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                           [COMMITTEE PRINT]
 
                         ADDRESSING GOVERNMENT
                        WASTE, FRAUD, AND ABUSE

                     SUBMISSION BY HOUSE COMMITTEES

                                and the

                     U.S. GENERAL ACCOUNTING OFFICE

               pursuant to section 301 of h. con. res. 95

                               __________

                        COMMITTEE ON THE BUDGET

                     U.S. HOUSE OF REPRESENTATIVES

[GRAPHIC] [TIFF OMITTED] TONGRESS.#13


                             SEPTEMBER 2003

                            Serial No. CP-2

                               __________

 THIS REPORT HAS NOT BEEN OFFICIALLY APPROVED BY THE COMMITTEE ON THE 
                                 BUDGET

           Printed for the use of the Committee on the Budget


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                            WASHINGTON : 2003
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                        COMMITTEE ON THE BUDGET

                       JIM NUSSLE, Iowa Chairman
CHRISTOPHER SHAYS, Connecticut       JOHN M. SPRATT, Jr., South 
  Vice Chairman                          Carolina,
GIL GUTKNECHT, Minnesota               Ranking Minority Member
MAC THORNBERRY, Texas                JAMES P. MORAN, Virginia
JIM RYUN, Kansas                     DARLENE HOOLEY, Oregon
PAT TOOMEY, Pennsylvania             TAMMY BALDWIN, Wisconsin
DOC HASTINGS, Washington             DENNIS MOORE, Kansas
ROB PORTMAN, Ohio                    JOHN LEWIS, Georgia
EDWARD SCHROCK, Virginia             RICHARD E. NEAL, Massachusetts
HENRY E. BROWN, Jr., South Carolina  ROSA DeLAURO, Connecticut
ANDER CRENSHAW, Florida              CHET EDWARDS, Texas
ADAM PUTNAM, Florida                 ROBERT C. SCOTT, Virginia
ROGER WICKER, Mississippi            HAROLD FORD, Tennessee
KENNY HULSHOF, Mississippi           LOIS CAPPS, California
THOMAS G. TANCREDO, Colorado         MIKE THOMPSON, California
DAVID VITTER, Louisiana              BRIAN BAIRD, Washington
JO BONNER, Alabama                   JIM COOPER, Tennessee
TRENT FRANKS, Arizona                RAHM EMANUEL, Illinois
SCOTT GARRETT, New Jersey            ARTUR DAVIS, Alabama
J. GRESHAM BARRETT, South Carolina   DENIS MAJETTE, Georgia
THADDEUS McCOTTER, Michigan          RON KIND, Wisconsin
MARIO DIAZ-BALART, Florida
JEB HENSARLING, Texas
GINNY BROWN-WAITE, Florida

                           Professional Staff

                       Rich Meade, Chief of Staff
       Thomas S. Kahn, Minority Staff Director and Chief Counsel


                             C O N T E N T S

                              ----------                              
                                                                   Page
Chairman's Introduction..........................................     1
Submission by the U.S. General Accounting Office.................     3
    Submissions by House Committees:
    Agriculture..................................................   305
    Education and the Workforce..................................   309
    Energy and Commerce..........................................   319
    Financial Services...........................................   323
    Government Reform............................................   331
    House Administration.........................................   339
    International Relations......................................   343
    Judiciary....................................................   387
    Small Business...............................................   393
    Transportation and Infrastructure............................   397
    Veterans' Affairs............................................   403
    Ways and Means...............................................   419


                        CHAIRMAN'S INTRODUCTION

                              ----------                              

    The problems of waste, fraud, and abuse in government 
programs have never been easy to resolve. Government lacks the 
built-in incentives that drive commercial enterprises, 
constantly, to reduce waste and improve efficiency. Over the 
years, therefore, Congress has created watchdogs, such as the 
General Accounting Office [GAO] and the Inspectors General, to 
track down systemic failures in government management. It has 
written laws, such as the Chief Financial Officers Act of 1990, 
and the Government Performance and Results Act of 1993, calling 
for regular measurements of government activities and 
expenditures. From time to time, various appropriating and 
authorizing committees have performed oversight of programs in 
their jurisdictions. Three years ago, the Budget Committee 
itself conducted its own examination of the continuing problems 
of waste, fraud, and abuse.
    But the need is especially acute today, with America facing 
the uncompromising requirements of winning the war against 
international terrorism, protecting Americans at home, and 
promoting sustained economic growth and job creation. Given 
these obligations, along with the myriad other demands on 
government resources, Congress and the President must do 
everything possible to assure that government funds are managed 
responsibly.
    This year the House of Representatives has advanced this 
ongoing effort to another stage. The conference report on the 
budget resolution for fiscal year 2004 (H. Con. Res. 95) 
formally required House authorizing committees to investigate 
programs in their respective jurisdictions, identify instances 
of waste, fraud, and abuse, and recommend ways of reducing or 
eliminating it. The resolution also called for a report on the 
subject from GAO.
    This committee print contains the findings of the House 
committees and GAO as submitted to the Budget Committee.
    As implied above, this report is neither the beginning nor 
the end of anything. It is continuation of efforts that have 
been going on for years and that must continue for years in the 
future. Government waste cannot be eliminated by a single 
agency, or a single legislative vehicle, or a single report. It 
will be reduced only by the constant and ongoing work of those 
who maintain a simple, fundamental belief: that Congress has a 
moral obligation to manage the public's money responsibly.

                                                Jim Nussle,
                                                          Chairman.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 

                          House of Representatives,
                                  Committee on Agriculture,
                                Washington, DC, September 10, 2003.
The Hon. Jim Nussle,
Chairman, House Committee on the Budget,
Cannon House Office Building, Washington, DC.
    Dear Mr. Chairman: Pursuant to section 301 of the 
Concurrent Resolution on the Budget--Fiscal Year 2004, we are 
including below the findings of the Committee on Agriculture 
with respect to programs within the Committee's jurisdiction.
    We commend the Budget Committee's efforts to identify 
waste, fraud, and abuse in government programs. Doing so is 
important to the nation's hard-working taxpayers who deserve 
value and efficiency in the government programs they pay for.
    The Committee on Agriculture has long viewed eliminating 
waste, fraud, and abuse in government programs as a critical 
aspect of our oversight responsibilities. That is why when 
problems have been identified, we have moved quickly to address 
them through legislation, when needed, or by working with 
Administration officials to make changes in rules and 
regulations. Our long term commitment to correcting problems is 
confirmed by our record. Here are a few examples:
    We addressed fraud in the Federal crop insurance program by 
limiting double insurance on the same acres in the same season, 
requiring that social security or tax identification numbers be 
used to track producers who previously would switch agents or 
companies for fraudulent activities, and encouraging the use of 
data mining techniques to identify schemes and devices used by 
agents, adjusters, and producers.
    We addressed fraud in both the commodity programs and crop 
insurance by requiring that producer information be reconciled 
between the Farm Service Agency's commodity programs and the 
Risk Management Agency's crop insurance programs.
    We addressed fraud in the food stamp program by requiring 
the use of EBT (electronic benefit transfer) cards to reduce 
trafficking in food stamp benefits and by tightening food stamp 
administration to ensure that certain classes of ineligible 
persons (such as prisoners) do not receive food stamps.
    Following the instructions of your May 20 letter, we have 
made every effort to identify changes in legislation that would 
allow us to save $5.25 billion of projected mandatory program 
costs (1% of the total) over 10 years due to waste, fraud, and 
abuse.
    Unfortunately, this is a very difficult legislative task. 
The steps needed to eliminate much--if not most--of the fraud 
and abuse uncovered by the Inspector Generals (OIG), the 
General Accounting Office (GAO), and others require 
management--not legislative--changes. They require increased 
vigilance and enhanced enforcement efforts under existing legal 
authority--not new legal authority.
    Certainly it would be possible to write into law general 
instructions to USDA to do a better job in minimizing waste, 
fraud, and abuse. Unfortunately, the Congressional Budget 
Office will not score any budget savings for such general 
language.
    We must constantly work to find the proper balance for 
enforcement activities. Our programs--whether food stamps or 
farm income support--are critically important to the well-being 
of recipients. Our society does not gain if, by writing the 
rules so tightly that no one receives benefits who shouldn't, 
we deny benefits to those who should receive (and need) 
benefits.
    We recognize that there is substantial policy disagreement 
for many areas-not just for agriculture-as to what constitutes 
``waste.''
    So with the above concerns as background, this is what we 
have done.
    We first reviewed reports from the U.S. General Accounting 
Office and the Office of the Inspector General of the U. S. 
Department of Agriculture. We also reviewed budget reduction 
options from the Congressional Budget Office (CBO) and ideas 
from think tanks. We had discussions with GAO and OIG staff. We 
held hearings on food stamps and crop insurance to better 
understand how program administrators are dealing with fraud 
problems.
    Based on this extensive review, we have identified a number 
of options for reducing the costs of federal programs. This 
list includes options to reduce possible waste, fraud, and 
abuse but also includes options to improve the economy, 
efficiency, and effectiveness of programs, as well as options 
affecting worthy programs that it may turn out we simply cannot 
afford to fund as generously as we would like. The options 
include:
    <bullet> Mandating increased use of advanced statistical 
techniques to guide fraud investigations in the crop insurance 
and commodity programs.
    <bullet> Tightening compliance measures for commodity 
programs.
    <bullet> Consolidating commodity program payment statements 
to producers.
    <bullet> Phasing-in a moratorium on land purchases by the 
Forest Service.
    <bullet> Improving the delivery of rural development 
programs.
    <bullet> Modifying nutrition programs.
    <bullet> Reorganizing USDA to eliminate duplicative 
organization structures.
    Based on CBO estimates (supplemented, when necessary, by 
Committee staff estimates), we believe that this list of 
possible options represents a ten-year savings pool of more 
than $10 billion--well beyond the $5.25 billion specified in 
this year's budget resolution.
    We need to be clear that it would be a major legislative 
undertaking to achieve $5.25 billion in ten-year savings in our 
programs. Rest assured that we will do what needs to be done to 
find the savings required by any new budget reconciliation. But 
doing so will require a great deal of effort if we are to 
preserve the essential elements of efficient programs that 
provide important benefits to many people.
    If next year we are given reconciliation instructions to 
find program savings, we will look at these options as well as 
others. We appreciate very much the Budget Committee's 
leadership in keeping issues of waste, fraud, and abuse on the 
front burner. Finding solutions to these problems requires 
constant vigilance and we are glad to have your support as we 
continue our efforts. Mr. Chairman, we look forward to 
continuing the excellent relationship that we have with you and 
that exists between our committees.
            Sincerely,
                                   Bob Goodlatte
                                           Chairman.
                                   Charles W. Stenholm,
                                           Ranking Minority Member.
         Committee on Education, and the Workforce,
                                  House of Representatives,
                                 Washington, DC, September 2, 2003.
Hon. Jim Nussle,
Chairman, Committee on the Budget,
Cannon House Office Building, Washington, DC.
    Dear Chairman Nussle: In reponse to your July 1, 2003 
letter, and as required in the FY 2004 Budget Resolution 
Conference Report (House Report 108-71), enclosed please find 
the submission for the Committee on Education and the 
Workforce. Also enclosed is a submission from Representative 
George Miller regarding the Minority Views.
    If you have any questions, please feel free to contact me 
at your convenience.
            Sincerely,
                                           John A. Boehner,
                                                          Chairman.

