SPEAKERS CONTENTS INSERTS
Page 1 TOP OF DOCTREASURY, POSTAL SERVICE, AND GENERAL GOVERNMENT APPROPRIATIONS FOR 1999
Thursday, March 19, 1998.
FEDERAL ELECTION COMMISSION
SCOTT THOMAS, VICE CHAIRMAN AND CHAIRMAN OF THE FINANCE COMMITTEE, FEDERAL ELECTION COMMISSION
LEE ANN ELLIOTT, COMMISSIONER AND VICE CHAIRMAN OF THE FINANCE COMMITTEE, FEDERAL ELECTION COMMISSION
Opening Statement of Chairman Kolbe
Mr. KOLBE [presiding]. The Subcommittee on Treasury, Postal Service, and General Government will come to order.
I apologize for the delay. Thank you for postponing it in order to accommodate my schedule, and we apologize for the delay here caused by votes. But, I think, we're probably good for a little while here.
So, we are pleased, this morning, to welcome the Federal Election Commission, Chairman Elliott, Vice Chairman and Commissioner Thomas, before our subcommittee today. I'm going to be very brief in my opening remarks because we are getting started late, and so we can get the questions quickly. And, I know that both Mr. Hoyer and I have a short timeframe here today because we have speaking obligations at noon.
Page 2 PREV PAGE TOP OF DOC
Commissioners, I appreciate the fact that the Federal Election Commission continues to be challenged, both by its resources and the workload that comes its way. There's no doubt about it, the workloads are up. The issues surrounding enforcement are becoming ever more complicated, and public scrutiny is becoming greater than ever.
For the upcoming Fiscal Year, the FEC's requesting $36.5 million, that's an increase of 15 percent over the current Fiscal Year. It also represents approximately the same increase in staffing that you're asking for.
I want to, first, commend you for the resources that you are allocating this year in your budget requestthe computer modernizationto keep that effort on track. As you know, from the comments I've made at past hearings, I believe these efforts are critical to your ability to meet the growing workloads, particularly in the areas of disclosure, as well as compliance. I'm not quite as optimistic about some of the rest of what I see in the budget request.
Despite the fact that you tell us that disclosure is one of the top priorities of the FEC, the budget doesn't reflect this. You request an increase of 34 FTEs and $2.4 million for the Office of General Counsel, all of which are dedicated, of course, to compliance. But, you're not requesting much of an increase, or any increase at all, for disclosure activities. As a percent of your total resources, 29 percent goes to compliance, only 20 percent goes to disclosure. It just doesn't seem consistent with the strategic plan, and I don't think it's consistent with what I believe American people need, and that is, first, to have information regarding committees and candidates and to make sure that we're getting that information in the most timely fashion.
Page 3 PREV PAGE TOP OF DOC
As it relates to the issue of compliance, my concern is that all of your energy seems to be dedicated to investigating possible campaign finance violations. I don't see, in the budget, initiatives that target prevention and deterrence of possible violationseducational ways in which we can keep it from happening in the first place. And, finally, as I review the performance plan, I don't see any true measures of compliance. They all seem focused on workloads and outputs. So, you'll see in the questions I'm going to have about the current compliance rate, not only what the current compliance rate is, but what you consider to be an acceptable rate, and how you know when we've reached that compliance rate. I look forward to hearing the testimony that you have and clarifying some of those concerns.
Before I ask for your opening statementand, by the way, as always, your full opening statement will be placed in the record, and if you would summarize it, it would certainly help us to get as quickly as possible to the hearinglet me see if Mr. Price has any opening remarks before we go to your statement.
Mr. PRICE. No, Mr. Chairman. I'd just extend my welcome to the witnesses and look forward to the testimony.
Mr. KOLBE. Thank you very much. Commissioner? I'm not sure if Commissioner Thomas is going to deliver a statement.
Mr. THOMAS. Thank you, Mr. Chairman, and members of the committee. My name is Scott Thomas. I just wanted also to clarify, briefly, Commissioner Elliott is here in her capacity as Vice Chairman of the Finance Committee. I am Vice Chairman of the Commission, and in that capacity, get the honor of presenting the budget, most directly. And, of course, Chairman AikinsJoan Aikinsis chairman this year, and she would be here but for other commitments that she had to undertake.
Page 4 PREV PAGE TOP OF DOC
The purpose of our appearing here this morning is, obviously, to present our budget request. I will do my best to summarize my statement, and, in doing that, I think, maybe the best thing would be to just choose a few choice paragraphs from our testimony and that will give the flavor of our request.
FY 1999 BUDGET REQUEST
We are currently operating with a budget of $31.6 million, roughly, and an FTE allowance of $313.5. For the Fiscal Year 1999, we are asking for an appropriation of $36.5 million, as you noted, and an FTE allowance of $360.5. Although this is a significant increase, percentage-wise, we believe that it is justified. What we are facing, in essence, is a situation where we think that we need to have both the technology that this committee has helped us achieve in recent years, and staff resources. We feel this is crucial because we're starting to sense that you need both in order to make sure the laws on the book are actually being adhered to.
Fiscal Year 1999 will be a pivotal year for the Federal Election Commission. During the period running from October 1, 1998, through September 30, 1999, Commission staff will process the financial reports immediately preceding and immediately following 1998 congressional elections. At the same time, we will begin processing the matching funds submissions by the primary candidates for the 2000 Presidential election. Also, we will be working on the complaints and audits associated with the 1998 election, and still we'll be digging ourselves out from under the tremendous compliance fallout of the 1996 election cycle.
Page 5 PREV PAGE TOP OF DOC
So, our focus in this budget request, obviously, is on an increase in staff for the compliance component. Investigating these extensive allegations of multimillion dollar violations involving hundreds of players requires extensive resources. There's just no escaping that. Timely and thorough investigation of these matters requires human resources more than anything else. Analyzing records, taking depositions, and drafting reports, interrogatories, subpoenas, and briefs associated with these cases, takes auditors, investigators, and lawyers. And, yet, in the current Fiscal Year, we are able to assign only about 24 FTE to the line attorney function of handling enforcement cases.
Also, our present compliance caseload is substantially different than previously experienced. A simple head count of the number of cases doesn't reflect the enormous increase in the scale of work we now face. Our major cases are completely different in terms of magnitude than whatthan we were dealing with just a few years back. One way to quantify that is in terms of the number of respondents. The number of respondents, on average, has gone up25 percentbetween the Fiscal Year 1995 timeframe and the Fiscal Year 1997 timeframe.
To give you an illustration of what this meansfive of our largest current cases involve a total of 222 respondents, they'll generate an estimated 2.1 million pages of documents in discovery, and they will require the assignment of 32 staff, commission-wide. We have experienced problems, obviously, because of this resource strain. We have discovered that we are having to dismiss, regrettably, more cases than we ought to, simply, because we aren't able to apply resources to them.
Page 6 PREV PAGE TOP OF DOC
The longer cases remain unassigned on our enforcement docket because of inadequate resources, the more the utility of commencing an investigation declines until, eventually, activation of that kind of case would not be an efficient use of commission resources. Indeed, some of the very serious allegations from the 1996 election cycle already have been dismissed due to staleness. This is a very troubling situation to us.
The requested budget increment of 37 FTE for the compliance program would give us the capacity to better handle this extraordinary compliance workload. We could pursue more cases, fewer would be dismissed without substantive commission action, and those cases activated would be resolved faster.
Mr. Chairman, that's really the heart of our request. I did want to, if I could, right at the outset, address what I think is your major concern, and that is that it seems that we're putting so much into the compliance program at the agency, and not really improving in the disclosure area. Just by way of detail, as I looked at the dollar numbers, we're actually, in terms of the disclosure component, we're increasing expenditures from $6.9 million for that function, to $7.4 million in the Fiscal Year 1999 budget. So, there is an increase there, in terms of the base functions for our disclosure effort.
Also, in terms of the electronic filing initiative, itself, which we ordinarily have separated out in the budget process, and have done so this year, we are planning to spend $563,000 in the current Fiscal Year. Yet, in Fiscal Year 1999, we're planning to spend $1.6 million. So, we are quite clearly, in terms of the disclosure effort, putting a lot more resources into that, as well. It just so happens that because we have been trying to show the committee, as we go along through the years, how much money we're putting into those computerization initiatives, we've separated out that electronic filing component. But, when you consider that, and add that in, it is clear that we are really moving upward in terms of our effort at that disclosure component, as well. Thank you.
Page 7 PREV PAGE TOP OF DOC
[The information follows:]
"The Official Committee record contains additional material here."
Mr. KOLBE. Thank you very much, Mr. Thomas. Let me see if Mr. Hoyer would like to make some opening remarks before we go to questions, since he wasn't here at the outset.
Congressman Hoyer's Opening Remarks
Mr. HOYER. And, I apologize, and I'll be very brief. I've read the Chairman's opening remarks. I understand his concern. You have just spoken to it and we'll look at it further. I want to welcome Mr. Thomas and Ms. Elliott to the hearing. We, obviously, as we pursue the consideration of your budget, will, again, raise the questions I know in terms of your information systems and the status of those updatesI'm pleased to see in the Chairman's remarks, that he believes that you're making significant progress on that; and, also, make some observations about the resources that you have to do what continues to be a geometrically increasing workload. But, I look forward to working with you to ensure, as I know the chairman wants to, as well, not only that we have proper disclosure of who is contributing to candidates, but also that the public has quick and easy access to that information so they can use it to make decisions on elections. I mean, that's, obviously, the entire purpose of the statute and the reforms that were effected, to have some logical controls, with reference to contributions, and have the public informed as to what those contributions are.
So, I look forward to the balance of the hearing and to working with you as we move towards, what I presume to be, an early markup. Thank you, Mr. Chairman.
Page 8 PREV PAGE TOP OF DOC
Mr. KOLBE. We certainly hope so. Thank you very much, Mr. Hoyer.
Let me begin with some of these questions on the issueon the area of compliance. In your own words of your own statement, or from the FEC, itself, you said, the greater concern is limited scope of the compliance program that fosters a belief that there are no consequences for violations of the Federal Election Campaign Act. Yet, of course, as you would acknowledge, the compliance program really is based on voluntary compliance. It has to be just as our tax laws arereally based largely on voluntary compliance. So, my first question is: how do you define compliance? Does the commission have a definition for what they consider to be compliance?
Mr. THOMAS. Well, it is not an easy task. It's a bit like defining air, but we do, as a basic proposition, try to keep various measurements that, I think, are a good way to objectively look at whether voluntary compliance is tapering off. Anticipating the committee's concern in this regard, I've had our folks try to put together some information that might be helpful.
In terms of just objective measurement, though, first, I want to start with the statement that we think that overall voluntary compliance is very high. We noted in our budget justification document that if you look at, for example, the fact that we have about 8,000 political committees reporting during any particular election cycle, only about nine tenths of one percent of those committees end up getting referred for some sort of compliance action from our Reports Analysis Division. Only about three tenths of one percent of those get approved for a ''for cause'' audit. Only about nine one-hundredths of one percent, of those committees, end up getting sued by the Federal Election Commission. So, overall, from our perspective, we, I think, can look at that and say: there is a high degree of voluntary compliance. By the same token, though, there are some other measurements that suggest, in recent years, compliance is tapering off a bit.
Page 9 PREV PAGE TOP OF DOC
We have provided these kinds of statistics in our budget justification document. You can look at and calculate these numbers. The number of requests for additional information (RFAIs) that our Reports Analysis Division sends out when they see something that looks like it might be a problem (the number of RFAIs) per report reviewed has gone up between the 1992 and 1996 cycle, by 25 percent. Now, that would be possibly a sign that we're having to send out more RFAIs per report because we're finding less voluntary compliance.
Similarly, if you look at the number of audit referrals from the Reports Analysis Division, per report reviewed, you see an even more dramatic increase between the 1992 and 1996 cycle. You see a 99 percent increase in the number of those referrals for possible audit. Another statistic that might be helpful for you concerns committees that we find are not filing reports by election day, and by this I mean candidate committees. We end up, under the law, having to publish the fact that they have not filed their reports. In terms of the number of published nonfiling committees that we saw in the 1992 cycle, compared to the 1996 cycle, the number we had to publish went up by 31 percent.
So, if you're looking for some measurement of voluntary compliance and whether it's tapering off, that's what I would offer.
Mr. KOLBE. Well, that's a measurement I can understand. I mean, if you don't file a report at all, that's a pretty easy one. And, you're saying if they're no longer active, they're supposed to file and tell you they're no longer active, right?
Mr. THOMAS. Yes. The committees we publish, however, are committees that are
Page 10 PREV PAGE TOP OF DOC
Mr. KOLBE. Active.
Mr. THOMAS [continuing]. And the committees that are active in the upcoming election.
Mr. KOLBE. And, it went up 31 percentthe nonfiling of those? That's a whopping jump.
Mr. THOMAS. Yes. And I
Mr. KOLBE. Thirty-one percent. What percent overall don't fileof the total number of committees?
Mr. THOMAS. Don't file? Well, I guess
Mr. KOLBE. I mean, what is the total number of nonfilers?
Mr. THOMAS. The total number, say, in the 1996 cycle
Mr. KOLBE. Right.
Mr. THOMAS [continuing]. Was 88, which we published
Page 11 PREV PAGE TOP OF DOC Mr. KOLBE. Oh, just 88.
Mr. THOMAS [continuing]. Out of about 2,000 candidate committees, probably.
Mr. KOLBE. Okay. So, 31 percent jump and that is statistically much different thanI thought we were talking about much larger numbers than that. In your statement about those who you have to send outwhat was it calledRA?
Mr. THOMAS. RFAI. Request for Additional Information.
Mr. KOLBE. Request for additional information. Is that because of noncompliance or is that because you've made the forms hopelessly complicated, like Congress does with the IRS and tax law. [Laughter.]
Mr. THOMAS. Well, I'm not going to say that our forms are the easiest thing in the world, but we work very hard to try to make them simple and understandable, and, in fact, we're in the process of revising the forms to make them even more so. But, for the most part, what we're talking about are fairly straightforward problems, like there is contributor information missing or there is an excessive contribution reported right on the face of the report when you do an aggregation with previous contributions by the donor.
Mr. KOLBE. I'm sure you track what it is that most of them go out foryour RFAIsand whether it's related to one specific item. You must question whether or not you're asking for that information in the right way for the committee.
Page 12 PREV PAGE TOP OF DOC
Mr. THOMAS. We do. Every two years, we take another look at our review procedures, and we analyze whether or not they ought to be revised. In the last several election cycles, we have revised those thresholds to increase the tolerance to allow, in essence, more possible problems to go by without sending out a request for some sort of clarification. So, if anything, to me, that would suggest that when you start seeing these drop offs, in terms of voluntary compliance, that those numbers I gave you are, in spite of the fact that we are increasing our tolerance levels, if you will. I think, it's an even clearer signal that there's a slight drop off, and we would say that one of the crucial components of getting disclosure is having an effective compliance system. You've got to have a credible threat that the Federal Election Commission will be able to do something about it if a committee does not adhere to the disclosure rules.
Mr. KOLBE. Well, one final question in this round, and that is: what are the tools that are available to you to get greater compliance levels besides audits and investigations? Are there any other tools you have?
Mr. THOMAS. We do. We work very hard on our information programs. We are conducting workshops around the country for treasurers of committees or any other official who's going to be involved with campaigning. They can learn the rules. We have workshops for corporations and unions. We have workshops for candidate committees. We have workshops for party committees. And we try as best we can with those to help the community. We also, I would note, Mr. Chairman, have had great success, again with your assistance, in promoting the use of computer technology to educate the regulated community.
Page 13 PREV PAGE TOP OF DOC We have developed a web page, which we are very proud of. Anybody in America, who has access to the Internet, can pull off of our web page all of the relevant guides about how to comply with the laws. Our Information Division has actually won several awards for their publications. They are very well written and clear, and they are there free of charge, on the Internet, for anybody that wants them.
So, I guess we've been a success at working on getting voluntary compliance to the extent possible because we have worked very hard to get that information out thereabout what the rules are and how they work.
Mr. KOLBE. Thank you very much. Mr. Hoyer.
Mr. HOYER. Thank you very much, Mr. Chairman. I didn't read your statement, and if you've already done this in the statement, then don't repeat this; but, clearly, one of the debates we've had is that you don't need more money, you need better handling of information capability, and, therefore, you don't need more money for people. You need it for computers, and if your information handling ability was more efficient, more effective, you wouldn't need more people. Can you outline, if you haven't already done it, the workload projection that we've gone over in the past as to why you've had this very substantial, sharp increase in workload and, therefore, requiring more people: and in that answer, specifically focus on why you can't handle the additional workload solely by doing more with less through information technology?
Page 14 PREV PAGE TOP OF DOC Mr. THOMAS. Well, our compliance workload
Mr. HOYER. Yes or no? [Laughter.]
Mr. THOMAS. Part of what I read covered it, and that was
Mr. HOYER. You know I'm just teasing you.
Mr. THOMAS [continuing]. The talk about how we have had increasing complexity of the types of cases we handle. We are now finding that more respondents are being involved in a particular case, and that probably reflects a growing complexity. We're finding that we are focusing our resources on enforcement cases where you have a number of different people involved in the allegations at hand. So, it's partly the substance of what we're looking at.
We have, in years past, focused, I suppose, more on the fact that there's a huge increase in the amount of financial activity in campaigns, and that, in and of itself, drives our resources. We didn't focus on that so much this year, but it is certainly true. The amount of spending in the 1996 Presidential election campaign cycle for Federal elections that we had to monitor was $2.7 billion. And, that was
Mr. HOYER. How did that relate to four years prior?
Mr. THOMAS. Four years prior, it was about $2 billion. So, it was a significant increase, percentage-wise. And, that carries all through our operations. Obviously, our staff has to make sure that all of those reports are put into the disclosure system, whether in terms of the digitized imaging at our FEC operations and on computer systems across America, or on the Internet, or, in some cases, in microfilm form. Then the reports analysis review folks have to review all that information and look for potential problems and send out requests for additional information and make referrals and so on.
Page 15 PREV PAGE TOP OF DOC
So, with a larger volume of activity in the process, they're going to have to review more, they're going to find more problems, going to have to make more referrals to the Counsel's office and so on.
And, likewise, with more financial activity in the process, you'll have the Counsel's office receiving more complaints. It's just inevitable that with more transactions going on out there, and more money coming into the process, there is more opportunity for someone to, say, file a complaint, because they have heard about a problem with the opposing party or opposing candidate.
So, in every sense, the increase in the volume of financial activity for campaigns carries through to our staffing requirements.
Mr. HOYER. And, specifically, why can't the additional volume simply be handled? For instance, if you have two candidatestwo major parties raising, i.e., soft money, to the extent that that's reported, or hard money through candidatesI don't know how many additional candidates we hadbut candidates, obviously, are raising a lot more money individually. Now, the premise could be whether I deposit $1, or I deposit $10, it is a deposit, in effect. And, if I have good enough information technology to handle that information, the increase, per se, in dollar volume that Steny Hoyer takes to run his campaign, as opposed to seven hundred thousand, $1.2 million, which is $500,000 additional dollars, which gets you that $700 million extra from $2 billion to $2.7, but does it, in fact, create additional workload. What you're saying, as I understand it, is in order to collect that extra $500,000, there are more transactions, more people contributing, more solicitations, more fundraisers, and, therefore, greater oversight being required.
Page 16 PREV PAGE TOP OF DOC
Mr. THOMAS. That's exactly right. And, as I said, we didn't include that kind of statistical increase, except in some of the charts in our budget justification document. But, we can supplement that for the committee, if you would like, to give you a sense of how that works.
Mr. HOYER. As you know, this has just been a continuing debate. Clearly, you're on the right track. Now, the Chairman's questionor statementreflects that, in termswe all know that throughout government, we need to do a better job of handling information. IRS is our biggest example in our committee of where that's fallen down. But, clearly, it's an issue with you, as well. And, you're not alone on that. Most agencies of government have not done as well as they could have done, or they probably would have hoped to have done, in terms of information handling. But, you're still asking for more people, and your response to that, as I understand it, is yes, because of the growing complexity that cannot simply be handled by information technology analysis.
Mr. THOMAS. Yes. The growing complexity results in, as I noted, an increased number of respondents. We have also had some changes in the laws in recent years, that have the Commission having to undertake the kinds of investigations that weren't quite as prevalent before. One example: as a result of the Colorado Republican Party Supreme Court decision, we now have an obligation in cases where there's an allegation of excessive spending by one of the party committees, to look into whether or not there was, in fact, coordination between the party officials and the candidate's officials. We used to presume there was such coordination, but now, if we have to prove a violation, we're going to have to prove there was coordination. To do that, you have to go out and depose the people involved. You have to take statements and so on. That moves into areas where staff are necessary. You have to have attorneys and investigators and auditors to do those kinds of functions.
