NOTICE
This is a transcript of a tape-recorded interview conducted by The United States General Accounting Office . The reader should remember that this is essentially a transcript of the spoken, rather than the written word.

Numbers appearing in square brackets (ex. [45]) within the transcript indicate the pagination in the original, hardcopy version of the oral history interview.

RESTRICTIONS
This oral history transcript may be read, quoted from, cited, and reproduced for purposes of research. It may not be published in full except by permission of the Harry S. Truman Library.

Opened 1987
Harry S. Truman Library
Independence, Missouri

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Preface

The General Accounting Office was established by the Budget and Accounting Act of 1921. Since then new legislation and modified policies have been adopted that enable GAO to meet the needs of the Congress as it comes to grips with increasingly complex governmental programs and activities.

GAO has initiated a History Program within its Office of Policy to ensure that the basis for policy decisions and other important events are systematically recorded for posterity. The program should benefit Congress, future incoming Comptrollers General, other present and future GAO officials, GAO's in-house training efforts, and scholars of public administration.

The primary source of .historical data is the written record in official government files. A vital supplement contributing to a better understanding of past actions is the oral history component of the program. Key governmental officials who were in a position to make decisions and redirect GAO's efforts are being interviewed to record their observations and impressions. Modern techniques make it possible to record their statements on videotapes or audiotapes that can be distributed to a wider audience, supplemented by written transcripts.

Elmer B. Staats, Comptroller General of the United States from 1966 to 1981, was interviewed by present and former GAO officials (see p. vii) on videotape at GAO Headquarters in Washington, D.C., on April 9, May 4, and May 7, 1987. This document is a transcript of the videotape; though a number of editorial changes have been made, GAO has tried to preserve the flavor of the spoken word.

Copies of the videotape and this document are available to GAO officials and other interested parties.

Charles A. Bowsher

Comptroller General
of the United States

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Page left blank (photograph of Elmer B: Staats in original document).

[v]

Biographical Information

Mr. Staats completed his 15 year term as Comptroller General of the United States on March 4, 1981. Appointed to this position by President Lyndon B. Johnson, he entered office in March 1966.

A native Kansan, Mr. Staats began his service in the federal government as a career employee on the staff of the Bureau of the Budget (now the Office of Management and Budget) and served in positions of increasing responsibility until his appointment by President Truman as Deputy Director of the Budget in 1950. During the World War II period, he was responsible for organizing, financing, managing, and coordinating the principal civilian war agencies.

In 1953, he was appointed by President Dwight D. Eisenhower as Executive Officer of the Operations Coordinating Board of the National Security Council, which was responsible for coordinated implementation of U.S. foreign policies and operations in foreign countries. In 1958, he returned to the Bureau of the Budget, where he was reappointed Deputy Director by President Eisenhower in 1959, continuing in that position under President John F. Kennedy and Johnson.

Mr. Staats holds an A.B. from McPherson College in Kansas, an M.A. from the University of Kansas, and a Ph.D. from the University of Minnesota. He holds honorary degrees from eight universities and distinguished service awards from the University of Kansas and the University of Minnesota. Other honors include Phi Beta Kappa, Alpha Kappa Psi, the Rockefeller Public Service Award, the Productivity Award of the American Productivity Center, the Medal of Honor of the American Institute of Certified Public Accountants, the Presidential Citizens Medal, the Hubert Humphrey Medal, and the Public Service Achievement Award of Common Cause. He was named an honorary member of the National Security Industrial Association and elected to the Accounting Hall of Fame in 1981.

Mr. Staats serves on the Board of Directors of several corporations and nonprofit organizations. He also is Chairman of the Board of Trustees of the Harry S. Truman Scholarship Foundation. He has been active for many years in the Conference Board, the American Management Association and the National Academy of Public Administration. He was National President of the American Society for Public Administration in 1961-62 and was a founding member of the organization in 1939, as well as of the National Academy of Public Administration in 1967. In 1984, he was appointed a member of the Governmental Accounting Standards Board.

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Mr. Staats is a member of the Cosmos and Chevy Chase Clubs and the Metropolitan Memorial United Methodist Church of Washington, D.C. He married Margaret Rich of Woolrich, Pennsylvania, in 1940 and they reside in Washington, D.C. They have three children.

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Interviewers

Henry Eschwege-retired in March 1986 after almost 30 years of service in GAO under three Comptrollers General. He held increasing responsibilities in the former Civil Division and became the Director of GAO's Resources and Economic Development Division upon its creation in 1972. He remained the Director after the division was renamed the Community and Economic Development Division. In 1982, he was appointed Assistant Comptroller General for Planning and Reporting.

Werner Grosshans-became Director of the Office of Policy in December 1986. He began his diversified career as a government auditor in 1958 in the San Francisco Regional Office and held positions of increased responsibility; he was appointed Assistant Regional Manager in 1967. In July 1970, he transferred to the U.S. Postal Service as Assistant Regional Chief Inspector for Audits. In this position, he was responsible for the audits in the 13 western states. In October 1972, he returned to GAO to the Logistics and Communications Division. In 1980, he was appointed Deputy Director of the Procurement, Logistics, and Readiness Division, and in 1983, he was appointed Director of Planning in the newly created National Security and International Affairs Division. In 1985, he became Director of the Office of Program Planning, where he remained until going to the Office of Policy.

Donald J. Horan-Assistant Comptroller General for Planning and Reporting since March 1986, joined GAO in 1955. He held positions of increasing responsibility in the New York Regional Office before transferring to the Audit Policy Staff of the Office of Policy and Special Studies in 1965. In 1968, he was designated Assistant Director for Auditing Policy. He served as an Assistant Director in the Procurement and Systems Acquisition Division from 1972 to 1974, when he was designated the Director, Office of Policy. In 1978, he was designated Deputy Director, Logistics and Communications Division, and in 1981, he became Director, Procurement, Logistics, and Readiness Division. In May 1983, he again became the Director of the Office of Policy.

Elizabeth Poel-historian in the Office of Policy. She joined GAO in 1976 in the Technical Library, where she was a Supervisory Librarian. For the past 4 years, she has been instrumental in establishing GAO's archival and historical program.

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Contents

[ix]

Appendix

[x]

Abbreviations

[1]

Introduction

ESCHWEGE: Hello, Mr. Staats, nice to see you here. I guess you know Werner Grosshans, Don Horan, and Elizabeth Poel. We are delighted you could meet with us here today.

Let's see, it has been a little over 6 years since you completed your term. Right?

STAATS: Six years on the 4th of March.

ESCHWEGE: That was a 15 year term; we would like to discuss a little bit about how you came to the office and some of the highlights of that 15 year term. We also want to get some insights by having you reflect on some of the things that you feel were particularly noteworthy. I think the way maybe to start is at the beginning.

Do you want to talk about Richfield, Kansas, and how you went through the education process and came to Washington? We certainly would like to hear a little bit about your illustrious career at BOB (Bureau of the Budget) and how you got to GAO.

STAATS: Some of that goes back quite a long way. Well, my educational background was a small college in central Kansas--McPherson College. Then a master's degree at the University of Kansas where I more or less changed my career goal.

I had planned for a career in journalism, but this was during the depression years so I hoped maybe somehow I could get more directly involved in dealing with some of the problems. So I decided when I went to the University of Kansas to major in government and economics. Then from there I went to the University of Minnesota to work on my doctorate. In my third year there, I got a fellowship to come to Washington as a Fellow of the Brookings Institution to finish my doctoral dissertation. In

[2]

Minnesota, I had a combined program in economics, business administration, and government. Needless to say, I did not have much accounting at this time.

From Brookings, I went to work as a very junior staff member in the then Bureau of the Budget which was located organizationally and physically in the Treasury Department. This was in June 1939. This was right on the heels of a major study that President Roosevelt had ordered by a Committee on Administrative Management which concluded that the President, they said, needs help.

So out of that grew a concept of an Executive Office of the President. President Roosevelt at that time had virtually no staff maybe three or four professional people plus secretarial help. So the Executive Office of the President was established to reinforce the staff needs for President Roosevelt. There was a National Security Resources Board which President Roosevelt's uncle, Frederic Delano, chaired. There was an Office of Government Reports which a newspaperman, Lowell Mollett, headed; it was designed to provide the President with progress reports on economic recovery. Then there was a Liaison Officer for Personnel Management a man named McReynolds who came out of the Treasury Department. The President's committee had recommended an agency, single headed; to deal with personnel problems, reminiscent of really what we have today. That was very controversial, so they settled the issue by having a liaison officer in the Executive Office who had worked with the agencies and the Civil Service Commission (CSC).

Then, of course, there was the Bureau of the Budget. President Roosevelt made a great point of our being moved out of the Treasury Department. Symbolically, he did not like the idea of our being regarded as a part of the Treasury Department rather than the Executive Office.

The question was where to put us. He wanted us to come over to what is now the Executive Office Building the old State, War and Navy Building but the State Department said there was no room for us. President Roosevelt did not quite accept that. Cordell Hull was the Secretary of State; President Roosevelt said he would like to make a firsthand inspection. So, in his wheelchair, he went over and started down the hall. At that time, that building had slat doors (it was built in the old style so you have ventilation through slat doors). So he would go down and ask that those doors be open and he would examine the files. Well, to make a long story short, the first file he opened was Fish and Wildlife in the

[3]

1890's. So he said that settled it; the Budget Bureau is coming in here. We moved into the north end of the building and the State Department was there also. At that time, interestingly enough, the State Department, the War Department, and the Navy Department were entirely housed in that building.

It gives you some idea of the change since then in the size and complexity of the government. That was how I got into government.

I did a lot of recruiting which gave me some ideas for GAO when I was recruiting from colleges and universities. I helped on the management side a great deal and then the war came along and I was a member of a group of about 15 or 20 people who were assigned the job of helping to establish the defense agencies this was before Pearl Harbor. In the Executive Office, there was something called an Office for Emergency Management which was just a shell. There was nobody in it, but it was created largely to take care of a situation where we might have an emergency. They were thinking mostly about the possibility of some disaster-type emergency. It provided a good shell, a good arrangement, to eventually create this whole myriad of war agencies. In effect, we were planning for a period when we might get involved in the war. We had price control, war production control, economic stabilization information, and censorship: The OSS (Office of Strategic Services) was created during that time; we were all involved in not only setting these agencies up, writing the executive orders, writing the budget, overseeing them, and helping them get started. So this was the period from 1941 up through 1945.