   COMMITTEE ON EDUCATION AND THE WORKFORCE FISCAL YEAR 2004 BUDGET 
                               RESOLUTION

    The Committee on Education and the Workforce applauds the 
efforts of the Committee on the Budget to focus Congressional 
attention on waste, fraud, and abuse in federal programs.
    In response to the FY 2004 Budget Resolution Conference 
Report (108-71), the Committee on Education and the Workforce 
finds that in the area of death and disability student loan 
claims, professional judgment, and fraudulent activities at the 
Department of Education, significant corrective action has 
already been taken. However, the Committee identifies the 
following potential means of reducing waste, fraud, and abuse 
in both discretionary and mandatory spending programs under its 
jurisdiction:
          <bullet> Request that the Committee on Ways and Means 
        examine an IRS data match legislative proposal designed 
        to reduce the Pell Grant shortfall;
          <bullet> Reform or repeal the Davis-Bacon Act to 
        reduce artificially-inflated federal construction costs 
        by as much as 38 percent; and
          <bullet> Reform or repeal the Service Contract Act to 
        permit employers in affected industries to pay 
        employees a market-based wage.

                 Significant Corrective Action Findings

Death and Disability Student Loan Claims
    According to Section 301(a)(1) of the FY 04 Budget 
Resolution Conference Report, ``the Inspector General of the 
Department of Education has found that nearly 23 percent of 
recipients whose loans where discharged due to disability 
claims were gainfully employed.''
    However, the Department of Education has already 
investigated this allegation and the Chief Operating Officer of 
the Department's Performance Based Organization found that 
there were far fewer improper claims paid than first reported 
by the Inspector General's (IG) Office. In its FY 2001 
Performance Plan, the Department's Office of Student Financial 
Assistance (SFA) stated ``we continue to work to determine the 
true scope of fraud in death and disability claims'' and 
``these efforts have helped us determine that false death and 
disability claims aren't nearly as widespread as originally 
thought.''
    Further, in the summer of 2000, a negotiated rulemaking 
session took place with the higher education community to amend 
the regulations governing death and disability discharges. 
These new regulations are far more onerous on the borrower, 
provide for a ``conditional'' discharge of the loan debt for up 
to three years, necessitate more information and certification 
of the borrower's condition, and require the loan to be 
assigned to the Secretary.
    Due to the complexity of this change in policy, the new 
regulations did not take effect until July 1, 2002. At this 
time, it is too early to determine the effect they have had on 
reducing fraudulent death and disability claims. However, the 
concern expressed by the IG in its report has been addressed.

Professional Judgment

    The Committee on the Budget has also indicated publicly 
that money can be saved in higher education programs by 
regulating what is known as ``professional judgment.'' 
Professional judgment is authority given to financial aid 
professionals which allows them to address special 
circumstances of students on a case-by-case basis. There are no 
regulations pertaining to this authority for obvious reasons, 
however, there are specific parameters within which the 
financial aid professional must work. For instance, in most 
cases there needs to be third party written documentation 
supporting the student's special circumstance or a specific 
student statement with evidence of the circumstance, and a 
written statement by the financial aid professional as to his 
determination.
    Examples of special or unusual circumstances include recent 
unemployment of a parent, high medical expenses not covered by 
insurance, domestic violence whereby the student no longer 
resides at home, or cases where a parent cannot be located. 
Most financial aid professionals use this authority sparingly. 
In fact, during the 107th Congress, a specific reference to 
professional judgment was included in the HEROES bill (P.L. 
107-122) to encourage financial aid officers to utilize the 
authority in specific circumstances. The Committee on Education 
and the Workforce believes that regulating something that is 
designed to deal with extraordinary exceptions would be 
counterproductive.

Fraudulent Activities at the Department of Education

    Over the past five years, the Committee on Education and 
the Workforce has held a series of eight hearings examining the 
financial management practices and fraudulent activities at the 
Department of Education:
          <bullet> The Financial Management Practices of the 
        Department of Education (12/6/99);
          <bullet> Financial Management at the Department of 
        Education (3/1/00);
          <bullet> Financial Management Issues at the 
        Department of Education (9/19/00);
          <bullet> Waste, Fraud & Program Implementation at the 
        U.S. Department of Education (10/25/00);
          <bullet> Department of Education Financial Management 
        (4/3/01);
          <bullet> Status of Financial Management at the U.S. 
        Department of Education (7/24/01);
          <bullet> Status of Financial Management at the U.S. 
        Department of Education (4/10/02); and
          <bullet> The Recent Improvements of Financial 
        Management Practices at the U.S. Department of 
        Education (3/10/03).
    As a result of this intense Congressional oversight and 
Secretary Paige's Management Improvement Team, the Department 
of Education--for only the second time in its 23-year history--
received a ``clean financial audit'' from an independent 
accounting firm earlier this year.
    In addition, the Department of Education's Office of 
Inspector General and the Department of Justice have made 
significant strides to recover some of the taxpayer funds that 
were lost due to prior waste, fraud, and abuse under the 
previous Administration. For example:
    <bullet> Four people have been arrested and indicted on 
federal charges for stealing $1.9 million in Impact Aid funds 
that should have gone to schools in South Dakota and instead 
were spent on real estate and luxury cars.
    <bullet> Nineteen people have either pled guilty to federal 
charges or were convicted after a federal trial for their 
involvement in a massive theft ring at the department. On 
February 6, 2003, Verizon Federal Systems (successor to Bell 
Atlantic) entered into a $2 million civil settlement with the 
Department of Education and the Department of Justice to settle 
federal claims of false overtime charges and improper 
electronic equipment purchases by their employees in conspiracy 
with Department of Education employees.
    <bullet> Two Department employees and three employees of 
vendors for the Department have pled guilty to charges stemming 
from the ongoing investigation of fraudulent purchase card use. 
These individuals admitted to conspiring to use government 
credit cards to purchase household furniture for the Department 
employees' personal use.
      The Committee on Education and the Workforce commends the 
Bush Administration and Secretary Paige for changing the 
internal culture at the Department of Education and for 
bringing those individuals who abused taxpayer dollars to 
justice.

               Identification of Waste, Fraud, and Abuse


Examine an IRS Data Match Legislative Proposal Designed To Reduce the 
        Pell Grant Shortfall

    The Committee on Education and the Workforce is committed 
to protecting student aid from abuse by improving management 
controls for programs under its jurisdiction. The federal Pell 
Grant Program, which provides undergraduate students from low-
income families with up to $4,050 this year to help pay for 
college and other post-secondary education, is an example of 
one such program.
      Recently, the Department of Education's Inspector General 
testified before the House Committee on the Budget that $300 to 
$400 million in Pell Grant aid was erroneously awarded because 
some applicants misreported their income levels on their 
federal student aid applications. The Wall Street Journal 
pointed out in their July 22nd ``Waste Not, Deficit Not'' 
editorial that according to Inspector General John Higgins this 
estimate was ``conservative.''
    The Bush Administration has proposed an Internal Revenue 
Service data match of information submitted by Pell applicants 
and believes that this will reduce over awards and under awards 
of Pell Grant funds. If enacted, the proposed match between the 
Department of Education and the IRS has the potential to free 
up as much as $340 million to reduce the currentPell Grant 
shortfall and strengthen the Pell Grant program for needy students 
striving for a college education.
    While the Higher Education Act currently provides 
authorization for such a data match to take place, additional 
legislative action on the part of the Committee on Ways and 
Means is necessary to implement a less burdensome and more 
streamlined process. The Committee on Education on the 
Workforce has asked the Committee on Ways and Means to examine 
this proposal to determine its potential effectiveness--
recognizing that any savings realized from the data match will 
be used to reduce the current Pell Grant shortfall.

