she had to 
complete simply to move the treatment process forward. Dr. 
Glacel stated that her struggles to achieve access to care 
under the TRICARE system have left her with the clear 
impression that TRICARE administrators believe that breast 
cancer is no more significant than the common cold.
    A retired enlisted man, Mr. Boyd Simmons, testified that 
because obtaining quality care for his ill wife under the 
current system was so difficult and costly, he came out of 
retirement and took a government job just so that he and his 
family could participate in the FEHBP. Mr. Simmons return to 
government employment was precipitated by his struggles to 
obtain quality health care for his wife, who suffered from 
tracheal stenosis. Mr. Simmons testified that the lack of 
choice of health care providers under the TRICARE system left 
his wife with inadequate treatment options and a fearsome 
bureaucracy with which to do battle. Mr. Simmons stated that 
full participation in the FEHBP for retirees was the only way 
in which to avoid the national disgrace of not providing 
quality health care to those men and women who served our 
country so well.
    Mr. Hal Franck, Retirement Activities Officer, Mountain 
Home Air Force Base, stated that it was particularly difficult 
for military retirees to get access to quality care in rural 
areas. He added that the way to help military retirees would be 
to provide access to the FEHBP in rural America to all military 
retired veterans and their families who are too far removed 
from veteran or military health care facilities. Mr. Franck 
noted that while civilian employees in his area who participate 
in FEHBP have no difficulty finding doctors, retirees and 
active duty families struggle to obtain care because they are 
limited to doctors who participate in TRICARE.
    The Acting Assistant Secretary of Defense for Health 
Affairs, Gary A. Christopherson, also testified. He contended 
that TRICARE is a strong system that is getting stronger every 
day. Mr. Christopherson added that while strong, TRICARE is not 
perfect, but neither is the FEHBP. In his opinion, offering the 
FEHBP option to active duty dependents, as well as to military 
retirees and their families, would present the DOD with vexing 
cost and readiness problems.

16. Civil Service Reform Issues.

    a. Summary.--After examining civil service issues in dozens 
of hearings during the 104th and 105th Congresses, a number of 
reform initiatives were advanced to the subcommittee. These 
initiatives addressed various aspects of Federal workforce 
management including safeguarding the integrity of the civil 
service, managing performance, reforming the employee appeals 
process, and enhancing pay and benefit programs. The 
subcommittee assembled a legislative proposal addressing these 
issues and incorporated a number of measures that had been 
referred in the course of the 105th Congress.
    To safeguard the integrity of the merit system, the 
proposal included provisions giving streamlined authority for 
agencies to conduct demonstration projects of personnel 
management improvements, restricting opportunities for 
political appointees to convert to career status, strengthening 
the sanctions imposed for violating the Hatch Act, and 
correcting abuses of official time (such as restricting Federal 
employees from lobbying while on official time.) To protect the 
Privacy Act rights of Federal employees, involuntary disclosure 
of home addresses to non-governmental organizations would be 
prohibited.
    The proposal contained measures to strengthening 
accountability through the management of performance. To that 
end managers would be better able to remove poor performers and 
retain their superior employees during a reduction in force, 
and agencies would be barred from implementing two-tier (or 
``pass/fail'') performance evaluation systems.
    To reform the employee complaint process several measures 
were considered to streamline the appeals procedures and 
strengthen alternative dispute resolution mechanisms.
    A number of pay and benefit reforms for Federal employees 
were advanced. The legislative draft included provisions to 
reform the firefighter pay system and raise the current ceiling 
on Federal overtime pay. The precarious fiscal status of 
Federal retirement accounts would be remedied by providing for 
funding through equity holdings rather than nonmarketable 
Treasury securities. Additional portability for retirement 
benefits would be provided by allowing immediate participation 
for employees in the Thrift Savings Program and by making the 
retirement benefit of political appointees and congressional 
staff (who experience shorter careers and higher turnover) 
fully portable.
    b. Benefits.--This legislation was intended to provide a 
comprehensive set of reforms that would result in better pay 
and benefits for Federal employees, strengthen the merit 
system, and eliminate many of the procedural obstacles to 
effectiveness management of Federal agencies.
    c. Hearings.--A hearing entitled, ``Civil Service Reform 
Issues'' was conducted on June 24, 1998, to examine the merits 
of various provisions of civil service reform legislation under 
consideration by the subcommittee. Chairman Mica, Mr. Pappas, 
Mrs. Morella, Mr. Sessions, Mr. Cummings, and Ms. Norton 
participated in the hearing. Witnesses included: Janice R. 
Lachance, Director, Office of Personnel Management; Mr. Michael 
Brostek, Associate Director, Federal Workforce and Management 
Issues, General Accounting Office; Mr. Grover Norquist, 
president, Americans for Tax Reform; Mr. Robert E. Moffitt, 
vice president, Domestic Policy Studies, the Heritage 
Foundation; Mr. Randel K. Johnson, vice president for Labor 
Policy, U.S. Chamber of Commerce; Mr. Patrick Korten, Cato 
Institute; Mr. John I. Just-Buddy, of Bowie, MD; Mr. Bobby L. 
Harnage, Sr., national president, American Federation of 
Government Employees; Mr. William W. Pearman, president, FAA 
Conference, Federal Managers Association; Mr. Albert Schmidt, 
national president, National Federation of Federal Employees; 
and Mr. Robert Tobias, national president, National Treasury 
Employees Union.
    Mr. Mica noted that the legislative proposal under 
consideration at this hearing reflected the subcommittee's work 
after more than 60 hearings during the previous 4 years. He 
noted that it incorporated major provisions that were adopted 
by the House in 1996. He noted the importance of reforms to 
ensure better performance and achieve greater accountability in 
the Federal workforce, to provide fair compensation for Federal 
employees, and to secure reliable funding for annuities. He 
stressed that we cannot separate the functions of rewarding 
government's outstanding performers from the challenge of 
developing more effective measures for removing poor 
performers. He contended that reform of the appeals procedures 
are critical because those procedures now impede effective 
management and obstruct efforts to enhance the caliber and 
reputation of public service. He emphasized that he is open to 
modifications of proposals contained in the subcommittee's 
draft outline, and solicited alternative proposals to deal with 
these pressing concerns from all witnesses and interested 
employees. He noted that the subcommittee had already approved 
legislation to strengthen veterans' preference, to limit fraud 
in the Federal Employees Health Benefits Program, to enhance 
Federal employees' life insurance benefits, and to correct 
retirement coverage classification errors. He described 
additional initiatives under consideration as employee 
benefits, including options for medical savings accounts and 
long-term care insurance.
    Mr. Cummings expressed support for several of these 
provisions, and indicated concerns about several significant 
provisions, including efforts to improve performance 
evaluations, to strengthen the Thrift Savings Plan [TSP], and 
to provide secure investment options for Federal employees' 
retirement benefits. He affirmed, ``I am fully prepared to 
delete and refine those items which are unworkable and 
unnecessary.''
    Mrs. Morella noted that many provisions in the draft 
outline incorporated bills that she had introduced. She cited 
measures increasing opportunities for Federal employees to 
invest in the TSP, to correct retirement decisions made during 
a period when OPM had not issued regulations, and to increase 
pay for administrative appeals judges in Federal agencies.
    Mr. Sessions expressed support for measures to strengthen 
the TSP, especially in making the Federal retirement benefit 
increasingly portable so that Federal employees will feel more 
able to move to private sector opportunities, and back, as 
opportunities develop. He praised the proposal to provide a 
more flexible, defined contribution benefit for political 
appointees and legislative staff, who need this flexibility for 
their careers.
    Ms. Lachance stated that OPM was working on a complex 
legislative proposal to balance flexibility and consistency 
while retaining the unified concept of Federal employment. 
Under questioning, however, she admitted that OPM's idea of 
flexibility did not extend to employee benefits. She supported 
measures to incorporate ``broadbanding'' approaches to 
employees' pay, which had been successful in previous 
demonstration projects. She indicated a willingness to work 
with the subcommittee to address concerns about the GS-10, Step 
1 cap on overtime pay, but described a proposal to increase the 
cap to the maximum pay in the General Schedule as ``too 
costly.'' She also opposed strongly any consideration of 
extending Federal retirement credit to nongovernment employees, 
such as those covered by the Railroad Retirement Board. Under 
questioning from Mr. Cummings, she also indicated that OPM is 
opposed to a requirement to collect information about the 
training activities of Federal agencies. In response to Mrs. 
Morella's questions, she indicated support for the TSP 
enhancements, but noted that cost concerns would have to be 
resolved before enactment.
    Mr. Brostek addressed concerns about demonstration project 
authority, uses of official time by organizations representing 
Federal employees, and the appeals processes. He noted that OPM 
had implemented demonstration projects only eight times in the 
20 years that the authority has been available, even though 
human resources management practices had altered dramatically 
in the private sector during that period. In a GAO survey of 34 
agencies, most could provide no formal records of the uses of 
official time. From the unsystematic reporting available, GAO 
estimated that Federal employees' organizations used more than 
2.5 million hours of official time, with more than 11,000 
employees charging some time to such accounts. About 460 
employees were reported as spending 100 percent of their time 
on representational activities. The total value of 
compensation, office space, facilities, equipment, travel and 
per diem attributable to official time reached $58 million. 
Although 23 agencies reported that official time helped to 
improve labor-management relations, 13 agencies acknowledged 
that official time diverted from the completion of routine 
agency work. GAO's extensive efforts to calculate official 
time, however, could not produce a single agency with a 
consistent method of maintaining such records over an extended 
period. Mr. Sessions expressed concern that GAO could not 
provide information about the amount of official time used to 
represent agencies' employees before the Congress. He described 
the current multiplicity of appeals systems as ``inefficient, 
expensive, and time consuming.'' He contended that any reform 
should provide fair treatment for Federal employees and promote 
effective Federal management. He noted that surveys of five 
agencies and five companies indicated promise for alternative 
dispute resolution approaches.
    Mr. Norquist expressed strong support for Representative 
Morella's proposal to strengthen employees' opportunities to 
save through the TSP. He also endorsed the measure to provide a 
more portable option for political appointees and legislative 
staff, who typically have less extensive government careers. He 
noted that defined contribution plans are being adopted 
increasingly at State levels around the country and that 
institutions of higher education also have implemented defined 
contribution plans to provide for the portability that 
professors seek as they move between institutions. In response 
to questions, he noted that most States and local governments 
have invested pensions independently, so that there are assets 
available to pay future benefits without burdening future 
taxpayers.
    Mr. Moffitt focussed on issues related to the relationship 
between career and noncareer employees, performance management, 
and proposals to restructure Federal employees' benefits 
programs. He emphasized the importance of drawing distinct 
lines between career and political employees as methods of 
ensuring the accountability of political employees and 
protecting the integrity of the career service. He noted the 
importance of the President's ability to appoint personnel, and 
described as ``wrong headed'' a proposal that would reduce the 
already tiny number of such positions, thereby weakening the 
President's control over an administration. He endorsed the 
proposal to apply sanctions to Hatch Act violations, especially 
since recent administrative and judicial decisions had 
restricted the imposition of penalties largely to removal from 
a position. Such sanctions have no effect on employees who have 
resigned office, leaving any violations unpunished. He also 
supported efforts to bar political appointees from ``careering 
in,'' and noted that the National Academy of Public 
Administration had previously raised similar concerns. He 
observed that efforts to improve the security of retirement 
funding and to create a more portable retirement system for 
political appointees and congressional staff responded to the 
need to attract highly-qualified persons for these positions. 
He also supported strengthening the investment options for 
Federal employees under the current TSP. He cautioned, however, 
that many civil service issues are resolved primarily in terms 
of the self-interest of government employees, and reminded the 
subcommittee that there is a broader public with common 
interests in the resolution of critical performance and 
government management issues. Under questioning, he noted the 
advantages of stock-invested pension accounts, and observed 
that we have greater public confidence in such investments, in 
part because 43 percent of citizens now own some form of 
equities. He opined that Federal employees' ability to watch 
their TSP investments grow has provided additional support for 
this perspective.
    Mr. Johnson observed that the need for reform of the method 
of using official time within the government should be a matter 
of bipartisan consensus. Under current practices, agencies 
provide employees abundant time to conduct union business, and 
the sum of subsidies to Federal employee unions provided 
through official time indicates a serious need of reform. He 
added that recent interpretations of law have allowed official 
time to be used to lobby the Congress, and that no current 
system exists to monitor these arrangements. He provided a 
legal analysis of several recent Federal Labor Relations 
Authority decisions which require the inclusion of official 
time for lobbying purposes in agency collective bargaining 
agreements. He indicated that by supporting their current 
programs and additional pay and benefits, Federal employee 
organizations would almost inevitably be lobbying against more 
general interests--such as reduced aggregate taxation. Although 
he acknowledged that comparable practices exist in the private 
sector, companies allowing union activities on corporate time 
monitor and manage such activities on a continuous basis. He 
hoped that the administration witness, who opposed additional 
paperwork burdens on Federal employee organizations, would take 
the same perspective on private organizations.
    Mr. Korten heartily encouraged the subcommittee to curb 
recent trends that undermine the integrity of performance 
management in the Federal service, especially the move toward 
pass/fail systems. He emphasized the adverse effects on morale 
when excellent performers receive the same ``pass'' rating as 
marginal ones, and he noted that the appeals process currently 
is so cumbersome that managers are deterred from taking sound 
performance management decisions. In particular, current 
practice undermines pay-for-performance. He noted the 
importance of turnover among political appointees, and approved 
of subcommittee proposals to limit the careering in of 
political appointees. He commented that the lack of portability 
in the Federal retirement system was a major factor encouraging 
appointees to seek career status. Although he supported 
measures to invest an increasing portion of retirement 
deductions in individual accounts, he fears that the present 
proposals will be overwhelmed by the effort to save Social 
Security in the not-too-distant future.
    Mr. Just-Buddy is a career employee of the Department of 
Agriculture who had managed an outreach office as Acting 
Director. When a directorship was created for the office, it 
was intended to be a political appointment, with a career 
deputy. However, the vacancy was announced as a career 
appointment, and he was forced to compete to retain his own 
position. The agency competed the vacancy twice, revising the 
position description to facilitate competition by noncareer 
applicants. The individual selected had previously served in a 
political capacity on the Secretary's staff in the office of 
communications. No interviews were conducted for this SES 
position. After the individual was selected, he was appointed 
to the position previously held by Mr. Just-Buddy, who noted 
that the competition against political appointees inevitably 
places career civil servants at a disadvantage. He is now 
serving with the National Association for the Advancement of 
Colored People on an Intergovernmental Personnel Act 
assignment. He believes that his ``rights as a citizen'' were 
violated in the course of placing a political appointee in this 
position, but current laws provide no redress, nor do they bar 
the repetition of such abuses.
    In response to Mr. Cummings' questions, panelists concluded 
that an absolute bar on Federal employment for persons 
convicted of narcotics abuses was excessive. Most panelists 
recommended a time limit, or gradation of penalties, at minimum 
differentiating between felony and misdemeanor convictions, and 
with some concern for the length of time that lapsed between 
the conviction and the possible Federal position.
    Mr. Harnage objected to significant reform measures 
incorporated in the draft legislation, including measures to 
curb abuses of official time for representational activities 
and proposals to improve managers' abilities to remove poor 
performers.
    Mr. Tobias insisted that any flexibility introduced through 
demonstration projects include union participation in reaching 
decisions. He also opposed efforts to monitor and curb abuses 
of official time and the performance management initiatives 
incorporated into the discussion outline. He expressed concerns 
about efforts to revise Federal Employees Compensation Act 
[FECA] provisions.
    Mr. Schmidt contended that Congress should strengthen the 
role of collective bargaining in Federal agency management. The 
National Federation of Federal Employees strongly opposed a 
provision, requested by the Office of Personnel Management, 
that would require the Federal Circuit to hear its appeals from 
Merit Systems Protection Board decisions. He joined the other 
union witnesses in opposition to major sections of the 
proposal.
    Mr. Pearman expressed support for modifications of the GS-
10, Step 1 ceiling on overtime pay and supported reform of the 
FECA, as well as for the expanded investment opportunities 
provided through the TSP reforms. The Federal Managers 
Association generally supports demonstration projects and the 
limitation on performance improvement programs and pass/fail 
performance management systems, but is reluctant to provide 
additional weight to performance appraisals in influencing 
personnel actions. Although all Federal Aviation Administration 
employees have been exempt from the personnel rules contained 
in Title 5, U.S. Code, since 1996, FMA is working to bring the 
agency back under several provisions that limit agency 
management, including restoration of the appeals system.

17. FEHBP Premium Increases for 1999.

    a. Summary.--On September 11, 1998, OPM announced that 
FEHBP premiums for 1999 would rise by an average 10.2 percent. 
The average increase in the individual's share of premiums will 
be 7.4 percent. The new ``Fair Share'' formula adopted in the 
Balanced Budget Act of 1997 was applied for the first time to 
determine the premium cost sharing for 1999. The FEHBP also saw 
65 plans, including one fee-for-service plan, withdraw. 
Although these plans were generally among the smallest 
participating in the program, this 19 percent decline in 
participating plans nevertheless limits employees' choices. The 
subcommittee examined these developments in order to identify 
the reasons for the premium increases and the departure of so 
many plans, as well as to examine the effects of the new 
formula.
    b. Benefits.--The subcommittee's examination of this issue 
has helped it identify the major factors underlying the 1999 
FEHBP premium increases. It has also identified one major area 
in which OPM has refused to allow BlueCross BlueShield to 
implement a cost containment strategy that other carriers have 
been permitted and may be over-regulating this important 
program.
    c. Hearings.--A hearing entitled, ``FEHBP Premium Increases 
for 1999'' was held on September 24, 1998. Witnesses were 
Stephen W. Gammarino, senior vice president, Federal Employee 
Program, BlueCross BlueShield Association; Terry Latanich, 
senior vice president, Merck-Medco Managed Care, L.L.C.; and 
William E. Flynn, III, Associate Director for Retirement and 
Insurance, OPM.
    Subcommittee Chairman Mica pointed out that in 1998 average 
subscriber premiums rose $132 and will rise by $88 in 1999. As 
a result, employees and annuitants spent $560 million more in 
1998 and will spend $400 million more in 1999 for health care, 
or almost $1 billion in extra costs over 2 years. Likewise, the 
government's burden over those 2 years is another $2.2 billion. 
He also pointed out that recent data indicated that 1998's 
FEHBP increase of 8.5 percent were substantially higher than 
the increases experienced by other employer-sponsored health 
insurance plans, and that the Congressional Budget Office had 
forecast single digit increases in private health care 
insurance premiums through the year 2008. He asked whether 
factors unique to the FEHBP explained this difference. 
Subcommittee Chairman Mica also noted that about half of the 
cost of implementing the President's so-called ``patient's bill 
of rights'' stemmed from additional paperwork requirements, and 
asked why the government should be fueling already rising 
premium increases by imposing irrelevant burdens on 
participating carriers and providers. In addition, he indicated 
that the subcommittee should examine the implications of the 
rapid rise in prescription drug costs, which currently account 
for 20 percent of overall FEHBP costs. The departure of 65 
plans from the FEHBP, Subcommittee Chairman Mica observed, is 
telling us something about the business climate fostered in the 
FEHBP. Congress, he noted, may need to redirect FEHBP 
management away from over-regulation toward flexibility and 
choice, roll back mandates, and look at other options to lower 
costs, such as medical savings accounts, and act on tort reform 
if it wants to ameliorate these higher costs.
    Mr. Gammarino testified that BlueCross BlueShield plans are 
experiencing an increase in overall health care costs, 
particularly in the cost of prescription drugs, the fastest 
growing component. Prescription drugs now approach 30 percent 
of BlueCross BlueShield plan's total benefit costs. In large 
part this is attributable to the large number of older people 
in those plans; the average age of individuals in its Standard 
Option plans is 60, and the average age is 70 in the High 
Option plan. He emphasized that prescription drugs have become 
effective alternatives to hospital admissions and surgery. 
Nevertheless, because their costs cannot be permitted to rise 
unabated, he explained that BlueCross BlueShield has looked 
continually for effective controls, and identified greater 
flexibility in benefit design as holding near-term promise.
    Mr. Latanich testified that Merck-Medco Managed Care 
(Merck) is the pharmaceutical benefit manager for several FEHBP 
plans, covering more than 4 million lives. He pointed out that 
most health plans have experienced 15 to 20 percent increases 
in their drug costs. The principal contributing factor is the 
aging of the FEHBP population and the attendant increase in 
drug utilization that accompanies aging. The second factor is 
that physicians are prescribing drugs more frequently as new 
drugs become available to treat a broader range of illnesses. 
Merck estimates that increased utilization adds about 10 to 12 
percent to plan costs. But Mr. Latanich also emphasized that 
these drugs often replace more costly invasive medical 
procedures and treat previously untreatable diseases. In 
addition, he pointed out that the mix of medicines changes in 
ways that increase drug costs, citing as an example a new, more 
effective drug for migraine headaches that costs $14 per day. 
It replaces a drug that costs about $3.40 per day. He also 
identified a third contributing factor: increases in the price 
of prescription drugs. In order to help FEHBP plans and others 
control costs, Merck employs aggressive use of generic 
substitution, formularies, drug utilization review, the use of 
mail order pharmacy benefits, and general health education and 
physician education. However, Merck does not foresee changes in 
the rate of cost increases in the prescription drug component 
of plans' costs, although prescription drug prices themselves 
will rise only modestly.
    Both Mr. Gammarino and Mr. Latanich identified additional 
flexibility as important for carriers to control costs. Both 
also suggested that with respect to drug costs in particular, 
requiring co-payments by the individual would increase their 
involvement in their own health care and help control costs. 
However, it also became clear through Mr. Gammarino's testimony 
that OPM has refused to allow his plans to implement co-
payments on mail order pharmaceuticals, primarily because of 
its impact upon the elderly. However, as Mr. Latanich made 
clear, other plans have been permitted to apply copayments to 
older individuals.
    Mr. Flynn testified that the FEHBP premium increases were 
in line with rate hikes facing large and mid-sized employers 
and reflected developments in the health care market. He 
further said that the new ``Fair Share'' formula had cushioned 
the impact of rising health care costs on employees. Without 
it, according to him, under the ``Big 6'' formula, individual 
shares would have gone up by 13 percent, and under the ``Big 
5'' formula, which would have applied if Congress had taken no 
action, employee shares would have skyrocketed by 36 percent. 
The government will spend an additional $803 million this year 
(not counting additional costs borne by the Postal Service) 
because of the premium increases. Mr. Flynn agreed with the 
other witnesses that the age of the FEHBP population and 
increasing drug costs are prime causes of the 1999 rate hikes. 
He also cited the need for insurers to maintain adequate levels 
of reserves in the context of their overall financial 
performance. He asserted that the President's ``patients bill 
of rights'' and other mandates have added little to costs. Mr. 
Flynn also said that OPM was concerned about the rising costs 
and is examining cost-containment strategies that have been 
used effectively by other employers.

18. Cost Accounting Standards.

    a. Summary.--The FEHBP contracts for both 1998 and 1999 
contained a provision requiring all experience-related carriers 
to begin conforming their accounting systems to the Cost 
Accounting Standards administered by the Cost Accounting 
Standards Board. These standards were originally developed to 
cover manufacturing operations and, as written, are 
incompatible with accounting practices suitable to health 
insurance carriers and providers. OPM itself had long 
recognized the incompatibility of the Cost Accounting Standards 
with the accounting practices of health care insurers and had 
refrained from requiring compliance with them. Imposition of 
these standards threatened to force some carriers, particularly 
BlueCross BlueShield, which covers about 44 percent of the 
FEHBP market, to discontinue participation in the FEHBP.
    b. Benefits.--The subcommittee's review of this issue 
revealed that OPM already has sufficient authority to ensure 
satisfactory audits of FEHBP plans. It also revealed that 
implementing the standards could disrupt the FEHBP and impose 
unnecessary costs on carriers while providing no additional 
benefit to the government. The subcommittee worked with the 
Appropriations Committee to include language prohibiting the 
application of those standards to FEHBP contracts in the 
Treasury and General Government Appropriations Act, 1999.
    c. Hearings.--There were no hearings specifically on the 
Cost Accounting Standards. However, the subject was examined in 
the hearings on the FEHBP premium increases in 1998 (Section 
II. B. 9 of the Subcommittee on the Civil Service) and 1999 
(Section II. B. 17 of the Subcommittee on the Civil Service) 
and the hearing on OPM's policy guidance for 1999 (Section II. 
B. 13 of the Subcommittee on the Civil Service).

19. Improper Release of Confidential Information on a Federal Employee.

    a. Summary.--Information taken from the background 
investigation file of a Department of Defense employee, Linda 
Tripp, was released to the media in apparent violation of the 
Privacy Act. Two high-ranking employees at the Department, 
Clifford Bernath and Kenneth Bacon, subsequently confessed to 
making the information public. To date, neither has been 
disciplined for his role in this apparently illegal disclosure. 
This incident has raised grave concerns about the security of 
the confidential background files that are routinely maintained 
on thousands of Federal employees.
    b. Benefits.--There have been no benefits to date because 
the administration has refused to cooperate with the 
subcommittee. Instead, the Department of Defense has invoked 
its Inspector General's investigation as a pretext for 
shielding even information that could not possibly compromise 
that investigation from legitimate congressional scrutiny.
    c. Hearings.--There have been no hearings.

                Subcommittee on the District of Columbia

1. Blue Plains Wastewater Treatment Plant.

    a. Summary.--The purpose of this subcommittee investigation 
is to review the significance of the Wastewater Treatment 
facility in the city of Washington, DC, and the immediate 
region. Most all Federal facilities, in all 3 branches of 
government, plus approximately 2 million residential users in 
Virginia, Maryland, and the District, depend upon Blue Plains. 
It treats an average 325 million gallons a day on 154 acres in 
Southwest Washington. A collapse of Blue Plains, which seemed 
possible last year, would be an ecological catastrophe.
    As recently as September 1995, the Environmental Protection 
Agency [EPA] warned of a very real possibility that raw sewage 
would flow into the Potomac because of serious shortcomings at 
Blue Plains. But since the new Water and Sewer Authority came 
into existence, on October 1, 1996, there have been no EPA 
violations. And there have been no more ``boil water alerts.''
    Subcommittee Chairman Davis convened a hearing to enunciate 
the improvements as a result of the new Water and Sewer 
Authority on November 12, 1997.
    b. Benefits.--In review of the current situation at Blue 
Plains under the new Water and Sewer Authority, existing 
concerns and practical solutions were explored. The new law, in 
place for 13 months at the time of the hearing, established an 
11 member Authority, with 5 suburban representatives and a 
super-majority required for significant actions. Blue Plains 
was transferred to the Authority from the Public Works 
Department of the District of Columbia government. There is an 
orderly payback of $83 million dollars planned for the 
Authority from the District of Columbia government. 
Subcommittee Chairman Davis praised the role of the local, 
State, and Federal officials who worked together to make it 
possible for the Water and Sewer Authority to work very well. 
Additionally, Subcommittee Chairman Davis praised the role of 
the subcommittee and its bi-partisan fashion in which it 
conducted itself for helping to reverse many dangerous trends 
at Blue Plains.
    c. Hearings.--On November 12, 1997, the subcommittee held 
an informational hearing on the ``District of Columbia Water 
and Sewer Authority.'' The hearing followed just over the 1 
year anniversary of the Water and Sewer Authority. Those 
testifying were, Michael McCabe, Region 3 Administrator, 
Environmental Protection Agency; Michael Rogers, chairman, 
Washington District of Columbia Water and Sewer Authority; 
Jerry N. Johnson, general manager, Washington District of 
Columbia Water and Sewer Authority; Honorable Douglas Duncan, 
county executive, Montgomery County, MD; Michael Errico, deputy 
chief administrative officer, Prince Georges County, MD; 
Anthony H. Griffin, alternate member, Washington District of 
Columbia Water and Sewer Authority, Fairfax County, VA.

2. Public Law 104-8, District of Columbia Financial Responsibility and 
        Management Assistance Authority (D.C. Control Board).

    a. Summary.--An oversight hearing was conducted to review 
the implementation of the management reforms required by the 
national Capital Revitalization and Self-Government Improvement 
Act of 1997 (Public law 105-33) by the D.C. Control Board. 
Legislation originating in this subcommittee and signed by the 
President on April 17, 1995 (Public Law 104-8) created the D.C. 
Control Board and conferred upon it responsibilities and 
authority. Since that time the underlying statute has been 
occasionally refined and the Control Board has participated in 
a significant number of hearings held by this subcommittee 
dealing with various significant issues affecting the District 
of Columbia.
    The management reforms enacted as part of Subtitle B of 
Title XI of the Revitalization Act (Public Law 105-33) went 
into effect following the President's signature on August 5, 
1997.
    b. Benefits.--The management reforms were enacted in 
response to the exceptionally poor management practices which 
Congress noted in the District government. Almost without 
exception, the District lacked sound management and direction. 
It was manifestly clear to Congress that changes had to be made 
rapidly in order to avoid a complete breakdown of municipal 
services. These reforms were not motivated by desire to confer 
or remove specific power from existing government entities. 
Rather, the reforms were enacted by a strong belief that 
management issues are the long term keys to the best possible 
government and prosperity for the District. The management 
reforms directed the Control Board and the city to develop and 
implement management reform plans for 9 specified departments 
of the District government. All entities of the District 
government were directed to develop and implement management 
reform plans in the areas of asset management, information 
resources management, personnel, and procurement. The Control 
Board was required to enter into contracts with consultants to 
develop the management reform plans.
    Management reform teams were established for each 
management reform plan. Department heads were directed to take 
any and all steps within their authority to implement the terms 
of the plan. In the case of a management reform plan covering 
the entire District government each member of the management 
reform team was instructed to take any and all steps within the 
member's authority to implement the terms of the plan, under 
the direction and subject to the instructions of the chairman 
of the control board. In carrying out any of the management 
reform plans the member of the management reform team was 
required to report to the Control Board. Such reports were 
required to be made solely to the Control Board.
    During the control year, as defined by Public Law 104-8, 
the Mayor may appoint the head of each department following 
recommendations from and consultation with the Control Board 
and notification to the city council. Each nomination of a 
department head is subject to approval by the control board. 
Appointments may be made directly by the control board if the 
Mayor does not make a nomination within 30 days from the date 
any vacancy begins, or for a longer period as established by 
the Control Board upon notification to Congress.
    A vacancy was deemed to exist in the head of each of the 9 
departments mentioned upon enactment of Public Law 105-33. The 
Control Board was also given the power to remove any department 
head. Removal by the Mayor was made subject to approval by the 
Control Board.
    Executive summaries of the initial consultant's reports 
were made available on October 16, 1997. These reports 
confirmed deep problems throughout city government. On December 
5, 1997, the Control Board announced plans to implement a 
number of recommendations for improving city services. A 
reported 170 projects were listed for priority consideration. 
The Control Board also indicated an intention to submit a 
report to Congress in January 1998, regarding final decisions 
about management improvements. A new chief management officer, 
as required by the Revitalization Act, is expected to be 
appointed shortly. The recently enacted Budget for fiscal year 
1998 (Public Law 105-100) signed by the President on November 
19, 1997, provides the Control Board with great flexibility in 
these areas.
    c. Hearings.--Subcommittee Chairman Davis convened a 
hearing on December 19, 1997, ``Oversight Hearing on D.C. 
Control Board, Implementation of Public Law 105-33 and Police 
Matters.''
    Witnesses who gave testimony to answer concerns of the 
subcommittee were Dr. Andrew Brimmer, chairman of the District 
of Columbia Financial Responsibility Management Assistance 
Authority (D.C. Control Board); Mr. Stephen Harlan, vice 
chairman, D.C. Control Board; and Ms. Sonya T. Proctor, acting 
chief of police, Washington D.C. Metropolitan Police 
Department.

3. D.C. Metropolitan Police Department and the Booz-Allen Memorandum of 
        Understanding.

    a. Summary.--The purpose of this subcommittee investigation 
was to focus on strategies to improve public safety in the 
District of Columbia. Implementation of recommendations by the 
consultant charged with helping the city improve crime 
prevention, Booz-Allen, were examined. Additionally, recent 
changes in the Metropolitan Police Department were discussed.
    b. Benefits.--(Also see H.R. 2015) There had been major 
changes in the Metropolitan Police Department during 1997. 
Prior to the Booz-Allen report, crime had gone up in the 
District while it had gone down in the country and in other 
major cities. The upsurge in crime prior to the Booz-Allen 
report occurred despite the fact that population in the 
District had gone down. That trend had now been reversed. The 
Office of Chief of Police was now much more in charge of the 
Department, including promotions, and the number of homicides 
and other major crimes were down. At the same time, also as a 
result of information prepared by Booz-Allen, major changes had 
been made in the homicide unit. There were disturbing reports 
of excessive overtime, closure rates that were unacceptably 
low, and ``secrecy pledges'' that were apparently being applied 
to other law enforcement agencies. The subcommittee sought a 
clear explanation of those matters as part of its oversight 
responsibility.
    c. Hearings.--The subcommittee held a hearing entitled, 
``Oversight of District of Columbia Metropolitan Police 
Department and the Booz-Allen MOU,'' on September 26, 1997. 
Those providing testimony were Mr. Larry D. Soulsby, chief, 
District of Columbia Metropolitan Police Department; Dr. Gary 
Mathers, senior vice president, Booz-Allen & Hamilton; Judge 
Eugene N. Hamilton, Chief Judge, District of Columbia Superior 
Court; Ms. Mary Lou Leary, acting U.S. attorney, District of 
Columbia.

4. District of Columbia Public School 1997 Repair Program and 
        Facilities Master Plan.

    a. Summary.--The purpose of this subcommittee investigation 
was to highlight the good efforts of local school officials to 
achieve some positive results in helping students obtain a 
quality education and to caution for the care needed to the 
overall recovery of positive results in helping students obtain 
a quality education.
    b. Benefits.--(See H.R. 2015) School closings of the prior 
year placed the school in a primary characteristic of turmoil. 
The Control Board had to deal with school closings, a school-
by-school assessment, and an excruciating court case. School 
repair work was expected to be done during the summer of 1997 
and it was never anticipated that all schools would have to be 
repaired by the opening day of classes. When D.C. Superior 
Courts ruled that no work could be done when anyone was inside 
the buildings, the crisis accelerated and deepened. There were 
virtually daily court hearings, and new buildings were found to 
require repairs. And the same people responsible for the 
repairs were also responsible for the school children and for 
procurement. Throughout this difficult time it was unclear 
exactly how much money would be available. There was some 
concern that the General Services Administration was not 
utilized, despite explicit congressional authority to employ 
their expertise. There was concern that the school officials 
were ``non co-operative.'' The hearing focused on addressing 
the concerns mentioned in addition to the Facilities Master 
Plan.
    c. Hearings.--The subcommittee held a hearing entitled, 
``D.C. Public School 1997 Repair Program and Facilities Master 
Plan,'' on January 23, 1998. Those providing testimony were: 
Ms. Mary Filardo, director, 21st Century School Fund; Mr. 
William R. Lawson, FAIA, Assistant Regional Administrator, 
Public Buildings Service, General Services Administration; Mr. 
Jonathan Miller, project manager, Daniel, Mann, Johnson, & 
Mendenhall Architects; Dr. Andrew Brimmer, chairman, District 
of Columbia Financial Responsibility and Management Assistance 
Authority; Mr. David Cotton, Cotton and Co., LLP; Mr. Anthony 
Williams, chief financial officer, government of the District 
of Columbia; Mr. Ed Stephenson, chief financial officer, 
District of Columbia Public Schools, Dr. Bruce MacLaury, 
chairman, District of Columbia Public School Emergency Trustee 
Board; General Julius Becton (USA, Ret), chief executive 
officer, District of Columbia Public Schools; General Charles 
Williams (USA, Ret), chief operating officer, District of 
Columbia Public Schools.

5. Management Reform--Cost, Savings, Net.

    a. Summary.--The purpose of this investigation was to 
review management reform in the District of Columbia in 
accordance with Public Law 105-33, National Capital 
Revitalization and Self-Government Improvement Act of 1997. The 
responsibility of the D.C. Control Board was increased by this 
law, transferring the authority of nine of the District's major 
agencies to the board.
    b. Benefits.--The hearing highlighted information on 
decisions made about management reform plans, scheduling of 
implementation, costs associated, regulatory reform and roles 
of the chief management officer.
    c. Hearings.--The subcommittee held a hearing entitled, 
``Management Reform--Cost, Savings, Net,'' on January 30, 1998. 
Those providing testimony for this hearing were: Marion Barry, 
Mayor, District of Columbia; Linda Cropp, council chair, 
District of Columbia City Council; Dr. Andrew Brimmer, 
chairman, District of Columbia Financial Responsibility and 
Management Assistance Authority; Dr. Camille Barnett, chief 
management officer, District of Columbia; Mr. Anthony Williams, 
chief financial officer, government of the District of 
Columbia; Mr. David Schlein, national vice president, District 
14, American Federation of Government Employees; Mr. Chuck 
Hicks, president and acting executive director, Council 20, 
American Federation of State, County, and Municipal Employees.

6. Fiscal Year 1997 District of Columbia Audit Report and CFO 
        Oversight.

    a. Summary.--The purpose of this investigation was to focus 
on the degree of improvement of the District's fiscal picture 
during the last year by reviewing the Comprehensive Annual 
Financial Report [CAFR].
    b. Benefits.--One of the most important benefits of this 
hearing included oversight of the Office of the Chief Financial 
Officer [CFO]. The District of Columbia Financial 
Responsibility and Management Assistance Act of 1995 (enacted 
on April 17, 1995) was intended in part to eliminate budget 
deficits and management inefficiencies in the District of 
Columbia government. The act established the Office of Chief 
Financial Officer for the District of Columbia. The following 
year, Congress enacted the 1996 Budget Act, which included a 
section expanding the CFO's authority by transferring all 
budget, accounting and financial management personnel in the 
executive branch of the District government from the Mayor's 
authority to the CFO.
    c. Hearings.--The subcommittee held a hearing entitled, 
``Fiscal Year 1997 District of Columbia Audit Report and CFO 
Oversight,'' on February 11, 1998. Those providing testimony 
were: Edward DeSeve, Acting Deputy Director, Office of 
Management and Budget; Mr. John Farrell, partner, KPMG, Peat 
Marwick, Marion Barry, Mayor, District of Columbia; Linda 
Cropp, council chair, District of Columbia City Council; Dr. 
Andrew Brimmer, chairman, D.C. Financial Responsibility and 
Management Assistance Authority; Mr. Anthony Williams, D.C. 
chief financial officer.

7. District of Columbia Public School Census and Enrollment Oversight.

    a. Summary.--The purpose of this investigation was to 
determine the number of students enrolled in the D.C. Public 
School System.
    b. Benefits.--The purpose of this hearing is to address 
matters involving past and present issues related to student 
enrollment counts and the procedures implemented to determine 
those enrollment statistics for the District of Columbia Public 
Schools. This hearing will also examine the findings documented 
in the report of the U.S. General Accounting Office issued in 
August 1997, which evaluated the accuracy of the enrollment 
count process that DCPS utilized in school year 1996-1997. The 
GAO report was specifically requested by this subcommittee.
    Additionally, testimony is expected to include the results 
of a follow-up review by GAO, of the procedures utilized by 
DCPS to determine the 1997-1998 student enrollment count, and 
the conformance with the findings, conclusions, and 
recommendations which were included in the August 1997 report.
    c. Hearings.--The subcommittee held a hearing entitled, 
``District of Columbia Public School Census and Enrollment 
Oversight,'' on March 13, 1998. Those providing testimony were: 
Ms. Cornelia Blanchette, Associate Director, Education and 
Employment Issues, Health, Education, and Human Services 
Division, U.S. General Accounting Office; Mr. George Grier, 
principal, the Grier Partnership; Mr. Richard Wenning, 
director, Department of Educational Accountability, District of 
Columbia Public Schools; General Julius Becton, chief executive 
officer and superintendent, District of Columbia Public 
Schools; Dr. Joyce Ladner, District of Columbia Financial 
Responsibility and Management Assistance Authority; Dr. Bruce 
MacLaury, chairman, District of Columbia Public School 
Emergency Board of Trustees; Mrs. Wilma Harvey, president, 
District of Columbia Board of Education.

8. Oversight on the Academic Plan for the District of Columbia Public 
        Schools.

    a. Summary.--This investigation reviewed the current status 
of the development and implementation of an academic plan whose 
goal is to improve student achievement in the District of 
Columbia Public Schools.
    b. Benefits.--Benefits included determining the current 
status of the development and implementation of an academic 
plan whose goal is to improve student achievement in the 
District of Columbia Public Schools. Issues which impact 
academic achievement, including but not limited to, the 
curriculum, support infrastructure, teacher certification, 
continuing education for educators and administrators, student 
promotion policies, short-term and long-term academic goals and 
objectives will be discussed.
    c. Hearings.--The subcommittee held a hearing entitled, 
``Oversight on the Academic Plan for the District of Columbia 
Public Schools,'' on April 3, 1998. Those providing testimony 
were: Ms. Patricia Harvey, senior fellow and director of Urban 
Education, National Center on Education and the Economy; Ms. 
Marlene Berlin, Ad-Hoc Parents Coalition; Ms. Delabian Rice-
Thurston, Parents United for the D.C. Public Schools; Linda W. 
Cropp, chairperson, District of Columbia City Council; Dr. 
Joyce Ladner, D.C. Financial Responsibility and Management 
Assistance Authority; Dr. Bruce MacLaury; chairman, D.C. Public 
Emergency Board of Trustees; General Julius W. Becton, chief 
executive officer and superintendent, District of Columbia 
Public Schools; Mrs. Arlene Ackerman, chief academic officer, 
District of Columbia Public Schools.

9. District of Columbia Metropolitan Police Department Oversight and 
        Federal Law Enforcement Assistance.

    a. Summary.--The purpose of this investigative hearing was 
to provide an introduction of the new police chief in 
Washington, DC and information concerning his plans for the 
department. The subcommittee was concerned about community 
policing and systemic improvements in law enforcement in the 
District. An emphasis also included information on strategies 
to improve public safety by the Metropolitan Police Department 
and the role that some of the Federal police forces have in 
local anti-crime efforts.
    b. Benefits.--N/A.
    c. Hearings.--The subcommittee held a hearing entitled, 
``District of Columbia Metropolitan Police Department Oversight 
and Federal Law Enforcement Assistance,'' on May 8, 1998. Those 
providing testimony were: Mr. Charles H. Ramsey, chief of 
police, District of Columbia Metropolitan Police Department; 
Mr. Stephen Harlan, vice chairman, District of Columbia 
Financial Responsibility and Management Assistance Authority; 
Mr. Gary Abrecht, Chief of Police, U.S. Capitol Hill Police; 
Mr. John L. Barrett, Special Agent-in-Charge, Criminal Division 
Washington, DC Field Office, U.S. Federal Bureau of 
Investigation; Mr. Peter J. Dowling, Special Agent-in-Charge, 
Washington, D.C. Field Office, U.S. Secret Service; Mr. Peter 
F. Gruden, Special Agent-in-Charge, Washington, DC Field 
Office, U.S. Drug Enforcement Administration.

10. New Washington Convention Center.

    a. Summary.--The purpose of the this investigation was to 
review the legislation enacted by the District of Columbia City 
Council, signed by the Mayor of the District of Columbia and 
approved by the District of Columbia Financial Responsibility 
and Management Assistance Authority (D.C. Control Board) 
regarding the financing plan for the Washington Convention 
Center. The subcommittee also considered congressional 
legislation to authorize the Convention Center Authority to 
issue bonds and waive the 30 legislative days waiting period 
for Council enactments to go into effect. Particular interest 
was focused on the proposed financing mechanism including any 
potential benefits or risks associated with the project, as 
well as the process employed to develop this project.
    b. Benefits.--N/A.
    c. Hearings.--The subcommittee held a hearing entitled, 
``The New Washington Convention Center,'' on July 15, 1998. 
Those who provided testimony were: Mr. Terry Golden, chairman, 
Washington Convention Center Authority; Dr. Andrew Brimmer, 
chairman, District of Columbia Financial Responsibility and 
Management Assistance Authority; Marion Barry, Mayor, District 
of Columbia; Linda Cropp, chairwoman, District of Columbia City 
Council; Ms. Gloria Jarmon, Director, Health, Education, and 
Human Services, Accounting and Financial Management Issues; 
U.S. General Accounting Office, Mr. Rick Hendricks, Director, 
Property Development, U.S. General Services Administration, 
National Capital Division; Mr. Dan Mobley, CAE president 
Washington, D.C. Visitors.

11. Status of District of Columbia Public School Readiness for the 
        1998-1999 School Year.

    a. Summary.--The purpose of this investigative hearing was 
to determine the status of the District of Columbia Public 
Schools [DCPS] related to readiness for the 1998-1999 school 
year. The hearing examined a number of issues regarding DCPS 
and the scheduled opening on September 1, 1998. Parts of the 
focus was on the progress of capital improvements and facility 
repairs. Other reviews included, but were not limited to, 
ongoing short term and long term plans, the status of a number 
of academic related issues and the management structure 
elements currently being addressed by DCPS.
    b. Benefits.--N/A.
    c. Hearings.--The subcommittee held a hearing entitled, 
``Status of District of Columbia Public School Readiness for 
the 1998-1999 School Year,'' on August 26, 1998. Those 
providing testimony were: Mrs. Arlene Ackerman, superintendent 
and chief executive officer, District of Columbia Public 
Schools; Mr. Joe D. Howze, acting director, Office of Capital 
Improvements and Assets District of Columbia Public Schools; 
Colonel Bruce A. Berwick, Commander and District Engineer--
Baltimore District U.S. Army Corps of Engineers; Mr. Nelson 
Alcalde, Regional Administrator--National Capital Region, U.S. 
General Services Administration; Mrs. Constance Newman, vice-
chairman, District of Columbia Financial Responsibility and 
Management Assistance Authority; Ms. Elois Brooks, deputy 
superintendent, District of Columbia Public Schools; Ms. 
Maudine Cooper, chairman, District of Columbia Public Schools 
Emergency Transitional Board of Trustees; Ms. Wilma Harvey, 
president, District of Columbia Public Schools Board of 
Education; Mrs. Constance Newman, vice-chairman, District of 
Columbia Financial Responsibility and Management Assistance 
Authority; Ms. Carlotta C. Joyner, Director, Education and 
Employment Issues, U.S. General Accounting Office.

12. District of Columbia Y2K Compliance Challenges.

    a. Summary.--The District of Columbia shares a part of the 
year 2000 computer problem. The Y2K as it is commonly known 
presents an enormous challenge for this Nation. It is a 
management issue of the magnitude which may never have 
confronted public agencies, private businesses or the citizens 
of American people ever before. The problem is not new. The 
requirement to address this matter has been known for years. 
However, many decisionmakers mistakenly believed that affected 
systems and devices would be replaced with new technology 
sufficiently in advance of the dates when the year 2000 issues 
would become a reality. Simply put, many computers and other 
electronic devices are programmed to use only two digits to 
represent each year. As a result, many computer systems will 
not be able to differentiate between the year 2000 and the year 
1900. In the 1970's and 1980's, it was common practice to 
program using two-digit dates to save costly computer storage 
space. Even in the 1990's, old habits are regularly 
demonstrated: two-digit dates abound in mainframe, client/
server, desktop, and process control systems. Programmers and 
managers making decisions to continue to use two-digit dates 
obviously failed to recognize, or acknowledge, the magnitude of 
the issues that the year 2000 problem would create. Government 
entities face a unique Y2K challenge. Not only does the year 
2000 matter require a plan for remediation and testing of all 
critical systems and processes, but it must be done in a manner 
so as to insure that there are a continued and uninterrupted 
delivery of services. The District of Columbia, as is the case 
with other local and State governments, is responsible for 
ensuring the health, safety and economic vitality of all of its 
residents. To accomplish this, efforts must be taken to 
minimize the risk of failures in both the government and 
business environments, which included contingency planning for 
possible failures. Many of these activities are interdependent, 
and in far too many instances, the recognition level of the 
potential ramifications is inadequate. Given the complexity of 
the issue itself, the unique nature of the relationship between 
the District of Columbia and the Federal Government, and the 
important role of the District of Columbia within the 
Metropolitan Washington region, our attention is drawn in a 
special way to the Y2K challenges that confront the District. 
The regional compacts which exist among various governmental 
entities require us to examine these matters in a more 
comprehensive fashion. Examples include the D.C. Water and 
Sewer Authority, and the Metropolitan Washington Area Transit 
Authority. Regional agreement dealing with emergency response 
and emergency preparedness, along with several health and human 
services activities, reinforces the need to work together to 
insure to the extent possible that none of these important 
public services are jeopardized. Additionally, the 
transportation and public safety activities which are critical 
to the ability of the Federal agencies to function efficiently, 
must be maintained.
    b. Benefits.--The subcommittee has worked closely with the 
new chief technology officer and the city's chief management 
officer to identify any impediments to the District's ability 
to achieve successful results in addressing this challenge, and 
that with the commitment of the Control Board, the City 
Council, and others, that all sides can collectively improve 
the potential for a positive result, while minimizing the risk 
of a less desirable outcome. The results and progress to 
clearly understand the status of the District's Y2K plan 
development and implementation, and then pursue an oversight 
strategy that will keep the subcommittee informed of their 
progress. Utilities, communications, health services, 
transportation and public safety, are but a handful of the 
areas that will require specific strategies and oversight. It 
is anticipated that future hearings will examine the status of 
these efforts.
    c. Hearings.--The subcommittee held a hearing entitled, 
``District of Columbia's Year 2000 Compliance Challenges,'' on 
October 2, 1998, together with the Government Management, 
Information, and Technology Subcommittee and the Technology 
Subcommittee of the Science Committee. Those providing 
testimony were: Mr. Jack Brock, Director, Information 
Management Issues, Accounting and Information Management 
Division, U.S. General Accounting Office; Mrs. Constance 
Newman, vice-chairman, District of Columbia Financial 
Responsibility and Management Assistance Authority; and, 
Suzanne Peck, chief technology officer for the District of 
Columbia.

   Subcommittee on Government Management, Information, and Technology

1. GAO High-Risk Series.

    a. Summary.--The General Accounting Office [GAO] High-Risk 
Series highlights programs, activities, or agencies 
particularly vulnerable to waste, fraud, and abuse. GAO 
compiled the first high-risk list in a letter dated January 23, 
1990. The letter responded to a request from the chairmen of 
the House Government Operations Committee and the Senate 
Governmental Affairs Committee based on congressional concern 
that waste, fraud, and abuse were endemic throughout the 
Federal Government. GAO found that the Government was plagued 
by serious breakdowns in its internal control and financial 
management systems. If uncorrected, these breakdowns create an 
environment ripe for waste, fraud, and abuse. The January 23rd 
letter also found that these serious breakdowns in systems 
controls had been known, in several instances for many years, 
but had not been corrected by the agencies. The high-risk 
series was an attempt to ensure that areas likely to result in 
material losses are identified, and that appropriate corrective 
actions are undertaken to stem or minimize the losses. GAO 
decided to continue monitoring agencies progress in correcting 
the problems and, in 1993, changed the format from a letter to 
a series of reports, 17 in all. In 1995, GAO identified 20 
high-risk problems. Now, with the issuance of the 1997 series, 
the number of areas considered particularly vulnerable to 
waste, fraud, and abuse has risen to 25, including 10 that were 
on the original list.
    Subcommittee Chairman Horn convened a hearing to examine 
the substantive problems behind the programs on the high-risk 
series. The subcommittee heard testimony from Gene L. Dodaro, 
Assistant Comptroller General, Accounting and Information 
Management Division, accompanied by Keith O. Fultz, Assistant 
Comptroller General, Resources, Community and Economic 
Development Division, and Henry L. Hinton, Jr., Assistant 
Comptroller General, National Security and International 
Affairs Division, all from the U.S. General Accounting Office.
    Mr. Horn opened the hearing by noting the challenges 
presented by both the areas that have been on the high-risk 
series since 1990 and the new areas that were added in 1997. He 
asked for analysis from GAO on the problems that land agencies 
on the high-risk series and the types of solutions that enable 
them to improve.
    Gene L. Dodaro opened his testimony by focusing on the 
problems at the Department of Defense and the Internal Revenue 
Service. He noted that as of 1995, about half of the $70 
billion in defense inventory, or $35 billion, was not needed. 
He further noted that no major component of the Department of 
Defense had received a positive audit opinion. In terms of the 
IRS, he noted that for the past 4 years, GAO has been unable to 
render an audit opinion at the IRS. The reason is that the IRS 
has been unable to substantiate the balances of $1.4 trillion 
in revenues collected with the account balances of individual 
taxpayers.
    Mr. Dodaro also addressed the major information technology 
projects on the high-risk series, including the tax system 
modernization at the IRS and the air traffic control 
modernization effort. He noted the importance of the Clinger-
Cohen Act for improving the record on these projects, as well 
as for addressing one of the major new additions to the high-
risk series, the year 2000 problem. He stressed the importance 
of reform legislation in general, noting the importance of 
``fully and effectively implementing the legislative foundation 
established for broader management reforms.'' Mr. Dodaro 
emphasized the Chief Financial Officers Act of 1990 and the 
Government Performance and Results Act of 1993.
    b. Benefits.--Publicity is one of the best cures for waste, 
fraud, and abuse in Government. The high-risk series brings 
much-needed congressional attention to areas where management 
is inadequate. Focus on the series and the issues outlined in 
it provide useful direction for implementation of important 
reform legislation. According to the General Accounting Office, 
areas of waste that can be substantially reduced include:
          $6-$20 billion in fraudulent and abusive Medicare 
        claims (1996),
          $1 billion in SSI overpayments (annually),
          $132 million in tax filing fraud (1995).
    c. Hearings.--The subcommittee held a hearing entitled, 
``Oversight of the General Accounting Office's High-Risk 
Series,'' on February 13, 1997.