Page 17 PREV PAGE TOP OF DOC
Mr. HOYER. Thank you. Thank you, Mr. Chairman.
LEGISLATIVE RECOMMENDATION ON PUSH POLLS
Mr. KOLBE. Mr. Price.
Mr. PRICE. Thank you, Mr. Chairman. I'd like to turn in the exercise of our oversight responsibilities to some of your legislative recommendations, especially those having to do with disclaimers. You note the increase in so-called ''push-poll'' activity in your legislative recommendations, and suggest that Congress might want to consider adding disclaimer requirements for this kind of activity. You also acknowledge that it's rather hard to define exactly what falls within this category. How do you define push poll activity, and do you have some specific basis for the claim you make that this activity seems to be increasing?
Mr. THOMAS. Well, we don't actually have any occasion to define push polling, per se. The way that we have gotten into the question of how to deal with push polling in terms of disclaimers, is that our statute requires a disclaimer if a communication to the general public contains either express advocacy of the election or defeat of a clearly identified candidate, or some sort of solicitation of contributions. As it turned out, push polling, as most of us understand it now, sometimes involves an effort to go beyond just an innocent query of the person on the end of the phone as to what their views are on many topics. It starts to move into an area where there are suggestions that a particular candidate, who is not liked, has done something bad. And, so, there's an effort to somehow influence. So,
Page 18 PREV PAGE TOP OF DOC Mr. PRICE. Well, I think in our experience, it often does go beyond that in the way of deception, in that it often purports to be a poll, or at least that's the way the communication begins. Yet, as one listens to the questions, it becomes clear that they're designed to influence, really, rather than to elicit opinion.
Mr. THOMAS. I don't know how far Congress can go in terms of requiring disclaimers on communications that someone might argue has no connection at all with an election, but, with regard to most push polls, I think it would be fairly apparent that they are involved with a particular election. It might be that Congress could change the law and just specify that, in cases of any polling that is paid for by a candidate committee, or some other registered political entity, there has to be a disclaimer. That would take care of this difficulty we have of having to analyze in more detail whether there is some express advocacy of the election or defeat of a clearly identified candidate, or a solicitation.
Mr. PRICE. Well, I commend you for the attention you've paid to this, and for the recommendation you've made. It's very disturbing that it's on the increase because it is almost always deceptive activity. It's under the radar screen. It's precisely the kind of campaign activity where a disclaimer is most needed. And, one would hope that if a disclaimer were to be required, then that would, of course, discourage the activity, or at least discourage the worst abuses. So, I commend you for raising the subject.
Let me ask you now about the content of the disclaimer requirement we do have, and that you enforce. The disclaimers that appear on television ads, for example, let's just focus on that. These consist of unreadable, small print lines of type, postage stamp size picturesalmost a parody, it seems to me, of what one would think of as an effective disclaimer. To what extent are you bound in what you require by the law? To what extent do you have the flexibility to make those disclaimers something more meaningfulthat would encourage a genuine assumption of responsibility by a candidate or a political committee for the material that's appearing on the screen?
Page 19 PREV PAGE TOP OF DOC
Mr. THOMAS. Well, we do enforce the existing statute which does require a disclaimer indicating, in the case of a candidate's ad, who paid for it. In the case of an ad that's paid for by someone else, a disclaimer has to go on and state whether it was authorized by a candidate. But, in terms of the length of time a disclaimer has to appear on a TV ad, or the size of the type, we regulate that, in essence, through the concept in our law which says it has to be a clear disclaimer. So, we have attempted to borrow the FCC's rule on how long a television disclaimer has to be on and how large it has to be. Whether we could go beyond that, I'm not quite sure. I'm not quite sure, specifically, what you have in mind, whether you're talking about requiring an image of the candidate to actually appear in the disclaimer, as well?
Mr. PRICE. Well, I've made clear, personally, what I would like to see. Steve Horn and I and a number of co-sponsors have a stand by your ad proposal which we think would improve disclaimers greatly. We would require a full screen appearance, either in person or a photograph and the candidate's own voice saying, ''I'm so and so, running for so and so, and I paid for this ad.'' We would require that kind of significant assumption of responsibility on the part of the candidate. We're not trying to regulate content, we're not breaking new ground legally. The disclaimers are already required; we just want to make them effective. So, that's my own opinion of what an effective disclaimer would look like. What I'm asking you, is what kind of flexibility you already have to improve on what I think almost anybody would agree is an ineffective disclaimer requirement. To what extent are you bound by what the FCC or anybody else has done in the past?
Mr. THOMAS. I would say we're not bound by what the FCC has said, but I suppose it would take a fair amount of lawyering to try to work on whether or not we think we have authority to do more. I'm sure part of the legal analysis would be, given the fact that the current statute says that the disclaimer has to state who paid for it and whether it was authorized, it would be a pretty strong argument, I suppose, that going beyond that and having the Commission require a picture of the candidate, or an image of the candidate, would be problematic. I don't mean to be pessimistic, but I'm just guessing that there might be some credible argument that that would be going a little bit beyond our existing statutory authority. But, that's not to say that if some sort of petition for rulemaking were filed, and our legal staff looked at it, something couldn't be worked on which would be, perhaps, different than what we have now.
Page 20 PREV PAGE TOP OF DOC
Mr. PRICE. Well, just one follow-up, if you don't mind, Mr. Chairman. The present requirement for a picture, which is interpreted to mean a very small picture, is that your requirement or the FCC's?
Mr. THOMAS. It's not our requirement. No.
Mr. PRICE. But, it is a requirement.
Mr. THOMAS. I believe the FCC's rule does not require a picture on a television ad of the candidate in question. Just a statement as to who paid for it.
[CLERK'S NOTEThe witness later stated that further research indicates that although the FCC's disclaimer rules do not require a picture, as a practical matter most candidate ads include either a picture or a voice over in order to qualify for the lowest unit rate. See 47 C.F.R. §73.1212, 73.1941(b), and 1942.]
Mr. PRICE. Well, in most ads, the very small picture does appear on screen.
Mr. THOMAS. I think you see some state laws that have gone beyond and have non-Federal
Mr. PRICE. No, these are Federal campaigns. We need to clear that up and we will do that. Thank you. Thank you, Mr. Chairman.
Page 21 PREV PAGE TOP OF DOC
Mr. KOLBE. Mrs. Meek.
Mrs. MEEK. Okay. Mr. Chairman, how are you?
Mr. KOLBE. Very well.
Mrs. MEEK. I don't have a question. I have a comment. I agree very much with the Chairman when he spoke about the fact that you have increased your compliance and your disclosure methodology. But, hopefully, you will do a strong job in terms of educating us in terms of what those rules are, and what those regulations are. I think that an outreach program doing that would be very helpful. And, I'm sure you're going to do that because of what you said in your opening statement. Thank you very much.
Mr. THOMAS. Thank you.
Mr. KOLBE. Mrs. Northup.
Mrs. NORTHUP. Yes. Thank you. I'm sorry I was so late today. You may have covered some of these.
Page 22 PREV PAGE TOP OF DOC There are mainly two issues that I'd like to ask you. One is, I understand that PACs are a way oflet me seeit is possible for a PAC to raise money from an individual who's already given to a campaign, given the maximum, and when they give, in a sense, that money is pooled together. But, considering the few numbers of PACs that give the maximum and the few individuals who have given the maximum, how directly would you be able to say that's money laundering? But I do believe, on both sides of the political spectrum that there are several organizations that are very into what I call money laundering. What I want to make sure of is, is that whoever I'm running against is playing by the same rules that I'm playing by. And, I believe that money laundering is illegal, or it is certainly an immoral interpretation of present law. And, I just wondered how able you are to identify PACs that try to funnel money from previous contributors who have donated previously to a candidate and then return to that candidate about an equal number of additional money by bringing it in from out of state?
Mr. THOMAS. Well, under the current law, there are provisions that we can utilize to try to prevent an obvious attempted evasion of the contribution limits. For example, under the statute, if someone gives money to a PAC that is directed to be for a particular candidatethat is earmarked for a particular candidate's benefitthe law says that that contribution does have to be treated legally as if it were a contribution by that original donor to the candidate. So, the question we get into is: was there sufficient indication of earmarking or designation to trip that test? Aside from that, we have a regulation at 11 C.F.R. 110.1(h) which, in essence, says that if you give money to a committee with an understanding that that money is, in fact, going to be expended on behalf of, or contributed to, a particular candidate, that likewise is a contribution that would have to be treated as if it's from the individual.
Page 23 PREV PAGE TOP OF DOC Mrs. NORTHUP. Is that enforceable?
Mr. THOMAS. Is it enforceable? It is when we find out about it.
Mrs. NORTHUP. Okay.
Mr. THOMAS. Now, in terms of finding out about it, that's more difficult. The benefit of having a good disclosure system is that someone who's looking closer can sometimes find patterns. If you find a pattern of a lot of money coming into a particular PAC on a certain date from a bunch of contributors who happen to be, perhaps, related in some fashion, and then promptly, a similar amount of money going to a particular candidate from that PAC, someone can file a complaint, and if they've got any sort of information that will help us generate that as an enforcement case, it would help, but we can look into it that way. For the most part, though, it is something that has to be brought to our attention by a complaint.
Mrs. NORTHUP. The other thing, though, is I wanted to talk about issue ads being charged as in-kind contributions to candidates. First of all, I have to tell you I'm not crazy about issue advertising because, even if somebody does it on my behalf, it may not be the message that I want to give. It may not beit often isn'thow I would define myself to the public. I have been just so careful about not ever having a conversation that would evernot allowing anybody in my office to ever have a conversation; that everybody understands that we are not going to be a partner to issue ads.
Page 24 PREV PAGE TOP OF DOC But the risk I take is that somebody that thinks they're helping me really doesn't help me, and that actually happens to us. My concern is that not only would I be subject to that, and I am subject to itthat's a free speech issue, and I understand I can't do anything about it, but I'd hate to have it charged against me.
Mr. THOMAS. If I somewhere said that we do think we can and should regulate issue ads as a general concept, then that's a misstatement. We don't. We do, however, have to look at the question of whether or not there is coordination with a candidate. So if something is not perhaps an express advocacy ad, but it, nonetheless, is something where a candidate's people have requested it or suggested it, or coordinated in the airing of that particular ad, that is a fair definition of an in-kind contribution.
Mrs. NORTHUP. I'm actually talking about what I think is your recommendation to us, and that is that issue ads actually be considered an in-kind contribution; that we change the law.
Mr. THOMAS. I see. What we're asking in our legislative recommendation in that regard is that, if you will, you help us try to clarify when there is sufficient coordination to amount to an in-kind contribution, and also help us define the line between something that someone would agree is pure issue advocacy, has nothing to do with the Federal election process, and something that, on the other hand, does have to do with election process; it's electioneering in purpose and effect in every sense.
Mrs. NORTHUP. I think sometimes with issue ads that they think that their purpose is to help Jim Kolbe be elected. They think this is the way to do it. Jim Kolbe may see that ad on television and be horrified that it defines him to his voters. The problem is that, for those people that are just so careful not only to go by the letter of the law, but the spirit of it and everything else, we have even less chance to influence what the content of the ad is, and are more likely to be horrified.
Page 25 PREV PAGE TOP OF DOC
Mr. THOMAS. Rest assured, if there's no coordination, you won't have any trouble with the Federal Election Commission.
Mrs. NORTHUP. Oh, and I'm not worried about trouble. I'm just worried about changing the law like you've recommended.
Mr. THOMAS. Oh, your opponent then.
Mrs. NORTHUP. Oh, I'm very worried about that. [Laughter.]
Mr. KOLBE. We should have time for one additional quick round of questions, I think, before we have to go. Let me try to focus the question here on a couple of areas. One, about the vacancies among the Commissionersthere's been a vacancy since October of 1995, I believe. That vacancy includes not only the Commissioner spot, but, presumably, the staff that's assigned to that Commissioner, but we have funded the Commissioner and staff salary in each of those subsequent years. What savings were achieved in 1997 and/or 1998 due to these vacancies, and how did those savings get applied?
Mr. THOMAS. Well, if you look at what happened in Fiscal Year 1997, you'll see that, rather than expending funds for 18 FTEs, which would pick up six fully-staffed Commissioner offices, we ended up funding the equivalent of 15.7, I believe it is, FTEs. So instead of 18, we were down at 15.7.
Page 26 PREV PAGE TOP OF DOC
If you look at a Fiscal Year, you would save roughly $300,000 when you take into account the Commissioner's salary, the Executive Assistant's salary, and an Administrative Assistant's salary. There are only three people in each Commissioner's office. So, roughly, $300,000 you would expend on any Commissioner office in any one year.
The current Fiscal Year, it's not clear when this will happen in terms of getting new Commissioners onboard, any new Commissioner to fill that vacancy, that is, but our current planning is that maybe it will happen in early June. In terms of savings in this Fiscal Year, staff tells me that, in terms of what we have planned for all along, it's going to work out to about, I guess it works out to about $200,000, because we weren't planning on expending any for the first quarter anyway. So roughly $200,000 we're planning on having to work with.
Mr. KOLBE. So the Commissioner spot, the staff spots are not filled when the Commissioner is not there?
Mr. THOMAS. That's correct.
Mr. KOLBE. What are the consequences of having this vacancy in terms of the operations of the Commission?
Mr. THOMAS. Well, we have more difficulty, I suppose, getting a fourth vote on some cases. You need four votes to take action at the Federal Election Commission, and that has not changed even though there is a vacancy. So in practical terms, I suppose we have some longer debates and some more difficult discussions, because we're trying to come to a consensus and get that magical fourth vote.
Page 27 PREV PAGE TOP OF DOC
Beyond that, you lose, I suppose, whatever benefit of additional input you get from an extra person, but, in terms of savings, I suppose the bright side is it has given us a little financial flexibility, having that extra money that we can pour into some of the programs that this Committee and we at the Commission feel are essential.
DEPARTMENT OF JUSTICE RESOURCES
Mr. KOLBE. I want to ask you a couple of questions about the detailees. I understand you've asked for some from Justice. How many have you requested, and what's the status of those negotiations? Have you gotten any onboard?
Mr. THOMAS. In March of 1997, we asked the Justice Department if they would be able to help us by detailing some workers. We didn't hear back from them until September. They then said, give us a specific request. We then at that point sent them a letter saying we would like 32 people, and we listed the different kinds of job classifications we would like to have help with. So far, they have not responded favorably to that request. So that's where we are at this point in Fiscal Year 1998, and we haven't received those support services from the Department of Justice. I'm sure that they're obviously very busy over there, and so it's not as though we exactly expected to get it. We hoped we could get it, but so far we have not.
Mr. KOLBE. If youyou don't expect to get them?
Mr. THOMAS. If I were a betting man, I would say we will not get them.
Page 28 PREV PAGE TOP OF DOC
Mr. KOLBE. But you still have
Mr. THOMAS. We're still working with
Mr. KOLBE [continuing]. Negotiations ongoing?
Mr. THOMAS [continuing]. Them. We have periodic contacts. Our General Counsel's office has been the lead on this, and they have been staying in contact with the Justice folks.
Mr. KOLBE. If you got all those that you were asking for, I think your budget justification says you wouldn't need 37 of the 47 additional positions that you requested?
Mr. THOMAS. Well, I suppose, depending on how we framed the request, if we framed the request to give us enough people for the full 37 compliance component that we're asking for in Fiscal Year 1999, we wouldn't need any of that, if we got them from Justice. In terms of Fiscal Year 1998, we had only asked them for 32, thinking that, given the timeframe we had, taking on 32 would be about all we could handle in terms of providing space and all of the backup support and services as well.
Mr. KOLBE. One final question, and then I'll let Mr. Hoyer, and we'll be able to finish this up. Last year we gave you $1.3 million for litigation, document support. I think that was for a contract, I believe, with the DOJ for imaging, coding, storing, retrieval related to ongoing operations. What's the status of that? Is that happening?
Page 29 PREV PAGE TOP OF DOC
Mr. THOMAS. It has been great. The Counsel's office has been able to install the terminals and they've gotten the process up and working. It allows them to image and index documents in these discovery cases that have hundreds of thousands of pages. They tell me they've already imaged and indexed 700,000 pages. They project having to image as many as 2 million using this system. But it has been very helpful and, again, it's something that we're happy that the committee has helped us along with and pushed us to do; it has been a great project.
Mr. KOLBE. Mr. Hoyer?
PRESIDENTIAL ELECTION CAMPAIGN FUND
Mr. HOYER. I have a lot of questions that I won't have time for right now. But the question I would ask you is: Tell me about the presidential fund. I notice one of your recommendations is changing priorities so that conventions would be third, rather than first. Can you tell me where we are in the fund and how it looks for the next presidential election?
Mr. THOMAS. We have prepared some analysis which suggests that there will be a shortfall in matching fund payments when the first payments are made in January of the year 2000. In terms of how drastic that shortfall will be, roughly, we're saying we'll have about $25 million available to use for primary matching fund purposes on that date, and yet we'll probably have a payout obligation of about $60 million. So that first payment, based on those kinds of projections, would suggest that the candidates will only get about a 42 percent ratio payment on what they would otherwise be entitled to.
Page 30 PREV PAGE TOP OF DOC
Now as receipts start coming in through calendar year 2000 from checkoffs, we'll eventually be able to make that up by the end of the year certainly, and we'll in fact be able to make up most of that shortfall probably in the July-to-August timeframe of that year, before the conventions.
But there is definitely a shortfall. There is a structural problem, if you will, built into the system right now. Congress was helpful and upped the checkoff to $3 several years ago, but did not actually at that time index it for inflation. Eventually, inflation is just going to catch up, and the payouts which are indexed for inflation are going to outpace the checkoff receipts coming in.
So the bottom line, though, for the 2000 election cycle: the primary matching fund program is in some jeopardy of having a shortfall, but campaigns will probably have to operate under those circumstances by getting bank loans to cover expenses during that timeframe before they can get the replenishment.
In the year 2000, I would assume that the situation may be more drastic, depending on how many candidates are active. If it's an open election, like we have this year, certainly the year 2000 suggests that we'll haveI'm sorry, 2004, if I misspoke2004 will be even more problematic.
Mr. HOYER. Mr. Chairman, I guess our time is just about up. So I'll submit the rest of them.
Page 31 PREV PAGE TOP OF DOC Mr. KOLBE. Thank you very much, Mr. Hoyer, for your questions.
Commissioners Thomas, Elliott, thank you very much for being here today with us.
The subcommittee will stand in recess until 2:00 o'clock.
"The Official Committee record contains additional material here."
Tuesday, March 24, 1998.
U.S. GENERAL SERVICES ADMINISTRATION
DAVID J. BARRAM, ADMINISTRATOR, U.S. GENERAL SERVICES ADMINISTRATION
DENNIS J. FISCHER, COMMISSIONER, FEDERAL TECHNOLOGY SERVICE
ROBERT A. PECK, COMMISSIONER, PUBLIC BUILDINGS SERVICE
Mr. KOLBE. The subcommittee will resume its testimony now with Mr. David Barram, Administrator of the General Services Administration and his staff; Mr. Peck, who is Commissioner of Public Buildings Service [PBS]; and Dennis Fischer, Commissioner of Federal Technology Service [FTS].
Page 32 PREV PAGE TOP OF DOC
Thank you very much for being with us here.
For the next fiscal year 1999, the General Services Administration is requesting an appropriation of $140,735,000, a decrease of about $2.8 million below fiscal year 1998. But it is also requesting $5.1 billion in new obligational authority for the Federal Buildings Fund.
My colleagues will recall that last year we had a lot of discussion about this issue, particularly the revenue shortfall in the Buildings Fund. And I am pleased to hear, Mr. Barram, at least from your written testimony that we have reviewed, that you believe you have successfully corrected the problems that led to the shortfall.
We are certainly going to want to hear more about that so that we can monitor that situation. This year, you are facing a shortfall in the rental of space activity of the Federal Buildings Fund. It is a continuation of a problem that surfaced last year. I hope you will be able to tell us what you are going to be able to do in this area to improve your ability to forecast your needs.
You have requested new obligational authority within the Federal Buildings Fund for new construction projects but have not requested any new courthouse construction. If we were to follow the recommendations of the Administration it would be the second year in a row with no courthouse construction. I am very concerned about how many years you can go without keeping up with the courthouse infrastructure needs. I recognize that the realities of the budget are going to make it very difficult to continue this important program.
Page 33 PREV PAGE TOP OF DOC
We are also, though it is not an appropriations matter, we are also following very closely the progress you are making as you prepare for new contracts for long-distance telecommunications services for the Federal Government.
So, we look forward to what you have to say to us today. As always, your full statement will be placed in the record and I hope that you would summarize it very briefly.