Repeal or Reform the Davis-Bacon Act

    As a means of reducing waste, fraud, and abuse in federal 
programs, the Committee on Education and the Workforce suggests 
consideration of the repeal or reform of the costly and 
outdated Davis-Bacon Act. Repeal or reform of Davis-Bacon would 
improve the efficiency and cost-effectiveness of federal 
contracting, and address systemic flaws contained in the 
statute that have led to documented fraud and abuse.
    In general, the Davis-Bacon Act requires that employers on 
federally funded construction projects valued in excess of 
$2,000 pay their workers no less than the ``prevailing wage 
rate'' as determined by the Department of Labor (DOL). Enacted 
in 1931, the law was drafted to apply to contracts for 
construction to which the federal government was a contracting 
party. In the 70+ years since its enactment, however, the 
application of Davis-Bacon has been interpreted and 
legislatively expanded to encompass a far wider range of 
federal programs than the original ``federal construction'' 
model for which it was intended. For example, in recent years, 
it has been legislatively applied to programs using 
increasingly indirect and/or attenuated federal financing.
    The application of Davis-Bacon has been demonstrated to 
inflate construction costs on average from five to fifteen 
percent, and in some instances up to almost 40 percent (38 
percent in rural areas, according to some studies). Moreover, 
the determination of ``prevailing wages'' by the Department of 
Labor has been documented to be rife with abuse. A January 1999 
General Accounting Office report found errors in 70 percent of 
the wage forms used by DOL to calculate prevailing wages, and 
DOL's own Inspector General concluded in 1997 that two-thirds 
of the wage surveys provided to the Department for use in 
calculating prevailing wage rates were inaccurate.
    Worse, some believe the Davis-Bacon Act encourages 
discrimination against some of America's most vulnerable 
workers. ``The effect of the Davis-Bacon Act is that of 
discriminating against contractor employment of non-union and 
lower skilled workers,'' wrote Dr. Walter E. Williams, a noted 
columnist and professor at George Mason University, earlier 
this year. ``Thus, it has a racially discriminatory effect, 
since most blacks are in the non-union sector of the 
construction industry. Even black contractors wanting to hire a 
lower skilled black worker can't do so.'' (Walter E. Williams, 
``Congress'' Insidious Discrimination,'' Augusta Chronicle, 
March 14, 2003)
    An increase in the $2,000 threshold for Davis-Bacon 
projects (last revised in 1935) would also result in 
significant cost savings to the federal government. In the 
Congressional Budget Office's Budget Options 2003, it is noted 
that simply raising the threshold for Davis-Bacon covered 
contracts from $2,000 to $1 million could save the government 
$50 million in FY 2004. Over a four year period (2004-2008) CBO 
estimates a savings of $750 million.
    At a minimum, the Committee on Education and the Workforce 
endorses limiting the Davis-Bacon Act to the historic and 
traditional model for which it was enacted and intended, and 
opposes any expansion of these outdated requirements for new 
federal programs or non-traditional means of federal financing.

Repeal or Limit the Service Contract Act to Ensure Payment of Market-
        Based Wages

    As a further means of reducing waste, fraud, and abuse in 
federal programs, the Committee on Education and the Workforce 
also endorses the repeal or limitation of the costly and 
outdated Service Contract Act, originally enacted in 1965 to 
compliment Davis-Bacon. Repeal or limitation of the Service 
Contract Act would improve the efficiency and cost-
effectiveness of federal contracting and permit employers to 
pay employees a market-based wage, rather than a wage 
determined artificially by the federal government using data 
that is frequently outdated and/or of questionable value.
    The Service Contract Act has been problematic and 
unnecessarily costly for virtually everyone involved with it--
private sector workers, private sector employers, American 
consumers, and the federal government itself. Take 
environmental enthusiasts, for example. The National Forest 
Recreation Association (NFRA) in 1999 tried to persuade 
Congress to change the Service Contract Act because it was 
applied--to the surprise of many--to wages paid to employees 
working on privately operated campgrounds in the nation's 
national forests, resulting in fees nearly doubling for 
Americans visiting those popular environmental attractions. 
According to the Modesto Bee, NFRA argued the Service Contract 
Act was meant to apply to ``carpenters and electricians 
providing services to the government, not campground hosts 
serving the public,'' (Ron DeLacy, ``Wage Ruling Assailed; 
Angry Campers Protest Changes,'' Modesto Bee, February 8, 
1999). According to an Associated Press account, ``Forest 
Service officials had assumed the campground workers were 
exempt from the McNamara-O'Hara Act. They viewed their 
contracts with concessionaires as leases, which don't come 
under the act's jurisdiction. When told otherwise, Forest 
Service officials tried to get an exemption last year. The 
Labor Department already exempts concession contracts for 
lodging at national parks, they said, arguing that campgrounds 
should be considered lodging, too.'' (John Hughes, ``Wage 
Increase for Campground Workers Could Boost Fees in Federal 
Forests,'' Associated Press, January 18, 1999)
    At a March 10,1999 hearing of the House Armed Services 
Committee, the U.S. Navy cited the Service Contract Act not 
only as an unnecessary cost-driver, but also as an obstacle to 
its efforts to provide quality childcare for military families. 
Rear Admiral James B. Hinkle, U.S. Navy Assistant Commander, 
Navy Personnel Command, Personal Readiness & Community Support, 
testified on the topic before the House Armed Service 
Committee's Special Oversight Panel on Morale, Welfare, and 
Recreation. He discussed the Navy's experience with a 
demonstration project designed to explore the possibilities of 
contracting with commercial child care centers to provide care 
for the children of military personnel, rather than relying 
exclusively on military-operated centers, which is the most 
expensive option. The project was successful in some places but 
not in others, Admiral Hinkle noted, in part because of 
unnecessary cost increases resulting from the Service Contract 
Act. ``The Service Contract Act increases the cost to the 
government, which often makes the cost of the program 
uneconomical as compared to other alternatives.'' (Federal News 
Service Transcripts, March 10, 1999)
    Like Davis-Bacon, the Service Contract Act has been 
identified by previous Congresses as a source of waste that is 
ripe for reform or repeal. For example, the chairman's mark for 
the FY 2000 Budget Resolution proposed in March 1999 by Senate 
Budget Committee Chairman Pete Domenici (R-NM) proposed 
repealing both Davis-Bacon and the Service Contract Act for a 
net $1 billion in savings. (National Journal's CongressDaily, 
``Domenici Plan Includes Reserve Fund, 10-Yr. Tax Cut,'' March 
17, 1999)
    The Congressional Budget Office's Budget Options 2001 
estimated that $9.8 billion could be saved in Fiscal Years 
2002-2011 by repealing the Service Contract Act. The document 
concludes that, ``Federal procurement costs would fall because 
repealing the Service Contract Act would promote greater 
competition among bidders, although the precise magnitude of 
the savings is difficult to estimate.'' At a minimum, a review 
of the Davis-Bacon and Service Contract Act impact on federal 
procurement demonstrates the need for significant reform if not 
outright repeal.

                             Minority Views


Majority's Recommendation to Slash Worker Benefits to Support Tax Cuts 
        for the Wealthy

    We strongly disagree with the recommendation of our 
Republican colleagues that the Congress should repeal or 
otherwise weaken the Davis-Bacon Act and the Service Contract 
Act. The Republicans are proposing is to slash the wages and 
living conditions of working Americans in order to pay for 
their irresponsible tax cuts for the wealthy.
    The Republican proposal would undercut the financial 
security of millions of middle income families in order to 
address the largest in history, one they have created through 
irresponsible tax policy. In 2001, the Congressional Budget 
Office (CBO) estimated that the Federal Government would have a 
unified surplus of $359 billion in 2003. Instead, after two-
and-a-half years of the Bush Administration, CBO forecasts that 
the Federal Government will have a deficit of $401 billion for 
2003, and even higher for 2004. Under the policies of the Bush 
Administration, the federal budget has deteriorated by $760 
billion dollars in 2003 alone. The long-term picture is even 
worse. The cumulative budget over 2002-2011, which was a 
surplus of $5.6 trillion when President Bush took office, has 
deteriorated to a $3.3 trillion deficit--a swing of $9 trillion 
to the worse.
    While President Bush's budget policies have sent the 
deficit soaring out of control, they have yet to produce any 
benefit, trickle down or otherwise, for most Americans. Since 
President Bush took office, we have lost 3.2 million private 
sector jobs, by far the worst jobs record of any Administration 
since the Great Depression. Long-term unemployment has tripled. 
Real GDP growth has been the lowest for any Administration 
since World War II. Real business investment has fallen by 10.4 
percent under the Bush Administration, and the trade deficit 
has increased by almost $100 billion. Further undermining the 
wages and living conditions of American citizens as the 
Republican majority recommends, by repealing prevailing wage 
protections, compounds these job and income problems.
    Prevailing wage laws such as the Davis-Bacon Act and the 
Service Contract Act ensure that the government procurement 
process does not undermine the wages and living conditions of 
taxpayers. Generally, the government purchases on a low-bid 
basis--if contractor A agrees to perform the work for less than 
anyone else, then contractor A is awarded to the contract to do 
the work. Particularly in the construction industry and many 
segments of the service sector, where labor costs are often the 
single largest cost that can be manipulated in the absence of a 
prevailing wage statute, the low bidder will ultimately be 
determined on the basis of who pays the lowest wage. For 
example, prior the enactment of the Service Contract Act in 
1965, star carriers, private truckers and trucking companies 
who contract to carry mail for the U.S. Postal Service, were 
typically paying their truck drivers less than the minimum 
wage. Further, employees had no means of bettering their 
condition because any increase in wages typically resulted in 
the loss of the contract to a different contractor able and 
willing to pay the former lower wage. In other words, without 
prevailing wage protection, the government procurement process 
acts to undermine wages and living conditions by encouraging 
contractors to compete for government contracts on the basis of 
who will pay their employees the least.
    By recommending the repeal of the Davis-Bacon Act and the 
Service Contract Act, Republicans are recommending that the 
government undermine the wages of its citizens. They claim that 
undermining wages will save the government money. It will not. 
By establishing a wage floor at locally prevailing wages rates, 
the Davis-Bacon Act and the Service Contract Act ensure that 
government contracts are competed for on the basis of who can 
most efficiently fulfill the contract rather than who can pay 
the least. Prevailing wage laws ensure that the government has 
access to reputable contractors who employ skilled and trained 
workers. They ensure that the government receives quality for 
its dollars. Repealing the Davis-Bacon Act and the Service 
Contract Act will cost the government money by undermining the 
quality of the work performed for the government. It will also 
cost the government money by undermining the wages and living 
conditions of its citizens, trapping workers in dead end jobs 
and increasing reliance upon public resources while 
simultaneously undermining the ability to pay for those 
resources.
    We note that the Republican leadership has refused to bring 
vital public works bills to floor because the bills have 
included prevailing wage requirements and the Republicans have 
lacked the votes to remove or eliminate those requirements. The 
Republican leadership has prohibited House consideration of the 
Water Quality Financing Act, the Railroad Track Modernization 
Act, and the Rail Infrastructure Development and Expansion Act 
for the 21st Century because Davis-Bacon Act requirements would 
apply to the projects. It is estimated that the highway and 
water project construction jobs that have been put on hold by 
the Republican leadership would create as many as three million 
jobs. Instead, we are failing to meet vital public needs and 
exacerbating unemployment in a faltering economy.