2. Year 2000 Computer Date Problem.

    a. Summary.--Many computers that use two digit date fields 
will fail to recognize the century date change on January 1, 
2000. After midnight on the last day of ``99,'' computers 
around the world will automatically flash to ``00''--and many 
will interpret these digits as the year 1900 instead of the 
year 2000. If left unchanged, affected computer systems will be 
unable to function or send correct and accurate information to 
multiple systems. This issue must be addressed promptly by 
industry and government.
    The Subcommittee on Government Management, Information, and 
Technology held its initial hearing on the year 2000 problem on 
April 16, 1996. The specific focus was on what Federal agencies 
were doing to prevent a possible computer disaster on January 
1, 2000. Kevin Schick of the Gartner Group, expressed concern 
that ``there is no sense of urgency . . . [I]f [Federal 
agencies] are not already well into this project by October of 
1997, [the Government] will be doing a disservice to the very 
constituents that depend on [it] to prevent something like this 
from happening to them . . .''.
    Alarmed by what the subcommittee learned at that hearing, 
Subcommittee Chairman Stephen Horn and Ranking Member Carolyn 
Maloney sent a joint congressional oversight letter on behalf 
of the subcommittee. The letter was addressed to each Cabinet 
department and 10 additional agencies. The April 29, 1996, 
letter asked 13 detailed questions intended to learn the status 
of each agency's preparation for the year 2000.
    The overall response the subcommittee received was 
discouraging. Only 9 of the 24 agencies responded that they had 
a plan for addressing the problem. Five of the agencies had not 
even designated a specific official within the agency to be 
responsible for the problem. No agencies had complete cost 
estimates for fixing the problem. Only seven agencies even had 
partial estimates. Efforts at the Departments of Energy and 
Transportation were so primitive that neither could answer any 
of the 13 questions posed by the April 29th letter. Many 
agencies with direct responsibilities for furnishing services 
to the public, such as the Departments of Labor and Veterans 
Affairs and the Federal Emergency Management Agency, had only 
the most limited year 2000 initiatives underway.
    Appearing before the House Appropriations Subcommittee on 
Treasury, Postal Service and General Government on March 11, 
1997, the Director of the Office of Management and Budget 
committed to furnishing Congress with a quarterly report on 
Federal progress toward correcting the year 2000 computer 
problem. The first quarterly report was transmitted to Congress 
on June 23, 1997. It was based on data provided to OMB by all 
major departments and agencies on May 15, 1997.
    The subcommittee convened three hearings on this issue. The 
first hearing drew, in part, on agency responses to a January 
14, 1997 oversight letter to each of the statutory department 
and agency Chief Information Officers. Witnesses included the 
following agency Chief Information Officers: Ms. Liza 
McClenaghan, Department of State; Assistant Secretary Emmett 
Paige, Department of Defense; Ms. Patricia Lattimore, 
Department of Labor; Mr. John J. Callahan, Department of Health 
and Human Services; Associate Deputy Secretary Michael Huerta, 
Department of Transportation; and Mr. Mark D. Catlett, 
Department of Veterans Affairs. In addition, Joel C. 
Willemssen, Director, Accounting and Information Management 
Division, General Accounting Office, testified about GAO's work 
on the topic.
    Mr. Horn opened the hearing with reference to the January 
14 letter that requested information from each agency on its 
year 2000 plans, noting that ``the quality of the response 
varies widely.'' Mr. Horn outlined three questions every agency 
must answer:
          1. Have you defined the size and scope of the 
        problem?
          2. Do you know how and when the fixes will be made?
          3. Have you identified mission critical systems and 
        set clear priorities for action?
Mr. Horn expressed grave concern that 12 of the 14 Federal 
Departments plan to implement their solutions in the final 3 
months of 1999.
    Joel C. Willemssen's testimony focused on GAO's newly-
released report: ``Year 2000 Computing Crisis: An Assessment 
Guide.'' The purpose of the report was to provide a useful 
framework for agency managers to use in planning and 
implementing their year 2000 programs. Ms. Liza McClenaghan, 
Chief Information Officer for the Department of State, 
testified that the Department of State had accurately defined 
the year 2000 problems if faced. She reported that 57 of the 85 
mission-critical systems were not year 2000 compliant. She 
estimated the total cost of the year 2000 problem for the State 
Department at $135.2 million. She stated that the strategy 
included integrating year 2000 fixes into a larger plan for 
modernization of information technology infrastructure.
    Assistant Secretary Emmett Paige, Department of Defense, 
testified that the DOD was ``far down the road to completing'' 
the assessment phase. He pointed to the Defense Integration 
Support Tools, or DIST, as a management tool to track essential 
information regarding DOD systems. He also noted that the DOD 
was reprogramming resources from all areas for use in solving 
the year 2000 problem and asked that Congress reduce the drain 
on resources by lowering the number of special reporting 
requirements.
    The subcommittee's second hearing on the year 2000 problem 
in 1997 extended the focus beyond standard computer systems to 
survey other affected technologies, including a variety of 
consumer products. Witnesses testified on the year 2000 risks 
associated with embedded microprocessors. Many critical 
technology systems depend on automated devices that control 
their operations. These can include security systems for badge 
readers, surveillance and home security systems, medical 
devices, factory machinery, and telephone systems. Problems 
associated with date calculations in these devices can result 
in various malfunctions or shutdown.
    At the hearing, Bruce Hall, research director for the 
Gartner Group, explained the ``time horizon to failure'' issue. 
Ann Coffou, managing director, Giga Group, testified on the 
problems with embedded microchips. Vito Peraino, an attorney 
with Hancock, Rothert & Bunshoft, covered the potential for 
year 2000 liability claims. Harris Miller, president, 
Information Technology Association of America, testifying about 
his organization's certification program for the year 2000 
software conversion process. Following the hearing, the 
chairmen and ranking members of the two subcommittees sent an 
oversight letter to department and agency heads to determine 
whether the agencies were assessing their vulnerability to the 
embedded chip problem.
    The subcommittee's third hearing on the year 2000 problem 
in 1997, once again held jointly with the Technology 
Subcommittee, evaluated Federal department and agency progress 
on the basis of the quarterly progress report provided to 
Congress by the Office of Management and Budget. At this 
hearing, committee members called upon the executive branch to 
attach far greater priority to the year 2000 effort.
    Subcommittee Chairman Horn opened the hearing by stressing 
the importance of high-level attention for progress on this 
problem. With the Office of Management and Budget as lead 
witness, he asked: ``Has the President of the United States 
made this an issue? He is one of the great communicators of 
this century. We need him to awaken the Nation to this very 
serious situation.'' He also asked whether agency timetables 
were realistic and adequate to solve the problem before the 
unmovable deadline of midnight, December 31, 1999, and whether 
agencies have sufficient management processes in place to 
monitor their year 2000 efforts. He asked these questions in 
the context of the disappointing news reflected in OMB's 
quarterly report, which showed that some agencies with critical 
responsibilities for providing public services were stuck at 
the starting gate. As of May 15, noted Mr. Horn, fully 18 out 
of 24 agencies had yet to finish assessing the vulnerability of 
their computer systems to the year 2000 problem; 10 out of 24 
agencies had yet to complete any testing of software changes. 
Mr. Horn stated that these were discouraging and worrisome 
statistics.
    Sally Katzen, Administrator, Office of Information and 
Regulatory affairs, Office of Management and Budget, testified 
that the administration's estimate for governmentwide cost of 
preparing its computers for the date change had risen to $2.8 
billion, from $2.3 billion in February. Despite this, she 
insisted that the Government was on track to complete all 
necessary fixes before January 1, 2000. Her prepared testimony 
concluded that ``the year 2000 computer problem will be a non-
event.'' She testified that ``we will all breathe a very happy 
sigh of relief on December 31st, 1999.''
    Joel Willemssen, Director of Accounting and Information 
Management Division, General Accounting Office, was much less 
optimistic. He testified that based on the latest information, 
Federal agencies simply did not have enough time to complete 
all necessary fixes. He strongly urged agencies to prioritize 
so that critical systems are fixed in time.
    Joe Thompson, Chief Information Officer, General Services 
Administration, testified that the General Services 
Administration is working to raise awareness of the year 2000 
problem throughout the government. He reported that GSA's 
Federal Supply Service has notified manufacturers and service 
and equipment providers that all products sold to the 
Government must be year 2000 compliant.
    Kathleen Adams, chair of the Interagency Year 2000 
Subcommittee of the Chief Information Officers Council and 
Assistant Deputy Commissioner for Systems, Social Security 
Administration, testified on the role of the Interagency Year 
2000 Subcommittee. She reported that the year 2000 subcommittee 
is developing a database that will contain information 
regarding whether commercial-off-the-shelf software presently 
in use in Federal agencies will function properly after the 
date change. She stressed that although the efforts like this 
database can help, the responsibility for success or failure 
ultimately lies with the Chief Information Officer of each 
agency and with OMB.
    b. Benefits.--The year 2000 problem is going to be 
expensive to the taxpayers, but how expensive depends on how 
quickly officials step up to the problem. Administration cost 
estimates are already nearing $4 billion, and figures in this 
range have been deemed dramatically low by a variety of 
experts. The ultimate cost depends to a great extent on how 
early and how efficiently the Government can address the 
problem. The costs associated with fixing this labor-intensive 
problem will rise significantly as the date change nears. 
Furthermore, failure to repair computers before the date change 
will bring a variety of costs of untold proportions. It is 
therefore critical that the fixes are made and made early. 
Effective efforts to expedite this process will save the 
taxpayers considerable amounts of money.
    Potentially even more significant that the financial toll 
of a delayed response to the year 2000 problem is the danger of 
failure. It is very difficult to determine the exact 
consequences of inaccurate date computations in most computer 
programs. Despite this, or perhaps because of it, preparations 
for the date change are crucial. Failure to make the necessary 
fixes puts citizens at risk of everything from late social 
security checks to unsafe travel conditions.
    c. Hearings.--The Subcommittee on Government Management, 
Information, and Technology held three hearings on this issue 
in the first session of the 105th Congress: (1) ``Will Federal 
Government Computers Be Ready for the Year 2000?'' February 24, 
1997; (2) ``Year 2000 Risks: What Are the Consequences of 
Information Technology Failure?'' March 20, 1997, held jointly 
with the Subcommittee on Technology of the Science Committee; 
(3) ``Will Federal Government Computers be Ready for the Year 
2000?'' July 10, 1997, held jointly with the Subcommittee on 
Technology of the Science Committee; (4) ``Russia's Year 2000 
Problem,'' October 17, 1997, a field hearing held in Beverly 
Hills, CA; (5) ``Oversight of the Federal Government's Year 
2000 Efforts,'' March 18, 1998; (6) ``Status Update on the Year 
2000 Problem,'' June 10, 1998; (7) ``Year 2000: Biggest 
Problems and Proposed Solutions,'' June 22, 1998; (8) 
``Oversight of the Year 2000 Problem: Lessons to Be Learned 
from State and Local Experiences,'' a series of field hearings 
held in New York City; Dallas, TX; New Orleans, LA; Lakewood, 
OH; Indianapolis, IN; and Palatine, IL; (9) ``Y2K: What Every 
Consumer Should Know to Prepare for the Year 2000 Problem,'' 
September 24, 1998, held jointly with the Technology 
Subcommittee of the Science Committee; (10) ``Y2K: Will We Get 
There On Time?,'' September 29, 1998, held jointly with the 
Transportation Committee and the Technology Subcommittee of the 
Science Committee; and (11) ``District of Columbia's Year 2000 
Compliance Challenges,'' October 2, 1998, held jointly with the 
Technology Subcommittee of the Science Committee.

3. Implementation of the Government Performance and Results Act.

    a. Summary.--The American voters have made it clear that 
they think the Federal Government is too often ineffective, 
inefficient, and overly expensive. Real reform must involve 
fundamental changes in how the Government operates, beginning 
with the adoption of effective management techniques from the 
private sector. Outcome-oriented or results-driven performance 
management strategies adopted from the private sector are the 
driving force of the Government Performance and Results Act of 
1993.
    The Government Performance and Results Act is the 
centerpiece of Federal management reform in recent years. In 
essence, the act requires Federal agencies to ask and to 
repeatedly answer some very basic questions: What is the 
agency's mission? What are its goals and how will the agency 
achieve them? How can the agency's performance be measured? How 
should that information be used to make improvements? These 
questions are answered in Strategic Plans, required by the 
Results Act to be completed for the first time by September 30, 
1997. The plans provide the framework for agency's management 
to examine activities throughout the organization, ensuring 
that all activities relate to the agency's basic mission. To 
Congress, this is an opportunity for a broad discussion about 
an agency's future direction and program priorities.
    In preparation for this historic submission of the first 
Strategic Plans, the Subcommittee on Government Management, 
Information, and Technology consulted with the Office of 
Management and Budget [OMB], House Majority Leader Dick Armey, 
and a wide range of Federal agencies. The General Services 
Administration [GSA] was a particular focus of subcommittee 
efforts.
    In August agencies submitted draft Strategic Plans. The 
plans were reviewed by Congress for legal compliance and 
quality. The subcommittee was the primary evaluator for GSA and 
participated with Mr. Armey's staff in the evaluation of all 
Federal agencies. A large number of agency Strategic Plans were 
not legally compliant. The quality of these plans ranged from a 
low of 11 to a high of 62 on a 105 point scale. The GSA 
Strategic Plan rated an unacceptable 35.
    The final Strategic Plan submissions in September were 
reviewed and evaluated by the same process using the same 
criteria. Because of the congressional oversight the average 
score increased by 56 percent from 29.9 to 46.6, with a low of 
28 and a high of 75 on a 100 point scale. GSA increased to 40.5 
points.
    In addition to GSA, the subcommittee paid particular 
attention to the Strategic Plan of OMB because of OMB's role in 
guiding the Results Act compliance of all other agencies. OMB's 
final plan was much improved in packaging and clarity but not 
in substance. OMB's Strategic Plan does not show the strategy 
and resources required for high quality Results Act Strategic 
Plans throughout the Federal Government.
    The subcommittee held a series of four hearings on the 
Results Act in the first session of the 105th Congress. This 
series of hearings will continue in the second session. The 
Results Act provides a unique opportunity to view the Federal 
Government on a comprehensive basis. In this context, the 
executive branch should seek to identify and set the priorities 
for the services that must be provided, the activities that 
must be carried out, and the measurement of the results that 
are achieved.
    The first subcommittee Results Act hearing of the session 
was held in two parts. In the first part, the subcommittee 
examined the status of the consultation process required by the 
Results Act. It anticipated the consultations between executive 
branch agencies and Congress that would take place during much 
of 1997 on the content of agency strategic plans. The objective 
was to take a closer look at what the consultation process 
would actually involve.
    L. Nye Stevens, Director, Federal Management and Workforce 
Issues, General Government Division, testified for the General 
Accounting Office. Mr. Stevens stressed the importance of the 
consultation process. He pointed to the string of failed 
efforts to link results with resources in the Federal 
Government, including PPBS (the Planning Programming Budgeting 
System) and zero-based budgeting. The reason they failed, 
argued Mr. Stevens, was that they each ignored the need for 
constructive, candid communication and shared goals between 
branches of the Government. He advised the members of the 
subcommittee to pay particular attention to engaging the right 
people in the consultation discussions. Those with authority 
over operations need to be involved in the process, as do 
Members of Congress. He also suggested that strategic plans 
should be considered dynamic, subject to change and open to 
criticism by all participants.
    The subcommittee also heard testimony from three agencies: 
the Department of Housing and Urban Development, the Social 
Security Administration, and the Forest Service. All three were 
early GPRA pilots. Representatives from these agencies 
discussed how they were preparing for full GPRA implementation. 
Dwight Robinson, Deputy Secretary, Department of Housing and 
Urban Development, testified that HUD has used performance 
reporting to monitor performance of programs since fiscal year 
1994. He emphasized the role of technology by highlighting 
HUD's use of an application of Lotus Notes software to 
coordinate program and departmental efforts. He said the 
application facilitates communication among management levels. 
He also said it ``allows for a system based on resource levels 
that may be utilized by program areas down to the process 
level.''
    The second part of the hearing took place on March 13, 
1997. The subcommittee listened to a local government success 
story with an eye toward the Federal reform effort. The 
featured program was the substantial reinvention process 
undertaken by the city of New York under the leadership of 
Mayor Rudolph Giuliani. The reinvention has involved re-
engineering and could extend to privatization of certain 
government activities. The subcommittee heard about how New 
York City dramatically improved its management practices and 
gained nationwide acclaim for its considerable crime-fighting 
accomplishments.
    Mr. Horn opened this part of the hearing by observing that 
New York's achievement is part of a pattern of change from 
which the Federal Government should learn. In New Zealand, the 
Federal Government and local governments include performance 
measures in their annual financial reports, and in Great 
Britain the Audit Commission compiles and reports on a series 
of performance measures for local governments. They have 
improved the performance of their departments and lowered the 
cost of doing business. The approach is basic: carefully 
evaluate each activity, decide whether it furthers the agency's 
mission, drop it if it does not, and then decide how to perform 
the essential tasks more efficiently and at a lower cost.
    State and local governments in the United States are using 
performance measures to improve the quality of their services. 
Several States and local governments in the United States also 
provide examples of the effective use of performance 
measurement for management of programs, including Oregon, 
Minnesota, North Carolina, Florida, and Texas. Prince William 
County in Virginia has a performance management system for all 
major areas of service delivery. The Board of Prince William 
County in Virginia uses performance data to annually update its 
current 5-year strategic plan and to formulate a new plan that 
will be more realistic. Portland, OR has a performance 
reporting system for the city's six largest programs: police, 
fire, parks, water, sewer, and streets.
    Mayor Giuliani testified on the management reforms behind 
New York City's reduction in crime over recent years. He 
pointed to reorganization. Three separate police departments 
were merged into one, enabling the pooling of resources and 
efficiency of organization where jurisdictional disputes 
traditionally hindered action. Mr. Giuliani also pointed to the 
innovative use of technology in the form of the Compstat 
program. This program provides the police department with up-
to-the-minute statistics on crimes in each of the city's 
precincts, allowing both immediate response to trends in crime 
as well as coordinated planning on overall patterns of crime.
    The subcommittee's second hearing on the Results Act in 
1997 focused on pilot projects required by the law in the early 
stages of implementation. The Results Act specifies that the 
Office of Management and Budget shall report on the benefits, 
costs, and usefulness of the plans and reports prepared by 
pilot agencies. These pilots are essential to effective 
implementation of the act. From them the Government will 
experiment with and learn about three aspects of Federal 
management reform: performance goals, managerial accountability 
and flexibility, and performance budgeting.
    The law called for a minimum of 10 performance measurement 
pilot agencies. But instead of 10 or another relatively small, 
manageable number, OMB created 72. This is troublesome to the 
subcommittee. At the hearing, Subcommittee Chairman Horn 
expressed concern that it looks very much as though executive 
branch attention to this law is being spread too thin. The 
pilots were meant to provide concrete experiences with success 
and failure in the implementation of this act. Quantity appears 
to have become the enemy of quality.
    John Koskinen, Deputy Director for Management at the Office 
of Management and Budget, testified on his Office's reviews of 
pilot agency efforts to implement the principles of the Results 
Act. He stated that no element of performance-based management 
is more important than the strategic plan. They are the 
foundation and framework for implementing all other parts of 
the Results Act. According to Mr. Koskinen, OMB issued strong 
guidance to Federal agencies supporting congressional 
consultation. Looking ahead, he further reported that OMB has 
prepared guidance on the preparation and submission of annual 
performance reports in fiscal year 1999.
    L. Nye Stevens, Director of Federal Management and 
Workforce Issues at the General Accounting Office, testified 
that implementation of the Results Act had so far achieved 
mixed results. Mr. Stevens predicted highly uneven 
governmentwide implementation in the fall of 1997, noting that 
many agencies did not appear well positioned to provide in 1997 
an answer to the fundamental Results Act question of whether 
programs have produced real results.
    GAO found that agencies are confronting five key challenges 
that were limiting effective implementation of the Results Act: 
(1) establishing clear agency missions and strategic goals when 
program efforts are overlapping or fragmented; (2) measuring 
performance, particularly when the Federal contribution to a 
result is difficult to determine; (3) generating the results-
oriented performance information needed to set goals and assess 
progress; (4) instilling a results-oriented organizational 
culture within agencies; and (5) linking performance plans to 
the budget process.
    At the third Results Act hearing, the subcommittee heard 
testimony from the Office of Management and Budget and the 
General Accounting Office regarding the content of OMB's 
Strategic Plan. Gene Dodaro, Assistant Comptroller General, 
Accounting and Information Division, General Accounting Office, 
testified on the deficiencies in OMB's August draft Strategic 
Plan. He also testified on the improvement in OMB's final 
September Strategic Plan and the remaining deficiencies. Mr. 
Dodaro cited evidence within OMB's plan to make the distinction 
between relative strengths in budgeting and serious weaknesses 
in management. GAO continued to testify concerning the serious 
weaknesses in the strategy and resources for management tasks. 
GAO emphasized the lack of assurance that the planned method of 
coordinating agency efforts via councils would accomplish 
anything.
    Mr. G. Edward DeSeve, Acting Deputy Director of Management 
at OMB, testified on the compliance and completeness of OMB's 
final Strategic Plan. He testified that a number of meaningful 
tasks were accomplished using the method of coordinating 
councils. He testified that the strategy and resources 
currently available to OMB were sufficient to accomplish all of 
OMB's responsibilities.
    Subcommittee Chairman Horn questioned Mr. DeSeve concerning 
``management'' as versus ``budget'' activities at OMB. In 
particular, he enumerated some of OMB's responsibilities and 
questioned OMB's capacity to handle all the work. Mr. DeSeve 
insisted that OMB's strategy of coordinating councils was not 
due to insufficient resources but a purposeful choice of the 
best way to achieve management improvement throughout the 
Federal agencies.
    At the fourth and final subcommittee hearing on the Results 
Act in 1997, testimony was heard from the General Services 
Administration [GSA] regarding the content of GSA's Strategic 
Plan. Mr. Dennis J. Fisher, Chief Financial Officer at GSA, 
testified as to the completeness and quality of the GSA 
Strategic Plan. Mr. Fisher was personally in charge of the 
plan's development and attested to its alignment with GSA 
divisional plans and budgets. Mr. Horn questioned GSA building 
rental rates, overhead costs, and flexibility.
    b. Benefits.--The quality of agency Strategic Plans and 
their derivative Performance Plans and Performance Reports 
affects the effectiveness and efficiency of the entire Federal 
Government. Without strategic plans and actual performance 
measures against those plans, it is impossible for any large 
organization to access its success. This is particularly true 
to Federal Departments and agencies because of the diverse 
nature of the programs they administer. For a large number of 
Federal programs it is very difficult to assess their success. 
It is especially difficult to compare the relative success of 
duplicate or overlapping programs. Consequently, it is 
difficult for Congress to determine which programs are worth 
the American taxpayer's investment; which programs should be 
expanded because they work well and which programs should be 
canceled because they do not deliver their intended result.
    The subcommittee has conducted hearings to oversee the 
Government's implementation of GPRA. The subcommittee has made 
recommendations on how strategic plans should be developed. The 
subcommittee has made explicit the intentions and expectations 
of Congress for the content and quality of GPRA strategic 
plans. The subcommittee has worked with specific agencies such 
as GSA and OMB to review their draft strategic plans. Further, 
because of the special function of OMB in guiding other Federal 
agencies, the subcommittee has insisted that OMB set serious 
standards for all Federal agencies to deliver realistic 
strategic plans and meaningful performance measures.
    The subcommittee worked closely with congressional 
leadership to evaluate the draft strategic plans submitted in 
August. The critiques provided to the largest 24 Federal 
Departments and agencies resulted in substantial quality and 
content improvements in the final strategic plans submitted for 
September fiscal year end. In fact, the average score for final 
strategic plans was almost double the score for draft plans.
    The quality of agency Strategic Plans and their derivative 
Performance Plans and Performance Reports affects the 
effectiveness and efficiency of the entire Federal Government. 
Further, the quality of Results Act plans affects the ability 
of Congress to evaluate program adherence to policy, program 
effectiveness and efficiency, and program duplication, overlap, 
and waste. Similarly, the administration and the agencies 
themselves are affected by the quality of their Results Act 
plans. A small effort by the subcommittee has tremendous 
leverage in improving Results Act plans and, thereby, 
performance throughout the Federal Government.
    c. Hearings.--The subcommittee held four hearings on the 
Government Performance and Results Act in 1997: (1) 
``Government Performance and Results Act Implementation: How to 
Achieve Results,'' March 10 and 13, 1997; (2) ``Government 
Performance and Results Act: Status and Prospects of the 
Results Act,'' June 3, 1997; (3) ``Oversight of OMB's GPRA 
Strategic Plan,'' October 6, 1997; (4) ``Oversight of GSA's 
Government Performance and Results Act Strategic Plan,'' 
October 8, 1997; and, (5) ``H.R. 2883, The Government 
Performance and Results Act Technical Amendments of 1997,'' 
February 12, 1998 (see the legislative section of this report 
for more on H.R. 2883).

4. Internal Revenue Service Management.

    a. Summary.--The Internal Revenue Service has had 
difficulty adapting to the information and accountability 
demands of the late 20th century. The subcommittee held two 
hearings on financial management at the IRS in 1996. Those 
hearings focused on the IRS's revenue accounting system and the 
IRS's problems with collections, management of accounts 
receivables, filing fraud and fraudulent refunds, records 
retention, tax lien recovery, and unauthorized browsing of 
taxpayer records by IRS personnel. Despite promises for reform 
made at those hearings, a steady stream of press reports on 
feeble management, failed automation, and poor customer service 
at the IRS continued unabated into 1997.
    The list of failed projects at the IRS includes:
        
 The Tax Systems Modernization project, a $4 
        billion attempt to modernize the IRS's decades-old 
        computer systems;
        
 Cyberfile, a project that would have allowed 
        taxpayers to prepare and electronically submit their 
        tax returns from their personal computers;
        
 Integrated Case Processing, a program that 
        would have allowed IRS representatives to access all 
        the data needed in order to answer taxpayer questions 
        over the telephone;
        
 the Document Processing System, a system that 
        would have scanned paper documents and electronically 
        captured data for subsequent processing and retrieval; 
        and
        
 the Service Center Recognition/Image 
        Processing System, the failed document-scanning program 
        that the Document Processing System was designed to 
        replace.
    Several important questions must be answered. What does the 
IRS need to do to get its modernization project back on track? 
How is the Treasury going to ensure that the IRS embarks on a 
modernization plan that will work? What sort of milestones or 
benchmarks should a modernization plan have so that its 
progress can be monitored? How long do we have to wait to see 
results? Will the right people be held accountable? How can we 
overcome obstacles to change such as the organizational culture 
of the IRS? How do we modify it? How do we make sure that the 
IRS can manage multimillion-dollar information-technology 
development projects, even if such projects are given to 
outside contractors?
    The IRS must be accountable. Americans have a right to know 
whether the agency that collects taxes from their hard-earned 
money is capable of managing its internal operations in an 
efficient, fair, and accountable way.
    A hearing entitled, ``Internal Revenue Service 
Mismanagement and Ideas for Improvement,'' was held on April 
14, 1997. The subcommittee heard testimony from Lynda Willis, 
Director for Tax Administration and Policy of the General 
Accounting Office, who discussed the progress the IRS has made 
in acting on recommendations submitted by GAO to improve IRS 
operations. Robert Tobias of the National Treasury Employees 
Union, presented IRS employees' views on how to restore public 
and congressional confidence in the IRS. Sheldon Cohen, former 
IRS Commissioner during the Johnson administration and a 
National Academy of Public Administration fellow, also 
testified on information technology challenges at the IRS. Mr. 
Cohen was Commissioner when the IRS first started to 
computerize its operations. Deputy Commissioner Michael Dolan 
provided testimony on the IRS's approach to modernization.
    Mr. Horn noted at the hearing that the President was faced 
with the task of nominating a new IRS Commissioner. Mr. Horn 
advised the President that he should be judicious in his choice 
of the new IRS Commissioner. It should not be someone who is 
simply a CPA tax accountant, or a tax lawyer, but someone who 
has demonstrable management expertise in providing leadership 
to large, complex organizations. The President later followed 
Mr. Horn's advice by nominating Charles O. Rossotti, a 
technology executive, to the position.
    b. Benefits.--Congressional attention to the troubles at 
IRS are essential if the agency is going to reform. At the 
heart of IRS's problems is poor management, including poor 
financial management and poor information technology 
management. The year 2000 computer software conversion problem 
is an issue that illustrates the importance of improving 
management at the IRS. Without serious attention, it may become 
necessary to add the year 2000 problem to the IRS failure list. 
This would be a catastrophe not only for the IRS but for all 
the other agencies and organizations that depend on IRS 
information.
    c. Hearings.--``Internal Revenue Service Mismanagement and 
Ideas for Improvement'' was held on April 14, 1997.

5. Debt Collection.

    a. Summary.--The Debt Collection Improvement Act [DCIA] was 
signed into law on April 26, 1996, as a part of Public Law 104-
134. The DCIA established new tools to assist agencies in 
collecting debts owed to the United States. It provides 
agencies incentives to increase collections of delinquent debts 
while protecting the rights of debtors. It also allows agencies 
to rely on the expertise of private-sector debt collectors.
    The subcommittee held two hearings regarding the 
implementation of the Debt Collection. The first hearing was 
entitled ``Implementation of the Debt Collection Improvement 
Act of 1996.'' Larry Summers, Deputy Secretary of the Treasury, 
described efforts to reform and modernize the Internal Revenue 
Service. Summers noted his opposition to an independent 
Internal Revenue Service and opposition to an oversight board. 
According to Mr. Summers, no other issue occupies more of his 
time than debt collection. John Koskinen, Deputy Director, 
Office of Management and Budget described the challenges, 
priorities, trends in the debt collection area, and the 
importance of interagency cooperation. Koskinen was questioned 
as to OMB's commitment to the debt collection function. 
Koskinen asserted that debt collection is a priority and that 
OMB is actively engaged, although the function occurs primarily 
at other agencies.
    Mr. Gerald Murphy, Assistant Fiscal Secretary, Department 
of the Treasury described the activities within his Department 
to organize the Treasury Offset Program to intercept payments 
to delinquent debtors, provide for cross-servicing, draft 
regulations and other activities intended to promote debt 
collection. Mr. Steven McNamara, Assistant Inspector General, 
Department of Education, noted his office's work to identify 
benefit fraud in the Pell Grant program. According to McNamara, 
a confidential survey of tax returns was conducted that 
compared them against stated income. The survey revealed that 
nearly $200 million in Pell Grants went to ineligible 
individuals who had lied on their applications.
    Mr. Mitchell Adams, commissioner, Massachusetts Department 
of Revenue, described the effort of the State of Massachusetts 
to collect delinquent debts including student loans and child 
support, through wage garnishment. Mr. Adams noted a 
technically advanced system designed to automate this process.
    The subcommittee's second hearing on debt collection was 
entitled ``Oversight of Federal Debt Collection Practices,'' 
and held on November 12, 1997. Jerry Hawke, Undersecretary, 
Department of the Treasury, and Gerald Murphy, Assistant Fiscal 
Secretary, Department of the Treasury, described the Department 
of the Treasury's efforts to implement the Debt Collection 
Improvement Act. The Department was criticized for poor 
progress and missteps. The Department was unable to produce a 
timetable for implementation.
    David Longaknecker, Assistant Secretary for Postsecondary 
Education, Department of Education, noted his agency's 
improvements in debt collection. The department, with years of 
experience in the area and an excellent team in place, has 
improved its recoveries of delinquent debts.
    John Gray, Deputy Administrator, Small Business 
Administration, described the SBA's program to collect 
delinquent debts. These efforts include a large loan sales 
program that has been the subject of some delays. Mr. Gray 
indicated that the SBA would begin referring delinquent 
accounts to the private collection agencies under contract with 
the Department of the Treasury by January 1998.
    The subcommittee convened another hearing on debt 
collection, entitled ``Oversight of the U.S. Department of 
Agriculture Debt Collection,'' on March 30, 1998. At this 
hearing, the subcommittee examined issues relating to debt 
collection practices at the Department of Agriculture including 
the agencies' implementation of the DCIA. The Department of 
Agriculture holds 40 percent of the loans owed the Federal 
Government, or approximately $100 billion. According to the 
Department of the Treasury, the Department of Agriculture 
accounts for 20 percent of the delinquent debts held by major 
credit agencies and almost 50 percent of the debt which has not 
yet been referred to the Department of the Treasury for 
collection action. The Rural Utility Service, a bureau of the 
Department of Agriculture, lists only $50,000 in delinquent 
debts in a total portfolio of about $35 billion. The 
subcommittee was particularly interested in Department of 
Agriculture loan programs and debt collection efforts. 
According to recent GAO reports describing the debt collection 
situation at the USDA, compared with other major credit 
agencies, the USDA has referred a relatively small amount of 
debts for cross-servicing and offset.
    The subcommittee heard from witnesses from the USDA as well 
as the General Accounting Office. Ms. Linda Calbom, Director, 
Civil Audits at the GAO, summarized the findings of a report 
issued by GAO in September 1997 entitled, ``Federal Electricity 
Activities: The Federal Government's Net Cost and Potential for 
Future Losses.'' As part of this report, GAO provided an 
assessment of the Federal Government's risk of future losses 
from the Rural Utility Service's electric portfolio. Ms. 
Calbom's testimony focused on findings from the report 
concerning substantial write-offs of loans to rural electric 
cooperatives, likely additional losses from electricity loans 
considered financially stressed, and the potential future 
losses of currently viable loans that may become stressed due 
to high production costs or regulatory or competitive 
pressures.
    The most significant loan write-offs were related to 
generation and transmission cooperative borrowers who defaulted 
on loans due to poor business judgment either by 
underestimating production costs or overestimating customer 
demand. Further the GAO report concluded that many generation 
and transmission borrowers have production costs higher than 
investor-owned or publicly-owned generating utilities which 
indicated that RUS borrowers may have difficulty competing in a 
deregulated electricity market.
    The second panel of witnesses was comprised of officials 
from the USDA. These witnesses included Sally Thompson, Chief 
Financial Officer; Mr. Keith Kelly, Administrator, Farm Service 
Agency; Mr. Wally B. Beyer, Administrator, Rural Utilities 
Service; and Mr. Jan E. Shadburn, Administrator, Rural Housing 
Service.
    Sally Thompson pointed out that while the USDA is the 
largest user of Federal direct credit, its delinquency rate of 
7.2 percent is well below the overall Federal delinquency rate 
of 20 percent. Ms. Thompson noted that the USDA is taking 
significant steps to improve the collection of delinquent 
debts. USDA has actively utilized administrative offsets to 
collect delinquent debts.
    Keith Kelly commented on the progress made by the Farm 
Service Agency in implementing the provisions of the DCIA. 
According to Mr. Kelly, at the end of fiscal year 1997, the FSA 
had a total debt portfolio of approximately $34.6 billion. Mr. 
Kelly explained that most of this debt is being serviced in a 
timely fashion. The Farm Service Agency is in the process of 
making a full transition to the use of the Treasury Offset 
Program as required by the DCIA and plans to be fully compliant 
with the Treasury Offset Program in the fall of 1998.
    Wally Beyer testified that the Rural Utilities Service has 
taken the necessary steps to be in full compliance with the 
DCIA. The RUS has a $31 billion electric loan portfolio. 
According to Mr. Beyer, the overwhelming majority of RUS 
financially stressed borrower loans are the result of RUS-
financed Generation and Transmission cooperative investments. 
These loans were made approximately 20 years ago to generate 
and transmit coal and nuclear power. Moreover, these loans were 
made at a time when interest rates were in the double digits 
which has increased the financial burden on these borrowers. 
RUS has developed an in-house division devoted entirely to 
financially stressed electric utility borrowers. Only 14 RUS 
power supply borrowers have entered into debt restructuring 
negotiation during the past 18 years. Negotiations and the 
complexity of debt restructuring makes the DCIA's 180 day 
timeframe for debt recovery impractical.
    Mr. Jan Shadburn, Administrator of the Rural Housing 
Service [RHS] at the Department of Agriculture, explained that 
implementation of the DCIA by the RHS has been delayed due to 
the necessity to revise systems and procedures. Mr. Shadburn 
testified that the RHS has a loan portfolio of over $35 
billion. The debt collection tools included in the DCIA has 
assisted in the efficient and effective management of this loan 
portfolio.
    The subcommittee's fourth hearing on debt collection was 
entitled, ``Oversight of the Implementation of the Debt 
Collection Improvement Act,'' held on June 5, 1998. Federal 
debt collection continues to be a major problem. According to 
the Department of the Treasury the United States is currently 
owed $50 billion in delinquent non-tax debt. The Debt 
Collection Improvement Act of 1996 [DCIA] provided Federal 
agencies with new tools and incentives to improve Federal debt 
collection. Agencies, however, have been slow to implement the 
DCIA. Thus far, the Department of the Treasury has spent $40 
million to implement the DCIA, but only $4 million has been 
collected. This includes $5 million on a computer system which 
was discarded once completed.
    Administrative offset is the withholding of funds owed to a 
person to satisfy a debt also owed by that person. This is 
accomplished by matching the delinquent debtors name and 
verifying information against the payment records of Federal 
agencies. The Department of the Treasury's Financial Management 
Service [FMS] will undertake this offset. Key implementation 
issues include whether delinquent debts have been referred to 
FMS by the agencies; whether the payment files include Social 
Security numbers; the degree of success obtained by these 
actions; cooperation between OMB, Treasury, and the agencies; 
and collection results. Early reports indicate that agencies 
have expressed reluctance and stated that they were unprepared 
to give FMS the delinquent debt.
    In addition, FMS has run into problems building the system 
for administrative offset. FMS initially built the Interim 
Treasury Offset Program [ITOP], which was designed as a concept 
system to demonstrate the feasibility of conducting offsets. 
FMS then paid a contractor $5 million to build the Grand 
Treasury Offset Program [GTOP], a more robust system, in the 
words of the Department of the Treasury, to accomplish a 
greater range of functions. Once developed, GTOP was discarded, 
and FMS returned to using ITOP.
    At the hearing, the General Accounting Office and the 
Inspector General of the Department of the Treasury addressed 
FMS' development of administrative offset systems in some 
detail. GAO has criticized FMS for lacking an overall concept 
of operations, functional requirements, and a risk management 
plan for ITOP. Since GTOP also lacked these plans, there is 
some concern that ITOP would experience the same problems as 
GTOP, which cost taxpayers $5 million.
    The Department of the Treasury is required under the DCIA 
to write regulations. The Department also intends to put out 
guidance on certain issues. There is no formal deadline that 
the Congress established in passing the DCIA. While the 
Department of the Treasury has not completed the regulations, 2 
years past the date of enactment, the department has made good 
progress in the last 6 months on drafting regulations.
    To date, agencies have referred $16.5 billion for 
administrative offset and $1.5 billion for collection action. 
That leaves approximately $10.7 billion that is eligible for 
referral but has not been referred for administrative offset, 
and $6.9 billion that has not been referred for collection 
action.
    The subcommittee heard from a number of witnesses from 
Federal agencies about implementation of the DCIA. The DCIA 
will largely be implemented by program staff and personnel in 
the offices of the chief financial officers. It will be audited 
by the Inspectors General in their respective agencies.
    Richard Gregg, Commissioner of the Financial Management 
Service [FMS], Department of the Treasury, testified on the 
progress FMS has made in implementing the debt collection 
provisions of the DCIA. FMS established a management team 
responsible for implementing the DCIA. The merger of the tax 
refund offset and the Treasury offset programs, proposed for 
January 1998 has been delayed until January 1999. FMS and the 
Internal Revenue Service have worked closely and developed a 
mechanism for agencies to simultaneously refer debts to both 
the tax refund offset and administrative offset programs. Mr. 
Gregg also testified that FMS is working to increase the 
collection of past-due child support. As of 1998, 15 States 
have voluntarily agreed to participate in this administrative 
offset program to collect past-due child support.
    John Hawke, Undersecretary of the Department of the 
Treasury, testified about the Department of the Treasury's 
progress implementing the DCIA. Mr. Hawke provided an analysis 
of the $52 billion in delinquent non-tax debt owed the Federal 
Government. According to Mr. Hawke, $47.2 billion of the debt 
is older than 180 days and therefore within the scope of the 
DCIA.
    Richard Calahan, the Acting Inspector General from the 
Department of the Treasury, testified about an audit performed 
by the Treasury Office of Inspector General on FMS' efforts to 
develop the Grand Treasury Offset Program [GTOP]. The audit 
report concluded that the development of the GTOP was not well 
planned or well managed. According to Mr. Calahan, FMS has 
concurred with the recommendations in the IG audit report. The 
OIG is conducting another review focusing on FMS' overall 
strategic process. The IG is finding fundamental weaknesses in 
FMS overall strategic planning process. According to Mr. 
Calahan, these fundamental weaknesses will need to be corrected 
if FMS is to be successful in implementing the DCIA.
    Gary Engel, Associate Director, Governmentwide Accounting 
and Financial Management Issues, Accounting and Information 
Management Division of the General Accounting Office testified 
about GAO's review of the Department of the Treasury's efforts 
to collect delinquent non-tax debts through its administrative 
offset program. Since the subcommittee's oversight hearing on 
the DCIA implementation held in November 1997, agency referral 
of delinquent debt to the Department of the Treasury for 
administrative offset has increased from $9.4 billion to $16.7 
billion. This increase is the result of a closer working 
relationship between the Department of the Treasury and Federal 
agencies to identify debts that can be referred and to 
incorporate the debt agencies submitted for the IRS tax refund 
offset program into Treasury's administrative offset database. 
A significant amount of debt remains uncollected, in part 
because Treasury has experienced significant problems 
developing an administrative offset program system.
    b. Benefits.--The role of the Federal Government in the 
credit markets is enormous. The Federal Government dominates 
the markets for student loans and housing loans, and has a 
strong impact on other sectors as well. Effective Federal debt 
collection practices is essential to protect the interests of 
the taxpayers, and strong congressional oversight is essential 
to effective debt collection practices. At this point, the 
Government is still in the process of implementing the DCIA. 
There are a variety of steps in the process of implementation 
that warrant heightened congressional attention.
    c. Hearings.--Subcommittee Chairman Horn called two 
hearings regarding implementation of the Debt Collection 
Improvement Act, one on April 18, 1997 and the other on 
November 12, 1997. In addition, (3) ``H.R. 4243, Government 
Waste, Fraud, and Error Reduction Act of 1998; H.R. 2347, The 
Federal Benefit Verification and Integrity Act; and H.R. 2063, 
The Debt Collection Wage Information Act of 1997,'' was held on 
March 2, 1998; (4) ``Oversight of the U.S. Department of 
Agriculture Debt Collection,'' was held on March 30, 1998; and 
(5) ``Oversight of the Implementation of the Debt Collection 
Improvement Act,'' convened June 5, 1998.

6. Federal Measures of Race and Ethnicity.

    a. Summary.--For the past two decades, the Federal 
Government had used four racial categories to measure the 
population: black, white, American Indian or Alaskan Native, 
and Asian or Pacific Islander. Separately, individuals have 
also been classified according to Hispanic ethnicity. Since the 
1978, these categories have been set forth in the Office of 
Management and Budget's Directive No. 15--Race and Ethnic 
Standards for Federal Statistics and Administrative Reporting. 
Race and ethnic classifications are used for implementation of 
numerous Federal laws on voting rights, lending practices, 
provision of health services, and employment practices. The 
data are also utilized by State and local governments for 
legislative redistricting and compliance with the Voting Rights 
Act.
    Directive No. 15 has restricted designation of an 
individual to one of the four racial categories. The major 
concern with this requirement is that a growing segment of the 
population can claim multiple racial heritages. It is argued 
that forcing such individuals to choose just one heritage is 
unfair to them and an unnecessary inaccuracy in the measurement 
of race. Proposed solutions included creation of a new category 
called ``multiracial,'' and, alternatively, allowing 
individuals to mark more than one of the four traditional 
categories.
    Due to increasing pressure over the measure of multiracial 
status as well as a variety of other concerns, OMB conducted a 
4-year review of Directive No. 15. The review involved four 
public hearings around the country and three sample surveys to 
measure the affect of proposed changes. The review was 
conducted by the Interagency Committee, a task force created by 
OMB with representation from 30 Federal agencies. The 
Interagency Committee completed its review of Directive No. 15 
and submitted its recommendations to OMB in July 1997. The 
recommendations were published in the July 9, 1997, Federal 
Register. The Interagency Committee rejected the proposal for 
creation of a ``multiracial'' category but recommended that 
individuals be permitted to ``select one or more'' of the 
current categories of race whenever the Federal Government 
measures race.
    The Interagency Committee argued for its ``select one or 
more'' recommendation by observing that the multiracial 
population is growing. Allowing individuals to identify with 
more than one race will help to measure the demographic changes 
more precisely. The Interagency Committee also pointed out that 
at least 0.5 percent of respondents already mark more than one 
race in spite of instructions to choose just one. Finally, 
there is a trend toward reporting more than one race at the 
State level. Currently five States allow individuals to select 
a multiracial category or to choose more than one race.
    The Interagency Committee provided several reasons for 
rejecting a multiracial category. First, it found that there is 
no general consensus on the definition of ``multiracial.'' 
Second and related, a multiracial category is more likely to be 
misunderstood by individuals responding to questions on race. 
Such misunderstanding would lead to inaccurate responses and 
therefore less reliable data on race. A third reason is that a 
multiracial category would require either more space or mode 
coding.
    OMB accepted public comments on the Interagency Committee 
recommendation for approximately 2 months, after which time it 
announced its decision to adopt the recommendation with slight 
modifications. On the multiracial issue, it adopted the 
``select one or more'' recommendation. The changes will be 
adopted by the Census Bureau during its dress rehearsal for the 
2000 census in the spring of 1998.
    The subcommittee held a series of three hearings on this 
issue. The series was entitled, ``Federal Measures of Race and 
Ethnicity and the Implications for the 2000 Census.'' They took 
place on April 23, May 22, and July 25, 1997.
    The first hearing provided background on the issues 
involved in Federal measures of race and ethnicity. The 
subcommittee heard testimony from the Office of Management and 
Budget, the General Accounting Office, the Department of 
Education, and the Department of Health and Human Services.
    The second hearing featured advocates and opponents of a 
multiracial designation, including Susan Graham, president, 
Project RACE; Ramona Douglass, president, Association of 
MultiEthnic Americans; Karen Narasaki, executive director, 
National Asian Pacific American Legal Consortium; Harold 
McDougall, director, Washington Bureau, National Association 
for the Advancement of Colored People; Eric Rodriguez, policy 
analyst, National Council of La Raza; and JoAnn Chase, 
executive director, National Congress of American Indians. The 
subcommittee heard arguments that the categories of Directive 
No. 15 did not accurately account for a particular group from 
U.S. Senator Daniel K. Akaka (D-HI) and Helen Hatab Samhan, 
executive vice president, Arab-American Institute. The hearing 
also featured demographic and sociological specialists: Dr. 
Mary Waters, Department of Sociology, Harvard University; Dr. 
Balint Vazsonyi, director, Center for the American Founding; 
and Dr. Harold Hodgkinson, Institute for Educational 
Leadership.
    The third hearing featured testimony on the potential 
consequences of the Interagency Committee recommendation. 
Several witnesses focused on challenges presented by the 
variety of new data created by allowing individuals to select 
more than one race. The central issue is how this data will be 
tabulated. One major concern is whether the recommendation, if 
adopted by OMB, would lead to double counting of individuals 
who identify with more than one race. This could be a problem 
particularly in the enforcement of civil rights laws. The 
Acting Assistant Attorney General for Civil Rights, Isabelle 
Katz Pinzler, addressed this issue.
    b. Benefits.--Federal measures of race and ethnicity are 
important to many people for a variety of reasons. The data 
gathered by the Census Bureau and other Federal agencies as 
well as by school districts and hospitals throughout the 
country provide essential information to governments, 
businesses, and a variety of other organizations. Professionals 
from statisticians to law enforcement officials rely on this 
data. Furthermore, all individuals have a first-hand experience 
with this data: they are the ones who provide it. The way the 
Federal Government decides to measure race and ethnicity 
therefore affects many people at many levels. The decision of 
whether to make changes to the current standards was a very 
important one. It was a decision that needed to be considered 
cautiously and openly. Although ultimately the decision was in 
the hands of OMB, it first needed the attention of Congress and 
the American people. The subcommittee's hearings on the issue 
both broadened and deepened deliberations on the issues 
involved in the decision.
    c. Hearings.--The subcommittee held a series of three 
hearings on this issue. The series was entitled, ``Federal 
Measures of Race and Ethnicity and the Implications for the 
2000 Census.'' These hearings were held on April 23, May 22, 
and July 25, 1997.

7. The Post FTS-2000 Telecommunications Contract.

    a. Summary.--The FTS2000 contract was first issued in 1988 
by the General Services Administration. The contract governs 
Federal purchases of long-distance telephone services and other 
ancillary services. By most estimates, it has been successful 
in reducing Federal telecommunications costs. Prior to the 
FTS2000 contract, GSA operated a government-owned 
infrastructure that cost more than standard commercial rates 
offered by AT&T, MCI and Sprint, the three main long-distance 
firms. The FTS2000 contract reduced significantly the rate-per-
minute charge paid by Federal agencies using the contract, 
which was awarded to Sprint and MCI.
    GSA has worked with the Interagency Management Council 
[IMC], a group of agency telecommunications experts, in 
managing the FTS2000 program and planning for the follow-on 
contract. This planning process was initiated in March 1993. 
The IMC and GSA solicited input from agency users, industry, 
and academia for the follow-on contract (FTS2001).
    Enactment of the Telecommunications Reform Act of 1996 
[TRA] affected planning for the FTS2001 contract by promising 
to bring a new era of competition to telecommunications. This 
undermined the justification for a longer-term contract, since 
a long-term contract awarded now would not allow the Federal 
Government to benefit from industry consolidation and 
competition under TRA.
    In September 1996, GSA released its then-current strategy 
for the FTS2001 contract. In response to congressional and 
industry interest, GSA released a revision of the strategy in 
February 1997 in the form of a statement of principles rather 
than a draft RFP. The revision created an opportunity for the 
eventual contractors in the FTS2001 and MAA programs to compete 
against each other. A refinement of these principles was issued 
on April 4, 1997. The refinement governs the contract duration, 
award process and means of competition, and the inclusion of 
optional services.
    b. Benefits.--The FTS-2000 contract has benefited taxpayers 
enormously. The follow-on contract will provide a contracting 
vehicle to allow Federal agencies to obtain better rates for 
local service. Congressional participation in guiding this 
process was crucial to achieving the best possible 
telecommunications deal for the taxpayers.
    c. Hearings.--The subcommittee held a hearing on April 30, 
1997, entitled, ``Oversight of the Post-FTS2000 
Telecommunications Contract.''

8. White House Management Issues.

    a. Summary.--The subcommittee addressed two concerns 
regarding management of the Executive Office of the President: 
the status of special Government employees and the lack of a 
chief financial officer in the White House. The issue of a 
chief financial officer in the White House was treated through 
legislation with H.R. 1962 (see Section III. A. Legislation, 
New Measures for more discussion.)
    The continuing spate of allegations about mismanagement at 
the White House have been frequent reminders of the need for 
serious, statutory changes in the way the White House is run. 
H.R. 1966, the ``Special Government Employee Act of 1997,'' 
updates the definition of a ``special Government employee'' to 
cover unpaid, informal advisors. Foremost is the need for 
accountability and adherence to conflict-of-interest and other 
disclosure requirements. The White House has a history of using 
informal associates and advisers who are present in the White 
House on an ongoing basis and regularly affect public policy, 
yet who are utterly unaccountable to the public. Americans have 
a right to know who is influencing policy decisions in the 
White House. Too often influential associates of the President 
wield power in the White House yet remain hidden in the shadows 
and unaccountable to the public. Hearings before the full 
Committee on Government Reform and Oversight in the last 
Congress demonstrated that certain associates of the President 
used their access to President Clinton, the First Lady, and the 
staff of the Executive Office of the President to promote their 
own business interests, even to the extent of encouraging the 
termination of career employees of the White House.
    b. Benefits.--Redefining ``special Government employee'' 
will shine the light of publicity on back-room advisors. The 
proposed measure will expand the definition of ``special 
Government employee'' to cover unpaid, informal advisors to the 
President so that they come under the same conflict of interest 
and financial disclosure statutes as regular White House staff. 
This proposal would amend the current definition to make it 
completely clear who comes under conflict of interest and other 
disclosure requirements. This includes a functional test that 
focuses on what the advisors actually do and on whether they 
are involved in the Government's deliberative processes. The 
bill will help put a stop to abuses of power of the unelected 
and unaccountable.
    c. Hearings.--``Oversight of the `Presidential and 
Executive Office Financial Accountability Act of 1997' and the 
`Special Government Employee Act of 1997' '' was held on May 1, 
1997. Representative John L. Mica (R-FL), who in the last 
Congress introduced H.R. 3452 and is a strong supporter of 
accountability in the Federal Government, explained why the two 
bills are sorely needed. Gregory S. Walden, counsel, Mayer 
Brown & Platt, and former Assistant General Counsel in the 
White House, and Stephen Potts, Director, Office of Government 
Ethics, testified on the ``Special Government Employee Act of 
1997.''

9. Executive Branch Information Dissemination.

    a. Summary.--The Subcommittee on Government Management, 
Information, and Technology is a principle congressional 
guardian of access to executive branch information. The 
subcommittee's charter states that it ``will ascertain the 
trend in the availability of Government information and will 
scrutinize the information practices of executive agencies and 
officials.'' The subcommittee oversees Federal information 
dissemination. Information dissemination programs at the 
Government Printing Office include the distribution of 
publications to Federal depository libraries nationwide, 
cataloging and indexing, and distribution to recipients 
designated by law. They also include distribution to foreign 
libraries designated by the Library of Congress, in return for 
which the Library receives governmental publications from those 
countries.
    The Government Printing Office distributes about 100 
million copies of Government publications per year. 
Approximately 75 percent of all its printing needs are 
contracted out to private printers. Of the work handled in-
house, about half is for Congress. The Government Printing 
Office currently employs 3,674 employees, fewer than at any 
time in this century. There is concern that the administration 
has been reducing public access to information. Specifically, 
many executive branch agencies are not furnishing copies of the 
information they produce to the Government Printing Office for 
dissemination through the Federal depository libraries. 
Furthermore, there is concern that the administration is 
allowing many agencies to enter into restrictive distribution 
agreements that further limit the availability of agency 
information to the public.
    b. Benefits.--Access to information--especially 
governmental information--is the foundation of an educated 
citizenry and hence a free society. The Government Printing 
Office plays an essential role in making governmental 
information available to the American people. In times of rapid 
technological advance, it is important that the Government 
keeps pace with changes--both to maintain availability and to 
take advantage of time and cost saving measures. Subcommittee 
oversight in the areas of both information and technology is 
crucial to this process.
    c. Hearings.--``Oversight of the Government Printing Office 
and Executive Branch Information Dissemination'' was held on 
May 8, 1997. Witnesses from the Government Printing Office were 
Michael DiMario, the Public Printer, accompanied by Wayne 
Kelley, Superintendent of Documents. Other witnesses included 
Daniel S. Jones, president, NewsBank, Inc., who appeared on 
behalf of the Information Industry Association and Robert L. 
Oakley, Washington Affairs Representative of the American 
Association of Law Libraries, who appeared on behalf of a 
coalition of library associations.

10. The Medicare Transaction System.

    a. Summary.--In November 1995, the Subcommittee on 
Government Management, Information, and Technology and the 
Subcommittee on Human Resources held a joint hearing that 
considered, among other matters, how existing information 
technology processes could be incorporated into the Medicare 
claims system to more effectively identify fraud. Based on 
several reports from the General Accounting Office, the 
subcommittees had serious concerns at that time about the 
ambitious Medicare Transaction System or MTS. Congressman Horn 
feared that the Health Care Financing Administration [HCFA] was 
ill-equipped to manage such a massive and complex project, and 
that the costs would outweigh the benefits.
    Unfortunately, the fears materialized. On April 4th, the 
Health Care Financing Administration announced that it was 
``exploring other options to develop MTS.'' Moreover, the 
subcommittees learned in 1997 that HCFA has a serious year 2000 
problem. The General Accounting Office wrote a report that 
includes sharp criticism of HCFA's involvement in the year 2000 
software conversion effort of its claims contractors and 
standard systems maintainers.
    b. Benefits.--If the Medicare system is unable to process 
claims accurately in the year 2000, the impact on Medicare 
beneficiaries across the country, and indeed the entire health 
care system, could be catastrophic. Congressional oversight was 
necessary to get assurances for the American people about the 
future of Medicare transaction processing as well as the HCFA's 
management of the year 2000 problem.
    c. Hearings.--``Status of the Medicare Transaction System'' 
was held jointly with the Subcommittee on Human Resources on 
May 16, 1997. Witnesses included Joel Willemssen, Director, 
Information Resources, General Accounting Office; and Bruce 
Vladeck, Administrator, Health Care Financing Administration.