By the end of that time, I was the head of a group that was involved in all the domestic war agencies. We had the job of winding down the controls. I remember particularly we had something called the Office of Temporary Controls. The Administration was so concerned about the fact that these regulations might stay on that they wanted to call it something which would make it clear that it was to be of a temporary nature.

Jim Webb was appointed Director of the Budget in 1945. He came out of the Treasury Department and asked me shortly thereafter to come over and be his assistant. I was there for about a year. Then I became the head of something called the Office of Legislative Reference which had responsibility for coordinating the agencies' views on both legislative proposals and enrolled bills. I was in that job for about 2 to 3 years and

[4]

then I moved up to be the number 3 person in the Budget Bureau. President Truman appointed me Deputy Director in 1950.

So, all together, I had more than 20 years in the Bureau, but there was a hiatus from 1953 to 1958. I served in the National Security Council. I had been involved in helping to organize a coordinating group in the National Security Council when President Eisenhower came in. They decided to go ahead and formalize this and they had both a Planning Board and an Operations Board. I headed up the Operations Board. I was there for 5 years and went back as a Deputy Director of the Budget in 1958.

I was still there when President Johnson asked me if I would be interested in coming to GAO. I told him that he, having been a senator, knew a lot more about GAO than I did. I said you will have to decide. Well, he said you come back and see me and we will decide. But, the next thing I knew, he had announced the appointment and there I was. So that is how I got here.

I did not know a great deal about GAO, in spite of the fact that we both operated under the same statute. Our staff had a lot of relationships with GAO, but, personally, I had not had a great deal.

An interesting episode was that, I guess along about 1964 or in the early 1960's, the Government Operations Committee had asked GAO to make a review of the Budget Bureau. Clerio Pin and A. T. Samuelson of GAO's Civil Division were the two principals involved and we said fine, but there is a line of confidentiality here that has to be observed on Presidential documents and recommendations to the President. So we said we would try to sort that out and, well, we found out that we could not really effectively do it. So we had a meeting with Joseph Campbell, Bob Keller, A. T. Samuelson, and Clerio Pin. We had difficulty really coming to an understanding as to what was the audit objective. We were not opposed to it, but we were just having a hard time responding to it. So, finally, Lee White (who was Assistant to President Kennedy) and I went up to Chairman Dawson and said, whatever it is you want, we will give you, but we have to know the audit objective in order to respond. We explained our problem on Presidential privilege and Chairman Dawson said, well, just forget the whole thing.

[5]

ESCHWEGE: I remember that, Mr. Staats, and I remember Clerio Pin's phone was really ringing the day we heard that you were nominated for the position of Comptroller General because we knew that he had met with you and we wanted to know all about you.

One thing, in your modesty, that you did not mention, which I just want to add, is that you did get the Rockefeller Public Service Award in 1961 and you got our attention at that point already.

STAATS: Well, Bob Keller later got one too.

ESCHWEGE: Yes.

STAATS: I think I was on the selection committee at the time. By the way, much was made when I came here of the hearings that were conducted by Chairman Holifield on GAO's work in the defense contracting business. I had been asked to come up and testify during the hearings, long before I knew I was coming to GAO. So, I, working with our staff in the Bureau, put together a statement which was a fairly neutral statement but really quite supportive overall of the work of GAO. I had come to know Chairman Holifield very well because we had worked with him on reorganization plans for many years and so, when President Johnson nominated me, one of the first people I talked to was naturally Chairman Holifield. I told him that I was aware of this report and I had nothing to do with the Frank Weitzel letter which had been written in response to the Committee's report. I said to Chairman Holifield he would have to bear with me, that I would want to be in GAO for a while, and then make up my own mind as to whether these recommendations would be the ones that I would support or not. He accepted that.

[6]

There was a good deal of tension between him and the present Chairman of that Committee, Jack Brooks, at the time. I was aware of that, I had worked with both of them, but they had different views about that hearing. So I realized that it was a very sensitive area.

ESCHWEGE: Apparently, Senator Dole also was supportive of GAO at that time from what I heard.

STAATS: Well, I visited with quite a number of people in the Congress after I was nominated and included in that was Senator J. J. Williams of Delaware. He was then, I believe, the Chairman of the Senate Finance Committee. We had a good deal of work with him and he was very helpful. I remember concluding our meeting with the question of "How do you manage to keep so well in touch with GAO reports? You seem to be making statements about them all the time." He said, "See that young lady outside my door. Her job is to read all the GAO reports and tell me any of the reports that I ought to comment on." That was very unusual because the general reaction I got among the many people I talked to in the Congress was that they were sure that GAO was a fine agency, does good work, but not really very relevant to the needs of the Congress. That surprised me a bit. So that was one of the things I kept in mind after I came here. One of my objectives was to see whether we could improve this relationship between GAO and the Congress.

One of the early things we did was to set up an Office of Legislative Liaison which is now the Office of Congressional Relations. The other thing I did was to ask Larry Powers, who was an assistant to Mr. Campbell who preceded me, to give me a rundown on the extent to which GAO was responding to congressional requests for audits. Larry said we do not have that kind of information here in GAO. I said, well, let's do the best you can and let's get a picture of it. He came back and said 8 percent, roughly as near as he could determine, of the work of GAO was at the request of the Congress. Well, you know what the story is today. It was about 50 percent when I left GAO.

[7]

GROSSHANS: It is up to about 80 percent now.

STAATS: It is about 80 percent today. I sensed a concern as I talked with the staff about being "too close to Congress." They felt we might lose our objectivity or that the Congress might dictate what went into those reports and we would lose our independence. Well, that was a valid concern, all right, as I saw it, but not a concern that ought to override the need to be of greater relevance to the needs of the Congress.

ESCHWEGE: Getting back to the people that you consulted with as you came to GAO – Mr. Campbell had resigned 9 months earlier, I guess, and I do not know if there was any opportunity there to actually meet with him because I think he had left the city.

STAATS: I had two meetings with Mr. Campbell after I came here, out at his home, to get the benefit of his advice on anything he had, just as Chuck Bowsher talked with me after he was appointed. I guess, without being critical at all of my predecessor, I came to GAO with a different perspective, I guess you would have to say.

The Bureau of the Budget was concerned with management improvement throughout the executive branch. We were much closer to the Congress, actually, in terms of assistance than it turned out that GAO had been at that point. Mr. Campbell also had, it seemed to me, an over-concern about allowing GAO people to get involved in anything other than strictly internal.

For example, there was a rule that you could not belong to professional organizations. You could not attend professional meetings. Now, there were a number of people who went off to Harvard's Advanced Management Program but that was different. His concern was that, if they associated with people from the executive branch, that might somehow color

[8]

and influence their objectivity. I did not share that view. He had abolished the Financial Systems Division, which made me somewhat concerned because I had been a part of the effort way back in the beginning when I was in the Budget Bureau to work out a cooperative program between Treasury, GAO, and the Budget in the field of improving accounting systems and financial management generally.

Part of the background of that was that, when Jim Webb was Director of the Budget, we worked with him on that issue; he having come out of Treasury and he also having been a close friend of Lindsay Warren's. Well, this was a logical time to try to renew this relationship. So he talked with Lindsay Warren to see whether or not he would be agreeable to try and work out a three-way joint program. His response was affirmative. He would do that.

In 1950, when the Budget and Accounting Procedures Act was enacted, there was language put in there to ratify this, as you will recall. It did not designate a specific entity, but it did talk about cooperation among the three agencies. This had lapsed during Mr. Campbell's period. This was a part of his philosophy that this was not a very high priority. I disagreed with that.

So, when I came in, we established something called the Joint Financial Management Improvement Program (JFMIP). It had a staff which was financed jointly by the three agencies. We added the Civil Service Commission to it because of the problem of getting adequate grade levels for the people in financial management throughout the government, adequate training programs, and things that we felt the Commission could be helpful on. Well, that was another difference of opinion.

GROSSHANS: Mr. Staats, could I maybe get back at the question of when you first came in here. What did you do and who did you primarily rely on in trying to assess what was needed in GAO, the way you saw it? I think in our earlier meeting you had mentioned to us a couple of meetings that were very helpful to you---one was held in Williamsburg and I think Jim Webb and John Gardner were some other folks that were present. Could you just kind of speak to that?

[9]

STAATS: Well, this just happened to come along about the time that I came to GAO. There was a group at Columbia University working with the Carnegie Corporation which was interested in the subject of accountability in government. They sponsored two conferences by the Ditchley Foundation--one held in England and one held in Williamsburg on this subject. They had Members of our Congress, Members of the Parliament, they had the Auditor and Comptroller General of Great Britain, and myself. I remember going over on the airplane with Senator Muskie. He was much interested in this subject.

The concept of three-way accountability kept coming through these discussions, that is, financial accountability, what they called managerial accountability, and program accountability. This helped a great deal in sharpening up my own thinking on the subject; particularly after the conference we had in Williamsburg. Not that that was the bible in any sense, but I guess it more or less reinforced my own feelings about what I would like to do.

The other thing that impressed me, I guess, was the interest on the part of the many people in GAO in bringing about change. They felt the need for change. I talked to many people--Ellsworth Morse was very helpful, Bob Keller, Frank Weitzel, and many others.

So, all together, I began to shape up my thinking that I would like to redirect the work of GAO along several lines. One was to deal more with interagency-type problems because, uniquely, GAO and the Office of Management and Budget (OMB) have perspectives across the board. Many of these problems are common problems. You can learn from one agency what can be applied in another agency--the case study type of approach. So that was one thing.

The other was a question whether or not we could do something about trying to evaluate the effectiveness of the programs. I am not trying to say GAO had not done any work in the management field; it had, but it was a relatively low priority. People would bring to me examples of some of the things that had been done. Larry Powers was particularly helpful in that respect. It was a low priority. These were some of the things that came out.

I talked to quite a few people who were not in the executive branch but friends of mine from the outside. So, very early, I decided I would try to get a group from the outside to meet with me from time to time to really

[10]

kick these issues around. These people could bring a different perspective to it.