But, before I do that, let me call on Mr. Hoyer, for any opening comments.
Mr. HOYER. Thank you, Mr. Chairman.
Welcome, Mr. Barram, and Mr. Peck, Mr. Fischer and other officials of the General Services Administration. I share the chairman's concern. We have to some degree fallen on bad times at GSA in the sense that our investment in our public infrastructure is being delayed, perhaps not postponed, well, delayed and postponed, not eliminated but certainly delayed.
And to the extent that we have done this last year, to presumably affect the payment of the shortfall in the rental receipts which were projected, which I understand now total somewhere in the neighborhood of $800-plus million. Maybe a little more.
To the extent that the problem has been substantially resolved, I think we need to look very carefully at whether or not we can afford to continue to delay very needed Federal projects, particularly courthouses. We are talking about increasing our law enforcement efforts, we are increasing our arrest levels, we are increasing our incarcerations, all of which have led to some additional activity in the courts of the land at the Federal and State levels. And I share the Chairman's concern and we look forward to hearing your thoughts on that and we will have some questions on that. But I look forward to hearing your testimony.
Page 34 PREV PAGE TOP OF DOC
You are doing more with less. At least we are doing administratively more with less people. I think you have a 31 percent decline in FTEs since 1993. And to that extent I suppose that you mirror to some degree the rest of the Federal Government, although perhaps a deeper cut than some others.
Thank you, Mr. Chairman.
I look forward to Mr. Barram's testimony.
Mr. KOLBE. I would ask if any other members of the subcommittee have an opening statement or remarks that they want to make?
Okay. Let me begin the questions here.
Oh, I am sorry, you have not made your statement.
I am so anxious to get right into it.
Mr. WOLF. Take that as a hint. [Laughter.]
Mr. KOLBE. Mr. Barram, of course, your testimony.
Page 35 PREV PAGE TOP OF DOC Mr. BARRAM. Mr. Chairman, and members of the subcommittee, thank you. I am Dave Barram, Administrator of GSA and you have already said I could put my full statement into the record and I am going to do that.
I would like to make two points today that will maybe take four minutes. The first point is an assertion and that is that GSA is a successful agency today. Our people have a lot to be proud of. It is not your father's GSA, not even the GSA of a few years ago. We had to change a lot and we have.
I could go on and on about that but I will not. You have all been very gracious listening to me do that already, so I will not do that today. But I believe our change and resultant success is driven by two forces. One is that we have committed ourselves to our customers to try to thrill them and the second is that we are learning how to get satisfaction from having tough measures of performance and holding ourselves to it.
We are going to screw up sometimes, I am afraid, but we are confident that we can fix it, that we can get back on the right track and be stronger for it.
The second point is the one you both talked about, our budget for new construction. We have discussed it with you individually and we should talk about it today in as much depth as you would like. You mentioned that this is the second year in a row that our budget has no new dollars, essentially, for construction.
This decision reflects a number of considerations. A couple I will mention. One is the President's decision to curb spending as he drove toward his balanced budget. Second, we now have an agreed on willingness, I think, to allocate all the available dollars to repairs and alterations. This comes from a recognition that the Federal Buildings Fund is capable of paying for repairs and alterations or new construction, but not both.
Page 36 PREV PAGE TOP OF DOC
We have an inventory of Federal Buildings at a replacement value of $30 billion and we need to keep them up. We have spent about $600 million a year over the last nine years in Repairs and Alterations, R&A. The private sector benchmarks say we should annually spend between 2 and 4 percent of asset value which would suggest $600 million to $1.2 billion a year, which puts our $600 million at the bottom of that range.
Even if we were to spend at that $600 million level, we have a hill to climb as many of our old and historic buildings are behind the curve when it comes to rehabilitation. We would need more than the bottom of the range to get where we need to go.
The Congress has asked us to run GSA like a business. That means we need to charge enough rent to generate enough money in the Federal Buildings Fund to allow us to keep our assets in good shape.
Our customers expect to occupy Class A space when they pay Class A rents, so, we need to keep their spaces in Class A condition. To do that, we cannot skimp on R&A funds in the budget. It is a little like not keeping bridges and roads in top condition, it is pay me now or pay me later. And for some of our buildings it has been, unfortunately, pay me later. Later never seems to come for OPM, Education and a few other buildings.
And all this is before we even talk about new construction. For the foreseeable future, I believe we will require appropriated dollars to fund new construction. So, I want to make the case that we should not raid the R&A account to finance new construction.
Page 37 PREV PAGE TOP OF DOC That is a stark way to describe the situation, Mr. Chairman, but that is how I see it. Last week, the Senate Budget Committee decided there should be additional new construction in fiscal year 1999, and its budget resolution specified that the funds should come out of general appropriations. I think that is the right way to do it.
I have with me today the right people to discuss anything that you wish about GSA. Bob Peck is here, Donna Bennett is Deputy Commissioner of Federal Supply Service, Dennis Fischer from FTS, Marty Wagner, who runs our office of Government-Wide Policy, Bill Early, our very able budget director, our new CFO, Tom Bloom, Bill Ratchford, your old colleague, Martha Johnson, GSA's Chief of Staff and a number of other people from GSA.
We did leave a few people back at the office, but we have enough here to answer any questions that you have.
[The prepared statement of Mr. Barram follows:]
"The Official Committee record contains additional material here."
RENTAL OF SPACE ACCOUNT
Mr. KOLBE. Thank you very much, Mr. Barram, for your remarks there. Mr. Barram, a couple of months ago in January, you submitted a reprogramming request of $243 million to meet the contractual and program requirements in the rental of space and installment acquisition payments activities.
Page 38 PREV PAGE TOP OF DOC
Would you explain to us what happened to cause the shortfalls in these accounts?
Mr. BARRAM. Do you mind if Bill Early answers that?
Mr. KOLBE. Certainly.
Mr. EARLY. Thank you, Mr. Chairman.
The primary reason was in our rental of space account. As we indicated a year ago, we had projections for government downsizing that did not occur. We have had a robust real estate market where rental rates have gone up higher than projected two years ago. And your committee approved reprogramming last year in this rental of space account and the full year impact this year.
Those are the major reasons that we need to change our priorities, and realign our dollars so that we can pay for our leases with the private sector landlords.
Mr. KOLBE. What is going to happen if you do not get the additional money in that rental account?
Mr. EARLY. We will have inadequate funds in mid-August to pay contracts with our landlords.
Page 39 PREV PAGE TOP OF DOC Mr. KOLBE. And what happens?
Mr. EARLY. We will be in violation of anti-deficiency statutes, which do have criminal penalties.
Mr. KOLBE. Not a very good option.
Mr. EARLY. We would have to abrogate our contracts with our landlords.
Mr. KOLBE. Not a very good option.
Mr. EARLY. Not very many choices, no.
Mr. KOLBE. Where are we reprogramming this from?
Mr. EARLY. The reprogramming is primarily from the balances that we have in some of our repair projects. Where the projects have been completed, schedules would not be impacted and there are balances in those accounts that would be made available for this.
Mr. KOLBE. There is a piece of it from your construction and acquisition facilities activity; is that going to affect any projects now underway?
Mr. EARLY. No, sir.
Page 40 PREV PAGE TOP OF DOC
Mr. PECK. Well, let me put it a different way, Mr. Chairman, that is actually good news. That is all from projects that have been completed that we brought in under-budget.
Mr. KOLBE. Those projects are all completed, signed-off, done?
Mr. PECK. Yes, sir.
Mr. KOLBE. So, that is money that is available.
Mr. PECK. The bad news for us quite honestly is that a big chunk of the rest of the funding source for that reprogramming, $142 million, is from our basic repair and alteration program and in a year in which we did not have much to begin with.
Mr. KOLBE. So, this means what Mr. Barram was talking about earlier, the $600 million which is going to be cut even further?
Mr. PECK. Right.
Mr. KOLBE. So, we are reallyit is like eating your young in a sense almost?
Mr. PECK. Yes, sir. The problem in our program, of course, is that we have two accounts that are just completely non-discretionary. One is installment acquisition payments. Those are like mortgages. You have to pay them. And the other is leasing because we have signed on behalf of the Government contractual obligations to pay rent.
Page 41 PREV PAGE TOP OF DOC
And as Mr. Early explained, in this case what is happening is that when you project a budget, as we have to in our budget system, 18 months in advance, we projected what we thought was a generous amount for anticipated increases in the rent levels we would pay as we renew leases. About 1/6 of our inventory is renewed every year.
We thought that the economy would be improving and the real estate market would improve to the tune of about 2 percent increases in lease rates. It has turned out to be about 3 to 5 percent increases in leased rates.
Now, for the fiscal year 2000 budget we will project that and hopefully in that year we will be right.
Mr. KOLBE. Is there anything you can do to improve those projections of those rental rates?
Mr. PECK. Well, I have been in the private sector real estate market also. You are trying to project a year and a half or two years in advance, actually, what the market is going to do and it is just very hard. I think that when we projected two years ago that there would be 2 percent increases average in new leases people would have thought that was a generous amount.
Mr. KOLBE. What is the amount in 1999 you are requesting for new obligational authority for the rental space and is that going to be sufficient? Do you have confidence?
Page 42 PREV PAGE TOP OF DOC
Mr. PECK. In 1999, it is about $2.6 billion. We will be in better shape than we were in 1998, I think, by quite a bit.
But each year, as in 1998, in which you add to the lease payments you are making means that you add to the base you will be paying in fiscal year 1999.
In other words, this thing rolls along. What we believe we can do in fiscal year 1999 is to come up with an accounting way in which we take account of that particular dollar amount that you just cannot predict in advance. There is a way to do this within the Federal budget system. We have had some discussions with OMB about it but I cannot yet present to you a finished product for taking better account of that kind of uncertainty.
Mr. KOLBE. One final question. By reprogramming $142 million out of your repair and alterations, is there a major renovation project that is going to miss getting going this year or is it a little bit taken out of an air conditioning system here and stairs there and that kind of thing?
Mr. PECK. It is the latter. We have taken it out of the account that is the small projects, below prospectus limits.
Mr. KOLBE. That is a lot of small projects, $142 million that is not going to get done.
Mr. PECK. Yes, sir. Well, when you have 1,800 buildings you have these all over the place. And that is what we basically have.
Page 43 PREV PAGE TOP OF DOC
Mr. KOLBE. Mr. Hoyer.
Mr. HOYER. By reference you have had a significant reduction in personnel. Based upon your being there for some period of time, do you have sufficient people to accomplish the objectives and responsibilities you have?
Mr. BARRAM. Yes. If we improve our ability to get rid of old work and do the new work well, we will do a better job of doing the right work.
If we do not, if we just do things the way we
Mr. KOLBE. Excuse me for interrupting, we have a vote.
The subcommittee will be recessed for a vote.
Mr. KOLBE. We will resume. As I mentioned, there will apparently be another vote or two, so we may get interrupted again.
Mr. Hoyer, did you need to repeat the question or Mr. Barram, in mid-thought, can you resume where you were?
Page 44 PREV PAGE TOP OF DOC
Mr. HOYER. Complement of personnel sufficient to carry out your duties.
Mr. BARRAM. The short answer is yes but we have to work real hard at it because as we do more and more new things, people need to develop new skills. That takes a lot of flexibility in systems; it takes a lot of flexibility in the personnel system, something that, in my view, hasn't always been a word you associate with personnel systems in the government. But we are working hard at it.
GSA people are under a lot of stress right nowI can feel it all around the countrybecause we are doing some exciting things and people are working very hard. We have to learn the lesson that all organizations have to learn in this rapidly changing time: how to do the A work and not the B work. It is really tough.
I don't know if that answers your question. I think if you asked any manager in GSA if he or she wanted more people, that person would answer yes.
Mr. HOYER. I presume, like all managers, the challenge is to identify A and B.
Mr. BARRAM. That is right.
Mr. HOYER. And the opinion of which is A and which is B sometimes differs.
Page 45 PREV PAGE TOP OF DOC
Mr. BARRAM. That is right.
Mr. HOYER. Okay, I will move on. I am very concerned about where we are in terms of complement of personnel in GSA.
Your 1999 budget, $44 million for new construction, we have all talked about it. Is that the right amount?
Mr. BARRAM. It is the amount.
Mr. HOYER. I stated it as being the amount in my premise to the question. Now, is it the right amount?
Mr. BARRAM. It is like A and B work. You know, everybody has a different opinion. We spent a lot of time with OMB in the budgeting process and this is what we have submitted as the President's budget.
Mr. HOYER. What was your request to OMB?
Mr. BARRAM. It was $570 million.
Mr. HOYER. $570?
Page 46 PREV PAGE TOP OF DOC
Mr. BARRAM. I think so.
Mr. HOYER. We have that list, I think.
Mr. BARRAM. The bulk of that, of course, is courthouses because that is what we build in this countrycourthouses, jails and border stations.
One of the things that I think is really important, and you know this very well, we have established in the last couple of years a priority list on which courthouses to build and I am very pleased, as a relative newcomer to government, to see the way the Congress and GSA and the Administration in general and the Courts have worked on this because otherwise, it gets to be who has the most political power rather than what is the right thing to do.
We have an eight-year program, a long-time program of $8 billion or whatever it is of building new courthouses in this country and we have a list of which come first. So when we have the dollars, the idea is this courthouse gets built first.
Mr. HOYER. Because our time is brief, let me ask a series of quick questions on this.
A, do you believe the federal judiciary's process of setting priorities is appropriate at this point in time?
Mr. BARRAM. I think it is, the short answer.
Page 47 PREV PAGE TOP OF DOC
Mr. HOYER. Do you believe that the dollars projected for construction is for what the public would say is needed space, as opposed to gingerbread space? I don't like either one of those terms, but I couldn't find any better way to say it. Do you know what I mean?
Mr. BARRAM. Yes.
Mr. HOYER. So that of the $570 million, GSA's view is A, this is appropriate, it is priority and it is the proper priorities?
Mr. BARRAM. Yes. One of the things that we had planned a couple of years ago is to spend about $500 million a year every year and that would be a reasonable way to do it. We were unable to do it in 1998 and the budget says we are unable to do it in '99.
Mr. HOYER. Have there been discussions about alternative means of financing?
Mr. BARRAM. Yes. We have had lots of discussions. I think I will let Bob answer that.
Mr. HOYER. Again, time is brief and we may want to answer that for the record.
Mr. PECK. I will just give you the brief answer. Yes, we have looked at lots of different ways, some of which are actually done in the government right now. A lot of them don't conform to rules that were set down in the Budget Enforcement Act of 1990, so there are lots of hurdles you have to overcome to try to make any of those things that people do in the private sector work in the public sector.
Page 48 PREV PAGE TOP OF DOC
Mr. HOYER. Mr. Chairman, if I can, a last question. What are we doing on amortizing federal construction projects? What is the maximum time you have available to do that under the present rules?
Mr. PECK. Well, we actually do not amortize federal construction,
Mr. HOYER. It is 100 percent in one year?
Mr. PECK. Yes, sir.
Mr. HOYER. My point being, Mr. Chairman, every state government, I presume, and I know Maryland, that purchases capital projects amortizes them overin Maryland it is 15 years, which is a relatively short period of time We do it 100 percent up front and it is a real constraint fiscally but it also is a real constraint in terms of investment.
Mr. BARRAM. I think that is because you don't build nuclear submarines in Maryland.
Mr. KOLBE. I was going to say we do the same with aircraft carriers and nuclear submarinesbuy them all in one year.
Mr. Wolf has asked to go next and I will accommodate his request.
Page 49 PREV PAGE TOP OF DOC
Mr. WOLF. Thank you, Mr. Chairman. I am going to have a series of questions for the record but I just want to make the record here.
You would agree that Governor's Island is a treasure that we should protect? Is that fair? It is a very historical sitewould you just give us a sentence or two, why it is so historical, for the record?
Mr. BARRAM. Well, it is a wonderful place and at one time or other in its existence it was under seven different flags. It has some beautiful old buildings. It has great historical significance.
Mr. WOLF. It looks out on Ellis Island; is that correct?
Mr. BARRAM. Yes, it does.
Mr. WOLF. It looks out on the Statue of Liberty; is that correct?
Mr. BARRAM. Yes.
Mr. WOLF. Secondly, how much money did the President request for maintenance of Governor's Island in fiscal year 1999?
Page 50 PREV PAGE TOP OF DOC
Mr. BARRAM. $7 million.
Mr. WOLF. $7 million, and you have a tight budget. Can you afford these costs over the next five years, given the rapid deterioration taking place over on the island?
Mr. BARRAM. It is appropriated funds. We also have talked about the value of having it be no-year funds, if we can do that.
Do we think seven is enough?
Mr. EARLY. We think that seven is enough but that is for this year. There is a recurring need. We would expect to see recurring requirements in future budgets, maybe at this level, maybe at higher levels. This is the amount we are comfortable with for this year.
Mr. WOLF. I was out on the island about a month and a half ago. For the members, they have Coast Guardsmen raking leaves. The buildings are beginning to show the effects of weather.
There has been some interest by only one or two individuals in New York City to bring gambling to the island. Do you think it would be inappropriate to bring gambling to the island?
Page 51 PREV PAGE TOP OF DOC Mr. BARRAM. Well, I do personally.
Mr. WOLF. Well, that is all we need to know. [Laughter.]
And I agree with you.
The last question is this, and then you can elaborate a little bit more for the record.
Senator Moynihan and Congresswoman Maloney and some others have an amendment, have an idea of a concept to set up a commission to save the island with people from the Federal, state and local governments. My own sense of what should be done with Governor's Island, is it should be used for the citizens of the New York State area, for tourism, and for citizens from Maryland and Virginia and Arizona or wherever, when they come.
Secondly, a portion of it should be used for the Park Service because there are some very historic buildings out there. I think one of the oldest buildings in New York City is out on the island. The prison out on the island is very, very historic.
And lastly, to take all of the buildings that are not historic and allow universitiesNYU, Cornell, Fordham and other universitiesto use them.
Would you work with the committee and with Senator Moynihan and Congresswoman Maloney to work out some mechanism for an orderly process for the disposal of the land?
Page 52 PREV PAGE TOP OF DOC
Mr. BARRAM. Absolutely. We really welcome it because we have the responsibility to dispose of it and we are delighted that they are taking such an active role and that you are, too. It is a tough task unless we get a lot of people working together in some creative ways.
Mr. WOLF. I thank you, Mr. Administrator.
Mr. Chairman, thank you very much. I have others I will just submit for the record.
Mr. KOLBE. We will resume our order here. Mrs. Northup.
Mrs. NORTHUP. Mr. Barram, I wanted to ask you about the GSA's cooperation with the Goodwill Games. There was language specifically in the bill last year about cooperating with the Goodwill Games and about the GSA providing services to the Goodwill Games, like we do for the Olympics.
I think what I understand is that for any other services besides the ones specifically in the report language, the Goodwill Games is interested in reimbursing you. For example, if there are printing services that are part of your buildings, communication services, whatever, that they could use the GSA's facilities and services and then reimburse for them.
Page 53 PREV PAGE TOP OF DOC The question is, do we need specific language to allow that? And were those contracts always with the memorandum of agreement with DOD and GSA in the past or with the Olympics? Did you all provide those services directly to the Olympics with provisions in the budget, special report language?
If not, I understand that DOD is no longer doing that. It has now been transferred to the Army. But because it just was transferred to the Army, they have never done it before; they don't have the expertise; they are not prepared to set it up.
The Goodwill Games are going to be on Long Island this summer and I guess there are some people getting pretty desperate about that.
Mr. BARRAM. We are going to try to give a short answer.
Mr. PECK. Let me try a short answer. One is we think we are close to an agreement with DOD on some cooperation, which will allow us to do a couple more things, but I would like to get you an answer for the record on what we can do reimbursably because that always gets complicated.
[The information follows:]
SUPPORT FOR GOODWILL GAMES
On March 26, 1998, GSA and DOD signed a Memorandum of Understanding concerning coordination and assistance in support of national and international special events. Either GSA or DOD may provide any of the following services to the other on a reimbursable basis in conjunction with that agency's support of a national or international special event: waterhouse space, furniture, security, administrative supplies, inventory management, motor vehicles, telecommunications, and other forms of support or services.
Page 54 PREV PAGE TOP OF DOC
Mrs. NORTHUP. The question that is before us immediately is that we have the supplemental going through and there was a question about report language and what it should say. There was disagreement from the staff about what the exact language would be that would be appropriate and acceptable, apparently between your committee staff and the committee staff.
This bill is headed to the floor now but certainly in conference committee that report language possibly could be accommodated. We just need to know what it is.
I think, Mr. Chairman, am I right that we are looking for that?
Mr. KOLBE. Yes.
Mrs. NORTHUP. I think there is just a clarification that we really need here.