11. Total Quality Management.

    a. Summary.--Total Quality Management [TQM] is management 
philosophies that has helped many organizations become more 
efficient and effective in a very competitive environment. 
Government has many concerns other than the bottom line, but 
public and private sector services are inevitably compared in 
the consumer's mind--and in certain cases Government must 
compete directly with private companies. It is no surprise that 
in recent years voters have made abundantly clear their desire 
for a more efficient and affordable government. TQM strives to 
achieve continuous improvement of quality through organization-
wide efforts based on facts and data. Organizations use quality 
management principles to determine the expectations of all 
their customers--both external and internal--and to establish 
systems to meet those expectations. In recent years, both 
Federal and State governments have found that they could not 
attain high quality by using traditional approaches to managing 
service and product quality. The customer of the Federal 
Government is the American taxpayer. To satisfy its customer, 
the Government must design its programs, goods, and services 
for quality. Furthermore, application of quality management 
principles to the Government--an organization whose customers 
are also its owners--presents a unique set of challenges.
    The subcommittee sought ideas on how quality management 
principles might be applied to the special case of the 
Government with the overall purpose of working toward a more 
efficient and effective Federal Government. The formal 
definition of a Total Quality Management company exists in the 
criteria for the Malcolm Baldrige National Quality Award. This 
annual award, given since 1988 by the Department of Commerce, 
recognizes companies that excel in managing for and achieving 
quality.
    b. Benefits.--In our relentlessly competitive global 
economy, the only constant is rapid change. In this 
environment, organizations must adapt or perish. 
Competitiveness depends on management. The private sector has 
proven remarkably adept at organizational flexibility. The 
public sector has been distinctly less successful at changing 
with the times. The subcommittee has jurisdiction over 
management in the executive branch and is therefore responsible 
for examining management philosophies that could help to 
improve the efficiency and effectiveness of the Federal 
Government.
    c. Hearings.--A hearing entitled, ``Total Quality 
Management'' was held on June 9, 1997. Witnesses included 
Steven Bailey, president of the American Society for Quality 
Control; Dr. Harry Hertz, Director, National Quality Standards, 
National Institute of Standards and Technology, Department of 
Commerce; Nick Juskiw, chief executive officer and president, 
Trident Precision Manufacturing; Rosetta Riley, president and 
chief executive officer Sirus 21, Inc.; Rear Admiral (Ret.) 
Luther Schriefer, senior vice president and executive director, 
Business Executives for National Security; Lawrence Wheeler, 
vice president, Programs Systems Management Co., (a division of 
Arthur D. Little, Inc.); Steve Wall, director, Office of 
Quality Services for the State of Ohio; Greg Frampton, 
executive administrator, South Carolina Department of Revenue; 
Thomas Carroll, National Director for Quality, Internal Revenue 
Service; and David Cooke, Director of Administration and 
Management, Department of Defense.

12. Electronic Funds Transfer.

    a. Summary.--The Debt Collection Improvement Act [DCIA] was 
signed into law as a part of Public Law 104-134 on April 26, 
1996. The DCIA included provisions that will move Federal 
payments toward electronic funds transfer [EFT], which includes 
direct deposit, credit cards, and other forms of electronic 
payments. This will take place by 1999 unless the EFT 
requirement represents a hardship for the recipient. Prior to 
this law, Federal payees had the option of receiving EFT or a 
paper check in payment of salary, benefit, or other Federal 
payment due the individual from the Federal Government. 
Unfortunately, these checks are often forged, counterfeited, 
stolen, or fraudulent, and are sometimes delayed in the mail or 
lost.
    ``Oversight of the Implementation of the Electronic Funds 
Transfer Provisions of the Debt Collection Improvement Act of 
1996,'' was held on June 18, 1997. During the subcommittee's 
hearing Mark Catlett, Chief Financial Officer, Department of 
Veterans Affairs, described the department's efforts to promote 
the use of electronic payments by the VA's vendors. Vendors 
have traditionally been reluctant to accept such electronic 
payments. Currently, governmentwide, only 16 percent of vendors 
are currently receiving electronic payments. However, the VA 
has aggressively promoted the use of such payments, and the 
Department has achieved rates approaching 80 percent. This has 
eliminated 10 million paper transactions, thus reducing the 
burden on VA finance office staff.
    Marcy Creque, volunteers director, American Association of 
Retired Persons, described her organization's efforts to ensure 
that senior citizens are not hurt by the EFT mandate. She noted 
a telephone survey performed by a contractor for the Financial 
Management Service. According to this survey, 18 percent of 
Federal check recipients do not have bank accounts. By way of 
comparison, 13 percent of all U.S. households do not have 
accounts with a financial institution. The reasons vary. Many 
of those without bank accounts said that they do not have 
enough money (47 percent), they do not need an account (21 
percent), and that bank fees are too high (6 percent). This 
raises the question of whether financial institutions should 
provide accounts with no minimum balance amount, and with a 
large number of free ATM withdrawals and reasonable fees.
    b. Benefits.--The EFT requirement to receive benefits 
electronically will affect millions of Americans in a number of 
ways in the coming years. It will bring individuals heretofore 
outside the financial system into the mainstream. It will 
modernize Federal payment methods. It will give new impetus to 
electronic smart card products. Above all, EFT will solve the 
problems of lost, stolen, and fraudulent checks, reduce check-
cashing charges for Federal beneficiaries in the amount of $1.6 
billion per year, and reduce Federal expenditures by $100 
million per year, according to the Department of the Treasury. 
Congressional oversight of the implementation of EFT is 
necessary to ensure that these benefits are realized.
    c. Hearings.--``Implementation of the Electronic Funds 
Transfer Provisions of the Debt Collection Improvement Act of 
1996'' was held on June 18, 1997.

13. Inspectors General.

    a. Summary.--Inspectors General serve to protect the 
integrity of Federal programs and resources. Through their 
audits and investigations, Inspectors General seek to determine 
whether program officers, contractors, Federal workers, 
grantees, and others are conforming with regulations and laws. 
The Offices of Inspectors General were established by the 
Inspector General Act of 1978. The Inspector General Act of 
1978 (IG Act) consolidated the audit and investigative units 
within major Federal agencies under a single office and 
established protections to ensure independence and objectivity. 
By merging the audit and investigation functions within a 
single office, the IG Act sought to substantially reduce waste, 
fraud, and abuse and to make the Federal Government more 
accountable.
    Originally, Offices of Inspectors General [OIGs] were 
established in the 12 largest Federal departments and agencies. 
Today OIGs exist in 27 of the largest departments and agencies 
and in an additional 30 smaller designated boards, commissions, 
corporations, and foundations (including the Government 
Printing Office, the only legislative branch statutory IG). 
These smaller ``Designated Federal Entity'' OIGs were 
established by the 1988 amendments to the IG Act.
    Inspectors General have enjoyed substantial success in 
recoveries from investigations and recommendations that Federal 
funds be put to better use. There is concern, however, that the 
success of the IGs has come at the expense of long-range 
strategies that would ultimately lead to an improved 
government. Critics of the IGs have argued that too much 
emphasis is placed on securing convictions of fraudulent 
contractors, for example, and not enough emphasis placed on 
preventing fraud and waste from occurring in the first place. 
To carry out their responsibilities, the Offices of Inspectors 
General have broad investigative authority. They have access to 
documents relating to programs and operations within their area 
of responsibility. They have the ability to administer oaths, 
affirmations or affidavits and the power of subpoena. Recently, 
questions have been raised about investigative techniques used 
by some Inspectors General. In particular, investigative 
practices by Inspectors General, especially communications with 
witnesses and witness access to counsel, have come under 
scrutiny lately.
    ``Oversight of Investigative Practices of Inspectors 
General,'' was held on June 24, 1997. The subcommittee heard 
testimony from Representatives Lee Hamilton (D-IN) and Porter 
Goss (R-FL). Four Inspectors General as well as the Assistant 
Director, Criminal Investigative Division, Federal Bureau of 
Investigation, also testified.
    On Tuesday, April 21, 1998, the subcommittee conducted a 
hearing entitled, ``The Inspector General Act of 1978: Twenty 
Years After Passage, Are the Inspectors General Fulfilling 
Their Mission?'' At this hearing the subcommittee focused on 
the role of the Inspectors General, how that role has changed 
over the last 20 years, problems and issues facing the 
Inspectors General, and how the Inspector General concept can 
be strengthened for the future. The subcommittee heard 
testimony from Senator Susan Collins (R-ME) who discussed the 
merits of S. 2167 the ``Inspector General Act Amendments of 
1998'', a bill she introduced to enhance the efficiency and 
accountability of Inspectors General. The subcommittee also 
heard from both past and present Inspectors General, former 
congressional staff and OMB officials, the General Accounting 
Office and Paul Light, Director Public Policy Program of the 
Pew Charitable Trusts.
    b. Benefits.--In fiscal year 1995, the most recent year for 
which information is available, Inspector General 
investigations and audits led to $1.5 billion in ``recoveries'' 
(fines and reimbursements from individuals and companies that 
defrauded the Government). In addition, IG recommendations led 
agency managers to cancel or seek reimbursements of $2.3 
billion from contractors or grantees in 1995. IG 
recommendations also inspired Federal managers to improve plans 
for spending $10.4 billion--maximizing the return on Federal 
dollars. In addition, IG accomplishments in fiscal year 1995 
include 14,122 successful prosecutions, 2,405 personnel 
actions, and 4,234 suspensions and debarments of persons or 
firms doing business with the Government. The effectiveness of 
the Inspectors General is therefore of obvious interest to 
Congress and to the taxpayers.
    c. Hearings.--(1) ``Oversight of Investigative Practices of 
Inspectors General'' was held on June 24, 1997; and (2) ``The 
Inspector General Act of 1978: Twenty Years After Passage, Are 
the Inspectors General Fulfilling Their Mission?,'' was held on 
Tuesday, April 21, 1998.

14. Performance-Based Organizations.

    a. Summary.--In September 1995, Vice President Al Gore 
announced that a series of agencies would be transformed into 
performance-based, customer-oriented agencies. This 
transformation will build on existing initiatives that reorient 
Government agencies away from focusing on the resources they 
receive and toward their concrete accomplishments with those 
resources. Federal agencies need to change their incentives and 
internal cultures in order to focus on customers and achieving 
results. Agencies need to be more responsive to citizens at the 
same time that they account for program costs and safeguard 
broader public interests. According to the administration, this 
can be done by creating performance-based organizations that 
set forth clear measures of performance, hold the head of the 
organization clearly accountable for achieving results, and 
grant the head of the organization authority to deviate from 
governmentwide rules if this is necessary to achieve agreed-
upon results.
    A Performance-Based Organization is a discrete management 
unit with strong incentives to manage for results. PBOs commit 
to clear objectives, specific measurable goals, customer 
service standards, and targets for improved performance. Once 
designated, a PBO must have customized managerial flexibilities 
and a competitively hired chief executive. The chief executive 
signs an annual performance agreement with the Secretary and 
has his or her pay and tenure tied to the organization's 
performance. The British Government, on which the PBO concept 
is modeled, has found that such agencies improve performance 
while cutting administrative costs.
    The President's 1998 Budget identifies nine PBO candidates. 
These candidates are in varying stages of preparing legislation 
and sending it to their respective authorizing committees in 
Congress. The administration has several prerequisites for 
becoming a PBO candidate: a clear mission, measurable services, 
and a performance measurement system in place or in 
development; a general focus on external, not internal, 
customers; operations that can be separated from policymaking 
with a clear line of accountability to an agency head; top-
level support to transform the function into a PBO; predictable 
funding levels that correspond to their business operations. In 
a PBO, the policymaking and regulatory functions are split from 
their program operations. The PBO focuses on programmatic 
operations. However, not all Government agencies are suited to 
become PBOs. Operations that do not have clear, measurable 
results should be excluded.
    The subcommittee received testimony from Mr. Christopher 
Mihm, Acting Associate Director, U.S. General Accounting 
Office, General Government Division, Federal Management and 
Workforce Issues, who described the conclusions of GAO 
regarding the British Next Step agencies, upon which the 
concept of PBO is based. Mr. Mihm stressed that (1) a lack of 
clarity in the relationship between agencies and their parent 
departments, (2) an uncertainty concerning who is accountable 
for performance, and (3) difficulties in developing and setting 
performance goals, have confronted the British, and may pose 
similar problems for the United States PBOs.
    Mr. Edward Kazenske, Deputy Assistant Commissioner for 
Patents, Patent and Trademark Office, described the Patent and 
Trademark Office's [PTO] leadership in seeking a PBO 
designation. Mr. Kazenske outlined the recent troubled history 
of the PTO. The turnaround at PTO came in 1982, with the 
enactment of legislation to increase the agency's fees, gave 
the agency access to such fees, and paved the way for self-
sufficiency. This set up a ``compact'' with inventors to: 
reduce the time required to examine and issue a patent to 18 
months; reduce the time required to issue a trademark first 
action notice to 3 months and to register a trademark by 13 
months; to automate the operations of the PTO by the 1990's; 
and to strengthen the world-wide protection of intellectual 
property. While David Sanders, Deputy Administrator, Saint 
Lawrence Seaway Development Corporation [SLSDC], described his 
agency's proposal to create a PBO by creating incentives to 
promote individual and agency performance. According to Mr. 
Sanders, this gives all employees a direct stake in the 
agency's future for the first time in history.
    Mr. Craig Bolick, president of Local 1968 American 
Federation of Government Employees [AFGE], discussed his 
organization's opposition to PBO status for the SLSDC. Mr. 
Bolick opposes the PBO legislation for SLSDC because it would 
prevent AFGE from negotiating wages and benefits and includes 
mandatory usage of alternative dispute resolution procedures. 
AFGE also opposes bonuses for the chief operating officer.
    b. Benefits.--As proposals for converting Federal agencies 
into such PBOs increase, it is extremely important to examine 
the impact that such proposals will have on the procurement and 
civil service systems, and to determine the goal of such 
changes.
    c. Hearings.--The subcommittee held a hearing entitled, 
``Performance Based Organizations,'' on July 8, 1997.

15. Governors Island.

    a. Summary.--Located half a mile off the southern tip of 
Manhattan, Governors Island is Federal property that was 
recently declared surplus by the Federal Government. Governors 
Island consists of 204 acres, with 225 structures totaling 3 
million square feet of space ranging from residential to office 
space. A portion of the island is historic; it includes Fort 
Jay and Castle Williams, which was built to protect New York 
harbor. As part of its reorganization plan, the Coast Guard 
streamlined its base structure and in 1995, announced it would 
close Governors Island.
    As the property returns to civilian use, a number of 
disposal issues have surfaced, including how to pay for 
maintenance, and what type of access ought to be allowed. The 
1997 balanced budget agreement requires the General Services 
Administration to sell the island at fair market value. The 
Congressional Budget Office estimated that the island would 
yield $500 million if it were sold for the estimated fair 
market value.
    The subcommittee convened a hearing to examine what Federal 
actions would be necessary between now and year 2000, to ensure 
that the island does not deteriorate and possible prospects for 
future projects. Congressman Jerrold Nadler, (D-NY), expressed 
his interest in seeing increased public space such as 
hospitals, parks and other public facilities. In addition, 
Karen Alder of the General Services Adminstration outlined 
GSA's internal system of property disposal. She described the 
various possible uses of the land, and stressed that GSA would 
follow legislation enacted by Congress; however, the ultimate 
choices for reuse lay with the local authorities. An official 
from the city of New York, criticized the ``fictitious and 
unattainable $500 million'' figure estimated by the CBO.
    b. Benefits.--Governors Island is a historic landmark and 
played a key role in the defense of New York harbor in the War 
of 1812. The island played an important part in U.S. history 
and its preservation is an important responsibility of the 
Federal Government.
    c. Hearings.--On July 14, 1997, the subcommittee convened a 
hearing entitled, ``Governor's Island: Options for Reuse after 
Federal Government Departure.''

16. Government-Sponsored Enterprises.

    a. Summary.--The Federal Government established the first 
financial entity known as a Government Sponsored Enterprise in 
1916. These entities were created to direct funds to particular 
sectors of society that seemed to be inadequately served by the 
private credit markets. Private parties own most of the stock 
in GSEs, whose traditional function has been to engage in 
business operations in the private sector to increase the flow 
of credit to home buyers, farmers, students, and colleges. 
Although GSEs are authorized or established by Congress, their 
activities are not included in the Federal budget totals on the 
grounds that they are privately owned. Due to their special 
relationship with the Federal Government, however, detailed 
statements of financial operations and conditions are presented 
in the President's budget to the extent such information is 
available. These statements are not reviewed by the President; 
they are presented as submitted by the GSEs.
    There are currently 11 GSEs in operation. They were 
established by law between 1916 and 1989. Five enterprises 
operate in the housing area: the Federal Home Loan Banks; the 
Federal National Mortgage Association (Fannie Mae); the Federal 
Home Loan Mortgage Corporation (Freddie Mac); the Financing 
Corporation; and the Resolution Funding Corporation. Four 
enterprises operate in the agriculture area: the Federal 
Agricultural Mortgage Corporation (Farmer Mac); the Banks for 
Cooperatives; the Agricultural Credit Bank; and the Farm Credit 
Banks. Two enterprises operate in the education area: the 
Student Loan Marketing Association (Sallie Mae); and the 
College Construction Loan Insurance Association.
    While private parties own all of the stock of most GSEs and 
they are managed by private individuals, GSEs have strong ties 
to the Federal Government. The enabling legislation of each GSE 
specifies its general purpose and authorized transactions. For 
example, Fannie Mae is chartered to increase housing credit 
availability by engaging in secondary market and other 
transactions. The enabling legislation also identifies Federal 
agencies responsible for prescribing overall policy and 
regulations for the GSEs and usually provides that a minority 
of their board members be appointed by the President or another 
Federal official.
    GSEs typically receive their financing from private 
investors. They issue capital stock and short- and long-term 
debt instruments, sell asset backed securities (also known as 
mortgage-backed securities), and collect fees for guarantees 
and other services. Their principal source of financing is 
borrowing through the issuance of debt obligations or the sale 
of mortgage-backed securities. GSEs generally do not receive 
Federal appropriations.
    As a result of the benefits conferred upon GSEs and the 
similarity between their debt securities and those of the U.S. 
Treasury, most GSE debt and mortgage-backed securities are 
perceived by the credit markets to be guaranteed by the Federal 
Government. This perception allows GSEs to borrow in the credit 
markets at interest rates only slightly higher than the rates 
paid by the Treasury on its borrowings. Furthermore, this 
perception by the credit markets was enhanced by the 
Government's 1987 rescue of the Farm Credit System, which at 
that time was composed of three GSEs. This rescue could 
ultimately cost the Federal Government $5 billion.
    Subcommittee Chairman Horn convened the hearing to examine 
the evolving role of GSEs. Mr. Jim Bothwell, Chief Economist, 
U.S. General Accounting Office, described the five criteria for 
an effective regulator of GSEs: objectivity and arm's length 
status; prominence in government; consistency in regulation of 
similar markets; separation of the regulation of primary and 
secondary markets; and economy and efficiency. Mr. Bothwell 
noted past examples of regulatory failure, and noted that most 
GAO recommendations have gone unimplemented.
    Mr. Thomas Woodward, Economist, Congressional Research 
Service, noted that the creation of special benefits or 
privileges for a GSE are themselves a form of market 
distortion. While this may be justified in order to ensure that 
a public purpose is accomplished, it may be wise to 
periodically review whether the GSEs need their privileges, 
according to Mr. Woodward.
    Mr. Thomas H. Stanton, fellow, Johns Hopkins University, 
made three main point: (1) that safety and soundness rules must 
be designed before rather than after a GSE gains political 
power, since such political power could prevent later 
imposition of these sensible requirements; (2) the public 
benefits of a GSE depend upon the quality of ongoing public 
oversight, since in their markets, the GSE has an incentive to 
provide profitable services regardless of the presence of a 
public benefit; and (3) GSE legislation should contain an exit 
strategy and full disclosure of expenditure to influence the 
political process.
    b. Benefits.--Federal legislation confers a number of 
benefits on GSEs that are not provided to private companies. 
Most enterprises have a direct line of credit with the U.S. 
Treasury, their securities are exempt from Securities and 
Exchange Commission registration requirements, and their 
investors' interest income is exempt from State and local 
taxation. In addition, GSE debt obligations and securities have 
characteristics that are common to U.S. Treasury obligations. 
These advantages, combined with their strong impact on credit 
markets generally, make effective oversight essential.
    c. Hearings.--``Oversight of Government-Sponsored 
Enterprises'' was held jointly with the Subcommittee on Capital 
Banking Markets, Securities and Government Sponsored 
Enterprises of the Banking and Financial Services Committee on 
July 16, 1997.

17. Metropolitan Statistical Areas.

    a. Summary.--Metropolitan areas are geographic areas that 
have a large population center together with adjacent 
communities. The Office of Management and Budget designates and 
defines metropolitan areas following a set of official 
standards. Various categories of metropolitan areas include 
metropolitan statistical areas [MSAs], consolidated 
metropolitan statistical areas [CMSAs], and primary 
metropolitan statistical areas [PMSAs]. An MSA consists of one 
or more counties that contain a city of 50,000 or more 
inhabitants, or contain a Census Bureau-defined urbanized area 
that has a total population of at least 100,000 (75,000 in the 
six New England States).
    Additional outlying counties are included in the MSA if 
they have large numbers (generally 15 percent) of commuters to 
the central counties and they meet requirements for population 
density, urban population, percentage growth in population 
between the two previous decennial censuses, and the number of 
inhabitants within the urban area that qualifies the MSA.
    These designations are used as a framework for the Federal 
statistical system. They are also used for other reasons. For 
example, local community leaders use metropolitan area 
designation to promote the community as a business district. 
State governments use metropolitan areas to make communities 
eligible for programs that may be focused on urban or rural 
districts. The private sector uses metropolitan areas to 
develop sales territories and market new products. For example, 
according to USA Today, ``having MSA status designation is like 
having money in the bank because it puts them on marketers 
``A'' lists. Some restaurant chains and big retailers would not 
even consider coming to a city without MSA designation'' (USA 
Today, August 22, 1996).
    Testimony was received from Representatives Tim Holden (D-
PA), Bill Remond (R-NM), Duncan Hunter (R-CA), and Maurice 
Hinchey (D-NY), described the problems communities they 
represent face in obtaining designation as an MSA. The 
Honorable Sally Katzen, Administrator, Office of Information 
and Regulatory Affairs, noted the process by which MSAs are 
designated and the review process for proposed changes. Mr. Ed 
Spar, executive director, Council of Professional Associations 
on Federal Statistics, noted that the private sector users of 
Federal statistical data ideally want data on the lowest 
possible geographic area so that it can be aggregated according 
to the needs of the data user. Finally, Mr. Alvin Marshall, 
member of the Board of Directors, Schuylkill Economic 
Development Corp., noted that Schuylkill County was unable to 
qualify for an MSA designation since heavy strip mining left 
scarred portions of the land which were unable to support 
housing, and therefore could not meet the contiguity 
requirements for the MSA.
    b. Benefits.--Since so many private organizations and 
Government programs are based on the Federal MSA designation, 
it is important to periodically review this MSA designation 
process, especially in light of charges that some communities 
are unfairly affected by the current classifications.
    c. Hearings.--The subcommittee held a hearing entitled, 
``Oversight of Metropolitan Statistical Areas'' on July 29, 
1997.

18. Statistical Proposals.

    a. Summary.--The economic statistics gathered and analyzed 
by the Federal Government are integral to public and private 
decisionmaking. The financial markets rise and fall, Federal 
aid is determined and distributed, and businesses make a wide 
variety of decisions all based on the data provided by the 
Government. Although sound statistics and analysis do not by 
themselves produce sound public policy, they do provide a 
necessary foundation from which to identify problems, to 
evaluate options, and to monitor results. There is widespread 
concern that Federal statistical agencies could be working more 
efficiently. The solution may be to consolidate the three main 
statistical agencies into a single entity. Introduced last 
Congress as the Statistical Consolidation Act, this measure 
would create the Federal Statistical Service as an independent 
agency. The Service would incorporate the Bureau of the Census, 
the Bureau of Labor Statistics, and the Bureau of Economic 
Analysis. This proposal directly addresses the need for better 
coordination and planning among economic statistical agencies. 
The goal of this and other proposals is to improve the Federal 
statistical system by reducing the organizational and legal 
barriers to greater coordination.
    b. Benefits.--Given the importance of Federal Government 
statistics, it is crucial that this data be gathered and 
processed in the most accurate and timely manner possible. 
Changes in the structure of the Federal statistical community 
are necessary if this goal is going to continue to be met in 
the near future. Substantial changes will require a broad 
consensus in Congress and throughout the Government. The 
subcommittee's efforts on this issue are meant to help forge 
this consensus in order to preserve and improve the integrity 
and Federal statistics.
    The current Federal statistical system is an assortment of 
more than 70 different entities located within 12 Cabinet 
departments in the Federal Government. Many of these entities 
are subject to different data confidentiality requirements 
which impedes data sharing and contributes to duplicative data 
collection. Data sharing and the establishment of a Federal 
statistical service would eliminate the duplication in the 
collection of statistical data, save valuable resources, and 
improve the quality of statistical data while protecting the 
privacy of individuals.
    The subcommittee held a hearing entitled, ``Oversight of 
Statistical Proposals,'' on July 29, 1997. Witnesses included 
Sally Katzen, Administrator, Office of Information and 
Regulatory Affairs, Office of Management and Budget; Dr. Edward 
J. Sondik, Director, National Center for Health Statistics; and 
Mr. Jay Hakes, Administrator, Energy Information 
Administration, Department of Energy.
    The purpose of this hearing was to discuss various 
proposals to improve the Federal statistical service. Proposals 
included consolidating or studying the consolidation of 
statistical agencies including the Bureau of the Census, the 
Bureau of Economic Analysis, and the Bureau of Labor 
Statistics, into a single independent agency. Another proposal 
for improving the quality of Federal statistical data and 
information was to authorize statistical data sharing between 
designated statistical agencies.
    Representatives from the Office of Management and Budget's 
Office of Information and Regulatory Affairs testified on the 
merits of the ``Statistical Confidentiality Act,'' a bill 
introduced in the 104th Congress by Representative Horn (H.R. 
3924). This bill was designed to improve the efficiency of 
Federal statistical programs and the quality of Federal 
statistics by permitting limited sharing of records for 
statistical purposes under strong confidentiality safeguards. 
The benefits of allowing statistical agencies to share 
statistical data include reducing the burden on respondents of 
having to reply to multiple and duplicative requests for 
information.
    The subcommittee also heard testimony from representatives 
from Federal agencies and from the private sector. Edward 
Sondik, Director of the National Center for Health Statistics 
[NCHS] discussed efforts to coordinate statistical data both 
within the department and across the statistical system. At the 
NCHS, the Director works with the Department of Health and 
Human Services' Data Council to integrate the department's 
statistical efforts and bring a strategic focus to information 
needs. The lack of uniform medical privacy protections is a 
special concern that needs to be addressed when considering 
access to medical records for statistical purposes.
    According to Mark Wilson of the Heritage Foundation, to 
ensure accuracy of responses, respondents need assurances that 
data they provide to the Federal Government for statistical 
purposes will not be used for regulation or enforcement. Mr. 
Wilson opined that consolidation should occur on a functional 
rather than organizational basis.
    The subcommittee held a hearing on March 26, 1998, on the 
``Statistical Consolidation Act of 1998'' and S.1404, the 
``Federal Statistical System Act of 1997.'' These pieces of 
legislation were designed to improve the quality and 
reliability of Federal statistical data and statistical 
analysis through organizational consolidation and data sharing 
for statistical purposes. The bills incorporated many of the 
suggestions offered at the subcommittee's July 29, 1997 hearing 
entitled, ``Oversight of Statistical Proposals.''
    The legislation would establish a commission to study 
whether and how Federal statistical agencies, including the 
Bureau of the Census, the Bureau of Economic Analysis, and the 
Bureau of Labor Statistics, should be consolidated into a 
single statistical agency. The bills would establish uniform 
confidentiality protections and encourage data sharing among 
statistical agencies for the sole purpose of statistical 
analysis.
    The subcommittee heard testimony from Senator Patrick 
Moynihan (D-NY) in addition to representatives from the General 
Accounting Office, former officials from Federal statistical 
agencies, and representatives from the private sector. Franklin 
Raines, Director of the Office of Management and Budget, 
speaking on behalf of the Administration, offered written 
testimony which was inserted into the record.
    At the hearing, Senator Moynihan discussed the need to 
improve the quality of the Federal statistical system and the 
benefits of creating a commission to study reorganization. 
According to Senator Moynihan, the major problems with the 
current Federal statistical system include impediments to data 
sharing; burdens on those responding to requests for 
information; priority setting; difficulties within the 
dispersed system; and protecting confidentiality.
    Franklin Raines, Director of the Office of Management and 
Budget, speaking for the administration, supported 
congressional efforts to enhance the usefulness of the Nation's 
statistical information. The administration was supportive of 
provisions of the legislation which allowed statistical 
agencies to share statistical data and information for 
statistical purposes. The administration had concerns with 
proposals to consolidate Federal statistical agencies, but 
supported the concept of creating a commission to study the 
idea. Subcommittee staff met with minority staff members as 
well as the administration to discuss these concerns. The bill 
introduced by Congressman Horn, H.R. 4620, the ``Statistical 
Consolidation Act of 1998,'' incorporated many of these 
suggestions.
    The remaining witnesses were generally supportive of 
consolidation of statistical agencies. Consolidation of 
statistical agencies would cut down on duplicative efforts to 
collect statistical information. This is significant since 
statistical agencies often rely on other agency efforts to 
compile statistical data. Centralization also makes it easier 
to develop uniform standards, definitions, classification and 
integrated time schedules. Furthermore, strengthening the 
Federal statistical system is needed because responses to 
requests for information to develop statistical data are down.
    c. Hearings.--The subcommittee held a hearing entitled, 
``Oversight of Statistical Proposals'' on July 29, 1997; and on 
March 26, 1998, the subcommittee held a legislative hearing on 
``The Statistical Consolidation Act of 1998, and S. 1404, the 
Federal Statistical System Act of 1997.''

19. Defense Surplus Equipment.

    a. Summary.--Treatment of Federal surplus personal property 
is governed by the Federal Property and Administrative Services 
Act of 1949 [FPA]. There are two categories of surplus 
property--excess and surplus. Excess property is property that 
has been declared unnecessary by the owning agency. Once 
property is declared excess, it is screened for further reuse. 
If another agency determines that it can use the property, it 
is reused. If it cannot be used or is not desired by another 
Federal agency, the property is declared surplus. Once it is 
declared surplus, the property can be donated for any number of 
public purposes, such as education or drug interdiction or to 
municipalities. The FPA authorized State Agencies for Surplus 
Property to receive equipment as an intermediary for ultimate 
use by State governments and other entities within a State. The 
State agencies are funded by charges on recipients of the 
donated property. Property not donated may be sold.
    The Defense Reutilization and Marketing Service [DRMS] was 
established in 1972 and is part of the Defense Logistics 
Agency. Its purposes are: (1) to receive personal property 
(everything except real estate, from battleships to paper 
clips) from defense units that no longer need the property; (2) 
to inspect personal property to verify the condition code 
reported by the reporting agency, to determine whether it needs 
to be demilitarized (i.e., the military capacity of the item 
destroyed), and to identify any property needing special 
handling, such as hazardous waste; (3) to transfer the 
property, at no cost, to other organizations that can use it; 
and, (4) to sell the remainder of the property unless it has no 
value or is still a military item. Items with no value can be 
scrapped and military items need to be demilitarized prior to 
disposal.
    The agency received $25 billion of property last year at 
its 148 facilities, and employs about 2,500 people. 
Approximately 50 percent of the property is unusable and must 
be demilitarized. About 60 facilities handle two-thirds of the 
volume. The amount of property declared surplus has increased 
due to base closure and the post-Cold war drawdown. Property 
sold in fiscal year 1996 by DRMS yielded 1.9 percent of the 
original acquisition cost.
    The subcommittee heard from Representative Nick Smith (R-
MI), Bob Lieberman, Assistant Inspector General for Auditing, 
Department of Defense, and David Warren, Director, Defense 
Management Issues, General Accounting Office. Noting that the 
headquarters of the Defense Reutilization and Marketing Service 
is located in the district of Representative Smith, he asserted 
that the donation program is inherently unfair, since many 
States have very small military organizations within them and 
therefore do not generate substantial volumes of surplus 
property. Mr. Lieberman described the complexities of balancing 
the need for maximizing disposal sales and ensuring that 
dangerous military equipment does not get into the hands of 
purchasers. The Inspector General has assigned a high priority 
to logistics issues, and this has led to close scrutiny of the 
Defense Reutilization and Marketing Service, and Mr. Lieberman 
points out that many problem areas remain. GAO officials 
described the disposal process which the Defense Reutilization 
and Marketing Service follows. This process is governed by laws 
and regulations that require the Department of Defense to make 
the best property available to other DOD agencies, other 
Federal agencies, and a host of other eligible donees who 
represent State agencies, prior to the sale. This resulted in 
low market returns.
    b. Benefits.--Between $20 and $30 billion in defense 
personal property is declared surplus each year. The use of 
this property by the subsequent owner should be a concern of 
all taxpayers, since the efficiency of the Defense 
Reutilization and Marketing Service can significantly affect 
the value of the property.
    c. Hearings.--``Oversight of Defense Surplus Equipment and 
the Activities of the Defense Reutilization and Marketing 
Service'' hearing was held on September 12, 1997.

20. U.S. Customs Service.

    a. Summary.--The First Congress passed and President George 
Washington signed the Tariff Act of July 4, 1789, which 
authorized the collection of duties on imported goods. It was 
called ``the second Declaration of Independence'' by the news 
media of that era. Four weeks later, on July 31, the fifth act 
of Congress established the Customs Service and its ports of 
entry. For nearly 125 years, the Customs Service funded 
virtually the entire Government, and paid for the Nation's 
early growth and infrastructure. The territories of Louisiana 
and Oregon, Florida and Alaska were purchased with Customs 
revenue. By 1835, Customs revenues alone had reduced the 
national debt to zero. The Customs Service currently collects 
about $20 billion for the Federal Treasury with 19,000 
employees.
    The agency was restructured in 1995 as a three-tiered 
organization modelled of people, processes, and partnerships, 
with the emphasis on service delivery at ports of entry. The 
Commissioner of Customs, by authority delegated by the 
Secretary of the Treasury, establishes policy and supervises 
all activities from the Service Headquarters in Washington, DC. 
The Customs Service ensures that all imports and exports comply 
with U.S. laws and regulations. The Service collects and 
protects the revenue, guards against smuggling, and is 
responsible for the following: (1) assessing and collecting 
Customs duties, excise taxes, fees and penalties due on 
imported merchandise; (2) interdicting and seizing contraband, 
including narcotics and illegal drugs; (3) processing persons, 
baggage, cargo and mail, and administering certain navigation 
laws; (4) detecting and apprehending persons engaged in 
fraudulent practices designed to circumvent Customs and related 
laws; (5) enforcing U.S. laws intended to prevent illegal trade 
practices, including provisions related to quotas and the 
marking of imported merchandise; the Anti-Dumping Act; (6) 
enforcing import and export restrictions and prohibitions, 
including the export of critical technology used to develop 
weapons of mass destruction, and money laundering; and (7) 
collecting accurate import and export data for compilation of 
international trade statistics.
    California has traditionally received fewer resources and 
personnel than ports of entry on the East Coast for the same 
workload. The North American Free Trade Agreement will bring 
increased trade with Mexico. The growing economies of the 
Pacific Rim will bring increased trade with Asia. This makes it 
more difficult to enforce trade laws and intercept illegal 
narcotics. When he testified before the subcommittee, Bob 
Trotter, Assistant Commissioner, Field Operations, U.S. Customs 
Services, Department of the Treasury, described the agency's 
strategic plan and its performance-based management 
initiatives. Mr. Trotter denied that there was a regional 
disparity in staffing at the Customs Service. John Heinrich, 
Director, Customs Management Center, U.S. Customs Services, 
Department of the Treasury, described the challenges to the 
trade services area from the growth in volume from the Asia-
Pacific region and Latin America. Mr. Heinrich described the 
opportunities of the past few years to increase staffing at 
airports due to the Consolidated Omnibus Reconciliation Act 
fees. Ms. Judy Grimsman, president, Los Angeles Customs and 
Freight Brokers Association, described the need for additional 
resources in the southern California area and the changes 
wrought by NAFTA in terms of promoting automation in the trade 
servicing area. This automation has placed additional duties on 
importers, according to Ms. Grimsman, but the Customs Service 
has not completed the automation process. Ms. Grimsman asserted 
that the Service must complete the automated bonding and air 
manifest processes in order for such automation to be fully 
implemented.
    In April 1998, the General Accounting Office issued a 
report examining the allocation of inspectional personnel. In 
this report, GAO noted that: (1) Customs does not have an 
agencywide process for annually determining its need for 
inspectional personnel--such as inspectors and canine 
enforcement officers--for all of its cargo operations and for 
allocating these personnel to commercial ports of entry 
nationwide; (2) while Customs has moved in this direction by 
conducting three inspectional assessments, these assessments: 
(a) focused exclusively on the need for additional personnel to 
implement Operation Hard Line and similar initiatives; (b) were 
limited to land ports along the Southwest Border and certain 
sea and air ports considered to be at risk from drug smuggling; 
(c) were conducted each year using generally different 
assessment factors; and (d) were conducted with varying degrees 
of involvement by Customs headquarters and field units; (3) 
Customs conducted the three assessments in preparation for its 
fiscal year 1997, 1998, and 1999 budget request submissions; 
(4) for fiscal year 1998 and fiscal year 1999, Customs 
officials stated that they used factors such as the number and 
location of drug seizures and the perceived threat of drug 
smuggling, including the use of rail cars to smuggle drugs; (5) 
focusing on only a single aspect of its operations; not 
consistently including the key field components in the 
personnel decisionmaking process; and using different 
assessment and allocation factors from year to year could 
prevent Customs from accurately estimating the need for 
inspectional personnel and then allocating them to ports; (6) 
the President's budgets did not request all of the additional 
inspectional personnel Customs' assessments indicated were 
needed; (7) the President's fiscal year 1997 budget ultimately 
requested 657 additional inspection and other personnel for 
Customs; (8) Customs and Department of the Treasury officials 
cited internal and external budget constraints, drug 
enforcement policy considerations, and legislative requirements 
as the primary factors affecting the number of additional 
personnel that Customs could ultimately request and the manner 
in which it could allocate or reallocate certain personnel; (9) 
further, for fiscal year 1998, the Office of National Drug 
Control Policy directed Customs to reallocate some of the 
additional 119 inspectors it requested and was appropriated 
funds for Southwest Border ports in accordance with the 
priorities in the National Drug Control Strategy; and (10) 
finally, Customs could not move certain existing positions to 
the Southwest Border because Congress had directed Customs to 
use them for specific purposes at specific ports.
    The subcommittee held a hearing entitled, ``The Customs 
Service: Allocation of Inspectional Personnel,'' on August 14, 
1998. At the hearing, the General Accounting Office reported on 
the allocation of inspectional personnel at Custom Service 
facilities at various locations around the country. GAO 
described how inspectional personnel are allocated, recent 
changes in allocations, and how workloads compare with the 
allocation of such personnel.
    These issues are particularly important because there has 
been a revolution in the past 50 years with respect to world 
trade. Any visit to the Ports of New York and New Jersey will 
show the importance of trade to the region. The massive growth 
of world trade has led to many high-paying export industries in 
the United States. Jobs in trade typically pay more than the 
average job. This huge volume of trade, however, has not been 
without its difficulties.
    For example, the trade in ``goods'' has also been 
accompanied by trade in illegal narcotics and herbs; pirated 
fakes of intellectual property, including video and music 
cassettes; and illegal weapons designed for use by 
international and domestic terrorists. The primary Federal 
agency with responsibility in these areas is the U.S. Customs 
Service. The Customs Service ensures that traded goods can be 
purchased by Americans, and attempts to minimize the illegal 
imports and exports that threaten our citizens in many ways. 
The Customs Service assesses the correct duties on trade, 
bringing in billions of dollars per year, enforces trade quotas 
for certain sensitive goods, and generally enforces U.S. trade 
laws.
    Each area of the country faces unique threats based upon 
its proximity to drug source countries and the nature and scope 
of the trade flows coming into the United States. The 
subcommittee examined the process by which the Custom Service 
allocates inspectional personnel, and how those allocations 
connect to workloads at the various air and seaports.
    b. Benefits.--Given the rapid changes inherent in a 
globalizing economy and the vital role of the Customs Service, 
it is crucial that this agency is well-managed. Close 
congressional scrutiny is necessary at this point to ensure 
that the agency is prepared to adjust to important economic and 
demographic changes.
    c. Hearings.--A field hearing was held in Long Beach, CA, 
entitled, ``Oversight of the Management Practices of the U.S. 
Customs Service,'' on October 16, 1997; and ``The Customs 
Service: Allocation of Inspectional Personnel,'' was held 
August 14, 1998 in New York City.

21. U.S. Forest Service.

    a. Summary.--In the last Congress, a pilot program was 
authorized for the Forest Service to allow visitors to pay a 
fee to use park amenities. This pilot is similar to the 
permanent authority which the National Perk Service possesses 
to charge fees for visits to National Parks. Previously, the 
Forest Service had argued that the large number of entry points 
to National Forests, in contrast to the more controlled 
National Parks, makes a program of fee collection 
administratively infeasible.
    The Forest Service was created in 1905 to manage public 
forests and rangelands. Recent legislation reflects the 
agency's renewed commitment to managing healthy ecosystems and 
creates more avenues for public participation in agency 
decisionmaking. Other legislation has strengthened the Forest 
Service's ability to provide technical, financial, and economic 
assistance to State and private land owners and other 
countries. The Subcommittee on Government Management, 
Information, and Technology has conducted three field hearings 
discussing topics such as the results of the Forest Service's 
Consolidated Financial Statement, the status of Forest Service 
timber sales, the Forest Service's custodianship of the 
Knutson-Vandenberg Fund (K-V Fund), and the implementation of 
the Recreation Fee demonstration project.
    Representative Charlie Bass, (R-NH), testified that it is 
important to take into account the views of the local citizens, 
review services provided within the National Forests by State 
governments, and ensure that payment-in-lieu of taxes [PILT] 
are fully funded. Since PILT funds services in which there is a 
large Federal presence, including roads and fire protection, it 
is a key funding priority for States with a large Federal 
presence. However, according to Mr. Bass, PILT has not been 
fully funded.
    Donna Hepp, Forest Supervisor, White Mountain National 
Forest, U.S. Forest Service, described her agency's 
implementation of the pilot fee program at the White Mountain 
National Forest, citizen comment and reactions to the fee. 
Generally, respondents to a poll support the notion of fees by 
a wide margin.
    The Government Management Reform Act of 1994 required the 
Forest Service to produce an audited financial statement. In 
past work, the General Accounting Office has noted that the 
Forest Service has taken some positive steps to address the 
accounting deficiencies cited in the IG's fiscal year 1995 
audit report, but that serious problems have been encountered 
in the initial implementation of a new financial accounting 
system. Financial management was a major focus of the 
subcommittee's field hearings in Bellflower, CA and Wenatchee, 
WA in July 1998. Linda Calbom and Jim Meissner of the General 
Accounting Office discussed the Forest Services significant 
financial management problems. The Inspector General of the 
Forest Service testified that the Forest Service's financial 
management is so disturbing that it is borderline whether the 
audit should be considered anti-deficient.
    In addition to the Forest Service's financial management, 
at the field hearings in Bellflower and Wenatchee, the 
subcommittee also discussed the status of the Forest Service's 
timber sales, as well as their disbursement and use of trust 
fund moneys, such as the Knutsen-Vandenberg Trust Fund (K-V 
Fund). The timber sales program, since it involves the sale of 
Federal property and the custodianship of funds paid to a 
Federal Agency, have a strong bearing on the financial audit. 
The subcommittee heard discussions, in particular, as to how 
accounting systems that do not accurately capture costs on the 
timber sales program could create problems when auditors seek 
to reconcile accounts and determine costs. While the missing or 
inaccurate data from timber sales can directly affect a 
financial audit, the Forest Service's disbursement of the 
Knutson-Vandenberg Fund moneys can also affect a financial 
audit. The discussions of the K-V Fund at each of these 
hearings revolved around whether the Forest Service can use the 
K-V Fund for overhead costs in the central office and for 
purposes unrelated to Wenatchee, WA. The Forest Service 
answered concerns that these funds might be administered 
improperly. Forest Service officials were present at each of 
these hearings to answer questions regarding the timber sales 
program and the K-V Fund, as was the General Accounting Office, 
who have done work in this area and was present for their added 
expertise.
    Many of the witnesses at the three field hearings, 
including the hearing on October 20, 1997 in Conway, NH, 
discussed the implementation of the Recreation Fee 
Demonstration Program to test the collection, retention, and 
reinvestment of new recreation admission and user fees. The 
Forest Service declared that this demonstration project tests 
the feasibility of user fees as a way of helping finance 
recreation programs on Federal lands. This procedure helps 
officials determine whether charging fees in this manner 
provides adequate funding for projects that do not produce 
enough revenue to help meet their recreation needs.
    On the contrary, many witnesses were represented at each of 
the field hearings in the areas of the Angeles National Forest 
in California, the White Mountains of New Hampshire, and the 
Wenatchee National Forest in the State of Washington to discuss 
the merits or demerits of the Recreation Fee Demonstration 
Program. Many contest Congress' legislation and the Forest 
Services implementation of the project, because they feel that 
these user fees are just another avenue for the government to 
get money other than taxes, merely a double tax.
    b. Benefits.--As Federal agencies move toward more funding 
through user fees, it is important to examine public 
accessibility, the use of proceeds, and accountability to 
taxpayers.
    Users of Federal forests have expressed mounting 
frustration with management at the Forest Service. Subcommittee 
actions served to review the management issues and respond to 
genuine concerns among those who value Federal forests. As a 
result of subcommittee actions, there is heightened awareness 
of these management issues both in Congress and at the Forest 
Service itself.
    c. Hearings.--A field hearing was held in Conway, NH, on 
``Management Practices of the U.S. Forest Service: Review of 
the User Pilot Program'' on October 20, 1997; and two 
additional field hearings on ``Management Practices at the 
United States Forest Service'' in Bellflower, CA and Wenatchee, 
WA on July 7 and 9, 1998.

22. Clinger-Cohen Act.

    a. Summary.--The Clinger-Cohen Act of 1996 [CCA] is now 1 
year old and the subcommittee held the first congressional 
oversight hearing on its implementation. (CCA was originally 
passed as the Federal Acquisition Reform Act of 1996 and the 
Information Technology Management Reform Act of 1996. These 
acts are Divisions D and E, respectively, of Public Law 104-
106.) The intention of CCA is to significantly improve the 
effectiveness and efficiency of Information Technology [IT] 
throughout the Federal Government. CCA has several major 
components: (1) procurement reform for IT hardware and software 
acquisition; (2) the requirement for a set of IT plans 
including a business-driven IT strategic plans and an IT 
Architecture; and (3) the establishment of the Chief 
Information Officer [CIO] as a statutory position throughout 
the Federal Departments and agencies.
    CCA procurement reform is moving forward and has been 
reflected in the Federal Acquisition Requirements that regulate 
all Federal purchases. Business-driven IT strategic plans and 
architecture have made little if any progress. The positions of 
CIO have in general been implemented, however, the quality of 
work produced by the various offices of CIO is inconsistent. 
This concern was the subject of a subcommittee hearing.
    Further, there is a particular class of IT projects with 
tremendous potential benefit to the Federal Government that are 
not being utilized, specifically, cross-cutting IT projects. An 
example cross-cutting IT project, the International Trade Data 
System [ITDS], was examined in this hearing. The ITDS project 
has the potential to deliver a $25 billion a year tax cut to 
American business involved in international import and export. 
ITDS would also result in cost savings of hundreds of millions 
of dollars per year for the Federal Departments and agencies. 
Plus, ITDS would improve the effectiveness of Federal agency 
regulatory enforcement in areas such as illegal immigration, 
unsafe imported foods, and drug trafficking.
    The Federal Government does not have a process whereby such 
cross-cutting IT projects can be identified, evaluated, funded, 
housed, supported, coordinated, and implemented. Every aspect 
is missing. Consequently, the likelihood of such projects being 
successful or even getting started is very low. The 
subcommittee made recommendations for improving cross-cutting 
IT projects based upon the experiences of the ITDS project.
    Mr. Gene Dodaro, Assistant Comptroller General, Accounting 
and Information Management Division of the General Accounting 
Office, testified about the current shortcomings in CIO 
positions and incumbents. He further testified to the 
difficulty of obtaining qualifications information about CIOs. 
This information has not been forthcoming from OMB. GAO 
recommended Congress, OMB, and the Federal agencies take action 
to rectify the situation because of the high leverage impact 
the CIOs could have upon the effectiveness and efficiency of IT 
throughout the Federal Government.
    The second panel of witnesses represented CIO success 
stories in selective Federal agencies. Mr. Alan P. Balutis, 
Deputy Chief Information Officer of the Department of Commerce, 
testified about a collection of 25 successful IT projects 
published by the CIO Council. These successful IT projects 
prove that it can be done. The next step is to understand why 
these projects were successful when so many others are not.
    Ms. Liza McClenaghan, Chief Information Officer for the 
Department of State, testified about the accomplishments of the 
CIO Council in setting training requirements and skill targets 
for IT professionals. This work has lead to improvements in 
training programs, classroom curriculum, and identification of 
automated training tools. The next step is to understand the 
component training plays in developing and retaining an IT 
workforce in face of increasing competition from the private 
sector for technically competent employees.
    Ms. Anne Reed, Chief Information Officer for the Department 
of Agriculture, testified about the IT architecture standards 
that are being established by the CIO Council. There is a long 
way to go, and nobody wants to create one governmentwide 
standard, but the start has been well made. The Clinger-Cohen 
Act requires each Federal agency to develop an IT architecture. 
The CIO Council is attempting to establish selective IT 
architecture components across multiple Federal agencies.
    The subcommittee also heard testimony on the International 
Trade Data System [ITDS], a cross-cutting IT project, that 
could save $25 billion a year of unnecessary paperwork expenses 
for American businesses. Mr. John P. Simpson, Deputy Assistant 
Secretary of Treasury for Regulatory, Tariff, and Trade 
Enforcement of the Department of the Treasury, testified about 
the national benefits that could accrue from this system. Mr. 
Michael D. Cronin, Assistant Commissioner of Inspection of the 
Immigration and Naturalization Service, testified about the 
increases in productivity and quality that Customs could 
achieve because of the ITDS project. Mr. Robert W. Ehinger, 
Director, ITDS Project Office of the Department of Treasury, 
testified about the difficulties of getting all relevant 
Federal agencies to participate in the ITDS project; the 
improved productivity in the 6 pilot sites already up and 
running; and planned subsequent steps.
    Subcommittee Chairman Horn summarized the lessons learned 
from the hearing and made recommendations for OMB and Federal 
agencies to improve IT effectiveness and efficiency for the 
benefit of Federal programs, their beneficiaries, and the 
American taxpayer.
    b. Benefits.--The Federal Government spends at least $26 
billion every year on information technology. This figure 
represents only the direct cost of IT. It does not count the 
millions of labor hours spent using IT systems. It does not 
consider the effects of these IT systems on Federal programs or 
the American citizens those programs serve.
    Private sector experience is that 24 percent of large IT 
projects are significantly over budget and behind schedule. 
Experience in the Federal sector is considerably worse--so bad, 
in fact, that no official figures have even been collected. 
Subcommittee Chairman Horn has repeatedly asked, ``Why do we 
cancel these projects at the $4 billion level instead of the 
$400 million or $40 million level. Why can't we cancel these 
failures at $4 million and save everybody not only billions of 
dollars but years of frustration and unfulfilled citizen 
needs?''
    The Chief Information Officers are now in place throughout 
the Federal agencies. By law they are required to report to the 
head of the agency, to be dedicated full-time to information 
technology, and to be qualified in terms of large organization 
and technical experience. Unfortunately, these requirements are 
not met by well over half of the current CIOs. The subcommittee 
is pressuring OMB and the Federal agencies to rectify this 
situation. The effectiveness of the CIOs can make a difference 
in the billions of dollars of IT expenditures, the success of 
hundreds of IT projects, and the efficiency improvements 
achieved by IT in agency programs and service delivery to the 
American taxpayers.
    The International Trade Data System [ITDS] was selected as 
an example cross-cutting IT project because it has the 
potential to save American business approximately $25 billion a 
year in unnecessary paperwork costs. This is the equivalent to 
a $25 billion a year tax cut or $125 billion over the typical 5 
year Federal budgetary planning horizon. The subcommittee made 
recommendations to Federal agencies in general and this project 
in particular. The subcommittee was at least partially 
influential in another congressional committee funding the ITDS 
project for the first time.
    c. Hearings.--``Oversight of the Implementation of the 
Clinger-Cohen Act'' was held on October 27, 1997.

23. Management Practices in State and Local Governments.

    a. Summary.--Governments of all sizes throughout the ages 
have been susceptible to waste, corruption, and inefficiency. 
The problem has seemed especially bad lately, probably more due 
to the contrast with our extraordinarily productive and 
efficient private sector than for any other reason. The 
challenge for the Subcommittee on Government Management is how 
to articulate the practices that make government work to its 
maximum potential.
    The Innovations in American Government Awards Program is 
funded by the Ford Foundation and administered by the Kennedy 
School of Government in partnership with the Council for 
Excellence in Government. It is designed to promote a national 
conversation about what works in Government. Each year the 
program receives applications from more than 1,500 Federal, 
State, and local government programs around the country. Of 
these, 25 programs are chosen as finalists and 10 of these are 
selected as winners by the National Committee on Innovations in 
American Government. The committee makes its selections on the 
basis of four criteria: (1) originality of approach; (2) 
effectiveness in addressing important public problems; (3) 
value to clients; and (4) potential replication in other 
jurisdictions. The National Committee is chaired by David 
Gergen, editor-at-large at U.S. News and World Report, and its 
members include former elected officials, private industry 
leaders, and journalists.
    Innovations awards finalists and winners each receive 
grants. The awards grant is intended to help successful 
programs disseminate information to the public as well as to 
other government agencies looking for ways to address similar 
problems or to make similar programs work better. The 1997 
Innovations winners were announced on October 8.
    b. Benefits.--The programs singled-out by the Innovations 
Program provide an excellent opportunity to consider what works 
in results-oriented management. The 105th Congress and 
especially the Government Reform and Oversight Committee have 
been working hard to oversee and encourage implementation of 
the Government Performance and Results Act. Another important 
element of government reform involves looking at successful 
programs, seeing what factors make them successful, and asking 
whether those factors can be applied elsewhere. Innovative and 
effective State and local government programs throughout the 
country can be seen as laboratories of good governance. The 
hearing will provide Congress with the occasion to learn from 
this array of experience.
    c. Hearings.--``Management Practices in State and Local 
Governments: Lessons for Federal Government'' was held on 
October 31, 1997. Witnesses included Susan Berresford, 
president, the Ford Foundation; David Gergen, chair, National 
Selection Committee, Innovations in American Government Awards 
Program; Alan Altshuler, director, Innovations in American 
Government Program, John F. Kennedy School of Government, 
Harvard University; Patricia McGinnis, president and chief 
executive officer, Council for Excellence in Government; Jeff 
Tryens, executive director, Oregon Progress Board; Paul Evans, 
commissioner, Boston Police Department; and Elijah West, Jr., 
Pathways to Teaching Scholar, College of Education, Armstrong 
Atlantic State University.