I set up what we called the Comptroller General's Consultant Panel which Chuck Bowsher has continued. This was made up of people from business, from accounting, from universities, and from people who had served in the government and had since retired. I found that tremendously helpful.

We set up an Educator Consultant Panel this came later by the way-to try to help us particularly in recruiting. Leo Herbert (GAO's Director of the Office of Personnel Management) played an important part in helping organize that. Later on, that group became a little impatient just dealing with questions of how you could get better people for GAO. They wanted to talk about the substance of the GAO audits. We just let some of that develop. I cannot really say how it has developed since I left, but I thought it was a useful approach.

I guess all I am saying is that all these things had some part in my thinking. I might comment a little bit more about the work we were doing in the Defense Department.

I sensed a feeling when I came here that, because of the Holifield hearings, GAO was not supposed to do much in the Pentagon. I had not realized fully for a while how deeply that went. It went to the field staff and that bothered me a good deal.

I decided very early that we would restore the level of defense audit work that we had prior to the Holifield hearings.

Now, to be sure, it seemed to me that GAO's role had changed. What stimulated a lot of the controversy were the pricing reviews that GAO was making where GAO was in effect examining post facto the cost of the contractor and said the contractor was overcharging or had allocated its charges in the wrong way and, therefore, there should be some reimbursement to the government.

[11]

Well, you could see how this could be upsetting to some people. Chairman Vinson took cognizance of this and passed the Truth in Negotiations Act. In substance, what that act said was that, if there is an arms length negotiation between the government and a contractor, placing all the facts and all the costs on the table, then it would not be subject to challenge and a request for reimbursement to the government. So my decision was that we would try to be sure that the act was being enforced and observed, rather than going in and continuing to do the pricing studies. I think this probably accounted for a lot of the misunderstanding about whether GAO had "called off the dogs on the Pentagon."

The other thing that had happened was the establishment of the Defense Contract Audit Agency (DCAA). Should GAO try to duplicate the work of DCAA or should it try to say whether DCAA was doing its job properly or not?

I decided that we would try to emphasize both those things. We had to do a lot of contractor audits in order to be able to determine that. Some misunderstanding arose later on whether or not GAO had really audited defense contractors. We did audit them, but we did it in the context of trying to be sure the Truth in Negotiations Act was enforced and that DCAA was doing its job properly.

We had people out in contractor plants. Later on, we put, as you recall, people in the contractor plants to be sure that the Selected Acquisition Reports--the SARS--were accurate. So that we did not just rely on the Defense Department, we could get those costs directly from the contractor. This myth, I would call it, that we had not been auditing defense contractors, I think, was just a misunderstanding.

GROSSHANS: After considerable study, you indicated earlier that you really did not get too involved with the response that Mr. Weitzel sent to the committee. I am sure you must have given a considerable amount of thought to that study. Do you have any further views on what got us into that particular position? Could it have been the way we did some of those post-audits?

[12]

STAATS: I could not really cite you chapter and verse of what GAO's response was and what later developed, but a number of things occur to me that were involved here.

One of the criticisms of GAO at the time was that GAO was not getting responses from the Defense Department on its draft reports. The contractor was saying that "we were being hit with the newspapers, we had not had a chance to examine the reports," and so on. That seemed to me to be a matter we ought to be sure that we were careful about because I felt that we had to protect ourselves on our facts in our reports. If we are wrong factually, you can throw the whole report away.

In the interest of fairness to the agencies, we changed our relationship with them and generally told them we ought to have agency comments.

Thirdly, from the perspective of the Congress using our reports, I felt they would be interested in knowing what the agencies' comments were and what we had to say about those comments. We established the rule that is still in effect, I know, as to getting agency comments and having that whole story packaged together in that report. Now another point that I recall was involved here was the concern that the titles of GAO's reports were headline seeking. I do not know whether that was true or not but that was the charge. It was a matter we ought to take a look at. So the rule which we worked out--Ellsworth Morse helped on this--was that the report title should be descriptive but not emotional or inflammatory. In other words, we ought not to try to tell the story in the headline of a title of our report; this had caused concern to some people on the outside. Keep in mind that all this was going on during the Vietnam period. The emotions about the Defense Department were running very high. Now, I am sure, that adds something to this picture.

Now another point that was made was that GAO would not list names of the people involved in contracts in the report. That was a more difficult one. What we came out with was a rule which said that, if an individual contractor was guilty of abuse or misuse of his position, say a monopoly position, we would not hesitate to name the contractor in that report. We did this on two or three occasions but not very often.

Beyond that, the philosophy was that we were auditing the agency and its performance and you could not hold some Lieutenant Colonel responsible for something where he was acting under instructions or under the

[13]

guidelines or under the policies established by the agency head. So we put in the report names of all the responsible officials in the agency.

ESCHWEGE: When you say contractor, did you mean the contracting officer? Now, would you still mention the name of the contractor?

STAATS: Well, both.

ESCHWEGE: Both, you would not mention the company either?

STAATS: We would list all the contractors that we visited.

ESCHWEGE: Right.

STAATS: We would not put the finger on one and say that he was a bad boy. We tried to look at what really went wrong with the system--whether it was the supervision, the monitoring, or the audit, things of this type. It is very difficult, it seems to me, to sort out--the question of how you share the responsibility between the contracting agency and the contracting officer for the performance of the contractor.

One of Jim Webb's cardinal rules in the space program, which I think was right, was that you cannot really divorce the agency from the responsibility of monitoring the contract.

You have got to have enough capability in the government to be sure that the contractor's performance is what it is supposed to be. In other words, you cannot just turn the contractor loose--it has to be a shared responsibility.

ESCHWEGE: This is really not so different from what we did later on, if you remember, on the water resources projects, where we looked at a whole bunch of them for a while, and looked at the methodology in order to get at what can be done better in the agencies on that.

[14]

As a result of the Holifield hearings, there was some early change in the organizational setup of the Defense Division. Am I correct on that. Some functional realignment…….

STAATS: This came a little later, I think. I guess it is fair and accurate to say there were three GAO's when I came here--international GAO, defense GAO, and the civilian agency GAO. They were not, shall we say, as cohesive as you might like.

I had quite a number of meetings in which the three heads of those divisions were present and the differences of approach in programming, in the audit techniques, and how the reports were written became very apparent.

One of the things we did to try to deal with this policy was to set up an Office of Policy, which Ellsworth Morse headed, to review the reports as they came through. We began to develop more audit guidelines, but it became clear to me later on that it needed something more than that. Bob Keller and I talked about this many times. We finally agreed to set up a task force to look at the basic structure and the organization of GAO. Keeping in mind, now, that we wanted to emphasize management improvement and performance and also government wide issues. The conclusion of that effort, I believe, was in 1971 or 1972

ESCHWEGE: Oh, that was the 1971 task force which resulted in a major reorganization in April 1972.

STAATS: This reorganization set up program divisions or functional divisions. The Office of Policy, I believe, kept its name, but we also set up a program planning unit which would help us on this. Of course, we did not bring in additional people, except for a little later when Tom Morris came in. He came in, not as a line supervisor, but as a Special Assistant and, later, an Assistant Comptroller General.

Later, I brought in Sam Hughes but that was in connection with the Office of Federal Elections. That was a new responsibility.

[15]

The point I am making is that my effort here was to try to build on the background and expertise and loyalty of GAO staff. This organizational change that took place in 1972 was one that really kind of emerged after endless discussions. Some people thought it went on too long. This was, I think, a price that was worth paying to be sure that we had a consensus in the organization as to the direction that we wanted to go.

ESCHWEGE: But there were some earlier initiatives that you took. For instance, the planning function came, I would say, within about a year from the time that you came to GAO. You recognized that need right away, I guess.

STAATS: I do not think I had the solution to it at that time. That was one of the more difficult things; I suppose it always will be for GAO. How do you assess the priorities for GAO work? What gave rise to this effort that you refer to, Henry, was the obvious difference in the way that the three divisions were planning their forward program. The regional managers, particularly, brought this forcefully to my attention, saying that we had three different systems at work here. Mr. Samuelson had a 6 month program, Bill Newman in the Defense Division had a different program. It became very clear that was not a tenable situation. We had to do some thing about it. This was a preliminary effort. It was not very satisfactory, but later on we hit on the idea that maybe these program divisions would lend themselves to the idea of dealing with issues not just government wide but internal as well.

I wrote down, one weekend when I was down here, about 20 of these. I asked Bob Keller and Ellsworth Morse and some others to take it and see what we could come up with. We eventually came up with 36 issue areas. I do not know what it is today.

GROSSHANS: It is about the same.

[16]

STAATS: Well, this was somewhat of an experiment. It still seemed to me, as time went on, that it was the best device that we could have developed to assess priorities and to do something else, which I felt for a long time GAO had a unique capability in, and that is to anticipate issues or emerging problems.

Congressman Rose with others in the Congress was quite active in organizing a kind of futurist group. He tried to get me involved in it. I went to a number of meetings up there.

It seemed to me that in these 36 issue areas we could do a lot to anticipate problems which were not yet front-burner problems.

We had, for example, a study which we initiated on the evacuation plans for nuclear power plants. We did not know whether this would ever happen, but, just by happenstance, our report came out 3 days before the Three Mile Island accident. I took a good deal of kidding about this when I went up before the Congress as to how GAO had become omniscient it was a very friendly kidding. I think there was, and still is, a good opportunity in those reports by doing the necessary research you need or by talking to enough people.

I recall, Henry, for example, an area you were involved in, that is, the extent of foreign ownership of farm land. This was a matter on which no one had good information. I believe we uncovered that in some magazine article. The staff went out to Iowa and to Kansas and to many other places and found that the states did not know either. The Agriculture Department did not know if this was a serious problem or not. We would not know until you had some mechanism set up to deal with it. But that was another example of the kind of thing where we could make a review to see if there was a potential problem.

ESCHWEGE: It turned out that we kind of destroyed the myth that was out there that the Arabs were coming in and picking up all the land; it turned out to be negligible.

STAATS: But you would not know that unless you had the data.

ESCHWEGE: It took a lot of staff-days to do it, but we got it done.

[17]

HORAN: Did you encounter much resistance to that approach up on the Hill? Did anybody think that GAO was getting away from the role that it wanted GAO to play?

