Evening star., 1947-11-18
Warren 'sReport
'0n GSI Studied
By2Comnittees
Controller Proposes
Reorganization and
Changed Legal Status

Changed Legal Status
Two congressional committees to-
day were studying a comprehensive
investigation report by the General
Accounting Office, recommending
both reorganization and changes in
the legal status of Government
Services, Inc
In the long-awaited report, Con-
troller General Lindsay C. Warren
found the huge operations of the
welfare and recreation agency gen.
orally have been we'll conducted. But
he recommended that Congress care
fully study the whole picture and
such specific suggestions as these:
l. Clariication of the status of
GSI under a new contract or con-
tracts, depending on just how the
agency might be reorganized.
@ Adoption of policy as to rental
of space in Government buildings.
3. Adoption of price policy for
operations by the GSI or some
similar organization.
Stronger Financial Controls.
4 Establishment of stronger con-
trols over it's financial operations,
including more exact responsible
lties for installed equipment.
5. A definite separation of policy
making and administrative func-
tions of those having charge of the
use of Government properties in
volved in GSI operations.
6. Creation of funded account
in marketable securities for the re-
placement of equipment, this to
include the present reserve of more
than 100000, earmarked for such
purposes by GSI.
The Warren report was released
late yesterday after it had been
received officially at the Capitol
and referred to the House Execu-
tive Expenditures Committee and
to the Senate Civil Service Com
mittee. A report by the Baldwin
subcommittee of the Senate civil
service group on its own extended
probe of GSI had been held up,
pending receipt of the GAO recon-
mendations.
GSI operates more than so Fed
eral cafeterias and snack bars here,
as well as numerous park conces-
sions.
Alternatives Suggested.
In his 190-page report Controller
General Warren suggested three al
ternatives for any congressional
move to clarity the status of the
GSI.
These were: To continue GSI
with internal reorganization, to
permit competitive bidding for
some of the contracted services it
now operates, or to set up formal
Government corporation to take
over all its operations, now handled
by selected Government officials
constituting the trustees of the
service.
AS to GSI reorganization, the re-
port brings out, the controller had
in mind the establishment of a
board which would fix all policies
and separate administrative officers.
The report suggests there have
been too many interlocking interests
among the official duties of Govern
ment officials serving GSI and their
separate Government post re-
sponsibilities. There should be, it
suggests, more "arm's-length" deal
ingS.
Certain Independence Prescribed.
Without criticizing any individual,
it illustrated this by saying GSI
should be more independent in man
agement of its affairs from the Fed
efal Works Agency,s and the latter
should have a freer hand to nego-
tiate with GSI.
The GAO Investigators reported
they were unable to unscramble
many of the accounts as to which
Government agencies bore the cost
of the installation of a considerable
amount of equipment installed in
GSI operations.
The report brings out that this
subject posed difficult questions not
only as to who originally had had
the equipment installed but also as
to what was the accountability of the
GSI. The view of the GAO was that
a large amount of equipment had
been installed at the expense Of the
Government that should have been
at the cost of the GSI.
The Investigators, unable to un-
scramble these old accounts, sug-
gested that Congress should write
requirements into any new contracts
which would specify what agency
was responsible for any equipment
hereafter installed.
19-Year Period Covered.
The controllers report included
an audit of GSI operations for the
19-year period from January l, 1927,
to December 81, 1945. This showed
the nonprof1t organization had
crossed $89, 100000 during that
stretch.
The agency netted, during this
period, over 100000, but of this
sum more than $1,800,0O0 was
ascribed as the Governments share
of profits. The Governments profits,
undistributed at the time of the
audit period, was said to be $47S 124.
The handling of accounts dealing
with the Washington Tourist Camp
came in for criticism. Mr.. War
ren's report contends revenues from
the tourist camp operation served
as a major source to cover losses in
other GSI operations, such as tennis
courts and swimming pools.
The report pointedly suggests that
Congress should consider this sit
uation in the absence, in the past,
of rental charge policy covering
GSI use Of the tourist camp grounds.
This was tied in with the suggested
congressional consideration of a
GSI price policy and the question
of a policy on rental of Govern
ment space.
The report also contains criti-
osm that the managers of two cof-
fee shop and news stand conces-
sions were paid $10,702 more than
should have been paid them in re-
lation to payments granted the
managers of other operations. An
investigator explained this refer
af S..