24. Federal Advisory Committee Act.

    a. Summary.--When it passed FACA in 1972, Congress was 
explicit in its intention that the law not apply to the 
National Academy of Sciences [NAS] and similar organizations, 
such as the National Academy of Public Administration [NAPA]. 
For the last 25 years, it has been the operating assumption of 
the Academies, Congress, and the executive branch that FACA did 
not apply to these organizations.
    The Federal Advisory Committee Act of 1972 governs the 
activities of advisory committees created by the Government to 
obtain expert views and advice and to solicit input from 
citizens on local issues. The act was designed to address two 
major concerns. One, advisory committees seemed to be 
disorganized, duplicative, and generally in need of oversight. 
Two, committee activities often took place without public 
participation, making it hard to know whether the committees 
were really acting in the public interest.
    The act addressed these concerns by requiring, among other 
things, open meetings, involvement by Government officials, 
balanced membership, and oversight located in the General 
Services Administration [GSA]. It also established termination 
dates for committees unless their charters are renewed.
    The Committee Management Secretariat at GSA prescribes 
administrative guidelines and management controls 
governmentwide; consults with agencies on the establishment of 
committees; and consults with agencies on comprehensive reviews 
of advisory committees.
    Specific requirements of the Federal Advisory Committee Act 
include: a determination of need by an agency before it creates 
a new advisory committee; a committee charter for each 
committee (written in consultation with GSA, noticed in the 
Federal Register, and filed with Congress, GSA, and the Library 
of Congress). In addition, the agency must make plans for 
fairly balanced membership, place notice of committee meetings 
in the Federal Register, set procedures for closing meetings, 
and provide for public access.
    The head of each agency that makes use of advisory 
committees must designate a committee management officer as 
well as a Federal officer to oversee each committee's 
activities. The agency head must also conduct an annual review 
of the need to continue existing committees, ensure that 
meetings are held at reasonable times and places, and review 
committee members' compliance with conflict-of-interest 
statutes.
    There are four types of Federal advisory committees: (1) 
those authorized (but not required) by statute; (2) those 
required by statute; (3) those created by Presidential 
directive; (4) those created by an agency under its own 
authority where the agency determines that a committee is 
needed to advance the public interest. Currently, 24 percent of 
advisory committees are authorized by statute; 44 percent are 
required by statute; 5 percent are created by Presidential 
directive; and 27 percent exist under agency authority.
    In a recent court case brought by the Animal Defense League 
Fund [ADLF], FACA was interpreted as applying to NAS and by 
logical extension to NAPA and perhaps to an unknown number of 
other groups like the American Bar Association that are 
utilized by the Federal Government. The ADLF and other 
interested parties sought more public participation in NAS 
committee processes.
    Both Houses of Congress were in favor of clarifying through 
legislation that FACA does not apply to the NAS. OMB Director 
Franklin Raines also expressed support for a legislative 
remedy. The primary litigants met with the House majority and 
minority staffs to identify committee process for NAS and NAPA 
that would provide more public participation without 
inappropriate requirements for a Federal Government committee 
as per FACA. NAS and NAPA agreed to modify their committee 
processes as follows:
          1. Post to the Internet for public comment the 
        committee members names, biographies, and brief 
        conflict of interest disclosures when nominated.
          2. Invite public attendance at all data gathering 
        committee meetings by posting notice to the Internet.
          3. Make public the names and biographies of reviewers 
        of draft committee reports by posting this information 
        to the Internet.
          4. Make available summaries of formal committee 
        meetings that are not open to the public.
    NAS and NAPA already made their final reports available to 
the public via the Internet and both will continue to do so. 
They simply anticipated adding the above to their same Internet 
web databases. The only remaining issue for resolution was the 
location of the above list and its exact wording.
    In February 1993, President Clinton issued Executive Order 
12838. This order directed agencies to reduce by at least one-
third the number of discretionary advisory committees (those 
created under agency authority or authorized by but not 
mandated by Congress) by the end of fiscal year 1993. Since 
that time, the number of advisory committees has dropped from 
1,305 to 963. Over the same period, however, the cost of these 
committees has increased by almost 50 percent in constant 
dollars. The Government spent $178 million on advisory 
committees last year.
    A hearing was held on November 5, 1997. A bill was drafted 
in consultation with a team of majority and minority staff from 
both the House and the Senate. The bill, H.R. 2977, was 
introduced by Mr. Horn on November 9 and passed the House under 
suspension of the rules on November 10 by voice vote. The bill 
was then considered by the Senate and passed without amendment 
by unanimous consent on November 13. The bill was signed into 
law on December 17, 1997, Public Law 105-153.
    In June, the General Accounting Office released a report 
entitled ``Federal Advisory Committee Act: General Services 
Administration's Oversight of Advisory Committees.'' GAO found 
GSA deficient in four main responsibilities: (1) GSA did not 
ensure that advisory committees were established with complete 
charters and justification letters; (2) advisory committees 
were not comprehensively reviewed annually; (3) annual reports 
were not submitted to the President in a timely manner; and (4) 
GSA did not ensure that follow-up reports to Congress on 
Presidential committee recommendations were prepared.
    GAO issued a second report that was based on a survey of 
both Federal officers involved in administering FACA and 
advisory committee members. The majority of advisory committee 
members stated that the committees were well balanced in 
membership, had access to all information that was needed for 
decisions, and were not asked by agency officials to make 
decisions based on inadequate or inaccurate data. Of the 19 
agencies surveyed, 10 stated that FACA requirements were more 
helpful than burdensome. Also, the agencies reported a total of 
26 advisory committees that should be terminated.
    The subcommittee held a hearing on the Federal Advisory 
Committee Act on July 14, 1998. Witnesses included L. Nye 
Stevens, Director, Federal Management and Workforce Issues, 
General Government Division, U.S. General Accounting Office; G. 
Martin Wagner, Associate Administrator for Governmentwide 
Policy, General Services Administration; Ruth L. Kirschstein, 
Deputy Director, National Institutes of Health; Jim Solit, 
Committee Management Officer, Department of Energy; John 
Applegate, professor, University of Indiana, and Chair, Fernald 
Citizens Advisory Board; Clarence J. (Terry) Davies, director, 
Center for Risk Management, Resources for the Future, 
accompanied by Thomas C. Beierle, research associate; and Dr. 
Bruce Alberts, president, National Academy of Sciences.
    b. Benefits.--The American people benefit from the 
expertise and experience of the committees created by the 
National Academy of Sciences. When confronted by an important 
problem with key scientific aspects, the Federal Government can 
commission a study by NAS. At any given point in time 
approximately 400 such studies may be simultaneously under way. 
These studies are commissioned by Federal Departments and 
agencies, Congress, State governments, international bodies, or 
private organizations. NAS then selects a committee of the most 
qualified scientists who work for free. These scientific 
committees are independent of the various parties that may have 
a vested interest in the outcome of their study, including the 
Federal Government.
    The expertise, experience and independence of the best 
scientists for each particular problem delivers high quality, 
objective findings and recommendations. This benefits the 
Federal agency that commissioned the NAS study and the American 
people, who are assured that the scientific aspects of the 
problem are studied free of political pressures. All NAS 
studies result in a report that is readily available to the 
public--either by writing NAS or from the Academy's Internet 
web site.
    The National Academy of Public Administration operates in a 
manner similar to NAS but specializes in matters of public 
administration rather than science. Again the best expertise 
and experience is brought to bear for a commissioned study of 
an important administrative problem. The benefits of NAPA 
accrue to the Federal agency requesting the study and the 
American people. Their reports are also publicly available by 
writing NAPA or from their Internet web site.
    The benefits of this particular amendment to FACA are 
twofold. First, the Federal Government and the American people 
will continue to benefit from the independent high-quality 
studies of NAS and NAPA without undue restrictions. Second, the 
processes used by NAS and NAPA will be more open to scrutiny by 
all interested parties. The American people can be assured that 
all NAS and NAPA studies will be conducted in a balanced and 
objective manner.
    Subcommittee actions raised awareness in Federal agencies 
that many are not making the best possible use of advisory 
committees. Furthermore, subcommittee oversight of the General 
Services Administration helped to improve administration of the 
Federal Advisory Committee Act.
    c. Hearings.--The subcommittee held a hearing on November 
5, 1997, entitled, ``Oversight of the Federal Debt Collection 
Practices,'' and ``Oversight of the Federal Advisory Committee 
Act,'' July 14, 1998.

25. The Federal Election Commission

    a. Summary.--The subcommittee investigated management 
problems at the Federal Election Commission [FEC]. The FEC was 
established in 1975 as an independent regulatory agency with 
the mission of improving the public's confidence in the 
campaign finance system following the Watergate scandal. 
Congress created the FEC to administer and enforce the Federal 
Election Campaign Act [FECA]--the statute that governs the 
financing of Federal elections. Pursuant to the FECA, the FEC's 
primary objectives are to disclose campaign finance information 
to the public; enforce campaign finance laws; administer the 
public funding of Presidential elections; and to assist State 
and local governments on election administration.
    The FEC has exclusive civil jurisdiction to enforce 
campaign finance laws. Criminal violations of campaign finance 
laws are handled by the Department of Justice's Public 
Integrity Section. In 1993, to address the backlog of 
enforcement cases and to deal with the increasing complexity of 
campaign finance law, the FEC established an enforcement 
priority system. Under this system, the Office of General 
Counsel ranks cases based on a set of criteria which include 
the identity of the parties, the nature and complexity of the 
case, and the importance of the issues involved. Cases that do 
not meet the criteria are automatically dismissed. Cases that 
do meet the criteria and involve significant issues can also be 
dismissed if they linger in the system and become ``stale.''
    The FEC has been criticized for its record on enforcing 
campaign finance laws. Under the FEC's enforcement priority 
system, more than two-thirds of compliance cases are dismissed 
each year. The purpose of the enforcement priority system was 
to focus the FEC's enforcement resources on the more 
significant campaign finance issues. Many of these dismissed 
cases, however, involve significant campaign finance issues. 
The hearing addressed whether the enforcement priority system 
has been effective in enforcing the provisions of the FECA.
    The FEC also has the responsibility to disclose the sources 
and amounts of funds used to finance Federal elections. 
Disclosure helps citizens evaluate the candidates running for 
Federal office and enables them to monitor committee compliance 
with election law. The major concern with the FEC's Disclosure 
Division has been its reluctance to embrace modern technology 
to maximize efficiency and improve public disclosure. Over the 
years, Congress has allocated massive amounts of new funds for 
automation and computerization. Congress has earmarked funding 
for digital imaging, an automated case management system, and 
electronic filing. Unfortunately, the FEC has been slow to 
implement these initiatives.
    On March 5, 1998, the subcommittee held an oversight 
hearing on the management practices of the FEC. The 
subcommittee was particularly interested in learning how well 
the FEC is carrying out its disclosure and enforcement 
responsibilities. Representative Rick White (R-WA) offered 
suggestions on how to improve the public disclosure of campaign 
finance activity by increased utilization of modern technology. 
He discussed the merits of a bill he introduced requiring the 
FEC to develop a searchable web-site where anyone with access 
to the Internet could conduct a search of campaign finance 
activity. The bill would also require campaigns raising over 
$25,000 to file reports electronically.
    The subcommittee also heard from former FEC officials, 
election law attorneys, and individuals from non-profit 
organizations. These witnesses testified that automation of the 
disclosure process would enhance the accuracy of reporting. 
Political action committee and campaign reports filed with the 
FEC should be cross-referenced to check for accuracy. For 
example, if a candidate returns an unsolicited check from a 
political action committee [PAC], the information needs to 
appear in the political action committee report as well as 
candidate report at the FEC.
    Kent Cooper, executive director of the Center for 
Responsive Politics testified that improved disclosure is vital 
because campaign finance activity moves very quickly and 
enforcement actions, when undertaken, are completed well after 
an election is over. Mr. Cooper called for the FEC to do a 
better job at promoting electronic filing of campaign reports 
and encouraging the timely notification by political action 
committees and other contributors if they get a check returned.
    FEC Staff Director John Surina testified that two things 
could be done to improve the accuracy of information on 
candidate reports and PAC reports. The first would be to 
harmonize the reporting frequency so PACs and candidate 
committees are reporting on the same timeframe. Second, 
electronic filing would cut down on the lag time in data 
capture and would improve efficiency. The FEC currently is 
considering a rule which would amend the disclosure forms to 
separate PAC contributions from other candidate committee 
contributions.
    FEC Chairman Joan Aikens testified that in fiscal year 
1998, the FEC received an appropriation of $31,650,000, with 
$3.8 million earmarked for computerization, and $750,000 
earmarked to be transferred to the General Accounting Office 
for an independent audit of the agency. Chairman Aikens 
acknowledged that there is room for improvement in the 
enforcement division of the Office of General Counsel. General 
Counsel Lawrence Noble defended the FEC's enforcement record 
and testified that enforcement problems are primarily due to a 
lack of resources.
    Chairman Dan Burton (R-IN) submitted a line of questions on 
an enforcement case against Howard Glicken (a prominent fund-
raiser for the Democratic party and a close friend of Vice 
President Gore) that was dismissed by the FEC. General Counsel 
Noble testified that the case against Mr. Glicken was dismissed 
because the 5 year statute of limitations was due to expire; 
the evidence against Mr. Glicken was not solid; and according 
to Mr. Noble, ``given Mr. Glicken's high profile as a prominent 
Democratic fund-raiser, including his potential fund-raising 
involvement in support of Gore's expected Presidential 
campaign, it is unclear Mr. Glicken would settle the matter 
short of litigation.''
    The events surrounding the Glicken case became the subject 
of a Government Reform and Oversight Committee hearing in March 
1998, as part of the committee's campaign finance 
investigation. In July 1998, Mr. Glicken, a Miami businessman 
and prominent Democratic fund-raiser and friend of Vice 
President Gore, pled guilty to two criminal violations of the 
Federal Election Campaign Act for soliciting foreign money for 
Democratic campaigns.
    b. Benefits.--The FEC was established in 1975 to restore 
faith in the integrity of the Nation's political process. 
Despite these ambitious origins, the FEC has not been at center 
stage in the increasingly intense debate over campaign finance 
reform. Oversight is necessary to make the FEC more effective. 
The subcommittee's activity in this area promoted a better FEC 
and therefore a better political process. For example, 
comprehensive and accurate disclosure is essential to the 
democratic process. In order to make an informed decision about 
which candidate to support, voters need and are entitled to all 
available information relating to campaign finance activity. 
Further, they need this information before the election. That 
makes speedy disclosure essential. The subcommittee's efforts 
encouraged more effective disclosure.
    c. Hearings.--``Oversight of the Federal Election 
Commission'' was held on March 5, 1998. Witnesses included 
Representative Rick White (R-WA); Kent Cooper, executive 
director, Center for Responsive Politics; Frank Reiche, former 
FEC Commissioner; Robert Dahl, director, Fair Government 
Foundation; Danielle Brian, executive director, Project On 
Government Oversight; Becky Cain, president, League of Women 
Voters; Joan Aikens, FEC Chairman; John Surina, FEC Staff 
Director; Lawrence Noble, FEC General Counsel; and Lynn 
McFarland, FEC Inspector General.

26. Office of Workers' Compensation

    a. Summary.--The Office of Workers' Compensation Programs 
[OWCP] at the Department of Labor is responsible for processing 
injured employee compensation claims for most Federal workers. 
The subcommittee investigated the management of OWCP, including 
whether the Federal Employees' Compensation Act [FECA] is being 
administered in a fair, timely, and efficient manner.
    The subcommittee held a field hearing that addressed the 
management practices at the Office of Workers' Compensation 
Programs and its administration of the Federal Employees' 
Compensation Act. The hearing focused on the timely 
adjudication of a Federal injured worker's claim and the 
process of a fair and just appeal. The hearing took place on 
July 6, 1998 in Long Beach, CA. Joseph Perez and William Usher, 
hearing representatives from the Office of Workers' 
Compensation Programs, presented testimony on the first panel. 
These two witnesses expressed their frustrations and criticism 
for the way in which the Department of Labor administers its 
Office of Workers' Compensation Programs, the slowness of the 
adjudication process, as well as existing waste, fraud, and 
abuse within the agency. The second panel consisted of injured 
Federal workers from the U.S. Postal Service and the Navy. 
Witnesses described their personal strifes with the Department 
of Labor, in particular the Office of Workers' Compensation 
Programs. The third panel consisted of officials from the 
Department of Labor that gave a status update on any 
questionable management practices at the Office of Workers' 
Compensation Programs. Michael Kerr, Deputy Assistant 
Secretary, Office of Workers' Compensation Programs testified 
on the third panel. The hearing was conducted to determine 
whether injured Federal employees received timely and equitable 
adjudication of their compensation claims and to determine 
methods to improve the compensation system.
    b. Benefits.--Subcommittee action responded to widespread 
concerns among injured Federal workers about management at 
OWCP.
    c. Hearings.--``Oversight of the Management Practices at 
the Office of Workers' Compensation Programs,'' held in Long 
Beach, CA, on July 6, 1998.

27. H.R. 1966, the Special Government Employee Act of 1997

    a. Summary.--The continuing spate of allegations about 
mismanagement at the White House have been frequent reminders 
of the need for serious, statutory changes in the way the White 
House is run. H.R. 1966, the ``Special Government Employee Act 
of 1997,'' updates the definition of a ``special Government 
employee'' to cover unpaid, informal advisors. Foremost is the 
need for accountability and adherence to conflict-of-interest 
and other disclosure requirements. This includes a functional 
test that focuses on what the advisors actually do and on 
whether they are involved in the Government's deliberative 
processes.
    The White House has a history of using informal associates 
and advisers who are present in the White House on an ongoing 
basis and regularly affect public policy, yet who are utterly 
unaccountable to the public. Americans have a right to know who 
is influencing policy decisions in the White House.
    b. Benefits.--Subcommittee action responded to the need for 
increased accountability of informal White House advisors and 
called for a full disclosure of Special Government Employee 
activities.
    c. Hearings.--A hearing entitled, ``Presidential and 
Executive Office Financial Accountability Act of 1997 and 
Special Government Employee Act of 1997,'' was held on May 1, 
1997. Representative John L. Mica (R-FL), who is a strong 
supporter of accountability in the Federal Government, 
explained why the bill is sorely needed. Gregory S. Walden, 
counsel, Mayer Brown & Platt, and former Assistant Counsel in 
the White House, and Stephen Potts, Director, Office of 
Government Ethics, also testified on the ``Special Government 
Employee Act of 1997.''

                    Subcommittee on Human Resources

1. Food and Drug Administration [FDA] Steps Against the Health Threat 
        Posed by ``Mad Cow Disease'' and Other Transmissible Spongiform 
        Encephalopathies [TSEs].

    a. Summary.--The Human Resources Subcommittee reviewed the 
timing and effectiveness of the FDA proposal to prohibit the 
use of certain rendered animal parts in feeds for other 
ruminant animals as a means of protecting the U.S. food supply 
from TSE-infection. It also examined current blood safety and 
risk assessment standards designed to guard against the 
transmission of TSEs through blood and blood products.
    The subcommittee considered FDA, USDA, CDC, and NIH efforts 
to understand and prevent the spread of TSEs; the monitoring of 
agricultural health situations of U.S. trade partners; the lack 
of any known U.S. TSE that is transmissible to humans; and the 
differences between animal-to-animal transmission of bovine 
spongi-form encephalopathy [BSE], or ``Mad Cow Disease,'' and 
human-to-human transmission of Creutzfeldt-Jacob Disease [CJD], 
a variant form of the human TSE. Members also discussed the 
risk analysis as the vehicle for establishing a rational policy 
for dealing with a little understood disease, as well as the 
methodology used by the agencies in revealing blood 
contamination.
    b. Benefits.--The investigation informed Members and the 
public about the nature and scope of the threat TSE poses to 
the Nation's food supply and blood and animal products. It also 
exposed the challenges presented by the need to develop an 
appropriate response to a public health threat where there is 
little conclusive evidence but theoretical risks of serious or 
even calamitous spread of infection.
    c. Hearings.--A hearing entitled, ``Potential Transmission 
of Spongiform Encephalopathies to Humans: The Food and Drug 
Administration's [FDA] Ruminant to Ruminant Feed Ban and the 
Safety of Other Products'' was held on January 29, 1997. 
Testimony was received from the FDA, the U.S. Department of 
Agriculture's [USDA] Animal and Plant Health Inspection 
Service, the Centers for Disease Control and Prevention [CDC], 
the National Institutes of Health [NIH], the University of 
Southern Alabama School of Medicine, and the Virginia-Maryland 
College of Veterinary Medicine.

2. The Need for Better Focus in the Rural Health Clinic Program.

    a. Summary.--The Human Resources Subcommittee looked into 
the administration of, and allocation of resources in, the 
Nation's rural health clinic [RHC] program, with special 
emphasis on the General Accounting Office [GAO] report 
entitled, ``Rural Health Clinics: Rising Program Expenditures 
Not Focused on Improving Care in Isolated Areas'' and the 
Office of Inspector General [OIG] of the Department of Health 
and Human Services [HHS] report entitled, ``Rural Health 
Clinics: Growth, Access, and Payment.''
    The subcommittee focused on Medicare and Medicaid 
reimbursement policies for RHCs, administered by the HHS Health 
Care Finance Administration [HCFA], and program eligibility 
criteria. It also addressed how rural health care access can be 
measured more accurately and more often, and how to extend the 
reach of Medicare and Medicaid into isolated rural areas more 
efficiently and effectively.
    b. Benefits.--The subcommittee inquiry exposed the RHC 
program's lack of focus on those people who have difficulty 
obtaining primary care. It also highlighted a growing consensus 
that HCFA ought to revise its Medicare payment policy to hold 
all RHCs to payment limits, or caps, and generated a dialog 
about other tools that would help set the RHC program back on 
track.
    c. Hearings.--A hearing entitled, ``The Need for Better 
Focus in the Rural Health Clinic Program'' was held on February 
13, 1997. Witnesses included representatives from GAO, the IG 
for HHS, HCFA, the HHS Health Resources and Services 
Administration [HRSA], the National Association of Rural Health 
Clinics and the National Rural Health Association. A hearing 
entitled, ``The Need for Better Focus in the Rural Health 
Clinic Program--Part II'' was held on September 11, 1997. 
Testimony was received from private physicians and 
representatives from GAO and HRSA.

3. Cabinet Department and Agency Oversight.

    a. Summary.--The Human Resources Subcommittee, which has 
oversight jurisdiction over those departments and agencies of 
Government managing human service programs, conducted an 
oversight investigation examining the most pressing management 
and programmatic problems facing those departments and agencies 
in the 105th Congress. It also explored the extent to which 
they are able to comply with the requirements of the Government 
Performance and Results Act [GPRA]. Over the course of its 
investigation, the subcommittee reviewed budget data, Inspector 
General [IG] reports and audits, and General Accounting Office 
[GAO] studies and recommendations. The undertaking culminated 
in oversight hearings with the Secretaries of the Department of 
Housing and Urban Development [HUD] and the Department of 
Labor, as well as representatives of the five Cabinet and 
National Labor Relations Board [NLRB] IG offices, and the GAO.
    The HUD inquiry focused on the problems and challenges that 
led the $40 billion department to be rendered a ``high-risk'' 
agency by the GAO--namely weak internal controls, inadequate 
information and financial management systems, and an 
ineffective organizational structure. In addition, the 
subcommittee addressed IG Susan Gaffney's concern that HUD has 
yet to resolve three major issues: the mismatch of HUD's 
numerous programs and diminishing staff and work capacity; the 
inability of certain offices to oversee the most efficient use 
of taxpayer funds; and the incompatibility of its ``place-
based'' program delivery goals and its program-based 
organizational structure. In response to the subcommittee's 
probe for answers, Secretary Cuomo pointed to downsizing and 
streamlining of the Department and implementation of management 
and legislative reforms as possible solutions.
    The subcommittee's investigation into the Department of 
Labor began with an examination of the Secretary's plans for 
reform of the $38 billion Department, including investment in 
learning and skill development, the movement of people from 
welfare to work, pension protection and the initiation of 
greater pension portability, improved enforcement, and an 
appreciation of family needs. The subcommittee also considered 
the GAO's suggestion that the Department improve management and 
develop new regulatory strategies that are less burdensome and 
more effective than the ones that are currently in place, as 
well as IG Charles Masten's insistence that it improve the 
effectiveness of DOL's employment and training system, 
safeguard pension assets, implement significant new statutory 
mandates, and ensure the integrity of the unemployment 
insurance [UI] system. Masten also cited opportunities for 
savings in the Department's foreign labor programs.
    The oversight inquiry into the Department of Health and 
Human Services [HHS] focused on the IG's concern about three 
program areas in Medicare found to be particularly susceptible 
to waste, fraud and abuse: home health, hospice and durable 
medical equipment. The subcommittee also considered program-
wide issues raised by the GAO such as the need to improve 
accountability, coordination and oversight, generate timely and 
reliable information, identify and correct program 
vulnerabilities, and integrate its information management needs 
as part of its overall process of developing a strategic plan 
in compliance with the GPRA.
    The inquiry into the Department of Veterans Affairs 
generated positive messages about the Department's willingness 
and ability to streamline its focus to reduce the vulnerability 
to waste, fraud and abuse, as well as its attempts to comply 
with the GPRA. However, the subcommittee did find problems in 
its outdated health care system, large backlog in claims and 
appeals, and workman's compensation program.
    In carrying out its oversight responsibility for the 
Department of Education, the subcommittee looked into how well 
the Department satisfied its mission, worked with State and 
local educators, and managed its budget. The subcommittee found 
the areas needing the greatest improvement to be student 
financial aid programs at ``high risk'' of waste, fraud, and 
abuse, persistent data system problems, an inability to curtail 
fraud in grant applications, and a failure to meet the 
performance measure criteria for the GPRA.
    The oversight investigation into the NLRB focused on recent 
efforts to improve the resolution of labor-management disputes, 
the size of the case backlog, the speed of case processing, the 
number of case settlements, and the effectiveness of compliance 
enforcement. It also looked at why the agency has difficulty 
fulfilling the requirements of the GPRA.
    b. Benefits.--The subcommittee's review of Department and 
agency problems and weaknesses provided valuable information 
regarding where and how the Government might reign in the 
capacity for waste, fraud, and abuse. In so doing, the hearings 
gave Members a valuable overview and insight into how to best 
focus their energies as an oversight body and helped lay the 
groundwork for future reform and savings.
    c. Hearings.--The subcommittee held a series of oversight 
hearings covering each of the five Cabinet agencies under its 
jurisdiction. ``Oversight of the Department of Housing and 
Urban Development [HUD]: Mission, Management, and Performance'' 
was held on February 27. ``Agency Oversight--the Department of 
Housing and Urban Development and the Department of Labor: 
Mission, Management, and Performance'' was held on March 6, 
1997. ``Agency Oversight--the Department of Health and Human 
Services and the Department of Veterans Affairs: Mission, 
Management, and Performance'' was held on March 18, 1997. 
``Oversight of the Department of Education: Mission, Management 
and Performance'' was held on March 20, 1997. ``Department of 
Labor: Mission, Management and Performance'' was held on June 
10, 1997. ``Oversight of the National Labor Relations Board: 
Mission, Management and Performance'' was held on July 24, 
1997.

4. Oversight of the Department of Health and Human Services' Healthy 
        Start Program.

    a. Summary.--The subcommittee conducted an investigation 
into the Healthy Start Program, a 5-year demonstration 
initiative designed to fight infant mortality. The purpose was 
to explore the extent to which the initiative accomplished its 
mission, HHS's management of the program, and the lessons 
learned.
    Healthy Start began in 1991 with the goal of reducing 
infant deaths by 50 percent in selected communities with infant 
mortality rates above the national average, and emphasized 
innovative approaches to health and other support services to 
combat the problem. The inquiry was intended to draw 
conclusions about the program's strengths and weaknesses in the 
wake of the President's proposal to expand the program to 30 
more sites.
    b. Benefits.--The inquiry generated valuable information 
regarding the potential impact of Healthy Start's community-
driven strategies on the leading causes of infant mortality, 
low birth weight, birth defects, and sudden infant death 
syndrome, as well as how to measure the program's effectiveness 
given the absence of long-term data. The information will prove 
useful to lawmakers, health care professionals, and other 
interested parties as they begin to debate the wisdom of 
expanding this and other related programs.
    c. Hearings.--The subcommittee held a hearing entitled, 
``Healthy Start: Implementation Lessons and Impact on Infant 
Mortality'' on March 13, 1997. Testimony was received from 
representatives from HHS' Health Resources and Services 
Administration [HRSA], the Agency for Health Care Policy and 
Research, the National Institutes of Health, the Centers for 
Disease Control and Prevention, as well as community project 
directors from the District of Columbia, Baltimore, Cleveland, 
and the Mississippi Delta.

5. Nursing Home Fraud.

    a. Summary.--The subcommittee reviewed reports of waste, 
fraud, and abuse in the nursing home industry in hopes of 
determining how to improve nursing home regulation for maximum 
taxpayer benefit. During the course of its investigation, the 
subcommittee considered the extent of waste, fraud, and abuse, 
the impact on State Medicaid programs, the effectiveness of 
Medicaid Fraud Control Units [MFCUs] and private industry 
programs in detecting and preventing waste, fraud, and abuse, 
the complexity of reimbursement policies, and options for 
coordinating care for beneficiaries eligible for both Medicaid 
and Medicare.
    b. Benefits.--The investigation culminated in two hearings 
which demonstrated the need for greater vigilance over nursing 
home practices and improved enforcement of waste and fraud 
control programs. The undertaking also made complex 
reimbursement and ``pay and chase'' processes, as well as other 
practices that enable over billing and improper claims to slip 
by current control measures, easier to understand and control.
    c. Hearings.--A hearing entitled, ``The Extent, Causes, and 
Effects of Fraud and Abuse in Nursing Homes'' was held on April 
16, 1997. Testimony was received from the Medicaid director for 
operations for the State of Connecticut, the vice president of 
the National Association of Medicaid Fraud Control Units 
[NAMFCU] and the director of Maryland MFCU, the assistant 
attorney general and director of AHCCS Fraud Unit in Arizona 
MFCU, the HHS Deputy Inspector General for Evaluations and 
Inspection, the GAO Associate Director of Health Financing and 
Systems Issues, the executive vice president of the American 
Health Care Association, and the vice president for Public 
Policy for the American Association of Homes and Services for 
the Aging. A hearing entitled, ``Health Care Fraud in Nursing 
Homes--Part II'' was held on July 10, 1997. Testimony was 
received from the Health Care Financing Administration, the 
California Advocates for Nursing Home Reform, the American 
Association of Retired Persons, and the National Long Term Care 
Ombusdman.

6. Fixing the Consumer Price Index [CPI].

    a. Summary.--The subcommittee examined proposals by the 
Department of Labor's Bureau of Labor Statistics [BLS] to 
improve the accuracy and maintain the integrity of the CPI. As 
the Government and private sector's tool for measuring 
inflation, the CPI is used in the calculation of cost of living 
adjustments [COLAs] for major Federal entitlement programs and 
private pension benefits, giving it the power to wield enormous 
consequences for the economy at large. The subcommittee focused 
its investigation on conflicting views regarding the degree of 
bias in the current CPI, difficulties in quantifying the impact 
of new products and quality improvements on the economy, as 
well as the BLS' ability to create and implement an impartial, 
effective, and timely process to make the changes.
    b. Benefits.--The inquiry taught Members and other 
interested parties about the nature, extent, and source of the 
problems and challenges faced by the BLS as it begins the 
process of adjusting the CPI. The investigation and subsequent 
hearing also shed light on the degree to which the BLS is 
capable of resolving these issues, and whether any immediate 
adjustments can be made pending long-term legislative changes.
    c. Hearings.--A hearing entitled, ``Bureau of Labor 
Statistics Oversight: Fixing the Consumer Price Index'' was 
held on April 30, 1997. Testimony was received from the 
Department of Labor's Commissioner of Labor Statistics and 
private economists.

7. Bio-Ethics and Informed Consent.

    a. Summary.--The subcommittee reviewed the Federal 
Government's approach to biomedical ethics issues in research 
involving human subjects and the adequacy of informed consent. 
The subcommittee considered the emerging parameters of informed 
consent in view of recent scientific advances in areas such as 
cloning and gene therapies and increased research budgets, with 
particular attention to vulnerable patient populations 
including children, mentally ill and drug addicted individuals, 
as well as current procedures used to address bioethics 
questions and disputes.
    b. Benefits.--The investigation revealed deficiencies in 
the evaluations and oversight needed to maintain a rigorous 
bioethical review system, institutional barriers and logistical 
obstacles in the policing of thousands of research projects, 
and a false sense of security that difficult issues are being 
confronted. The ensuing hearing then sharpened questions 
regarding the mechanism used to address these ethical issues, 
and provided information that will prove valuable in future 
reform efforts.
    c. Hearings.--A hearing entitled, ``Oversight of the NIH 
and FDA: Bio-Ethics and the Adequacy of Informed Consent'' was 
held on May 8, 1997. Testimony was received from 
representatives of the Department of Health and Human Services, 
the Food and Drug Administration, the Centers for Disease 
Control and Prevention, the National Institutes of Health, the 
National Alliance for the Mentally Ill, and scholars from the 
University of Pennsylvania, the University of California-San 
Francisco, and the University of Arizona.

8. Analysis of the Medicare Transaction System [MTS].

    a. Summary.--The subcommittee, working in conjunction with 
the Government Management, Information, and Technology 
Subcommittee, reviewed problems associated with the Health Care 
Financing Administration's [HCFA] multi-million dollar 
development of MTS. The investigation looked at a cost-benefit 
analysis of MTS, projected overall costs of design and 
implementation of the system, and the adequacy of HCFA's 
management and oversight of the project. Other issues addressed 
were HCFA's management of Medicare's nine claims processing 
systems that are being used while MTS is being developed, and 
the agency's preparations for ``the millennium problem'' when 
computers may not recognize dates after the year 2000.
    b. Benefits.--The investigation revealed the nature and 
extent of critical managerial and technical weaknesses that 
continue to delay and undermine the MTS effort, the process 
through which HCFA is reassessing the MTS project, and 
prospects for its completion by the year 2000. This information 
will prove useful to those engaged in efforts to contain HCFA's 
spiraling costs.
    c. Hearings.--A joint hearing with the Government 
Management, Information, and Technology Subcommittee entitled, 
``Status of the Medicare Transaction System'' was held on May 
16, 1997. Testimony was received from the Director of 
Information Resources at the General Accounting Office, the 
Administrator of the Health Care Financing Administration, the 
vice president and general manager of the Information Systems 
Division at GTE, and the vice president of Intermetrics Systems 
Services Corp.

9. Food and Drug Administration's [FDA] Enforcement of Blood Safety 
        Regulations.

    a. Summary.--The subcommittee examined the effectiveness of 
the FDA's enforcement practices in ensuring the safety of the 
blood supply. Members considered the adequacy of the FDA's 
inspection and enforcement practices for the blood and plasma 
industries, the response to accident and error reports, the 
effectiveness of the Blood Products Advisory Committee [BPAC] 
and the Transmissible Spongiform Encephalopathy [TSE] Advisory 
Committee, and the agency's recall and notification practices. 
The subcommittee also reviewed the current regulatory approach 
to the risks associated with pooled plasma products, with 
particular attention to the relationship between the size of 
the plasma pool and the risk of infectious disease 
transmission.
    b. Benefits.--The investigation demonstrated the need for 
continued systemic improvements in the inspection of blood 
facilities and in the methods used to notify practitioners and 
patients of potentially unsafe products. It also helped 
elucidate Members and others as to the risks associated with 
the possible transmission of Creutzfeldt-Jacob Disease [CJD] 
through blood transfusion and the effectiveness of surveillance 
efforts to detect the presence of CJD in the blood supply.
    c. Hearings.--A hearing entitled, ``FDA Regulation of Blood 
Safety: Notification, Recall and Enforcement Practices'' was 
held on June 5, 1997. Testimony was received from 
representatives of the General Accounting Office, the Office of 
Inspector General for the Department of Health and Human 
Services, and the Food and Drug Administration. A hearing 
entitled, ``Food and Drug Administration [FDA] Oversight: Blood 
Safety and the Implications of Pool Sizes in the Manufacture of 
Plasma Derivatives'' was held on July 31, 1997. Testimony was 
received from representatives of the Centers for Disease 
Control and Prevention, the National Institutes of Health, the 
Food and Drug Administration, the National Hemophilia 
Foundation, the Immune Deficiency Foundation, the American Red 
Cross, and all the major plasma fractionators.

10. Reducing Education Mandates.

    a. Summary.--The subcommittee looked at the regulatory 
burdens and mandates on schools that may detract from 
educators' mission of teaching children. The investigation 
explored how education could be deregulated to achieve maximum 
flexibility in using Federal education dollars to improve 
teaching and learning. The inquiry explored the scope and 
effects of existing Federal mandates, potentially conflicting 
Federal, State, and local government mandates, current options 
for mandate relief, and alternative models of regulatory 
flexibility.
    b. Benefits.--The investigation revealed how mandates 
affect educators and how their requirements and restrictions 
might be eased or facilitated. It also brought to light the 
need for schools and school districts to have greater access to 
technical assistance to make educators aware of existing 
flexibility provisions. Finally, it demonstrated a tendency of 
mandates to have a disproportionate impact on disadvantaged 
urban districts that find it hard to raise money through 
increased property taxes, and suggested ways in which this 
inconsistency might be resolved.
    c. Hearings.--A hearing entitled, ``Reducing Regulatory 
Mandates on Education'' was held on June 12, 1997. Testimony 
was received from Representatives Rob Portman (R-OH), Kay 
Granger (R-TX), and Gary Condit (D-CA), and representatives 
from the National School Boards Association, the American 
Association of School Administrators, the Association of School 
Business Administrators, the Texas Association of School 
Boards, and the National Education Association.

11. Restructuring the Department of Veterans Affairs [VA] Medical 
        Services.

    a. Summary.--The subcommittee explored the impact of VA 
health services restructuring and resource allocation on the 
quality of care at VA facilities, with particular attention to 
hospitals in Castle Point and Montrose, NY. The subcommittee 
considered how the VA measures the quality of health care 
provided to veterans, the impact of budget cuts imposed under 
the Veterans Equitable Resource Allocation [VERA] system, as 
well as how the VA plans to assure the consistent quality of 
medical care in the new ``integrated'' structure.
    b. Benefits.--The investigation demonstrated the existence 
of financial incentives for Senior Executive civil servants 
awarded according to their progress in meeting VA goals, 
including the achievement of Veterans Integrated Service 
Network [VISN] savings. It also gave the subcommittee and 
general public the opportunity to review the extent to which VA 
reform measures were examined prior to their implementation, 
the degree to which they have helped or hurt veterans, and the 
way in which they are viewed by the men and women they are 
supposed to aid.
    c. Hearings.--A hearing entitled, ``Restructuring VA 
Medical Services: Measuring and Maintaining the Quality of 
Care'' was held on August 4, 1997, at the Wallkill Community 
Center in Middletown, NY. Testimony was received from 
representatives of VISN 3, the VA Office of Performance 
Management, the New York State Division of Veterans Affairs, 
the Orange County Veterans Service Agency, the Rockland County 
Veterans Service Agency, the Sullivan County Veterans Service 
Agency, the Dutchess County Veterans Service Organization, and 
a large number of public witnesses.

12. Pfiesteria and Public Health.

    a. Summary.--The subcommittee reviewed State and Federal 
public health responses to outbreaks of Pfiesteria piscicida, 
the alleged source of fish kills and human illness in Maryland, 
North Carolina and other areas, to determine Federal and State 
governments' ability to respond to new public health threats 
presented by emerging infectious agents and toxins.
    b. Benefits.--The investigation and ensuing hearings 
suggested ways to improve the sensitivity and effectiveness of 
State and national programs, policies, and practices designed 
to prevent and reduce the Pfiesteria threat. It also revealed 
unprecedented ways in which leaders in Government, science, 
medicine, agriculture might work together to design and 
implement a more unified response.
    c. Hearings.--A hearing entitled, ``Pfiesteria and Food 
Safety: the State Response'' was held on September 25, 1997. 
Testimony was received from the Governor of Maryland and 
representatives from North Carolina State University and the 
University of Maryland School of Medicine, the Secretary of 
Health and Human Services for the State of North Carolina, the 
Secretary of Environment and Natural Resources for the State of 
North Carolina, the commissioner of the Department of Health 
for the Commonwealth of Virginia, and author Rodney Barker. A 
hearing entitled, ``Pfiesteria and Food Safety: the Federal 
Response'' was also held on September 25, 1997. Testimony was 
received from representatives from the Department of Commerce, 
the National Institutes of Health, the Food and Drug 
Administration, the Centers for Disease Control and Prevention, 
and the Environmental Protection Agency.

13. Job Corps.

    a. Summary.--The subcommittee examined Job Corps' success 
in training people for employment, including the degree to 
which the program ensures client commitment, removes barriers 
to employment, improves employability skills, and links skill 
training to the local job market. The investigation drew 
heavily from the results of a General Accounting Office [GAO] 
examination of the Department of Labor's management of Job 
Corps recruitment and placement contractors in terms of how 
they demand and measure success in client commitment and long 
term job potential.
    b. Benefits.--The investigation unearthed a need for Job 
Corps to generate more data in order to maintain a stronger 
focus on performance and accountability, with hearing witnesses 
providing suggestions as to how this might be achieved. 
According to GAO and the Department of Labor Inspector General, 
high program drop-out rates may indicate contractors need to 
revise Job Corps admissions standards, while poor job placement 
prevents the Government from determining the program's 
benefits.
    c. Hearings.--A hearing entitled, ``Job Corps Oversight: 
Recruitment and Placement Standards'' was held on October 23, 
1997. Testimony was received from representatives from GAO, the 
Office of Inspector General for the Department of Labor, Job 
Corps, the Clearfield Job Corps Center, the Hubert H. Humphrey 
Job Corps Center, the David L. Carrasco Job Corps Center, as 
well as a Job Corps graduate.

14. Privatization of Child Support Enforcement Services.

    a. Summary.--The subcommittee looked at the benefits, 
challenges, and future course of State and local efforts to 
privatize social service programs, with special emphasis on 
child support enforcement. The investigation considered 
testimony and data from various sources, including a report by 
the General Accounting Office [GAO] on the benefits, problems, 
performance, and cost effectiveness of efforts to privatize 
child support enforcement services [CSE].
    The subcommittee also reviewed H.R. 399, the ``Subsidy 
Termination for Overdue Payments [STOP] Act'' introduced by 
Congressman Michael Bilirakis (R-FL). The legislation would 
require parents to pay child support obligations or face loss 
of Federal financial assistance, with a ``good cause'' 
exception to avoid penalizing parents in situations where they 
are unable to satisfy their child support obligation due to 
factors beyond their control.
    b. Benefits.--The investigation injected the debate over 
the CSE privatization efforts of State and local governments 
with a historical perspective, as well as an understanding of 
the key issues surrounding State and local privatized services, 
with particular attention to implications for Federal policy. 
The inquiry also yielded an appreciation of the negative 
effects that the absence of robust competition, lack of 
experience specifying contract results, or failure to monitor 
performance can have on privatization benefits and program 
quality.
    c. Hearings.--A hearing entitled, ``Social Services 
Privatization: the Benefits and Challenges to Child Support 
Enforcement Programs'' was held on November 4, 1997. Testimony 
was received from Congressman Michael Bilirakis (R-FL) and 
representatives from the GAO, Policy Studies Inc., Lockheed 
Martin IMS, Maximus Inc., G.C. Services, the Ventura County 
District Attorney's Office, and the Association for Children 
for Enforcement of Support.

15. Department of Labor Enforcement of the Employee Retirement Income 
        Security Act [ERISA] and the Limited Scope Audit Exemption.

    a. Summary.--The subcommittee investigation highlighted a 
loophole in the pension security system. The limited scope 
audit exemption puts assets held by banks and other regulated 
entities beyond the direct view of plan auditors, based on the 
assumption that those funds are already sufficiently protected. 
Since sound accounting standards no longer acknowledge the 
validity of limited audit opinions, the limited scope audit 
exemption effectively puts all such a plan's assets outside the 
protection of an unqualified opinion.
    b. Benefits.--The limited scope audit exemption shields 
from full view $939 billion in pension assets held for more 
than 29 million beneficiaries. The average cost increase of 
requiring full scope audits to protect these assets is 
estimated to be less than $4 per participant.
    c. Hearings.--``Pension Security: Department of Labor [DOL] 
Enforcement of the Employee Retirement Income Security Act 
[ERISA] and the Limited Scope Audit Exemption,'' February 12, 
1998.

16. Department of Health and Human Services, Administration for 
        Children and Families, ``Early Head Start: Linking Early 
        Childhood Programs to Success.''

    a. Summary.--The Department of Health and Human Services 
[HHS] has begun to award grants and expand the Head Start 
program to include child care services for infants and 
toddlers. This new program is called Early Head Start [EHS]. 
Early Head Start has very limited program data to measure 
results and effectiveness. Currently, HHS is conducting an 
evaluation of the program which has slipped 2 years behind the 
expected completion date in 2000.
    The Early Head Start program seeks to change the course of 
children's lives. As physical science now supports, well 
designed programs can enhance the physical, emotional and 
cognitive development of at-risk children. As one witness 
stated, ``Public hope and confidence in the promise of such 
programs is a scarce commodity that we dare not squander on 
approaches that are not likely to succeed. I believe that it 
makes sense to begin with programs that have been tested, 
replicated and found to work.''
    Early Head Start grantees are concerned Early Head Start 
will become a separate program drying up funds meant for the 
older program. They base their concern on the proposal that 5 
percent of Head Start funds are automatically earmarked for 
Early Head Start programs. In addition, they have raised the 
issue that HHS is not doing enough to link EHS and Head Start 
to ensure a seamless transition from Early Head Start, through 
Head Start, and into the classroom. They point to the fact that 
non-Head Start programs (e.g. Parent and Child Centers) 
received Early Head Start grants over existing Head Start 
programs. HHS defends this by pointing out the EHS grants are 
awarded on a competitive basis.
    b. Benefits.--To ensure cost effective, reliable, quality 
child care.
    c. Hearings.--``Early Head Start: Goals and Challenges'' 
and ``Early Childhood Interventions: Public-Private 
Partnerships,'' February 19, 1998 and July 16, 1998.

17. Department of Labor, Bureau of Labor Statistics, ``Fixing the 
        Consumer Price Index.''

    a. Summary.--The Consumer Price Index [CPI] is one of the 
most important and widely used economic indices produced by the 
U.S. Government. The rendering of so prominent a measure must 
be based on sound principles and current data, and should be 
immune to external and internal political manipulation.
    In view of recent estimates of CPI upward bias of more than 
1 percent, and subsequent calls for one-time or permanent CPI 
adjustments, the Subcommittee on Human Resources conducted an 
oversight inquiry to determine the degree to which the BLS is 
implementing an impartial, on-going and effective process to 
enhance CPI methodology and data.
    b. Benefits.--To maintain the integrity and improve the 
accuracy of the CPI.
    c. Hearings.--``Oversight of the Bureau of Labor 
Statistics: Fixing the Consumer Price Index'' and ``Bureau of 
Labor Statistics Oversight: Fixing the Consumer Price Index 
(Part II),'' April 30, 1997 and April 29, 1998.

18. AIDS: Availability, Cost and Access to Long-Term Treatment Options.

    a. Summary.--The range of emerging HIV-AIDS therapies and 
treatments were investigated and reviewed as were recent 
Federally funded research initiatives. Reports from the Centers 
for Disease Control were reviewed which highlight recent 
findings that the rate of death from HIV-AIDS has decreased, 
particularly in certain population groups. The investigation 
explored policy implications of new treatments and therapies 
now available which improve and prolong the lives of HIV-AIDS 
infected persons. A review of literature was conducted on how 
local providers and advocates are working to ensure the new 
treatments are equally available to hard-to-reach and emerging 
populations due to the high costs and complications of 
treatment associated with possible homelessness, mental illness 
or substance abuse. There is increasing concern by certain 
advocates that the high cost of the current triple drug regime 
results in the disproportionate unavailability of the treatment 
in the low-income, minority populations.
    b. Benefits.--The hearing discussion raised awareness of 
the difficulty of certain AIDS-infected populations accessing 
current successful treatments which permit people to live 
longer and improve their quality of life. The mix of State, 
city and local witnesses facilitated an informative discussion, 
resulting in improved coordination among policymakers, funding 
sources, care providers, and HIV-AIDS advocates. The hearing 
highlighted the fact that allocation of resources to assist 
with the high cost treatments needs to be better coordinated to 
ensure equity in distribution. Hearing follow-up with care 
providers and advocacy groups contributed to an improved dialog 
among the range of providers and advocates.
    c. Hearings.--``AIDS: Toward Long-Term Treatment Options,'' 
February 20, 1998.

19. Gulf War Veterans' Illnesses: The Research Agenda.

    a. Summary.--In 1998, the subcommittee continued its 
oversight investigations and hearings, which began in March 
1996, on the diagnosis, treatment and compensation of sick 
veterans who served in the Persian Gulf war. The focus of this 
particular investigation was the Federal Government's approach 
to research into the health concerns of veterans, with 
particular emphasis on the research strategy, objectives and 
agenda of the Persian Gulf Veterans Coordinating Board [PGVCB]. 
Since the 1991 Gulf war, the government has sponsored a variety 
of research projects on Gulf veterans' illnesses. The PGVCB, 
composed of representatives from the VA, DOD and HHS, has 
responsibility for coordinating and managing research into Gulf 
war illnesses. Questions have been raised by medical experts 
whether the government's research program--including its 
emphasis on epidemiological studies and de-emphasis of studies 
on the health effects of low-level chemical exposures--is 
likely to produce valid case definitions of veterans' 
illnesses.
    b. Benefits.--The subcommittee investigation identified 
major flaws in the government's approach to research on Gulf 
war veterans' illnesses. The vast majority of Federal research 
was initiated during or after 1994, and few studies have been 
completed. Some studies are behind schedule, and many will not 
be completed until after the year 2000. A majority of the 
studies fall into two areas: neurological and psychological 
with a focus on stress and post-traumatic-stress-disorder; and 
epidemiologic studies on veterans' symptoms and diagnosable 
diseases, and possible causes. Conclusions reached on Federal 
research include: it lacks a coherent approach; formidable 
methodological problems are likely to prevent researchers from 
providing precise, accurate and conclusive answers regarding 
the causes of veterans' illnesses; and neither the VA nor DOD 
has systematically attempted to determine whether ill Gulf 
veterans are any better or worse today than when they were 
first examined.
    c. Hearings.--``Gulf War Veterans' Illnesses: The Research 
Agenda,'' February 24, 1998.

20. Department of Health and Human Services, ``Oversight of the 
        National Organ Procurement and Transplantation Network.''

    a. Summary.--Since the enactment of the National Organ 
Transplant Act of 1984 [NOTA], American medicine has been a 
world leader in organ transplantation. In 1996, some 20,000 
Americans, about 55 a day, had transplants. Demand for organs 
exceeds supply. About 4,000 people die in the United States 
while waiting for a donated kidney, liver, heart, lung or other 
organ. This March, approximately 54,500 people were on the 
transplant waiting list and the list grows by about 500 per 
month. According to HHS, the system for allocating scarce 
organs is weighted to local organ allocation, instead of 
broader regional or national allocation related to medical 
need.
    HHS proposed new regulation ``to improve the nation's organ 
transplantation system, to assure that allocation of scarce 
organs will be based on common medical criteria, not accidents 
of geography.'' The new rule, according to HHS, calls on the 
Organ Procurement and Transplantation Network to develop 
revised organ allocation policies that will reduce the current 
geographic disparities in the amount of time patients wait for 
an organ. Many nonprofit organizations responsible for the 
coordination, collection and distribution of organs have 
reacted negatively to HHS's call for a new regulation.
    b. Benefits.--To ensure fair distribution of scarce human 
organs to all Americans in every region of the country.
    c. Hearings.--``Oversight of the National Organ Procurement 
and Transplantation Network,'' April 8, 1998.

21. The Complexity of the Medicare Program: The Evolution of the 
        Program, the Effects of Complexity, and Impact on Waste, Fraud 
        and Abuse.

    a. Summary.--After nine hearings on various aspects of 
waste, fraud and abuse in the Medicare and Medicaid programs 
over the past 4 years, the subcommittee looked at program 
complexity as a possible element contributing to waste, fraud 
and abuse. The investigation documented the problems associated 
with program complexity which is an unintentional outgrowth of 
program expansion, benefit enhancement, financing changes, 
modifications in reimbursement and program alterations as a 
result of medical speciality interests. The review focused on 
Medicare and followed the evolution of the program from its 
inception in 1965, through several program expansions, benefit 
enhancements, and overall growth both in terms of eligible 
population and program costs. The review examined the impact of 
complex Medicare billing and coding requirements on the 
practice of medicine, including how health care anti-fraud 
programs distinguish between inadvertent errors and intentional 
billing irregularities. The investigation looked at whether 
there are opportunities to simplify the current coding and 
billing process.
    b. Benefits.--To determine the source of the complexity and 
explore what opportunities exist to simplify the program, 
improve provider program knowledge and enhance overall 
management by HCFA.
    c. Hearings.--``Medicare: Cures for Billing Code 
Complexity,'' April 9, 1998.

22. Department of Health and Human Services, ``Public Health 2000: 
        Immune Globulin Shortages--Causes and Cures.''

    a. Summary.--Tens of thousands of Americans, many of them 
children, suffer from immune system deficiencies and must use 
Intravenous Immune Globulin [IVIG], a blood-based medicine. 
Critical and unexpected shortages of IVIG products are putting 
their lives at serious risk. Manufacturers seem unable, or 
unwilling to meet the growing demand. The FDA does not know why 
there are shortages. Suspected causes of shortages include: 
growth in product demand, product hoarding, recalls of products 
at risk of transmitting disease, and FDA enforcement actions.
    b. Benefits.--to identify solutions to the public health 
crisis of IVIG shortages and ascertain specific actions and 
implementation time lines for regulatory agencies and 
manufacturers.
    c. Hearings.--``Public Health 2000: Immune Globulin 
Shortages--Causes and Cures,'' May 7, 1998.

23. Vulnerabilities in the Department of Housing and Urban Development 
        [HUD]'s Procurement and Contracting Practices.

    a. Summary.--The subcommittee investigation examined 
reports by the Office of Inspector General [OIG] and the U.S. 
General Accounting Office [GAO] which concluded HUD's 
procurement and contracting practices leave HUD vulnerable to 
waste, fraud, and abuse. Implementation of the HUD 2020 
Management Reform Plan is expected to increase the need for 
contracted work, making this investigation particularly timely. 
The subcommittee also examined the Department's commitment to 
systemic procurement and contracting reforms, as well as the 
potential of planned reforms to correct Department 
deficiencies.
    b. Benefits.--HUD awarded 9,600 contracts worth over $3.2 
billion between 1992 and 1996. In a targeted audit of 63 
contracts worth $1.5 billion, the OIG found a variety of 
problems including: need determination, planning, and periodic 
assessments; cost consciousness; contract oversight and 
monitoring; contracting for prohibited services; contract 
close-out procedures; and interagency agreements. While HUD was 
initially resistant to the OIG's conclusions and 
recommendations for change, the Department has since recanted 
its denials and has endorsed nearly all of the OIG's 
recommended reforms.
    c. Hearings.--``HUD Contracting: Vulnerabilities and 
Proposed Solutions,'' June 5, 1998.

24. National Institutes of Health, ``Institutional Review Boards: A 
        System in Jeopardy.''

    a. Summary.--There are 3,000-5,000 Institutional Review 
Boards [IRBs] in the United States overseeing both public and 
private research activities. IRBs, the cornerstone of the 
entire bioethics review structure to protect the interests of 
patients, review too much, too quickly and with too little 
expertise.
    The HHS Inspector General's report, ``Institutional Review 
Boards: A System in Jeopardy,'' concluded that Institutional 
Review Boards [IRBs] limited oversight of research on human 
subjects compromises the protection of study participants.
    b. Benefits.--To ensure adequate oversight of human 
subjects in research studies.
    c. Hearings.--``Institutional Review Boards: A System in 
Jeopardy,'' June 11, 1998.

25. Department of Labor, Employment and Training Administration, ``Job 
        Corps: An Examination of the Program and Operational 
        Components.''

    a. Summary.--The Job Corps is one of the few remaining 
fully Federal training programs serving 69,000 disadvantaged 
youths annually at a cost of about $1.3 billion. The 
subcommittee investigated the Job Corps' vocational training 
component to determine if the vocational training provided is 
appropriate to meet the demands of local labor markets. In 
addition, the subcommittee investigated whether Job Corps 
participants are completing their vocational training and 
obtaining jobs related to the training received.
    b. Benefits.--The investigation documents the need for 
better criteria to determine vocational training completers, 
accurate reporting of job training and placement information, 
and the need for Labor to justify the use of sole source 
contracts for vocational training services.
    c. Hearings.--``Job Corps Oversight: Recruitment and 
Placement Standards'' and ``Job Corps Oversight Part II: 
Vocational Training Standards,'' October 23, 1997 and July 29, 
1998.