Mr. BARRAM. Bill.
Mr. EARLY. As you indicated, the authorities that we are aware of are with the Defense Department now, and with the Department of Army. GSA does not have the authority to deal directly with these nongovernmental entities, even on a reimbursable basis, but the Defense Department and now Army do.
So it is important for us to have that memorandum of understanding with them. Absent that, we are not able, without new statutory authority, to deal directly on a reimbursable basis for those services.
Page 55 PREV PAGE TOP OF DOC
Mrs. NORTHUP. If the supplemental beats the memorandum of agreement in terms of a time level, could the report language say pending memorandum of agreement between DOD and GSA that reimbursable services would be allowed?
Mr. EARLY. We try to be as imaginative as possible but I think we would have a problem without clear statute. Report language would be inadequate for us to do things where we don't have the authority.
Mrs. NORTHUP. So it would actually have to be bill language.
Mr. EARLY. Yes, ma'am.
Mrs. NORTHUP. You are not aware of anything with the Olympic Committee?
Mr. EARLY. What we have done in the past with Goodwill and Olympics and Para-Olympics has been through the agreements with DOD. They have been the lead and in many cases under their charter we might work directly with those agencies, but the reimbursements are all through DOD as the parent.
Mr. KOLBE. Mr. Istook.
Mr. ISTOOK. I pass, Mr. Chairman. I have another commitment.
Page 56 PREV PAGE TOP OF DOC Mr. KOLBE. Mr. Forbes.
Mr. FORBES. Thank you, Mr. Chairman.
I note in this wonderful brochure you gave the committee the kids on Broadway, the GSA Child Service Center, the partnership with the City of San Diego and the private sector and, of course, I want to thank GSA and Commissioner Peck for the help that you all gave us in New York and Long Island with the IRS and child care there.
My question is, Mr. Administrator, first of all, you note that GSA has opened three additional child care centers in the last year. How many GSA-sponsored child care centers or GSA-encouraged child care centers exist in the various court complexes around the country?
Mr. BARRAM. Well, there are 108 or 109 total. In courthouses?
Mr. FORBES. Just the courthouses. Are there child care facilities at courthouses?
Mr. BARRAM. There are some, yes, a handful, six, seven.
Mr. FORBES. I would appreciate it if we could have that for the record at some point.
Page 57 PREV PAGE TOP OF DOC
Mr. BARRAM. Sure.
[The information follows:]
CHILD CARE CENTERS IN COURTHOUSES
There are fifteen child care centers currently located in facilities where there are Judiciary court operations. Only one of thesea new courthouse in Kansas City, Kansasis located in a building used strictly as a courthouse. There is also a child care center planned for the new Boston Courthouse Building which is scheduled to open September 1998.
Mr. FORBES. My concern, of course, is I think the President has laid out that child care facilities is certainly a priority. I know your administration, Mr. Barram, and GSA in general has a very strong philosophy in favor of encouraging child care centers and we do, as I said, appreciate what you did with the IRS at Brookhaven Service Center on Long Island. These are obviously among the most modest of wage-earners, and having a child care facility there, even in the event that it is not fully staffed by federal employees but the fact that there is a partnership with the private sector, I think, goes a long way.
There is another complex being constructed at Central Islip, the court complex there. I was wondering and I would appreciate it, if you can't do it now, if you could provide it for the record, have there been any discussions about providing child care? There are going to be, I think, close to 2,000 employees when that facility is completed.
Page 58 PREV PAGE TOP OF DOC Mr. BARRAM. There have been discussions. The issue we have, the struggle we have, and maybe those are the wrong words to use but not all judges feel like it is a good thing to have child care in the courthouses, for security reasons. We are in extensive and intensive discussions with them about that.
[The information follows:]
CHILD CARE CENTER IN CENTRAL ISLIP COURT COMPLEX
Yes, we have had and will continue to have child care discussions with the Courts and with the other agencies who will be tenants of the facility when it is completed in 2000.
Mr. FORBES. Because they don't necessarily have to be on the site; is that correct? As a matter of fact, I think there are some facilities that are within a mile or two, a three- or four-mile radius of a site? They aren't always contiguous to the site itself.
Mr. BARRAM. They don't have to be and a child care center has to work economically, too. So the space has to be cost-effective and the clientele has to be available. So all that stuff plays, but it could be close by.
Do you know anything specifically about the Islip one?
Mr. FORBES. Well, if you could provide it for the record, I would appreciate it. I think, though, for the record, I think it has been a public policy decision by the Clinton Administration and one that I certainly agree with and I think large numbers of the Congress, if not the Congress in general, feel that in the current climate, that child care facilities are a very, very important undertaking.
Page 59 PREV PAGE TOP OF DOC
And I understand the cost. We have debated that cost at the facility on Long Island in particular but certainly if we can't take the lead, as public policy-makers, whether it is on the administrative side or on the congressional side, I wonder who does take that lead.
So I would appreciate it very, very much if GSA could look seriously at not just the Central Islip courthouse, which I encourage you to do, but also some of the other new construction projects that may be coming down the pike, because this is certainly an area where that ought to be the place where leadership starts on the child care question.
Mr. BARRAM. Absolutely. We agree.
Mr. FORBES. And I thank you certainly for your personal leadership and, Mr. Peck, for your help in New York.
Mr. BARRAM. Let me just say one thing about that brochure you mentioned. I only had five because they are actually warm. They just came off the printers. So for those of you who didn't get one, I will make sure you get one.
Mr. FORBES. Thank you. Thank you, Mr. Chairman.
Mr. KOLBE. Thank you very much, Mr. Forbes.
Page 60 PREV PAGE TOP OF DOC
Mr. PRICE. Thank you, Mr. Chairman.
I am happy to have you here, and I would like to raise a brief question about your FTS 2001 contract procedure. I understand the RFP on that went out the middle of last year and you are looking now at early 1998; is that right?
Mr. BARRAM. It went out at the beginning of this year.
Mr. FISCHER. In the latter part of February we had proposals on the technical side in.
Mr. KOLBE. We need to have you come up and identify yourself.
Mr. FISCHER. Dennis Fischer, Commissioner of FTS.
The RFP closed on March 2 with all the technical proposals. The price proposals are due April 2 and we contemplate an award in the fall of this year.
Mr. PRICE. Award will be in the fall of this year?
Mr. FISCHER. Yes, sir.
Page 61 PREV PAGE TOP OF DOC Mr. PRICE. And how does that relate to the expiration date of the FTS 2000 contracts? To what extent do those overlap?
Mr. FISCHER. Well, the existing FTS contract expires in December of 1998. We have a unilateral right to extend that for six months. Because the transition, given the time line that we are on now, will take longer, we will also negotiate with the existing providers for transition beyond that until the complete transition is made to FTS 2001.
Mr. PRICE. Well, as you probably know, some questions have been raised about the extent to which the FTS 2001 contract procedure is going to be open to all comers and to what extent there may be a locking-in taking place or a bias towards those who have the earlier contract.
I just would like to ask you to explain this mandatory use issue that has come up with regard to your budget submission and to offer whatever assurances you can as to the openness of this process.
Mr. FISCHER. Okay, sir. The present contract, FTS 2000, has a contractual requirement that calls for mandatory use and this subcommittee over the years has been very supportive legislatively of helping us enforce that.
Two years ago the subcommittee approved an extension of it because at that time it appeared we would only need it for two years. Subsequent to that time, as you mentioned, the RFP process was extended. The Telecommunications Reform Act came into play.
Page 62 PREV PAGE TOP OF DOC
What we are asking for is to have that mandatory use language on FTS 2000 extended in an open-ended fashion until the FTS 2000 contracts are completed.
Now, the follow-on contracts for FTS 2001 will not be mandatory. So agencies will have a choice. The major agencies have pledged to stick with us through the initial part of that contract as we satisfy the minimum revenue guarantees that are in there and we need those revenue guarantees to attract good and aggressive and hopefully lower prices than we pay today.
Mr. PRICE. Is the effect of that handling of the issue to bias the procurement process for FTS 2001 in favor of the present contract-holders?
Mr. FISCHER. No, sir, it is not. All it really does is say to us that while this old contract winds down, to the extent that services need to be provided under it after December 1998, that it would be extended to keep that in the envelope until the contracts expire.
Mr. PRICE. All right, thank you.
Mr. Chairman, do I have any time remaining or should I wait until the next round?
Mr. KOLBE. You have one minute.
Page 63 PREV PAGE TOP OF DOC Mr. PRICE. Well, I will wait until the next round. Thank you.
Mr. KOLBE. Mrs. Meek.
WELFARE TO WORK INITIATIVE
Mrs. MEEK. Thank you, Mr. Chairman.
I apologize. I was in a full committee meeting. That is why I wasn't here to greet Mr. Barram. He certainly has come a long way since last year. I notice you have quite a bit of information, which I have hurriedly read here.
I have a question that I hope is germane to what you are doing. It has to do with job creation by GSA. I notice you have a lot of out-sourcing. You have a lot of contractual arrangements with everybody, it seems, throughout the country.
Have you paid any attention to a welfare-to-work initiative with the people with whom you do this contracting?
Mr. BARRAM. The people with whom we do this contracting? We have a very aggressive welfare-to-work initiative inside of GSA. That is a very interesting question. We account for maybe $14 billion, I think the number may be, $40 billion in contracts with people in the private sector, but we do that by having our customers, the federal agencies, make purchases from them. We set up contracts and let them purchase.
Page 64 PREV PAGE TOP OF DOC We are very aggressive with SBA; we have recently made it even easierin getting our federal agency customers to pay attention to small businesses, but I don't know if anybody has ever done what I think you are asking.
Mrs. MEEK. You would think there would be some sentiment from the top down as far as you are concerned in impressing this over the agency.
Mr. BARRAM. Well, personally I would have some sentiment for it but I would really be careful of it. I would want to understand it well because it could end up being a really difficult task to figure out how you were doing it. If you ended up with requirements and regulations or laws, you could spend an awful lot of effort and I don't know whether you could get where you want to get. It's a very interesting sentiment.
I like the way we are going about it in the country with doing it inside the federal government in an aggressive way and the President challenging American companies to try to make welfare-to-work work, but I haven't ever thought about the question you asked.
FEDERAL AGENCIES REQUEST TO MOVE BETWEEN DISTRICTS
Mrs. MEEK. My next question has to do with a concern of mine. I may have asked you this question last year. I can't recall exactly if I asked it or how I asked it.
What procedures does GSA use when an agency requests to be moved from one district, one congressional district, to the other? Let me give you an example.
Page 65 PREV PAGE TOP OF DOC
Members are fairly provincial about having Federal buildings moved out of their district into another district.
Mr. BARRAM. I hadn't noticed that.
Mrs. MEEK. Yes. Tell me what kind of methodology do you use or regulations do you use before you go forward with this kind of request?
Mr. BARRAM. I will answer that and Bob may want to add to that, as well. Here is how I look at it. We have some drivers for us and one of them is helping the central cities of America stay strong. The President's executive order says to locate in the central cities, locate in historical districts and we have worked very hard to try to make that happen.
If an agency wants to move out of a central district into another member's district that is not in a central city, we are going to work hard with them to try to keep them located downtown, not because we like one member over another but because it is the downtown central city reason.
We, I hope, are indifferent to what district it is in.
Mrs. MEEK. He said he is indifferent to which district it is in. That is what you said, Mr. Barram?
Page 66 PREV PAGE TOP OF DOC Mr. BARRAM. Except for the two of you.
Mr. PECK. Obviously
Mr. BARRAM. Let me be clear about this for the record. We should be professionally indifferent to which congressional district a property is in. We work with our customers, the federal agencies, and we focus on the downtowns.
Mrs. MEEK. When Mr. Peck finishes, I will
Mr. PECK. There are several ways in which a relocation can happen. For example, an agency can decide that it is going to consolidate the number of offices it has nationally and instead of having 40 field offices, have four. That is not a decision that we in GSA look behind, nor can we because we have no competence to tell them how to do their business.
That may mean that some federal employees who are currently located in congressional district X are going to go to congressional district Y or transfer to another agency or whatever. We sort of take the locations as they are given.
What the Administrator was talking about is absolutely right. With respect to relocations within a given metropolitan area we have clear policies given to us by the President, which are incumbent upon us and the federal agencies to follow. That puts us in the position of sometimes trying to enforce something that some agencies aren't happy with.
Page 67 PREV PAGE TOP OF DOC There is one other factor that I would be remiss if I didn't note. We are very strong; we have a fixed inventory of federal office space, which we pay on whether it is occupied or not. If it is not occupied, we are losing money for the taxpayers.
Our first preference is to locate federal agencies in existing federally owned space if we believe that that space is productive work space. If it is not productive we ought to dispose of it somehow or other. So that is another clear preference which sometimes comes into play when we talk to agencies about location decisions.
Mrs. MEEK. Mr. Chairman, I would like to go off-record with my next statement. I want to be off the record.
Mr. KOLBE. Off the record.
[Discussion off the record.]
Mr. KOLBE. Thank you, Mrs. Meek. We will begin here with a second round of questioning.
FEDERAL BUILDINGS FUND
I want to come back to the Federal Buildings Fund and the concerns we have about that. How are your revenues in 1998 matching up to the projections you made so far?
Mr. BARRAM. Very good.
Page 68 PREV PAGE TOP OF DOC
Mr. KOLBE. Very good?
Mr. BARRAM. Yes. We have a quarter of the year done and we have a quarter of the year revenues.
Mr. KOLBE. As far as you know, in the budget that has been submitted to Congress for fiscal year 1999, have all the agencies requested the full amount of their rents?
Mr. BARRAM. Yes, sir.
Mr. PECK. Which I might note is a breakthrough.
Mr. KOLBE. All agencies have requested the full amount, so there is none that is outstanding?
Mr. PECK. Yes, sir.
Mr. KOLBE. Are all agencies currently paying their full amount of rent?
Mr. PECK. This year?
Mr. KOLBE. Yes.
Page 69 PREV PAGE TOP OF DOC
Mr. PECK. No, sir.
Mr. KOLBE. Can you tell us which ones are not or provide for the record a list of those that are not?
Mr. PECK. I would rather give you the list so I don't have to say it in public.
Mr. KOLBE. Well, it is going to be in the record.
Mr. PECK. They are being better.
Mr. KOLBE. It is going to be in the record. I want the list and I want it in the record.
Mr. EARLY. Those that are not paying us the full amount today are related to not having adequate funds appropriated for them to pay us, so they
Mr. KOLBE. I want that list.
[The information follows:]
AGENCIES NOT PAYING FULL RENT
Page 70 PREV PAGE TOP OF DOC Several years ago the Department of Agriculture (USDA) appropriation bill began imposing limitations on the rent payments to GSA, regardless of the volume or value of space received from GSA. Additionally, the law stipulated that GSA could not decrease service or decline requests for new space from these agencies. Due to the perceived intent of Congress, USDA and the Food and Drug Administration (FDA) have been requesting in their budgets insufficient funds to pay GSA full rent. In fiscal year 1998, the loss of income to GSA due to these rent limitations is expected to be approximately $43 million. In fiscal year 1997 and 1998 appropriations bills, GSA was instructed to decrease service and decline requests for new space from agencies who do not pay GSA full rent. As a result, GSA, OMB, USDA, and FDA have worked together to prepare a budget which includes full rent payments to GSA from USDA and FDA in fiscal year 1999.
Since the inception of the Federal Buildings Fund (fiscal year 1975) GSA has billed trust fund agencies (Social Security Administration, Health Care Financing Administration, and Railroad Retirement Board) only for the cost of space, not the full market rent. The loss of income to GSA is expected to be approximately $99 million in fiscal year 1998 and approximately $98 million in fiscal year 1999. The policy of billing for actual cost arises from report language accompanying the fiscal year 1975 Labor, HEW appropriation Bill. This policy is currently under review but a final resolution was not reached for the fiscal year 1999 budget cycle.
Mr. PECK. Let me note one other thing. The trust fund agencies, by statute, provide us cost but don't provide full rent. Again that is a statutory determination.
Mr. KOLBE. Would you repeat that again?
Page 71 PREV PAGE TOP OF DOC Mr. PECK. Social Security and other trust fund agencies pay a cost of space but don't pay us the full market rent like everybody else.
Mr. KOLBE. The reason they are not paying full rent in all cases is because they have not had the funds appropriated; is that correct? Is there any other reason? Are there other agencies that are withholding, not paying their rent?
Mr. PECK. No, sir. But to be fair to you all, the couple of agencies that hadn't paid rent before hadn't requested their appropriators to give them full rent. There have been other cases in the past in which it has been requested and it hasn't been provided but currently it is
Mr. KOLBE. I definitely want that list. I intend to make an issue out of that this year.
You have requested a little over $5 billion in new obligational authority for the Federal Buildings Fund. What is your estimate of revenue for this coming fiscal year?
Mr. PECK. For fiscal 1999 we are in balance. We anticipate a small surplus based on our anticipated revenues.
Mr. KOLBE. You only have the $44 million request for obligational authority for new construction projects. Can we anticipate that is the level of new construction we are going to be able to support in the future?
Page 72 PREV PAGE TOP OF DOC Mr. PECK. We have taken a look at the 20 some years that the Federal Buildings Fund has been in existence. I have to say that if we provide the level of basic infrastructure repair that the Administrator talked about, we think that $50 million, in some years maybe $100 millionthis is our viewof what it would be prudent to spend on new construction, compared to the requirements to spend on keeping up what you have.
So that is a pretty good guess about where we think the level
Mr. KOLBE. Let me see if I understand that statement. You are saying if we provide the adequate funding for renovation and repair, then $50 million would be about all you would need for new construction?
Mr. PECK. No, sir. I am not saying that is all you would need. I am saying that if you run the fund in a businesslike way, the amount of construction that the fund can support
Mr. KOLBE. Ah, that is all we can support. Now you are asking for $668 million in the repair and renovation fund. You told us a few moments ago that $600 million to $1.2 billion should be spent and you are right at the lower end of that. So you are really not asking for an adequate amount for that, are you?
Mr. PECK. No.
Mr. BARRAM. We could be confusing you with these two answers, and I don't want to do that. We think we have $4.5 billion of repairs and alterations over a period of eight or nine years, which would get us to that $500 million, but that we should do that faster if we really were doing it right.
Page 73 PREV PAGE TOP OF DOC
I want to say what I hear from Bob and he may want to disagree with that, but yes, we could, if we think about things the way we thought a little bit in the past, we could maybe find $50 million or $100 million out of thatwe could take $50 million or $100 million and spend it on new construction but we wouldn't be rehabbing as fast as we should.
Is that fair?
Mr. PECK. Yes.
Mr. KOLBE. All right. We are running out of time. We have votes called and I want to see if others have other questions. I want to ask just one question here.
You have released some of the relocation money to the FCC for moving into the Portals Building. A, have you taken control of all of that building? B, has the move started?
Mr. PECK. The base building is complete and the move has not started. That is the short answer. We do not have the building yet in shape for the FCC to move in. We have released all the funds necessary, however.
Mr. KOLBE. I thought you were going to take over segments of it on six-month or month-long segments.
Page 74 PREV PAGE TOP OF DOC Mr. PECK. Mr. Chairman, we had an agreement to begin paying rent and to take all the different parts of the building under our wing for rental purposes and the answer to that is yes, we are now at a point where we are paying rent on it.
Mr. KOLBE. You are paying rent but you still don't have it in rentable condition. Is that what you are saying?
Mr. PECK. There are parts of the building that are still not in a move-in position. It is in a rentable position.
Mr. KOLBE. When is the FCC going to start moving?
Mr. PECK. We believe in September.
Mr. KOLBE. Not until September. I will probably have some other questions on that. Thank you.
Mr. HOYER. Is GAO still looking at this move?
Mr. PECK. Yes, sir. As you know, they concluded one report and said that they were asked to look into some allegations of political influence and they said they had not concluded their inquiry on that. But they did conclude their inquiry on the question of is it cost-effective for the government to move the FCC. There the answer is yes. Did GSA follow all of its laws and regulations in signing the lease? The answer was yes.
Page 75 PREV PAGE TOP OF DOC
Mr. HOYER. It is my understanding that we tried to cancel this procurement. We were taken to court and lost in 1992, and then told to reinstate the procurement at the point of cancellation. Is that correct and is that why we are at the point we are now?
Mr. PECK. That is correct, sir.
Mr. HOYER. Okay. Well, I share the Chairman's concern about this project and I am sure we will follow it closely.
Mr. Chairman, I have other questions. I will submit them for the record.
Mr. KOLBE. Mr. Price.
ICC/CONNECTING WING PROJECT
Mr. PRICE. Thank you, Mr. Chairman.