STAATS: I do not recall we ever had any difficulty in that respect. I just do not believe we did. I would say the bulk of our work though was still a combination--I am talking here about the issue papers--of congressional interest. I say interest rather than request because part of the procedure we developed in putting those issue papers together was to go up and sit down with the committee staff and ask, "What are the issues that you think GAO ought to concentrate on?"

Another area that I was not very successful in doing--and I always regretted this--I went to the Appropriations Committee Chairman and said, "Look, when you finish your hearings, give us some time before your next set of hearings. If you have got issues that you feel that GAO ought to concern itself with, we would like to hear from you."

Of course, you always had the committee reports and that was no problem. GAO had done a very fine job of analyzing those committee reports for ideas, but there were other things that really did not get reflected in the reports. I was never fully successful on this and I still think it was a good idea.

Second, those issue papers contained the status of ongoing work to get some assessment of how the ongoing work was progressing. With all the divisions represented around the table, they had an opportunity to have input from various perspectives and I thought that was very useful.

Thirdly, there was the question of anticipating emerging problems so that all three of those things seemed to come together in those issue papers. I found it was the best way I knew how to monitor what was going on. I could get hold of an audit review before it came to my desk for signature. If I felt we ought to change the direction of it, it would not mean any great problem as far as staff work was concerned. I think it was a very healthy involvement.

ESCHWEGE: I think it also allowed us to find programs in the different agencies that were similar, so that we could kind of review them across the board. Housing programs are an example where you had them in Agriculture,

[18]

in the Department of Housing and Urban Development, and in the military. The issue area combined all those together.

STAATS: One area that comes to mind is that this was a period when the grant programs to the states were expanding rapidly--the Great Society programs of the 1960's. We did not have a very good feel of what was going on at the state level.

One of the issue areas was intergovernmental relations. How successful were the agencies, really, in determining what the grants should be and monitoring that grant and going in and auditing the agency performance at the state level? This was another issue area that emerged and I thought it turned out extremely well.

You may recall we had Don Stone come in and give a number of training courses in intergovernmental relations. All those were examples of benefits derived from our issue area planning.

GROSSHANS: We started the planning process shortly after you came in. It started with Harry Kensky in the 1967-68 time frame and it took us about 5 years (1971-72) before we got to that issue area concept. Do you have any further comments you want to make about the time frame that transpired there before we really hit on the issue area concept we still use today?

STAATS: Unsuccessful experimentation. We could not find any approach up until that time which seemed to meet the needs of the regional offices and the divisions as well.

ESCHWEGE: The other area in which I think you recognized early on that there were some problems, and we have since then recognized it all along, is the reporting side. So you established early on in November 1966 a little task force under Larry Powers. Milt Socolar, Ed Stepnik, Harry Kensky, and a few others were involved in trying to find out what we could do about speeding up our reporting. Do you recall that?

[19]

STAATS: I dare say that GAO is still trying to do that.

ESCHWEGE: I guess you are right, but the one thing that I recall that came out of there, which really had a planning facet to it, was the Troika system. You remember that?

STAATS: Oh yes.

ESCHWEGE: There was a planning guy who was a member of the Troika and the other two were doing execution and reporting. That was experimented with in a couple of places.

Mr. STAATS: GAO has always had, of course, a problem of shortening up the time frame of its reviews. Part of this is in the nature of the work itself and maybe this has been overcome and maybe not--a normal auditor's concern about thoroughness and being sure that his facts are right. Along with that goes the referencing process and then the review process. By the time all this emerges, people are concerned about it being irrelevant. Well, irrelevancy depends a little on what you assess the value of GAO's product. It is not irrelevant if one still learns a lesson for the future, but it is irrelevant if the committee hearings on the subject have come and gone and the legislation has either been passed or rejected. I think we did a great deal to streamline the process.

I think it is, at least it was at the time I left, still a problem--there has been a lot of criticism in the Congress. You recall there was a committee set up in both the House and Senate to look at the staff agencies support for the Congress--not just focused on GAO--but this problem of timely reporting was discussed in the GAO part of that report. This was kind of a central point--the timing and the question of whether GAO reports took too long. That was the term they used--GAO reports take too long to do.

One way we found, at least I thought would be helpful in that respect, would be to monitor the committee schedules. If we had work in process, even though not completed, then staff could be put together to brief the committee on what was found. It seemed to me it turned out pretty well. We even brought in regional staffs.

[20]

Another thing we did, and it was not successful, we experimented with the idea of letting one of the regional managers be an audit manager/Project manager. Well, you can obviously see the kinds of issues that were raised because the divisions here did not want to lose control of it. We kept pushing on that. We did some of them that way. I would say, overall, it was not really a step that did a whole lot to save time. Part of the idea that I had on that was that it would save a lot of time to give the regional managers, say in Detroit or Kansas City, the job of putting the whole thing together, including checking out with Policy, checking out with legal, and things of this type. I must say they too were reluctant to take it on.

Mr. ESCHWEGE: The other thing that I just wanted to get your views on a little bit is the antipoverty programs--the Prouty Amendment work--that came along in late 1967 and kind of put us in some turmoil in terms of finding enough resources to do this rather formidable job of not just reviewing but evaluating the programs. I want to know how much of an impact you believe this work had on GAO?

Mr. STAATS: Not just that program, but all those programs under the antipoverty program--the Office of Equal Opportunity (OEO). This came to me as somewhat of a surprise too. Congressman Prouty had talked with me about an idea along these lines and I thought he had decided not to pursue it. I did not really argue too much against it, but I was not really sure how serious he was or under what time frame or anything of that type he wanted this work to be done.

It turned out that they had a conference between the House and the Senate. The agreement was not to extend the OEO program, except that GAO would make an evaluation of the effectiveness of those programs--they used the word effectiveness.

Well, that surprised many of us in GAO, but the question was could we do it? How would we do it? Our experience in evaluating program effectiveness was practically nil at that point. We decided to roll up our sleeves and go to work. I got accused of being the audit manager once in a while.

[21]

We had some of it done by contract, some of it with consultants. A large part of it was done by our own staff in GAO.

The question was how do you do it? What test do you apply? Well, of course, you go back to the statute and the committee reports. That is where you always start on an audit of a program. Then you go to the agencies to see how they interpreted their mandate and then you go to their appropriations reports. All these things play a part in defining the objectives of a program. We had 15 months to do this. They fixed that in the statute. We made our report on schedule.

Nothing major came out of that, except on the Job Corps. We recommended that the rural Job Corps be phased out and put them in the urban areas. Part of what we found was that the attrition rate was very high in the rural Job Corps program. People were pulled out of the inner city--Philadelphia, New York, and Washington--and they were very unhappy, they got homesick, and they ran away as soon as they could. In other words, the attrition rate was very high that was one of the things we were interested in.

We got into educational levels of the Head Start Program. Some testing was done as to the achievement levels of children who went into the Head Start Program when they were 3 years old, what happened to them when they were 5 years old, and what were the normal educational levels. We were able to make some pretty valid conclusions. We had some pretty hard data on that. Particularly, we were saying that it showed a major advance from ages 3 to 5, but, once they moved up age wise, they really did not do much better than their compatriots who had not been in the Head Start Program.

Overall, I think GAO's effort was a moderately good effort. We got a lot of compliments from people in the evaluation community outside, in the universities, the agencies, and so on.

The only kickback we had was, I remember, the hearing I was called up to and spent about 4 hours before Teddy Kennedy who was very unhappy about our recommendation on the Job Corps. I never felt that he had done his homework on it because, as it happens so often, somebody keeps putting questions in front of him. There were no hard feelings, but he was really very vehement about it.

Mr. ESCHWEGE: Wasn't Senator Mondale on that committee too?

[22]

Mr. STAATS: See, the report came out just at the change of the Administration and after a new Secretary of Labor came on board. What they were saying was that we had been playing ball with the new Administration on this because the Labor Department came out agreeing with our position. They put two and two together and got five or six out of it.

Mr. ESCHWEGE: The Labor Department actually wanted to close some of the Job Corps Centers. Is that the idea?

Mr. STAATS: Yes, as I recall, they agreed with our report. It was probably a coincidence of timing, but, overall, I think it demonstrated to GAO that this was not an impossible job to look at program effectiveness as part of what I call program accountability, going back to the Ditchley Foundation Conference.

Mr. ESCHWEGE: Would you say that propelled us a little faster into getting into effectiveness?

Mr. STAATS: Yes, indeed, partly because it demonstrated we could do it and partly because we thought there was a need there and we could fulfill it. That was partly the beginning of our greater use of consultants and partly the beginning of our efforts to recruit on a multidisciplinary basis at the colleges and the universities.

Mr. GROSSHANS: I was one of those Job Corps evaluations and it was an interesting experience; I think the way you recall some of the experiences accurately reflected the situation. I just would like to add one aspect to it and that is the post follow up type of issue that we raised. The programs really did not have a way of measuring success.

In other words, they really looked at the success rate on the basis of whether they placed anyone, not whether anybody retained the job they had gotten for them. I think that was a major contribution that we were able to make. We still make those types of recommendations on a lot of

[23]

the programs. The agencies generally do not have good visibility as to what happened to those individuals and I think GAO made major contributions in that area. I know we were severely challenged as to how auditors and evaluators could come in here and assess educational type of programs.

Mr. STAATS: I think there was a growing recognition all around at that time of the need to do more of this sort of thing.

I was involved in President Johnson's Planning, Programming, and Budgeting System (PPBS) which is essentially an effort to try to relate inputs to outputs, not for just one budget year but over a 5 year cycle. The executive branch was beginning to try to do more program evaluation.

The Urban Institute was set up along about this time to help the Department of Housing and Urban Development; the Rand Corporation was also set up for this purpose. So there was a general recognition that the statutes were no good unless they were effective.

I guess one of my frustrations in GAO was to try to get the Congress more interested in oversight. This is a never ending battle to get them to pay attention to oversight. Oversight is not nearly as glamorous as writing new legislation where you are going to write regulations or make grants, or you are going to do something which is much more interesting politically than to do the hard job of assessing the effectiveness of the legislation you passed. GAO, I would say, kept pushing the Congress' nose into this, but the results were not uniform by any means.

Mr. ESCHWEGE: Did you sense that there was a difference between the Government Operations Committees and Appropriations on one side and the legislative committees? In other words, would the legislative committees have been more receptive to program effectiveness reviews and how did that play with these other committees. Were they kind of reluctant to have us get into that?

