May 15, 1995 CONGRESSIONAL RECORD — HOUSE H 4925

million of land acquisition from willing

sellers, and in the long term when mining operations cease and the lands revert back to the Forest Service.

In addition, the bill creates a land acquisition account to be funded by the

first $5 million of royalties collected

for further land purchases in the

Tongass National Forest, with priority

to non-Federal lands within the national monument.

Pursuant to the terms of the agreement, if Greens Creek fails to purchase

and deliver title to $1.1 million worth

of lands acceptable to the Forest Service, the land exchange will not be consummated.

Mr. Speaker, it is important to consider this agreement in the context of

efforts to reform the mining law of

1872. The notion that those of us who

favor modernizing the mining laws are

opposed to the mining industry in this

country is simply false. My support of

this legislation, which is likely to significantly enhance the economics and

life of the Greens Creek Mine, should

put that falsehood to rest.

This legislation does set an important precedent that the Government

should receive a royalty share for the

development of public lands. At the

same time, I do not consider the 3-percent net royalty negotiated in this

agreement as universally applicable for

purposes of mining reform.

I recognize there were concessions

from both sides in the negotiating

process and I am reluctant to rewrite

the deal. On balance, however, I applaud both Kennecott and the Forest

Service for their efforts, and I ask

Members to support the bill.

May I add personally, Mr. Speaker,

again my congratulations to the gentleman from Alaska [Mr. YOUNG]. the

chairman, and the appreciation of all

the members on the minority side for

his openness and, as always, his willingness to be cooperative with us.

With that, Mr. Speaker, I reserve the

balance of my time.

Mr. YOUNG of Alaska. Mr. Speaker, I

yield myself such time as I may

consume.

Mr. Speaker, I could only echo what

the gentleman just said. There is a way

we can work on many of these issues

and solve the problem if we seek to do

so.

The gentleman from Hawaii has always been able to work with me on his

issues especially in his great State. We

have a great deal in common. We hope

to solve some of his problems with the

Hawaiian natives which we have also

solved in Alaska. I do compliment him.

I may suggest to the gentleman from

California [Mr. MILLER], the ranking

member, we ought to let the gentleman

from Hawaii [Mr. ABERCROMBIE] manage these bills more often.

Mr. Speaker, I have no further requests for time, and I yield back the

balance of my time.

Mr. ABERCROMBIE. Mr. Speaker, I

have no further requests for time, and

I yield back the balance of my time.

The SPEAKER pro tempore (Mr.

FUNDERBURK). The question is on the

motion offered by the gentleman from

Alaska [Mr. YOUNG] that the House

suspend the rules and pass the bill,

H.R. 1266, as amended.

The question was taken; and (twothirds having voted in favor thereof)

the rules were suspended and the bill,

as amended, was passed.

A motion to reconsider was laid on

the table.

Mr. YOUNG of Alaska. Mr. Speaker, I

GENERAL LEAVE

fask unanimous consent that all Members may have 5 legislative days within

which to revise and extend their remarks, and include extraneous material, on H.R. 1266, the bill just passed.

The SPEAKER pro tempore. Is there

objection to the request of the gentleman from Alaska?

REPUBLICAN BUDGET PROPOSAL

There was no objection.

CRONYISM INVOLVED IN

f(Ms. FURSE asked and was given permission to address the House for 1

minute and to revise and extend her remarks and include extraneous material.)

Ms. FURSE. Mr. Speaker, can this

really be true? The 1996 budget before

us cuts school lunches, makes Medicare

more expensive, guts environmental

protection, all in the name of balancing the budget, but the biggest item

of all is not touched. In fact, it is increased. The millions of Americans

who thought that the end of the cold

war meant the end of huge Pentagon

budgets will be sadly disappointed.

For years, when thoughtful people

said that the waste in the Pentagon

was enormous, we were criticized for

not being strong on defense. But, of

course, we were right all along.

An article in Sunday’s Washington

Post states, ‘‘Each year the Department of Defense inadvertently pays

contractors millions of dollars that it

does not owe.’’