We are pressed for time but let me raise the issue of this ICC Connecting Wing project that is in your budget request. I very much hope that the management problems that the Chairman is referring to and the funding difficulties that have gone along with that can be resolved . . . because the ICC Customs Connecting Wing project is in abeyance and, as I understand it, it is costing us money the longer we fail to complete it.
I wonder if you could just briefly, in the time we have and then maybe do a fuller submission for the record, indicate what your plans are for that project, which EPA is, of course, waiting to occupy.
Page 76 PREV PAGE TOP OF DOC
We have a situation in North Carolina where EPA is renting, I think, in 13 locations now and eagerly awaiting the construction of this new laboratory that will let them consolidate those operations and operate far more efficiently and effectively. And, as I understand it, EPA here in Washington has a similar situation where they are scattered in rented locations.
So the completion of this Connecting Wing projectit is an $84 million request in your fiscal 1999 budgetthis will be the last stage in their occupying new space that will let them consolidate their operations and, one hopes, operate more effectively here, as well.
Could you clarify for us the priority you give to this request and the kind of benefits you expect to reap from it, including the kind of rental income that should come in, once the project is complete and EPA is occupying this space?
Mr. PECK. Let me go backwards. I will provide for the recordI don't know what we have established as the rental rate for the project but I can tell you, since this is the second year in a row we have wanted to fund this project, we are ready to go. It is a high priority. We are consolidating the EPA right now in the Ronald Reagan Building, the Ariel Rios Building, and but for this, we can have them pretty much in one location in downtown Washington.
It is a high priority. It is yet another of the Federal Triangle buildings which have gone on for now 60 years without ever having a major rehabilitation. We can provide tremendously productive work space for EPA in the building and we are ready to go.
Page 77 PREV PAGE TOP OF DOC
[The information follows:]
RENTAL INCOMEICC/CONNECTING WING/CUSTOMS COMPLEX
When fully occupied, the complex should provide approximately $22.9 million in annual gross revenues to the Federal Building Fund and annual operating costs are expected to be approximately $5 million.
Mr. PRICE. I have information from EPA citing GSAyou tell me if this is correctestimating that a failure to secure this $84 million could result in additional operational costs and lost rental revenues exceeding $40 million. And then EPA estimates itself that it would incur operational costs, additional costs, of about $10 million each year that this consolidation is delayed. Does that sound correct to you?
Mr. PECK. That is about right. That would be their rental cost. We would probably add to that our cost of having an empty building on which we are not collecting rent, and I could provide that number for the record, also.
Mr. PRICE. Well, that would be helpful if you could provide your analysis for the record, just so that we can more adequately evaluate this request.
[The information follows:]
IMPACT OF FAILURE TO COMPLETE ICC/CONNECTING WING/CUSTOMS COMPLEX
Page 78 PREV PAGE TOP OF DOC
If funding to complete modernization of the Interstate Commerce Commission Building, the Connecting Wing Building, and the U.S. Customs Service Building (the ICC/CW/USCS complex) is delayed, there will be a significant financial impact. In addition to a cost to EPA in excess of $10 million, we estimate the impact on the Federal Buildings Fund to be $43.0 million$22.2 million annually in lost revenue; $1.9 million annually in minimal building services required to prevent deterioration; $12.6 million in added construction costs, temporary building system connections and maintenance, and additional design cost to update tenant fitout documents; and $6.3 million annually in additional rent at the Fairchild and Crystal Gateway Buildings.
An example of the impact of delayed funding involves equipment maintenance costs. Most of the building systems were included in Phase II of this project, which is currently being completed. Warrantee periods for this type of equipment begin immediately after installation. Given a funding delay, at least a full year will be lost before these systems experience normal usage and maintenance costs will increase. Should the delay in funding exceed one year, construction drawings will need to be reviewed again for Fire and Life Safety compliance. Any required changes must then be reflected in the construction and contract documents.
With receipt of the requested $84 million for the project in fiscal year 1999, the complete renovation of the remainder of the complex can be accomplished. Phased occupancies are planned to occur between November 30, 2000, and December 7, 2002. When fully occupied, the complex should provide approximately $22.9 million in annual gross revenues to the Federal Building Fund and annual operating costs are expected to be approximately $5 million. Discontinuing leases for space that EPA currently occupies is expected to result in an annual savings of approximately $20 million.
Page 79 PREV PAGE TOP OF DOC
Thank you, Mr. Chairman.
Mr. KOLBE. Thank you very much, Mr. Price.
Mr. Barram, thank you very much, you and your colleagues, for appearing with us today here and for the answers. We will have some questions for the record and your early response would be helpful to us as we prepare the record.
This subcommittee will stand adjourned.
[Questions for the Record follow and the budget justification material follows:]
"The Official Committee record contains additional material here."
Tuesday, March 24, 1998.
NATIONAL ARCHIVES AND RECORDS ADMINISTRATION
JOHN W. CARLIN, ARCHIVIST OF THE UNITED STATES
Page 80 PREV PAGE TOP OF DOC Mr. KOLBE. The Subcommittee on Treasury, Postal Service and General Government will come to order. Let me begin by apologizing to Governor Carlin and the Archives people, as well as the General Services Administration, who are going to follow them, for the delay here and to also advise you if I bang the gravel in mid-sentence, we will walk across the hall for a vote. It is not because we are trying to be rude to you here. As you know, we are doing a mark-up and there are a number of amendments yet to go.
Let me begin by welcoming Governor Carlin, who is the Archivist of the United States. He will be testifying on behalf of the National Archives, the budget request for the National Archives and Records Administration.
Governor, I look forward to your testimony and I agree that, and we have talked about this before, for such a small agency you have a tremendous amount of responsibility. I suppose if you ask most Americans, ''What do the Archives do?'' they say, ''Ah, that is where we have the Declaration of Independence, the Constitution, the Bill of Rights and other historic documents.'' But, as you note in your testimony, you touch the lives of Americans in a lot of other ways.
In this next fiscal year you are requesting $230 million for operating expenses. That is a 12 percent increase over the amount appropriated in FY 1998. In the current budgetary climate, that is a large increase. But based on our initial review of your budget, I think there is merit to what you are asking for.
However, the realities of the budget and the 302(b) allocations may mean that we are not going to be able to do everything that you would like to do. So as we go through this process, I hope that you will help us by identifying your highest priorities, those items that really are the absolute must items for this year.
Page 81 PREV PAGE TOP OF DOC
In the repairs and restoration activity, we are very interested in your plans for constructing new encasements for the Charters of Freedom and renovating the National Archives Building here in Washington. Because of the costs involved in this effort, this is an area in which we will want to work very closely with you.
Governor, we look forward to your testimony. And, of course, we will put your whole prepared statement in the record so you may summarize it.
Before you do, let me turn to Mr. Hoyer for any comments he might want to make.
We should just get it out of the way before you begin, Mr. Hoyer, that we did have our bet last week and while I won that bet, those crabs aren't going to taste as good as I thought they were going to taste.
Mr, HOYER. There is nothing to say. My friend from Connecticut has nothing to say. Only our friend from Kentucky will
Mr. KOLBE. Governor Carlin definitely has nothing to say.
Mr. HOYER. My son-in-law went to the University of Kansas and there is no joy in Mudville tonight. However, there is joy in Louisville.
Governor, I will not make an opening statement other than to welcome you here before we hear your testimony and I will have a number of questions. We need to be brief on this side of the table so we can hear what you have to say on that side of the table.
Page 82 PREV PAGE TOP OF DOC
Mr. KOLBE. There are no other opening comments. Governor Carlin.
Summary Statement of Mr. Carlin
Mr. CARLIN. Mr. Chairman and members of the subcommittee and staff, I am John Carlin, Archivist of the United States, and I am pleased to present the 1999 appropriation request for the National Archives and Records Administration. And thank you for submitting my full testimony for the record. I would like to obviously briefly highlight here some of the key issues.
Before I begin I need to introduce my Deputy, Dr. Lew Bellardo, and Assistant Archivist for Administrative Services, Adrienne Thomas.
First let me thank you for the opportunity you have given me to discuss our request with you, Mr. Chairman, with you, Mr. Hoyer, and other members of the committee and also for your previous support. With it, we are making progress. From beginning to address our electronic records issues, expanding our preservation work, and making the improvements at the Truman and Roosevelt Libraries, last year's support is becoming reality. In addition, the electronic access project you funded earlier is showing the positive and practical way to use modern technology to carry out our mission. You can be proud, Mr. Chairman, of this as one government investment in technology that is really helping the customer.
Now to 1999. This is my third budget hearing and up to this point I have emphasized our doing better with existing resources, protecting our base funding, and seeking modest help for a few specific areas. The base remains essential and we must continue efforts to improve our work processes, but that does not address what is now clear to me, and that is the huge deficiencies that we face in doing what the law requires us to do.
Page 83 PREV PAGE TOP OF DOC
It took me some time to fully comprehend the significance of the resource shortfall but when I did, I did not hesitate going to the President and asking for the resources I believed to be critical for NARA to have any chance of carrying out our mission. The President's budget of $246 million, $21 million over 1998, represents an important step in providing resources we can responsibly invest to address the enormous challenges we face. The budget is consistent with our strategic plan as revised to conform with the Results Act and complements what we are doing in the current fiscal year. Our emphasis is on addressing critical records management issues, expanding access to the records, and preserving at-risk records.
Crucial to our mission is successfully promoting better front-end records management, which includes dealing with the government's quickly expanding reliance on electronic records. The problems are that we don't know in any depth what records are being created, how those records are being managed, what electronic systems are being used, and how those systems might be accessible over time.
Therefore, we are requesting help to expand our contact with federal headquarters agencies and to greatly improve our work with field agencies, especially those that have had little or no contact with NARA staff. We will redesign how we identify, appraise, schedule and track records in agency custody.
The results we want will not happen overnight. But these resources will allow us to significantly begin the retooling of one of NARA's most critical processes, start to get a handle on government-wide high priority records management issues and begin establishing a true partnership with agencies.
Page 84 PREV PAGE TOP OF DOC
One established partnership with the Department of Defense will develop electronic recordkeeping requirements and certify products capable of meeting those requirements which could be then shared with all federal agencies. Clearly, sound records management has always been important, but with electronic records, the risks and pitfalls are much greater. Experts believe we have already created an information gap. The question now is whether that gap can be contained.
Access to meet the growing expectations and demands of citizens requires not only additional staff but an improved technology infrastructure. We will develop a plan to provide access to electronic records online. This, when implemented, would allow users to do initial research in records regardless of format.
Other resources will allow us to upgrade our internal and external communications system, start a replacement program for microfilm readers and audio and video players, and place research computer terminals in every NARA archival facility and presidential library so that researchers visiting NARA can access the same information that we can make electronically accessible to researchers from their home.
Additionally, we will be better able to deal with the constantly increasing citizen demand for access, which accelerates, for example, when independent counsels' investigations close.
Ready access to essential evidence depends on preservation, and no preservation work is more important than addressing the need to reencase the Charters of Freedom. Resources requested would fund the study of the design of the prototype encasement, the testing of the prototype and the eventual construction of the seven final encasements.
Page 85 PREV PAGE TOP OF DOC
Other resources would enable us to begin plans for Archives I renovation, which makes the charters accessible to the public and helps preserve other valuable and heavily used records like those from the Civil War. Also, preservation copying of our at-risk audiovisual collection would be accelerated.
I would like to show you an example. Mr. Chairman, this aerial photo of Tucson, Arizona in the '40s obviously was just pulled out of the large inventory we have. It could have been somewhere in Maryland, Mr. Hoyer, but it just happened to be Tucson.
This is an aerial photo. The negative is on acetate-based material which, over time, disintegrates, turns to vinegar. This is just one example of a photo that we consider valuable because it is representative of the entire set of photos that covers the entire United States done by the Department of Agriculture, as well as the Department, in that time, of War.
Let me show you some other examples. This photo is of Generals Eisenhower, Bradley and Patton inspecting Nazi accumulations of looted art at the end of World War II. It is not only an excellent photo of three distinguished leaders but it is further evidence of one of the major issues a lot of work is being done on in terms of the Nazi gold issue, which will focus on looted art here pretty soon as the work on the original material is completed.
And this additional photograph I share with you, also from the World War II era, taken in Geich, Germany. This is evidence obviously of the destruction that takes place, as well as the reality of being a part of that war. These records are obviously valuable but, without help, very much at risk.
Page 86 PREV PAGE TOP OF DOC
[CLERK'S NOTE.The photographs will be retained in Committee files.]
Another major body of records at risk are the military personnel records. Some 8,000 cubic feet of these veterans' records are disintegrating because of poor quality paper and frequent handling in reference use. An additional 113,000 cubic feet salvaged from a 1973 fire are charred, brittle and contaminated by mold. In 1999 we would begin work to set up the kind of comprehensive preservation program these valuable 20th century veterans' records deserve.
And given the avalanche of electronic records about to reach NARA, expanding our own capacity for preserving electronic records is a high priority. For example, this chart shows that NARA has accessioned approximately 90,000 electronic files in the last 26 years from the entire federal government.
Compare that number to the approximate 1,780,000 files NARA will accession annually from just two agenciesthe State Department and Treasury. And these numbers are for e-mail only. Add to that the word processing documents, automated databases and whatever else is coming. But let me tell you, folks, being overwhelmed is not a choice when the record of our country is at stake. Together, these challenges must be addressed.
[A copy of the chart displayed at the hearing follows:]
"The Official Committee record contains additional material here."
Mr. CARLIN. Today I have highlighted only a few of our issues, but I welcome questions on any and all, like preparing for the change to reimbursable funding in our records center program, continuing our nationwide space study, maintaining our facilities with the repairs and restoration fund and, of course, the exceedingly valuable work done by the National Historical Publications and Records Commission (NHPRC). All are critical to our mission of providing ready access to essential evidence.
Page 87 PREV PAGE TOP OF DOC
In summary, this budget request could be characterized as one of dramatic increases. On the other hand, if one takes into account the fiscal history of this agency, the huge explosion of government records, the seemingly impossible electronic records problems, and, of course, the value of records, I conclude that this is a very reasonable investment in the democracy we all care so much about.
Documenting the rights of citizens, holding government accountable and preserving the record of the national experience is no small task. We accept that challenge and ask for your continued support to be successful. Thank you, Mr. Chairman.
[The prepared statement of Mr. Carlin follows:]
"The Official Committee record contains additional material here."
Mr. KOLBE. Thank you very much for your opening statement there. We will stand in recess.
GENERAL RECORDS SCHEDULE 20
Mr. KOLBE. We are back for a little while, anyhow.
Governor Carlin, this Sunday there was an article in the Washington Post which said that there is a judge that is asking why you should not be sanctioned or held in contempt for failing to submit a timely response to demands that you comply with the ruling.
Page 88 PREV PAGE TOP OF DOC
Let me begin by asking about General Records Schedule 20. What are the provisions in that that are the subject of this lawsuit?
Mr. CARLIN. Basically the lawsuit is over whether or not in this case the GSR20 schedule was inappropriately used. The General Records Schedules are used to dispose of what normally are administrative housekeeping records, so they are not scheduled. we don't sit down and identify specifically whether it should be a five-year retention or a ten. The General Records Schedule applies across the board to all agencies.
The issue here dealt with electronic records and specifically the disposal of electronic records and whether or not there were program records that were being destroyed. That is really the main issue in terms of the court action.
Quite frankly I will tell you, Mr. Chairman, I have no problem telling you program records should not be destroyed arbitrarily. They should be scheduled. In that sense, from that perspective, we concur as an agency with both plaintiffs and the court. There are some other complicating factors in this, as it takes place in all lawsuits and I would tell you that in terms of where you started and as far as missing the deadline, I would ask you to talk to the Department of Justice, who represents me. I wouldn't pretend to try to explain the confusion between the Department of Justice and the court over a deadline.
Mr. KOLBE. What steps are you taking to comply with the judge's ruling?
Page 89 PREV PAGE TOP OF DOC Mr. CARLIN. We are taking a number of steps. Our strategic plan identified, well before this suit, that we needed to make changes in how we deal with the up-front issues of appraisal, scheduling, dealing with he records at the front end of the life cycle. We had, in this budget, starting a year ago, made the decision that we wanted to do a total reengineering process of that whole front end of the life cycle. To accelerate the action, though, when the court decision was made, I appointed a working group that my deputy, Dr. Bellardo, heads up and works on to address what, in the short run, immediately we could do to satisfy the concerns that not only the court had but we had, as well.
And that working group, including individuals from federal agencies who have some particular expertise to offer, as well as outside consultants, are moving towards a deadline in July that would allow us to have something in place no later than the first of October to address temporarily this issue as we move towards more permanent action.
Mr. KOLBE. Well apparently one of the things that has bothered some of the groups that brought this suit is that you have said since the suit was brought and since the ruling was made that General Records Schedule 20 still applies. Is that true, that you are telling agencies to continue as though the court had not ruled otherwise?
Mr. CARLIN. We are advising them on the mammoth amount of records that are involved in already scheduled situations that yes, but we are saying to the agencies, when you submit new schedules, include the electronic records that heretofore you were dealing with using the GRS20, seeing that as a reasonable way to proceed, to try to avoid what could be a very significant impact on agencies if suddenly there were no choices or there was not transition period.
Page 90 PREV PAGE TOP OF DOC
CHARTERS OF FREEDOM ENCASEMENTS
Mr. KOLBE. I have a whole series of other questions in this area that I will submit for the record but just one other question, on the new encasements for the Charters of Freedom. You are asking for $4 million for design and construction. Is that going to cover the entire cost of this project, including design and development, testing the prototype, and construction of the new encasements?
Mr. CARLIN. Yes, the $4 million will cover what you have just startedthe design work, the testing of the prototype and the building of the actual encasements.
Now, so that we are really clear here, we are talking about the encasement that the record will set in.
Mr. KOLBE. Not the world around it.
Mr. CARLIN. Not the bed in which the reencased charters will lay and be secured.
Mr. KOLBE. Nor the things that you would need to do to comply with the Disabilities Act, those kinds of changes?
Mr. CARLIN. Correct.
Page 91 PREV PAGE TOP OF DOC
NATIONAL ARCHIVES BUILDING CONCEPT DESIGN
Mr. HOYER. Thank you.
Governor, you have a $2 million item for concept design. Can you tell me a little bit about that and what the funding will be used for?
Mr. CARLIN. The $2 million in the concept design refers to the Archives Building in total, the building aspects that need to be addressed. We are talking about ADA compliance. We are talking about the major building systems that need to be updated and changed. We are talking about improvements in the humidity and control of temperature, the air that is in the stack area. Those are the basics that we are dealing with and this will be the first stage.
I would tell you candidly that the $2 million will take us beyond concept design into what will follow in early stages, not the total design of the building obviously. We wouldn't even come close with the $2 million, but the $2 million will take us slightly beyond the concept design of Archives I for the renovation. It would also deal with the Rotunda and what the Chairman was asking about, where those reencased documents will lie, those issues that are involved in that area.
Mr. HOYER. Okay. The encasement which you are talking about now and the restoration work on the National Archives Building downtown, what is the time line involved here? How are they related and what is the time line involved?
Page 92 PREV PAGE TOP OF DOC
Mr. CARLIN. The time line is this. We have been able to secure an $800,000 grant from the Pew Foundation which will allow us to do some very initial exploratory work in terms of the research initially that would go into the prototype reencasement component. That allows us to get started sometime in the next few months and, with your support, to continue that in the fall.
The time line is basically this. We think the work on the reencasement, all the way through having the reencasements completed and tested could be done by mid-year 2001, which would be shortly after the year of the millennium. During that time frame in between, we would do a lot of special things to call attention to the project, realizing that taking these Charters of Freedom off public display for a period of time is not going to be popular, but we have no choice.
And we want to minimize that with a significant educational program leading up to what will then be about an 18-month period in which the renovation of the Rotunda, if things stayed on schedule, and I know this is all hypothetical, could take place that would allow, then, in about 2003, for the project to be complete if you lay the time line out based on a series, we admit, of hypotheticalswhen the support comes, et cetera.
ARCHIVES II SPACE
Mr. HOYER. Governor, in the scenario that you refer to, when are you going to run out of space at Archives II in College Park?
Page 93 PREV PAGE TOP OF DOC Mr. CARLIN. The original projection, if you go back many years was 2004; our projection now would be 2006, which would require us, again assuming these numbers hold up, we would want to be discussing the issue of expansion of Archives II two years from now or in the 2001 budget.
Mr. HOYER. When would you start construction. If you are talking about 2001 doing planning and design money?
Mr. CARLIN. Correct.
Mr. HOYER. We are talking about fiscal year 2001?
Mr. CARLIN. Yes, fiscal year 2001.
Ms. THOMAS. The design would take about 18 months. We would need about eight months to let a construction project and then construction would take about 30 months.