Mr. STAATS: Well, that is an interesting question. I had not thought about it in quite those terms, but I would say that the greatest interest was in the legislative committees by far.

[24]

Appropriations Committees, very little. They have the job in a short time frame of putting dollars and cents on the administrative operations, personnel increases, new procurements, and things of this type. Assessment of whether or not the legislation was producing the best results was really not very relevant to that exercise.

Government Operations Committees were somewhere in between, perhaps.

But, by and large, that is where my disappointment was because their charter is oversight and the tendency to oversight in terms of things which are out of order or where things go wrong. They address management issues, but very, very little on, you might say, whether or not this program really produced the results.

Mr. ESCHWEGE: We are really into GAO's relationship with the Congress, here. I was wondering whether you had any additional comments since we always look to the Government Operations Committees--as the ones that sort of have oversight over GAO. What kind of relationship did we have with them over the years?

Mr. STAATS: The general answer to that question is that, I think, it was quite good, but the thing we had to keep emphasizing all along was that, while those two committees had jurisdiction over our basic statutes, they were by no means in a position to tell other committees what GAO's jurisdiction should be.

I recall we made an analysis once of where GAO's statutory base was and most of it was not in the Government Operations Committees. It came out of other committees of the Congress.

[25]

There was discussion, at one time, of whether or not to require joint referral of all legislation emanating on the legislative committees to the Government Operations Committees; that did not work out.

Now, having said that, let me give you an example. The Legislative Reorganization Act of 1970 was not handled in the government operations committees. That came out of special hearings conducted by Senator Monroney, hearings where I testified while I was still in the Budget Bureau, but the act did not come into being until 1970. That was the statute which gave GAO the basic charter in evaluating program effectiveness, unless you want to consider the 1946 statute as the basic charter, which refers to "expenditure analysis," which was never implemented.

Lindsay Warren, for reasons of his own, did not want to try to do that and maybe at that point in time it was a wise decision--I do not know.

Another example is the 1974 legislation, the Budget and Impoundment Act; that was not done through the Government Operations Committees. In fact, they were against it, and this was handled in the House through, the name is stumping me right now, but it was the special committee, the Rules Committee, that is what I am trying to think of; it was handled through the Rules Committee. I suppose the Government Operations Committees always felt that they had a special obligation to assess the work of GAO and the other oversight agencies, and they did.

Of course, that is where this review that I mentioned a while ago was made.

Mr. ESCHWEGE: That review you mentioned a while ago came about in around 1977 or 1978, I think; that is when the report came out, but really there was not that much of a review over the years that specifically focused on GAO. You wanted to have more review if I recall.

Mr. STAATS: Well, as a matter of fact, I do not know how many times I made the recommendation, to both the House and the Senate, that they try to do more. I said this could help us if you would get deeply enough involved in GAO's work to give us some help on these issues.

I said the annual report is a good time to do that, because that is the time when you would pull it all together and you could hold hearings on

[26]

the annual report just like they do in the parliamentary countries. That is the way the Auditor General in Canada, for example, gets his input and output from the Parliament. I was never successful in doing that. They said, well, we know enough about what GAO is doing, we keep in touch with what you are doing, we read your reports, so they really did not feel more frequent reviews were needed. Well, in a way that was a compliment, but it was not really responding to what I had in mind, which is to say, "Look, we got problems, and maybe you could help us."

So when we came to the question of jurisdiction over the Internal Revenue Service (IRS), over the Federal Reserve System, over the Federal Bureau of Investigation (FB1), over the Exchange Stabilization Fund, all these issues were handled separate and apart from the Government Operations Committees.

Another example was our needs in the personnel area. One of the early things I sensed that we needed to do was to have more supergrades in GAO and give more opportunities for people to move up. We had no jobs at Level IV, where if you look around the agencies, they had quite a number of them, so I got five positions that were entitled Assistant Comptrollers General, but that did not come out of the Government Operations Committees.

Mr. ESCHWEGE: There were particular Congressmen and Senators, who during your tenure, kept us quite busy with work through requests that they asked of us--there was Congressman Brooks, Senator Proxmire, maybe to a lesser extent Senator Ribicoff, but those are just a few examples of the ones that come to mind. How did you feel about that in terms of serving the whole Congress? Was that any problem that these people seemed to come in more often with requests than the others?

Mr. STAATS: Well, you are quite correct, it was a subject of some comment that GAO is really carrying the water for some few people in the Congress. Well, this was a tough problem because we could always say that what we put out has to be our own product. It has to be an independent judgment on the part of GAO and not dictated by anybody. Getting credibility for that,

[27]

though, is not so easy if a lot of our material is being quoted and used on the floor publicly by the requester.

Senator Williams, I am sure, must have had the same problem because he was about the only person in the Congress that was speaking publicly about GAO reports when I came here. I guess there is just no way to control a member of the Congress who wants to use or misuse a GAO report.

It did result, however, in one rule which I established--I guess it is still in effect we would not allow a member to bury a report.

During the Vietnam period, I recall, we were asked to do a study on refugees, a very controversial issue on how the government was handling refugees in Vietnam. So, we were asked to go in and make a study of this. The report did not come out the way the requester wanted it. So, a press release was issued which purported to reflect GAO findings but did not accurately do so.

Well then, the question is what did we do to correct it? We could put out our own press release and say this guy really messed it up or do we just put out our report, and this is what we did.

So, the rule then was, in 30 days, all reports would be made public. Thirty days might be a little long in some cases. We always had the discretion of moving it up, but the 30 days generally was the limit. Rationale for the 30 days was that, in many cases, they wanted to take our report and put it in the grist for the mill for congressional hearings. In other cases, the committee said the most effective way we can use your report is to release that report in conjunction with a hearing. And both those reasons, I felt, were valid reasons, but you had to find some way to tell them. We did this publicly. I wrote letters to every single committee chairman saying that generally reports are going to be issued within 30 days after they are made for the Congress.

Mr. ESCHWEGE: In terms of what we now call sister agencies, they were born during that period: the Office of Technology Assessment (OTA); the Congressional Research Service (CRS), although it was an outgrowth of another agency

[28]

that was there before in the Library of Congress; and the Congressional Budget Office (CBO). There were some early concerns about some of those agencies and their jurisdictions as opposed to GAO's jurisdiction. Would you like to kind of review that a little bit?

Mr. STAATS: Yes, there has been a lot of discussion about the Congress having excessive staff and, when they do that, they lump all these together: committee staff, personal staff, GAO, OTA, and so forth.

I guess the one that I had the greatest difficulty with was the establishment of OTA. OTA was a product of discussions that Jim Webb and I had had with Congressman Daddario who was interested in finding some way to bring more input into the committees on scientific developments and assessment of potential dangers and possibilities. I guess his model was the President's Science Advisory Committee which had operated back in the 1950's under the chairmanship of Jim Killian of MIT (Massachusetts Institute of Technology). Jim Webb and I had both worked closely with that committee and with Jim Killian.

We thought we understood exactly what Congressman Daddario was talking about. So we talked with him about a possibility of creating something similar to what was then called PSAC (the President's Science Advisory Committee) to work with the committee chairman who had primary jurisdiction over science and technology matters. This was the concept that Congressman Daddario had in his bill. He took it out on the floor with 25 members of the House present, and Jack Brooks had not had a chance to get briefed--did not know about it at all apparently. He got up and made a speech questioning as to why the President should be allowed to appoint anybody who is going to advise the Congress. So he proposed that the committees head it up in the House and Senate and, essentially, what came out was a committee which is very similar to the Joint Committee on Atomic Energy.

In other words, OTA is not an agency in the same sense that GAO, CBO, and CRS are. It does not undertake any studies except at the direction of the committee. The point of this is that it came out very differently. Congressman Daddario had raised with me the question earlier as to whether this was something that ought to be given to GAO as an additional part of its charter. I said we are doing some of that kind of work. But it would be a different kind of organization if the function here is to

[29]

bring in directly the input around the table discussion studies and mandate by an outside group of people, working with the committee chairman; that is a different kind of an organization.

I think in retrospect that I could not have anticipated what was going to happen. I guess Congressman Daddario could not have anticipated what was going to happen, but it came out to be very different from what was discussed earlier.

Now the statute made the Comptroller General a member of the advisory committee. I think I sat in on virtually all, if not all, those committee meetings so that there was liaison with OTA. GAO people were present at many meetings, a lot of liaison consultations took place between them. It did not damage GAO, but it did mean that there was another body here that GAO had to coordinate with, work with, and to some degree it duplicated GAO work.

Mr. GROSSHANS: Did you have any concerns at all that that model of deciding as to what
jobs would be done by OTA would possibly be also made applicable to GAO? Was there any concern along that line?

Mr. STAATS: Well, I do not think GAO could or should ever let that happen. I think it would strike fundamentally at the independence of GAO.

I think that CBO was different in that it was to function in conjunction with and in lieu of staff of the two budget committees. It had a pricing job on new budget proposals, a pricing job on projections of the economy, things of that type.

Now, there was something that happened here though which was a misunderstanding. They had difficulty getting a first director for CBO and they were anxious to get going. I made a mistake, because I should have done it orally, but I wrote a letter to Senator Muskie, who was the chairman of the committee, saying in the interim we would be happy to take this function on. He has a fairly short fuse, and he reacted very much as if this was an effort for GAO to establish for itself a jurisdiction. I did not intend it that way, but I made a mistake of not doing it orally and verbally rather than in a letter, because he used that letter on the floor and in the committee hearings. It blew over, but I felt that the CBO function was so different from GAO's function that it probably would not have worked if it had been given to GAO.

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For one thing, it would have required a lot of our GAO manpower to do the job and, secondly, you would have had to have somebody who was on tap every day, every hour. It was more like a committee staff.

Mr. GROSSHANS: How did you view the relationships that were developed between GAO and the sister agencies? Did you think they worked as well as they might have?

Mr. STAATS: Yes, a question came up in our budget hearings as to the extent at which we were coordinating and not duplicating the work of the other agencies; they called them sister agencies.

We kept saying they were aware of what we were doing, and we were not duplicating, and they were aware of what we were doing, but that was not enough. So, we created a committee, I guess you would call it, and we would have lunch at one place or another and usually it was right here at GAO because we had a place we could get lunch a little easier.