Administration's Failure to Address Growing Pension Crisis: PBGC 
        Deficit of $3.7 Billion Puts Taxpayers at Risk

    Despite repeated requests by the Minority for the Bush 
Administration to address a $300 billion shortfall in private 
pension plans, and a $3.7 billion PBGC deficit, no action has 
been taken to address this urgent problem. In fact, the 
Administration is unable to demonstrate how its proposal to 
scrap the 30-year Treasury Bond Rate will improve pension plan 
security. The failure of the Administration and the Republican 
Congress to act poses a significant risk to taxpayers, who may 
be required to paybillions of dollars to bail out the PBGC 
which currently has its largest deficit in its 29-year history. Over 
the past two years, the PBGC has paid out 18 times the amounts in 
benefits that it paid in the period 1993 to 2000. The GAO recently put 
the PBGC on its watch list because of its precarious financial 
position. The Administration must stop its dithering on pension 
security, and provide Congress with information necessary to make 
urgently needed pension reforms.

Death and Disability Student Loan Claims

    Any efforts to eliminate fraud and abuse in death and 
disability student loan claims must not impede students with 
legitimate claims from receiving fair and timely consideration. 
In addition, the definition of `disability' used by the 
Department of Education should be updated to provide a uniform 
federal definition and threshold, to better coordinate and 
expedite legitimate discharge of student loans.

Pell Grant Shortfall

    The Committee on Education must fully investigate the 
Department of Education's inability to resolve the chronic Pell 
Grant shortfall. The Department has repeatedly failed to make 
accurate assumptions as to how many eligible students will 
apply for Pell Grants when writing its annual budget. The 
Department's failure to make accurate assumptions has 
undermined efforts to fully fund the Pell Grant program and to 
ensure that all low and middle-income students have access to a 
college education. The Administration has also intentionally 
failed to budget sufficient funds to address the shortfall, 
thus undermining appropriations necessary for even modest Pell 
increases. The Department must revise its outdated methods to 
ensure accurate assumptions regarding participation levels in 
the Pell Grant program.

Student Loan Subsidies

    As instructed by the Committee on Budget, in its FY 2004 
Budget Resolution Conference Report, the Committee on Education 
and the Workforce finds that two of the most promising areas to 
reduce wasteful spending are to eliminate lender windfall 
profits and to promote competition within the student loan 
programs.
    Under current law, student lenders are not required to 
rebate excess federal subsidies to the government when they 
earn more than a fair market return on student loans. According 
to the Congressional Budget Office (CBO) eliminating these 
lender windfall profits would save an estimated $4.5 billion 
between 2004-2008.
    In addition, the Department of Education must pursue 
opportunities to increase competition among the loan programs, 
such as eliminating the Single Lender Rule, as a means to 
eliminate wasteful spending. One such area of competition where 
the Department has failed to make progress is on the issue of 
how to appropriately set lender yields, or competitive 
mechanisms, on federal student loans. The Department must move 
forward on competitive market mechanisms in order to ensure 
both private sector participation and government savings.

                                             George Miller,
                                          Senior Democratic Member.
                          House of Representatives,
                          Committee on Energy and Commerce,
                                 Washington, DC, September 2, 2003.
Hon. Jim Nussle,
Chairman, Committee on the Budget, House of Representatives, Cannon 
        House Office Building, Washington, DC.
    Dear Chairman Nussle: Pursuant to section 301(b) of the FY 
2004 Budget Resolution, this letter details findings that 
identify changes in law within the Committee on Energy and 
Commerce's jurisdiction that would achieve the level of savings 
through the elimination of waste, fraud, and abuse that you 
specified in the Congressional Record on May 21, 2003. As is 
the custom in our Committee, our minority may choose to submit 
their own findings under separate cover.
    Congress should strongly consider acting on some of these 
ideas within the next year. With entitlement spending growing 
at a rapid rate, it is critical to identify new ways to limit 
spending. At the same time, we must continue to strengthen and 
preserve the core mission of our safety net programs. These 
recommendations reflect this delicate balance and will 
contribute to our joint efforts to balance the Federal budget 
in future years.

                           MEDICAID FINANCING

    Medicaid pays for the costs of providing health care 
coverage to 44 million low-income Americans. States and the 
Federal government fund the program jointly, with the Federal 
share determined by the use of the FMAP (Federal Medical 
Assistance Percentage) formula, which is based upon state per 
capita income. The Federal liability for Medicaid program 
expenditures is presently open-ended, because the Federal 
government is obligated to pay a set percentage of all state 
Medicaid expenditures covered under each state's Medicaid plan. 
As states' costs rise, the Federal government's costs increased 
as well.
    Unfortunately, the current mechanism for funding Medicaid 
encourages states to aggressively define their Medicaid 
spending as creatively as possible in order to qualify for 
Federal matching funds. In addition, the current system has 
inappropriately led many states to adopt various schemes to 
obtain additional federal funds. These strategies--known 
generally as ``Medicaid maximization''--have led to the well-
documented abuses associated with Upper Payment Limits, Inter-
Governmental Transfers, and Disproportionate Share Hospital 
payments.\1\
---------------------------------------------------------------------------
    \1\ HHS, Office of Inspector General, A-03-00216, September, 2001 
(Upper Payment Limits); HHS Office of Inspector General, A-06-01-00069, 
December 2001 (Disproportionate Share Hospital payments); U.S. General 
Accounting Office, Medicaid: State Financing Schemes Again Drive Up 
Federal Payments. GAO/T-HEHS-00-193. September 6, 2000.
---------------------------------------------------------------------------
    Each of the financing schemes involves states responding to 
the perverse incentives currently reflected in how the Federal 
government finances Medicaid. So long as the Federal government 
continues to provide an open-ended commitment to match all 
state expenditures, states will have strong financial 
incentives to maximize the amount of Federal dollars that can 
be drawn-down as matching payments. In addition, states 
engaging in these practices will always be able to provide 
persuasive arguments for why the additional Federal dollars are 
necessary to support a wide variety of popular expenditures to 
provide health care for particularly vulnerable Medicaid 
beneficiaries. These justifications have historically made it 
very difficult for Congress to reduce or eliminate abusive 
financing schemes, despite the large potential savings that 
could result from such changes.\2\ Ironically, many of these 
financing schemes have not even resulted in our precious 
Federal health care dollars being utilized for patient care.
---------------------------------------------------------------------------
    \2\ For example, the CBO has estimated that requiring all states to 
be in full compliance with the January 2001 UPL regulations by 2004 
(rather than the extended deadlines provided under the Benefits 
Improvement and Protection Act of 2000) would reduce federal outlays by 
almost $2.8 billion in 2004 and $7.3 billion over five years.
---------------------------------------------------------------------------
    Recommendation No. 1: The current Medicaid reimbursement 
methodology should be altered to eliminate the current perverse 
incentives that encourage states to engage in Medicaid 
maximization schemes. Adopting capped, state-specific 
allotments for optional populations and services, as recently 
discussed by a National Governor's Association task force, 
would significantly reduce the incentives for states to 
maintain or prospectively implement such financing schemes. 
Such an approach would also give states incentives to manage 
their Medicaid programs more cost-effectively.

                     MEDICAID ADMINISTRATIVE COSTS

    Before 1996, common costs for administering food stamps, 
Medicaid, and welfare were often charged to the AFDC program--
the predecessor of the Temporary Assistance for Needy Families 
(``TANF'') grants. These common costs were subsequently 
included in the calculation of each state's TANF grant when 
Congress passed welfare reform in 1996. Unfortunately, states 
that had previously charged their Medicaid program's share of 
common administrative costs to AFDC now receive Federal 
Medicaid reimbursements for these same expenses. This double 
payment should be eliminated.
    Recommendation No. 2: Reduce federal reimbursement for 
Medicaid administrative costs to reflect the portion of these 
costs that are already included in the TANF block grant that a 
state receives.