Mr. HOYER. Mr. Chairman, I don't know whether my time is up. I have other questions. Are we doing five minutes?
Mr. KOLBE. Yes.
Page 94 PREV PAGE TOP OF DOCRECORDS CLASSIFICATION/DECLASSIFICATION
Mrs. NORTHUP. Thank you.
Mr. Carlin, can you give me a simplified explanation of declassification of records? Some of the questions that come to mind are are some agencies or departments, all of their records are classified. Is there, in general, a process? Do they go through that process before or after the records come to you? And do the agencies make those designations themselves?
Mr. CARLIN. The classification/declassification process is basically this. The agencies make the decision to classify a record. We are not involved. The agencies really make the decision to declassify a record but we are involved to some extent because a lot of times the records have already been transferred to us.
In some cases the agencies opt to give us guidance. If they give us guidance, then we can, following that guidance, declassify those records. We can work with the agencies to make it as easy as possible.
It gets complicated in some area because many times a record will be classified by more than one entity; as many as five or six is relatively routine. That means in order for that record to be declassified, all five, six, depending on how many different entities are involved, have to be a part of that process.
Mrs. NORTHUP. If I were the head of an agency, what might be really simple is to just say everything is classified. I realize there would be some things that clearly aren't classified, some things that clearly are classified, but let's say everything that is in between. Wouldn't the easiest thing to do be to classify it?
Page 95 PREV PAGE TOP OF DOC
Mr. CARLIN. Well, there would be those who would say and draw that conclusion that one of our problems is it is very easy to classify, relatively speaking. The complicated part comes in in declassifying because then you have to make sure you are opening something up that should be opened. You can classify something that maybe didn't need to be classified in the first place.
For example, presidential itinerariesI learned this in a visit to the Carter Libraryare classified. They really shouldn't need to be classified for a very long period of time, yet all the itineraries of the Carters, of routes, are still classified because it is easy to classify; it is not so easy to declassify, or at least in the eyes of the agencies that is the perspective often.
Mrs. NORTHUP. So I guess my question is what is your role or responsibility in getting everything in the correct designation?
Mr. CARLIN. Well, as our mission statement states, ready access to essential evidence, we believe in access, so whatever we can do to facilitate things for the agencies.
For example, and it has yet to be to the point where I would say it is a slam-dunk, going to work real well, but in the last year or so we have worked with the CIA in developing a scanning technology that allows us to officially scan records, for example, from the presidential library system where they are scattered all across the country, to go in and scan and thenand obviously this can't be done in routine technology because we are talking about classified information but then, through technology, divide those equities up so that all the agencies that are involved in a particular record, not having to go to Austin, Texas, can, in their own workplace, proceed to declassify it.
Page 96 PREV PAGE TOP OF DOC
We have tried the project at Johnson. It is now starting at, I believe, Kennedy.
Mrs. NORTHUP. Besides sort of the technical steps, I am interested in the reality of how it works. It strikes me that every one of us has more on our desks than we can possibly get to today, tomorrow or next year. So going back and reviewing what I did two years ago and deciding whether it is classified or declassified means I have to think about it again, and I can't even think about what is on my desk right now.
And all of that would have the effect of making it very laborious and difficult to declassify things in a regular and timely manner.
Mr. CARLIN. A couple of things I would share with you. One is the President's executive order now working in the third year is having a dramatic impact on declassification because there is a deadline. In fact, in the last three years, as compared to the total work that has been done in, I think, the last 25 years, 70 percent of the records that have been declassified in that lengthy period of time have happened in the last three years because there is a deadline and a great deal of emphasis and momentum towards that taking place.
Also I would remind you that you in your kind wisdom shared the Information Security Oversight Office [ISOO] entity, a small office that deals at the front end of classification; they are now a part of NARA. And in that sense, although we try to keep those components separate, they work with the executive branch in a lot of detail in terms of how classification and declassification really work.
Page 97 PREV PAGE TOP OF DOC
Mr. KOLBE. Mr. Istook.
INTERNAL REVENUE SERVICE RECORDS POLICY
Mr. ISTOOK. Thank you, Mr. Chairman.
Mr. Carlin, I have read some things that indicate that, of course, you don't always have the degree of cooperation you would like from different agencies and it is a challening task. I have read some things in particular about the Internal Revenue Service. There has been a great deal of interest, of course, in its operations.
Can you kind of assess for me what the situation is regarding the records retention and maintenance and preservation policy with the IRS and how that is consistent or not consistent with what your agency has recommended or tried to do?
Mr. CARLIN. The issue with the IRS has been one of difference of opinion as to whether we can have access, actual visual access, to appraise records within the Internal Revenue Service. They interpret 6103 differently than we have, and that has been the issue for decades. A year ago that is where we were.
Some progress has been made in that legislation now working its way through the process that has been passed by the House and is now in the Senate. We believe if the House version stays intact as it relates to us that the issue then will be resolved and we will have access for appraisal purposes.
Page 98 PREV PAGE TOP OF DOC
We have no intent and never have had any intentionand 6103 refers to the privacy issues involved with your filing of 1040s, to put it in my language that I understand. We obviously have no interest whatsoever in those kinds of records being made public. It is for appraisal purposes, to make sure that within the IRS there are not other records that are records that should be scheduled for a much longer retention period than the 1040.
Mr. ISTOOK. Let me ask, in follow-up on that, if your assessment of the legislation and how it would affect the situation is the same as the assessment of the IRS. The last thing we want is to try to resolve something and then find that there is still a lack of agreement on what it means. So I would like to ask you about that.
Also, if you could describe what are really the practical effects of this difficulty that has been long-running between your agency and the IRS. Is this just an esoteric matter about what happens to millions of copies of 1040s, for which there would probably never be any useful purpose, or is there something more significant at play? So could you address those two parts, please.
Mr. CARLIN. Okay. There is certainly something very significant here, Congressman, and let me go to your letter question first in that regard. We are talking about a situation where I, as the Archivist of the United States, my agency cannot come to you and assure youand I am talking hypothetically, not passing judgmentI cannot assure you because we have notmy staff has not had direct access, I can't assure you the records are being kept that should be kept. And until I have that, we are not talking about an insignificant issue.
Page 99 PREV PAGE TOP OF DOC
Records are important, for your purposes in terms of holding any agency accountable, you need to be able to have access to those records for your purposes.
So I take it very seriously. This is not an academic discussion. We are talking about serious business that impacts whether we can do our job and whether we can assure you, as the Congress, that the work is being done appropriately and that you can be sure that the records are being kept.
Again, I am not passing judgment. We have had what appears to be a technical legal dispute for many years, which is hopefully resolved.
The first question you asked is also very good and one I appreciate the opportunity to get on the record. It is our understanding that we are in agreement on this. I would certainly encourage you to ask the same question, if you have the opportunity, with my colleague from the IRS.
Mr. ISTOOK. It would help if there were maybe an exchange of memos between you that you each signed off on or something like that.
Mr. CARLIN. We would be very happy
Mr. BELLARDO. In fact, the comments on the House version went through OMB clearance and the two agencies basically were in accord on that, in terms of the comments that were sent forward and the language that was ultimately drafted.
Page 100 PREV PAGE TOP OF DOC
Mr. ISTOOK. Even aside from the issue of being able to look at any individual 1040, as far as the basic records retention and classifying and indexing and accessing situation with the IRS, does the National Archives have any assessment of whether they even have a system that, whether you can see it or not, they can actually keep control of the information and find what they want when they need it? Do you have any judgment call on that?
Mr. CARLIN. Yes. And in fairness to the Internal Revenue Service, I want to assure you this 6103 dispute is not across the board. We do have access to a lot of their records, do appraise. We recently, within the last year, completed an evaluation of all their processesa little over a year ago because they have been working in the last year to make changes to accommodate what we felt needed to be changed.
So much of the operation is very similar to other agencies. It is what they choose to associate with 6103 that is in dispute.
Mr. ISTOOK. Thank you.
Thank you, Mr. Chairman. For the record I would like to get copies of those evaluations. That might be useful to us in how we are trying to understand what the IRS is doing in their information systems. Thank you, Mr. Chairman.
[The information follows:]
"The Official Committee record contains additional material here."
Page 101 PREV PAGE TOP OF DOC Mr. KOLBE. Thank you very much, Mr. Istook.
ELECTRONIC ACCESS PROJECT
Mr. FORBES. Thank you, Mr. Chairman.
Mr. Carlin, thank you for being here.
I will admit upfront my bias toward the National Archives, as somebody who has spent many, many hours in the hallowed halls of that great building.
Mr. CARLIN. We do not object. [Laughter]
Mr. FORBES. We appreciate the great work that you and your staff do there.
I had one question about the Electronic Access Project which, I think, is a very exciting project and will allow, as you note in your statement, from the student to those involved in military, every citizen in the country to have access to many of the great historic documents and a lot of the research that is available through your small agency.
You make reference, I think, that you have got about 40,000 documents now that have been scanned onto the system and you anticipate maybe up to 120,000 in the next fiscal year. It begs the question, if you will, sir, the sensitive nature of the documents that are being used, scanned, the handling of those documents.
Page 102 PREV PAGE TOP OF DOC
And my question is, first of all, understanding that the people within your employ are certainly great protectors of our historic documents, I do have a little bit of a concern, I guess, as to the volume of those documents being scanned on and transferred to electronic capability. And maybe you could talk to us a little bit about how the Archives handles that? Are you privately contracting for that service to be done and the numbers of people that are handling these documents and jut the kind of security measures that you are taking to protect those documents.
Mr. CARLIN. You ask a very excellent set of questions. I am very happy to respond. We obviously have a very serious responsibility to protect the record. That is what preservation is all about. So, we are very sensitive to what you are asking. Obviously, we are not talking about any record that is classified. We are not talking about any record that has a privacy issue involved.
We are talking about the most requested records, the ones most likely to be of interest to the most peoplethe 40,000 headed to 120,000. WE have in our current collection approximately 4 billion pages. So, in terms of the quantities we are putting up, I refer to it as a very nice brochure. And it is of incredible value because the Electronic Access Project has two directions. One you make reference to specifically, the scanning, the digitization, the getting up there of these 120,000 documents and we will be there within the year.
The other element is the catalog, the complete catalog of what we have and they come together in this way. The complete catalog allows you from a public library anywhere in the United States, from your own home, a business, a school to see what we have, to know how to access it, but also in many cases there will be a linkage to a document that you can look at.
Page 103 PREV PAGE TOP OF DOC
And we have heard back already from genealogists who say this is the most incredible thing to happen for them who are not located in many cases right next to where a lot of the records are, but can do searches so efficiently and can see an example as to whether this is what they are looking for, this is what would be helpful to them. And that can be multiplied many times over in the classroom for researchers for all kinds of purposes.
But the key is the catalog and we are privately contracting. The scanning, the digitization work is all done in private contract but we have staff that closely oversees that process so that the question you have and the way I answered, I can assure you we are taking it seriously. We have not just farmed out the records to a private company. They come to our facility under our supervision to do the scanning.
THEFT OF DOCUMENTS
Mr. FORBES. One final question. I know that theft has been a very big concern of the Archives for many years. Could you maybe speak a little bit about how that is going? I know there have been some efforts to try to clamp down on the theft of documents and pilfering of documents our of the building and I know that has been a great concern.
Maybe you could speak to that?
Mr. CARLIN. Well, you start with the incredible value of the records we hold and the obvious responsibility to protect those records and the ultimate loss is somebody walking out with one. You cannot preserve, make accessible a record that somebody else has. So, we take that very seriously.
Page 104 PREV PAGE TOP OF DOC
You know, it is always a challenge as to where you draw the line. You know, to what extent when a researcher comes in, do you check things out? We do not allow, for example, a researcher to carry a bag into the research room. That does not happen. We check researchers when they leave.
I would say as far as we know we do not have a huge problem. It is a problem because the loss of one record is significant. The credibility of our agency is at stake. And, so, we take security very, very seriously.
But how farI mean we want our facilities to feel open and a welcome-type atmosphere to researchers as well. And, so, we try to balance that set of issues.
Mr. FORBES. I appreciate it.
Mr. Chairman, if you could, Mr. Carlin, perhaps if your folks could provide for the committee some idea of what the level of theft has been in the last year, I think it would be helpful to the committee to have an appreciation for that.
Mr. CARLIN. Yes.
[The information follows:]
THEFT OF DOCUMENTS AT THE NATIONAL ARCHIVES AND RECORDS ADMINISTRATION
Page 105 PREV PAGE TOP OF DOC During 1997, a year in which over 331,000 walk-in researchers visited NARA research rooms nationwide, NARA only had one reported theft of documents from our holdings. In 1989, NARA instituted a number of security measures in our research rooms that would make the theft of documents extremely difficult. We have instituted a ''clean'' research room, whereby researchers are not permitted to take anything with them into the research rooms. Lockers are provided for the researchers' personal effects, and the researchers are issued paper and pencils in the research rooms. If they have prior research or notes that are essential for their current work, NARA staff examine and mark the materials being brought into the rooms. Upon exiting NARA facilities, the personal belongings of the researchers are searched for hidden documents.
Mr. FORBES. Thank you.
Thank you. Mr. Chairman.
Mr. KOLBE. Mr. Price.
NATIONAL HISTORICAL PUBLICATIONS AND RECORDS COMMISSION
Mr. PRICE. Mr. Carlin, I'm also glad to welcome you and your colleagues today.
I want to join other colleagues on both sides of the aisle in commending you on bringing before us a reasonable budget, well designed, I think, to achieve your objectives.
As we discussed in last year's hearing, the downsizing of the Federal Government sometimes has had the opposite effect on the National Archives, actually creating more work as you have to deal with the records of programs and agencies that are restructured or eliminated altogether.
Page 106 PREV PAGE TOP OF DOC
So, I am pleased that this year you are seeking the funds that are necessary to meet the increased demands on your agency.
I am particularly pleased with the increase you have requested for the National Historical Publications and Records Commission Grants Program. Last year, you testified that Archives had included a $6 million request for the National Historical Publications and Records program in its budget submission to OMB, but that that amount was reduced in the pass back to just $4 million.
We had some discussion here, you may recall, of what the impact of such a reduction would be, how the Founding Era program within that budget would fare in relationship to the rest of the budget and so on. A number of us, working with the Chairman, were able to provide $5.5 million in the end for that program in the House version of the bill. And through the Chairman's good efforts we retained that level in conference.
I want to thank the Chairman and the staff, everyone who had a part in that for looking out for this program and fighting to maintain the House proposed increase.
Now, apparently you had better luck this year with OMB on this program, and your budget submission includes your request of $6 million for NHPRC. If Congress funds the program at the $6 million level that is requested, it would mean a 10 percent increase over the fiscal year 1998 level and a 20 percent increase over the fiscal year 1997 level.
I would like to ask you how you utilized last year's increase. What use you have made of those funds? How would the proposed increase this year affect this program in the number of grant applications you are able to fund? Once again, how do you see the Founding Era component of this program in relation to the other aspects? Can you tell me what percentage of grant applications you are able to fund now as compared to fiscal year 1997; how you would utilize this funding increase if granted; and whether you expect to be able to increase the matching funds that this money leverages?
Page 107 PREV PAGE TOP OF DOC
Mr. CARLIN. Congressman, the President's recommendation is a very positive one for the NHPRC which you specifically questioned about now. and obviously, it will help us with all of our priorities. The focus for us, as we look at the $6 million recommendation from the President, is to certainly, yes, take care of the Founding Era project. It will allow
Mr. PRICE. The Founding Era project is what percentage of that total amount? Approximately what amount?
Mr. CARLIN. We are talking about a significant portion, like a $1.5 million to $2 million is a ballpark. We can get you an exact number, obviously, but we are talking about a significant portion of the total.
[The information follows:]
NATIONAL HISTORICAL PUBLICATIONS AND RECORDS COMMISSION FOUNDING-ERA DOCUMENTARY EDITIONS
During fiscal year 1998, it is estimated that awards for the Founding-era documentary editions will total $1,300,000 of the $5,500,000 annual budget, or 23.6 percent.
But $6 million is important in terms of the Founding Era project. It allows us to move those projects a little faster, potentially; to work with projects, and a lot of them will be completed in the relatively near future. Three of the eight Founding Era will be finished within the next 5 to 10 years, which seems like a long time but these projects started in the 1940s and 1950s. So, relatively speaking, that is quite soon.
Page 108 PREV PAGE TOP OF DOC
It will allow us to do more with the States as they work to upgrade their programs at the State and local level. The matching programs, the re-grant programs, that are educational in nature and providing additional training in terms of archival works at the local and State level.
As I have said before and will remind you today, that is critical for us at the Federal level, not just because the NHPRC was set up to do that, but as I stated last year, a lot of the Federal work is done there. And if you do not have how the States use the Federal dollars, how the local communities use those Federal dollars, you do not have a complete record, certainly not a complete record at the practical end where the programs were really used. And, so, that component is important.
The third area we emphasize is link to our electronic records programs. We have the opportunity of working with States to try new ideas, to partner and to do research and the $6 million recommended by the President certainly allows us in each of those three key components to do more than we would have if it was $5.5 million or $5 million or less.
Mr. PRICE. Do you have any figures as to the number or the percentage of meritorious grant applications you are able to fund?
Mr. CARLIN. That is difficult to answer because of the tremendous amount of screening work done State-by-State. They do not all come to us. We get the projects I am talking about that come from the States, which is a significant number just in terms of numbers, because their grants are very small relative to the documentary editing projects. We do not see them all. The States have a volunteer advisory committee that works with their individual States for applications and we get the best that they look at. And then we fund, depending on the appropriation, in the neighborhood of I would say 60 percent. Would that be a ballpark?
Page 109 PREV PAGE TOP OF DOC
Mr. PRICE. Well, in your testimony last year, you noted that you were authorized, I believe, at a $10 million level. But you said that $6 million seemed about right in terms of what you could handle and what you would like to fund.
Whatever information you can furnish to the subcommittee for the record I would like to see as to the trend line and the number of projects funded, the percentage that come before you that you are able to fund. Just to give some perspective on the universe of applications you are working with and what you are able to do with those in terms of support.
Mr. CARLIN. We will be very happy to do so.
[The information follows:]
NATIONAL HISTORICAL PUBLICATIONS AND RECORDS COMMISSION GRANT APPLICATIONS FUNDED
In fiscal year 1996, the Commission received 138 proposals requesting a total of $9,913,281. With an appropriation of $5,000,000, the Commission was able to fund, in whole or in part, 94 of these proposals.
In fiscal year 1997, the Commission received 120 proposals requesting a total of $9,355,235. With an appropriation of $5,000,000, the Commission was able to fund, in whole or in part, 102 of these proposals.
In fiscal year 1998, the Commission received 132 proposals requesting a total of $10,816,601. With an appropriation of $5,500,000, the Commission estimates that it will be able to fund, in whole or in part, 103 of these proposals. Final figures for fiscal year 1998 will not be available until mid-September.
Page 110 PREV PAGE TOP OF DOC
States awarded regrant funds also receive proposals, but these proposals are evaluated at the local level, rather than by the Commission itself. As an example, a regrant project currently taking place in North Carolina received 47 proposals. Utilizing $50,000 in regrant funds, eight of these proposals were funded.
Mr. PRICE. Thank you.
Thank you, Mr. Chairman.
Mr. KOLBE. Thank you, Mr. Price.
Mr. WOLF. I have no questions, Mr. Chairman.
Mr. KOLBE. I have no further questions.
Mr. Hoyer, do you have any questions on a second round here?
Mr. HOYER. I have some other questions but I just want to ask one because I know we want to end this so that we can get to GSA because our time is constricted.
Page 111 PREV PAGE TOP OF DOC You mentioned, of course, the managing of the electronic information. You point out this chart where there was a court case involved. It seems to me that we really have to come to grips with a policy as to what, as you have discussed, is a record that ought to be kept and what is a record that throughout history would never have been kept in the past but now that everything electronically is being either recorded or put on E-mail or something of that nature this explosion to which you refer, which is an incredible explosionwhen we talk about 90,000 files of everything to date, and then just two departmentsand what is the time frame there?
Mr. CARLIN. I would say annual on the departments.
Mr. HOYER. Annually, I am not sure what is that, 20 times or I mean 2,000 times is what that is? How are we going to deal with that retention of information and if we do deal with the potential of the information, how in Heaven's name are we going to deal with it in terms of having it categorized so that we can recover important information as opposed to being deluged in what I presume is an awful lot of day-to-day, administrative, non-historical activity that all of us participate in? Sort of like this question. [Laughter.]
Mr. CARLIN. Well, let me point out that the chart hypothetically because we are projecting, we cannot way an exact number, only represents what we would guess is the 2 percent. That is not representative of total volume. It is apples and apples over there in terms of the portion that we would declare permanent.
So, you are talking about an incredible amount from which to sort through.