I think that was helpful, but I do not really think that the committee per se was a solution. I think the solution is that there be an exchange of work programs. CRS has a tough problem here because their work program changes hourly and daily. Then liaison points should be established in each of the agencies so that, if there is a problem, question, or need for a meeting, they call up Joe Dokes and work it out. But you cannot do it through the heads of the agencies very well.

Mr. ESCHWEGE: That is pretty much the way we try to work it today--that is to have these meetings and liaisons. Maybe we can get into the relationship with the press and the media. One of the first things you did is you appointed an Information Officer in GAO. That was something different for us, having worked under, as you mentioned earlier, a Comptroller General who really was more turned inward rather than outward to the media. You also kind of pushed for some press releases and conferences.

[31]

Mr. STAATS: I believe there are two things involved here. One was the criticism I got from a number of people I had known in the media. "We cannot find out what is going on over there. We ask questions; we never get a call back. They (GAO) were very different from the relationship we had with other agencies." That was relatively a minor point.

A more important point was that a GAO product has to be a public product unless it is classified for security reasons. That is a part of its credibility; that is a part of why GAO is in existence--to bring these issues out in the public. So I felt we needed some way to do that. This is coupled with some other things of how we write our reports and whether we can write them in terms that would enable the press and media to understand them.

So, I started looking around for somebody to bring in and I found a fellow named Roland Sawyer. He was over at the World Bank and he seemed to be interested. I checked him out. I did not know him previously, but he came in, and one of the people he had brought with him was Laura Kopelson. But, he had also another person he brought in from IRS that worked out.

Well now, that raised a question, what should the posture vis a vis the media be? This is more difficult. My view was that GAO ought never to be in a position where it is out on the street promoting or lobbying, if you will, to get acceptance of its product. At the same time, I felt it had to be open and the reports had to be understandable. I guess the resolution of this dilemma was that we would alert people in the press if we had some report coming out that we knew had particular significance to that sector of the press and arrange to be sure to get copies of the report to them.

We put out a list of reports and had the press media on the receiving end of that. If we had a highly technical report which was difficult to translate in any kind of written form, then we would have a briefing or offer to have a briefing, and invite in the people to come to that so as to get a more usable product.

Now part of the difficulty here is the danger that you get something in the press before the committees of the Congress have access to it. That is a very sensitive point and you do not want that to happen.

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The tendency of a newspaper reporter, if he gets hold of a draft report in order to write a story, is to want to call up the Congressman or the staff person in the Congress and say, "What do you think about this?" The reply would be, "We ain't never seen it." That is the concern that you have. So you have to handle that on a very careful basis in order to be able to get the story out in an intelligent way; at the same time, you do not in effect want to scoop the Congress.

Now, there are ways that mechanically you can deal with this, in part, through the Office of Congressional Relations. You can get a copy of the report, take it up to the Hill--you do not rely on the mails--and give the staff a rundown of what is in it, and tell them that the press has it. These are things you can do, more or less, in a mechanical way to deal with that problem, but I do not think there is really any better way of dealing with this dilemma of dealing with the media because, if you do not get exposure, you are not going to be very effective either.

Another point here, one of the things I think we learned very soon is that a member of the Congress is more alert to what comes through from his hometown newspaper than he is to what comes out in the Washington Post or the New York Times or the Wall Street Journal. So, we tried to find some way to get these out to the local press.

Now, the UPI (United Press International) and the AP (Associated Press) dealt with that to some degree, but, if there is a key report you knew was of concern to Chicago, you sent it to the Chicago newspaper and you would be sure to get hold of the Chicago correspondent here. There were quite a few of those reports.

Mr. ESCHWEGE: Somewhat related to that are the leaks that occur with respect to some of our draft reports to the media. I know we have all had to deal with that and I just wanted to get your reaction.

Mr. STAATS: I must say in the 15 years that I was here, I could not really make much of a complaint about leaks from GAO staff. I give them very high marks. There were a few, but you never knew for sure where those leaks came from. I always suspected that most of them came from the agencies who

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had draft reports, who either did not like what we had to say or felt for some reason it was to their advantage to release that report. There were a few where it was quite clear they came from here.

I remember a case, I would say it was a misunderstanding really on the part of our staff person. We were doing a study at my request on the Tennessee Tombigbee Navigation Project. You probably recall this. I initiated it, along with two or three other projects, to see what we could learn about the planning process by the Corps of Engineers and their cost estimates; we had a number of things in our audit objective.

Along about midway in that review, a suit was filed by an environmental group asking a court to restrain the Corps of Engineers from proceeding with the construction of the project. I did not know about that at the time, but Senator John Stennis was very much interested in this project. He was for it. He called me up and said, "What about this? What are you going to do?" And I said, "I do not know anything about the court case," but I checked then and found that there was an actual suit in progress.

Under the long established GAO rule, which I think was right, once a suit is brought where the issue gets transferred into the court's jurisdiction, GAO ought to step out until that is resolved.

So I called Senator Stennis back and said that we were going to stop the review of this particular project, but we would resume it one way or another after the court had made its decision. We would complete our review of the other projects because we were not interested in the environmental issue, per se, we were interested in something different. Well, a person on the GAO staff felt that I had sold out to Senator Stennis and he gave it to the press. That created quite a flurry for a while.

Mr. ESCHWEGE: We did get that Tennessee Tombigbee job done later on.

Mr. STAATS: Well, we finally did, but I guess not relevant here, but by the time we had finished our study, there were a number of other people in the Congress that asked us to come into it because they wanted to kill the project. Our conclusion was that we were way past the point of no return. The cost of rehabilitating the area would be much greater than to go ahead and finish it.

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'Mr. ESCHWEGE: Well, we have covered part of this already. This has to do with the relationship of GAO and the executive agencies. We talked about the changes that occurred after you came in, but I am particularly interested in some of the things that you started, bringing some of the agency officials over here for our Wednesday lunches, and also in terms of our general relationship with, say, OMB, even the White House, and through the Joint Financial Management Improvement Program, which you mentioned already.

Mr. STAATS: Well, I never worried particularly about getting too close to the agencies. I did agree, as I mentioned, the need to get the agency comments and that there be adequate consultation along the way with respect to what we were trying to achieve. This meant that we would sit down with the agency at the time you start an audit and be sure that they understand what we are after. These I think are fairly basic to GAO's work..

The thing which Henry refers to is efforts to try to bring some of the top people from the agencies in to get an informal exchange at lunch and a short meeting after lunch just to get better acquainted.

It is very easy for an agency person to feel that GAO is interested mostly in just making brownie points and to criticize. That was the main sensing that I got from the operating agencies; they did not feel that GAO ever gave them a break in the sense of telling them the things they did right.

Well, they were correct in this in the sense GAO is in the problem solving business. If you are in a problem solving business, you basically look for problems and issues and difficulties. Sure, you can put in the report the things that were successful and so on. That is one of the ways you learn. We tried to do a lot of that, but, as far as the press is concerned and the committees, unfortunately, they would pick up what we said was critical. So you can see there is a natural allergy here between the agencies and GAO audit work.

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If they understood what we were trying to do, then it made it easier for us to have access to the information. A lot of this information, as you well know, is not on paper. You have to do it through an interview process. You have to talk to the people involved to understand what was on the paper or what is left out of the paper. If an agency feels basically that GAO is out in a sense to get them, they can make it awful difficult for GAO in more ways than one to get hold of the information that you need to conduct an audit.

There is a delicate line here that you have to draw--in a sense an arms-length relationship--at the same time that you have to have an understanding of what we are trying to do, how we are going to do it, so it is not an antagonistic relationship.

It is a different relationship than the one a public accounting firm has with a corporate client--very different.

Right now, you know, there is an issue that Chairman Dingell has been raising--whether or not the public accountant should go public if he finds something that is not right, a public watchdog who anticipates problems concerning the future of a company. It is a different concept. The accounting profession is united in the idea that that is not their role. They are there to make an independent judgment and to make it to management.

Now, the Treadway Commission is in the process of completing a report trying to define this relationship in the public accounting arena. It has been fairly public as to what they are going to come out with, and this is where I have come out, being on corporate audit committees now. The public accounting firm, if it senses something that is unethical or criminal or fraudulent, should go to the audit committee. If the accountant is not satisfied with what the audit committee does, he goes to the corporate board of directors. If he is not satisfied then, he resigns and files an exception report and automatically makes it public.

There is a different relationship in GAO; GAO has a threefold role as I always saw it. One is that it is accountable to the Congress. Two, the law says we make recommendations to the President and the Congress and, as you know, all of our reports go to the executive agencies. If you look at changes that are made in terms of management, programs, or savings, I do not know what the percentage is, but I would guess probably 80 or 90 percent of those accomplishments that we have in our annual report

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are done by the agencies without regard to the Congress. Third, it is accountable to the public.

I think that GAO's accountability is to all three of these audiences. It is a very different role than the one that is played by the public accounting firms in their auditor relationships to their clients.

Mr. ESCHWEGE: Well, just a quick question. In terms of your relationship to OMB, having come from that area, do you feel that helped in strengthening the relationships between OMB and GAO?

Mr. STAATS: Well, we made a number of efforts here and I guess a part of the response to your question relates to the de-emphasis in BOB and OMB in the area of management improvement. This was our great frustration because, in so many of our reports, particularly those issues which are generic or government wide in nature, we found no place to go except OMB. That was their charter, they had the power of the President behind them, they were approving funds, and they had the leverage that goes with that.

We were not too successful in getting them to give high priority to GAO reports. What we did on a couple of occasions was to bundle up all the recommendations that we had made where we were saying OMB should take action on such and such and we sent it over to them.

I had quite a lot of contact with people at OMB--Shultz and Ash and others--but I think the fundamental problem is one that is still there. That is the fact that the budget function had just crowded out everything else. They had taken on the regulatory function but only because the Commission on Paperwork, which I was a member of, put the onus on them because they had the responsibility in the Federal Reports Act. Then, there was the Office of Procurement Policy, which we tried to get OMB to administer, but they did not pick it up so the Congress put through legislation to create an Office of Federal Procurement Policy.

I think part of the problem too was that several years ago OMB took the position that the way to set a good example for the agencies was to cut

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back its own staff, which I thought was absolutely wrong. The example does not really work.