26. Food and Drug Administration ``Blood Safety: Minimizing Plasma 
        Product Risks.''

    a. Summary.--An estimated 500,000 people in the United 
States receive products manufactured from human plasma each 
year. Plasma products have infected recipients with diseases 
such as Hepatitis C virus and Human Immunodeficiency Virus 
[HIV]. In the 1980's, before HIV transmission was understood, 
63 percent of the Nation's hemophiliacs became infected with 
HIV. Some safety concerns remain due to the fact that more than 
50 percent of U.S. based manufacturers are under court order to 
abide by Good Manufacturing Practices [GMPs]. GAO conducted a 
study at the request of the subcommittee chairman to evaluate 
the safety of plasma based products. GAO concluded that known 
risks of plasma products are low if good manufacturing 
practices are followed.
    b. Benefits.--To ensure that the FDA is enforcing current 
Good Manufacturing Practices to assure the safety and 
availability of blood and plasma products.
    c. Hearings.--``Blood Safety: Minimizing Plasma Product 
Risks,'' September 9, 1998.

27. Restructuring the Department of Veterans Affairs [VA] Medical 
        Services

    a. Summary.--The subcommittee continued to explore the 
impact of VA health services restructuring and resource 
allocation on the quality of care at VA facilities, with 
particular attention to the Togus [Maine] VA Medical Center and 
the VA Connecticut Healthcare System. The subcommittee 
considered how the VA measures the quality of health care 
provided to veterans, the impact of budget cuts imposed under 
the Veterans Equitable Resource Allocation [VERA] system, as 
well as how the VA plans to assure the consistent quality of 
medical care in the new ``integrated'' structure.
    b. Benefits.--The investigation examined progress in 
meeting VA goals, including the achievement of Veterans 
Integrated Service Network [VISN] cost savings, especially 
VISN-1 which includes the New England states. It also gave the 
subcommittee and general public the opportunity to review the 
extent to which VA reform measures were examined by all 
stakeholders prior to their implementation, the degree to which 
they have helped or hurt veterans, and the way in which they 
are viewed by the men and women they are supposed to aid.
    c. Hearings.--``Restructuring VA Medical Services: 
Measuring and Maintaining Quality of Care,'' September 25, 
1998.

28. Department of Labor, Employment and Training Administration, 
        ``Employment and Training in the Welfare-to-Work Environment.''

    a. Summary.--The purpose of the investigation is to 
determine the way in which some States' employment and training 
programs are meeting the needs of their Temporary Assistance to 
Needy Families [TANF] clients within the new welfare-to-work 
environment. In addition, the investigation seeks to determine 
how State and local welfare agencies are preparing clients for 
employment.
    b. Benefits.--To determine what successful models or 
approaches State and localities are using to help their welfare 
clients get and keep jobs.

29. Department of Education, ``An Examination of Federal Regulations 
        and School Districts.''

    a. Summary.--The purpose of the investigation is to 
determine the major Federal regulations that apply to school 
districts and how the public might benefit from these 
regulations. In addition, the subcommittee is examining the 
flexibility provisions available for those regulations 
perceived by school district officials as being especially 
burdensome.
    b. Benefits.--To determine what flexibility provisions are 
successful to provide relief from Federal regulations to local 
school districts.

    Subcommittee on National Economic Growth, Natural Resources and 
                           Regulatory Affairs

1. Investigation of the White House Database.

    a. Summary.--The subcommittee has been investigating and 
continues to investigate the misuse of the White House Database 
[WhoDB] for unauthorized purposes. This investigation has been 
a part of the Committee on Government Reform and Oversight's 
investigation of campaign fundraising abuses. This 
investigation was first referred to the subcommittee by 
Chairman William F. Clinger, Jr., in the 104th Congress.
    This referral was reaffirmed at the beginning of the 105th 
Congress by Chairman Dan Burton and ratified in writing on July 
17, 1997.
    b. Benefits.--The misuse of the WhoDB implicates the Anti-
Deficiency Act, 31 U.S.C. 1301(a), which prohibits the use of 
funds authorized by Congress for unauthorized purposes and 18 
U.S.C. 641 which imposes criminal sanctions for the use of 
Government property for nongovernmental purposes.
    According to documents produced to the subcommittee by the 
White House, creation of the WhoDB involved approximately $1.7 
million of taxpayer funds. The subcommittee is investigating 
whether the White House converted this government asset to 
assist the private political purposes of the President and the 
Democratic National Committee. The subcommittee has received 
more than 35,000 pages of documents and spoken to more than 20 
witnesses. The subcommittee expects to continue its 
investigation during the second session of the 105th Congress. 
The documents produced to the subcommittee and the testimony of 
the witnesses continue to suggest that the WhoDB was misused 
for unauthorized purposes.

2. Investigation of the Misuse of Statistics by the Department of 
        Energy.

    a. Summary.--The subcommittee has initiated an inquiry into 
the use of statistics by the Department of Energy to 
misrepresent its activity in making grants to disadvantaged 
business enterprises.
    b. Benefits.--Such misrepresentations undermine the 
credibility of the Department and reflect a political agenda 
that may be inconsistent with the program requirements. The 
subcommittee expects to investigate the matter further during 
the second session of the 105th Congress.

3. Investigation of OIRA'S Review of NAAQS Rules.

    a. Summary.--EPA's National Ambient Air Quality Standards 
[NAAQS] for particulate matter and ozone were considered a 
``significant regulatory action'' under Executive Order 12866 
and were reviewed by the Office of Information and Regulatory 
Affairs [OIRA] of the Office of Management and Budget [OMB]. 
OIRA approved the rules as complying with the requirements of 
the order. The NAAQS rulemaking was one of the most significant 
regulatory actions of this year, expected to impose costs of 
over $9 billion per year on the regulated public for partial 
attainment. Because of the major impact of these rules, the 
subcommittee has carefully investigated OIRA's involvement in 
the rulemaking to determine the extent to which OIRA performed 
its regulatory review obligations under President Clinton's 
Executive Order 12866 and ensured that the proposed rules 
complied with all applicable statutes and Executive orders.
    b. Benefits.--The investigation has thus far exposed 
serious deficiencies in OIRA's conduct of regulatory review 
pursuant to Executive orders and procedural statutes. As a 
result, the subcommittee better understands specific areas in 
which the regulatory review process needs further oversight and 
reform. OIRA has repeatedly failed to cooperate fully with 
congressional oversight efforts.
    c. Hearings.--The subcommittee held a hearing on ``EPA's 
Particulate Matter and Ozone Rulemaking: Is EPA Above the 
Law?'' on April 16 and 23, 1997.

4. Securities and Exchange Commission.

    a. Summary.--From March 1996 through April 1997, the 
Subcommittee on National Economic Growth, Natural Resources, 
and Regulatory Affairs reviewed the official travel policies 
and procedures of the Securities and Exchange Commission [SEC]. 
Based upon its investigation, the subcommittee recommended that 
the SEC begin following the internal guidelines set out by the 
SEC Comptroller, particularly those in a July 9, 1993, memo on 
first-class travel, which states that employees should not fly 
first class even at their own expense.
    The subcommittee recommended and the SEC implemented the 
following reforms:
        
 Strictly construe the FTR's requirements for 
        approvals of upgrades for travel or lodging 
        accommodations, and require explicit justifications for 
        such upgrades consistent with FTR requirements.
        
 Do not construe the FTR to permit travel 
        upgrades to business class for the reason that official 
        business needs to be conducted in flight, even if the 
        official work is confidential in nature.
        
 Continue to caution SEC travelers to be 
        circumspect about doing work on confidential or 
        sensitive matters while traveling to protect against 
        inadvertent or premature disclosure of confidential or 
        sensitive information. (The subcommittee has concluded 
        that neither business- nor first-class travel 
        significantly enhances the opportunity to maintain 
        confidentiality of agency documents or records.\13\ )
---------------------------------------------------------------------------
    \13\ The subcommittee does not believe that the exceptional 
security circumstances cited in the FTR include maintaining 
confidentiality of agency records.
---------------------------------------------------------------------------
        
 Include the specific FTR justification for any 
        travel upgrade in a written approval memorandum, which 
        must be submitted to the SEC's Comptroller's Office 
        with the travel voucher before any reimbursement for 
        upgrade expenses is approved. Consistent with current 
        practice, that memorandum should be retained with the 
        agency's official records relating to the trip.
        
 If a traveler receives an upgrade for lodging, 
        and he or she stays at a hotel with a rate in excess of 
        the maximum approved rate for subsistence expenses 
        (currently up to 150 percent of the standard per diem 
        allowance) (the maximum per diem allowance), determine, 
        on a case-by-case basis, whether the appropriate 
        reimbursement is the standard per diem allowance or the 
        maximum per diem allowance.
    Factors to be considered include, but are not limited to, 
the following:
          1) net savings to the Government due to the proximity 
        of the chosen hotel to the location of work which would 
        lessen related transportation costs to be paid by the 
        Government;
          2) reasonable personal safety concerns, particularly 
        relative to persons traveling alone; and
          3) attendance at conferences or meetings which take 
        place at hotels with rates above the maximum per diem 
        allowance.
    Increasing the lodging allowance up to the maximum per diem 
allowance for a particular locality should be considered 
exceptional--travelers are expected to attempt to find 
reasonable accommodations within the per diem allowance set by 
GSA. The traveler bears the burden of persuasion to satisfy the 
SEC's Office of the Comptroller that the traveler should 
receive more than the standard per diem allowance. The 
subcommittee is of the view that justifying a rate above the 
standard per diem allowance on the basis of attending 
conferences or meetings at hotels with rates above the maximum 
per diem allowance is appropriate only if the traveler stays on 
site, at a less expensive hotel in close proximity to the 
conference or meeting site, or if no other hotel is reasonably 
available.
        
 Consult with the Inspector General to 
        implement a periodic audit by the Inspector General's 
        office of agency travel vouchers, including those in 
        which upgrades have been approved, to determine 
        compliance with the FTR and agency policies.
        
 Require all SEC travelers to attach used 
        airline ticket stubs, demonstrating the class of 
        accommodations used by the traveler, to their travel 
        vouchers.
        
 Review and approve requests for travel 
        upgrades on a uniform basis.
    b. Benefits.--The SEC has agreed to implement all of the 
subcommittee's recommended reforms. Many of these 
recommendations are not reforms; rather, they require 
enforcement of internal agency travel policies and Federal 
travel regulations already on the books. In adopting these 
recommendations, the SEC has come into compliance with the 
regulations which govern all Federal employees' travel.
    The SEC's Inspector General is making quarterly reports to 
the subcommittee on compliance with the travel reforms. Reports 
were submitted in October 1997 and January 1998, showing full 
compliance. The subcommittee hopes that the SEC will begin to 
serve as an example of an agency that fully complies with its 
internal travel policies and the Federal travel regulations, 
with the benefit being, the protection of taxpayer dollars.
    c. Hearings.--None.

5. Oversight of the U.S. Army Corps of Engineers Wetlands Programs.

    a. Summary.--The subcommittee conducted oversight into the 
U.S. Army Corps of Engineer's (the Corps) wetlands program. The 
subcommittee held an oversight hearing on this issue in 
Marietta, GA, on June 16, 1997. The hearing, ``Wetlands: 
Community and Individual Rights vs. Unchecked Government 
Power,'' examined particular difficulties that local citizens 
and the county government had in obtaining permits from the 
Corps to develop their property.
    First, the hearing covered the issue of the Corps' denial 
of a permit for Cobb County to build the West Cobb Loop, a 
much-needed roadway to ease traffic congestion in the area. The 
Corps denied the permit because it favored an alternate route 
which would not impact any wetlands, but would affect more than 
700 homes, 2 churches and a school in the West Sandtown 
community, and force residents in 39 homes to completely 
relocate.
    Second, the hearing examined the problems Robert Dabbs, a 
small, local developer of subdivisions, experienced in 
obtaining a permit from the Corps. The Corps put a Cease and 
Desist Order on his entire development project, although he 
only affected 0.63 of an acre of wetlands in the 111-acre 
residential development. Mr. Dabbs cooperated with the Corps' 
every request, spending thousands of dollars to comply, but the 
Corps did not have time to look at his paperwork. At the time 
of the hearing, Mr. Dabbs was on the brink of financial ruin 
due to the Corps' delay. One of his partners had already folded 
and 165 construction workers' jobs had been eliminated.
    Third, the hearing examined the situation of Grady Brown, 
an elderly cattle rancher and businessman. The Corps stopped 
him from using part of his own land because the Georgia 
Department of Transportation [DOT] inadvertently flooded it 10 
years previously, creating a wetland. The DOT recognized their 
error and drained the property, but when the Corps found out, 
they ordered the DOT to undo their work and reflood the land. 
The Corps left Mr. Brown with a lot of useless swamp land and 
no recourse but to go through a long and likely futile 
permitting process or to engage in a costly, protracted legal 
battle.

Background: Federal Wetlands Regulations

    The key program under which wetlands are regulated by the 
Federal Government is found in Section 404 of the Clean Water 
Act [CWA], which was established in 1972. Under Section 404, 
landowners and developers must get permits from the Corps 
before conducting any work which results in the disposal of 
dredged or fill materials into the waters of the United States, 
including wetlands. The Section 404 program is jointly 
administered by the Corps and the Environmental Protection 
Agency [EPA]. Section 404 authorizes States to take over the 
administration of permits, but the process to do so is very 
complex and only two States have assumed this responsibility--
Michigan and New Jersey.
    The Corps issues general permits for activities that will 
only have a minor impact on wetlands and individual permits for 
more extensive activities. General permits, which are issued 
for 5-year periods, allow activities in their scope to go 
forward without individual review, reducing paperwork and 
delay. Over 80 percent of the approximately 50,000 activities 
permitted by the Corps each year are covered by general 
permits.
    In December 1996, the Corps reissued its 37 nationwide 
permits [NWPs], as its general permits are known, and added 2 
new ones. The Corps made a few significant revisions to the 
NWPs. Most importantly, it is phasing out the Nationwide 26 
permit which authorizes discharges into isolated waters (not 
connected or adjacent to surface waters) and headwaters 
(minimal flow waters) affecting up to 10 acres. The Corps has 
reauthorized NWP 26 for 2 years. After 2 years, NWP 26 will be 
eliminated entirely and replaced by new, activity-specific 
permits. While NWP 26 remains in existence, it has been reduced 
to cover only those activities affecting up to 3 acres. A 
preconstruction notification is now required for any activity 
affecting more than one third of an acre, reduced from 1 acre. 
Landowners and developers have voiced great concern that the 
Corps will not be able to replace NWP 26 sufficiently and that 
the increased workload of granting individual permits for all 
the activities that were formerly covered by NWP 26 will result 
in long, costly delays. Over 20,000 activities occur under NWP 
26 every year.
    The subcommittee examined a study recently released by the 
Competitive Enterprise Institute [CEI], which concluded that 
wetlands restoration has exploded in the last decade resulting 
in ``no net loss'' of wetlands. In fact, the study reported, 
there has been a net gain in wetlands. The U.S. Department of 
Agriculture's Natural Resource and Conservation Service has 
conducted a survey of wetlands across the Nation as part of its 
most recent National Resources Inventory [NRI]. The NRI showed 
a trend of wetland losses that indicates about 141,000 acres of 
wetlands were lost in 1995. In the same year, three non-
regulatory wetland restoration programs of the USDA restored at 
least 187,000 acres of wetlands. These programs are the 
Partners For Wildlife Program, the North American Waterfowl 
Management Plan, and the Wetland Reserve Program. Wetland 
restoration is defined as ``the re-establishment of wetland 
hydrology and wetland vegetation to lands which had previously 
been drained, typically for agricultural purposes.'' 
Restoration is distinct from creation of a new wetland where 
none existed previously or enhancement of an existing wetland 
to improve its functioning.
    b. Benefits.--As a result of the subcommittee's oversight 
hearing, the Corps agreed to readdress the West Cobb Loop and 
Robert Dabbs' permit issues, as well as drainage of the wetland 
on Grady Brown's property.
    At the hearing, Cobb County Department of Transportation 
Director Jim Croy testified on behalf of Cobb County on the 
West Cobb Loop issue. The Commission's application for a permit 
to build the road was rejected by the Corps because the chosen 
route would impact 11 acres of wetlands--not the ``least 
environmentally damaging alternative.'' The Commission and 
local citizens chose the route that would impact some wetlands 
because it would have the smallest impact on the residents of 
the area. They also offered to mitigate the impact by creating 
eight times as many wetlands and building bridges where 
possible to span the wetlands, making the project more 
expensive. The route the Corps preferred would widen an 
existing road through a residential neighborhood, affecting 
700+ homes, 1 school and 2 churches, and forcing the complete 
relocation of 39 homes. This route would not touch any 
wetlands. The route the county chose would only force the 
relocation of three homes. The citizens of Cobb County feel 
strongly that there is a need for this road to ease the traffic 
on smaller roads. They are paying for the road directly from 
their own tax dollars--no Federal funds--through a 1 percent 
tax they voted to impose on themselves for road improvement 
projects.
    Two citizens testified about the impact the road would have 
on their community if the Corps' preferred route was chosen. 
Chris McLean and David Parr addressed issues of community 
safety and well-being. There is a school on the road the Corps 
wanted to widen. Children walk to school along that road every 
day. The road connects several housing subdivisions. The rate 
of accidents in this residential area would greatly increase if 
the road was widened from two to five lanes and the speed 
increased.
    Col. Grant M. Smith, District Commander of the U.S. Army 
Corps of Engineers Savannah District, testified on behalf the 
Corps. He made the decision to reject the county's application 
for a permit to build the West Cobb Loop. At the hearing, Col. 
Smith agreed to work with the county on its re-proposal of a 
route for the West Cobb Loop. To date, Cobb County has 
submitted a new application for a permit to build on a route 
similar to the one in its first proposal. Currently, the 
application is in a joint comment period. According to Cobb 
County officials, it is likely that the application will be 
approved and a permit will be granted to begin construction in 
March or April 1998.
    In the case of a permit for Robert Dabbs' housing 
subdivision, Col. Smith testified that he was not aware of the 
costly delays caused by the Corps, and he apologized for them. 
He announced that the Corps had scheduled a meeting to inspect 
Mr. Dabbs' property again on June 18 (2 days after the 
hearing). At the inspection, the Corps agreed with the 
delineation Mr. Dabbs' engineer had determined--they settled on 
0.9 of an acre of wetlands. Mr. Dabbs applied for an after-the-
fact permit from the Corps for his development, and he will 
mitigate for the wetlands he disturbed. The Corps gave him a 
letter releasing the part of the development that isn't wetland 
for construction to continue.
    Col. Smith was not able to be as accommodating in Mr. 
Brown's case. Because the regulations do not distinguish 
between man-made and natural wetlands, both must be protected. 
But he agreed to reconsider the issue to determine if a 
mutually agreeable solution could be reached. The case has not 
yet been resolved satisfactorily.
    c. Hearings.--A field hearing was held on this matter on 
June 16, 1997, in Marietta, GA, ``Wetlands: Community and 
Individual Rights v. Unchecked Government Power.''

6. Oversight of the Security and Exchange Commission's ``Disclosure of 
        Accounting Policies for Derivative Financial Instruments and 
        Derivative Commodity Instruments'' (derivative rule).

    a. Summary.--The subcommittee conducted a substantial 
review of the SEC's derivative rule, which was promulgated on 
February 10, 1997, to determine whether the rule was sound and 
efficient and whether the SEC had complied with the statutory 
requirements of the underlying securities law (National 
Securities Markets Improvement Act of 1996) and the 
Congressional Review Act under the Small Business Regulatory 
Enforcement Fairness Act (Public Law 104-121). The subcommittee 
sent the SEC oversight letters on March 17, 20, and 28, 1997, 
requesting a complete copy of the initial and final regulatory 
flexibility analysis for the rule, among other materials.
    The subcommittee reviewed all the documents submitted by 
the SEC and conducted extensive interviews of the SEC Chief 
Economist, the SEC Chief Accountant, the SEC Deputy Chief 
Accountant, and an SEC Assistant General Counsel, all of whom 
were involved in the derivative rulemaking process. The 
subcommittee also interviewed a number of outside economic 
experts, market analysts, and securities experts and met with a 
variety of interested parties in the regulated community. In 
addition, the subcommittee has carefully reviewed the findings, 
conclusions, and recommendations of the Senate Subcommittee on 
Securities in their report dated April 21, 1997 (Report of the 
Subcommittee on Securities on Proposals by the Securities and 
Exchange Commission and the Financial Accounting Standards 
Board for the Accounting Treatment of Financial Derivatives). 
Based on this substantial review of the derivative rule, we 
find additional support for and endorse the findings and 
conclusions of the Senate report.
    Most significantly, the subcommittee reviewed a memorandum 
from the SEC Office of Economic Analysis dated January 7, 1997, 
which presents a thorough and persuasive critique of the 
quantitative disclosure requirements of the derivative rule. 
The memorandum suggests that the market has already responded 
positively to the concerns that arose a few years ago in well-
publicized cases and will continue to do so without any action 
by the SEC. In contrast to the direction the market is taking, 
the SEC's Chief Economist states that the derivative rule, 
particularly its quantitative disclosure requirements, ``has 
the potential to create misleading representations of market 
risks in the registrants'' disclosures.'' In fact, the SEC's 
Chief Economist wrote that under the rule ``some risk 
disclosures will be misleading.'' (Emphasis added.) To cite but 
one example, the Chief Economist wrote that ``a registrant may 
be at considerable risk due [to its] derivatives positions and 
yet report a quantitative risk of zero under the [derivative 
rule].'' Finally, the Chief Economist wrote that the 
quantitative disclosure requirements of the derivative rule 
will likely cause market participants to shift to over-the-
counter contracts that entail even greater risk. As the 
memorandum relates, the rule ``creates incentives for financial 
engineering and a movement of trading to over-the-counter 
markets from financial exchanges.'' In short, it appears that 
the SEC's Chief Economist believed that no quantitative 
disclosure requirement was necessary and that the requirements 
in the rule the SEC has issued will be misleading and 
counterproductive.
    Apart from the persuasive criticism of the derivative rule 
in the memorandum, the subcommittee is most troubled that the 
Chief Economist's conclusions, and many other comments that the 
SEC received from the regulated community on the quantitative 
disclosure requirements, appear to have been completely ignored 
by the SEC's Office of the Chief Accountant and others at the 
SEC. Sadly, the subcommittee has concluded that the SEC 
regulated for the sake of regulating, rather than for the 
protection of investors.
    b. Benefits.--The subcommittee concluded, in accordance 
with the Senate Subcommittee on Securities' Report, that the 
derivative rule is problematic for the following reasons.
    1. There is no justification for requiring quantification 
of derivative risks, as the derivative rule requires, but not 
requiring quantification of the following intangible risks, 
each of which the SEC Chief Economist said usually has a larger 
impact on a public company's stock value:
        
 changes in company management;
        
 the possibility of a labor strike;
        
 changes in a competitor's line of products or 
        services;
        
 development of valuable patent rights;
        
 good or bad marketing decisions;
        
 increases or decreases in the cost of 
        manufacturing inputs; and,
        
 all other good or bad business decisions.
    2. Although the market developed the valuation methods that 
the SEC now requires under the derivative rule, the market 
players who developed the tools oppose mandatory disclosure. By 
mandating disclosure, the derivative rule, creates an incentive 
for the market not to develop or improve such risk management 
tools in the future, for derivatives or for any of the other 
risks listed above.
    3. The SEC Chief Economist admitted in an internal memo and 
in a subcommittee interview that none of the derivative 
debacles of the past would have been prevented by the new 
derivative rule.
    4. The SEC's initial economic analysis and cost estimate on 
the derivative rule was simply guesswork on the part of the 
Deputy Chief Accountant with no input from the SEC Office of 
Economic Analysis. The SEC's final economic analysis was based 
on anecdotal interviews by the Deputy Chief Accountant, who has 
since left, with only minimal review by the SEC Office of 
Economic Analysis. The Senate Subcommittee on Securities found 
that the SEC had violated Section 106 of the National 
Securities Markets Improvement Act of 1996 by not conducting a 
real cost benefit analysis. The Subcommittee on National 
Economic Growth, Natural Resources, and Regulatory Affair 
concurs with this conclusion.
    5. The actual direct cost of compliance with the derivative 
rule will far exceed the SEC's estimates. Interviews with the 
CFOs of several major corporations convinced the subcommittee 
that the SEC's final cost estimate was based on faulty 
assumptions about the amount of time it would take to comply 
with the rule.
    6. Those companies to which the derivative rule applies are 
at serious risk of competitive harm because they are forced to 
disclose sensitive information that their foreign competitors 
and those domestic companies which are not covered by the rule 
do not have to disclose.
    7. The SEC Chief Economist concluded that the analyses 
required by the derivative rule will be too complex for most 
investors to follow. Therefore, the rule will provide 
misleading information to investors.
    8. The SEC Chief Economist concluded that the analyses 
required by the derivative rule will also be misleading because 
the various options the rule allows for reporting derivative 
risk are not compatible. Companies are given three options for 
quantitative reporting: tabular presentation (describing the 
fair value and contract terms), ``sensitivity analysis'' 
(describing potential earnings and losses under various market 
fluctuations), and ``value at risk'' (describing potential 
losses within a historical context). It would be difficult, if 
not impossible, for most investors to compare what one company 
puts in one format and another company puts in another format.
    9. The SEC Chief Economist concluded that the derivative 
rule will create an incentive for firms to move from financial 
exchanges to over-the-counter or other non-cash settled 
commodity markets, thus increasing the risk to investors.
    10. The SEC Chief Economist concluded that the derivative 
rule will create an incentive for firms to engage in less 
hedging activity, thus increasing the risk to investors. This 
is the case because derivatives are used by companies primarily 
to reduce risk. The companies that use derivatives oppose the 
rule because it requires them to disclose financial trade 
secrets. If these companies have to disclose information about 
how they use derivatives to their competitors, it is not as 
worthwhile for them to use derivatives. Thus, the rule creates 
an incentive for companies to use fewer derivatives. Using 
fewer derivatives creates more risk for the companies' 
investors.
    11. Although the ``safe-harbor'' provision of the SEC rule 
is an attempt to limit the litigation arising from the rule, 
the subcommittee believes that substantial litigation remains 
likely to occur.
    c. Hearings.--None.

7. EPA's Particulate and Ozone Rulemaking.

    a. Summary.--The subcommittee conducted significant 
oversight of the process that the Environmental Protection 
Agency [EPA] followed in developing new air quality standards 
for particulate matter [PM] and ozone. This review focused on 
EPA's compliance with Federal laws and procedures intended to 
assure that regulations will not do more harm than good. In 
particular, the subcommittee examined the Agency's compliance 
with the requirements of the Small Business Regulatory 
Enforcement Fairness Act [SBREFA], Regulatory Flexibility Act 
[RFA], the Unfunded Mandates Reform Act [UMRA] and Executive 
Order 12866, and with the administrative procedures set forth 
in the Clean Air Act.
    On November 27, 1996, EPA proposed revisions to tighten 
dramatically the National Ambient Air Quality Standards [NAAQS] 
for particulate matter and ozone. The new NAAQS, which were 
finalized in July 1997, will regulate fine particles and impose 
a lower acceptable level of smog measured over a longer time 
period. Under the Clean Air Act, NAAQS are required to be set 
at a level that is ``requisite to protect the public health,'' 
while ``allowing an adequate margin of safety.'' Throughout the 
rulemaking proceeding, EPA Administrator Carol Browner 
persistently maintained that the Clean Air Act allows the 
Agency to consider only health factors in its decisionmaking. 
Therefore, she insisted that UMRA's regulatory requirements did 
not apply and that EPA could not consider the results of its 
regulatory impact analyses in determining whether to revise the 
current standards. She also argued that RFA and SBREFA did not 
apply, because these health-based standards do not, in 
themselves, have any direct regulatory effect. Moreover, she 
stated that it is not feasible to conduct regulatory impact 
analyses at the NAAQS-setting stage, because the Agency does 
not know what specific regulatory requirements a State will 
choose for implementing the standards.
    However, EPA's analyses assume that the available science 
indicates a threshold for unacceptable risk from which EPA 
could set a standard allowing an adequate margin of safety. In 
fact, this assumption ignores the findings of EPA's own 
scientific advisory committee. Based on the best available 
science, the Clean Air Scientific Advisory Committee [CASAC] 
determined that there are no such bright scientific lines. 
Indeed, CASAC indicated that there is no scientific proof that 
EPA's standards will measurably improve public health. In the 
case of ozone, the panel concluded that the proposed standard 
was not significantly more protective of public health than the 
current one. In the case of PM, they found significant 
uncertainty surrounding the health effects of fine particles. 
In their view, there is no compelling evidence on which to set 
more restrictive standards at this time. As a result, CASAC 
concluded that science could not make the judgment call on 
EPA's new standards.
    In the face of inconclusive science and the prospect of 
questionable public health benefits, compliance with ``good 
government'' procedures takes on added significance. Under 
these circumstances, sound policy judgments can be made only 
after (1) a careful balancing of the weight of the available 
scientific evidence against anticipated costs, risks, and 
likely benefits; and (2) an adequate opportunity for review and 
comment. For this reason, the subcommittee closely reviewed 
EPA's compliance with the Federal laws, Executive orders, and 
administrative procedures that require the Agency (1) to 
analyze and take into account a range of factors in exercising 
its discretion on proper risk management; and (2) to allow 
ample time for the filing and review of comments. The 
investigation focused on the following problems:
    Regulatory Flexibility Act.--EPA certified that its rules 
will not have a significant impact on small business. This 
finding is very problematic because EPA indicated that these 
rules will have a significant economic effect on a substantial 
number of small entities in its regulatory impact analyses. 
Moreover, the Agency has previously prepared analyses of small 
business effects in other NAAQS-setting rulemakings. Finally, 
the Small Business Administration, the controlling legal 
authority, determined that EPA was required to do so in this 
rulemaking proceeding.
    Unfunded Mandates Reform Act.--EPA has insisted that the 
Clean Air Act (Act) prohibits it from complying with the 
requirements of UMRA. Therefore, EPA did not prepare a written 
statement that evaluated the effects of its changes on State, 
local, and tribal governments and the private sector or provide 
an explanation why the Agency could not select the least 
costly, most cost-effective, and least burdensome alternative 
that achieves the objectives of the Act. Nor did EPA involve 
State and local officials in developing its rules. Yet, the 
Agency had the discretion not to change the existing air 
quality standards and this NAAQS review involved policy 
judgments.
    Executive Order 12866.--Although EPA considered it 
appropriate to evaluate alternative regulatory options, the 
Agency maintained that it would be inconsistent with the Clean 
Air Act for the Agency to take into account the results of its 
economic analyses in determining which option to select. This 
is problematic in light of CASAC's conclusion that science 
could not make the judgment call in this rulemaking proceeding.
    Regulatory Impact Analyses.--At the proposing stage, EPA 
failed to perform full cost analyses of its changes to the PM 
and ozone standards and available alternatives, even though 
doing so would have enabled a more informed evaluation of the 
achievability of these standards and their net benefits.
    Risk Management.--In developing its new PM2.5 annual 
standard, the Agency did not give appropriate weight to the 
inconclusive nature of the scientific evidence on the health 
effects of fine particles, especially the significant 
uncertainties raised by CASAC. Moreover, in spite of the 
marginal public health benefits that its ozone proposal would 
provide and its own determination that the costs of 
implementing the standard would outweigh the benefits, EPA 
preferred this option to issuing an 8-hour equivalent of the 
current standard.
    PM Research.--Despite the many unanswered questions and 
uncertainties surrounding the mortality effects of fine 
particles, EPA refused to validate the two key government-
funded prospective studies upon which the Agency relied, by 
obtaining and making available to the public for independent 
review the data underlying those studies.
    Opportunity for Review.--EPA did not find it necessary to 
provide an adequate opportunity for public comment and 
regulatory review before adopting any revisions to the PM and 
ozone NAAQS. This is very problematic given the complexity of 
this NAAQS review, which addressed both the PM and ozone 
standards, and the amount of time allocated in the past to 
reviewing just one standard. In the case of the ozone standard, 
this is particularly egregious because EPA was not under a 
court-ordered deadline to review that standard. Moreover, in 
its filing with the District Court in Arizona seeking an 
extension of the deadlines for the particulate matter 
rulemaking, EPA recognized that the court provided ``an 
extraordinarily short time period'' for reviewing and 
responding to public comments in a rulemaking of this nature. 
Under such severe time constraints, it is highly dubious that 
EPA was able to perform a meaningful review of all of the 
comments filed on both the PM and ozone proposals.
    In pursuing its oversight work, the subcommittee sent 
letters of inquiry to EPA, OIRA, SBA, and the Council on 
Economic Advisers. The subcommittee also interviewed EPA, SBA, 
and OIRA officials involved in this rulemaking proceeding, 
CASAC scientists, State and local authorities, and economic and 
policy analysts. In addition to the documents provided in 
response to its inquiries, the subcommittee reviewed legal, 
economic and scientific analyses developed by the private 
sector and the public comments submitted on EPA's proposals.
    Finally, on April 16 and 23, 1997, the subcommittee held a 
hearing on EPA's rulemaking. On the first day of the hearing, 
the subcommittee heard testimony from representatives of the 
public, small business, the scientific community, and State and 
local government. Testifying at the second day of the hearing 
were EPA Administrator Browner, OIRA Administrator Sally Katzen 
and SBA Chief Counsel for Advocacy Jere Glover.
    On the first day of the hearing, witnesses provided 
persuasive testimony that EPA's proposed new stringent 
standards were misguided. Dr. Christopher Grande, an 
anesthesiologist and intensive care specialist in trauma 
injury, said that the proposed rules are ``the latest example 
in what [he] see[s] as a disturbing trend of the last two 
decades where scarce public health resources are diverted from 
more clearly demonstrated beneficial uses.'' ``For example,'' 
he added, ``if a community is forced to spend its resources 
implementing the ozone and particulate matter air quality 
standards, what other public health needs will the community 
sacrifice?'' This concern was echoed by Faith Kline, a fourth-
grade school teacher and severe asthma sufferer, and Fred 
Congress, a minority business owner. Both admonished the Agency 
not to take a great public policy leap without more scientific 
justification. To do otherwise, they agreed, will just result 
in onerous new control measures being imposed on the backs of 
citizens for minimal health benefits.
    A bipartisan group of State and local elected officials 
also expressed concern that EPA's air quality standards will be 
counterproductive to cleaner air and improvements in public 
health. According to Ohio Governor George Voinovich, ``the 
proposed standards threaten to undo all the hard work and 
sacrifice made by our [citizens] to bring their communities 
into attainment.'' San Diego Mayor Susan Golding and Illinois 
State Representative Jeffrey Schoenberg believed that the rules 
will have an enormous impact on small business and will become 
``one of the largest unfunded mandates'' ever faced by State 
and local government.
    During the course of its oversight, the subcommittee also 
found the following information particularly noteworthy in view 
of its concerns about the conduct of the rulemaking process:
    Interagency Review.--EPA did not adequately address the 
economic and scientific criticism that its air quality 
standards provoked throughout the Clinton administration. The 
President's own Office of Science and Technology Policy 
objected that these standards are not based on adequate 
scientific information. The Council of Economic Advisers [CEA] 
observed that, ``the incremental health-risk reduction from 
more stringent standards is small, while costs are high.'' In 
fact, the CEA estimated that the costs of fully complying with 
just EPA's new ozone standards could reach $60 billion a year. 
According to the SBA, these are ``the most expensive 
regulations faced by small business in 10 or more years.'' The 
Department of Transportation [DOT] commented that it was 
``incomprehensible that the administration would commit to a 
new set of standards without much greater understanding of the 
problem and its solutions.'' A DOT analysis of the impact of 
EPA's standards on States and localities showed that areas in 
noncompliance will face ``economically strangling restrictions 
to daily operations.'' The Department noted that the standards 
will ``bring a significantly larger proportion of the 
population and more jurisdictions under Federal oversight and 
procedural burdens.''
    State and local elected officials.--EPA did not adequately 
address the concerns voiced by numerous governors and thousands 
of mayors about these standards. They maintained that the 
standards will have a disproportionate impact on small business 
and will impose one of the largest unfunded mandates ever on 
State and localities. These standards will force onerous new 
control measures and unnecessary lifestyle changes on hundreds 
of counties that will not be able to comply. The costs of doing 
business will rise considerably, causing massive layoffs. Areas 
in nonattainment will have to adhere to stringent requirements 
regarding building permits and uses, transportations plans, 
industrial uses, and the like. In short, the elected officials 
protested that States and localities will face oppressive 
constraints on their freedom to run their own communities and 
meet the needs of their citizens.
    EPA's Final Regulatory Impact Analysis.--While EPA has 
interpreted the Clean Air Act as requiring the setting of NAAQS 
to be health-based and not based on cost or other economic 
considerations, the Agency nonetheless performed a regulatory 
impact analysis [RIA] to determine the costs and benefits of 
its new standards. Moreover, EPA's final RIA clearly shows that 
its preliminary analysis did not conform to the 
administration's own guidelines for issuing regulations (OMB's 
guidelines for implementing Executive Order 12866). In contrast 
to that preliminary analysis which showed that the standards 
were cost-effective, EPA now has found that its new standards 
may actually result in harm to the public, potentially 
producing net negative benefits of $26 billion. Based on its 
estimates, EPA has concluded that the net benefits for ozone 
are negative and that it is quite plausible that the net 
benefits of the PM2.5 standard also will be negative. Total 
costs could be $47 billion ($37 billion from the PM2.5 rule 
plus $9.6 billion from the ozone rule). By the time EPA 
finalized its rules, its cost estimate rose about five-fold, 
while its measure of public health fell by over 80 percent 
(number of lives saved fell by 97 percent). Finally, the level 
that EPA has adopted for its annual PM2.5 standard is very cost 
sensitive. A change in the level by just 1 microgram per cubic 
meter, from 15 to 16, would result in a 37 percent reduction in 
the number of residual nonattainment areas--from 30 to 19.
    Job Impacts.--In its study, ``Costs, Economic Impacts, and 
Benefits of EPA's Ozone and Particulate Standards, the Reason 
Public Policy Institute found that the standards could cost 
from $90 to $150 billion annually. These costs would have an 
adverse effect on economic growth and employment, taking about 
$1,600 from each family of four after taxes and putting 200,000 
to 400,000 jobs at risk. The costs of these standards could 
reduce the purchasing power of lower income families by more 
than 5 percent. Finally, the study projected that 
disproportionate share of the job losses would come from lower 
paying occupations in the small business sector.
    Better Investments.--EPA did not evaluate the health 
benefits from investing scarce resources in the implementation 
of its stringent PM and ozone standards as compared to benefits 
from investing in other public health and safety programs. In 
terms of cost per life-year saved, EPA's rules are very cost 
ineffective when compared with other investment choices, such 
as mammograms and immunizations. For example, the cost per 
life-year saved of breast cancer screening for women ages 40-64 
is about $17,000, while the cost per life-year saved of 
pneumonia vaccinations for those over 65 is about $2,300. By 
contrast, EPA's PM analysis indicates a cost per life-year 
saved of $2.4 million.
    Research.--Although EPA's 1996 ``Air Quality and Emissions 
Trends Report'' shows that nationwide air quality has improved 
substantially over the last 10 years, the incidence of asthma 
is increasing appreciably. Most experts believe that the 
primary cause of increased asthma prevalence is related to 
indoor not outdoor air pollution. Further research is needed to 
examine the effects of poverty and indoor air quality on the 
incidence of asthma, relative to the effects of outdoor air. 
Moreover, with respect to the health effects of fine particles, 
CASAC urged EPA to ``immediately implement a targeted research 
program to address [the] unanswered questions and 
uncertainties.'' President Clinton's budget request for fiscal 
year 1998 underscored the necessity for research. In requesting 
$26.4 million for PM research, a 37 percent increase over 1997, 
the President indicated, among other things, the need to 
investigate the ``biological mechanisms by which PM 
concentrations in outdoor air may induce health effects and, in 
doing so, evaluat[e] potential links between PM exposures and 
health effects.'' Clearly, absent a better understanding of the 
science, effective control strategies cannot be designed.
    Underlying Data.--The subcommittee sent letters to Harvard 
and the American Cancer Society [ACS] urging that they 
cooperate with efforts to structure a public process for the 
independent review of the data underlying their long-term 
studies, which are critical to EPA's annual PM2.5 standard. 
Prompted by such appeals, Harvard and ASC are working with the 
Health Effects Institute to set up procedures for independent 
scientific review.
    Unintended Adverse Consequences.--EPA did not evaluate any 
of the following potential adverse consequences: (1) Reducing 
ground-level ozone may cause an increase in malignant and 
nonmelanoma skin cancers and cataracts, as well as other health 
risks from ultraviolet B rays; (2) Setting a generic fine 
particle standard may result in controlling particles that 
don't significantly harm the public health, and not controlling 
ones that do; and (3) The regulatory costs that will be 
transmitted throughout the economy will increase poverty 
levels. As a result, workers and consumers will have less 
disposable income to spend on safety devices, on medical 
checkups and procedures, and on clean and safe housing.
    b. Benefits.--The record developed through the 
subcommittee's oversight clearly shows that EPA defied good 
government laws and procedures in developing its new air 
quality standards, that these standards are scientifically 
indefensible, and that they will impose enormous burdens on 
State and local government and the private sector, with little 
or no assurance of public health benefits. Nothing in the Clean 
Air Act removes the Agency's discretion and responsibility to 
take a reasonable approach when the scientific evidence is 
inconclusive. Contrary to good government procedures and 
requirements, EPA rushed to judgment without weighing a range 
of relevant factors and without providing an adequate 
opportunity for public comment and review.
    c. Hearings.--The subcommittee held a hearing entitled, 
``EPA's Particulate Matter and Ozone Rulemaking: Is EPA Above 
the Law?'' on April 16 and 23, 1997.

8. GAO Findings on Superfund Cleanup.

    a. Summary.--On February 13, 1997, the subcommittee held a 
hearing on the preliminary findings of the General Accounting 
Office [GAO] on the duration of the Superfund cleanup process. 
Despite the Environmental Protection Agency's [EPA] claims to 
the contrary, GAO testified that the pace of the Superfund 
program is actually slowing down. GAO stated that it now takes 
much longer for non-Federal sites to move through the Superfund 
system than it did 10 years ago. Moreover, GAO staff warned 
that longer completion times are significant because many 
listing and cleanup activities remain in the Superfund program.
    The Superfund program was created in 1980 when Congress 
enacted the Comprehensive Environmental Response, Compensation 
and Liability Act [CERCLA] to identify and cleanup the Nation's 
worst hazardous wastesites. After nearly 17 years, the public 
and private sectors combined have spent over $30 billion on the 
program, with only 30 percent of the sites on the National 
Priorities List [NPL] cleaned up.
    At the request of former Government Reform and Oversight 
Chairman William F. Clinger, GAO investigated the time it takes 
to assess and cleanup contaminated sites on the NPL and why 
cleanups have been delayed. In March 1997, GAO issued its final 
report, ``Times to Complete the Assessment and Cleanup of 
Hazardous Waste Sites,'' which confirmed its earlier findings. 
Based on EPA's own data, GAO concluded that:
          (1) It now takes substantially longer to list sites 
        on the NPL than it did 10 years ago. In 1996, it took 
        9.4 years to evaluate and place sites on the NPL, while 
        sites listed between 1986 and 1990 took about 5.8 
        years. GAO predicted that long delays will continue 
        because a large number of sites are potentially 
        eligible for Superfund listing and only a limited 
        number of sites are being added to the program each 
        year. GAO estimated that between 1,400 and 2,300 sites 
        could be added to the program in the future;
          (2) The average number of site additions to the NPL 
        has fallen dramatically over this same 10 year period. 
        Only 16 sites per year have been added in recent years;
          (3) The time it takes to clean up a site, once it has 
        been placed on the NPL, is more than twice as long as 
        it was 10 years ago. In 1986, the average time to 
        cleanup a Superfund site listed on the NPL was less 
        than 4 years. In 1993, EPA established a goal of 5 
        years to cleanup a site. However, by 1996, cleanups 
        were averaging 10.6 years; and
          (4) The actual time it takes to do ``construction 
        work''--the real shovels-in-the-dirt part--is being 
        completed in the same length of time. In 1996, remedial 
        actions took about 2 years, as long as it took in 1991.
    EPA told GAO that the increased cleanup times are the 
result of three factors: ``(1) the growing complexity of sites, 
(2) efforts to find parties and reach settlements with them, 
and (3) resource constraints.''
    Certainly, sites are now ``more complex'' in one respect. 
GAO reported in 1993 that a full 40 percent of all the sites 
that EPA had reported as ``construction complete'' required no 
remedial action whatsoever. Basically, EPA finished leaning up 
the sites that were easier to deal with early in the program. 
However, GAO also noted in their report that actual cleanup is 
just as fast today as it was previously. Therefore, the 
``complexity'' that EPA cites as a reason for delay is 
attributable to the pre-cleanup phase--studies, remedy design, 
et cetera. In the case of multi-party sites, this phase is 
dominated by legal battles with potentially responsible parties 
[PRPs] over who should pay and how much, and what should be 
done--that is, issues of liability and remedy selection.
    Moreover, by stating that efforts to reach settlements with 
parties delays the process, EPA acknowledged that the liability 
system hinders site cleanup. Notably, EPA reported to GAO that 
the reason remedial designs are completed twice as quickly at 
Federal sites as they are at non-Federal sites is because 
``Federal cleanups do not usually involve negotiations or 
litigation with private responsible parties.'' EPA's own data 
suggest that the number of parties involved in legal disputes 
is correlated to the speed of cleanup:
        
 A full 50 percent of all ``orphan'' sites 
        (sites where EPA is unable to identify any viable 
        liable party and simply pays for the cleanup itself) 
        have been completed, and 41 percent of the sites with 
        10 or fewer parties have been cleaned up. However, at 
        sites with 500 or more PRPs, just 17 percent have been 
        finished.
        
 The average multi-party Superfund site takes a 
        total of 12 years to be completed after it is listed on 
        the NPL. As John F. Lynch, Jr., an experienced 
        Superfund lawyer, testified at the hearing, the 
        problems at multi-party sites are much greater than at 
        single party sites, ``by orders of magnitude.'' The 
        lengthy testing, decision and ``down'' periods are 
        directly attributable to complicated negotiations and 
        litigation with PRPs over remedies and their costs, and 
        which parties should pay.
    Finally, President Clinton sought unsuccessfully to 
increase funding for the current Superfund program during 
fiscal year 1998 by $650 million. Clearly, based on GAO's 
findings, appropriating such amounts without first reforming 
the underlying program would do little to expedite cleanups but 
would simply perpetuate this flawed and inefficient program.
    In presenting data on completion times, GAO used a ``date 
of event'' analysis (e.g., date of a site's placement on the 
NPL, date of completing a cleanup) and looked back to compute 
the length of time. The GAO staff testified that this 
methodology is the most appropriate measure of the productivity 
and management of Super-fund resources over time. GAO's 
analysis considered the actual number of listings, cleanups 
completed, or intermediate steps completed in a given year 
regardless of when the sites were discovered or placed on the 
NPL. The staff pointed out that this approach is consistent 
with the method that EPA uses in its management reports to 
measure the Superfund program's performance and to justify 
budget requests.
    At the hearing, Elliot Laws, Former Assistant Administrator 
for Solid Waste and Emergency Response, testified that recent 
EPA reforms have fundamentally changed the program. Among other 
things, he claimed that the Agency's reforms have brought 
relevant stakeholders into the process earlier, increased the 
number of small parties who are protected from liability, 
adopted liability allocations worked out by the relevant 
parties, allowed States to assume more responsibility for 
cleanups, increased the speed of cleanups by using presumptive 
remedies, and reduced cleanup costs by establishing a Remedy 
Review Board to review proposed high-cost remedies at sites.
    In March 1997, EPA submitted its own analysis comparing 
cleanup durations during the Clinton administration to those 
under prior years. The Agency claimed that its data show that 
it has taken only 8 years to clean up a site in recent years 
(1993-1996), as opposed to the more than 10 years it had taken 
for sites in the pipeline between 1987-1992. EPA's study used a 
``date of submission'' analysis, which tracks processing times 
by the year sites were discovered or listed. For each time 
period, EPA's analysis only counted activities started and 
finished during that time period. As a result, EPA's findings 
are skewed. The Agency's study shows improvement in processing 
times only because the data for later years excludes a higher 
proportion of ongoing work than the data for earlier years.
    On September 24, 1997, GAO issued a report entitled, 
``Super-fund: Duration of the Cleanup Process at Hazardous 
Waste Sites on the National Priorities List.'' In that report, 
GAO compared EPA's projection that sites listed in 1993 through 
1996 would be cleaned up in an average of 8 years against the 
program's historical performance. In doing this, GAO used the 
same methodology as EPA, a ``date of submission'' analysis, to 
isolate any effects of recent policy or procedural changes on 
processing times. GAO calculated the duration of the cleanup 
process from a site's listing on the NPL through remedial 
action for all sites that began this process in fiscal years 
1986 through 1994. GAO examined both how long it took to clean 
up completed sites and how long the uncompleted sites have been 
``in process.'' Based on EPA's own data, GAO determined that 
the only way cleanups could average 8 years would be if all 
cleanups ``in process'' had been completed by July 1, 1997. 
However, because such a large proportion of the sites listed in 
the 9-year period are still in process, the average cleanup 
time for these sites will exceed 8 years by a substantial 
margin. Therefore, even after using the same methodology as EPA 
to analyze Superfund processing data, GAO verified that 
cleanups are taking substantially longer.
    Finally, on May 30, 1997, at the request of the 
subcommittee and full committee, GAO completed its report, 
``Superfund: Information on EPA's Administrative Reforms,'' in 
which it examined whether, in fact, EPA's 45 administrative 
reforms have resulted in significant, fundamental changes in 
the program and are achieving demonstrable results. GAO found 
that the Agency could report quantifiable results for just six 
of them. Furthermore, of those six, EPA could document the 
benefits fully for merely four reforms. These results do not 
show any significant progress, let alone a fundamentally 
different program.
    b. Benefits.--The subcommittee's oversight and the GAO 
report on cleanup times provide further evidence that the 
current Superfund program is not working and requires 
comprehensive reform. GAO's findings show that the program will 
probably get worse before it gets better. Even assuming that 
the administration can do a better job, the sheer number of 
potential Superfund sites is staggering. GAO estimated that 
1,400 to 2,300 additional sites may be added in the future. If 
EPA can only clean up 65 sites per year, and it is only taking 
on 16 new sites per year, the job may never be done. Moreover, 
GAO's findings show that the delays are attributable to the 
pre-cleanup phase, which is plagued by legal battles over who 
should pay and what should be done. Actual cleanup time has 
remained steady. Therefore, cleanups will continue to be 
delayed, unless the Superfund's liability system is 
fundamentally reformed. Only those who are truly responsible 
for the pollution, those parties which owned and controlled 
sites and parties which violated disposal laws, should be held 
accountable. Otherwise, the real mission of this program--
cleaning up sites that pose a risk to our citizens--will never 
be achieved. The subcommittee is amazed that EPA is not equally 
concerned by GAO's findings and acknowledging the urgency for 
comprehensive legislative reform.
    c. Hearings.--The subcommittee held a hearing entitled, 
``GAO Findings on Superfund Cleanup,'' on February 13, 1997.

9. OMB's ``Report to Congress on the Costs and Benefits of Federal 
        Regulations.

    a. Summary.--On October 27, 1997, the subcommittee sent a 
letter to the Office of Management and Budget [OMB] expressing 
its concerns about the adequacy of the agency's ``Report to 
Congress on the Costs and Benefits of Federal Regulations.'' 
These concerns also were shared by the Commerce and 
Transportation and Infrastructure Committees. Based on a 
thorough review, all three committees found that OMB's report 
failed to provide a sound information base for public policy 
decisionmaking.
    This report was submitted pursuant to Section 645 of the 
Treasury, Postal Services, and General Government 
Appropriations Act, 1997 (Public Law 104-208), which required 
the Director of OMB to provide to Congress, by September 30, 
1997, a report containing the following information:
          (1) Estimates of the total annual costs and benefits 
        of Federal regulatory programs;
          (2) Estimates of the costs and benefits of each rule 
        that is likely to result in annual costs of $100 
        million or more;
          (3) An assessment of the direct and indirect impacts 
        of Federal rules on the private sector, State and local 
        government, and the Federal Government; and
          (4) Recommendations from the Director and a 
        description of significant public comments to reform or 
        eliminate any Federal regulatory program or program 
        element that is inefficient, ineffective, or is not a 
        sound use of the Nation's resources.
    In adopting these regulatory accounting requirements, 
Congress sought to obtain a credible and reliable assessment of 
the benefits and burdens of regulation in order to develop a 
more effective and accountable regulatory system that will 
achieve better results. However, OMB's report made painfully 
clear that the Federal Government has not yet established an 
information system that will yield meaningful estimates of the 
effects of regulation on our society.
    In particular, the letter to OMB noted that its report did 
not fully comply with specific statutory requirements. It was 
wholly deficient in assessing the direct and indirect impacts 
of Federal rules and it made no recommendations for reform. In 
addition, OMB interpreted Congress mandate too narrowly to 
achieve the legislative goal. For example, the report did not 
break down information by Federal program, it provided 
information on only a limited number of major rules, and it 
excluded information on rules issued by independent agencies. 
Most significantly, the report exposed the lack of any 
systematic approach to collecting, analyzing, and reporting 
data on regulatory impacts. Moreover, in developing this 
report, OMB did not take the leadership role that Congress 
intended in assuring the quality and reliability of the 
information reported. Without a systematic approach and OMB 
auditing, Congress will not be assured of the accurate, 
complete, and consistently measured information that it needs 
to properly manage the regulatory process.
    The letter recommended that OMB take the lead in 
implementing the following improvements:
          (1) Standardize procedures governmentwide for 
        collecting, analyzing, and documenting the best 
        available information on a regular and systematic 
        basis, including formalizing the agency's ``Best 
        Practices'' guidelines;
          (2) Establish an information database on the benefits 
        and costs of regulation, obtaining information from a 
        variety of sources as it becomes available;
          (3) Establish a system for tracking net benefits of 
        different regulatory programs and their program 
        elements;
          (4) Ensure that the report to Congress includes 
        information on all Federal mandates, provides estimates 
        on paperwork burdens and full social costs, and 
        disaggregates the total overall estimates by regulatory 
        program and economic sector;
          (5) Use traditional economic measures, such as 
        impacts on productivity, employment, and income 
        distribution, to present aggregate information in a 
        more meaningful way; and
          (6) Synthesize and evaluate the information provided 
        by Federal agencies, especially their compliance with 
        OMB's guidelines, and supply both an independent 
        assessment of regulatory impacts and concrete reform 
        recommendations.
    b. Benefits.--Based on the letter's recommendations, the 
subcommittee, along with the Committees on Commerce and 
Transportation and Infrastructure, will work with OMB to 
implement more effectively Section 625 of the Treasury and 
General Government Appropriations Act, 1998 (Public Law 105-
61), which carries forward these regulatory accounting 
requirements for another year. As the OMB report indicated, 
Federal regulation constitutes ``a major component of our 
economy'' and regulations have ``enormous potential for both 
good and harm.'' The committees hope that, working together 
with OMB, we can begin to build a sound information base for 
decisionmaking and can make regulatory accounting the effective 
management tool that Congress intended.
    c. Hearings.--None.