Mr. HOYER. So, that what you are saying is that ifwhat is the percentage? Twenty percent?
Page 112 PREV PAGE TOP OF DOC
Mr. CARLIN. No, 2 percent.
Mr. HOYER. Okay, 2 percent. So, if you are talking about 90,000 is 2 percent of X and 1.7 million is 2 percent of X, the X volume to which you are referring is an incredibly large volume of information that you will have to deal with. I do not know whether we will have the Budget of the United States sufficient to give you the resources to do that.
Mr. CARLIN. Well, let me help this a little bit by reminding all of us that what we really need to do is to get in the position where technology allows us to do this. It is not like we are looking at statisticsif those, for example, were textual records, for a moment. I mean let us just pretend for a moment that green is all that we have ever taken in terms of paper. And now we are going to have thisI mean we would be talking about space issues beyond anyone's capacity. They are electronic.
The problem we have today is we have waited too long to get intensely involved, so, we are playing catchup. With a reasonable amount of help this can be handled but not with existing resources.
But as you can tell in our budget request, we are not asking for that kind of growth in our budget. We are asking for modest increases because we believe we can make technology work for us so that we can do the job.
But it is going to take partnering, as we are doing with the Department of Defense. That is a very significant project. It is going to take a lot of partnering with the private sector to make sure that they are plugged into standards, because in a real simple and clear way we have got to get to the point where we are basically using the same system across the entire Federal Government.
Page 113 PREV PAGE TOP OF DOC
We work with some 340 different entities in the Federal Government that set up different systems. We cannot have them going in 340 different directions. If we get them going in one direction, a direction that makes sense for them in terms of their recordkeeping, that makes sense for us in terms of preservation and accessibility, we can make it possible for us to not be talking about this in a dramatic way 5 or 10 years from now.
It is reasonable to deal with. If we can have the help, we can make technology work for us.
Mr. HOYER. Thank you, Mr. Chairman.
Well, we are obviously going to have to deal with it. We have to think new ways about this and obviously contemporaneously with the creation of the information we are going to have to categorize it and archive it at the same time. That is the only way it can be done.
Thank you, Mr. Chairman.
Mr. KOLBE. Ms. Northup, do you have any questions?
Ms. NORTHUP. I may have other questions for the record.
Mr. KOLBE. I think that completes the testimony. Again, we want to thank you very much, Governor Carlin, for being here today and for your testimony and we look forward to working with you as we get into the budget.
Page 114 PREV PAGE TOP OF DOC
Mr. CARLIN. And we will be very happy to work with you.
Mr. KOLBE. Thank you.
[Questions for the record and budget justification material follow:]
"The Official Committee record contains additional material here."
Friday, March 13, 1998.
OFFICE OF PERSONNEL MANAGEMENT
JANICE R. LACHANCE, DIRECTOR, OFFICE OF PERSONNEL MANAGEMENT
Mr. KOLBE. The Subcommittee will come to order. We are at our last hearing of the week here. We are very pleased to welcome this afternoon Janice Lachance, the Director of the Office of Personnel Management, and her staff that is here to testify this afternoon on the 1999 budget request for the office.
Ms. Lachance, this is your first opportunity to appear before the subcommittee, and we look forward to hearing the statement that you have to give. Just a couple of remarks before we do that. And we will be joined shortly by Mr. Hoyer, I believe.
Page 115 PREV PAGE TOP OF DOC
OPM is, of course, the Government's chief personnel office, with responsibility for managing the oversight of the merit system, managing the trust funds that provide for the retirement and health plans of Federal employee annuitants, provides advisory assistance to Federal agencies on personnel matters, among other issues.
We are very aware that OPM has gone through a lot of changes in the last 5 years, both in terms of the restructuring that it has undergone, and in outsourcing a number of your activities, and that there has been a cut in your staff by nearly 50 percent as a result of that.
As a part of your responsibility for overseeing the trust funds for health and retirement benefits, you also have to keep foremost in mind the best interests of the Federal work force, both in terms of the quality of the health care benefits they receive and the compensation and the role that all of these play in serving to attract and retain the very best possible people in government service.
Included in your appropriations is funding for the Office of the Inspector General, which, in addition to its standard responsibilities, has been taking additional measures to counter criminal diversion of retirement and health payments. And I hope we will get into that and hear a little bit about that from you.
So I look forward to your testimony. When Mr. Hoyer does get here, I would certainly turn to him for some remarks. But, in the meantime, let's go ahead with your statement. Let me remind you that the full statement can be placed in the record, and if you would like to summarize, that is fine.
Page 116 PREV PAGE TOP OF DOC
Ms. LACHANCE. I would appreciate that, Mr. Chairman. And actually, I can just then speak to a couple of highlights.
OPM has had a long and productive history with this subcommittee, and I intend on my part to do everything that I can to continue that and build on our past successes. As you mentioned, we have changed dramatically over the last 5 years. I think we can characterize those years as challenges that have been successfully met, and our future course continues on that path.
Since the inception of the administration's Reinvention of Government effort in fiscal year 1993, OPM's FTE level has dropped 52 percent, from 6,208 to 3,005; and our salaries and expenses budget is smaller by more than one-third in constant dollars. Simultaneous with our downsizing, we have redesigned the agency and achieved three major objectives.
First, we privatized functions such as training, delivery, and investigations. We created the first employee stock ownership plan in Federal Government history, and that ESOP has been a resounding success.
Second, we reorganized OPM to sharpen the focus on our core mission, protecting the merit system principles and veterans preference in Federal employment.
Third, we have positioned the agency to meet its long-term goals and objectives. We now are submitting a budget that is fully integrated with our performance plan, which was developed to meet the requirements of the Government Performance And Results Act. The plan also reflects that we are on target to meet all requirements for the year 2000 computer conversion. All OPM systems will be renovated by September and implemented by December of this calendar year. And all mission-critical systems will be independently verified as year 2000 compliant.
Page 117 PREV PAGE TOP OF DOC
The total OPM budget request for $13.5 billion includes appropriations that are 1 percent discretionary and 99 percent mandatory. OPM's request for basic operating expenses from general funds totals $85.4 million, the same level as in fiscal year 1998. We will provide Federal agencies with human resources leadership oversight and technical assistance which are both innovative and of the highest quality. We will contain our increased cost within the same funding level as last year. We will continue to make increased use of the best available technology, from our employee express system that allows Federal workers to monitor and manage their benefits and personnel data to an interactive CD-ROM that equips managers to resolve performance problems. In our oversight role, OPM will continue to evaluate human resources management across government. We plan to complete evaluations in all major Federal agencies by the year 2000.
As you mentioned, our trusteeship of the earned benefits programs for the Federal workers, annuitants and their families is OPM's most significant responsibility from a fiscal perspective. It also matters deeply to these people in their individual lives. For the administration of these retirement and insurance programs, we are requesting $91.2 million in transfers from the trust funds. Since this is the same level provided in fiscal year 1998, we will be absorbing the impact of cost increases.
I would also like to note that a variety of services provided by OPM are financed by payments from other agencies through the revolving fund. The fiscal year 1999 budget includes an estimated $179 million in obligations for ongoing revolving fund programs. As recently as the end of fiscal year 1994, the fund had experienced a cumulative deficit of $48.8 million. But I am glad to report that OPM has reversed a 10-year trend of such deficits.
Page 118 PREV PAGE TOP OF DOC
As always, the OPM budget request includes mandatory appropriations to pay the Government's contributions to the Federal Employees Life Insurance and Health Benefits Program on behalf of annuitants as well as for the Civil Service Retirement and Disability Fund. Serving our Federal employees allows us to better serve our ultimate customers, the American people.
All of us at OPM are deeply committed to creating the work force necessary to meet the challenges of the next century. Again, I want to thank you for the opportunity to appear before you.
STATEMENTS FOR THE RECORD
[The information follows:]
"The Official Committee record contains additional material here."
Mr. KOLBE. Thank you very much.
As I indicated when I called on you for your statement, we call Mr. Hoyer for some opening remarks.
Mr. HOYER. Thank you, Mr. Chairman. I apologize for being a little late.
Page 119 PREV PAGE TOP OF DOC I want to welcome Ms. Lachance to the hearing. This is her first appearance as Director of the Office of Personnel Management. I was honored to be included at her swearing in ceremony at the White House and enjoyed that very much and had an opportunity to meet her parents. She probably thinks it hasn't been very cool here in the last 3 days, being from Maine, as she is.
Ms. Lachance, as you know Mr. Chairman, has an outstanding career both in the private and public sectors, as well as on behalf of Federal employees as an officer of the AFGE. I want to welcome her here and say that I look forward to working with her and look forward to coming to solutions on some of the issues that we will raise and questions that we have had the opportunity to discuss regarding the pay and benefits of Federal employees. But the Federal employees, I think, are going to be well-served by Ms. Lachance's leadership.
Ms. LACHANCE. Thank you very much.
Mr. HOYER. Thank you, Mr. Chairman.
Mr. KOLBE. Thank you, Mr. Hoyer.
RETIREMENT OPEN SEASON
Let me direct a couple of questions, and we talked about this a little bit when you were in my office informally about the open season, or the CSRSFERS transfer shift for people to move from one retirement system to the other. The last time, I guess, this was possible was the year 1987.
Page 120 PREV PAGE TOP OF DOC
As we know, of course, the President used his line-item veto against this provision and then withdrew it subject to the court decision or court action in this area, but he has gone ahead and requested that we repeal this provision in the law. There have been different estimates of the cost to the Government by CBO and OMB based largely on the participation rates that we would see.
You are personnel director; you would have a better handle than anybody in terms of how many people are likely to get involved in this to do this to pick up the option of making the transfer. So what do you expect the costs would be?
Ms. LACHANCE. We went back and looked at the last time there was an opportunity to switch, and we have come up with a ball park figure of perhaps 5 percent of the people who might make the switch. It could end up being far more than that. There has been a lot of excitement and enthusiasm about the thrift savings plan. So the number could be higher. But if it is 5 percent, that would mean additional retirement cost to the agencies of $1.4 billion between now and fiscal year 2002. So there is a real concern in the administration about the amount of money that would take out of programs, out of possible pay raises, out of a number of other issues that need to be funded. So there is a very strong concern.
Mr. KOLBE. And why, if it is only 3 percent or 2 percent, is there a net savings, a net benefit, for the Government? I do not understand.
Ms. LACHANCE. I am not sure exactly where you mean. Could I, perhaps, call on Ed Flynn, who might be able to answer?
Page 121 PREV PAGE TOP OF DOC
Mr. KOLBE. Certainly. If you would come up to the table and identify yourself for the reporter and use your name and position and use the microphone.
Mr. FLYNN. My name is Ed Flynn. I am the Associate Director for Retirement and Insurance at the Office of Personnel Management. I am not sure exactly the point about net savings.
Mr. KOLBE. Well, I think it was CBO said that, based on somewhere between a 1 and 4 percent participation rate, they estimate there would be a net savings. Because I think there is a savings in the annuity cost; is that right?
Mr. FLYNN. There is a savings in terms of the outlays that go out from the Retirement and Disability Fund. But if you look at net cost to the government, what you do see, assuming a 5-percent switch rate, about 60,000 people, would be a net long-term cost to the Government of about a billion dollars.
Mr. KOLBE. And if you have a 2-percent, you would have a net long-term cost of roughly two-fifths of that; would that not be correct?
Mr. FLYNN. That is correct, Mr. Chairman.
Mr. KOLBE. So CBO is off the mark when they say there would be a net savings to the Government?
Page 122 PREV PAGE TOP OF DOC Mr. FLYNN. I am not aware of CBO offering a net savings.
Mr. KOLBE. As staff just indicated, maybe they were referring to the short-term savings. Is there a short-term savings that is involved in this?
Mr. FLYNN. If you look at simply the long-term outlays from the Retirement and Disability Fund, that would be the case. CBO did testify on this before Mr. Mica's subcommittee and indicated that if they used the same estimates that the administration used, the cost would be essentially the same.
Mr. KOLBE. Well, let's assume, then, we are talking about the same, there is going to be some net cost. I think that it is highly unlikely that this Congress will take that option away and repeal that. So given that, would you describe what preparations you were making for this shift.
Ms. LACHANCE. In any event, whatever action Congress takes, Mr. Chairman, OPM will be ready to provide individual employees with the kind of information they need to make this very important decision.
Mr. KOLBE. When in the law are they supposed to be eligible to enter into open season?
Ms. LACHANCE. Open season would begin July 1st and go through December 31.
Page 123 PREV PAGE TOP OF DOC Mr. KOLBE. Six months.
Ms. LACHANCE. Yes I think what is important to remember as a backdrop to all of this is the fact that agencies run open seasons all the time. They do a big one every year for the Federal Employees Health Benefits Program.
Mr. KOLBE. So it is not a big thing to do this.
Ms. LACHANCE. It is unusual because of the subject matter, but not the process. So we are working very closely with benefit counselors at every agency and personnel officers there to give them the kind of information they need. We are going to update our calculation formula so that individuals can make their own calculations on how it is going to affect them personally. We are going to put that up on the Web site on the OPM home page so that everyone will have access to it, and we are going to produce a CD-ROM as well as the very traditional printed material.
So, whatever happens, we will be ready and we believe that every Federal employee that has this option will be able to make a rational decision based on good and up-to-date information.
Mr. KOLBE. We are talking about most of it being in this current fiscal year. Do you have sufficient administrative expenses in there to do this?
Ms. LACHANCE. We are going to absorb this, and we have been able to work that through.
Page 124 PREV PAGE TOP OF DOC
Mr. KOLBE. When we first created FERS, how many made the switch then and in between then and 1987? What was the rough number?
Ms. LACHANCE. I believe 4 percent of those who were eligible.
Mr. KOLBE. Just 4 percent after we have shifted over to FERS. A lot more wished they had, then, at this point.
Ms. LACHANCE. That is what we are thinking would happen at this point.
Mr. KOLBE. Of course, the pool is substantially smaller.
Ms. LACHANCE. That was the best information we had.
Mr. HOYER. Mr. Chairman, the estimate I have, these figures here by OMB of how many people would switch in 1987 is 4 percent.
Mr. KOLBE. In 1987.
Mr. HOYER. In 1987, 86,000 employees actually switched.
Mr. KOLBE. And now even if it is another 4 or 5 percent, the pool is much smaller because you have a lot of those people retired by this time, so you are talking about fewer.
Page 125 PREV PAGE TOP OF DOC
What is the total number of Federal employees, active current Federal employees that are still in the CSRS.
Ms. LACHANCE. It is about half. It is about half, and it has switched over to being predominantly FERS. Mr. Chairman, we can get back to you with specifics for the record. Actually here are the exact numbers right here. As of September 30, 1997, there were 1.194 million CSRS employees and 1.487 FERS employees.
Mr. KOLBE. Mr. Hoyer.
Mr. HOYER. I had those figures.
Mr. KOLBE. I am yielding.
Mr. HOYER. Okay. I would observe that as you indicated, as well, the probability of that ability to shift being changed is very, very small I would think.
REDUCTION IN PERSONNEL AT OPM
First, let me ask you about the reduction in personnel at OPM. There was a pretty caustic letter that you may have seen in Mike Causey's column a week ago, Monday, I guess it was, where he does his, you know, you get the responses of the week, a pretty angry one about the reduction in employees and pretty critical of Mr. King. As you know, I thought Mr. King did a good job and I was a supporter of his. And I think what he did with the ESOPS was very innovative and very helpful to a lot of employees.
Page 126 PREV PAGE TOP OF DOC
Ms. LACHANCE. And very successful.
Mr. HOYER. And has been very successful and maybe set an example for others to follow. But, nevertheless, we reduced a lot of employees.
Do you have an analysis that you could give for the record, because the answer would probably be too long, as to the commensurate reduction in duties performed by OPM that is analogous to or relates to the very, very significant reduction in employees? Obviously, the intent of my question is to assure that we did not reduce large numbers of employees and retain significant numbers of duties above and beyond what could be expected of the worker to perform so that unless there was a radical change in productivity, we are just going to have frustrated people on the job.
Ms. LACHANCE. Sure, I understand and I will be glad to get that for you. But I think what is important to remember, Congressman, is that as we downsized, we also redefined our mission and so we really have changed OPM and really focused on its core missions and have been able to make, I think, some very, very good businesslike decisions on what could be done better outside of government. We went through a very rigorous process. And I think the organization that is there now is ready to meet the needs of the future. But I will be happy to give you that analysis.
[The information follows:]
OPM DUTIES FOLLOWING DOWNSIZING
Page 127 PREV PAGE TOP OF DOC
The Office of Personnel Management (OPM) has been a leader in downsizing, both by example (reducing its Fiscal Year 1999 Full-Time Equivalent employment level 52 percent below that of Fiscal Year 1993) and by providing guidance and assistance to other agencies in their downsizing efforts. There has not been, however, a commensurate reduction in OPM's duties. Part of our downsizing was achieved through the privatization of two OPM programs, training and investigations. The only significant reduction in duties was in the training program when much of the conduct of our classroom training was taken over by the Department of Agriculture's Graduate School. OPM does retain its policy and oversight role for training and employee development in the Federal Government and conducts training for Federal managers and executives at the Federal Executive Institute and two Management Development Centers. In the area of investigations, OPM privatized the conduct of the investigative field work through the formation of an employee stock ownership plan (ESOP) company. OPM does, however, retain full responsibility for the personnel investigations program including policy setting and oversight of ESOP work as well as delivery of the investigative products to the customer.
PAYMENT FOR ANNUITANTS' HEALTH BENEFITS
Mr. HOYER. Good. A question I have asked since Don Devine told me the second year I served on this committee, well, we had to reduce health benefits because you did not give us enough money. My question to Mr. Devine was, ''Mr. Devine, you asked for the money we gave you.'' His answer, ''Yes, but it wasn't enough.''
Is the $4.632 billion for the trust fund health benefit payment sufficient to maintain health benefits at present levels?
Page 128 PREV PAGE TOP OF DOC
Ms. LACHANCE. Yes, it is.
Mr. HOYER. You are confident that any renegotiations this summer will not adversely impact that level?
Ms. LACHANCE. Not that we can anticipate. We believe we carefully thought it through and have anticipated anything that may come up.
Mr. HOYER. I asked you that question so if something happens in October, I can say
Ms. LACHANCE. ''I told you so''?
Mr. HOYER. It is not so much ''I told you so.'' I want to be careful that we do not, through budget mistakes, if you will, lack of understanding what the benefit cost might be, reduced benefits without intending to do so.
Mr. KOLBE. Would the gentleman yield to me on that point?
Mr. HOYER. I will be happy to yield.
CAUSES OF INCREASE IN PAYMENT FOR ANNUITANTS' HEALTH BENEFITS
Mr. KOLBE. You have got, I think, a 12-percent increase; is that right, $485 million increase?
Page 129 PREV PAGE TOP OF DOC
Ms. LACHANCE. I believe so, that is correct. Yes, that is correct.
Mr. KOLBE. Can you tell me, is that mostly due to the cost per annuitant, or is that mostly due to increased participation? Because 12 percent is a whopping increase way beyond right now where we are in Medicare or the private health sector and I am wondering what is causing this 12 percent increase.
Ms. LACHANCE. To make sure I do not misspeak, why don't I get Ed back up here again.
Mr. FLYNN. Mr. Chairman, the increase is a reflection of two primary factors: First, the increased number of annuitants for whom OPM serves as the payroll office; and secondly, the increase trend of medical costs generally. It is two factors and that causes the increase.
Mr. KOLBE. Can you break that down at all? I am just curious. Or let me just ask you, I guess really what I am trying to find out is what is the increase per annuitant that you are projecting for next year?
Mr. FLYNN. The increase per annuitant would be in the range, this is an estimate at this point of medical inflation continuing at its current levels, which is at about 7 percent a year.
Page 130 PREV PAGE TOP OF DOC Mr. KOLBE. Thank you.
Mr. HOYER. Mr. Chairman, as you know, what happens is that OPM will renegotiate with the insurers, with those folks who participate in the FEHBP before the open season this coming fall, and that is an annual renegotiation and benefit levels and premium levels will be discussed in that process. And then, of course, they will package that program and send it on to Federal employees and they will make their determination at what levels they want.
But, generally speaking, what they try to do is not through budget shortfalls drive reduction in either benefits or increases in premiums. That is what I was getting at. So, obviously, to some degree this is an estimate because it is pending negotiations.
On pay, I asked Mr. Raines yesterday, as I discussed with you earlier, about the status of our economy. He was, of course, as we all are, very pleased with status of our economy. I asked him further, Ms. Lachance, whether or not it was known at the time that the Federal employee pay raise was recommended by the President that we would, in fact, have a budget surplus in fiscal year 1998, not the budget year that we are now budgeting for, but the one we are in. He said that we did not know that.