                      MEDICAID DRUG REIMBURSEMENTS

    Many states currently reimburse Medicaid providers for the 
costs of covered outpatient drugs based upon manufacturer 
reported prices. These prices, known as either Average 
Wholesale Price (``AWP'') or Wholesale Acquisition Cost 
(``WAC'') have been reported to far exceed the acquisition 
prices paid by many providers.\3\
---------------------------------------------------------------------------
    \3\ HHS Office of Inspector General, Medicaid Pharmacy: Actual 
Acquisition Cost of Brand Name Prescription Drug Products, A-06-00-
00023, August 2001.
---------------------------------------------------------------------------
    The Energy and Commerce Committee has already conducted an 
extensive investigation into how the manipulation of AWPs 
currently costs the Medicare program hundreds of millions of 
dollars annually due to inflated reimbursements. This 
investigation also revealed that certain drug manufacturers 
have deliberately inflated their AWPs above their sale prices, 
in order to create an inducement for providers to use their 
products. Similar incentives exist in the Medicaid program for 
certain types of drugs, and the Committee is currently 
conducting an extensive investigation to assess the extent to 
which the inflation of AWPs unnecessarily increases Medicaid 
drug reimbursements. Reports prepared by the Department of 
Health and Human Services' Office of Inspector General (OIG) 
have estimated that the inflation of AWPs for brand-name drugs 
resulted in Medicaid overpayments in excess of $1 billion per 
year and $470 million per year for generic drugs.\4\
---------------------------------------------------------------------------
    \4\ Id.
---------------------------------------------------------------------------
    Recommendation No. 3: Require that states reimburse 
providers for Medicaid-covered outpatient drugs at prices that 
better reflect their acquisition costs.
    State Medicaid programs are currently required to collect 
and submit information regarding the utilization of covered 
outpatient drugs. This data is then used to calculate the 
amounts that drug manufacturers must pay in the form of 
Medicaid rebates. A recent letter from the Centers for Medicare 
and Medicaid Services' (``CMS'') Director of the Center for 
Medicaid and State Operations highlighted that many states do 
not currently collect the data necessary to obtain rebates on 
drugs administered in physician office settings. The letter 
encouraged states to collect and submit this data, and pointed 
out that their failure to do so has in the past led to millions 
of dollars in potential rebates going uncollected. Congress 
should step in to fix this problem.
    Recommendation No. 4: Require that states collect and 
submit the necessary information that will enable the Medicaid 
program to collect the correct rebates for these drugs.

                         MEDICARE OVERPAYMENTS

    The Energy and Commerce Committee included several 
provisions that will reduce excessive payments to Medicare 
providers in H.R. 1, the Medicare Prescription Drug and 
Modernization Act of 2003. As the House-Senate conference on 
H.R. 1 proceeds, it is critical that we continue to modernize 
the Medicare Program and make it more efficient. Currently, 
Medicare comprises approximately 12% of all Federal spending--a 
number expected to more than double in the next twenty-five 
years. Absent changes to Medicare, the financial burdens on 
future taxpayers and beneficiaries will be overwhelming. That 
is why sections 302 and 303 of H.R. 1 are essential in clamping 
down on some of the unwarranted spending in two areas of the 
traditional fee-for-service program: (1) payments for drugs 
administered within physician office settings and (2) 
reimbursements for certain types of durable medical equipment.
    Working in collaboration with the Ways and Means Committee, 
our Committee developed policies earlier this year designed to 
reduce the level of inappropriate payments in the 
aforementioned areas and to create a more competitive market-
oriented structure that efficiently expends health care 
resources. Enactment of sections 301 and 302 alone will, 
according to the Congressional Budget Office, save the Medicare 
Program over $22 billion over the next ten years. Additionally, 
the reduction in these payments will significantly reduce 
beneficiaries' overpayments for coinsurance. For drugs 
administered in the physician office setting, the Inspector 
General has estimated that Medicare beneficiaries are 
overpaying over $175 million in coinsurance annually. The AWP 
policy in H.R. 1 will reduce those overpayments and create a 
more rational payment policy for beneficiaries, providers, and 
taxpayers.
    With respect to durable medical equipment, beneficiaries 
and taxpayers will also save billions of dollars if Congress 
moves toward a competitive acquisition system. The results of 
two recent competitive bidding demonstration projects in Polk 
County, Florida and San Antonio, Texas show how promising this 
new policy could be if implemented in many parts of the 
country. Preliminary reports indicate that savings of between 
17-20% could be realized for certain products. Moreover, 
because our policy provides the Secretary with the flexibility 
to exempt products for which competitive bidding may be 
inappropriate or not cost-effective, this policy will be 
precisely targeted to the products for which we are currently 
overpaying. Rather than randomly freezing a fee schedule to 
reduce rates, reimbursement prices will be dictated by market 
conditions within a geographic area--not by a governmental 
price fixer.
    Recommendation No. 5: Enact sections 302 and 303 of H.R. 1 
in order to begin immediately reducing the overpayments for 
drugs administered within physician office settings and 
lowering the excessive prices paid for durable medical 
equipment.
    I share your strong interest in reducing waste, fraud, and 
abuse government-wide. The previously referenced 
recommendations are by no means an exhaustive list of all of 
the areas within the Energy and Commerce Committee's 
jurisdiction that we will continue to examine, nor are they 
exhaustive of matters within just the Medicaid and Medicare 
programs. We look forward to working with you in coming budget 
resolutions to addressing these issues.
    Please contact me or have your staff contact Patrick 
Morrisey or Chuck Clapton if you would like to discuss the 
matters contained in this letter in more detail.
            Sincerely,
                                      W.J. ``Bill'' Tauzin,
                                                          Chairman.
                          House of Representatives,
                           Committee on Financial Services,
                                     Washington, DC, July 31, 2003.
Hon. Jim Nussle,
Chairman, Committee on the Budget,
Cannon House Office Building, Washington, DC.
    Dear Jim: Pursuant to section 301 of the Conference Report 
to Accompany the Concurrent Resolution on the Budget for Fiscal 
Year 2004, and by direction of the Committee on Financial 
Services, I transmit herewith a committee print entitled 
``Changes in Law to Eliminate Waste, Fraud, and Abuse'' 
together with Dissenting Views. The committee print was 
approved by the Committee on July 24, 2003 by a voice vote, a 
quorum being present. An electronic copy is also included.
    Should you have any questions, please do not hesitate to 
contact me.
            Sincerely,
                                          Michael G. Oxley,
                                                          Chairman.
    Enclosures.

          CHANGES IN LAW TO ELIMINATE WASTE, FRAUD, AND ABUSE

    Pursuant to section 301 of the Conference Report to 
Accompany the Concurrent Resolution on the Budget for Fiscal 
Year 2004 (H. Con. Res. 95; H. Rept. 108-71), the Committee on 
Financial Services is transmitting herewith its findings on 
means of eliminating waste, fraud, and abuse in spending 
programs under the Committee's jurisdiction.
    Section 301 of the resolution requires committees to 
``submit findings that identify changes in law within their 
jurisdictions that would achieve the specified level of savings 
through the elimination of waste, fraud, and abuse'' in 
mandatory programs. Along with all Committee chairmen, the 
Chairman of the full Committee announced his intention to meet 
the goals of section 301 with respect to all programs under the 
Committee's jurisdiction, not just mandatory programs.

              Unliquidated Obligations in Housing Programs

    On June 25, 2003, the Subcommittee on Oversight and 
Investigations held a hearing entitled, ``Saving Taxpayer Money 
Through Sound Financial Management.'' The focus of his hearing 
was to identify current and quantifiable savings in 
appropriated funds under the Committee's jurisdiction which 
could be easily recaptured to meet the goals of the budget 
resolution. Upon a review ofthe pertinent agencies, the 
Committee concluded that savings can be most readily identified in 
funds labeled as ``unliquidated obligations.'' Unliquidated obligations 
are funds that are appropriated and obligated for a function but, for a 
variety of reasons, never actually disbursed. By their nature, grant 
and subsidy programs and long-term contracts maintain a high level of 
unliquidated obligations at any given time. Through vigilant oversight 
of the status of individual grants, subsidies, and contracts, senior 
agency managers can recapture unliquidated obligations and either apply 
them for other purposes and reduce future appropriations, or deobligate 
them. The funds can be recaptured without any changes to program 
eligibility or any cuts to program functions or personnel.
    Based on these criteria, the programs under the Committee's 
jurisdiction which are most likely to have high levels of 
unliquidated obligaitons are the Section 8 and Section 236 
rental assistance programs at HUD and the rural rental 
assistance program at the Rural Housing Service (RHS) of the 
Department of Agriculture. Committee staff, senior HUD and RHSD 
officials, the Inspectors General of HUD and the Agriculture 
Department, and the GAO are collaborating to determine the 
amount of unliquidated obligations that could meet the goals in 
the budget resolution without changes to the programs.

Department of Housing and Urban Development

    At the hearing, the Chief Financial Officer of the 
Department of Housing and Urban Development (HUD) testified on 
the level of unliquidated obligations at HUD. The Chief 
Financial Officer announced that for FY 2004 alone, over $1.7 
billion in previously appropriated and obligated funds most 
likely will not be used for the purposes appropriated. It has 
proposed to use these funds to lower (offset) what would have 
been the total cost of the HUD appropriations request in FY 
2004 by this amount.
    As of the end of May this year, HUD held $108 billion 
dollars in unexpended appropriated funds, more than 3 times its 
requested appropriation for FY 2004. Of these balances, $34 
billion has yet to be awarded and obligated by HUD, primarily 
because Congress enacted the FY 2003 Appropriations Act in 
February of 2003.
    The Chief Financial Officer also discussed the detailed 
measures that her office has undertaken to reduce unliquidated 
obligations and outstanding balances in other areas. For 
instance, since December 2001, total funds not committed to 
specific public housing authority modernization projects have 
fallen from $3.4 billion to $700 million as of March 31, 2003, 
meaning that the funds have been committed and spent more 
quickly.
    With respect to the long-term outlook (FY 2004-2013), HUD 
currently has an additional $30 billion in funds that are owed 
(mainly to landlords and multi-family project owners) that 
provide subsidized housing to millions of families across the 
country. It is not clear to what extent some of these funds 
will not be needed in the future. Originally, Congress 
appropriated the full cost of these rental subsidy programs 
based on a certain set of economic assumptions, such as 
inflation and wages of tenants. These may or may not bear out 
over the many years left on the contracts HUD has with the 
owners. Hence decisions on the amount of excess that will be 
available have to be made on a year-by-year basis and can not 
be presumed ahead of time.
    The Committee also requested and received a statement for 
the record from the Inspector General of HUD on his office's 
initiatives to detect and prevent wasted, fraud, and abuse. The 
Inspector General stated that HUD is not recapturing 
unliquidated obligations and undisbursed contract authority in 
a timely manner.
    Additionally, the Inspector General noted that HUD 
identified significant errors in the billings and payments 
processes, which also results in excess rental subsidy 
payments. The GAO now lists rentals subsidy overpayments as one 
of the Department's high risk areas. While the amount 
attributable to fraud is unknown, the Department estimates 
losses linked to improper housing assistance payments to exceed 
one billion dollars annually. The OIG announced a new effort to 
detect and prevent fraud in housing assistance programs.