‘‘In addition,’’ the article says, ‘‘the

department has spent $15 billion’’—and

I repeat, $15 billion—‘‘it cannot account for over the last decade.’’

Why are we cutting education, nutrition, health care, and environmental

protection, but increasing Pentagon

spending? Could it possibly be that defense contractors make huge contributions? But children, seniors, endangered species, they do not.

This is not an issue of security. This

is an issue of cronoyism.

Mr. Speaker, the article referred to is

as follows:

[From the Washington Post, May 14, 1995]

LOSING CONTROL—DEFENSE DEPARTMENT—

BILLIONS GO ASTRAY, OFTEN WITHOUT A

TRACE

(By Dana Priest)

Each year, the Defense Department inadvertently pays contractors hundreds of millions of dollars that it does not owe them,

and much of the money is never returned.

In addition, the department has spent $15

billion it cannot account for over the past

decade.

And Pentagon purchasing agents appear to

have overdrawn government checking accounts by at least $7 billion in payment for

goods and services since the mid-1980s, with

little or no accountability.

Unlike the infamous $7,600 coffee pot and

$600 toilet seat pricing scandals of years

past, these problems, and many more, are

the result of poor recordkeeping and lax accounting practices that for years have characterized the way the Defense Department

keeps track of the money—$260 billion this

year—that it receives from Congress.

According to a series of investigations by

the Department’s inspector general and the

General Accounting Office, and ongoing

work by Pentagon Comptroller John J.

Hamre, the department’s systems of paying

contractors and employees are so antiquated

and error-prone that it sometimes is difficult

to tell whether a payment has been made,

whether it is correct, or even what it paid

for.

Just how much money does the poor accounting waste?

Former deputy defense secretary and new

CIA Director John M. Deutch wouldn’t hazard a guess. ‘‘Lots,’’ he scribbled recently on

a reporter’s notebook in response to a question.

For months after he took the job as chairman of the Joint Chiefs of Staff in late 1993,

Gen. John Shalikashvili received paychecks

for the wrong amount. In the last year and a

half, Comptroller Hamre counted six problems with his own pay.

A paper-based system in which items frequently are misplaced or lost and computers

that often cannot talk to each other are part

of the problem. But there are other major

systemic weaknesses. A lack of basic accounting procedures—such as matching invoices and payment records, or keeping

track of money spent on a given piece of

equipment from one year to the next—has

made it impossible to determine how billions

of dollars have been spent by each of the

service branches.

In addition, Hamre explained, tracking the

money has been nearly impossible because

300 different program directors—the Air

Force F–16 fighter program director, the

commanding officer of an aircraft carrier,

the head of a maintenance depot, for example—have had separate checkbooks, each one

free to write checks without regard to the

balance in the Pentagon’s central registry.

The U.S. Treasury has always paid the

bills, even when there was no money in a

given project’s account, because it assumes

any error was unintentional and someday

would be corrected, said Pentagon officials

and inspector general investigators.

‘‘There’s this huge pot of money over there

in the Treasury that you can keep drawing

down,’’ said the Deputy Inspector General

Derek J. Vander Schaaf. ‘‘As long as your

[overall] checkbook’s good,’’ he said, meaning the Treasury, ‘‘nobody screams.’’

The problems were created over several

decades and made worse during the 1980s

Reagan administration defense buildup during the latter days of the Cold War, when

there was little political will to scrutinize

the record sums being spent.

Today, however, even ardent defense

hawks have become disturbed over the mismanaged flow of funds. Some Republicans

who looked deeply into the matter are suggesting a freeze on military spending until

the Pentagon’s corroded payment system

can be permanently fixed.

‘‘The defense budget is in financial chaos,’’

said Sen. Charles E. Grassley (R-Iowa), who
H 4926 CONGRESSIONAL RECORD — HOUSE May 15, 1995

is advocating a freeze. ‘‘The foundation of

the defense budget is built on sand.’’

A Senate Armed Services subcommitte is

scheduled to hold a hearing on the problems

Tuesday. It will be chaired by Sen. John

Glenn (Ohio), a Democrat, who was authorized by Republicans to conduct it because of

his long-standing interest in the subject.