If OMB wants to cut its own staff, that means agencies will have less trouble with them. OMB will not be in their hair' so much. It was really not a wise move, but, in that process, OMB cut back the work they were doing in the management field.

A number of us feel today that something is going to have to be done. This is a matter of concern to the Governmental Operations Committees in the Congress. The new staff that is going in with Senator Glenn as Chairman, I believe, is going to take up this issue. That is a part of the answer to your question--why we did not feel that we were getting as much attention to our reports and why there was not enough follow-through. After all, GAO cannot direct anybody to do anything unless what the party is doing is illegal.

Mr. ESCHWEGE: Right. Can we discuss the relationship with the internal auditors and later on the inspectors general? I know you devoted a lot of time to this and, of course, people are always saying, "Well, if we got these people, what is GAO doing, how does their mission differ from that of GAO?"

Mr. STAATS: Well, there are several pieces to the response to that. One is the extent to which we would duplicate the work being done by internal audit. There was, I do not say always, but I think the general practice was not to do that. If GAO felt that it was a direct duplication, they would wait to see what came out of an internal audit.

Another dimension of that relationship was the question of what GAO could do to strengthen the inspector general and the audit function in the agencies. I think that will always be an important concern on the part of GAO.

GAO obviously cannot do the whole job and should not even try in my book. It can do a lot to try to strengthen the internal audit and internal management facilities, more than just internal audit. If you are looking for management performance, then you got to be concerned with the

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budget function, the personnel function, the inspector general function, the audit function, and the financial management function. All these are part of the tools that agency management has to use to be able to perform adequately. GAO has a concern with all of those, but particularly it's a concern with audit and inspection, I believe.

We did a number of reports, you may recall, where we tried to focus on that. We have done it in individual reports, too, if we felt that there was inadequacy or maybe a problem that they were not really on top of, particularly DCAA over in the Pentagon.

The third part of the response I would make to that is that how big should GAO be? There is no answer to that question either. It should be big enough and not too big. It did play a part in my thinking at least as to how fast we would grow. We wanted to grow fast in the 1970's and we were just not adequately staffed to fulfill these three missions that I mentioned.

When we got up to around 5,000 total, it began to raise a question in my mind of whether we should be increasing a staff here as against trying to get the agencies to strengthen their own internal staff under our monitorship and surveillance. That does not answer the question of how big GAO should be because a lot of new statutes come along which generate a lot of new assignments.

As a general proposition, it seems to me that the dangers of GAO becoming too big is maybe a loss of quality control. Quality control seems to me basic to credibility, basic to the respect for the work that GAO does. It does not take too many "bad apples" to contaminate the whole barrel as far as GAO is concerned. Quality control really has to be number one, and size has something to do with that. If GAO gets too big, then obviously there is some additional risk that you will lose that.

I worry about some of the big accounting firms. I am associated with one of the big eight firms now which has almost 2,000 partners. I am on a committee of professional standards where quality control is an everyday concern to them because, for one thing, at stake is not only their reputation with their existing clients and new clients, but it is also a matter of litigation. How you assure quality is one factor that I think is really very fundamental and basic.

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Mr. GROSSHANS: Could you maybe elaborate what you had in mind when you suggested that GAO has a role to play with guiding the internal audit agencies and inspectors general? What did you have in mind there?

Mr. STAATS: Well, you may be referring to the effort that we started back in 1968 to see if we could develop improved guidelines for audit. Ellsworth Morse and Don Scantlebury particularly had roles to play here. I discovered that we had a guide on contract audit. We had the principles and standards for accounting systems, but we did not have really anything which would provide guidance to the agencies on what GAO would consider to be an adequate audit.

To some degree, I was trying to reflect this three way accountability in what we call the "Yellow Book" which is now undergoing a review. The Yellow Book, essentially, said that there are four types of audits. There is a financial audit; there is an audit of compliance with statutes, rules, and regulations; there is an economy and efficiency audit; and there is a program effectiveness audit. Separately or in combination, what we tried to do there was to recognize that there is a broader audience out there than just GAO. There are the internal auditors in the agencies, and there are 50 states out there that are receiving federal money and then there was a public accounting profession that was auditing their operations as well as their own internal auditors.

The 4 years of discussion that took place seemed much too long, but, as a final analysis, it paid off. When we issued that document in 1970, people understood what we were trying to get at. They did not fight it; it did not all seem so strange when you talk four categories of audit. Then, in 1981, we revised it somewhat and that is the one that is still in effect.

We were pleased and surprised, I should say, that we got the kind of acceptance of the principles in that guide that we got. Then it was translated into other languages--Chinese, Arabic, French, German, and so forth; it became kind of a bible. I am told that now half the states have accepted it, either by statute or by directive.

The state of Illinois, for example, passed a law in 1972 verbatim out of the Yellow Book. They even now require, before the utilities are given

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any rate increase, that there has to be an audit in accordance with the Yellow Book. So it has had wide acceptance. The need was there too, I think, and that probably made it easier. People recognize that need.

Now along with that, we took the lead in establishing something called the "Intergovernmental Audit Forum" made up of the state and local governments, the grant agencies, Treasury, OMB, and GAO. That has also hit a responsive chord. Some of the state auditors who came to see me said "We have problems with the federal government because there is no way to communicate, no way to really sit down around the table and tell them what our problems are." That generated the idea of creating something called the Intergovernmental Audit Forum.

Each of the 10 major regions have such a forum and follows the national pattern. I believe they are all still in place.

Mr. ESCHWEGE: Is it fair to say that this also was a good vehicle to have liaison with the various accounting societies and the accounting profession on the outside?

Mr. STAATS: I should add, I forgot to add, that the American Institute of Certified Public Accountants put out a booklet which was based on our Yellow Book, shortly after ours came out. They, of course, obviously were one of the organizations that we worked with in putting that Yellow Book together.

Mr. ESCHWEGE: Being that we had expanded beyond accounting in the work that we were doing, there were also relationships that, by necessity almost, we had to have with such groups as business, labor, environmental groups, and so on which became quite active in the 1960's and 1970's. Sometimes they made their views known quite well to GAO on some of the things we did. You recall that I am sure.

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Mr. STAATS: Well, I think what you may be alluding to is the effort on the part of some of the associations, the trade associations particularly. There were others as well who wanted us to send our draft reports to them for comment. They were unhappy that they had no direct input to GAO which came up fairly sharply, I believe, in the case of Agriculture once--where they wanted us to send them a copy of our draft report.

Well, obviously, we knew what would happen if they did not like what was in the draft. They all had their connections with the Congress and you would get premature input from members of the Congress.

Secondly, is that, as I told them, we are not auditing you, we are auditing agencies. We are auditing the people who are responsible for carrying out these programs. If these people choose to consult with the associations in preparing their response to our draft reports, that is their problem, that is their business. We do not encourage them to do it, but we cannot control them. If the agencies want to do that, that is part of the input they will have.

I would say this was not a major problem. I recall on the question of safety--the transport of liquefied natural gas--we had a terrible problem with a firm up in Boston. They became very excited about what we said. We were saying that the standards for transport and for storage were not adequately protected. They got terribly excited and they came to see me two or three times. You could not close the door on that sort of thing, but you certainly do not invite it.

Mr. ESCHWEGE: Well, the other thing I was going to talk to you about is that you served on a number of commissions, boards, and other kinds of bodies while you were Comptroller General. There was always some concern on some people's part, depending upon what commission it was, if we participated in the deliberations and helped in formulating policies and procedures

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Mr. STAATS: We would be stuck with the result.

Mr. ESCHWEGE: We would be stuck with the result and then our poor auditors might come in later and they might say, "Well, Elmer Staats was on this commission, can I reopen this issue and raise questions?"

Mr. STAATS: There is a point to that concern, all right. Well, there was a Commission on Government Procurement which was, I guess, initiated in the Government Operations Committee in the House.

That was a case where there had not been a review of the procurement policies of the government. They all realized, when they started working on this statute, that this was an area GAO had a very important role in. A fellow named Herbert Roback was the staff director for the House committee. When he was in the process of writing the bill, he wanted to work with GAO on what the commission should be concerned with, what kind of issues did GAO develop. We helped them out on that. So right in the purpose of the commission were a lot of the things that GAO had been instrumental in raising as issues.

Chairman Holifield asked me if I would be willing to serve. I had to make a decision. I would be a statutory member, not an appointed member; that made some difference. If I am a statutory member, then the whole Congress has agreed that I, technically at least, should be a member of that commission, not the committee chairman, not the President, or anybody else. That made a difference, so I agreed to do it. And after we had met several times, we began to focus on the issues of who is looking at government procurement government wide I started to look at our organization GAO. So, well, maybe we are not doing what we ought to do. So I announced that I am going to set up a Procurement and Systems Acquisition Division in GAO. That is how that came about.

Later on, as you know, I came to the conclusion that there ought to be an Office of Federal Procurement Policy. Well, that was one case. Nobody really raised that kind of concern anywhere along the line, that I am aware of, of our having been a member of it.

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Mr. ESCHWEGE: I think it was more internal when we first started and then, after a while, the problem went away.

Mr. STAATS: All right, now, there was something later on called the Commission on Paperwork which Congressmen Horton chaired. He had been a member of the Commission on Government Procurement. He saw what GAO could contribute to it so they again asked if I would be willing to be on it.

A more difficult one was the Cost Accounting Standards Board. Congressman Gonzales made that proposal. Where he got the idea I do not know, but certainly Admiral Rickover was very much involved that GAO be required to issue a set of cost accounting principles and standards applicable to all of the contracts under the Armed Forces Procurement Act. Senator Proxmire picked it up over on the Senate side. They were in the process of trying to decide what to do about this. Along the way, they asked me if this was feasible for us to do and I said "No, no way. If you pass the law, I just will not be able to promulgate these standards in 18 months."

So the compromise was that GAO would make a study on the feasibility and desirability of promulgating cost accounting standards by the government. They did not say by whom. It would be a normal kind of a GAO study.

The end result was that they set up a board that I was to chair and I would appoint four other members. We would promulgate standards, let them lie before the Congress for 60 days, and then they became law unless the Congress overruled it. This was before the constitutional issue was raised. Some of the contractors did raise a constitutional issue at the time but did not get very far with it. This board ran for 10 years. This was on top of everything else that I had to do, but I guess I really did not have much choice in the matter.