Department of Agriculture

    The Under Secretary for Rural Development at the Department 
of Agriculture, a program also under the Committee's 
jurisdiction, also testified at the hearing on the level of 
unliquidated obligations in the Section 521 Rental Assistance 
Program. The Section 521 Program currently helps 264,000 
households to maintain their rental residence by providing a 
subsidy to pay the difference between the basic rent for the 
apartment and up to 30 percent of an eligible tenant's income. 
The General Accounting Office is reviewing the Section 521 
Program and has raised concerns about the unliquidated balances 
on the 20-year contracts and 5-year contracts on which rental 
assistance payments continue to be paid on units beyond the 
original terms.
    The Office of Rural Development determined that there is 
$737,000,000 outstanding on active contract that were obligated 
between 1978 and 1988. These funds are only available for the 
current contracts or may be transferred to other units on 
existing contracts. At the hearing, the Chairwoman of the 
Oversight and Investigations Subcommittee announced that the 
Committee has asked the GAO to review the contracts in question 
and determined how much of the $737 million outstanding can be 
deobligated through legal action or, if needed, legislation.

                               Conclusion

    In its review of its programs, the Committee found that in 
one of its largest categories of spending--housing assistance 
programs--the agencies have significant unliquidated 
obligations which, if deobligated or otherwise recaptured, 
could result in significant savings without meaningful 
reductions in program services. This ensures that both the 
Department of Hous8ing and Urban Development and the Department 
of Agriculture can continue to serve their customers while 
assisting in efforts to reduce the deficit.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
July 23, 2003 and considered a committee print entitled 
``Changes in Law to Eliminate Waste, Fraud, and Abuse''. On 
July 24, 2003, the Committee agreed to a motion by Mr. Oxley to 
approve the Committee print and forward it to the Committee on 
the Budget by a voice vote.

                            Committee Votes

    A motion by Mr. Oxley to report the bill to the House with 
a favorable recommendation was agreed to by a voice vote. The 
following amendment was considered by a record vote. The names 
of Members voting for and against follow:

          An amendment by Mr. Meeks, no. 1, recommending 
        elimination of the public housing community service 
        requirement, was not agreed to by a record vote of 29 
        yeas and 30 nays.

                                              RECORD VOTE NO. FC-10
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Oxley......................  ........        X   .........  Mr. Frank (MA)...        X   ........  .........
Mr. Leach......................  ........  ........  .........  Mr. Kanjorski....        X   ........  .........
Mr. Bereuter...................  ........  ........  .........  Ms. Waters.......        X   ........  .........
Mr. Baker......................  ........        X   .........  Mr. Sanders \1\..        X   ........  .........
Mr. Bachus.....................  ........        X   .........  Mrs. Maloney.....        X   ........  .........
Mr. Castle.....................  ........        X   .........  Mr. Gutierrez....        X   ........  .........
Mr. King.......................  ........  ........  .........  Ms. Velazquez....        X   ........  .........
Mr. Royce......................  ........        X   .........  Mr. Watt.........        X   ........  .........
Mr. Lucas (OK).................  ........        X   .........  Mr. Ackerman.....        X   ........  .........
Mr. Ney........................  ........        X   .........  Ms. Hooley (OR)..        X   ........  .........
Mrs. Kelly.....................  ........        X   .........  Ms. Carson (IN)..        X   ........  .........
Mr. Paul.......................  ........  ........  .........  Mr. Sherman......        X   ........  .........
Mr. GIllmor....................  ........        X   .........  Mr. Meeks (NY)...        X   ........  .........
Mr. Ryun (KS)..................  ........        X   .........  Ms. Lee..........        X   ........  .........
Mr. LaTourette.................  ........        X   .........  Mr. Inslee.......        X   ........  .........
Mr. Manzullo...................  ........        X   .........  Mr. Moore........        X   ........  .........
Mr. Jones (NC).................  ........        X   .........  Mr. Gonzalez.....        X   ........  .........
Mr. Ose........................  ........        X   .........  Mr. Capuano......        X   ........  .........
Mrs. Biggert...................  ........  ........  .........  Mr. Ford.........  ........  ........  .........
Mr. Green (WI).................  ........        X   .........  Mr. Hinojosa.....        X   ........  .........
Mr. Toomey.....................  ........        X   .........  Mr. Lucas (KY)...  ........  ........  .........
Mr. Shays......................  ........        X   .........  Mr. Crowley......        X   ........  .........
Mr. Shadegg....................  ........        X   .........  Mr. Clay.........  ........  ........  .........
Mr. Fossella...................  ........  ........  .........  Mr. Israel.......        X   ........  .........
Mr. Gary G. Miller (CA)........  ........        X   .........  Mr. Ross.........        X   ........  .........
Ms. Hart.......................  ........  ........  .........  Mrs. McCarthy            X   ........  .........
                                                                 (NY).
Mrs. Capito....................  ........        X   .........  Mr. Baca.........        X   ........  .........
Mr. Tiberi.....................  ........        X   .........  Mr. Matheson.....        X   ........  .........
Mr. Kennedy (MN)...............  ........        X   .........  Mr. Lynch........  ........  ........  .........
Mr. Feeney.....................  ........        X   .........  Mr. Miller (NC)..        X   ........  .........
Mr. Hensarling.................  ........        X   .........  Mr. Emanuel......        X   ........  .........
Mr. Garrett (NJ)...............  ........        X   .........  Mr. Scott (GA)...        X   ........  .........
Mr. Murphy.....................  ........        X   .........  Mr. Davis (AL)...        X   ........  .........
Ms. Ginny Brown-Waite (FL).....  ........        X   .........
Mr. Barrett (SC)...............  ........        X   .........
Ms. Harris.....................  ........        X   .........
Mr. Renzi......................  ........        X   .........
----------------------------------------------------------------------------------------------------------------
\1\ Mr. Sanders is an independent, but caucuses with the Democratic Caucus.

                            Dissenting Views

    Section 301 of the FY 2004 Budget Resolution requires 
committees to ``submit findings that identify changes in law 
within their jurisdictions that would achieve the specified 
level of savings through the elimination of waste, fraud and 
abuse'' in ``mandatory programs.'' Report language indicates 
that such submissions must ``reduce outlays by an amount to be 
specified by the chairmen of the Budget Committees.''
    The findings contained in this report fail in every respect 
to meet the requirements of Section 301 of the Budget 
Resolution. The ``unliquidated obligations'' that are the sole 
focus of these findings do not represent ``waste, fraud, and 
abuse.'' These obligations do not arise from ``mandatory 
programs.'' The admonition contained in the findings that 
agency managers recapture unliquidated obligations not needed 
for programs or services would not, by definition, reduce 
``outlays'' by even a single penny. And, the findings do not 
identify any ``changes in law.''

                        WASTE, FRAUD, AND ABUSE

    Section 301 of the Budget Resolution requires submissions 
providing for the elimination of ``waste, fraud, and abuse.'' 
The findings in this report conclude that ``savings can be most 
readily identified in funds labeled as unliquidated 
obligations.'' The report cites in particular the HUD Section 8 
and 236 programs, and the Rural Housing Service (RHS) Section 
521 program.
    However, nowhere in either the written statement or oral 
testimony of either HUD's Chief Financial Officer (CFO) or the 
RHS Undersecretary for Rural Development is there any showing 
that these unliquidated obligations in any way result from or 
lead to ``waste, fraud, and abuse.''
    Both of these Bush Administration witnesses explained that 
balances predominantly reflect funds that will be needed at a 
future date to meet expected obligations. If appropriated funds 
exceed expected obligations, they are routinely recaptured and 
used to offset the cost of other programs or used for purposes 
specified by Congress. The written statement of HUD's CFO 
addresses the level of unexpended balances in HUD programs and 
concludes that ``In the vast majority of cases, these 
unexpended funds are either fully committed to long-term 
projects and will be spending out normally for many years to 
come, or are obligations from relatively recent appropriations 
and could not reasonably be expected to have been expended at 
this time.
    On the issue of Section 8 balances, in response to the 
question ``Would you describe that as fraud or abuse or 
waste?'', the HUD CFO responded ``Absolutely not.''

                           MANDATORY PROGRAMS

    The title of Section 301 of the Budget Resolution 
specifically refers to waste, fraud, and abuse in 11 mandatory 
programs.'' However, none of the programs cited in the hearing 
by either HUD or RHS are mandatory programs. Section 8, Section 
236, Section 521, and the other programs discussed in the 
hearing are all discretionary programs. On this point, the 
``findings'' are clearly non-responsive to the Budget 
Resolution directive.

                             OUTLAY SAVINGS

    As noted, Section 301 report language clearly specifies 
that the findings must identify programmatic instances of 
waste, fraud, and abuse which reduce ``outlays.'' Yet, the 
recapture of unobligated balances which are not needed for 
future obligations, as recommended by the findings, would not 
achieve any outlay savings. This is because if the funds are 
not expected to be spent, under OMB and CBO rules there are no 
outlay savings from their rescission or recapture. The only 
scoreable reduction would be in budget authority.

                             CHANGES IN LAW

    Section 301 requires committees to submit findings that 
identify ``changes in law'' to achieve the required savings. 
The findings being submitted herein identify no changes in law, 
only general admonitions to HUD and RHS to do a better job of 
tracking unobligated balances, in anticipation of their 
recapture. We are surprised that the majority thinks that the 
Bush Administration needs to be reminded of this, but telling 
HUD and the Agriculture Department to obey the law does not 
qualify as a change in the law.