Among the problems detailed by the Defense Department, the Pentagon inspector

general and the GAO:

Of the 36 Pentagon departments audited by

the inspector general (IG) in the last year, 28

used ‘‘records in such terrible condition’’ as

to make their annual financial statements—

an accounting of money collected and money

spent—utterly worthless, said Vander

Schaaf.

Financial officials cannot account for $14.7

billion in ‘‘unmatched disbursements,’’

checks written for equipment and services

purchased by all military units within the

last decade. This means that accountants

know only that a certain amount of money

was spent on the overall F–16 jet account, for

example, but not how much was spent on F–

16 landing gear or pilot manuals because

they cannot find a purchase order from the

government to match the check.

‘‘You don’t know what you’re really paying

for,’’ Vander Schaaf said.

The $14.7 billion represents ‘‘hardcore problems’’ where department accountants have

tried but failed to find the records. ‘‘We

could be paying for something we don’t need

or want,’’ said Russell Rau, the IG’s director

of financial management.

In the last eight years, various military offices appear to have ordered $7 billion worth

of goods and services in excess of the amount

Congress has given to them to spend. These

‘‘negative unliquidated obligations’’ may indicate that a bill has been paid twice or mistakenly charged to the wrong account because bookkeepers at hundreds of maintenance depots, weapons program offices and

military bases did not keep track of payments they made, said Vander Schaaf.

Of the $7 billion ‘‘the government has no

idea how much of this balance is still owed,’’

Rau said.

Hamre has threatened to take part of the

$7 billion out of the military services’ current operating budget if they cannot find

documentation for the expenditures by June

1.

Every year the Defense Department pays

private contractors at least $500 million it

does not owe them, according to Vander

Schaaf. The GAO believes the figure is closer

to $750 million.

The payment system is in such bad shape

that the Pentagon relies on contractors to

catch erroneously calculated checks and return them. Many of the overpayments are

due to errors made on a paper-based system

in which haried clerks are judged by how

quickly they make payments. And because

there is no adequate way to track the

amount of periodic payments made on a contract, businesses often are paid twice for the

work they have done.

Defense Department finance officials believe they are recouping about 75 percent of

the overpayments, although they admit they

have no way of knowing exactly how much is

being overpaid.

Today, after an 18-month struggle by

Hamre to turn the situation around, the department still has 19 payroll systems and 200

different contracting systems.

Hamre, who wins praise from Republicans

and Democrats for his efforts, has undertaken a major consolidateion of payroll and

contracting offices. He has opened more than

100 investigations into whether individual

program managers or service agencies violated the law by using money appropriated

for one program for something else or for

paying contracts that exceeded their budget.

He has frozen 23 major accounts and has

stopped payment to 1,200 contractors whose

records are particularly troublesome. In

July, clerks will be prohibited from making

payments over $5 million to any contractor

‘‘unless a valid accounting record’’ of the

contract can be found. By October, the

amount drops to $1 million, which means it

will affect thousands more contracts.

According to Hamre and Rau, a number of

cases are under investigation for possible

violations of the Anti-Deficeincy Act, the

law that governs how congressionally appropriated money must be spent. Penalties

range from disciplinary job action to criminal prosecution. Investigators are trying to

determine:

Why there is an unauthorized expenditure

of around $1 billion on the Mark 50 torpedo,

and the Standard and Phoenix missiles.

Hamre and Rau suspect that Navy officials

used money appropriated for other items or

wrote checks on empty accounts to pay contracts from 1988 and 1992.

Whether Air Force officials used money

from various weapons programs to build a

golf course at Wright-Patterson Air Force

Base in Ohio beginning in 1987.

What happened when some programs ran

out of money. ‘‘There are some [cases] in the

Air Force now that really stink,’’ Hamre

said. When money for the Advanced Cruise

Missile ran out, Air Force officials simply

terminated the existing contract and rewrote another, more expensive one the following day, Pentagon investigators recently

concluded. In order to pay for cost overruns

associated with the new C–17 cargo plane,

contract officials simply reclassified $101

million in development costs as production

costs.