10. EPA's Strategic Plan.

    a. Summary.--The subcommittee participated with the House 
Departmental Staff Team which reviewed and commented on the 
strategic plan developed by the Environmental Protection Agency 
[EPA] under the Government Performance and Results Act (Public 
Law 103-62) (Results Act). The overall aim of the Results Act 
is to foster accountability by requiring Federal Government 
agencies to establish goals and measure their performance. It 
is designed to obtain systematic and reliable information about 
where Federal programs and activities are going, how they will 
achieve their goals, and how performance will be measured.
    Specifically, the Results Act requires Federal agencies to 
prepare multi year strategic plans, annual performance plans, 
and annual performance reports. Under the act, Agencies had to 
submit their first 5-year strategic plans to Congress and the 
Office of Management and Budget [OMB] by September 30, 1997. 
The act requires agencies to include the following six critical 
components in their plans: (1) a comprehensive mission 
statement; (2) agency wide long-term goals and objectives for 
all major functions and operations; (3) strategies and the 
various resources needed to achieve the goals and objectives; 
(4) the relationship between the long-term goals and objectives 
and the annual performance goals; (5) an identification of key 
factors, external to the agency and beyond its control, that 
could significantly affect the achievement of the strategic 
goals; and (6) a description of program evaluations used to 
establish or revise strategic goals and a schedule for future 
program evaluation. In developing their strategic plans, 
agencies were required to consult with Congress regarding the 
contents of their plans.
    On July 28, 1997, the committees participating on the House 
EPA Staff Team sent a letter to the Agency providing comments 
on its draft strategic plan. In general, the committees felt 
that the draft plan was a good starting point, but that many 
changes were necessary before it complied with the act. The 
following are some of the changes that the committees 
recommended to improve the draft plan:
          (1) The Agency's mission statement should more 
        accurately reflect its founding statutes and authority. 
        Moreover, the plan should place priority on those 
        strategic goals for which the Agency has statutory 
        authority;
          (2) EPA's goals and objectives need to be more 
        results-oriented and measurable;
          (3) The Agency's goals and objectives should be 
        expressed as environmental outcomes, while 
        organization/program outputs should be classified as 
        implementation tools; that is, strategies for achieving 
        those goals;
          (4) The strategic plan should prioritize among goals 
        and objectives. In particular, EPA should commit to 
        using risk assessment to prioritize environmental risk 
        management decisions;
          (5) The plan should emphasize the need to have 
        reliable information in order to measure results. Also 
        needed are performance measures that link EPA's 
        activities to changes in health and environmental 
        conditions;
          (6) Given the kinds of goals and objectives that it 
        sets, the strategic plan should contain measurements of 
        the costs that EPA's regulatory actions impose on the 
        private sector and State and local government;
          (7) The Agency's numerical objectives must be 
        justified by reference to some statutory or policy 
        requirement;
          (8) EPA should include performance measures relating 
        to its efforts to work with States to achieve 
        environmental goals;
          (9) The draft plan lacked a sufficient assessment of 
        external factors that would limit the Agency's ability 
        to achieve its objectives;
          (10) The draft plan did not include program 
        evaluations used to develop the plan and a schedule for 
        future evaluations;
          (11) The draft plan did not address the relationship 
        between its long-term goals and objectives and the 
        annual performance goals; and
          (12) The draft plan did not discuss coordination with 
        other agencies for crosscutting programs, activities, 
        or functions that are similar to those of other Federal 
        agencies;
    b. Benefits.--Based on these comments, EPA made certain 
changes in the final strategic plan that it submitted to 
Congress and OMB in September 1997. It added sections on 
program evaluations used in preparing the plan and on the 
relationship of the plan's general goals to annual performance 
goals. The plan also described the steps that EPA took to 
coordinate its plan with other agencies, and addressed the role 
of the States in implementing EPA's programs. The section 
identifying key external factors was expanded to include 
additional factors, such as changes in producer and consumer 
behavior, that could directly affect the achievement of the 
plan's goals and objectives. The mission statement also was 
revised to coincide more closely with the language of the 
Agency's statutes. Finally, EPA included an addendum that 
identified its authorities by goal and objective.
    The Team will continue to work with EPA to make further 
improvements, such as: (1) stating goals and objectives in 
quantifiable and measurable terms; (2) relating specific 
strategies to specific objectives; (3) communicating more 
effectively the Agency's priorities; (4) ensuring the 
availability of sufficient scientific and environmental data; 
(5) coordinating plans and activities with other agencies that 
have similar or crosscutting functions; and (6) specifically 
linking the Agency's goals and objectives to each of its 
budgetary program activities.
    c. Hearings.--None.

11. Oversight of EPA and the Regulatory Process.

    a. Summary.--As part of its oversight responsibilities 
concerning Environmental Protection Agency [EPA] and the 
regulatory process, the subcommittee continued to inquire about 
specific Agency's rulemaking actions. These inquiries have 
focused on the Agency's compliance with ``good government'' 
laws and procedures intended to assure that regulations do not 
do more harm than good. Specifically, the subcommittee has 
investigated the Agency's compliance with the requirements of 
the Administrative Procedures Act, the Unfunded Mandates Reform 
Act, the Regulatory Flexibility Act, the Small Business 
Regulatory Enforcement Fairness Act, the Congressional Review 
Act, and Executive Order 12866. The subcommittee has been 
particularly interested in whether the following types of 
issues were adequately addressed in the rulemaking proceedings: 
the need for regulation; the incremental costs and benefits of 
available regulatory alternatives; whether the benefits of the 
intended regulation would justify its costs; what would be the 
most cost-effective, least costly, and least burdensome 
regulatory option and any reasons why the Agency could not 
select that alternative; paperwork burdens; impacts on small 
business, State and local government, and the private sector; 
efforts to involve small business and State and local 
government representatives early in the development of the 
rule; impacts on the economy; any disproportionate impacts of 
the rule on certain populations or geographical areas; 
opportunity for comment and review.
    In the recent past, the subcommittee conducted inquiries 
into the following specific rulemakings:
    Urban Area Source Program.--On November 18, 1997, the 
subcommittee sent a letter of inquiry to EPA regarding its 
implementation of the Urban Area Source Program under Section 
112(k) of the Clean Air Act. The subcommittee raised concerns 
about whether EPA, in developing a regulatory strategy on area 
sources, is complying with the requirements of the Small 
Business Regulatory Enforcement Fairness Act [SBREFA]. In 
particular, the subcommittee requested information about 
whether EPA is analyzing potential impacts on small business 
entities in developing its strategy; is providing a meaningful 
opportunity for small entities to participate early in the 
process; and is planning to convene a Small Business Advocacy 
Review Panel. Also, the subcommittee inquired whether EPA has 
been focusing on chemicals that are, in fact, emitted from area 
sources, in compiling its draft list of candidate air toxics 
for this program.
    Toxic Release Inventory [TRI] Program.--On March 17, 1997, 
the subcommittee sent a letter to OMB concerning its review of 
EPA's draft final rule, ``Addition of Facilities in Certain 
Industry Sectors: Toxic Chemical Release Reporting Community 
Right to Know.'' This ruled extended the requirements under 
Section 313 of the Emergency Planning and Community Right-to-
Know Act for the reporting of toxic chemical releases to seven 
new industry sectors. In the letter to OMB, the subcommittee 
raised concerns about the unnecessary paperwork burdens that 
this regulation would create, especially for small businesses. 
The letter requested information on the extent to which such 
burdens on small business had been analyzed and whether all 
practicable steps had been taken to exempt from reporting or, 
alternatively, to minimize the burdens on, small businesses and 
other small entities. The subcommittee also questioned whether 
the benefits from imposing these informational requirements 
justified their costs.
    NOX Rule for Utilities.--On November 21, 1997, the 
subcommittee sent a letter to EPA inquiring about its proposed 
Phase II Nox rules under the Clean Air Act. This letter raised 
concerns about the process that the Agency had followed in 
developing these rules. In this rulemaking, EPA proposed 
lowering Nox emissions for about 750 wall-fired and 
tangentially-fired utility boilers (Group 1 boilers) and 
establishing specific emission limits by category for about 190 
other boilers. The subcommittee questioned whether the Agency 
was providing an adequate opportunity for public input and 
whether EPA and its consultants used realistic methodologies to 
support lowering emissions limits on the Group 1 boilers. The 
subcommittee also questioned the need for changing the Nox 
emissions standard for Group 1 boilers and the need for 
regulating cyclone boilers at all. Finally, the subcommittee 
requested information on why the EPA did not prepare an Initial 
Regulatory Flexibility Act analysis and on the Agency's efforts 
to involve State and local officials in developing its rules.

12. Brookhaven National Laboratory.

    a. Summary.--The subcommittee has been investigating 
environmental, health, and safety problems at the Brookhaven 
National Laboratory [BNL], one of the Department of Energy's 
[DOE] major multi-program laboratories, and evaluating actions 
that are being taken at this Federal facility to remedy and 
prevent the recurrence of these problems.
    Initially, the focus of the subcommittee's oversight was on 
DOE and BNL efforts to clean up existing onsite groundwater 
contamination, stemming from the facility's past activities. 
However, when tritium from active operations was detected in 
groundwater on the Lab site, it became clear that the problems 
at BNL were not isolated events, but were, instead, systemic in 
nature. The subcommittee then began investigating institutional 
deficiencies in the management of environmental, health, and 
safety activities [E, H & S] at BNL.
    Because of its former use as a military facility and the 
later operations of the Laboratory, this site became 
contaminated with chemical wastes and hazardous substances. 
After a history of chemical and radiological releases to 
surface water and groundwater on site, the Brookhaven facility 
was listed on the National Priorities List under the Superfund 
law in 1989. While there have been ongoing remedial 
investigations to define future clean-up priorities, activities 
over the past few years have concentrated on capping inactive 
landfills, removing underground storage tanks, excavating 
cesspools, removing above-ground radiological waste tanks, 
installing a groundwater pump and treat system to minimize off-
site contamination, and hooking-up homes south of the site to 
the public water supply. Although BNL officials recognized the 
need for extensive groundwater monitoring back in 1992, this 
was given a low priority.
    In December 1996 elevated concentrations of tritium, a low-
level radioactive form of hydrogen, were discovered in 
monitoring wells adjacent to BNL's High Flux Beam Reactor 
[HFBRA], a research reactor at the site. Results of a DOE 
investigation pointed to the reactor's spent fuel pool as the 
source of the tritium. The tritium groundwater plume was found 
to extend about 2,200 feet and has peak concentrations, close 
to the reactor, over 30 times the Federal drinking water 
standard. Based on the size of the plume, the leak may have 
started as much as 12 years ago. At the time that the leak was 
detected, the HFBR had been shutdown for routine maintenance 
and remains shutdown today.
    Back in 1994, the Suffolk County Department of Health 
Services had informed BNL that the HFBR spent fuel pool did not 
comply with county code requirements for hazardous waste 
storage. While BNL agreed to install monitoring wells near the 
spent fuel pool at that time, the wells were not installed 
until 1996. Also, although the tritium leak was detected in 
December 1996, it was not until January 16, 1997, that the lab 
began notifying regulatory agencies and local officials. This 
delay severely damaged BNL's credibility with the local 
community. Finally, while the tritium plume posed no health 
threat to the surrounding communities and lab employees, this 
incident, which arose after various other problems, showed the 
need for improvement in laboratory E, S & H management and 
oversight.
    As a result of the discovery of the tritium leak and the 
management review and investigation that followed, Secretary of 
Energy Federico Pena terminated Associated Universities, Inc. 
[AUI] as the managing contractor for BNL. AUI had been 
operating contractor for the laboratory since its founding in 
1947.
    As part of its oversight, subcommittee staff visited BNL 
twice and interviewed managers and scientists at BNL; DOE's 
onsite staff, the Brookhaven Group; and local citizens. The 
subcommittee also interviewed officials at DOE headquarters 
within the offices of Oversight and Energy Research, and staff 
at the Environmental Protection Agency [EPA]. The subcommittee 
has reviewed investigatory reports and management reviews that 
have been done regarding BNL, including the ``Integrated Safety 
Management Evaluation of the Brookhaven National Laboratory'' 
by DOE's Office of Oversight, the ``Interim Report of the BNL 
Facility Review,'' the findings of EPA's Multi-Media Compliance 
Evaluation Inspection, and ``Brookhaven National Laboratory: At 
the Crossroads,'' the report resulting from the New York 
Attorney General's investigation.
    Based on such reports and evaluations, DOE has developed an 
Action Plan ``to improve the way DOE and BNL protect the 
environment, provide for the safety and health of employees, 
and address local community concerns and interests while 
conducting world-class science.'' Through its oversight, the 
subcommittee intends to track the implementation of this plan 
to determine whether DOE and BNL are meeting their objectives 
and milestones for change. In particular, the subcommittee will 
be monitoring their progress in the following areas: (1) 
Clarifying the roles, responsibilities, and authorities related 
to BNL; (2) Strengthening management systems and procedures 
used by BNL and the Brookhaven Group to determine necessary 
corrective actions and to prioritize, track, and implement 
those actions; (3) Establishing a structured, standards-based 
approach to the planning and control of work and related 
hazards across organizations, facilities, and activities, with 
a view to fully integrating effective E, S & H management 
processes and allocating appropriate funding support throughout 
BNL; (4) Strengthening DOE's monitoring and assessments of BNL 
E, S & H performance and safety management (especially, BNL's 
compliance with safety management policies, prioritization of 
issues and resources, and control of workforce hazards), and 
including the Department's performance expectations into its 
strategic plan and annual performance plans; and (5) Expanding 
BNL community involvement and outreach efforts.
    b. Benefits.--All of the investigatory reports and 
management reviews that the subcommittee reviewed identified 
opportunities for improvement at BNL. The laboratory must put 
into place E, S & H management systems and controls that will 
serve to prevent environmental problems from occurring and that 
will detect and quickly remedy those that do arise. This 
subcommittee intends to make sure that environmental management 
practices are securely in place, the causes of the tritium leak 
and other problems that have occurred are fully understood, and 
corrective actions are taken expeditiously.

13. Investigation of President Clinton's Executive Order 13083, 
        ``Federalism.''

    a. Summary.--On May 14, 1998, President Clinton issued 
Executive Order 13083, ``Federalism.'' On June 3rd, the 
subcommittee prepared a side-by-side analysis comparing 
President Reagan's 1987 Federalism Executive Order 12612 with 
President Clinton's first and second Federalism Executive 
Orders (12875 and 13083). On June 8th, the subcommittee 
chairman wrote President Clinton to inquire why he issued 
Executive Order 13083 since it abandoned protections for State 
and local governments (e.g., preparation of a Federalism 
Assessment for statutory and regulatory proposals and a 
presumption against Federal preemption of State and local laws 
and rules) which were in place since President Reagan's 1987 
order. On June 10th, the subcommittee alerted the National 
Governors' Association about the new order. Apparently, none of 
the seven major State and local interest groups were aware of 
the new order prior to the subcommittee's call. On July 27th, 
the subcommittee chairman wrote the Office of Management and 
Budget, initiating an investigation to discover documents which 
revealed the individuals involved and the philosophy behind the 
new order.
    On July 28th, the subcommittee held a hearing which 
included bi-partisan agreement and opposition to the new order 
(see Hearings section below). At the hearing, the 
administration witness committed to use President Reagan's 
Federalism order as the starting point for negotiations with 
State and local governments for a revision of President 
Clinton's new order. On July 30th, based on arguments presented 
at the hearing, the subcommittee chairman sent a second letter 
to President Clinton demanding that the President withdraw or 
indefinitely suspend his Federalism order.
    Executive Order 13083 provided an opportunity for the 
public to understand the basic difference in philosophy between 
Republicans and Democrats. Republicans believe that the powers 
of the Federal Government, specified in the Constitution, are 
defined and limited and that all other powers should be 
exercised by State and local governments. In contrast, 
Democrats support a centralized Federal Government, which 
usurps the powers of State and local governments even in 
traditional State and local functional areas.
    After the subcommittee provided the Senate Governmental 
Affairs Committee its side-by-side analysis and the 
subcommittee chairman's June 8th letter to President Clinton, 
on July 22nd, the Senate unanimously passed a Sense of the 
Senate resolution asking the President to repeal his new 
Federalism order. On July 29th, in the Departments of Veterans 
Affairs and Housing and Urban Development, and Independent 
Agencies Appropriations bill for 1999 (the VA-HUD 
Appropriations bill), the House passed a statutory prohibition 
on funds to implement Executive Order 13083. On August 5th, the 
House passed, by a 417-2 vote, an amendment to the Departments 
of Commerce, Justice, and State, the Judiciary, and Related 
Agencies Appropriations bill for 1999, which was similar to the 
provision in the House VA-HUD Appropriations bill. 
Additionally, the subcommittee chairman co-sponsored various 
bills and resolutions opposing the new Clinton order and a bi-
partisan bill which would codify President Reagan's Federalism 
order.
    On August 5th, President Clinton indefinitely suspended his 
new Federalism order.
    b. Benefits.--The subcommittee chairman's letters to the 
President before and after the subcommittee's hearing and the 
subcommittee's July 28, 1998 hearing itself put pressure on the 
administration to rethink Executive Order 13083. As a 
consequence, on August 5, 1998, the President issued Executive 
Order 13095 which suspended Executive Order 13083. On October 
1, 1998, Majority Leader Dick Armey gave an ``Excellence in 
Programmatic Oversight Award'' to the subcommittee for its 
oversight of Executive Order 13083.
    c. Hearings.--On July 28, 1998, the subcommittee held a 
hearing on President Clinton's Executive Order 13083, 
``Clinton-Gore v. State and Local Governments.'' The hearing 
included bi-partisan agreement and opposition to this order. 
Witnesses testifying for the five major State and local 
organizations--Governor Michael O. Leavitt (R-UT) for the 
National Governors' Association, State Representative Daniel T. 
Blue, Jr. (D-NC) for the National Conference of State 
Legislatures, Mayor Edward Rendell (D-Philadelphia, PA) for the 
U.S. Conference of Mayors, Councilman Brian J. O'Neill (R-
Philadelphia, PA) for the National League of Cities, and 
Commissioner Betty Lou Ward (D-Wake County, NC) for the 
National Association of Counties--voiced their concerns both 
about the process employed by the Clinton administration and 
the substance of the new Federalism order. In addition, former 
and current administration officials discussed the philosophic 
basis for their Federalism orders.

14. Investigation of Paperwork and Regulatory Accomplishments by the 
        Office of Management and Budget's Office of Information and 
        Regulatory Affairs.

    a. Summary.--The subcommittee serves both as the 
authorizing and oversight committee for the Office of 
Management and Budget's [OMB] Office of Information and 
Regulatory Affairs [OIRA]. In 1998, the subcommittee devoted 
substantial oversight to OIRA's activities under the Paperwork 
Reduction Act of 1995 [PRA], the Congressional Review Act 
[CRA], and the regulatory accounting provisions (section 625) 
of the Treasury and General Government Appropriations Acts for 
1997 and 1998. The subcommittee's oversight revealed that OIRA 
failed to satisfactorily perform its statutory responsibilities 
for paperwork reduction, the CRA, and regulatory accounting and 
failed to satisfactorily perform as well in the area of 
regulatory reviews. OIRA's performance relating to the CRA is 
discussed in the following section of this report.
            (1) Paperwork Reduction
    The PRA requires OIRA to work with the agencies to achieve 
government-wide paperwork reductions of 10 percent per year in 
fiscal years 1996 and 1997. OIRA is required to review all new 
and revised paperwork requirements proposed by the agencies on 
the public before they can take effect. OIRA's reviews resulted 
in the government's paperwork burden on the public not meeting 
the statutory reduction goals. Instead, there was only a 2.6 
percent reduction government-wide in fiscal year 1996 and an 
estimated 1.8 percent reduction government-wide in fiscal year 
1997. The amount of paperwork imposed on the public by several 
departments and agencies actually increased. For example, in 
fiscal year 1996, the Department of Housing and Urban 
Development, the Department of the Interior, and the 
Environmental Protection Agency increased their paperwork 
burden on the public by more than 10 percent, 4.6 percent, and 
4.5 percent, respectively.
            (2) Regulatory Reviews
    OIRA also performed very poorly in its review of new and 
revised regulatory requirements proposed by the agencies on the 
public. Executive Order 12866 requires OIRA to review all major 
or significant rules to ensure that the benefits of the rules 
outweigh their costs and that the agencies comply with all 
applicable laws and procedures. The subcommittee's oversight 
revealed that OIRA's regulatory review process has largely 
become a rubber-stamp function for agency proposals.
    OIRA, under the Clinton administration, reviews less than a 
fourth of the number of rules reviewed by OIRA under the Reagan 
and Bush administrations. Of the 4,476 rules reviewed by OIRA 
during the Clinton administration, OIRA rejected only 13 rules, 
compared to 87 rejected during the Bush administration, and 296 
rejected during the two Reagan administration terms. Last year, 
OIRA sent back only four rules, three of which were from the 
Railroad Retirement Board, which is not a major regulatory 
agency.
            (3) Regulatory Accounting
    Although some economists estimate that Federal regulations 
cost the American people as much as $1 trillion annually, it is 
not clear what the relative costs and benefits are in the 
aggregate and for each major regulation and Federal program. To 
make difficult choices about whether the social, environmental, 
and/or economic benefits of a particular government program or 
regulation are worth the overall costs of the program or 
regulation, Congress and the American people need accurate and 
comprehensive information about the impacts of Federal programs 
and rules.
    To begin to obtain such information, the Treasury and 
General Government Appropriations Acts for 1997 and 1998 
required OIRA to submit a report to Congress providing 
estimates of the total costs and benefits of Federal 
regulations and the costs and benefits for each major rule, and 
recommendations for the elimination or modification of specific 
Federal programs. Instead of providing actual estimates, in the 
first report, OMB simply rehashed several obsolete studies on 
the aggregate effects of regulations. For major rules, OMB 
provided estimates for only 15 of 59 major rules issued during 
the period covered by the report. Finally, OMB did not offer a 
single recommendation for terminating or even modifying any 
Federal regulatory program.
    On August 28, 1998, the subcommittee commented on OMB's 
draft second report to Congress on the costs and benefits of 
Federal regulations. The subcommittee applauded the 
improvements made by OMB since its first report to Congress, 
such as inclusion of rules issued by independent agencies, as 
the subcommittee recommended in its October 27, 1997 letter to 
OMB in response to the first report. Nevertheless, the 
subcommittee stated its belief that the report fell short by 
not estimating monetized costs for all major rules issued by 
these agencies during the period covered by the report. OMB's 
draft report includes monetized cost estimates for only 4 of 
the 41 major rules issued by these agencies between April 1, 
1996 and March 31, 1998.
    The subcommittee also repeated some of its concerns stated 
in its October 1997 letter. Those concerns include (a) the 
incomplete compliance with specific statutory requirements and 
(b) the absence of any mandatory systematic and standardized 
procedure for agencies to collect and report data to OMB on 
regulatory impacts of all existing, revised, and new 
regulations. The subcommittee stated its belief that the most 
significant failure was to comply fully with the statutory 
requirement to recommend a regulatory program (other than 
electricity restructuring) for regulatory reform or 
elimination. The statute requires OMB to recommend regulatory 
programs or program elements that are inefficient, ineffective, 
or not a sound use of the Nation's resources. The subcommittee 
believes that full compliance with this statutory provision is 
essential to protect the public from unwarranted regulatory 
intrusion.
    With respect to the absence of standard procedures for 
collecting and reporting data by the agencies, the subcommittee 
believes that implementing such procedures is critical to the 
credibility of future government-wide analyses. Accordingly, 
the subcommittee told OMB that it expects OMB to require all 
executive branch agencies to follow uniform systematic 
standardized procedures for collecting and reporting data to 
OMB and to request that the independent regulatory agencies do 
the same. At a minimum, the subcommittee asserted there must be 
a standardized procedure for collecting and reporting data on 
the costs and benefits for all existing rules.
    The subcommittee agreed with OMB about some of the 
limitations in the report: (a) there are still enormous data 
gaps; (b) the report's estimates of compliance costs are 
substantially understated; (c) the cost-benefit analyses for 
the 33 final rules issued last year incompletely monetized 
costs and benefits; and (d) there needs to be better 
information in proposed rules to assure selection of 
alternatives with the greatest net benefits.
    The subcommittee shared OMB's concern about aggregating the 
cost and benefit estimates from individual rules and various 
studies. The subcommittee is especially concerned about total 
Federal regulatory cost estimates that are understated because 
of insufficient data on the direct and indirect impacts of 
Federal rules. The statute requires that the report include 
both OMB's estimates of total costs and benefits and OMB's 
``assessment of the direct and indirect impacts of Federal 
rules on the private sector, State and local government, and 
the Federal Government.'' The subcommittee recommended that OMB 
seek out research or reports of any estimates from those 
sectors on the direct and indirect impacts of Federal rules for 
consideration in subsequent reports.
    b. Benefits.--As a result of the subcommittee's 
investigation and analysis, the Treasury and General Government 
Appropriations Act for 1999 includes a statutory requirement 
for OMB to submit a report to Congress by March 31, 1999 that 
identifies specific paperwork reduction accomplishments 
expected, constituting annual 5 percent reductions in paperwork 
expected in fiscal year 1999 and fiscal year 2000. 
Additionally, section 638 of the Treasury and General 
Government Appropriations Act for 1999 is a modification of 
section 625 of the Treasury and General Government 
Appropriations Acts for 1997 and 1998. The new language 
requires OMB to prepare an accounting statement and associated 
report on the cumulative costs and benefits of Federal 
regulatory programs and provides for peer review.
    c. Hearings.--None. See the next section of this report for 
information about two 1998 hearings relating to the CRA.

15. The Congressional Review Act.

    The subcommittee conducted an ongoing review and study of 
agency compliance with the requirements of the Congressional 
Review Act [CRA], 5 U.S.C. ch. 8. A series of hearings, 
oversight letters, review of new regulations, and extensive 
legal research revealed that the agencies have not fully 
implemented the CRA.
    a. Oversight of Agency Compliance With CRA.--The 
subcommittee conducted extensive legal research regarding the 
requirements of the CRA and reviewed agency compliance with the 
CRA, finding that many agencies failed to report many 
interpretive rules, guidances, and policy statements that fall 
within the CRA's definition of a covered ``rule.''
    Under section 801(a)(1)(A) of the CRA, the Federal agency 
issuing a rule must send a report to Congress. This report must 
include the text of the rule, a summary description of the 
rule, and the proposed effective date. The agency must file 
such report with Congress, including copies to the General 
Accounting Office [GAO], ``[b]efore a rule can take effect . . 
.'' Sec. 801(a)(1)(A). In other words, unless and until an 
agency properly reports a rule, the rule has no legal force or 
effect. Any action the agency takes to promulgate, implement, 
or enforce an unreported rule is an ultra vires act and, 
therefore, legally null and void.
    The CRA broadly defines a rule as any ``agency statement of 
general . . . applicability and future effect designed to 
implement, interpret, or prescribe law or policy . . .'' 
Sec. Sec. 804(3) and 551(4). This definition is not limited to 
``legislative'' rules subject to the notice and comment 
provisions of the Administrative Procedure Act's [APA] section 
553. On the contrary, the definition includes any interpretive 
rule or other agency statement used to apply existing law or 
implement policy. The legislative history confirms the plain 
text of the definition: ``Interpretive rules, general 
statements of policy, and analogous agency policy guidelines 
are covered without qualification because they meet the 
definition of a `rule' borrowed from section 551 of title 5, 
and are not excluded from the definition of a rule.'' Statement 
of Representative McIntosh, March 28, 1996, Congressional 
Record at H3005.
    In 1998, the subcommittee gave special attention to three 
rules that are covered by the CRA but were not reported.
            (1) Oversight of HHS/HCFA Compliance With CRA With Regard 
                    to Viagra-Medicaid Rule
    The subcommittee's review of the Department of Health and 
Human Services' [HHS] compliance with the CRA revealed that, on 
July 2, 1998, HHS's Health Care Financing Administration [HCFA] 
issued a rule requiring State Medicaid programs to cover 
Viagra, a prescription drug used to treat male impotence. Under 
HCFA's new interpretation of the prescription drug 
reimbursement provisions of the Social Security Act, States are 
required to reimburse Viagra users under any State Medicaid 
program that covers prescription drugs. HCFA imposed this 
interpretive rule on the States without adequate prior 
consultation with State Medicaid authorities.
    The Viagra rule was issued not only in violation of 
traditional federalism principles but also in violation of the 
CRA and is, therefore, legally invalid and should not be 
regarded as binding on the States. The subcommittee reviewed 
the Viagra ruling to determine whether HCFA complied with the 
requirements of the APA in issuing this new regulation. In 
particular, the subcommittee examined HCFA's compliance with 
the CRA to determine whether HCFA reported the rule to Congress 
pursuant to the CRA's rule reporting requirements. The 
subcommittee found that HCFA's Viagra directive is a rule 
subject to the CRA's requirements and that, in violation of the 
CRA, HCFA failed to report the rule to Congress.
    HCFA's interpretive directive on Viagra falls squarely 
within the CRA's definition of a rule and is, therefore, 
subject to the CRA's reporting requirements. HCFA issued this 
directive on July 2, 1998 in the form of a press release to all 
State Medicaid Directors. The directive is a statement of 
general applicability and future effect, applicable to all 
State Medicaid programs as of July 2nd. The directive is 
clearly designed to interpret existing law, deeming Viagra a 
``medically necessary'' drug within the meaning of section 1927 
of the Social Security Act.
    In view of the significant cost of this rule to State 
governments, which are obliged to administer Federal Medicaid 
programs, the subcommittee swiftly notified the Governor of 
each of the 50 States that, because HCFA's directive is a rule 
subject to the CRA and because HCFA has failed to report this 
rule to Congress as the statute requires, the rule has not 
legally taken effect. In other words, the subcommittee informed 
the Governors, HCFA's expansive interpretation of section 1927 
has no legal force or effect and should not be regarded as 
binding on the States, until such time as HCFA submits all 
required reports to Congress. Furthermore, because this 
interpretive rule was issued without observance of procedures 
required by law, any attempt by HCFA to enforce this illegal 
rule is subject to judicial review under section 706(2)(D) of 
the APA.
    The subcommittee also sent a letter informing the Secretary 
of HHS of the delinquent status of the HCFA rule. To date, HHS/
HCFA has not reported the rule and has provided the 
subcommittee with no legal justification for its delinquency.
            (2) Oversight of DOT Compliance With CRA in Regard to the 
                    ``Peanut-Free-Zone'' Rule
    The subcommittee's review of the Department of 
Transportation's [DOT] compliance with CRA revealed that DOT's 
Office of Aviation Enforcement Proceedings had issued a rule 
requiring the creation of ``peanut-free `buffer zone[s]' '' on 
airline flights. The rule, released on August 12, 1998 by DOT's 
Office of Aviation Enforcement Proceedings in the form of a 
letter sent to the 10 largest U.S. air carriers, interprets 
provisions of the Air Carrier Access Act of 1986 [ACAA], 49 
U.S.C. Sec. 1374(c), and its implementing regulations, 14 
C.F.R. Part 382; prescribes requirements that are binding on 
the air carriers; and establishes a new policy for enforcing 
such requirements. Although the preamble to the Federal 
Register entry for Part 382, 63 F.R. 10528 at 10529, refers to 
peanut allergies, the text of ACAA Sec. 1374(c) and Part 382 
make no mention of peanuts or allergies of any kind.
    The letter generally applies to the 10 largest airlines, 
effective August 12, 1998. Because the letter implements and 
interprets law, and prescribes a new DOT policy, and because 
the letter is a statement of general applicability and future 
effect, it is a rule within the meaning of the CRA (5 U.S.C. 
ch. 8). The subcommittee discovered that, in response to the 
rule, 4 of the 10 major air carriers canceled their peanut 
orders outright for fear of enforcement action by DOT, dealing 
a devastating blow to small peanut farmers.
    On September 17, 1998, the subcommittee sent a letter to 
Secretary Slater advising him of DOT's failure to comply with 
the CRA in this matter. At the time that this report was 
printed, the Secretary had failed to respond. Section 372 of 
the Department of Transportation and Related Agencies 
Appropriations Act for 1999 provides that no funds may be used 
to implement, carry out, or enforce any regulation that 
requires or encourages an air carrier to, on intrastate or 
interstate air transportation, provide a peanut-free buffer 
zone or any other related peanut-restricted area, or restrict 
the distribution of peanuts until the DOT Secretary submits a 
peer-reviewed scientific study to Congress. The study would 
need to determine that there are severe reactions by passengers 
to peanuts as a result of contact with very small airborne 
peanut particles of the kind that passengers might encounter in 
an aircraft.
            (3) Oversight of EPA Compliance With CRA in Regard to 
                    ``Environmental Justice'' Guidance
    The subcommittee's review of the Environmental Protection 
Agency's [EPA] compliance with the CRA revealed that EPA had 
issued ``Interim Guidance for Investigating Title VI 
Administrative Complaints Challenging Permits'' (Guidance). The 
Guidance, released on February 4, 1998 by EPA's Office of 
Environmental Justice, establishes a ``framework'' for handling 
complaints filed with EPA's Office of Civil Rights under Title 
VI of the Civil Rights Act of 1964, as amended (Title VI), 
alleging disparate environmental impacts on minority 
populations resulting from the issuance of industrial site 
permits by State and local governments that receive EPA 
funding.
    If EPA determines that a permit has discriminatory effects, 
it is required by its own Title VI regulations to terminate 
funding to the State or local agency issuing the permit (40 
C.F.R. pt. 7). These regulations do not specify what 
constitutes a discriminatory ``effect'' in the environmental 
permitting context. The Guidance, which applies prospectively 
to all Title VI complaints challenging such permits, 
effectively amends and interprets EPA's Title VI regulations by 
setting forth specific procedures and criteria that EPA ``will 
follow'' in processing complaints. As a result, State and local 
governments issuing permits, as well as private parties 
applying for permits, are likely to regard the requirements of 
the Guidance as binding in matters related to siting industrial 
facilities. In light of the legal and policy effects of the 
Guidance, the subcommittee determined that it is a rule within 
the meaning of the CRA. The determination as to whether the 
Environmental Justice Guidance is a rule under the CRA is being 
researched by the GAO and an opinion is expected in the near 
future.
    Benefits.--These instances of agency persistence in 
refusing to report rules covered by the CRA, despite the broad 
financial and policy implications of the rule for the States, 
the private sector, and small businesses, have given the 
subcommittee a telling illustration of the reasons for, and the 
extent of, the agencys' failure to comply with the rule 
reporting provisions of the CRA. The subcommittee's review 
demonstrated the glaring need for OMB to issue guidance to the 
agencies on the requirements of the CRA, including 
clarification of the definition of a ``rule.'' To assist OMB in 
the development of such guidance, the subcommittee conducted 
extensive legal research on the definition of a rule and 
prepared draft guidance for OMB's use.
    b. CRA Seminars.--In cooperation with the House Judiciary 
Subcommittee on Commercial and Administrative Law and the Small 
Business Subcommittee on Regulatory Reform and Paperwork 
Reduction, the subcommittee held three seminars on the use of 
the CRA as an oversight tool. The first two seminars were for 
personal staff, and a third seminar was conducted for committee 
staff. More than 60 House and Senate staff members and members 
of the public attended the seminars. The seminars addressed the 
overall structure and basic provisions of the CRA, focusing on 
the scope of agency actions covered by the statute and the use 
of the Resolution of Disapproval as an oversight tool in the 
struggle to control burdensome new regulations. The seminars 
also addressed more advanced topics regarding the statute's 
complex timing provision, floor procedures, and legal questions 
pertaining to the definition of a rule and the availability of 
judicial review of unreported agency rules.
    Benefits.--The seminars heightened congressional awareness 
of the value of the CRA for oversight of regulatory agencies 
and provided a forum for answering questions and exchanging 
recommendations pertaining to implementation of the CRA by both 
Congress and the agencies.
    c. CRA Implementation and Guidance.--OIRA failed to perform 
its responsibilities with respect to the CRA. Despite OIRA's 
obligation under President Clinton's Executive order to provide 
the agencies with guidance on compliance with regulatory laws, 
OIRA has done virtually nothing to insure that the agencies are 
complying with the CRA.
    To encourage OIRA to carry out its responsibilities under 
the CRA, the subcommittee proposed to increase OIRA's fiscal 
year 1998 budget by $200,000 specifically to help with CRA 
implementation and other responsibilities. Congress accepted 
this proposal. Regrettably, $200,000 and 12 months later, OIRA 
has shown no signs of improvement and even openly stated that 
it has no intention of doing anything new to implement CRA. As 
a result of the subcommittee's analysis, the Treasury and 
General Government Appropriations Act for 1999 includes a 
statutory requirement for OMB, by March 31, 1999, to issue 
guidance on the requirements of the CRA, including a standard 
new rule reporting form.
    d. Hearings.--Dismayed by OIRA's recalcitrance regarding 
CRA, the subcommittee held two hearings (March 10, 1998 and 
June 17, 1998) on OIRA implementation of CRA. In the 
subcommittee's hearing on OIRA's implementation of CRA on March 
10th, GAO General Counsel Robert Murphy testified that 279 new 
regulations were not reported as required by the CRA--and this 
does not include the undisclosed number of policy statements, 
guidance, and other rules that were not even published in the 
Federal Register. At both hearings, Mr. Murphy testified that 
OIRA has refused to cooperate with GAO in developing a standard 
format for agency reports on new rules. Furthermore, GAO 
testified that, under the Clinton OIRA's watch, at least eight 
major rules took effect illegally. At the hearings, OIRA 
indicated a willingness to improve its performance under CRA, 
but subsequently did little or nothing to improve its record on 
CRA implementation.

16. Investigation of the White House Initiative on Global Climate 
        Change and the Kyoto Protocol.

    a. Summary.--From March 2-18, 1998, the subcommittee sent 
letters of inquiry to 22 Federal agencies about the White House 
Initiative on Global Climate Change. Questions sought for the 
administration to justify the President's budget request for a 
huge increase in funding (+ $6.3 billion) and to disclose the 
administration's domestic strategies for climate change. The 
Clinton-Gore administration only very reluctantly and very 
slowly responded to the subcommittee's requests. Due to the 
incomplete responses to the subcommittee's questions and the 
incomplete document production, from June 26th to August 12th, 
the chairman of the full committee issued seven subpoenas for 
document production by four Executive Office of the President 
components (the Council of Economic Advisers, the Council on 
Environmental Quality [CEQ], the Office of Management and 
Budget, and the Office of Science and Technology Policy); and 
three other executive departments and agencies (the Department 
of Energy [DOE], the Department of State, and the Environmental 
Protection Agency [EPA]).
    On September 30, 1998, the subcommittee received from the 
White House Counsel's office 161 descriptions of over 300 
documents being withheld from review even by Members of 
Congress. Subsequently, the White House Counsel's office added 
more withheld documents, including some documents originally 
offered for review by Members. On October 1, 1998, the chairman 
of the subcommittee wrote White House Counsel Charles Ruff for 
six specific documents from those being withheld from Congress. 
On October 7th, Mr. Ruff stated ``we are prepared to assert 
Executive Privilege'' for four of these six documents. Such an 
assertion of Executive Privilege would be only the fourth time 
that President Clinton has made such an assertion in his 6 
years in office in response to a congressional request for 
documents.
    At the subcommittee's October 9, 1998 hearing, the 
subcommittee issued a report card for 10 agencies on their 
responsiveness to the subcommittee's March 1998 inquiries in 
terms of answers to questions and production of documents. The 
Department of the Interior received ``Incomplete'' in both 
areas. The Department of Agriculture received an ``Incomplete'' 
for its answers and an ``F'' for its document production. The 
Department of State received a ``D-'' for its answers and an 
``Incomplete'' for its document production. Other poor grades 
included a ``D'' for CEQ's answers and a ``D'' for DOE's 
document production. In contrast, the Department of the 
Treasury and EPA received an ``A'' and a ``B+,'' respectively, 
for their document production.
    The answers and documents which were provided revealed very 
few program performance measures (despite the requirements of 
the Government Performance and Results Act which mandates such 
measures for every program) on which Congress and the American 
public could assess what benefits would be received for the 
requested funding, and a possible backdoor approach to 
implementing the Kyoto Protocol prior to ratification of the 
treaty by the U.S. Senate. Documents, which were finally made 
available to the subcommittee, indicated that the 
administration has or is evaluating such measures as: (a) 
annual increases in the Corporate Average Fuel Economy [CAFE] 
standards for motor vehicles, which already impose unnecessary 
burdens on the public; (b) fees or taxes on less fuel-efficient 
vehicles, which will make driving much more expensive for 
families that need larger cars; (c) performance standards for 
electric utilities and other regulated sources, which will 
drive up utility bills; (d) greater use of energy efficiency 
standards and mandates; (e) a broad-based energy tax (possibly 
based on carbon content), which would result in higher energy 
prices to consumers; (f) fuel-specific excise taxes (such as an 
oil tax or import fee); (g) a sector-specific excise tax (such 
as a transportation tax); and (h) pollution/consumption taxes 
which could be costly to all Americans.
    As a result of the subcommittee's investigation, analysis, 
and hearings and other congressional investigations, the 
Departments of Veterans Affairs and Housing and Urban 
Development, and Independent Agencies Appropriations Act for 
1999 includes a statutory prohibition on funding for EPA to 
propose or issue rules for the purpose of implementation or in 
preparation of implementation of the Kyoto Protocol prior to 
Senate ratification and report language directing the 
administration to do a better job of justifying any requested 
funding increases in the fiscal year 2000 budget submission for 
all affected agencies. In addition, the Foreign Operations, 
Export Financing, and Related Programs Appropriations Act for 
1999 includes a statutory requirement for the President to 
provide a detailed account of all agency obligations and 
expenditures for climate change programs and activities for 
fiscal years 1998, 1999, and thereafter, including an 
accounting of climate change expenditures by agency for each 
line item in the President's Budget Appendix, and any plan 
related to the implementation or the furtherance of the Kyoto 
Protocol.
    b. Benefits.--The subcommittee's letters of inquiry, 
analysis, and hearings revealed very few program performance 
measures on which Congress and the American public could assess 
what benefits would be received for the funding requested in 
the President's Fiscal Year 1999 Budget, and a possible 
backdoor approach to implementing the Kyoto Protocol prior to 
ratification of the treaty by the U.S. Senate. As a 
consequence, Congress included several statutory provisions and 
report language in the fiscal year 1999 appropriations bills to 
ensure additional budget justification and program performance 
measures in the President's Fiscal Year 2000 Budget and to 
prevent implementation of the Kyoto Protocol prior to 
ratification by the U.S. Senate.
    c. Hearings.--On June 17, 1998, the subcommittee held a 
hearing, ``The White House Global Climate Change Initiative and 
Congressional Review Act Implementation: Is OMB Hiding The 
Truth About New Regulations and Programs?'' On October 9, 1998, 
the subcommittee held its eighth and final 1998 hearing on 
global climate change, ``Will the Administration Implement the 
Kyoto Protocol Through the Back Door?''

17. Hearings on the Kyoto Protocol.

    a. Summary.--The subcommittee conducted six hearings to 
examine the potential impact of implementing the Kyoto Protocol 
on the U.S. economy and energy system and to assure that the 
administration does not unilaterally implement this treaty 
before it is submitted to the Senate for advice and consent. 
The subcommittee heard testimony from citizens, State and local 
government elected officials, business and labor leaders, and 
economic experts who are concerned that this treaty could 
significantly harm our economy and standard of living.
    On December 11, 1997, the Parties to the United Nations 
Framework Convention on Climate Change agreed to a Protocol 
that imposes legally binding targets and timetables on 
industrialized nations for reducing emissions of six greenhouse 
gases. This Protocol places the greatest burden on the United 
States. At Kyoto, the Clinton/Gore administration committed the 
United States to reducing its emissions by 7 percent below 1990 
levels within the timeframe 2008 to 2012. In real terms, this 
requires an unprecedented 40 percent reduction of fossil energy 
use from business-as-usual. On the other hand, this treaty 
exempts developing countries from any restrictions, regardless 
of their level of economic development or the quantity of 
greenhouse gases they emit. There are no constraints on such 
huge emissions producers like China, India, South Korea, Brazil 
and Mexico.
    In Senate Resolution 98, which passed by a 95-0 vote, the 
Senate indicated to the administration that it would not ratify 
any climate treaty that excludes developing countries and that 
could harm the United States economically. Recognizing the 
Protocol's deficiencies, the Clinton/Gore administration has 
promised that it will not submit this treaty for ratification 
until there is ``meaningful participation'' by developing 
countries. In addition, in hearings before Congress, Under 
Secretary of State Stuart E. Eizenstat has repeatedly disavowed 
any intention of the administration to implement the Protocol 
before it is submitted to the Senate.
    At the subcommittee's hearing on May 19, 1998, Dr. Janet 
Yellen, chairman of the Council of Economic Advisors, testified 
that the costs to Americans of complying with the Kyoto 
Protocol would be ``modest.'' According to the administration's 
calculations, it would only cost one-tenth of 1 percent of 
projected GDP in 2010, about $7 to $12 billion per year, with 
an emissions price in the range of $14 to $23 per ton of 
carbon. Based on the modest energy price effects associated 
with these estimates, the administration also predicted that 
the treaty would likely have little impact on U.S. trade 
competitiveness or on U.S. jobs. The administration's estimates 
assume that there will be unrestricted global trading and that 
the United States will be able to satisfy 85 percent of its 
Kyoto obligation by purchasing credits from other nations that 
can reduce emissions less expensively.
    However, the administration's very low estimates stand in 
sharp contrast to the findings of most economic experts who 
have analyzed the economic costs of implementing the Kyoto 
Protocol. At the subcommittee's hearings, experts discussed a 
wide range of models which predict that meeting the U.S. 
emissions reduction target would severely diminish U.S. trade 
competitiveness, eliminate millions of American jobs, and slow 
U.S. GDP growth. In addition, experts addressed the lack of 
sound science to support the Protocol.
    U.S. Competitiveness. Without the participation of the 
developing countries, economic studies by Standard and Poor's 
DRI [DRI] and WEFA, Inc. concluded that the Kyoto Protocol's 
mandatory requirements for reducing emissions would shift 
existing competitive advantages away from the United States and 
other industrialized nations. This would lead to significant 
declines in American output and employment, with offsetting 
increases in those countries with low energy costs, such as 
China, India, and Mexico. They agreed that this treaty also 
would accelerate the relocation of energy-intensive industries 
to non-participating countries (non-Annex I countries) to take 
advantage of cheap labor, lower capital expenses and production 
costs, and lower environmental, health, and safety standards.
    DRI and WEFA noted that the impact on industries that 
depend on export sales or face strong import competition could 
be severe if developing countries were allowed to use low-cost, 
high-polluting technologies and to sell their products at a 
lower cost in the United States. For example, Ande Abbott of 
the Boilermakers Union projects that low-priced cement from 
China could flood the U.S. market, costing the United States 
its competitive position and hundreds of jobs without any 
offsetting environmental benefits. According to the Department 
of Energy's Argonne National Laboratory study, U.S. energy 
intensive industries such as cement, chemicals, paper, 
aluminum, and iron and steel would face sharp price increases 
that would depress domestic demand and encourage imports. That 
study asserts that, by excluding developing countries from 
mandated restraints, the Kyoto Protocol would effectively 
``redistribute output, employment, and greenhouse gas emissions 
to non-participating countries.''
    Loss of American Jobs. Without international trading, WEFA 
projected 2.4 million jobs lost from implementing the Kyoto 
Protocol. The AFL-CIO estimated that the treaty will cost as 
many as 1.5 million Americans their jobs. Even assuming the use 
of the treaty's flexibility mechanisms to achieve emissions 
reductions, DRI still predicted between 1.1 and 1.6 million job 
losses during 2008-2012. Cecil Roberts, president of the United 
Mine Workers of America, testified that every region of the 
country will be hit, nearly every sector of our economy 
affected, and many high-paying mining and manufacturing jobs 
lost. States that rely on energy production, manufacturing, and 
trade export will be the hardest hit. Governor Underwood of 
West Virginia testified that his State could lose over 6,000 
jobs, including 3,000 high-paying manufacturing jobs. Mr. 
Roberts queried ``whether the benefit of [implementing the 
Kyoto Protocol]--a decline in carbon concentrations of about 
one part per million--is worth a million lost American jobs and 
over $100 billion per year in lost economic output.''
    Impact on GDP Growth. At the subcommittee's hearing on 
April 23, 1998, WEFA, Inc. economist, Dr. Mary Novak, testified 
that the U.S. target could not be met without significant 
increases in energy prices. It would ``require substantial 
investments by both consumers and businesses to improve energy 
efficiency and to substitute low-carbon energy sources for 
higher carbon energy sources.'' Dr. Margo Thorning, Chief 
Economist for the American Council for Capital Formation, 
agreed, stating that, ``in the absence of an international 
trading system, the U.S. would be forced to curb its emissions 
by more than 30 percent within little more than a decade. As 
carbon emissions were reduced, economic growth would slow due 
to lost output, as prices rise for goods that must be produced 
using less carbon and/or more expensive processes.'' Dr. Novak 
estimated that total annual output in the United States would 
fall 3.2 percent below 2010 baseline projections, or $300 
billion. Limited trading schemes (involving only developed 
countries and Eastern Europe/Former Soviet Union) would cut the 
U.S.'s GDP by between 0.9 percent annually, according to Dr. 
David Montgomery of Charles River Associates [CRA], and 1.6 
percent, estimated by Dr. Joyce Brinner of DRI.
    Unsubstantiated Science. The science surrounding global 
warming is far from settled. William O'Keefe, executive vice 
president of the American Petroleum Institute, noted at one of 
the subcommittee's hearings that the 1995 Second Assessment 
Report published by the Intergovernmental Panel on Climate 
Change [IPCC] indicates considerable uncertainty about the 
magnitude, pace, and impact of global warming. There is no 
consensus among climate scientists about whether nature will 
amplify the small direct impacts on temperature from human 
greenhouse gas emissions into serious warming at some point in 
the future. According to the IPCC report, ``Our ability to 
quantify the human influence on the global climate is currently 
limited because the expected signal is still emerging from the 
noise of natural variability, and because there are 
uncertainties in key factors.'' As Paul Wilhelm, president of 
the U.S. Steel Group noted, ``There are major unresolved 
questions concerning the accuracy of current and historical 
temperature and atmospheric observations, the reliability of 
climate modeling and prediction techniques, and even whether 
climatic warming might be a good thing.''
    While the scientific evidence of global warming is very 
inconclusive, it is clear that measurable net reductions of 
greenhouse gas emissions cannot be achieved without the 
participation of developing countries. Paul Agathen, senior 
vice president of Ameren Corp., pointed out that, according to 
the former chairman of the IPCC, Bert Bolin, emissions 
reductions only by developed nations ``would not be detectable 
on projected temperature increases.'' By 2015, developing 
countries' emissions are projected to increase by more than 141 
percent over 1990 levels, as compared to only 30 percent for 
developed countries. Melvin Dixon of the United Paperworkers 
International Union asserted that ``It just seems unreasonable 
to expect that greenhouse-gas output can be reduced worldwide 
without regulating the fastest-growing segment of the world's 
economy.'' Melvin Brekhus, executive vice president of Texas 
Industries and Mr. Wilhelm both stated that an unintended 
consequence of the Kyoto Protocol would be the encouragement of 
energy inefficiency and increased greenhouse gas emissions by 
steel and cement manufacturing companies in developing 
countries.
    Cost of Tradeable Permits. Another measure of the burden 
that the Kyoto target would impose on the U.S. economy is the 
cost of a tradeable permit to emit a metric ton of carbon. 
Under a permit system, permits would trade at the marginal cost 
of abatement. Dr. Novak testified that ``requiring consumers 
and businesses to pay for a permit to consume energy 
effectively causes energy prices to increase.'' In her view, 
these price increases would ``act as a prolonged series of 
mini-shocks to the U.S. economy,'' as with the oil price shocks 
in the 1970's and early 1980's. Without international trading, 
WEFA estimated that a carbon fee of $265 per metric ton would 
be required to reduce emissions 7 percent below 1990 levels. If 
the United States can purchase credits overseas to offset 42 
percent of its obligation, DRI predicted a permit price of 
$110. Finally, CRA estimated a permit price of about $120 if 
the United States could achieve its goal of unrestricted 
trading among Annex I countries.
    The foregoing estimates about the impact of the Kyoto 
Protocol on American output, employment, and competitiveness 
are at great variance to the administration's estimates because 
they rely on quite different assumptions about the scope of 
international emissions trading, the conversion of powerplants 
from coal to natural gas, and the development rate of energy 
efficient and low-carbon technologies. These different 
assumptions affect the amount of fossil fuel combustion that 
the United States would have to cut domestically, the price at 
which those reductions could be achieved within the period 
2008-2012, and the impact of the price increases on U.S. 
growth, employment, and competitiveness. As Dr. Montgomery 
stated, under different and more reasonable assumptions, the 
costs of implementing the Kyoto Protocol would be 10 times 
higher than the estimates stated by Dr. Yellen.
    International Emissions Trading. The administration's 
estimate that carbon permit prices will be only between $14 and 
$23 per ton of carbon assumes that there will be unrestricted 
global trading, in which key developing countries, such as 
China, India and Brazil are active participants, and that the 
United States will be able to purchase sufficient emissions 
credits overseas to offset 85 percent of its commitment. 
However, as Dr. Brinner of DRI and other witnesses stated, this 
assumption is unrealistic for two reasons: (1) the Kyoto 
Protocol limits emissions trading only to participating 
countries (Annex I countries); and (2) other countries' and 
groups' philosophies on trading may well lead to limits on the 
amount of reductions that any one country can achieve outside 
its borders and on the amount of international trading that a 
nation can use to meet its emissions target.
    At the U.N. climate change negotiating sessions in Bonn, 
Germany earlier this year, the European Union and several 
Eastern nations insisted that a ``concrete ceiling'' be imposed 
on the use of trading. Moreover, developing countries refused 
to consider voluntary commitments. Robert Murray, president and 
CEO of Coal Resources, Inc., noted that, in a closing statement 
in Bonn, the Ambassador of Indonesia, speaking on behalf of the 
developing world, said ``The Group reiterates that there must 
be no new commitments, voluntary or otherwise, introduced for 
all developing countries, under any guise. . . .'' John 
Passacantando, president of Ozone Action, and Daniel Lashoff, 
senior scientist of the Natural Resources Defense Council, both 
testified that environmental groups expect the United States to 
provide leadership to the rest of the world, by achieving its 
target domestically through increasing energy efficiency and 
reducing energy consumption. Finally, in May 1998, President 
Clinton signed a G-8 nation communique committing the United 
States to ``undertake domestically the steps necessary to 
reduce significantly greenhouse gas emissions'' and to use 
trading, as the Kyoto Protocol says, to ``supplement domestic 
actions.''
    In addition, the administration's cost estimates assume 
that an international emissions trading system can be developed 
and operating by 2008-2012. Mr. O'Keefe quoted a statement by 
the distinguished economist Dr. Thomas Schelling that ``an 
international emissions trading agreement, while esthetically 
elegant, is economically unworkable. There is no likelihood 
that nations of the world can sit down and allocate once and 
for all among themselves several trillion dollars worth . . . 
of very long-term unchangeable emissions quotas.''
    Dr. Montgomery noted that ``When all of the 
Administration's assumptions about unrestricted emissions 
trading are removed, permit prices increase from $14 per ton to 
$193 per ton with no international trading.''
    Conversion of Coal-Fired Utilities to Natural Gas. Dr. 
Montgomery of CRA pointed out that the model on which the 
administration's analysis relies, the Second Generation Model, 
projects that all U.S. coal-fired utilities can be converted to 
natural gas by 2010. Both Dr. Montgomery and Mr. Agathen 
asserted that this is not feasible due to factors such as the 
huge costs of prematurely scrapping coal-fired plants and 
difficulties in obtaining and transporting huge additional 
quantities of natural gas in a short time period. Moreover, the 
administration's analysis is inherently contradictory. If 
international emissions trading holds the cost of carbon 
permits under $25 per ton, utility executives would have no 
incentive to replace coal with natural gas. And if the permit 
prices rise above that mark, the replacement of current coal-
fired plants would be a massive and costly undertaking.
    Development and Deployment of Energy Efficient and Low-
Carbon Technologies. The administration anticipates that 
improvements in energy efficiency over the next 10 years will 
have a major impact on the cost of reducing carbon emissions. 
The basis for the administration's optimism is a Department of 
Energy [DOE] study prepared by five national laboratories. As 
Dan Reicher, Assistant Secretary for Energy Efficiency and 
Renewable Energy at DOE, testified, this report concluded that, 
without increasing the Nation's energy bill, significant 
progress in reducing greenhouse gas emissions can be achieved 
by developing clean energy technologies. However, the report's 
conclusions are based on judgments about the effects of price 
and the assumed effect of a ``great commitment'' by the 
government and the ``very active'' private sector that might 
accompany the establishment of a permit scheme. The study does 
not analyze the policies that might be needed to accomplish 
higher penetration of energy efficient and low-carbon 
technologies or the costs of such policies.
    Dr. John McTague, vice president, Ford Motor Co., 
maintained that there is no short-term technical fix that would 
significantly lower U.S. carbon emissions. He testified that, 
contrary to the administration's rosy predictions, deployment 
of new technology through the joint government/industry 
Partnership for a New Generation of Vehicles will not meet the 
U.S. Kyoto targets and timetable. He added that the treaty's 
``rigid timetables threaten significant disruption to sound 
technological development.'' Furthermore, as George Harad, 
chairman and CEO of Boise Cascade Corp., noted, capital 
turnover has its own dynamic, particularly in such capital 
intensive industries as the forest products industry. Mr. 
O'Keefe referred to a recent analysis by Stanford University 
and the Electric Power Research Institute which indicates that 
an orderly, longer-term strategy would reduce emissions 
reduction costs by 80 percent and provide greater environmental 
benefits.
    Second Generation Model. The administration's analysis is 
based on the Second Generation Model [SGM] developed by Pacific 
Northwest National Laboratory. This model only takes into 
account costs in energy markets (direct costs) and is not 
appropriate for analyzing the Protocol's near-term economic 
impacts. The models used by CRA, WEFA, and DRI include the 
indirect costs of higher energy prices throughout the economy, 
not just in energy markets. Unlike the administration, CRA and 
DRI present results for a full range of trading scenarios, not 
just for the least-cost unrestricted trading scenarios. David 
Smith, director of Public Policy for the AFL-CIO, notes that 
the SGM ``does not allow us to determine employment impacts 
incurred during the transition to a lower emissions producing 
economy, especially as they are distributed across industries 
and geographic regions.''
    Domestic policies to curb emissions to meet the Kyoto 
target could have a significant impact on U.S. households' 
economic well-being, as well as negatively affecting the 
distribution of income. Judy Kent, a consumer and housewife, 
testified that the Protocol would mean higher costs for 
American families for housing, heating and air conditioning, 
lighting, transportation, food, and consumer products. 
According to Dr. Novak of WEFA, electricity costs could 
increase by 56 percent, home heating oil could jump 70 percent, 
and gasoline prices could rise by 48 percent. While all 
consumers would be affected, the hardest hit would be senior 
citizens, like witness Robert Johnson, and the poor, who pay a 
larger share of their income for utilities, gasoline, and food.
    Finally, the subcommittee's hearings were intended to 
assure that the administration does not unilaterally implement 
the Kyoto Protocol before the President submits it to the 
Senate. David Gardiner, Assistant Administrator of Policy, 
Planning, and Evaluation at the U.S. Environmental Protection 
Agency [EPA], testified that the agency has the authority to 
regulate the carbon dioxide that we exhale every day as an air 
pollutant under the Clean Air Act (Act), as if it were the same 
as other air pollutants, such as sulfur dioxide, or mercury, 
that already are regulated. Mr. Agathen indicated that, without 
establishing any basis for reclassifying CO
2
 as a 
pollutant, EPA modified a consent decree with the Natural 
Resources Defense Council to study ways to control carbon 
dioxide emissions from electric utilities under the Act's air 
toxics provisions. Notably, an internal EPA memorandum, dated 
May 1994, observed that ``such aggressive use of Clean Air Act 
authority'' would not be well-received in Congress. Mr. Murray 
testified that on February 18, 1998 at a widely attended 
meeting of the Agency's Clean Air Act Advisory Committee, the 
Acting Assistant Administrator for Air and Radiation indicated 
that the ``next set of major decisions and rules'' would 
include ``greenhouse gas implementation.'' Mr. Murray also 
described a closed-door meeting in the Assistant 
Administrator's office, when air program staff showed a slide 
about the Agency's ``Clean Air Power Initiative'' which 
included a statement that EPA's ongoing efforts would 
significantly impact coal use in favor of natural gas. Based on 
this testimony and the subcommittee's oversight, Congressman 
McIntosh urged Congress to support the limitation in the fiscal 
year 1999 VA-HUD Appropriations Act that would prevent EPA from 
funding regulatory actions aimed at implementing the Kyoto 
Protocol before it is submitted to the Senate for advice and 
consent.
    b. Benefits.--The record developed through the 
subcommittee's hearings shows that the Kyoto Protocol goes too 
far, too fast, and involves too few countries, given the state 
of the science and the potential economic consequences of 
implementing this treaty. These hearings demonstrate how 
important it is for decisionmakers and the public to be 
informed about the full range of risks that the United States 
might face under the Kyoto Protocol, including estimates of 
cost under less favorable assumptions than the administration's 
about what other countries will agree to. Given the need to 
increase U.S. economic growth to address such challenges as a 
growing population, the retirement of the baby boom generation, 
and a persistent trade deficit, policymakers need to weigh 
carefully the treaty's potential negative economic impacts and 
its failure to engage developing countries in meaningful 
participation. These hearings argue for a measured approach to 
climate change--an orderly, long-term strategy based on facts, 
rigorous analysis, and an objective assessment of the risks.
    The record developed through these hearings also strongly 
suggests that the EPA is taking actions to implement the Kyoto 
Protocol prior to its submission to the Senate. This record 
demonstrates that the funding limitation in the fiscal year 
1999 VA-HUD Appropriations Act is needed to prevent such back-
door regulatory actions.
    c. Hearings.--The subcommittee held a series of six 
hearings entitled, ``The Kyoto Protocol: Is the Clinton-Gore 
Administration Selling Out Americans?'' on April 23, May 19, 
May 20, June 24, July 15, and September 16, 1998.