                   FUNDING CUTS FOR HOUSING PROGRAMS

    This is the most serious defect in the majority report. The 
findings in this report conclude that deobligation or recapture 
of unliquidated balances ``could result in significant savings 
without meaningful reductions in program services.'' We would 
be pleased if that were the case. But, the reality is that the 
substantial recapture of such balances in recent years has 
contributed to the substantial funding cuts to housing 
programs, which have marked the Republican record.
    The FY 2004 VA-HUD appropriations bill recently adopted 
includes recapture of over a billion dollars in unobligated 
Section 8 budget authority. Yet, these funds did not shield HUD 
programs from program cuts. We believe there are insufficient 
funds in the FY '04 bill to fully fund Section 8 renewals, 
which would adversely affect both recipients and 
administrators. That bill also includes a devastating $524 
million cut in the public housing HOPE VI revitalization 
program.
    Repeatedly, under Republican control, Congress has 
rescinded unobligated Section 8 funds in supplemental spending 
bills and diverted such funds for non-housing programs. 
According to preliminary data provided by CBO, Congress 
rescinded $6.85 billion in Section 8 budget authority in 
supplemental spending bills from FY 1997 through FY 2002. The 
overwhelming majority of these rescissions were used to fund 
non-housing expenditures. These rescissions took place at a 
time when the majority party argued there were not enough funds 
in the budget for housing programs, and pushed through deep 
cuts in affordable housing programs.
    Therefore, we are concerned that the findings in this 
report create the false impression that budget savings can be 
easily effected in housing programs through a better job of 
rooting out waste, fraud, and abuse, and without any effect on 
the families that rely on these programs. Cuts to programs such 
as public housing, Section 8, and rural rental housing have 
real consequences, denying critically needed rental assistance 
to low-income families, seniors, and the disabled, and 
permitting the unnecessary deterioration of our affordable 
housing stock.

                                   Barney Frank.
                                   Paul E. Kanjorski.
                                   Carolyn B. Maloney.
                                   Luis V. Gutierrez.
                                   Melvin L. Watt.
                                   Julia Carson.
                                   Brad Sherman.
                                   Jay Inslee.
                                   Charles A. Gonzalez.
                                   Michael E. Capuano.
                                   Harold E. Ford, Jr.
                                   Ruben Hinojosa.
                                   Joseph Crowley.
                                   Wm. Lacy Clay.
                                   Steven Israel.
                                   Joe Baca.
                                   Stephen F. Lynch.
                                   Brad Miller.
                                   Rahm Emanuel.
                                   Artur Davis.
                          House of Representatives,
                            Committee on Government Reform,
                                Washington, DC, September 23, 2003.
Hon. Jim Nussle,
Chairman, Committee on the Budget,
House of Representatives, Washington, DC.
    Dear Chairman Nussle: Pursuant to H. Con. Res. 95, the 
Concurrent Resolution on the Budget for Fiscal Year 2004, I 
respectfully submit the following findings that identify 
changes in law within the jurisdiction of the Committee on 
Government Reform that would achieve at least the level of 
savings specified by Chairman Nussle under the Resolution 
through the elimination of waste, fraud, and mismanagement.
            Sincerely,
                                                 Tom Davis,
                                                          Chairman.

FINDINGS ON WASTE, FRAUD, AND MISMANAGEMENT PURSUANT TO SECTION 301 OF 
                     HOUSE CONCURRENT RESOLUTION 95

    The Concurrent Resolution on the Budget for Fiscal Year 
2004, H. Con. Res. 95, (the Budget) requires House and Senate 
authorizing committees to identify waste, fraud, and 
mismanagement within their jurisdictions. The authorizing 
committees are required to submit to their respective Budget 
Committees findings as to the changes in law needed to 
eliminate waste, fraud, and mismanagement.
    The Budget provides that the Committees on the Budget 
specify the dollar level of savings to be achieved through the 
elimination of waste, fraud, and mismanagement by the 
authorizing committees. Pursuant to that provision, the House 
Committee on the Budget has directed the Committee on 
Government Reform to find savings of $827 million in fiscal 
year 2004, $4.496 billion over the 2004-08 period, and $9.998 
billion over the 2004-13 period through the elimination of 
waste, fraud, and mismanagement within its jurisdiction 
(Congressional Record, May 21, 2003, H4512).
    Under the Rules of the House, the Committee on Government 
Reform's diverse jurisdiction includes the federal civil 
service, the District of Columbia, and the Postal Service as 
well as the overall, economy, efficiency, and management of 
government operations, federal paperwork reduction, and the 
relationship of the federal government to the states and 
municipalities (Rule X, clause 1 of the Rules of the House of 
Representatives). Consequently, government-wide cross-agency 
reforms such as procurement, property management, information 
sharing, performance assessment, and the federal grant-making 
process are within the Committee's jurisdiction. During 
consideration of the Budget in the House of Representatives, 
Chairman Davis and Chairman Nussle engaged in a colloquy where 
the Chairmen clarified that government-wide cross-agency 
reforms within the Committee's jurisdiction were appropriate 
targets for savings from waste, fraud, and mismanagement 
(Congressional Record, March 20, 2003, H2196).
    Of potential significance within the Committee's 
jurisdiction, the Office of Personnel Management (OPM) 
administers the retirement, health, and life insurance programs 
for the federal civil service, which taken together, account 
for more than $900 billion in projected mandatory spending 
(spending not subject to annual appropriations) over the next 
ten years according to the Congressional Budget Office. 
Although these programs do not appear to experience high rates 
of waste, fraud, and mismanagement, small percentage 
improvements insuch large programs can result in significant 
savings.\1\ Consequently, the Committee's first finding addresses these 
programs by proposing an increase in the operating budget for the 
Inspector General of the Office of Personnel Management.
---------------------------------------------------------------------------
    \1\ According to the testimony of the OPM Inspector General, the 
erroneous payment rate in OPM's retirement programs was less than one-
half of one percent and the improper payment rate in OPM's health 
insurance programs was less than one percent (Full Committee Hearing on 
``Cutting Out Waste, Fraud, Mismanagement, Overlap and Duplication: 
Exploring Ideas for Improving Federal Reorganization, Management and 
Spending,'' July 16, 2003). The General Accounting Office has not 
identified any of these OPM programs as being at high-risk for waste, 
fraud, or mismanagement (Performance and Accountability Series, Major 
Management Challenges and Program Risks: Office of Personnel 
Management, January 2003, GAO-03-115).
---------------------------------------------------------------------------
    The Committee also proposes three additional reforms under 
the Committee's broad jurisdiction over the management of 
Government operations. These reforms would achieve billions of 
dollars in savings to the federal government without reducing 
the levels of benefits or services provided. The Committee is 
proposing reforms to the management of federal real property, 
increasing data sharing for the purpose of reducing improper 
payments in benefit programs, and increasing competition and 
accountability for federal grants.

Office of Personnel Management Programs

    OPM administers three programs within the sole jurisdiction 
of the Committee on Government Reform that have a significant 
dollar level of spending commitments. The Committee held a 
hearing on July 16, 2003 on ways to eliminate waste and 
mismanagement in these programs. During fiscal year 2002, the 
Federal Employees Health Benefits Program (FEHBP) had outlays 
of $24 billion, the Retirement Programs had $48 billion, and 
the Federal Employees Group Life Insurance Program had $2 
billion. Fraudulent claims in FEHBP arise from improper 
payments to carriers by health care providers and suppliers, 
submitting false claims for services not rendered, billing for 
unnecessary procedures, falsifying billing codes to obtain 
higher rates of reimbursement, ordering illegal procedures for 
patients, and defective pricing payments. Fraudulent payments 
in the Retirement Programs include erroneous benefits paid 
after the annuitant's death and computation errors. The OPM 
Inspector General testified that the work his office is doing 
to recover fraudulent payments in these programs results in 
approximately $12 recovered for each dollar spent by his 
office. In fiscal year 2002, the OPM IG recovered approximately 
$116 million. The Committee proposes the doubling of the IG 
budget from $12 million to $24 million, which should result in 
an increased savings of $116 million annually.
    The OPM IG has also initiated a program to utilize computer 
technology to develop effective data warehouse and data mining 
techniques to more effectively recover funds lost to waste, 
fraud, and mismanagement by carriers in FEHBP. Implementation 
of these applications should lead to a more comprehensive 
claims auditing process, which should, in turn, result in 
increased recovery of fraudulent overpayments from audits.