Hamre said the services allowed such

money mingling to go on partly because of

the complexity of the yearly congressional

appropriations process. ‘‘People want to find

an easier way to get the job done,’’ he said.

‘‘They are trying to get some flexibility in a

very cumbersome system.’’

But, he added, some services also have resisted correcting problems and punishing

wrongdoers. ‘‘I’m very frustrated by it,’’ he

said. ‘‘In the past, they just waited until people retired. It was the old boy network covering for people.’’

The Defense Department is unlike any government agency in scope and size. It sends

out $35 million an hour in checks for military and civilian employees from its main financing office in Columbus, Ohio. And it

buys everything from toothbrushes to nuclear submarines; about $380 billion flows

within the various military purchasing bureaucracies and out to the private sector

each year.

It takes at least 100 paper transactions

among dozens of organizations to buy a complex weapons system. Some supply contracts

have 2,000 line items and, because of the congressional appropriations process, must be

paid for by money from several different

pots.

Fixing the problems without throwing the

entire system into chaos, Hamre said, ‘‘is

like changing the tire on a car while you’re

driving 60 miles per hour.’’

But some argue it has never been more important to make the fixes quickly.

‘‘Here we are in a period of reduced spending, it’s critically important today that we

get a bigger bang for the buck,’’ said Sen.

William V. Roth Jr. (R–Del.), chairman of

the Government Affairs Committee, where

many of the current problems were first revealed. ‘‘We’ve got to put pressure on to expedite it. At best, it will take too long.’’

But in the world of Defense Department financing, time is not always a solution, as

one small example illustrates.

In 1991, because of a computer programming error, the department’s finance and accounting service centers erroneously paid

thousands of Desert Storm reservists $80 million they were not owed. When officials realized the mistake, they began to send letters

to service members to recoup the overpayments. Many veterans complained to Congress, which then prohibited the Pentagon

from collecting any overpayment of less

than $2,500 and made it give back money collected from people who received less than

that amount.

To comply, the Defense Finance and Accounting Service (DFAS) payment centers in

Cleveland, Denver, Indianapolis and Kansas

City created new computer programs to cancel the debts and issue refunds. But they did

not adequately test the new programs, IG

and GAO investigators found.

As a result, the appropriate debts were not

canceled, and improper amounts of refunds

were issued, often to the wrong service member. The DFAS center in Denver, for example, canceled $295,000 that service members

owed it for travel advances. In all, the

botched effort to follow Congress’s direction

cost taxpayers an additional $15 million,

Pentagon officials said.

‘‘It isn’t possible now’’ to recoup the

money, Hamre said. ‘‘We can’t reconstruct

the records. We admit were really, really

bad. We won’t do it again.’’ The IG’s office

has agreed that it would be too costly to reconstruct the records and recoup the loss.

As he often does when he testifies about

these matters on Capitol Hill, Hamre confessed to the Senate Armed Services Committee recently: ‘‘We’ve made a lot of

progress. Boy, we’ve got a long way to go.’’

fRECESS

The SPEAKER pro tempore. Pursuant to clause 12 of rule I, the Chair declares the House in recess subject to

the call of the Chair.

Accordingly (at 12 o’clock and 36

minutes p.m.), the House stood in recess subject to the call of the Chair.

fb 1243

AFTER RECESS

The recess having expired, the House

was called to order by the Speaker pro

tempore [Mr. WELLER] at 12 o’clock and

43 minutes p.m.

PROVIDING FOR CONSIDERATION

OF H.R. 614, THE NEW LONDON

fNATIONAL FISH HATCHERY CONVEYANCE ACT

Mrs. WALDHOLTZ. Mr. Speaker, by

direction of the Committee on Rules, I

call up House Resolution 146 and ask

for its immediate consideration.

The Clerk read the resolution, as follows:

H. RES. 146

Resolved, That at any time after the adoption of this resolution the Speaker may, pursuant to clause 1(b) of rule XXIII, declare the

House resolved into the Committee of the

Whole House on the state of the Union for

consideration of the bill (H.R. 614) to direct

the Secretary of the Interior to convey to

the State of Minnesota the New London National Fish Hatchery production facility.