Mr. ESCHWEGE: Was your objection more to the short time frame that was given or the conflict that it might represent?

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Mr. STAATS: One was the time frame and the other was I was not sure you could do it until we made the feasibility study and the feasibility study came out positive on both the side of feasibility and desirability, so that we testified along those lines. But we did not make the pitch to take on the job because we knew it was extra--on top of everything else.

Mr. ESCHWEGE: I take it the same thing was true on the Chrysler Board. You did not make that pitch either.

Mr. STAATS: Chrysler Loan Guarantee Board, the same thing. That one was somewhat different in that the statute laid out the conditions and what the three member board did was to monitor them and make decisions as to whether or not to extend the guarantee up to a statutory limit of $2.5 billion. The board had its own staff which was appointed by the Chair man who was the Secretary of the Treasury. The Chairman of the Federal Reserve Board, the Secretary of the Treasury, and the Comptroller General were all three members of that board. So we were not in the business of promulgating new policies or rules and regulations. We had the job of in effect being sure that the mandate in the statute was observed.

I must say we did have one other issue, though, and that is, "How much of the $2.5 billion should be used?" That had not been really considered by the Congress when the bill went through. We here at GAO raised that question very early on. Suppose Chrysler goes broke? How do you protect the taxpayer? The result was that our Detroit office, working with an appraisal firm, made an independent appraisal as to what Chrysler's assets would be worth if it liquidated and did not continue to be used for automobile production. In other words, what salvage value would it have? They went back and redid this, later on, when the issue became a little more current as to how far we were going to go, but the result came back about $2.4 billion. It would take somewhere between 7 and 10 years to liquidate. The interest on that money would be such that you could not go beyond a guarantee of $12 billion and still fully protect the taxpayer. That is the amount that was eventually used.

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Mr. ESCHWEGE: You will be interested to know that the Railroad Accounting Principles Board is winding up its activity. I know that you were still on board here when that first came up. There were some concerns that that was somewhat different than the Cost Accounting Standards Board.

Mr. STAATS: Well, I am aware of that. Congressman Florio was the sponsor of this legislation. It was perfectly obvious that the proposal was generated by the shippers. They were unhappy with the increases of the allocation rates by the ICC (Interstate Commerce Commission). It was a self serving type of thing and I did not feel it was the kind of thing we would want to take on. I had a number of discussions with him. It went through, but there were no appropriation made for it. I guess GAO later got in a position where it could not really turn it down. My attitude was colored somewhat, I guess, by the Cost Accounting Standards Board. That is where he got the idea.

I would like to say a little bit about the jurisdiction of GAO. I think this is relevant maybe to what we have been talking about, more so than some Jurisdiction of the things we will be talking about at the other meeting.

I was impressed when I came to GAO with the fact that there are so many areas of government that GAO had been excluded from.

If you look at our basic charter, look at the legislative history of the 1921 act. For example, I said, "what are we doing at IRS?" IRS has to collect all this money. Well, we are not sure. It turned out that the internal auditor in IRS had come out of GAO. This is probably irrelevant in a sense, but, for some reason, he was very antagonistic to GAO and he persuaded the General Counsel of the IRS that GAO had no jurisdiction.

Bob Keller and all the staff here said they are wrong. They are stretching the statutes every way they know how. To make a long story short, after several meetings, I went up and talked to Wilbur Mills and to Russell Long and told them of what had developed. We thought IRS was wrong and we felt that this was not really a viable arrangement. They had a joint meeting of the House and Senate--the Joint Committee on

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Internal Revenue Taxation had this meeting--and they said that--they had me there--they said suppose we ask you to do this. I said "Fine, I do not think they are going to turn you down." So the staff director worked with GAO and we worked out a number of projects involving IRS. We went in for a period of about 2 years at the request of the committee. This was really a test of GAO as to whether or not we could do anything that is useful. Part of the argument was that our access to records would involve informants--the old confidentiality issue. So the Congress passed a law then to give GAO jurisdiction.

We had a somewhat similar issue with the FBI. I suppose, if J. Edgar Hoover had lived, the story might have been different. But there was a new director of the FBI. I had by the way--this is a kind of interesting interlude here--when I was appointed Comptroller General, President Johnson said, "It would be a good idea if you go over some time and have a talk with Mr. Hoover." He said, "Do you know him?" I said "No, I do not know him." He said it would be a good idea if I would go talk to him.

So I made an appointment to go over and see him. I expected to be there 5 or 10 minutes and I was there for an hour and a half, during which I heard all about the Lindbergh kidnapping case in graphic detail. The only thing that came out of that was that I asked the FBI if they would assign somebody to help us in training programs in investigatory techniques. Marty Fitzgerald's [formerly GAO's Director of OCR] father was designated as the liaison for that and that worked out quite all right.

When Mr. Kelley became the head of the FBI, we had several conversations about what GAO's role should be. He was pretty reluctant to let GAO come in. I said, "Well, you do not have any legal basis for keeping GAO out." Well, they cited the informant question again and that our coming in would dry up their sources and all that business. We finally had an exchange of letters about it. We had Mr. Kelley over for lunch one day and then we had meetings with him. It went on for a long time, and we finally worked it out.

Then, when Mr. Webster came in, it was no longer a problem.

Mr. Kelley was from Kansas too, wasn't he?

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Mr. Staats: Kelley was from Kansas City. He was police chief in Kansas City, and he had been to the University of Kansas, so we had a little to talk about.

The third case was the Exchange Stabilization Fund. This was relatively Fund minor, but Treasury would not allow GAO to audit the accounts of the Exchange Stabilization Fund. We had a break on that, because it turned out that they had used the fund to build a building in Tokyo. The question was, what is the fund doing building a building? So that helped us out. We got the law changed, you see, to do audit.

The fourth case was the United Nations. There was a congressional delegation that went to South America and raised the question about who is really monitoring some of these loans down there. The next thing I knew there was a bill introduced which would give GAO jurisdiction over the whole United Nations. I said, "Hold on, let's talk about this." We finally got the authority to make reviews of the U.S. contributions and role of the United Nations agencies.

We did studies of the specialized agencies, maybe five or six of them, to see whether or not there was really adequate audit and controls over the funds being made to those specialized agencies--World Health Organizations, UNICEF (United Nations International Children's Emergency Fund),and so on.

Mr. Eschwege: So the focus was mainly on the United States contribution to that agency?

Mr. Staats: You cannot separate them. We proposed, finally, that the United Nations establish an Auditor General. They need an Auditor General. We got a lot of support from Canada, the United Kingdom, and some other countries, but the Secretary General was afraid to take it on because each of these specialized agencies has its own audit arrangements, very loosely connected except to get their money from the United Nations General Assembly. The State Department supported us finally. Initially, they were against it. So, that was another chapter on our jurisdiction.

Another one was on the Federal Reserve System. This was an interesting case also because Mr. Arthur Burns was dead set against our having any

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jurisdiction. He threw up all of the smoke screens and he knew how to do it. Confidentiality was a part of it and the possibility of leaks to the market--they were independent just like GAO, they reported directly to the Congress, etc. He fought it every way he knew how, but we finally overcame that. We did agree to put in the statute that we would not try to monitor or second guess monetary policy. Now, beyond that, we had jurisdiction.

If you look at the work of the Fed, there is a tremendous amount of work there that is not related to monetary policy. Bank supervision is one of them, but a lot of it is not related to monetary policy at all. Mr. Burns later told me, "Well, you would never have won it if I had still been there." But we would have, because it was perfectly clear to the Congress that you needed the same kind of oversight on most of those operations that you have elsewhere.

So a lot of my time, when I was here Henry, was to try to be sure that GAO had jurisdiction. The only case where I did not press was in the case of the CIA (Central Intelligence Agency). Now, maybe, the situation is changed, but I had lead responsibility when I was in OMB for a number of years with handling the budget for CIA. While I was with the National Security Council Operations Coordinating Board, we had responsibility for monitoring the CIA's covert operations. It is such a highly compartmentalized arrangement and the information is highly sensitive.

I concluded that there really was not much that GAO could do that would be very helpful, GAO being oriented to public reporting. So when I testified on it, I said that (1) I would hope that the Congress would establish a Joint Committee on Intelligence but (2) if they had their own staff and if we could help them in any way, we were at their disposal in the same way we were at their disposal in respect to any other committee of the Congress. I was not going to press for independent jurisdiction to audit. Now, we did have limited jurisdiction over at the National Security Agency and this caused some of our people to wonder whether we should limit our position the way I did. I think, today, I would still probably take the same position.

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Mr. Eschwege: In terms of jurisdiction over the judicial branch, we were sort of invited in, I guess.

Mr. Staats: Oh, I had forgotten about that. We had a jurisdictional problem there too. I remember very early when I was here, after raising this issue with the administrative officer of the United States courts, he suggested I go out and talk to the Judicial Conference which was meeting in San Francisco. So I made the journey out there and then, after a while, they invited me to come in and talk about this. They apparently had been talking about it before I came in--I do not know; that was just my guess. After I outlined why I felt that they should not be excluding GAO--they did not have a statutory base for it, except they are an independent part of the government--one or two of them began to speak up and say I think GAO ought to be in here. So you had disagreement. We eventually worked it out so that we could look at the administrative operations.

I think Warren Burger welcomed this when he became Chief Justice. He and I got to be very good friends and I saw a lot of him. He had an interest in administration and management. For example, he helped set up the Court of Justice out in Colorado which was the training program.

I think, as of today, I am not aware of any major area of government that GAO does not have jurisdiction.

Mr. Eschwege: No, and, as long as Mr. Burger was there, he kept up that relationship with Chuck Bowsher as well.

The last one is just the legislative branch itself where we have done some little work, but, you know, I do not think we were really seeking to get in there too much.

Mr. Staats: This a question I got many times. I suppose Chuck Bowsher gets it too. People usually with a wry smile, say "Why don't you audit the Congress?" They do that by way of saying you are afraid to. Well, it was not

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GAO's job to do it. I think implicitly we did a good deal by way of suggesting changes in law. Sunset legislation, for example; I was very critical in many hearings about the Congress' lack of oversight of the agencies. So implicitly we were doing that sort of thing.

There were one or two cases where we we