Federal Real Property Reform

    Underutilized and excess property and deteriorating 
facilities cost the federal government billions of dollars each 
year. According to the General Services Administration, the 
upkeep of unused real property costs an estimated $4 billion 
annually. The Committee held a hearing on the savings that 
could result from reform of the limitations on government 
agencies' authority to revitalize or dispose of federal 
property (``Wasted Space, Wasted Dollars: Reforming Federal 
Real Property to Meet 21st Century Needs,'' June 5, 2003).
    On July 17, 2003, the Committee approved H.R. 2548, the 
Federal Property Asset Management Reform Act of 2003, which 
gives federal agencies the authority to exchange or sell 
unwanted property for better-suited property, sublease or 
outlease underutilized property, and partner with the private 
sector to redevelop or improve property. The legislation also 
provides agencies incentives, such as allowing retention of 
proceeds from dispositions and application to the agency's 
capital asset needs, and offsetting direct and indirect costs 
associated with property disposal.
    The bill contains a variety of property management tools 
that would improve property management and the condition of the 
federal workplace. The legislation was developed in 
consultation with the Administration and contains many of the 
property management reforms included in the President's Freedom 
to Manage Initiative. Specifically, the bill would:
          <bullet> Direct the Administrator of General Services 
        to develop asset management principles to guide federal 
        agencies and establish performance measures to 
        determine the effectiveness of federal property 
        management;
          <bullet> Require each agency to appoint a real 
        property officer to ensure that assets meet strategic 
        objectives, ensure the observance of asset management 
        principles, prepare asset management plans and 
        generally coordinate agency real property functions and 
        processes;
          <bullet> Authorize federal agencies to exchange or 
        transfer property with other federal agencies;
          <bullet> Authorize GSA, acting on behalf of 
        landholding agencies, to enter into agreements with 
        non-federal entities to exchange or sell property as a 
        means of acquiring replacement property or services 
        better suited for mission purposes;
          <bullet> Authorize GSA, acting on behalf of 
        landholding agencies, to sublease unexpired portions of 
        Government-leased property;
          <bullet> Authorize GSA, acting on behalf of 
        landholding agencies, to lease assets that must remain 
        in federal ownership, and partner with private sector 
        entities for the redevelopment or improvement of 
        selected federal holdings;
          <bullet> Require GSA to report to Congress on their 
        use of public-private partnerships valued at greater 
        than $700,000;
          <bullet> Authorize agencies to retain the proceeds 
        from the sale of surplus personal property, subject to 
        appropriations, to offset direct and indirect costs 
        incurred in the disposal of such property;
          <bullet> Authorize agencies to retain the proceeds 
        from real property transactions, subject to 
        appropriations, and allow such funds to be used for 
        meeting an agency's capital asset needs; and
          <bullet> Reduce the administrative burdens associated 
        with making real property available for homeless 
        assistance under Title V of the McKinney Act.
    The bill also contains provisions intended to reduce its 
budgetary impact, such as subjecting spending associated with 
public-private partnerships and receipts collected by agencies' 
property management authorities to Congressional 
appropriations. Nevertheless, the Congressional Budget Office 
(CBO) score of this legislation is again expected to be 
unreasonably high because it likely will not take into account 
the cost savings associated with public-private partnerships 
and outleases. Although CBO has yet to score this legislation, 
the Office of Management and Budget and the Committee believe 
that full implementation of this legislation would save the 
federal government a significant percentage of the $4 billion 
annual upkeep of unused real property.

Sharing Information To Reduce Improper Payments

    Improper payments to recipients of federal benefit and loan 
programs in the amount of $20 billion has been identified in 
agency financial statements for both fiscal years 2001 and 
2002.\2\ Significant reduction of improper payments could be 
achieved by more aggressive sharing of information collected by 
one government agency and analyzed by the paying agency if the 
pertinent information is utilized to verify program eligibility 
and provide improved controls over payments. For instance, 
savings have resulted from the use of taxpayer information for 
locating Department of Education loan default recipients and 
loan repayment amounts and from the use of criminal records to 
identify fugitive felons ineligible for food stamp and 
Temporary Assistance for Needy Families payments.
---------------------------------------------------------------------------
    \2\ Full Committee Hearing on ``Cutting Out Waste, Fraud, 
Mismanagement, Overlap and Duplication: Exploring Ideas for Improving 
Federal Reorganization, Management and Spending,'' July 16, 2003, 
testimony of Paul Posner, Managing Director for Federal Budget and 
Intergovernmental Relations Issues, Strategic Issues, General 
Accounting Office.
---------------------------------------------------------------------------
    Significant savings could also be achieved in the awarding 
of Department of Education Pell Grants, where approximately 
$602 million in excess payments were made during fiscal years 
2001 and 2002 because of underreported income by recipients. 
Internal Revenue Service data could serve as a check on income 
levels of recipients. Other grant and loan programs 
administered by the Department of Education where cost-savings 
could be achieved by data sharing include the Supplemental 
Educational Opportunity Grants, Stafford and Parent Loans for 
Undergraduate Students, Perkins loans, and work-study programs.
    Reported problems with federal rent subsidy programs 
administered by the Department of Housing and Urban Development 
(HUD) also suggest possible savings through better information 
sharing. HUD financial statements for fiscal year 2001 report 
that the federal government overpaid rent subsidies by almost 
$1 billion due to the underreporting of income by tenant 
beneficiaries. Similar savings could be targeted in Medicare 
and Social Security payments by relying on state and local 
death data, in Housing and Urban Development mortgage insurance 
programs by relying on IRS data, and in Food Stamp payments by 
comparing data on IRS income levels.
    The Committee proposes that government-wide cross-agency 
statutory provisions should be enacted that would allow 
administrators of federal benefit programs limited access to 
certain federal and state administrative data, such as federal 
tax returns and the National Directory of New Hires, for the 
purpose of verifying beneficiaries' eligibility. Limited access 
would be provided only in accordance with appropriate security 
and control policies to protect against unauthorized or 
inappropriate disclosure of information.

Enact Office of Management and Budget Recommendations for Expanding 
        Competition and Accountability of Federal Grant Awards

    In fiscal year 2001, the federal government awarded $325 
billion in federal grants (U.S. Chief Financial Officers 
Council, Federal Financial Assistance Management Improvement 
Act of 1999, p.2). Unlike federal procurement law, there are no 
uniform procedures for competing out federal grants, nor is it 
possible to establish how many grants and how much money are 
awarded by the federal government by non-competitive means. 
Because of Congressional earmarks, preferences for past grant 
recipients, and a lack of uniform certification and assurance 
requirements, many grants are not competitively awarded and 
lack accountability. The Committee believes that significant 
savings may be achieved by competitively awarding federal 
grants and requiring greater accountability.
    In the 106th Congress, the Committee on Government Reform 
worked to enact the Federal Financial Assistance Management 
Improvement Act of 1999 (P.L. 106-107). The act requires 
federal agencies to simplify the procedures by which state and 
local governments and nonprofit organizations apply for federal 
grant and assistance programs. Within three years of enactment, 
agencies were required to develop plans to implement the 
legislation's seven objectives, and report the plans to 
Congress. The seven objectives are:
          1. Streamline and simplify the application, 
        administrative, and reporting procedures for federal 
        financial assistance programs;
          2. Demonstrate active participation in interagency 
        coordination;
          3. Demonstrate appropriate agency use, or plans for 
        use, of the common application and reporting systems;
          4. Designate a lead agency official for carrying out 
        the responsibilities of the agency under the act;
          5. Allow applicants to electronically apply for, and 
        report on the use of, funds from the federal financial 
        assistance program administered by the agency;
          6. Ensure recipients of federal financial assistance 
        provide timely, complete, and high quality information 
        in response to federal reporting requirements; and
          7. Establish specific annual goals and objectives, in 
        cooperation with recipients of federal financial 
        assistance, and measure annual performance.
    The Act also requires OMB to report to the Congress on the 
agencies' plans and the General Accounting Office to evaluate 
and report to OMB and the Congress on the bill's effectiveness. 
On May 31, 2002, OMB submitted to the Congress its first set of 
recommendations to identify statutory impediments to 
competitively awarding federal grants. The recommendations 
included the following:
          1. Rationalize the certifications and assurances 
        required of grantees;
          2. Determine the proper use of ``certifications'' and 
        ``assurances;''
          3. Modify program statutes to set aside a specific 
        percentage of grant or program funding to pay for third 
        party evaluation;
          4. Shorten area-wide agency review to a reasonable 
        period;
          5. Establish simplified procedures for smaller 
        organizations to receive section 501(c)(3) tax status;
          6. Establish uniform requirements for financial 
        assistance programs across all thirteen appropriations 
        acts;
          7. Identify common requirements across program areas, 
        consolidate reporting requirements, and establish 
        uniform definitions;
          8. Require the use of a single identifier for all 
        grantees and require its use in the administrations E-
        Grants initiative; and
          9. Raise the threshold that requires grantees to be 
        audited from $300,000 to $500,000 in annual federal 
        assistance.;
    Pursuant to these recommendations, the Committee proposes 
to amend Federal Financial Assistance Management Improvement 
Act of 1999 and enact these recommendations. The Committee 
believes that the enactment of these recommendations would 
enable and encourage more organizations to compete for the 
award of federal grants and financial assistance and also 
ensure greater accountability. Greater competition and 
accountability for federal grants will promote greater 
efficiencies in the delivery of the intended benefits of the 
grant programs and allow the federal government to deliver the 
same benefits at a lower level of spending.

                             Additional Views

    I support ridding the government of waste, fraud, and 
abuse. I do not support, however, the numerical targets for 
waste, fraud, and abuse reduction that were handed out by 
Budget Committee Chairman Nussle. Eliminating waste, fraud, and 
abuse is inherently a bottom-up endeavor. Congress needs to 
scrutinize every program carefully to find areas of waste, 
fraud, and abuse--not cook the books to meet arbitrary targets 
from the Budget Committee.
    The Budget Committee instructed our Committee to identify 
ways to reduce waste, fraud, and abuse equal to 1% of the total 
mandatory spending subject to our Committee's jurisdiction, 
which the Budget Committee said was $9.9 billion over 10 years. 
This number is wrong because it double counted the civil 
service retirement and disability trust fund and the 
supplemental DC pension trust fund. In fact, 1% of the 
mandatory spending in Committee on Government Reform's 
jurisdiction is only $7.3 billion over 10 years. Moreover, even 
this $7.3 figure is unachievable. As the majority's findings 
explain, the amount of funds that can be saved in the mandatory 
spending programs within the jurisdiction of the Committee on 
Government Reform is relatively small.
    The majority makes several recommendations for reducing 
waste, fraud, and abuse in discretionary spending. I agree with 
some of these recommendations, such as increasing the operating 
budget for the Inspector General (IG) of the Office of 
Personnel Management. In addition, I support passage of H.R. 
2548, the Federal Property Asset Management Reform Act of 2003, 
although there is dispute among experts about the amount of 
savings this legislation would produce.
    In other instances, I support the goals articulated by the 
majority, but have some unanswered questions about the means. 
For example, the majority recommends reducing improper payments 
by increasing data sharing. Reducing improper payments is an 
important goal, but there are unanswered questions about data 
sharing. For example, it is important to know what information 
should be shared and with whom while still protecting privacy, 
confidentiality, and program integrity. The majority also makes 
recommendations regarding the grants process in the name of 
increasing competition and accountability. I support more 
competition and more accountability, but it is unclear whether 
the specific proposals in the majority's findings would achieve 
those worthy goals.
    One major concern I have abllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll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