Based upon that, have you asked for any opinion from your counsel or do you have an opinion from your counsel as to whether or not FEPCA would require in fiscal year 1998 or at least a proposal for fiscal year 1999, a pay raise, which I understand under FEPCA would be 12.9 percent?
Page 131 PREV PAGE TOP OF DOC
Ms. LACHANCE. We are looking into that, Congressman. But I think what is more important or maybe as important are the efforts that are going on within the administration to discuss this problem and try to come up with an equitable solution that can balance some of the President's policy and program priorities along with his very deep respect for Federal employees and the work they do. So we are, in fact, pursuing discussions on that front as well as looking into any legal issues that may come up.
Mr. HOYER. I appreciate that answer. But let me say, Mr. Raines said yesterday in conclusion something with which I agree wholeheartedly. He said that Federal employee pay ought not to be the last thing that gets attended to when you find out what's left over after everybody's wish list is accommodated, and we then ask the Federal employees to carry out those wish lists.
In that context, I understand what you are saying about balancing, but if Congress did not say in the statute, that it passed overwhelmingly and that President Bush signed, or that if there is enough money left over we will have comparability. If there is enough money left over, we will treat our employees as well as the private sector treats theirs. It did not say that. It said we are going to treat our employees comparably with the private sector.
As I said publicly and in private with you, I understand that there may be legitimate issues with respect to whether or not the present system accurately reflects the difference between private and public sector pay. As you know, because of the locality pay, we have tried to be more precise so that you do not have San Francisco prices driving Des Moines salaries. We all thought that made sense, which is why we have locality pay. Des Moines did not say to themselves, daggone, those people are overpaid. Who do they think they are? That was a legitimate frustration.
Page 132 PREV PAGE TOP OF DOC
Now that we have done that, however, and we have said we are going to pay Federal employees comparably, we clearly are not doing that under the present system. Now, I read in, I guess a letter from the Vice President or something about the fact that he was initiating a program or looking at a Phase II; is that what he called it, or two-tier study.
Now, what concerns me is I have been hearing since Don Devine in 1981, when I was on the Post Office and Civil Service Committee, that we are going to have a new study. That was 18 years ago. There is no study which any administration has said is the right study. George Bush did not argue about this as much as, frankly, Mr. Reagan did, and Mr. Clinton has done, the two Presidents on either side of the President who signed FEPCA. But we need to come to grips, and I would hope you would be an advocate within the administration for treating Federal employees as we promised them.
If we do not mean what we say, we ought to change the law, we ought not to promise. We ought to say, as a practical matter, we cannot afford our promise. But we ought not to just pretend that the economy is still in an emergency status and, therefore, we cannot pay you anything more than 3.1, notwithstanding the fact the law says we ought to get 12.9.
I am raising my voice for emphasis, not because I am angry with you. But I cannot, for the life of me, understand how we can with a straight face look our employees in the eye whether they work here or whether they work in the executive department and say to them, yes, we passed a law and, yes, you are entitled under the law to a 12.0 percent adjustment. That is what the Pay Advisory Committee made up of executive representatives, not legislative representatives, and high level representatives, you included, tell us is the pay due to Federal employees. And we either need to change the law and say we cannot afford it; we made a mistakewe did that in 1977 with Social Security. We said in 1972 we made a mistake. But the Federal employees are not forgetting.
Page 133 PREV PAGE TOP OF DOC
They are angry about it because now when this administration says the economy is in great shape, and I am proud as I can be of our role in that, as you know, but we cannot now say, but we still cannot follow the law.
So that is not a question, that is sort of, I know, a speech. And you have heard it and you knew I felt that way. But I want to emphasize that I am serious about this, and I want to pursue it, and I want a high level of angst in the administration to figure out how we at least move towards equitably compensating our people in good times.
They are, after all, the average working men and women that our administration and our party, this was the Republican President who signed this bill and who made this commitment. God bless him. I was proud of him. But now our party, when it says we are for working men and women, these are working men and women and we ought to pay them properly.
Thank you, Mr. Chairman.
Mr. KOLBE. Mr. Price.
Mr. PRICE. Thank you Mr. Chairman.
AGENCIES EXEMPTED FROM CIVIL SERVICE LAWS
Ms. Lachance, I want to add my welcome to you and your colleagues here today. I have only one question, but it does go to a rather important policy question I believe, so I appreciate your response. It has to do with the trend that we have seen of exempting various Federal agencies from title 5, the civil service provisions of the U.S. Code. Most recently, I believe this was done with respect to the Federal Aviation Administration. And I am not sure how long the list is. Perhaps you could furnish a list of what these exemptions add up to.
Page 134 PREV PAGE TOP OF DOC
My question has to do with whether this trend concerns you at all. I am sure there is a justification made each time this is done. Are there aspects of this, though, that we should be concerned about, the cumulative impact, and is there any way for us to be assured that merit system principles are being adhered to within these agencies once this exemption occurs?
Ms. LACHANCE. Congressman Price, I would be happy to furnish you with a thorough list of agencies who are no longer under title 5. There are more and more of them every day and it is a great concern to us. We do not currently have the authority to conduct oversight or authority to review agencies' practices who are outside of title 5. That is something that we would really like to see corrected.
I think the American taxpayer expects the entire government to operate on merit principles. I believe they have counted on an impartial civil service over the years and should be able to continue to count on that. And while I think agencies have the very best intentions when they seek to get out of title 5, I do believe that there is a way to accommodate the flexibility that they need, as well as make sure that they are strictly adhering to the merit principles that have been so prominent in our Nation's history. We would love to be able to do that work. We do it for title 5 agencies. We are good. It is collaborative. It is productive. It finds small problems here and there or sometimes big problems when there are systemic issues, and we get in there and solve them and I think to the betterment of the Federal service.
[The information follows:]
Page 135 PREV PAGE TOP OF DOCAGENCY EXEMPTIONS FROM CIVIL SERVICE LAWS
The tendency for agencies to seek exemption from title 5, United States Code, has gained momentum over the past few years. As a result, nearly half of Federal employees now work in agencies fully or partially outside title 5. But cataloging precisely which agencies are exempt from title 5 and from which particular provisions is not easy. For example, the General Accounting Office recently launched a study aimed at doing just that, but ultimately had to stop short of this goal. It was simply too complicated to follow all the legal threads for each agency without a huge expenditure of staff resources.
Recognizing this difficulty, the Office of Personnel Management (OPM) has nevertheless endeavored to identify and obtain information about the most significant non-title 5 agencies. We are currently in the midst of a study of 19 such agencies, which will help us understand the degree to which merit considerations pervade Human Resources management (HRM) at these agencies and also what kind of interesting HRM practices are found outside title 5. The attached list of the 19 is by no means comprehensive, but includes major agencies outside title 5 and surely demonstrates the breadth and diversity of the non-title 5 universe.
We can also offer, by way of illustration, three recent cases of agencies receiving the authority to leave all or part of title 5. Two of these Acts actually occurred after the list for the non-title 5 study was drawn and are, therefore, not included in the 19.
FEDERAL AVIATION AUTHORITY (FAA)
The 1996 Department of Transportation Appropriations Act permitted FAA to develop and implement a new personnel management system that ''addresses the unique demands on the agency's workforce.'' This legislation exempted the new personnel system from ''substantially all of title 5, though FAA has the discretion to adopt the substance of any portion of title 5 they deem appropriate.'' The Merit System Principles were not retained statutorily and, now by being outside title 5, are no longer subject to OPM oversight.
Page 136 PREV PAGE TOP OF DOC
FEDERAL BUREAU OF INVESTIGATION (FBI)
Contained in the 1998 Appropriations Act for the Departments of Commerce, Justice, and State, and the Judiciary was language authorizing the Director of the FBI, with the approval of the Attorney General, to establish a personnel management system providing for the compensation and performance management of not more than 3,000 non-Special Agent employees to fill critical scientific, technical, engineering, intelligence analyst, language translator, and medical positions in the FBI. An evaluation of this system was required to be submitted to Congress in 3 years, including recommendation for extension of authority.
In the same 1998 Appropriations Act as cited above, the Secretary of the Treasury was vested with the demonstration project authority contained in section 4703 of title 5, to establish demonstration projects for 3 years for up to 950 employees to fill the identical positions mentioned above.
Without specific knowledge of all the justifications behind these and other legislative proposals, we assume they intend to tailor HRM practices to the specific agency needs. What is disturbing in some cases is the lack of a statutory requirement for adherence to the Merit System Principles and lack of explicit oversight from OPM. Moreover, systems developed independently of OPM do not always allow for the experience and expertise of OPM as a central human resources management agency to be effectively shared and brought to bear through the blend of tailored systems and the best interests of the Government at large.
Page 137 PREV PAGE TOP OF DOC
OPM shares the desire for a title 5 that contains greater opportunity for flexibility and tailored systems that meet mission accomplishment; however, that must be balanced with core values and principles of a merit-based system. OPM does not currently have broad authority to review agencies outside of title 5, or legislatively exempted from oversight and, therefore, cannot play the strongest role to assure effective and accountable application of the Merit System Principles throughout the Executive Branch.(see footnote 1)
SIGNIFICANT AGENCIES FULLY OR PARTIALLY EXEMPT FROM TITLE 5
Central Intelligence Agency Department of StateForeign Service Farm Service Agency Federal Aviation Administration Federal Deposit Insurance Corporation Federal Reserve Board Foreign Agricultural Service Library of Congress Metropolitan Washington Airports Authority National Security Agency Nuclear Regulatory Commission Office of Federal Housing Enterprise Oversight Office of Thrift Supervision Peace Corps Sallie Mae Smithsonian Institution (Trust Fund Employees) Tennessee Valley Authority U.S. Postal Service Veteran's Health Administration (title 38, United States Code)
Mr. PRICE. Well, what are some of those reasons that you refer to? Are there aspects of agency operations that that represents an implied critique of? I mean what are some of the reasons that are given when these exemptions are made?
Page 138 PREV PAGE TOP OF DOC Ms. LACHANCE. I believe agencies and their congressional committees have a very difficult time navigating their way through some of the flexibilities that are available under title 5. We think that most agencies who claim to have trouble operating or meeting their missions because of the constraints of title 5 really could do it if they understood all the flexibilities that were currently available.
I understand the knee-jerk impulse to try to get out of the rules and regulations. However, I still very firmly believe that the government needs the government-wide merit principles and those need to be enforced equitably across government so that everybody is operating in a fair, open and competitive system.
Mr. PRICE. And the way this works now is that once this exemption is created, you then have no oversight powers or responsibilities with respect to that agency; is that true?
Ms. LACHANCE. That is correct.
Mr. PRICE. Thank you. Thank you, Mr. Chairman.
YEAR 2000 COMPUTER PROBLEM
Mr. KOLBE. I think we can wrap up with just one more round of questions for all of us here. I will have a couple that I want to put in the record, but the question I want to ask you is one that I know my colleagues and probably staff have become very tiredand I think I am tiredof asking repeatedly, but it has to do with the year 2000 century change.
Page 139 PREV PAGE TOP OF DOC
We fund the responsibility for OMB, which has the overall responsibility in the government for this and increasingly I am becoming concerned about agencies', as well as, I think, frankly, the private sector's, ability to be adequately prepared for this Y2K responsibility. You have got a lot of things that are critical here; keeping all the personnel records, the trust fund activity. You have a lot of preparations for this. Tell me, what priority does this have in your list of management responsibilities?
Ms. LACHANCE. It has my personal attention. I think it has to be one of the top three things that I pay most attention to within the agency. You are absolutely right. We have a lot of responsibility to the people that we serve. And we do not intend to shirk this duty at all. We are, in fact, doing quite well on it. We are going to meet and hopefully exceed the government-wide deadline date of March 1999. We anticipate being through with all of our fixes by December of this year, so that we will have a year to make sure everything is running right.
As you know, Congressman Horn just upgraded us from a D to a B on his report card; and we are very, very proud of that. But that does not mean that we are slacking off. The sooner we can get this done, the better I think we are going to sleep at night.
Mr. KOLBE. Do you have anybody in your shop that has operational responsibility for that?
Ms. LACHANCE. Chief Information Officer Janet Barnes.
Page 140 PREV PAGE TOP OF DOC Mr. KOLBE. Do you meet with that team on a regular basis?
Ms. LACHANCE. Yes.
Mr. KOLBE. Do you receive regular status reports?
Ms. LACHANCE. Yes, I do.
Mr. KOLBE. Do you have any way of independently verifying or saying we have been told everything is coming along swimmingly; that somebody looks at it independently?
Ms. LACHANCE. Yes, sir. We plan on having independent verification of all our mission-critical systems.
Mr. KOLBE. You are satisfied with the progress you are making today?
Ms. LACHANCE. Yes, sir. And I never stop talking about it.
Mr. KOLBE. You think you will be ready by March 1999. What would be one of the most critical areas that you have to address? I guess in the same breath I could ask, what would be the mission-critical failures if we were not ready at OPM for this?
Ms. LACHANCE. Well, to me, personally, given Congressman Hoyer referred to my parents, given the fact that my parents get Government annuity checks every month, I think I would have a tough time living down the fact that somebody did not get their check on time.
Page 141 PREV PAGE TOP OF DOC
Mr. KOLBE. So the actual processing of annuitant checks would be one of the critical things.
Mr. HOYER. God bless those lobbyists.
Ms. LACHANCE. They do not get paid very much.
Mr. KOLBE. How about all the health benefits?
Ms. LACHANCE. That is in the same category as far as I am concerned. I think anything that touches people's lives is critical and so certainly our retirement and our health benefits, to me, would be at the very top.
Mr. KOLBE. Are you making these changes mostly through upgrades and adjustments to your current hardware and software or are you bringing in whole new systems?
Ms. LACHANCE. It is a combination of things. There is a variety of systems.
Mr. KOLBE. Do you have adequate funding for the new systems you need?
Ms. LACHANCE. Yes, sir. We have planned for this and we are good to go.
Page 142 PREV PAGE TOP OF DOC
Mr. KOLBE. Okay. Next March we will talk again, and I hope we do not have to hold up these words to you and be shocked that we are not at this point. That is all the questions I have. As I say, I may have one or two more to submit for the record.
Mr. HOYER. Thank you. Mr. Wolf is not here. Congressman Wolf is the ranking member, as you know, on the Transportation Committee. So he has trouble getting here, but he has been the real leader on the family-friendly policies of the Federal Government as an employer, and he and I have worked on a number of issues, as you know, dealing with family-friendly child care centers at Federal facilities.
The IRS building, as you know, has an excellent one. I just went through the Department of Agriculture's building in Greenbelt that has a terrific child care facility. But there are a number of otherleave policies, flex-time, all those sorts of things.
Congressman Wolf has asked, as you know, and I have joined with him on a study to be done maybe short-term and long-term. I think he said in the next 60 days. But in any event, can you tell me whether or not you think we can accomplish something so Congressman Wolf will have, and I will have some information on how well we are doing, how much compliance we are getting by constituent agencies in dealing with these?
Page 143 PREV PAGE TOP OF DOC Ms. LACHANCE. I think we can help you on a number of fronts, and, in fact, we have sent a letter up, I want to say either last night or today, to you and Congressman Wolf to see how would you want to proceed with this. There is a lot of information already on the shelves that we can pull together and give you some immediate information, if that is what you are looking for.
Another thing we are proposing to do is, as we conduct oversight reviews on Federal agencies, include a factor on how well they are implementing the government's family-friendly policies, and we can start that literally tomorrowwell, Monday as we all come back to work. And then we have also proposed to you some longer term possibilities or options that you may choose to do. So we are committed to working with you on this and we will get it done in whatever way you think will best serve your needs.
Mr. HOYER. March 13. That would be the day. We have the letter. I have not read it yet. It is directed to Frank Wolf, as it should have been. I guess I have one myself. He has really been terrific on these issues. He cares a lot about them very sincerely.
As you know, he is very concerned about families and about their security. He has done a terrific job on this and I am glad to join with him on this. But I will talk to him about this letter and by, hopefully, Tuesday we can get back to you and see what his thoughts are.
Ms. LACHANCE. Let us know how would you like us to proceed.
Mr. HOYER. Thank you.
Page 144 PREV PAGE TOP OF DOCTELECOMMUTING CENTERS
Second question, Mr. Chairman, if I can, telecommuting centers. As you know, again, Congressman Wolf and I have both been ranking members on this committee; he, the ranking Republican; me, the ranking Democrat under Chairman Roybal, put $12 million in the pot for telecommuting centers. And we used, surprisingly enough, Maryland and Virginia as sites for this test. It was just random selection. But in any event, those sites have been very successful, some more successful than others in terms of utilization.
The Waldorf site, as you know, is the most successful in the United States in terms of rated capacity. They are at about 140 percent of rated capacity in Waldorf, which simply means that you expect to have certain vacancies in the work stations you have available and we hardly have any.
Prince Frederick is different and around the country they are different, but the bottom line is and this is my question, some agencies obviously are more enthusiastic about participating in telecommuting than others. We have a hellacious computer problem in the Washington Metropolitan area and a lot of metropolitan areas throughout the country. Telecommuting is obviously very popular in the private sector, particularly the airline industry, the insurance industry and other industries that deal with telephone business, and it doesn't matter whether you are in Timbuktu or in the middle of Washington D.C., or New York or San Francisco, nobody cares where you are. They just want you to have a computer that will get the information and do the order and do the reservation and tell them the status of their insurance or whatever. The bottom line is where you sit is not the issue. And productivity, the private sector has found, can be monitored without the supervisor visually looking at you and having you proximate to them.
Page 145 PREV PAGE TOP OF DOC
I am of the view that we are not encouraging telecommuting enough in some agencies because of their managerial concern about supervision and productivity. Can you give me your thoughts on that and what efforts we are taking in concert with GSA, of course, that oversees the program to implement more fully telecommuting.
Ms. LACHANCE. We are very committed to knocking down some of those barriers that you refer to. We are constantly promoting the effectiveness and productivity gains that can be made through telecommuting. We put out publications, hold fairs, conferences, different ways to break down some of those attitudinal issues that get in the way.
We think we are making some progress, but as you say, it is different in every agency and every agency culture, so we are going to continue to pursue it. Family-friendly policies are a priority for this administration. My marching orders are clear from you and this subcommittee, so you can count on us to pursue this.
Mr. HOYER. Let me suggest, and I am going to take this suggestion myself, I have not told the Vice President about this, but when you think about the concept of Reinventing Government and reinventing the workplace and all being wired, this really falls in with his highway. The highway you want to be on now is the communications highway, not the concrete highway, if I can make that poor analogy. But I would think this would be something the Vice President's office might want to focus on as well, and I will talk to him about that. But you might want to
Ms. LACHANCE. We have had those discussions with him and he is very committed to it as is the National Performance Review staff. I think that there are some wonderful ways of looking at these problems that are emerging.
Page 146 PREV PAGE TOP OF DOC
I have heard Dave Barram, who is the Administrator at GSA, talk about the fact that at some time or another every employee is telecommuting when taking a business trip and calling in for messages, faxing things back and forth, or carrying a lap top. So I think we are making progress in the way people are looking at this issue and how they are looking at it.
Mr. HOYER. Last suggestion I would make, again, not a question, but one of the ways to convince managers to do something is to show them that other managers have been successful in doing it. If perhaps in coordination with GSAI do not know whether staff knows if there has been a study. I do not know whether there has been a study of productivity gains that have occurred as a result of employees really being less stressed because the child is 5 minutes away as opposed to 35 minutes away; that they are on the road for 10 minutes rather than an hour, and they have a lot less stress as a result of that. I really think this could be a very positive productive relationship for all concerned. I am into win-win. That is the way you really ought to do things, and I think this is a win-win. But I think if we could show that to the managers in the Federal Government and they believe it, they will be much more likely to say to employees, sure we can reach that effort.
We have a telecommuting site in Prince Frederick that is just getting started. Waldorf has been up and going, I guess, for 4 years now, maybe even 5 years4 years, I guess. But such a study, I think, would be helpful to sell it to your other managers.
Mr. Chairman, I do not have any other questions. If I have some questions that my staff thinks ought to be in the record, they will put them in the record. I know we will get good responses. I thank the chairman and thank Ms. Lachance for her leadership.
Page 147 PREV PAGE TOP OF DOC
Mr. KOLBE. Thank you very much, Mr. Hoyer. And thank you very much, Ms. Lachance, for you and your staff for being here today and for answering questions. We appreciate it very much and look forward to working with you.
This subcommittee stands adjourned.
[Questions for the record follow:]
offset folios 962 to 1156 insert here
(Footnote 1 return)
These are the 19 agencies included by OPM in its current study of the non-title 5 universe. This is not intended as a comprehensive list of non-title 5 agencies, but rather represents important agencies in this category.