18. Investigation of OIRA's Review of NAAQS Rules.

    a. Summary.--The Environmental Protection Agency's [EPA] 
National Ambient Air Quality Standards [NAAQS] for particulate 
matter [PM] and ozone, proposed on November 27, 1996, were 
considered a ``significant regulatory action'' under Executive 
Order 12866 and were reviewed by the Office of Information and 
Regulatory Affairs [OIRA] of the Office of Management and 
Budget [OMB]. OIRA approved the rules as complying with the 
requirements of Executive Order 12866. The NAAQS rulemaking was 
one of the most significant regulatory actions of this year, 
expected to impose costs of over $9 billion per year on the 
regulated public for partial attainment. Because of the major 
impact of these rules, the subcommittee carefully investigated 
OIRA's involvement in the rulemaking to determine the extent to 
which OIRA performed its regulatory review obligations under 
President Clinton's Executive Order 12866 and ensured that the 
proposed rules complied with all applicable statutes and 
Executive orders.
    The subcommittee found that OIRA failed to perform its duty 
to function as an independent reviewer of agency regulatory 
impact data and an honest broker of disputes between agencies. 
Instead, politically-appointed OIRA decisionmakers passively 
followed the whims of the President, the Vice President, and 
the Administrator of EPA by perfunctorily reviewing and, for 
reasons of political expediency, approving the PM-Ozone rules 
despite serious, substantive objections raised by OIRA career 
staff pertaining to evidence in the record and the desirability 
of alternative courses of regulatory action. Also, OIRA 
political officials repeatedly failed to cooperate fully with 
congressional oversight inquiries and, in particular, with the 
subcommittee's investigation.
    b. Benefits.--The investigation has thus far exposed 
serious deficiencies in OIRA's conduct of regulatory review 
pursuant to Executive orders and procedural statutes. As a 
result, the subcommittee better understands specific areas in 
which the regulatory review process needs further oversight and 
reform.
    c. Hearings.--None.

19. Oversight of the National Highway Traffic Safety Administration's 
        proposed rule, ``State-Issued Driver's Licenses and Comparable 
        Identification Documents.''

    a. Summary.--The subcommittee examined the privacy concerns 
surrounding creation of a national identification [ID] card, 
and more specifically, the National Highway Traffic Safety 
Administration's [NHTSA] proposed rule, ``State-Issued Driver's 
Licenses and Comparable Identification Documents.'' This 
proposal, which provides that a Federal agency may only accept 
as proof of identity a State-issued driver's license which 
conforms to certain standards, including that it shall contain 
a Social Security Number [SSN] (or that a SSN is verified for 
each applicant), was criticized as establishing a de facto 
national ID card.
    NHTSA's rule (23 CFR Part 1331) was proposed on June 17, 
1998. The rule implements section 656(b) of the Illegal 
Immigration Reform and Immigrant Responsibility Act of 1998 
(included in the Fiscal Year 1997 Omnibus Consolidated 
Appropriations Act).
    The rule provides that a Federal agency may only accept as 
proof of identity a State-issued driver's license or 
identification document that meets certain criteria, including 
that it contains the holder's SSN, readable visually or 
electronically, by October 1, 2000. States which do not require 
SSNs on driver's licenses and identification documents are 
exempt from this requirement, but must require all applicants 
to submit their SSNs and must verify each SSN with the Social 
Security Administration [SSA]. This requirement still raises 
privacy concerns because the SSNs are likely to be held in the 
Department of Motor Vehicles records.
    The subcommittee also examined the privacy concerns 
surrounding two other measures developed over the past few 
years which indicate a move toward a national ID card--a law 
requiring the development of a unique health identifier or 
medical ID number for individuals and a law establishing a 
national database of all newly hired employees.
    b. Benefits.--The subcommittee held an oversight hearing on 
the national ID card issue, focusing on the NHTSA rule on 
State-issued driver's licenses. Witnesses representing a wide 
variety of organizations, including the American Civil 
Liberties Union, the National Conference of State Legislatures, 
and the National Taxpayers' Union, testified against the 
development of a national ID card in general and the NHTSA rule 
in particular.
    NHTSA submitted a written statement for the record, stating 
that it only issued the rule because it was required to do so 
by law: ``We . . . have no programmatic interest in whether a 
final rule is developed. We issued the proposal because we were 
directed by the act to do so. The use of the social security 
number, which has proven highly controversial, has little 
bearing on the safety mission of the agency.'' NHTSA asked 
Congress to reconsider the statutory requirement for the rule: 
``To the extent that the controversy over the proposal is 
requiring us to address thousands of comments from angry 
members of the public, we would welcome the Congress's 
reassessment of subsection 656 (b) [the statute].''
    Also, in a letter to Speaker Newt Gingrich, NHTSA 
Administrator Ricardo Martinez wrote, ``in view of these 
concerns, and the misgivings of several Members of Congress, we 
have concluded that the issuance of a final rule pursuant to 
the Act should await the opportunity for further review by 
Congress. Accordingly, the agency will await Congress's advice 
on the issuance of a final rule.''
    As a result of the hearing and increased opposition to the 
rule, a 1-year moratorium was included in the Omnibus 
Appropriations bill that prohibits NHTSA from promulgating 
regulations related to national ID cards.
    c. Hearings.--``A National ID Card: Big Government at its 
Worst or Technological Efficiency?,'' September 17, 1998.

20. Oversight of the Patent and Trademark Office's Proposed 
        Consolidation/Relocation.

    a. Summary.--The subcommittee conducted an oversight 
inquiry into the Patent and Trademark Office's [PTO] proposed 
consolidation and relocation in a new headquarters complex. 
Specifically, the subcommittee examined concerns raised about 
the cost of the move. PTO is currently located in leased space 
in Crystal City. The Federal Government is conducting a bidding 
process for a new building, which would involve a $1.3 billion, 
20-year lease.
    The subcommittee's concerns regarding PTO's acquisition of 
new space focused on the above-standard amenities which PTO 
included in its plans. PTO's Solicitation for Offers [SFO] 
requests that bidders incorporate such luxury features as 
marble or terrazzo floors/walls in the lobby, a fitness center, 
jogging trails, amphitheaters, statues, and fountains. PTO also 
plans to purchase all new furniture for the new building. 
Estimates of the furniture costs are extremely high--$5,000 
desks, $1,500 chairs, $1,000 coat racks, $83 wastebaskets, $250 
shower curtains, $309 ash urns, $13,298 modular tables, $1,000 
beds, $500 bedding, and $1,000 lecterns. General Services 
Administration [GSA] schedules reveal that the furniture could 
be purchased for far less. The shower curtains are $6.12, 
wastebaskets are $5.38, coat racks are $104, desks are $1,300-
$2,000, and chairs are $150 (ergonomic office chair)-$600 (top-
of-the-line leather, executive chair).
    PTO budgeted $29 million for above GSA-standard features, 
such as locks on private office doors, bumper guards in the 
hallways, and an uninterruptable power source for the computer 
system. Although PTO is completely funded by patent and 
trademark fees (as the new building would be), the subcommittee 
is still troubled by any misuse of PTO funds. The funds PTO 
raises are essentially taxpayer dollars because they go 
directly into the U.S. Treasury and Congress appropriates a 
portion of them to PTO. The remaining funds are used to pay off 
the debt and for other government purposes.
    b. Benefits.--The subcommittee sent oversight letters on 
the PTO's proposed consolidation/relocation to Commerce 
Secretary William Daley, PTO Commissioner Bruce Lehman, and GSA 
Administrator David Barram. The subcommittee raised concerns 
about the cost of the consolidation/relocation project, 
particularly for the above-standard upgrades and furniture. The 
subcommittee worked in conjunction with Senator Sam Brownback's 
Subcommittee on Oversight of Government Management, 
Restructuring, and the District of Columbia. Senator Brownback 
included an amendment in the Commerce, Justice, State 
Appropriations bill to put a cap on the funds for the PTO's 
consolidation/relocation.
    c. Hearings.--None.

21. The Noxious Nine: The Worst Clinton Regulations of 1997.

    a. Summary.--The subcommittee examined and evaluated many 
of the regulations issued by the Clinton administration in 
1997. The subcommittee discovered that the Clinton bureaucracy 
is making regulatory law at lightening speed. The Federal 
Register is now over 67,000 pages long--that's 37 percent more 
pages than 10 years ago. Last year alone, Federal agencies 
churned out over 4,000 new rules, including at least 59 major 
rules. Also, over 4,000 rules, including 125 major rules, are 
now in the planning stage. Each major rule will have an 
economic impact of at least $100,000. The costs for some of 
these regulations could run into the hundreds of billions.
    In 1997, Federal regulations cost the American people an 
estimated $688 billion--a 25 percent increase from 10 years 
before. Broken down, that is approximately $6,900 for a typical 
family of four. Regulations cost families more than medical 
expenses, food, transportation, recreation, clothing, or 
savings.
    In many cases these regulations fail to meet the goals of a 
cleaner, healthier and safer America. Worse, they often defy 
common sense--hurting the very people they are designed to help 
or actually polluting the environment instead of helping to 
clean it. Many are based on dubious, unproven scientific 
theories. The costs of such regulations often far outweigh the 
estimated benefits and, in many cases, the agencies do not even 
bother to estimate the costs.
    As a result of the subcommittee's oversight, the 
subcommittee assembled a cross-section of Clinton regulations 
that combine the worst of arbitrary government action, bad 
science and extraordinary costs without significant benefits, 
and, in short, indifference to the health, safety, and economic 
survival of America's families. These are the ``Noxious 
Nine''--the Clinton administration's nine worst regulations of 
1997:
            (1) PM-Ozone Standards (EPA).
    Last year the Environmental Protection Agency [EPA] gave 
itself sweeping new powers over the American economy by 
mandating rigid, new limits on emissions of particulate matter 
[PM] and ozone. Independent estimates show total costs 
exceeding $300-$400 billion per year, far outstripping the 
supposed health benefits and dealing a crushing blow to 
America's farms and small businesses. Data shows that the 
standards will actually harm public health, increasing risks 
for skin cancer and cataracts, reducing living standards for 
the poor, and shrinking revenues available for life-saving 
public health measures.
            (2) Airbag Deactivation Rule (DOT/NHTSA).
    Some regulations cost people their lives. Airbags have 
killed at least 40 small children and at least 35 elderly women 
and men. Responding to the public outcry, President Clinton 
promised action. The simple solution would be to allow people 
to remove their own airbags, or, to keep the airbags, but 
install an on-off switch to protect their children and other 
passengers at risk. The Clinton Solution was more government 
interference and more paperwork. Under new regulations from the 
Department of Transportation [DOT], people who want to turn off 
their airbags first have to apply to Dr. Ricardo Martinez, the 
head of the National Highway Transportation Safety 
Administration [NHTSA] at DOT, and go through an application 
and approval process that is so complicated and so expensive 
that most working men and women cannot afford it.
            (3) Derivatives Disclosure Rule (SEC).
    Designed to protect investors by forcing banks and 
corporations to disclose additional information about 
derivatives, this rule actually hurts investors. According to 
the Securities and Exchange Commission's [SEC] own chief 
economist, the new rule lulls investors into a false sense of 
security, leading them to take unnecessary risks. The 
disclosure requirements also impose unnecessary costs on 
consumers and investors, force corporations to reveal sensitive 
information to foreign competitors, and create perverse 
incentives likely to result in wasteful litigation. In short, 
the derivatives rule is unnecessary and its requirements are 
misleading and counterproductive.
            (4) Enforcement Guidance on Accommodating Mental Illness in 
                    the Workplace (EEOC).
    The Equal Employment Opportunity Commission's [EEOC] new 
mental illness ``guidance'' instructs employers to take certain 
``reasonable steps'' to accommodate the mental impairments of 
employees. Under the new guidelines, if an employee is 
incompetent, uncooperative, hostile, violent, chronically late, 
or depressed, the employer must first assume the role of 
professional psychiatrist and determine whether the employee is 
mentally impaired. The result: Any business with 15 or more 
employees must give mentally impaired employees extra time off, 
put up room dividers or build sound-proof offices for employees 
who have trouble concentrating or cannot get along with their 
coworkers because of mental illness, allow impaired employees 
to wear headphones, and provide a ``job coach'' to help them 
function in the workplace.
            (5) Anti-Recycling Policy for Asthma Inhalers Containing 
                    CFCs (EPA).
    EPA quietly reversed a long-standing, pro-recycling policy 
by issuing a ``verbal guidance'' urging manufacturers of asthma 
inhalers to incinerate factory-second inhalers instead of 
recycling them to capture the leftover chlorofluorocarbons 
[CFCs]. The result will be to undo 10 years of EPA-sponsored 
technology advances and harm the environment. EPA's stated goal 
is to protect the ozone layer by reducing the emission of CFCs. 
Ironically, this new, anti-recycling policy will have exactly 
the opposite effect.
            (6) Elimination of Asthma Inhalers Containing CFCs (FDA-
                    HHS) (proposed rule).
    Some regulations harm the very people they are intended to 
help. Not only has EPA banned the recycling of asthma inhalers, 
but last year the Food and Drug Administration [FDA] announced 
plans to outlaw the production of asthma inhalers and take them 
off the market, taking away an essential medical device from 
the people who need it most. The Clinton administration claims 
that its PM-Ozone standards will improve public health, 
supposedly benefiting 15,000 asthma sufferers. But the Clinton-
FDA ban on asthma inhalers does just the opposite: it harms 
exactly the people the clean air laws were designed to help by 
taking away a potentially life-saving medical device from 30 
million sufferers of asthma and other diseases.
            (7) Stealth Tax on Small Business Partnerships (Treasury/
                    IRS).
    The Internal Revenue Service [IRS] tried to slip through a 
tax increase and more paperwork for America's partnerships--
including engineering, consulting, and accounting 
partnerships--in the form of a regulation. This stealth income 
tax would require limited partners to pay Medicare health-
insurance taxes not only on their own incomes but also on 
partnership earnings. Congress enacted a 1-year moratorium on 
publication of a final rule. If the Clinton administration is 
serious about reforming the IRS, it must stop the IRS from re-
enacting the partnership tax or issuing any other illegal tax 
hike.
            (8) Special Education Regulations (Education) (proposed).
    The Clinton Education Department's proposed regulations on 
special education add 71 percent more words of rules on special 
education, impose new, unfunded mandates on every school 
district in the Nation, and undermine classroom discipline by 
mandating a double standard for violent and disruptive children 
that goes beyond the statute. The regulations strip parents and 
teachers of their authority, load them down with new paperwork, 
harm the very students the special education laws were intended 
to help, and create a bonanza for trial lawyers eager to sue 
local schools and communities.
            (9) A Category Unto Itself: The Kyoto Climate Change 
                    Treaty.
    The Kyoto Climate Change Treaty deserves a place on the 
Noxious Nine list, perhaps more than the other eight combined. 
Nevertheless it belongs in a category all its own, as the 
Clinton-Gore blueprint for what promises to be the most costly 
and far-reaching scheme of regulatory control this country has 
ever known. Although the Treaty has not yet been ratified by 
the Senate, as required by the Constitution, the administration 
has already jumped the gun on Congress through a regulatory 
backdoor approach--using regulation to implement a treaty that 
has not been ratified, for the sake of a theory that has not 
been proven.
    b. Benefits.--The Noxious Nine are the worst Clinton 
regulations of 1997. These regulations expose the Clinton 
administration's record of regulatory overkill and abuse. Many 
of them are still only proposals, so they may be improved or 
repealed. Others merit careful congressional review and, 
possibly, resolutions of disapproval under the Congressional 
Review Act.
    c. Hearings.--None.

22. Oversight of the Department of Transportation's ``Proposed 
        Statement of Enforcement Policy on Unfair Exclusionary Conduct 
        by Airlines.''

    a. Summary.--The Department of Transportation [DOT] 
published a ``Proposed Statement of Enforcement Policy on 
Unfair Exclusionary Conduct by Airlines'' on April 10, 1998. 
DOT issued this proposal to address what the administration 
believes to be a problem--larger airlines engaging in practices 
designed to eliminate competition by smaller airlines at hub 
airports. This proposal identifies the behavior that DOT will 
consider to be an unfair exclusionary practice and, therefore, 
will find unlawful. DOT General Counsel Nancy McFadden 
summarized DOT's policy as follows: ``If, in response to a new 
entry into one of its hub markets, a major carrier pursues a 
strategy of price cuts and capacity increases that either (1) 
sacrifices more revenue than all of the new entrant's capacity 
could have diverted from it or (2) results in substantially 
worse short-term operating results than would a reasonable 
alternative strategy for competing with the new entrant, we 
propose to find this unlawful'' (emphasis added). DOT has 
received wide-ranging opposition to its proposal from consumer 
advocates, small business groups, smaller communities, labor 
unions, economists, the U.S. Chamber of Commerce, major 
airlines, and numerous U.S. Senators and Members of Congress. 
Although the subcommittee shares many of the concerns raised by 
these parties about DOT's proposal, it has focused its 
oversight on the manner in which DOT appears to have conducted 
itself, in the face of this opposition, during the public 
comment period of this open regulatory docket. The subcommittee 
sent two letters to DOT Secretary Rodney Slater, inquiring 
about DOT's compliance with normal regulatory procedures, in 
accordance with the Administrative Procedures Act, in issuing 
this proposal for public comment. The subcommittee also 
questioned DOT about its use of appropriated funds to hire a 
public relations consultant to lobby Congress on the proposal; 
whether DOT considers the proposal to be binding on the 
airlines; and whether DOT plans to submit the proposal to 
Congress as a rule under the Congressional Review Act.
    b. Benefits.--In response to the subcommittee's August 13, 
1998 letter, DOT changed its policy on posting comments from 
Members of Congress in the public docket for this rulemaking. 
Many letters were not posted because DOT's practice was to wait 
until a reply was sent from the Secretary to the Member of 
Congress and then post the original letter and the reply. 
Therefore, the inclusion of important comments in the 
rulemaking's public docket was significantly delayed. After the 
subcommittee's inquiry, DOT agreed to begin posting comments 
from Members of Congress in the docket upon receipt.
    The subcommittee plans to continue its oversight of this 
rulemaking process.
    c. Hearings.--None.

23. Securities and Exchange Commission's Travel Oversight.

    a. Summary.--From March 1996 through April 1997, the 
subcommittee reviewed the official travel policies and 
procedures of the Securities and Exchange Commission [SEC]. 
Based upon its investigation, the subcommittee recommended that 
the SEC make the following reforms in its official travel 
policies and procedures:
         
 The SEC should strictly enforce the Federal 
        Travel Regulation's [FTR] restrictions on first-class 
        travel at government expense to permit first-class 
        travel only in situations expressly enumerated in the 
        FTR.\14\ The SEC voluntarily should adopt a formal 
        policy prohibiting personally-funded or host-paid 
        first-class travel.
---------------------------------------------------------------------------
    \14\ Criteria for use of first-class airline accommodations in the 
FTR: 1) No other reasonably available accommodations--neither coach 
class nor business class (scheduled to leave within 24 hours of the 
employee's proposed departure time or scheduled to arrive within 24 
hours of the employee's proposed arrival time). 2) Travel by an 
employee with a disability. 3) Security Reasons--exceptional security 
circumstances include but are not limited to: (a) travel in any other 
accommodations would endanger the employee's life or Government 
property; (b) travel by agents in who are in charge of protective 
details and who are accompanying individuals authorized to use first-
class; (c) travel by couriers and control officers who are accompanying 
controlled pouches or packages.
---------------------------------------------------------------------------
         
 The SEC should strictly construe the FTR's 
        requirements for approvals of upgrades for travel or 
        lodging accommodations, and require explicit 
        justifications for such upgrades consistent with FTR 
        requirements. The FTR should not be construed to permit 
        travel upgrades to business class for the reason that 
        official business needs to be conducted in flight, even 
        if the official work is confidential in nature. The SEC 
        should continue to caution SEC travelers to be 
        circumspect about doing work on confidential or 
        sensitive matters while traveling to protect against 
        inadvertent or premature disclosure of confidential or 
        sensitive information. The subcommittee does not 
        believe that business- or first-class travel 
        significantly enhances the opportunity to maintain 
        confidentiality of agency documents or records.\15\
---------------------------------------------------------------------------
    \15\ The subcommittee does not believe that the exceptional 
security circumstances cited in the FTR include maintaining 
confidentiality of agency records.
---------------------------------------------------------------------------
         
 The SEC should include the specific FTR 
        justification for any travel upgrade in a written 
        approval memorandum, which must be submitted to the 
        SEC's Comptroller's Office with the travel voucher 
        before any reimbursement for upgrade expenses is 
        approved. Consistent with current practice, that 
        memorandum should be retained with the agency's 
        official records relating to the trip.
         
 If a traveler receives an upgrade for 
        lodging, and he or she stays at a hotel with a rate in 
        excess of the maximum approved rate for subsistence 
        expenses (currently up to 150 percent of the standard 
        per diem allowance) (the maximum per diem allowance), 
        the SEC should determine, on a case-by-case basis, 
        whether the appropriate reimbursement is the standard 
        per diem allowance or the maximum per diem allowance. 
        Factors to be considered include, but are not limited 
        to, the following: (a) net savings to the government 
        due to the proximity of the chosen hotel to the 
        location of work which would lessen related 
        transportation costs to be paid by the government; (b) 
        reasonable personal safety concerns, particularly 
        relative to persons traveling alone; and (c) attendance 
        at conferences or meetings which take place at hotels 
        with rates above the maximum per diem allowance.
         
 Increasing the lodging allowance up to the 
        maximum per diem allowance for a particular locality 
        should be considered exceptional--travelers are 
        expected to attempt to find reasonable accommodations 
        within the per diem allowance set by GSA. The traveler 
        bears the burden of persuasion to satisfy the SEC's 
        Office of the Comptroller that the traveler should 
        receive more than the standard per diem allowance. The 
        subcommittee is of the view that justifying a rate 
        above the standard per diem allowance on the basis of 
        attending conferences or meetings at hotels with rates 
        above the maximum per diem allowance is appropriate 
        only if the traveler stays on site, at a less expensive 
        hotel in close proximity to the conference or meeting 
        site, or if no other hotel is reasonably available.
         
 The SEC should consult with its Inspector 
        General [IG] to implement a periodic audit by the IG of 
        agency travel vouchers, including those in which 
        upgrades have been approved, to determine compliance 
        with the FTR and agency policies.
         
 All SEC travelers must attach used airline 
        ticket stubs, demonstrating the class of accommodations 
        used by the traveler, to their travel vouchers.
         
 The SEC should review and approve requests 
        for travel upgrades on a uniform basis.
    b. Benefits.--The SEC has adopted and implemented the 
subcommittee's recommended travel reforms. The SEC Comptroller 
issued a new travel policy on February 2, 1998 to all its 
employees, restricting travel upgrades to exceptional 
circumstances as defined by the FTR. This new travel policy 
tightened reporting requirements and prohibited government-
funded upgrades used to defray the personal costs of employees 
traveling first-class (although employees are still free to 
upgrade from coach class to first class at their own expense). 
On June 5, 1998, the SEC IG conducted an audit of the 
Commission's travel practices, including travel upgrades. The 
audit found that the SEC's internal controls were generally 
functioning as intended and that the new travel upgrade 
policies complied with the FTR and the subcommittee's 
recommendations. The SEC's IG is making quarterly reports to 
the subcommittee on compliance with the travel reforms. Each 
report to date has shown full compliance with the travel 
reforms.
    c. Hearings.--None.

Subcommittee on National Security, International Affairs, and Criminal 
                                Justice

1. National Drug Control Policy.

    a. Summary.--The National Narcotics Leadership Act of 1988 
(21 U.S.C. 1501 et seq.) established the Office of National 
Drug Control Policy [ONDCP]. The act also provided for 
appointment of a Director of ONDCP, and required that the 
Director develop an overall strategy and budget for Federal 
anti-narcotics efforts, including both supply and demand 
reduction. Specifically, the statute provided that ONDCP: ``(A) 
include comprehensive, research based, long-range goals for 
reducing drug abuse in the United States; (B) include short-
term measurable objectives which the Director determines may be 
realistically achieved in the 2-year period beginning on the 
date of the submission of the strategy; (C) describe the 
balance between resources devoted to supply reduction and 
demand reduction; and (D) review State and local drug control 
activities to ensure that the United States pursues well-
coordinated and effective drug control at all levels of the 
government.'' Pursuant to the Government Reform and Oversight 
Committee's jurisdiction over ONDCP, as well as all other 
departments and agencies engaged in counternarcotics efforts, 
the Subcommittee on National Security, International Affairs, 
and Criminal Justice convened numerous in-depth oversight 
hearings during 1997 to assess the status and effectiveness of 
the Nation's Federal drug control strategy and the strategy's 
implementation.
    In addition to administration officials, expert advice and 
recommendations were sought from preeminent outside experts, 
including local officials and civic leaders. The subcommittee 
aimed to identify strategic and policy weaknesses, and in the 
course of its investigation, the subcommittee engaged in 
official contact with the various agencies and departments over 
which it has jurisdiction, namely those that engage in 
counternarcotics activities. These include, but are not limited 
to, the Office of National Drug Control Policy, the Departments 
of Defense, State, Justice, the Central Intelligence Agency, 
the U.S. Customs Service, and the Financial Crimes Enforcement 
Network.
    Throughout 1997, the subcommittee met extensively with the 
agencies involved in counternarcotics efforts, collecting and 
analyzing both statistical and anecdotal evidence on the 
effectiveness of the Nation's drug strategy and supporting 
programs. This includes the areas of source zone interdiction, 
transit zone interdiction, arrival zone interdiction, law 
enforcement, prevention, and treatment. The subcommittee sought 
further insight from GAO investigators, field agents, and 
departmental Inspectors General.
    Illegal drugs cost our society approximately $67 billion 
each year. Drug-related deaths have increased 42 percent since 
1990 and numbered 14,218 in 1995. Accidents, crime, domestic 
violence, illness, lost opportunity, and reduced productivity 
are the direct consequences of substance abuse. Drug abuse and 
trafficking hurt families, businesses, and neighborhoods; 
impede education; and choke criminal-justice, health, and 
social-service systems. According to the 1996 NHSDA, an 
estimated 6.1 million current illegal drug users were employed 
full-time (6.2 percent of the full-time labor force aged 18 and 
older) in 1996, while 1.9 million worked part-time. More than 
1.5 million Americans were arrested for drug-law violations in 
1996. Drug-trafficking organizations seek to launder $57 
billion a year spent in the illegal U.S. drug market.
    According to the 1996 National Household Survey on Drug 
Abuse [NHSDA] 13 million Americans (6.1 percent of the U.S. 
household population aged 12 and over) were current drug users. 
According to the 1997 Monitoring the Future Study (MTF) since 
1992 there has been a substantial increase in the use of most 
drugs--particularly marijuana; and 1 of 4 12th graders is a 
current illegal drug user while for 8th graders, the figure is 
approximately 1 in 8. A survey conducted by the Columbia 
University Center on Addiction and Substance Abuse [CASA] 
reported that 41 percent of teens had attended parties where 
marijuana was available, and 30 percent had seen drugs sold at 
school. In 1996, an estimated 1.7 million Americans were 
current cocaine users. The current-use rate has not changed 
significantly in the last 7 years. The 1997 MTF survey found 
that the proportion of students reporting use of powder cocaine 
in the past year was 2.2 percent, 4.1 percent, and 5 percent in 
grades 8, 10, and 12, respectively. This rate represents a 
leveling off in 8th-grade use and no change in 10th and 12th 
grade. Between 287 and 376 metric tons of cocaine are estimated 
to have been smuggled into the United States in 1995. 
Consumption-based calculations suggest the U.S. demand for 
cocaine was about 330 metric tons. There are approximately 
320,000 occasional heroin users and 810,000 chronic users in 
the United States. Rates of heroin use among teenagers rose 
significantly in 8th, 10th, and 12th grades during the 1990s. 
The 1996 NHSDA found that the mean age of initiation declined 
from 27.3 years in 1988 to 19.3 in 1995. Plan, TX, one of the 
Nation's 10 safest cities, had 11 heroin-overdose deaths in 
1997. Orlando, FL saw 48 heroin deaths in 1995 and 1996; 10 
victims were 21 years of age or younger. The 1996 NHSDA 
estimated that 4.7 percent (10.1 million) of the population 
aged 12 and older were current marijuana or hashish users, 
which is the same rate as 1995. Approximately three-quarters 
(77 percent) of current illegal drug users used marijuana or 
hashish in 1996. The 1997 MTF shows that marijuana continues to 
be the illegal drug most frequently used by young people. Among 
high school seniors, 49.6 percent reported using marijuana at 
least once in their lives. By comparison, the figure was 44.9 
percent for seniors in 1996 and 41.7 percent in 1995. After 6 
years of steady increase, current marijuana use fell in 1997 
among eighth graders, from 11.3 percent in 1996 to 10.2 
percent. While marijuana is the most readily available illegal 
drug in our Nation, there is currently no methodology to 
determine the extent of cannabis cultivation within the United 
States. Cannabis is frequently cultivated in remote locations 
and on public land to prevent observation and identification of 
owners. The 1996 NHSDA estimated that 4.9 million Americans 
tried methamphetamine in their lifetime, up significantly for 
the 1995 estimate of 4.7 million. Studies show that 
methamphetamine use continues to be more common in the western 
United States than in the rest of the country. Methamphetamine 
is by far the most prevalent synthetic controlled substance 
clandestinely manufactured in the United States. It is also 
imported from Mexico. The 1996 NHSDA reported no significant 
change in the prevalence of inhalants, hallucinogens (like LSD 
and PCP), or psychotherapeutics (tranquilizers, sedatives, 
analgesics, or stimulants) used for non-medical purposes 
between 1995 and 1996. Current usage rates among those 12 and 
older for both hallucinogens and inhalants remained well below 
1 percent in 1996.
    Congressional Delegation.--From May 23 through June 1, 
1997, Subcommittee Chairman J. Dennis Hastert was joined by 
Congressmen Souder, Sanford, Barr, and Blagojevich on a 
congressional delegation (CODEL) which visited Panama, 
Colombia, Peru and Bolivia. Accompanying the CODEL were 
subcommittee staff director and chief counsel, Robert Charles; 
professional staffers Sean Littlefield and Kevin Long; USCG CDR 
Rob Mobley and House International Relations Committee staffer, 
John Mackey. The purpose of the visit was to conduct an in-
country review of current U.S. counternarcotics efforts and 
determine the level of cooperation by source and transit zone 
countries. The CODEL held extensive meetings with United States 
and host nation civilian, military, and law enforcement 
officials to discuss current policies, programs and activities 
intended to stop the flow of illegal drugs coming into the 
United States. The CODEL also explored how financial support 
for these programs could be better directed, and more 
effectively used.
    On May 23, 1997, the CODEL visited with the Panama country 
team at the Embassy. Those attending included the U.S. 
Ambassador, DEA, country attache, the U.S. Customs attache, the 
military attache, and civilian personnel assigned to the 
Embassy. The country team emphasis seemed to be on unity. They 
were adamant about how well they worked together in their 
mission. The Embassy brought in the Panamanian Attorney General 
and several of his associates to explain Panama's new money 
laundering laws and creative efforts to stop the flow of 
laundered money to and through Panama. DEA explained that the 
Panamanian police were ill-equipped to handle certain routine 
tasks, and requested that money be provided to the Panamanian 
police for vehicles and communications equipment. United States 
Customs personnel expressed a desire to see more x-ray and 
other detection devices at Panama's airports; the need for 
Customs aircraft throughout the source country region became 
obvious.
    On May 24, 1997, the CODEL met with General Wesley Clark, 
Commander in Chief of U.S. Southern Command [SOUTHCOM] at his 
headquarters; SOUTHCOM'S support staff was present for the 
briefing. The General offered his view of how to effectively 
enhance counternarcotics efforts in the source countries and 
described the mission of SOUTHCOM as it related to an array of 
present and future counternarcotics issues. SOUTHCOM plays a 
major role in the region's counternarcotics efforts. It is the 
southern-most U.S. base, and, as such, is strategically vital 
in the war on drugs. SOUTHCOM's use of Howard Air Force Base 
provides regional support for detection, monitoring, and 
interception of illegal drug traffic by air. The U.S. presence 
also facilitates regional inter-military cooperation, jungle 
training, regional police and military training, and 
intelligence coordination. That presence must be strong, 
committed, enduring and well-supported by the Pentagon; despite 
the move of SOUTHCOM to Miami and the importance of continued 
and uninterrupted development of SOUTHCOM activities on Puerto 
Rico, there was a consensus among Members of the CODEL that the 
United States must maintain a strong forward-based presence at 
Howard Air Force base.
    In Colombia, the CODEL visited San Jose del Guaviare, a 
remote forward-operating base for the Colombian National Police 
[CNP], and the Colombian Army's Second Mobile Brigade on May 
25. This area is located in the southeastern region of 
Colombia, also known for its geography as the ``wild zone.'' It 
is the largest coca growing and producing area in the world, 
and is universally acknowledged to be narco-guerrilla infested. 
The CODEL was accompanied by CNP General Rosso Jose Serrano, 
CNP Colonel Leonardo Gallego, director of the DANTI 
(antinarcotics police), Ambassador Frechette and selected 
Embassy staff.
    The CODEL then continued west from Bogota to Maraquita, 
where the CNP maintains its aviation school. There, the CODEL 
witnessed a CNP special operations drug lab assault 
demonstration using UH-1H helicopters, helicopters critical to 
effective counter-narcotics operations in the narco-guerrilla 
regions. This involved a live-fire coca lab ``take down.'' 
Subsequently, the CODEL inspected three of the UH-1Hs, released 
just prior to the CODEL's arrival in Maraquita. They were 
released only after pressing the questions to Ambassador 
Frechette in the country team briefing 2 days earlier. The 
helicopters were in poor condition; notably, the U.S.-provided 
helicopters were inexplicably missing essential mounts for the 
guns that would protect the helicopters during coca lab take 
downs. The helicopters were in need of substantial maintenance 
to place them in flying condition; this was a development 
widely seen as ironic, in view of the U.S. ability to deliver 
repaired and flyable excess aircraft. For each helicopter 
Colombia received from the United States, the CNP must now 
commit an additional $100,000 to make the asset flight worthy. 
Following the CODEL's return, the remaining helicopters were 
released to the CNP. Instructively, these helicopters were 
conducting counternarcotics missions within 3 days of delivery. 
These facts strongly support a pressing need for U.S. draw down 
aid, namely additional ``surplus helicopters.''
    On May 27 and 28, in Santa Cruz, Bolivia, the CODEL met 
with the Bolivia country team, including the Deputy Charge of 
Mission [DCM], DEA agent in charge, NAS, and civilian assets in 
place. The country team was mission-specific, and appeared to 
be running efficiently and smoothly. The DCM outlined a 
coherent counter-narcotics strategy, which seemed to be the 
United States Embassy's No. 1 priority in Bolivia. The DEA 
reported that it would have seven new DEA personnel shortly. 
The DEA briefed the CODEL about ongoing operations in the 
Chapare region, which is the country's leading coca producing 
region. NAS reported on several alternative development 
projects, and provided persuasive statistics regarding their 
success.
    On May 29 and 30, in Lima, Peru, the CODEL met with the 
Peruvian country team. Considerable attention was given to the 
successful ``shoot down policy'' adopted by President 
Fujimori's government. Additionally, the DEA and NAS touted 
eradication efforts and the decrease in coca production. 
Earlier in Iquitos, Peru, the CODEL witnessed part of Peru's 
riverine interdiction program. The CODEL also visited some 
remote coca field sites in Peru. The ``shoot down'' policy, 
supported by the United States in combination with intensive 
Peruvian law enforcement activities, yielded an 18 percent 
reduction in coca cultivation during 1996. The subcommittee 
subsequently learned that, in 1997, Peru achieved a further 27 
percent reduction in coca cultivation.
    b. Benefits.--The subcommittee recognizes that the 
availability of drugs on U.S. streets and the number of persons 
using illegal drugs continue to be serious problems in the 
United States, and constitute a major national and personal 
security threat. The subcommittee, through its oversight 
hearings, determined that there are significant policy and 
management obstacles that must be resolved in order to markedly 
improve the U.S. drug control efforts. In addition, the 
effectiveness of U.S. efforts to combat drug production, 
transshipment, and importation remain, on the whole, 
handicapped by low resource allocation. It is apparent that the 
U.S. Government has yet to meet the drug threat with the same 
intensity and dedication that the drug cartels and traffickers 
undertake in their efforts. Obstacles include numerous 
organizational and operational limitations, as well as a lack 
of sufficient and consistent funding. The subcommittee's 
hearings, meetings, and official correspondence assisted in 
elevating interagency cooperation and coordination, as well as 
providing much needed attention to counternarcotics issues. The 
oversight and investigation of drug policies and programs also 
enabled the subcommittee to determine whether current 
strategies or programs were meeting their statutory 
obligations.
    c. Hearings.--During the 105th Congress, the Subcommittee 
on National Security, International Affairs, and Criminal 
Justice held 16 hearings on the topic of the status of this 
Nation's National Drug Control Policy. The hearings focused on 
all aspects of the war on drugs and demonstrated the importance 
of a several-tiered strategy, including source country and 
transit zone interdiction efforts to stop the illegal narcotics 
and precursor chemicals from entering the United States; a 
strong law enforcement and criminal justice system to apprehend 
and severely punish those convicted of drug trafficking; 
prevention efforts that not only educate our young people about 
the dangers of drug use but unite communities against drug use; 
and finally, an effective system of treating those already 
addicted. By encompassing all facets of the counternarcotics 
effort, we send a strong ``zero-tolerance'' message to anyone 
who considers cultivating, trafficking, or using illegal 
narcotics. A detailed description of the hearings held by the 
subcommittee follows:
    The subcommittee, in its role as authorizing subcommittee 
for the Office of National Drug Control Policy [ONDCP], 
conducts an annual hearing reviewing the President's National 
Drug Control Strategy. On February 27, 1997, the subcommittee 
received testimony from General Barry McCaffrey, Director of 
the Office of National Drug Control Policy at a hearing 
entitled, ``Oversight of the 1997 National Drug Control 
Strategy.'' On March 26, 1998, the subcommittee received 
testimony from General McCaffrey at a hearing entitled, 
``Oversight of the 1998 National Drug Control Strategy.'' The 
purpose of these hearings was to examine the short- and long-
term plan described in President Clinton's 1997 and 1998 
National Drug Control Strategies, and to assess how effectively 
the Nation is fighting illegal drug abuse, both domestically 
and internationally.
    At the 1997 hearing alarming statistics were cited to 
portray the status of our war on drugs.
    Drug-induced deaths increased 47 percent between 1990 and 
1994, and now number approximately 14,000 per year. In 1995, a 
record high 531,800 drug-related hospital emergency room 
episodes occurred. Heroin-related emergency room episodes 
increased 124 percent between 1990 and 1995. General McCaffrey 
described cocaine use as plummeting and higher purity heroin 
use as increasing. He characterized the increase in 
methamphetamine use as, ``. . . a potentially worse threat to 
America than the crack cocaine epidemic of the 1980's.''
    Even more threatening to the status of drug use, was the 
shocking decline in the average age of drug users, now dipping 
below the teen years. The perceived risk associated with drug 
use among teens has dropped and consequently the overall number 
of young people using drugs has skyrocketed. Use of illegal 
narcotics among 8th-graders, 11- and 12-year olds, is up 150 
percent over 1989. These numbers were widely viewed as 
startling and corroborate the need to educate all young 
Americans about the perils of drug use.
    General McCaffrey stressed the need to more strongly 
support different aspects of the drug war: stopping the 
cultivation of drugs at the source; interdicting the drugs in 
the transit zones and at the borders; enforcing severe 
punishment for those offenders who sell drugs; preventing young 
people from ever turning to illegal drug use; and providing 
treatment for those already addicted to narcotics. The 1997 
Strategy has established five strategic goals: (1) Educate and 
enable America's youth to reject illegal drugs as well as 
alcohol and tobacco; (2) Increase the safety of America's 
citizens by substantially reducing drug-related crime and 
violence; (3) Reduce health and social costs to the public of 
illegal drug use; (4) Shield America's air, land, and sea 
frontiers from the drug threat; and, (5) Break foreign and 
domestic drug sources of supply.
    With varying degrees of emphasis, all Members, and General 
McCaffrey, acknowledged that current Federal antidrug efforts 
are, while effective, under strain from reduced funding. 
According to McCaffrey, future strategies will continue to 
focus on drug-related crime and violence, as well as shielding 
our frontiers and reducing availability. The assumption is that 
it will also trigger an aggressive initiative to educate young 
people on the dangers of drug use.
    At the 1998 hearing the 1998 National Drug Control 
Strategy, as well as the accompanying budget and performance 
measure documents, were outlined. The 1998 National Drug 
Control Strategy states certain emphasis, goals, and budget 
priorities. In 1998, the administration released the first 5-
year budget for Federal drug control. The 5-year budget covers 
the fiscal years from 1999 to 2003. There are five goals of the 
1998 strategy. The strategy is designed to reduce drug use and 
availability by 50 percent over the next 10 years. Thirty-two 
supporting objectives are elaborated on in the strategy. Goal 
1: Educate and enable America's youth to reject illegal drugs 
as well as alcohol and tobacco. The strategy's mid-term 
objectives are to reduce the prevalence of past-month drug use 
among youth by 20 percent and increase the average age of first 
use by 12 months before the year 2002. The long-term objectives 
are a 50 percent reduction in current drug use and an increase 
of 36 months in the average age of first use by the year 2007. 
Goal 2: Increase the safety of America's citizens by 
substantially reducing drug-related crime and violence. The 
strategy's mid-term objective is to reduce drug-related crime 
and violence by 15 percent before the year 2002. The long-term 
objective is a 30 percent reduction by the year 2007. Goal 3: 
Reduce health and social costs to the public of illegal drug 
use. The strategy's mid-term objective is to reduce health and 
social consequences 10 percent by the year 2002. The long-term 
objective is a 25 percent reduction in consequences by the year 
2007. Goal 4: Shield America's air, land, and sea frontiers 
from the drug threat. The strategy's mid-term objective is to 
reduce the rate at which illegal drugs entering the transit 
zone and arrival zones successfully enter the United States 10 
percent by 2002. The long-term objective is a 20 percent 
reduction in this rate by the year 2007. Goal 5: Break foreign 
and domestic drug sources of supply. The strategy's mid-term 
objectives are a 15 percent reduction in the flow of illegal 
drugs from source countries and a 20 percent reduction in 
domestic marijuana cultivation and methamphetamine production 
by the year 2002. Long-term objectives include a 30 percent 
reduction in the flow of drugs from source countries and a 50 
percent reduction in domestic marijuana cultivation and 
methamphetamine production by 2007.
    The Performance Measures of Effectiveness [PME] are 
designed to 1) assess the effectiveness of the National Drug 
Control Strategy; 2) provide the entire drug control community, 
including State and local governments, the private sector, and 
foreign governments, with critical information on what needs to 
be done to refine policy and programmatic direction; and 3) 
assist with drug program budget management at all levels. The 
nucleus of the PME system consists of 12 impact performance 
targets that define desired outcomes of end states for the 
strategy. The remaining 82 performance targets calibrate 
progress toward the strategy's 32 objectives, which are 
supported by a system of drug control program efforts. In the 
area of overall drug use, the target is a 50 percent reduction 
by 2007 in the rate of illegal drug use in the United States 
compared with that in 1996. In the area of drug availability, 
the aim is a 50 percent reduction by 2007 of the available 
supply of illicit drugs in the United States compared with that 
in 1996. In the area of drug use consequences, the target is a 
30 percent reduction by 2007 in the rate of crime and violent 
acts associated with drug trafficking and drug abuse compared 
with that in 1996. In addition, this theme targets a 25 percent 
reduction by 2007 in damaging health and social costs 
attributable to drug use as measured by annual estimates of the 
social costs of drug use. The additional 82 performance targets 
establish benchmarks by which to gauge progress in achieving 
the National Drug Control Strategy's 32 objectives.
    Highlighting the work of successful prevention efforts 
around the country, the subcommittee held a hearing on February 
26, 1997 entitled, ``Civic Volunteers, Youth Service 
Organizations, and the War on Drugs.'' This hearing focused on 
successful efforts of civic groups and youth service 
organizations in the counterdrug effort.
    As the level of drug use among 8th and 10th graders has 
risen over the past few years, prevention efforts across the 
country are becoming increasingly important for young people. 
Representatives from a number of civic groups described 
successful, national programs that they have developed and 
sustained without any Federal money.
    In 1997, there were 5.6 million youth and adult members of 
the Boy Scouts of America, 260,000 members of the General 
Federation of Women's Clubs, and 132,000 members of the Junior 
Chamber of Commerce. Combined, these groups achieved hundreds-
of-thousands of volunteer hours and touched the lives of 
millions of young people. These organizations have the unique 
ability to reach out to all socioeconomic backgrounds and 
regions and successfully unite these that may normally not 
interact. Notably, each organization has approached the problem 
of youth drug abuse in a different and distinct manner. Several 
programs focused their exercises on character building, some 
follow the faith-based model, while others concentrate on 
building ties to the community through sports and community 
service projects. These organizations integrate the health 
dangers of drug use but the social and criminal perils as well.
    On the first panel, testimony was received from Mr. Frank 
Sarnecki, director, Loyal Order of Moose; Mr. John Creighton, 
Jr., president, Boy Scouts of America; Ms. Faye Dissinger, 
international president, General Foundation of Women's Club; 
and Mr. Mike Marshall, president, U.S. Junior Chamber of 
Commerce. Witnesses detailed the importance of building self-
esteem in our young people. By showing each and every teenager 
that they are important and can control the outcome of their 
lives, such programs taught responsible and well-reasoned 
decisionmaking skills.
    The second panel consisted of Mr. Dick Herndobler of the 
Benevolent and Protective Order of Elks; Mr. Gordon Thorson, 
national youth program director of the Veterans of Foreign 
Affairs; Mr. Howard Patterson, vice-president of Lions Club 
International; Mr. William Pease, assistant director for 
children and teens program of the American Legion Child Welfare 
Foundation; Mr. Don Baugher, president, Masonic National 
Foundation for Children; Mr. Larry Chisolm, also of the Masonic 
National Foundation for Children; and Mr. Dennis Windscheffel, 
a prominent drug prevention program consultant. Panel two 
brought a different perspective to the hearing. The essence of 
their message was that it is imperative that we demonstrate, as 
competent and dependable adults, that when you begin success in 
your teenage years, it paves the way for a successful 
adulthood. This panel emphasized that, too often, society is 
eager to point the finger at the young people and say, ``We 
need to change your behavior.'' While this may be true, we must 
demonstrate how to be an effective, reliable and productive 
adult.
    On June 18, 1998 the subcommittee held a hearing on 
athletes, celebrities, role models, and the message to young 
people about illegal drugs. The purpose of the hearing, 
``Athletes, Role Models and Their Influences on Young Americans 
to Stay Drug-Free'' was to highlight how professional athletes, 
and movie and television stars, serve as role models for young 
Americans, and that their conduct, particularly as it relates 
to the use of illegal substances, impacts young lives. 
Witnesses at this hearing included Sugar Ray Leonard, former 
professional boxing champion; Steve Fitzhugh, former Denver 
Broncos football player; Sergeant Sid Kelly, city of Chicago 
D.A.R.E. officer; Dr. Mark Gold, University of Florida Brain 
Institute; Bill Ellis, division vice president, K-Mart; and 
Bryton McClure, star of CBS sitcom, ``Family Matters.'' The 
subcommittee also heard from two Members of Congress with 
accomplished athletic careers, Congressman J.C. Watts of 
Oklahoma and Congressman Jim Ryun of Kansas.
    Sugar Ray Leonard testified that preventing children from 
ever experimenting with drugs is the most effective form of 
drug control for the Nation to adopt. As testament of his 
commitment to educating children about the dangers of drug 
abuse, one of the two principal objectives of the Sugar Ray 
Leonard Youth Foundation's objective is to educate children 
about the dangers of illegal drugs. Dr. Gold and Sgt. Kelly 
both testified to the effectiveness of the D.A.R.E. program 
(Drug Abuse Resistance Education), Sgt. Kelly from his 
experience with the Chicago Police Department, which began its 
D.A.R.E. program in 1988, and Dr. Gold as a prolific author on 
drugs and addiction, as well as his service with the Office of 
National Drug Control Policy on a variety of drug prevention 
matters. K-Mart's division vice president testified about the 
important role that corporate America can play in helping young 
people to make decisions about staying drug-free. K-Mart's 
annual Kids Race Against Drugs, conducted annually on Capitol 
Hill, is an example of an important corporate charitable 
initiative involving Members of Congress, celebrities and young 
people, which benefits anti-drug charities across the Nation.
    The hearing also inspired a letter from Congress to the 
National Basketball Association, because of the concern in 
Congress that teenagers are adversely impacted by professional 
athletes publicized as using illegal drugs. The day of the 
hearing, Chairman Hastert released a letter to the NBA 
Commissioner and to the Players' Association Executive 
Director, along with more than two dozen Members of Congress, 
including the Speaker, urging the NBA to adopt a consistent 
drug-testing policy for all players and tough sanctions against 
those testing positive for illicit drugs, and to adopt a 
``zero-tolerance'' policy for all NBA draft prospects, rookies 
and veteran players.
    On July 23, 1998 the subcommittee heard from experts on the 
problem of pregnant women and drug abuse from the States of 
South Carolina and Wisconsin. This hearing, ``Expectant Mothers 
and Substance Abuse: Intervention and Treatment Challenges for 
State Governments,'' highlighted two States which have been at 
the forefront of controversy and publicity for their approaches 
to the problem of mothers-to-be who use drugs. Witnesses at 
this hearing included Congressman Tom Latham of Iowa; Charles 
Condon, Attorney General, State of South Carolina; Joanne 
Huelsman; State senator, State of Wisconsin; Catherine 
Christophillis, director of drug prosecution, State of South 
Carolina; William Domina, Office of Corporation Counsel, 
Waukesha County, WI; Shirley Brown, outcome manager, Medical 
University of South Carolina; Paula Keller, director, Serenity 
Place; Betty Foley, associate director, Haymarket Center; 
Francine Feinberg, Meta House, Our Home Foundation; Mary Faith 
Marshall, program in bioethics, Medical University of South 
Carolina.
    South Carolina's program is a multi-level treatment plan 
which offers a reprieve-oriented judicial process for pregnant 
women using illegal substances. The State of South Carolina was 
sued for its program, but the Supreme Court upheld a lower 
court ruling, Whitner v. State, which held that viable fetuses 
(defined as 24 weeks gestation) are persons for purposes under 
the reporting requirements of South Carolina's code of law, 
protecting them against illegal drugs such as cocaine, heroin, 
LSD, amphetamines, and marijuana. Under the State's maternal 
drug screening protocol, patients are to be made aware that 
criminal prosecution is possible if they fail to adhere to the 
criteria of any treatment program required by them of the 
judicial system. In Wisconsin, the principal provision of 
legislation sponsored by witness, Senator Joanne Huelsman was 
to permit child protection officials to seek a court order for 
a substance-abusing pregnant woman to undergo alcohol or drug 
abuse treatment who has previously refused treatment. Inpatient 
treatment in a hospital can also be ordered. The bill has no 
mandatory reporting requirements, no criminal penalties, and 
relies on ``discretionary reporting'' by professionals who come 
into contact with pregnant women. The legislation resulted from 
the publicity surrounding two women, a ``cocaine mom,'' who 
used cocaine while 8 months pregnant, and Deborah Zimmerman, 
who allegedly was binge-drinking alcohol in order to kill her 
unborn baby. The cocaine mom repeatedly refused a doctor's 
pleas to stop using cocaine and had refused multiple offers of 
treatment. South Carolina's Attorney General argued 
persuasively that his State is making progress in solving the 
problem of pregnant addicts, mixing compassion with ``tough 
love.'' He cites the highest priority is sparing infants the 
``unimaginable suffering they experience when they come into 
the world as drug addicts. Some don't survive the trauma. 
Others are horribly impaired for the rest of their lives. Most 
experience exquisite pain during their first days.'' South 
Carolina's witnesses offered compelling evidence that by 
treating addicts as patients, allowing health care experts to 
intercede, but keeping law enforcement in the wings, prepared 
to act only in worst-case scenarios with treatment-resistant 
women, has resulted in successful interventions that render 
healthy mothers who can serve as fit parents, and healthy 
newborn children.
    On May 14, 1997, the subcommittee held a hearing 
highlighting the extraordinary efforts of the National Guard in 
the antidrug effort entitled, ``National Guard Support in the 
Fight Against Illegal Drugs.'' Historically, the National Guard 
has performed missions tasked by their respective Governor. 
However, as the drug epidemic has increased in this country, 
Governors have turned to the National Guard to combat the flow 
of illegal narcotics. To continue their high-level of mission 
performance, the Guard needs consistent support from Congress 
and the Pentagon.
    There are serious concerns that the fiscal year 1998 budget 
does not adequately support the needs of either their supply or 
demand reduction activities. A decrease in funding could result 
in severe reductions in aviation capabilities, intelligence, 
and engineering support. This hearing highlighted the 
successful efforts of the National Guard in tackling the rise 
in methamphetamine and heroin use, and their vital border 
support.
    The subcommittee received testimony from the Honorable Brad 
Owen, Lieutenant Governor of the State of Washington; the 
Honorable Michael Bowers, attorney general of the State of 
Georgia; Major General Russell Davis, Vice Chief of the 
National Guard Bureau; Mr. James Copple, president and CEO of 
the Community Anti-Drug Coalitions of America; and Mr. Ronald 
E. Brooks, chair of the drug policy committee, California 
Narcotics Officer's Association. The witnesses all testified 
regarding the value of National Guard counterdrug assistance. 
According to Attorney General Bowers, in 1996, National Guard 
assistance resulted in, ``. . . over 128,000 arrests and the 
confiscation of l,371 metric tons of processed marijuana, 
12,671 pounds of heroin, and 16,116 weapons.'' These statistics 
alone demonstrate the essential nature of the National Guard's 
long-term commitment to a drug-free America.
    During the 105th Congress the subcommittee conducted two 
oversight hearings on the issue of drug treatment programs and 
their effectiveness. On June 5, 1998 the subcommittee held a 
hearing entitled ``Cutting Edge Issues in Drug Testing and Drug 
Treatment.'' Witnesses at this hearing included Congressman 
Jerry Solomon of New York; Dr. Robert DuPont, president, 
Institute for Behavior and Health; Dr. Ian MacDonald, chairman, 
Employee Health Programs; Dr. Murray Lappe, president, National 
Medical Review Offices; Mark deBernardo, director, Institute 
for a Drug-Free Workplace; Dr. Tom Mieczkowski, professor, 
University of South Florida; Harold Green, president, 
Chamberlain Contracting Co.; Neil Fortner, vice president, 
Laboratory Operations, PharmChem Laboratories; Roxanne Kibben, 
president, National Association of Alcoholism and Drug Abuse 
Counselors; and Dr. David Kidwell, chemist, Naval Research 
Laboratory.
    There is a consensus that effective treatment is a crucial 
component in the war on drugs. There are several issues which 
have arisen within the context of drug treatment. The most 
important is overcoming the denial inherent in the addicted 
condition. According to the witnesses who testified, the best 
way to overcome the addicts' dependency is a threefold 
approach: 1) drug test all employees on a random basis; 2) 
require that addicts and drug users successfully complete 
treatment; and 3) drug test regularly after treatment to ensure 
that the addict does not relapse. The workplace is a perfect 
crucible for the above model. More than 70 percent of those who 
use drugs in this country are employed. Many of those presently 
using, but not yet abusing, drugs are deterred from continued 
use by the above policy. This may be one of the most important 
goals of drug testing. For both the drug user and abuser, the 
loss of their jobs represents a powerful deterrent to continued 
drug use. The success of the model is unmistakable and 
beneficent. One employer, Harold Green, testified that all of 
his employees appreciated the fact that the only way to ensure 
a drug-free workplace was to drug test. Most employees believe 
that drug testing is a small price to pay to be able to work 
with fellow employees who are drug free. Many of the witnesses 
suggested that the government should set an example by drug 
testing and treating its employees. When the Navy began to drug 
test its sailors, it found that more than a third used drugs. 
After drug testing was implemented for a short period, drug use 
decreased to about 2 percent.
    Obviously, there are constitutional restrictions related to 
drug testing government employees as opposed to employees 
working in the private sector. To solve this problem, several 
witnesses testified to the efficacy of drug testing hair or 
conducting ocular screening, much less intrusive searches under 
the fourth amendment. According to the witnesses who testified 
about these lesser intrusions, hair samples can be tested up to 
90 days after drug use, whereas urine can only be tested for 
drugs a couple of days after use, and ocular screening has been 
endorsed by the American Civil Liberties Union. Virtually all 
witnesses concluded and testified that the treatment component 
was impotent without testing, and that drug testing must be an 
integral part of every treatment dollar spent by the 
government.
    The taxpayers of the United States pay in excess of $3 
billion for drug treatment. Unfortunately, it is very difficult 
to figure out how this money is being spent, let alone whether 
the money is being spent efficaciously. On July 22, 1998 the 
subcommittee held a hearing ``Drug Treatment Programs and the 
Criminal Justice System: Making Treatment Work'' in order to 
determine these issues. Witnesses at this hearing included Dr. 
Donald Vereen, Deputy Director, Office of National Drug Control 
Policy; Dr. Marsha Lillie-Blanton; Associate Director, U.S. 
General Accounting Office; Dr. Sally Satel, psychiatrist, Oasis 
Clinic; Dr. Eric Wish, Director, Center for Substance Abuse 
Research; Raymond Soucek, president, Haymarket Center; Bryan 
Hill, president, American Jail Association; Arthur Pratt, 
president, Life Effectiveness Training; Dr. Douglas Lipton, 
senior research fellow, National Development and Research 
Institute; and Dr. Faye Taxman, associate research professor, 
University of Maryland.
    Initially, the subcommittee heard testimony from Dr. Vereen 
and Dr. Lillie-Blanton to determine how the money was being 
spent. Neither could explain where the money was going in 
anything but the most general way, but both maintained that 
treatment ``works.'' Support for their position is based on a 
series of studies which claim extraordinary results. As was 
pointed out by some congressmen on the committee during 
questioning, all of these studies are flawed in that they 
failed to include the facts that most patients drop out of the 
programs, most cannot be located later, most are self-reporting 
their own drug use and criminality, and most refuse to take a 
drug test to support their self-reported abstinence. Finally, 
exacerbating otherwise skewed studies is the important fact 
that most treatment specialists consider that the treatment is 
successful when an addict uses drugs less than he/she did 
before. When these variables are factored in, probably less 
than 10 percent can be characterized as non-using addicts 1 
year after treatment.
    All witnesses testified to the importance of drug testing 
in the determination of success. One witness testified to the 
success of the Vietnam Veterans who were addicted to heroin in 
overcoming their addictions. Virtually all veterans who 
returned to the United States who were addicted were no longer 
dependent on drugs 1 year after their return. This tends to 
show, not only that addiction is not a disease but also, that 
environment and a change thereof might play an important role 
in overcoming addiction. Further, a panel of witnesses 
testified that treatment should be an integral part of the 
incarceration process for those inmates who desire it. 
Presently there is little opportunity for those incarcerated to 
get treatment. Many of those in prison have a drug problem. The 
prison and jail system should be a perfect setting for 
successful treatment, but it has not proven itself to be so to 
any degree in the past.
    The primary conclusions of the witnesses about success, in 
addition to the importance of drug testing, creating a new 
environment for the addict and treating the prisoners is that 
drug courts work (but could work better). For most addicts it 
is very important that the government set up a system that 
provides very powerful ``carrots'' and very powerful ``sticks'' 
in order for treatment to succeed--the drug courts could 
provide the ``carrots'' and ``sticks'' necessary to have an 
impact on the drug problem.
    On March 10, 1997, the subcommittee held a hearing 
entitled, ``Coast Guard Drug Interdiction Efforts in the 
Transit Zone.'' The purpose of this hearing was to examine the 
national security threat posed by the explosion of maritime 
drug trafficking in the transit zone, and better understand 
efforts by the U.S. Coast Guard to combat it. Of particular 
interest were: (1) the nature of drug trafficking activities in 
the transit zone, especially the Eastern Caribbean; (2) host 
nation impediments to an effective regional strategy; (3) the 
adequacy of the U.S. Coast Guard's capabilities to interdict 
drug trafficking; (4) the extent of Federal agency planning, 
coordination, and implementation of U.S. interdiction efforts; 
and (5) the needs of the ``front-line'' drug agents.
    At this hearing, testimony was received from Admiral Robert 
E. Kramek, President Clinton's Interdiction Coordinator and the 
Commandant of the U.S. Coast Guard, as well as several front-
line Coast Guard personnel, including Lieutenant Commander Mike 
Burns, a C-130 aircraft pilot; Lieutenant Commander Randy 
Forrester, an HU-25C aircraft pilot; Lieutenant Jim Carlson, 
Commanding Officer of the Coast Guard cutter Vashon; Petty 
Officer Mark Fitzmorris, a Boarding Officer on the Coast Guard 
cutter Tampa. Finally, the subcommittee heard testimony from 
Admiral Paul A. Yost, president of the James Madison Memorial 
Fellowship Foundation, and former Coast Guard Commandant, on 
how the Coast Guard effectively shut down the Caribbean to drug 
traffickers in the late 1980's.
    The subcommittee found that interdiction is vital. As 
stated by Admiral Kramek, ``When the correct resources are 
applied, as the Coast Guard has recently demonstrated during 
Operation Frontier Shield, we get a lot of bang for our buck''. 
Operation Frontier Shield was a ``surge operation'' implemented 
on October 1, 1996, was designed to deny smuggling routes into 
Puerto Rico and the U.S. Virgin Islands. Using available 
intelligence, this concentrated effort resulted in the 
confiscation of almost 14,000 pounds of cocaine. Another 17,000 
pounds were jettisoned by smugglers during the first quarter of 
fiscal year 1997. Admiral Kramek testified to the importance of 
bi-lateral maritime agreements and how essential close 
cooperation is to their success. He noted that, currently, we 
have no such agreement with Mexico.
    The front-line Coast Guard Officers explained firsthand how 
intelligence, monitoring, detection, and ``end-game'' are 
linked for effective counterdrug operations; one link missing 
is failure. The importance of adequate resources for effective 
counterdrug operations was identified, including aircraft, 
patrol boats, DOD vessels, infrared and aperture radars, 
intercept radars, communications equipment, and other 
technology.
    Admiral Yost testified that, during his tenure as 
Commandant, the Coast Guard had more forces dedicated to drug 
interdiction (in 1990) than they have presently in 1997. He 
stated: ``I think that if you add assets to [the Drug War] you 
are going to reduce the amount of drugs coming across the 
Caribbean''. Subcommittee Chairman Hastert noted that our 
national strategy isn't a war anymore, but that the 
administration prefers to call it a cancer. He added, ``When 
something is a cancer, you don't usually win that. A war you 
can win. You have to put your resources out there and make sure 
you do win it''. A dominant theme was the cost-effectiveness of 
added resources for interdiction.
    On September 15, 1997, the subcommittee held a hearing 
entitled, ``Needle Exchange, Legalization, and the Failure of 
Swiss Heroin Experiments.'' The purpose of the hearing was to 
examine the current needle exchange programs in the United 
States, Europe, and in British Colombia which began as a way to 
deter the spread of HIV among intravenous drug users. Since the 
implementation of this program, however, in Europe and here in 
the United States, this initial goal has proven to be out of 
reach. Moreover, the programs appear to be genuinely harmful in 
most, if not all, locations described.
    Testimony was received from Ernst Aeschbach, M.D., vice 
president, Youth Without Drugs; Dr. Matthias Erne, expert on 
Switzerland Drug Policy; Mr. Robert Maginnis, senior policy 
advisor, Family Research Council; Ambassador David Jordan, 
former Ambassador to Peru, and professor, University of 
Virginia; Ms. Nancy Sosman, Coalition for a Better Community; 
and Dr. Peter Beilenson, commissioner, Department of Health, 
Baltimore City, MD.
    The subcommittee found that initiatives in other nations, 
which began similarly to programs in the United States, have 
proved to be highly destructive. They did not reduce the 
transmission of AIDS or HIV; in fact, in the Vancouver and 
Montreal studies, the incidence of AIDS transmission actually 
rose with the onset of needle giveaways. The programs were 
``moral compromises'' that provided drug paraphernalia to drug 
addicts for shooting an illegal drug into their veins. This is 
clearly the wrong message to send to America's children. The 
subcommittee heard testimony of a needle exchange program in 
Baltimore which may have had adequate ``exchange'' controls, 
but this program is not the norm and is also self-selecting; 
Baltimore virtually leads the Nation, today, in heroin 
addiction. Nancy Sosman testified that she was able to obtain 
needles, paraphernalia, and instructions on how to ``shoot up'' 
without providing any needles to ``exchange'' at the New York 
City program.
    Several hearings were held to highlight counterdrug efforts 
fought on foreign soil since these efforts are vital to keeping 
drugs out of our country. The United States has spent billions 
of dollars on international drug control and interdiction 
efforts but illegal drugs still flow into this country. A major 
factor is that international drug-trafficking organizations 
have become sophisticated, multibillion-dollar industries 
capable of changing tactics to elude new U.S. drug control 
efforts and corrupting the institutions of drug-producing and 
transit countries. U.S. efforts have also been hampered by 
competing foreign policy objectives, inconsistent funding for 
U.S. international drug control plans, and a lack of ways to 
measure the success of counternarcotics efforts.
    On March 12, 1998, the subcommittee held a hearing 
highlighting the efforts of the Departments of State, Defense 
and Justice in the counterdrug effort entitled, ``Oversight of 
U.S. Regional Counterdrug Efforts.'' Testimony was received by 
General Charles E. Wilhelm, Commander in Chief, U.S. Southern 
Command; Admiral Robert E. Kramek, Commandant, U.S. Coast 
Guard; Donnie Marshall, Deputy Administrator, Drug Enforcement 
Administration. In addition the U.S. General Accounting Office 
submitted written testimony for the record.
    Two areas of focus at this hearing were the loss of assets 
and funding for interdiction operations during the mid-1990's 
and the need for an influx of new assets. At this hearing 
Admiral Kramek testified that ``[the Coast Guard] now has 
approximately two-thirds of the resources, and about 50 percent 
of the shipdays, and less than 50 percent of the flight hours 
available than [the Coast Guard] had back in 1991-1992, 
entering the 1993 timeframe.'' Kramek went on to state that the 
``percentage of the drug budget [for] interdiction today is 
approximately 11 percent,'' whereas in the early 1990's it was 
``closer to 17-18 percent.'' Furthermore, ``[w]e cannot 
presently cover the Eastern Caribbean.'' General Wilhelm 
testified that Operation Caper Focus [an exercise to interdict 
the estimated 220 metric tons of cocaine transiting through the 
Eastern Pacific] was halted before it had been completed due to 
budget constraints. General Wilhelm estimated that U.S. 
Government assets currently cover only about 15 percent of the 
transit zone of the Caribbean and Eastern Pacific. One 
additional issue that was addressed, and that the subcommittee 
continues to monitor closely, is the maintaining of a forward 
presence for U.S counterdrug forces once the move of U.S. 
forces from Panama is complete. Currently, the United States 
Government and the Government of Panama have not been able to 
reach an agreement on the establishment of a Multinational 
Counternarcotics Center at Howard Air Force Base, therefore, it 
may be necessary to forward deploy air assets at other bases in 
Latin America. Without an ``in-theater'' air operations base it 
is estimated that 75 percent of the effectiveness of an air 
asset would be burnt in transit.
    The hub of counterdrug efforts overseas is Colombia. 
Colombia is the world's leading producer and distributor of 
cocaine, and remains a major source of heroin consumed in the 
United States. Since fiscal year 1990, the United States has 
programmed approximately close to $1 billion in assistance and 
equipment to support Colombian police and military units 
involved in counternarcotics activities. On February 14, 1997, 
the subcommittee held a hearing entitled, ``Oversight of United 
States Counternarcotics Assistance to Colombia.'' Witnesses at 
this hearing included Robert S. Gelbard, Assistant Secretary, 
Bureau of International Narcotics and Law Enforcement Affairs, 
U.S. Department of State; General Harold Bedoya Pizarro, 
chairman, Joint Staff, Colombian Armed Forces; Major General 
Rosso Jose Serrano Cadena, director general, Colombian National 
Police; Honorable Morris Busby, Former Ambassador to Colombia 
and Former Ambassador-at-Large for Counter-Terrorism; and Major 
F. Andy Messing, Jr. USAR (Ret.), executive director, National 
Defense Council Foundation. At this hearing a number of issues 
were examined. These included: what levels of counternarcotics 
assistance is the Government of Colombia receiving from the 
United States Government; did President Clinton's decision to 
decertify Colombia in 1996 have a significant detrimental 
effect on the levels of counternarcotics support Colombia 
received from the United States via the Department of State and 
Foreign Military Sales [FMS]; how involved are the Colombian 
guerrillas in narco-trafficking; what are the goals of the 
Colombian Government for 1997 in the war against illegal drug 
production, manufacturing and the organized narcotics 
traffickers; what support will be necessary from the United 
States to accomplish these goals; what are the constraints that 
the United States Government faces in Colombia; how close is 
Colombia to civil war with the narco-guerrillas and how many 
Colombian National Police and Military personnel have lost 
their lives in direct combat with the narco-traffickers; what 
should the United States do to assure the most effective 
counternarcotics effort in Colombia by the Colombian National 
Police and Colombian Military; and has the administration's 
decertification of Colombia caused delays in the delivery of 
vital counternarcotics aid? The overarching conclusion was that 
additional support for the Colombian National Police is 
imperative to permanently winning the United States drug war.
    On July 9, 1997, the subcommittee held a second hearing on 
counternarcotics activities relating to Colombia entitled, 
``International Drug Control Policy: Colombia.'' Witnesses 
included Myles Frechette, Ambassador, United States Embassy, 
Bogota, Colombia; Jeffrey Davidow, Assistant Secretary of 
State, Bureau of Inter-American Affairs, Department of State; 
Robert Newberry, Principal Director, Drug Enforcement Affairs, 
Department of Defense; Donnie Marshall, Chief of Operations, 
Drug Enforcement Administration; Jane E. Becker, Acting 
Assistant Secretary, Bureau of International Narcotics and Law 
Enforcement Affairs, Department of State; Henry L. Hinton, Jr., 
Assistant Comptroller General, United States General Accounting 
Office; and Jim Thessin, Deputy Legal Advisor, Office of Legal 
Advisor, Department of State. At this hearing an examination of 
the status of the promised 614 waiver for Colombia; the status 
of the placement of fiscal year 1997 appropriated DEA agents 
for Colombia; the delay in the production of documents, 
requested by General Accounting Office, for an examination of 
United States and Colombian efforts to combat drug trafficking 
activities; and the proposal by the Department of Defense, for 
expanded authority to provide enhanced interdiction 
capabilities of the counterdrug forces in Colombia were 
discussed. The hearing was characterized by a sense of enormous 
disappointment with the United States State Department and 
United States Embassy in Colombia both on policy decisions and 
management issues.
    According to estimates by the Department of State's Bureau 
for International Narcotics and Law Enforcement Affairs [INL], 
Mexico is a major transit point for cocaine entering the United 
States from South America, and a major source country for 
heroin, methamphetamine, and marijuana. Today, at least 400 
tons of cocaine enter the United States annually, 70 percent 
across the Mexico-United States border; and 150 tons of 
methamphetamine are now produced in Mexico. Cross-border 
shipments of these drugs have increased markedly in the past 
several years.
    Close economic and political ties, in addition to the 2,000 
mile border, necessitate that there be a close relationship 
between the United States and Mexico in the ``war on drugs.'' 
Moreover, the fact that as much as 70 percent of the drugs 
trafficked into the United States comes through Mexico, and 
that the United States is the main destination for the drugs 
accentuates this necessity. Both Mexico and the United States 
agree that there can be no progress at halting this flow 
without attention and cooperation from each party. Accordingly, 
high ranking officials from both countries meet regularly 
(known as the High Level Contact Group) to discuss what can be 
done to improve United States-Mexico cooperation. This High 
Level Contact Group [HLCG] has a number of working groups that 
focus on specific problems between the United States and 
Mexico. The HLCG has moved forward, as documented in the 
publication of the United States/Mexico Bi-National Drug Threat 
Assessment in May 1997, and the United States/Mexico Bi-
National Drug Strategy, released in February 1998. The group is 
now focusing on what could be the hardest part yet, in setting 
benchmarks to measure progress on the strategy. Without these 
benchmarks it is difficult to judge the potential effectiveness 
of these agreements. However, it is worth noting that a concise 
and agreed list of problems, including some difficult areas 
such as corruption, weapons, and extradition of nationals, is a 
significant indicator of how seriously Mexico views these 
issues. The current strategy does not provide clear benchmarks 
and it is uncertain when such standards will be developed and 
agreed to.
    Despite the fact that Mexico has been annually certified as 
``fully cooperating'' in counter narcotics programs, there is 
still doubt as to whether this is a reflection of Mexican 
potential or actual performance. Members of both the House and 
the Senate introduced resolutions to overturn the President's 
decision in 1997 and 1998.
    The flow of illegal narcotics from Mexico to the United 
States is growing. Cocaine is flown successfully from Colombia, 
through Mexico, and into the United States. Methamphetamine 
precursor chemicals and increasingly the finished product as 
well, have been smuggled in greater and greater quantities into 
the West and Midwest of the United States. Mexico has mounted a 
large and continuing eradication effort. These have produced 
steady declines in the harvestable crops of marijuana and opium 
grown in Mexico. Methamphetamine production, however, has 
expanded. In addition, major criminal gangs, such as the 
Amezcua Contreras, Arellano-Felix, Amado Carrillo-Fuentes, 
Caro-Quintero, and Gulf Cartels are increasing in power. 
Moreover, the death of Amado Carrillo-Fuentes in 1997 has 
created a power struggle both within the organization and 
between other organizations to establish control over his 
organization. A reported alliance between the Arellano-Felix 
and Caro-Quintero organizations (``the Federation'') promises 
to enhance trafficking ability across the border.
    The subcommittee conducted two hearings on the issue of 
United States-Mexico counterdrug efforts. On February 25, 1997, 
the subcommittee held a hearing entitled ``Counternarcotics 
Efforts in Mexico and Along the Southwest Border.'' Witnesses 
at this hearing included Congressman Henry Bonilla (R-TX); 
Thomas A. Constantine, Administrator, Drug Enforcement 
Administration; Robert S. Gelbard, Assistant Secretary, Bureau 
of International Narcotics and Law Enforcement Affairs, 
Department of State; Mary Lee Warren, Deputy Assistant Attorney 
General, Department of Justice; Douglas M. Kruhm, Assistant 
Commissioner, U.S. Border Patrol; and Tony Castaneda, Chief of 
Police, Eagle Pass, TX. These witnesses testified to the fact 
that the growing influx of narcotics along the U.S. 
Southwestern border poses a direct, palpable, insidious and 
deepening national security threat.
    On March 18, 1998 the subcommittee held a joint hearing 
with the U.S. Senate Caucus on International Narcotics Control 
entitled ``Oversight of United States/Mexico Drug 
Cooperation.'' Witnesses at this hearing included Ben Nelson, 
Director, International Relations and Trade Issues, National 
Security and International Affairs Division, U.S. General 
Accounting Office; Ambassador Jeffrey Davidow, Assistant 
Secretary of State, Bureau of Inter-American Affairs, 
Department of State; Donnie Marshall, Acting Deputy 
Administrator, Drug Enforcement Administration; Rand Beers, 
Acting Assistant Secretary, Bureau of International Narcotics 
and Law Enforcement Affairs, Department of State; Mary Lee 
Warren, Deputy Assistant Attorney General, Criminal Division, 
Department of Justice.
    Drug trafficking through the Caribbean region and into 
Florida is a major drug threat to the United States. According 
to United States law enforcement officials, up to 30-40 percent 
of the cocaine entering the United States may enter through the 
Caribbean section of the transit zone. During the past several 
years, traffickers in the Caribbean have shifted their 
operations from primarily air-related activities to maritime 
activities. In addition, traffickers are using improved 
technologies to counter efforts by U.S. agencies to identify 
and monitor their activities. In an effort to better understand 
the dynamic trafficking patterns of the Caribbean, the 
subcommittee on July 17, 1997, held a hearing entitled, ``Drug 
Interdiction in Florida and the Caribbean.'' Witnesses at this 
hearing included Newt Gingrich, Speaker, U.S. House of 
Representatives; Samuel Banks, Deputy Commissioner, U.S. 
Customs Service; James Milford, Deputy Administrator, Drug 
Enforcement Administration; Rear Admiral Norman Saunders, 
Commander, Seventh Coast Guard District, U.S. Coast Guard; 
Peter Girard, group supervisor for Cargo Theft, Miami Seaport, 
Office of Investigations, U.S. Customs Service; Mike Sinclair, 
Chief of Miami Seaport Cargo Inspection Team, U.S. Customs 
Service; James H. Wallwork, commissioner, Waterfront Commission 
of New York Harbor; Edward V. Badolato, chairman, National 
Cargo Security Council; and Art Coffey, international vice 
president, International Longshoremen's Association. This 
hearing focused on: 1) the nature and threat of drug-
trafficking activities in the transit zone with particular 
emphasis on south Florida and the northern Caribbean; 2) the 
capabilities of United States agencies to interdict illegal 
drugs in the Caribbean and in Florida's ports of entry; 3) the 
extent of Federal agency planning, coordination, and 
implementation of United States interdiction efforts in south 
Florida and the northern Caribbean; and 4) and the 
effectiveness of United States enforcement efforts in Florida's 
ports of entry. The importance of increased effort in this 
region was plainly corroborated.
    Field Hearings.--In addition to the 16 hearings held in 
Washington, members of the subcommittee traveled to several 
regions of the country to examine counternarcotics efforts by 
communities, State, and local law enforcement agencies, as well 
as cooperation by those groups with Federal counternarcotics 
agencies and vice versa. Survey after survey shows that drug 
abuse, especially among teens, is an increasing problem in the 
United States. Since 1991, teenage use of marijuana, inhalants, 
cocaine, methamphetamine, LSD, heroin, and other drugs has 
increased dramatically. This is a sudden reversal of successful 
antidrug policies in the 1980's, lowering cocaine use, for 
example, 70 percent in 4 years and reinforcing strong ``no 
use'' attitudes. In 1993, the trends began a dramatic reversal. 
Over the past several years, many communities--both rural and 
urban--have reported increasing difficulties in dealing with 
the effects of escalating drug use and drug-related crime. 
Local law enforcement authorities have been particularly 
frustrated as their communities have been subjected to an 
increase in violent crime and drug use. The subcommittee heard 
testimony at these field hearings highlighting the cooperative 
efforts of Federal, State, and local law enforcement officials 
who continue to take positive steps toward winning the war on 
drugs. Also apparent was the rising threat posed by traffickers 
employing more sophisticated technology. These field hearings 
highlighted two important conclusions. First, the most 
successful way to combat drugs is for entire communities to 
become engaged in tackling the issue, working in partnership. 
This includes families, schools, law enforcement, business, 
church, synagogue, and other community leaders. Second, 
interdicting drugs before they cross our border, either at 
their source or in transit, is essential to combating drug 
abuse and can be highly effective when properly funded. 
Effective drug interdiction, the most recent and best science 
indicates, raises drug prices, reduces drug availability and 
lowers drug purity. Accordingly, source country and transit 
zone programs can, if well managed, be highly cost-effective.
    On July 7, 1997, the subcommittee held two hearings in 
Illinois to examine the threat of drugs and gangs to kids in 
rural communities. In DeKalb, at the hearing entitled, ``Report 
From the Frontline: The Drug Threat to Teens in Our Rural 
Communities,'' testimony was received from the following 
witnesses: Ms. Pam Maakestad, whose son was a victim of drug-
related violence; ``Connie''--a teenager who has never used 
drugs; ``Jerome''--a teenager who formerly organized drug 
dealers; ``Derrick''--a former gang member; Mr. Mike Coghlan, 
former States attorney; Kris Povlson, project coordinator of 
the DeKalb County Partnership for a Substance Abuse Free 
Environment; Mr. John Nakonechny of DeKalb County Schools; Mr. 
Michael Haines, a professor at Northern Illinois University; 
Mr. Tim Johnson, DeKalb County States attorney; Sheriff Richard 
Randall of Kendall County; and Mr. Bob Miller, representing the 
Just Say No To Drugs Parade in Lee County.
    In Algonquin, at ``Report From the Frontline: Drugs and 
Gangs in McHenry County,'' testimony was taken from the 
following witnesses: Mr. Jerry Skogmo, the program director of 
the Renz Addiction Counseling Center; Mr. Carlos Chavez, 
coordinator of Youth Prevention Programs; Mr. Les Lunsmann and 
Mr. Bill LeFew, representing Communities Against Gangs; Mr. 
Gary Pack, McHenry County State's attorney; Mr. William Morley, 
Assistant Special Agent in Charge, Drug Enforcement 
Administration Chicago Field Office; and Sheriff Nygren of the 
McHenry County Sheriff's Department.
    When most people think of drugs and teens, they tend to 
think of impoverished urban areas crowded with crack dealers 
and gangs. Rural areas and small towns, such as DeKalb and 
Kendall, are generally not thought of as places where drug 
abuse is a problem. Unfortunately, this image no longer 
accurately reflects the true nature of the drug scourge in 
America. The victim's of this drug war painted a picture of the 
true status of drug use in this area. They related stories of 
drive-by shootings, kids as young as 11- and 12-years-old using 
heroin, and young people afraid to stand up to the gangs that 
terrorize their daily routine. This testimony was not meant to 
discourage the citizens of DeKalb and Algonquin, it was 
intended to send a message to Congress that the deadly epidemic 
is continuing and must be handled like the war on drugs it has 
become.
    Our public safety witnesses highlighted the role of our law 
enforcement officers as they face increasingly intense battles 
on the streets. With the rapid emergence of drugs such as 
heroin and methamphetamine which have been found to have purity 
levels high enough to kill a first-time user, the struggles 
facing our Federal, State, and local law enforcement officers 
multiply and increase in danger each day they report to work.
    Testimony from prevention groups and community coalition 
representatives described successful efforts being taken by 
citizens and members of the community to stop our kids from 
ever turning to drugs. As the burden on our law enforcement 
community continues to grow, the need for citizens in each and 
every community to take responsibility and play an important 
role in the battle against drugs is vital. The witnesses at 
both hearings have demonstrated that commitment and 
perseverance are essential in successfully keeping kids off 
drugs.
    On July 21, 1997, the subcommittee also held a field 
hearing at West Mesquite High School in Mesquite, TX entitled, 
``Report From the Frontline: The Status of Dallas' Fight 
Against Drugs.'' Witnesses included Paul Coggins, U.S. 
attorney, northern District of Texas; Donnie R. Marshall, Chief 
of Operations, Drug Enforcement Administration; Julio F. 
Mercado, Special Agent in Charge, Dallas Divisional Office, 
Drug Enforcement Administration; and Ken Yarbrough, chief of 
police, Richardson Police Department. These witnesses confirmed 
that cocaine continues to be readily available throughout the 
Dallas area; heroin remains available at all levels throughout 
northeast Texas; methamphetamine and amphetamine are trafficked 
in and around Dallas; and marijuana is encountered regularly by 
law enforcement authorities. The link between marijuana and the 
other drugs was made painfully clear. Additionally, the 
subcommittee visited a former crack house that was being 
transformed into usable living space by local business people, 
with the active support of the law enforcement community.
    On September 22, 1997, the subcommittee held a hearing in 
Aurora, IL entitled, ``Report From the Frontline: From South 
America to South Aurora.'' This field hearing highlighted the 
effect our counterdrug efforts in the source countries in South 
America have on the communities across the United States, like 
Aurora, IL. The subcommittee received testimony from the 
following witnesses: the Honorable Juan Carlos Esguerra, 
Colombian Ambassador to the United States; Lt. Col. Francis 
Kinney, Director of Strategic Planning for the Office of 
National Drug Control Policy; Mr. Juventino Cano, president of 
the Aurora Hispanic Chamber of Commerce; Mr. Bob Barwa, 
principal of East Aurora High School; Mr. Harold Osby, a former 
gang member; Mr. Mike Murphy, executive director of the Prayer 
Coalition for Reconciliation; Ms. Judy Kraemer, president of 
Illinois Drug Education Alliance; Sgt. Roy Garcia, of the North 
Central Narcotics Task Force, Illinois State Police; Chief 
Larry Langston of the Aurora Police Department; and Mr. Joseph 
Birkett, DuPage County State's attorney.
    This hearing focused on the nexus between drug cultivation 
in South America and how these deadly narcotics come across our 
borders and into our neighborhoods. The Colombian Ambassador 
discussed the country's persistent and courageous efforts to 
reduce drug cultivation and trafficking of the dangerous 
substances. State and local law enforcement witnesses testified 
to the various enforcement and prosecution issues inherent in 
the drug trade, as well as it's impact on drug-related criminal 
activity. Civic leaders described to our Members the various 
successful programs underway within the community to halt the 
spread of drug use, trafficking, and gang-related violence. All 
witnesses provided unique and invaluable information for the 
Members to bring back to Washington to assist in evaluating the 
current drug policy, as well as creating new legislative 
initiatives.
    On Monday, October 20, 1997, the subcommittee held a field 
hearing at Freehold Borough High School in Freehold, NJ. At 
this hearing the subcommittee heard testimony about rising drug 
use and violence in the community of Central New Jersey. 
Witnesses at this field hearing included Greg Williams, Chief 
of Domestic Operations, Drug Enforcement Administration; John 
Coleman, Special Agent in Charge, Drug Enforcement 
Administration; John Kaye, Monmouth County prosecutor; Michael 
Paquette, chief of police, South Brunswick Police; Captain 
Howard Butt, Narcotics Division, New Jersey State Police; 
Elliot White, director, Local Advisory Committee on Alcohol and 
Drug Abuse; Mary Pat Angelini, executive director, Substances 
Abuse Resources; Ernestine Winfrey, executive director, Mercer 
Council on Alcoholism & Drug Addiction; and Scott Sechrist, 
director, Good News Home for Women. In addition, local high 
school students contributed testimony regarding the current 
state of drug trafficking and abuse in their schools. Witnesses 
also testified to the effects drug use and availability had on 
their community and what is being done to effectively curb the 
spread. The community of Central New Jersey is proof that the 
social and economic problems caused by drug trafficking and use 
can occur anywhere, and can also be prevented when a community 
comes together to prohibit the spread of drug use by their 
young people.

2. Immigration and Naturalization Service Program Citizenship USA

    a. Summary.--This investigation of the Immigration and 
Naturalization Service's [INS] Citizenship USA Program [CUSA], 
initiated in June 1996, has uncovered a pervasive and alarming 
pattern of election-year fraud and abuses within the INS' 
naturalization process, the process by which resident aliens 
become American citizens. The subcommittee held three public 
hearings on the program, the second of which featured INS line-
agent whistleblowers.
    This politically-motivated program was evidently intended 
to naturalize 1.3 million people during fiscal 1996, concluding 
with the close of voter registrations in September 1996, just 
prior to the 1996 elections. The program eventually naturalized 
1.1 million people. This number represents a massive increase 
over previous years; from 1990 to 1994, INS naturalized about 
300,000 new citizens per year.
    Throughout the course of this program, legal and procedural 
requirements governing naturalization were consciously 
weakened, discarded or ignored. Immigration law requires each 
applicant for citizenship to have ``good moral character.'' 
This means that the applicant may not become a U.S. citizen if 
he has committed certain crimes, or lied to the INS about his 
criminal record. To enforce these requirements, the INS 
requires each applicant to disclose any criminal history on the 
application for citizenship, under penalties of perjury. More 
importantly, the INS takes fingerprints of each applicant and 
is required to submit them to the FBI. If a candidate's 
fingerprints match a criminal record on file with the FBI, the 
FBI sends a copy of the criminal record, or ``rap sheet,'' back 
to the INS. Because the rap sheet contains criminal charges, 
but generally does not report dispositions, the INS must then 
investigate the charges to discover resulting convictions and 
sentences. At that point, the INS examiner is able to match an 
application form with the applicant's complete criminal 
history. The examiner can then determine whether citizenship 
should be denied based on either (A) the seriousness of the 
criminal record, or (B) the applicant's failure to report it on 
his application.
    Historically, the INS' criminal background check process 
has suffered from a number of ingrained problems. They were 
described in reports issued in 1994 by both the Department of 
Justice Office of the Inspector General [DOJIG] and by the U.S. 
General Accounting Office [GAO]. The DOJIG and GAO reports 
pointed out that the INS' procedures left open the possibility 
that, in some cases, individuals with criminal records could be 
improperly naturalized. Both reports made strong 
recommendations to correct the serious flaws appearing in the 
process. However, for reasons that remain unexplained, the INS 
did not adopt the recommendations made by either DOJIG or GAO. 
Moreover, in many cases, the INS failed to submit fingerprint 
cards to the FBI, or submitted defective fingerprint cards 
which were rejected by the FBI. In other cases, the INS 
submitted fingerprint cards but failed to await the return of 
the a rap sheet before granting citizenship. Instead, under the 
enormous, knowingly generated load of the Citizenship USA 
program, the system broke down completely.
    Compounding the crisis, for many months, these problems 
were deliberately concealed by the INS. Beginning in September 
1996, the subcommittee requested detailed information and 
documents on the issue of criminal background checks. The INS 
refused to provide any information, and then went so far as to 
openly defy two congressional subpoenas. In addition, public 
statements made by senior INS officials and the INS press 
office were repeatedly misleading, even after receiving 
incontrovertible corrections from congressional investigators. 
For example, Alexander Aleinikoff, then the INS Executive 
Associate Commissioner for Programs (and who has left the 
agency), told National Public Radio in September that the 
problem was restricted to ``. . . perhaps 40 or 50 cases 
nationwide.'' The truth was somewhat different. Louis Crocetti, 
the INS' Associate Commissioner for Examinations, stated under 
oath during a congressional hearing last September that the 
number ``. . . was 60 for the entire naturalization program.'' 
To date, the INS still has not admitted the true scope and 
nature of its problems with criminal background checks, which--
at a minimum--involves tens of thousands of applications.
    Unfortunately, INS' disregard for its own procedures and 
safeguards has had predictable and serious consequences. On May 
12, 1997, DOJ, the parent agency over both the INS and FBI, 
reported to the subcommittee that out of 1,049,867 persons 
naturalized, 81,492 were identified as having FBI records which 
include INS administrative actions, dismissals, misdemeanor and 
felony arrests and convictions for serious and violent crimes 
such as drug trafficking, child molestation, assault, robbery, 
burglary, rape and murder; 124,740 persons were further 
identified as not having had definitive criminal history checks 
conducted because their fingerprint cards were rejected by the 
FBI because of poor quality prints; 55,750 persons were 
additionally identified for whom it could not and cannot be 
determined whether or not FBI record checks were ever 
conducted. Of the 81,492 persons identified as having FBI 
records, at least 5,500 were identified as convicted felons 
with disqualifying criminal histories. The DOJ and INS are 
currently trying to denaturalize these people, and determine if 
there are additional criminals who were granted citizenship, 
and if so, how many.
    DOJ's review process is still underway, and it is not known 
exactly how many of the quarter million cases under review 
should have been denied citizenship, based on criminal 
convictions and misrepresentation of criminal records. In many 
cases, especially the 180,000 who became citizens without 
having proper background checks, the full truth may never be 
known. In addition, fully remedying the problem may prove 
difficult or, in many cases, impossible, based on the automatic 
attachment of due process rights following naturalization, 
regardless of whether the naturalization in question was 
legitimate. The legal and logistical obstacles to removal of 
citizenship are mammoth, and the INS has historically 
denaturalized only 10 or 15 people per year. If thousands, much 
less tens of thousands, of people were improperly granted 
citizenship, the problem may never be fully remedied.
    One disconcerting aspect of the CUSA acceleration and 
waiver of critical regulations is the documented involvement of 
the White House, including intense involvement by the Vice 
President and several of his senior staff in the election-year 
acceleration.
    b. Benefits.--The subcommittee's investigation and hearings 
have brought the full scope and nature of CUSA fraud, abuse and 
recklessness into the public eye, as media reports from coast 
to coast have described criminal activities and abuses of power 
wrought by this politically-motivated and undeniably errant 
program.
    The INS has belatedly enacted new regulations which allow 
the agency to conduct administrative denaturalization 
proceedings, and to theoretically permit denaturalization of 
people who have been erroneously naturalized. The INS has had 
statutory authority to enact such regulations since 1990, but 
has heretofore neglected to promulgate any such regulations. 
Responding to our congressional investigation, this is a small 
step in the right direction. These administrative proceedings 
will be substantially less time-consuming and burdensome than 
judicial denaturalization, which until now was the agency's 
only method of denaturalization. Unfortunately, for legal and 
logistical reasons, these new procedures are unlikely to be 
retroactively applied to the large number of people who were 
illegally and improperly naturalized under CUSA during 1996 or 
prior. This raises additional legal and national security 
concerns beyond the scope of this report.
    In addition, the DOJIG has undertaken its own investigation 
to which it is devoting considerable resources. At the request 
of the subcommittee and other congressional offices, GAO also 
conducted its own investigation. Specifically, they examined 
the findings and recommendations made by Peat Marwick in 
addition to reviewing new INS naturalization regulations and 
procedures.
    In sum, the INS, under intense pressure from Congress, the 
public, and the media, has taken incremental steps to reform 
its badly-damaged naturalization process. However, this is only 
a small beginning, and much remains to be done by the INS, DOJ, 
and the FBI. Continued congressional oversight is necessary to 
ensure the success of reform efforts.
    c. Hearings.--The subcommittee held its third hearing on 
mismanagement of the naturalization process on March 5, 1997. 
The hearing, held jointly with the Subcommittee on Immigration 
of the Committee on the Judiciary, entitled, ``Improper 
Granting of U.S. Citizenship Without Conducting Criminal 
Background Checks,'' focused on the breakdown of safeguards at 
INS that led to the naturalization of at least 5,500 convicted 
criminals.
    Mr. Stephen R. Colgate, Assistant Attorney General for 
Administration, testified on behalf of DOJ. He was accompanied 
by Ms. Dawn Johnsen, Acting Assistant Attorney General for the 
Office of Legal Counsel, Department of Justice, and Mr. Gary 
Ahrens, KPMG Peat Marwick LLP. Mr. Colgate discussed the 
measures that DOJ was taking both to discover the exact 
magnitude of the problem and reinvent the naturalization 
process so that such abuses did not happen again. Mr. Ahrens 
discussed Peat Marwick's role in the naturalization review. Dr. 
Laurie E. Ekstrand, Associate Director for Administration of 
Justice Issues, General Accounting Office, discussed GAO's role 
in the review, which was to review Peat Marwick's methodology 
and implementation strategy.
    The Honorable Doris Meissner, Commissioner, Mr. David 
Rosenberg, Citizenship USA Program Director, Mr. Louis D. 
Crocetti, Associate Commissioner for Examinations, and Mr. 
David Martin, general counsel, testified for the Immigration 
and Naturalization Service. Mrs. Meissner denied any political 
influence was exerted on the program by the Clinton 
administration. She also discussed the new safeguards that INS 
instituted on November 29, 1996, that she believed would 
prevent such lapses in the future. She did not explain the 
apparent connections of the CUSA program to the 1996 Federal 
elections; nor did she address, at all, the failure to act on 
either past GAO or past DOJIG criticisms of and recommendations 
to INS. She offered no suggestions on how those responsible 
within INS should be held accountable, or how to address the 
legal and security concerns raised by the INS' abdication of 
responsibility in 1996. She explained that the Citizenship USA 
program had been implemented to address the surge in 
naturalization applications in the last few years while 
improving the entire process; she could not, however, explain 
why she had also, consonant with White House memoranda, 
simultaneously ramped up recruiting of applications in 1996. 
While she admitted that mistakes were made, she believes that 
new policies and procedures that INS recently implemented will 
preclude such errors in the future. On balance, the 
Commissioner appeared not to grasp the enormity of INS' 
misfeasance, and potential malfeasance, in 1996.

3. Department of Defense Inventory Management.

    a. Summary.--This investigation is exploring the entire 
universe of acquisition, storage, use and disposal of 
Department of Defense [DOD] supplies and repair parts, 
including everything from field rations and medical supplies to 
aircraft engines. The subcommittee's three policy goals were 
and are: (1) to identify more modern and efficient inventory 
management practices, which can simultaneously save taxpayer 
dollars and improve military readiness; (2) to insure that such 
practices, once identified, are fully implemented by DOD; and 
(3) to achieve substantial financial savings in inventory 
management, freeing up defense dollars for military 
procurement, research and development, combat training, and 
other war fighting necessities which have been under funded in 
recent years. By devoting consistent congressional attention to 
these issues, and by rendering assistance and applying pressure 
when necessary, the subcommittee hopes to assist DOD in 
formulating and executing a plan which will result in a 
substantially less expensive and more efficient system.
    Defense inventory management, for the last 6 years, has 
been identified by the U.S. General Accounting Office [GAO] as 
one of the 25 ``high-risk'' areas in the Federal Government. 
Defense inventory management was targeted as vulnerable to 
waste, fraud and abuse because of the enormous amounts of money 
spent on inventory and the inefficiencies which have long been 
rampant within the field.
    The Defense Logistics Agency [DLA] and the three service 
departments maintain extensive support and logistics 
infrastructure designed to supply our armed forces. 
Headquartered at Fort Belvoir, VA, DLA employs over 50,000 
military and civilian personnel worldwide and manages 
approximately 560 million cubic feet of storage space. DLA 
maintains a stockpile of millions of secondary inventory 
items--such as medical supplies, food, clothing and spare 
parts--worth an estimated $69.6 billion.
    The system continues to be based on ``just-in-case'' 
practices of overbuying and stockpiling excess inventory at 
many different locations and levels. This approach usually 
provides good availability of supplies and repair parts, but 
only by sacrificing efficiency and savings. However, modern 
methods of inventory management can provide both availability 
and efficiency, by making timely deliveries from centralized 
facilities. This has already been successfully demonstrated in 
certain areas of defense inventory management, such as medical 
supplies and food items.
    There are additional factors which aggravate the 
inefficiency of the inventory system. Cumbersome acquisition 
practices, which have begun to be reformed by Congress during 
the last two sessions, still contribute substantially to the 
problem. Furthermore, many of DOD's accounting systems are 
outdated and inefficient, which makes it difficult to identify 
exactly what inventory is in storage, or exactly how much money 
has been spent. This situation is further complicated by the 
fact that DLA, as well as the Army, the Air Force, and the 
Navy, all maintain their own logistics systems, which often do 
not share information in an efficient manner.
    As the military budget has decreased steadily, DOD's force 
structure and military readiness have suffered more than 
supporting infrastructure. At the same time that billions are 
wasted through inefficient inventory management and depot 
maintenance, there is less and less money for combat troops, 
combat training, military procurement, research and 
development.
    As part of the investigation, committee staff visited seven 
different military facilities, each of which added 
substantially to the committee's oversight investigation and 
plans for reform. On April 8-9, 1997, majority and minority 
staff from the committee, accompanied by personnel from the 
GAO, traveled to three different military facilities. The first 
stop was DLA headquarters at Fort Belvoir, VA, where the group 
was briefed by managers who provided an overview of DLA's 
current operations and plans for the future. The staff then 
traveled to Walter Reed Army Medical Center, in Washington, DC, 
to see DOD's innovative virtual prime vendor operations for the 
purchase of medical supplies. The group then traveled to the 
New Cumberland and Mechanicsburg supply depots in Susquehanna, 
PA. There are 90 warehouses at these two depots, each the size 
of approximately two or three football fields, and over $6 
billion worth of consumable and reparable parts are stored 
there. Compounding the acquisition of excess and unnecessary 
material is the enormous cost of continued storage for often 
obsolete or unnecessary inventory.
    On May 2, 1997, the staff and GAO personnel then traveled 
to Philadelphia to see the Defense Industrial Supply Center 
[DISC] and the Naval Inventory Control Point [NAVICP], where 
item managers determine the requirements for supplies, order 
new inventory, and give orders for storage and disposal. The 
DISC is responsible for hardware items--nuts, bolts, bearings, 
metal, electrical wiring, et cetera--and the NAVICP is 
primarily responsible for aircraft parts.
    From May 27 to May 30, 1997, the subcommittee staff 
traveled to the U.S. Army maintenance depot in Corpus Christi, 
TX, and the U.S. Air Force maintenance depot in Oklahoma City, 
OK. DLA storage and distribution facilities are collocated at 
these sites and support the depots. Helicopters and aircraft 
are upgraded and repaired at these facilities. The maintenance 
depots are major customers of the inventory system.
    b. Benefits.--Although there is much dispute about the 
complex issues involved in DOD inventory management, one thing 
is clear: substantial savings of hundreds of millions, if not 
billions, of dollars can be achieved from reform of the 
domestic defense infrastructure in general and defense 
inventory management in particular. However, the subcommittee 
does not suggest that money saved through improving the 
logistics system should be cut from the Defense budget.
    Rather, any savings that can be realized should be shifted 
toward procurement and modernization accounts that have been 
cut by more than 70 percent in real dollars as the Defense 
budget has been cut for 13 straight years. As the military 
budget has declined, the combat forces, or ``tooth,'' have 
undergone more severe reductions than the supporting 
infrastructure, or ``tail.'' Both DOD and Congress are 
committed to improving the ``tooth-to-tail'' ratio, and DOD 
recognizes that inventory management is one part of the 
``tail'' where significant savings may be realized. In 
comprehensive reform of support systems lies the opportunity to 
restore needed resources to the war fighters.
    In addition, even if DOD's budget was not continuing to 
decline, improving inventory management should still be a high 
priority. Good financial management and efficient utilization 
of resources are extremely important; reform of the system 
would be a laudable goal even if financial considerations did 
not now dictate it. Thus, saving billions of dollars through 
reform of inventory management is not only beneficial for the 
military but is compelled by our commitment to responsible 
fiscal management.
    DOD recognizes that it has to reform inventory management 
and is working with the subcommittee, GAO, and other 
congressional offices to resolve these long-standing problems. 
Serious and thoughtful reforms have been initiated by DOD over 
the last few years which should lead to substantial management 
improvements and cost-savings over the next several years. 
Nevertheless, this will be a long, difficult process which will 
certainly require vigorous congressional involvement to 
encourage DOD to continue to aggressively pursue reform.
    c. Hearings.--On March 20, 1997, the subcommittee held an 
introductory hearing on DOD inventory management practices and 
related issues entitled, ``Improving Defense Inventory 
Management.'' The hearing focused on general defense inventory 
management problems, measures undertaken by DOD to address the 
problems and the effectiveness of internal reforms, and the 
implications that extensive reform might have on DOD's budget, 
and ways that the committee, working in cooperation with DOD, 
GAO, and outside experts, can work together to address and 
solve inventory problems.
    Mr. James B. Emahiser, Assistant Deputy Under Secretary of 
Defense for Materiel and Distribution Management, and Mr. 
Jeffrey A. Jones, executive director for Logistics Management, 
Defense Logistics Agency, presented DOD's perspective of the 
problem and discussed the measures that have been, or are 
being, implemented to modernize the logistics system. While 
they strongly disagreed with many of GAO's definitions and 
conclusions, they acknowledged that DOD is currently holding 
billions of dollars' worth of excess inventory. They testified 
that the purchase value of current excess inventory is 
approximately $12 billion, which for accounting purposes they 
value at about $300 million. This inventory is sometimes 
difficult to properly dispose of, but DOD recognizes that 
disposing of excess inventory, and avoiding purchases of more 
excess inventory, will ``free up'' scarce resources. Although 
further inquiry will follow in 1998, these DOD witnesses denied 
that DOD is continuing to buy inventory in excess of current or 
foreseeable requirements.
    Both witnesses stated that DOD has proposed incremental 
changes to improve support functions and operate more like a 
private business, but appeared resistant to dramatic or 
sweeping changes. Commercial practices, the DOD witnesses 
argued, are not entirely feasible for the military and that the 
burden of supplying the military cannot be shifted to the 
private sector. They cautioned that excessive outsourcing or 
privatization of support functions could adversely affect 
national security.
    The second panel was composed of personnel from GAO. Mr. 
Henry L. Hinton, Jr., Assistant Comptroller General, Mr. 
Kenneth R. Knouse, Jr., Assistant Director, and Mr. Robert L. 
Repasky, Senior Evaluator, presented an overview of the defense 
inventory problem, on which GAO has been reporting for over 30 
years and on which it has issued over 100 reports. The panel 
addressed problems ranging from adopting commercial sector best 
practices to trimming budgets for secondary inventory items. 
GAO asserted that inventory oversight is essential, and there 
remain weak financial accountability measures and a tendency 
toward overstated requirements. Within DOD's vast supply 
system, the GAO estimates that roughly half of the $69.6 
billion of secondary inventory items that DLA stockpiles--$33.7 
billion worth of inventory--is excess to DOD war reserve or 
current operating requirements. This excess inventory results 
in hundreds of millions of dollars wasted on storage costs each 
year. In addition to the problem of excess inventory from past 
purchases, it is likely that DOD is continuing to purchase and 
store more inventory than is needed for military requirements, 
or than would be needed if DOD's inventory management and 
maintenance operations were run more efficiently.
    Even though GAO asserts that over half of DOD's current 
inventory is excess to current operating or wartime 
requirements, they decline to advocate massive disposal of 
excess stocks. While they assert support for adoption of modern 
business practices, they appear somewhat short on action. DOD 
acknowledged, however, that the enormous amount spent on 
purchasing secondary inventory--approximately $15 billion a 
year, more than NASA's entire budget--makes reform imperative.
    The third panel was composed of Dr. Jacques A. Gansler (now 
serving as Under Secretary of Defense for Acquisition and 
Technology), vice chairman, Defense Science Board, and Admiral 
Luther F. Schriefer (USN, Ret.), executive director, Business 
Executives for National Security. Both Dr. Gansler and Admiral 
Schriefer testified that ``billions of dollars'' could be saved 
through outsourcing and privatization of most domestic military 
``infrastructure'' functions. They asserted that moving 
commercial functions into the private sector would allow DOD to 
save money while putting greater focus on DOD's core mission--
preparing for and fighting wars.
    Dr. Gansler discussed the current imbalance in Defense 
spending, estimating that 55 percent of the Defense budget, or 
$140 billion a year, is spent on support and infrastructure. Of 
that, he testified that an estimated $60 billion is spent on 
logistics alone. He cited a November 1996 report by the Defense 
Science Board, entitled