CHAPTER EIGHT Health, Education, Welfare, Labor, and Veterans' Services DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE Our work during the fiscal year 1962 in the Department of Health, Education, and Welfare (HEW) covered selected activities primarily of the Office of Education, the Public Health Service, the Food and Drug Administration, and the Bureau of Family Services and the Bureau of Old-Age and Survivors Insurance in the Social Security Administration. We issued 5 reports to the Congress, 3 reports to agency officials at headquarters offices, and 16 reports to the heads of agency field installations. Comments on the principal work done and findings in our reports follow. OFFICE OF EDUCATION During the year we began reviews of selected activities administered by the Office of Education under titles II and III of the National Defense Education Act. Title III of the act authorizes financial assistance to States for strengthening science, mathematics, and foreign language instruction. Field work pertaining to title III activities was completed in four States and in progress in five States at the end of the fiscal year. Also in progress was a review of the student loan program authorized by title II. In this review we expect to examine the pertinent records of about 35 representative institutions of higher education in various parts of the country. As a result of our findings in one State, the Office of Education recovered about $43,000 representing the amount the State had allowed as the Federal share of the cost of equipment acquired in contravention of the eligibility requirements under title III of the National Defense Education Act and applicable regulations. In accordance with a recommendation made in our report to the Congress, issued in June 1961, the Office of Education revised its regulations, effective in the fiscal year 1962, to provide more suitable criteria for determining the eligibility of school districts for school construction grants under section 305(a)(3) of Public Law 815, Eighty-first Congress, as amended. While the effect of the revised regulations on the number and amounts of school construction grants to be awarded cannot be precisely ascertained, we estimate that substantial annual savings will be realized inasmuch as a much smaller number of applications were found eligible in the fiscal year 1962 than in former years. PUBLIC HEALTH SERVICE We completed field reviews of selected aspects of Indian health activities at area offices located in Phoenix, Ariz., Oklahoma City, Okla., and Aberdeen, S. Dak., and the hospital survey and construction (Hill-Burton) program in the HEW Atlanta, Chicago, and San Francisco regional offices. We also reviewed selected operations of the Robert A. Taft Sanitary Engineering Center, Cincinnati, Ohio, and we began a review of the civil defense medical stockpile program in the HEW Boston, New York, Kansas City, and San Francisco regional offices. Our review of the Hill-Burton program showed that one grant recipient had included the cost of the same space to support the need for Federal grants under both the hospital survey and construction program and the health research facilities construction program administered by the National Institutes of Health. After we brought this duplication of costs to the agency's attention, the research facilities construction grant was reduced by $60,000. Dual Federal financing noted on another HillBurton grant was also discussed with Public Health Service officials, bringing about savings of $7,500. During the fiscal year 1962 we issued two reports to agency officials pointing out procedural weaknesses in certain phases of administering the Public Health Service Hospital, Seattle, Wash., and the Indian Health Area Office, Phoenix, Ariz. We were informed that action was being taken to correct most of these procedures. National Institutes of Health During the year we completed our review of the health research facilities construction program. As a consequence of our review of the construction costs associated with one facility, the National Institutes of Health (NIH) reduced the Federal grant by over $86,000 because of erroneous amounts claimed for Federal matching by grant recipients. Two reports were issued to the Congress on NIH activities. In March 1962 we reported on our survey of policies followed by selected medical schools in charging faculty salaries to NIH research and training grants. We pointed out that neither the Public Health Service nor the medical schools generally required current information on the time or effort spent by faculty members on grant work. In the absence of such information, NIH has no reliable basis for determining the extent to which the amounts charged to NIH grants for faculty salaries vary from the amounts properly chargeable under Government-wide cost principles applicable to research grants. We recommended to the Secretary, HEW, that a review be made to determine and establish reasonable guidelines, consistent with Governmentwide cost principles, for charging medical school faculty salaries to NIH research and training grants. Our report to the Congress issued in June 1962 presented information pertaining to the award of two research project grants totaling $644,475 to finance purchases of equipment needed in NIH's cancer research program. The equipment consisted largely of durable items commonly used in medical research. Since the grantee rather than the Government obtained title to the equipment, we raised for consideration the question of whether it would have been more prudent for NIH to have retained some control, over the equipment to provide greater assurance that the equipment would continue to be used for the benefit of Government-supported medical research. In July 1961 we issued to the Secretary, HEW, a report on our review of selected cost-type contracts for cancer chemotherapy research. NIH agreed with our recommendation to more carefully administer lease agreements involving significant contract rental charges. FOOD AND DRUG ADMINISTRATION In September 1961 we issued a report to the Congress on our review of the enforcement and certification activities of the Food and Drug Administration (FDA). We pointed out that different measures of control and varying degrees of testing were employed by HEW in its three control programs for drug products. We raised the question of whether the available skilled manpower and other testing resources used in these programs were being allocated in a manner which would give full consideration to the relative potential dangers of the various products tested and to other pertinent factors. The Secretary, HEW, agreed with our suggestion for a reexamination of the drug control programs. In April 1962 he informed the chairman of the House Committee on Government Operations that extensive consideration was given in a study of the drug control programs to the question raised in our report, that certain changes in the administration's regulations had been made, and that some needed legislative changes had been recommended by the President on March 15, 1962. In conformance with other proposals made during our review, the Food and Drug Administration adjusted upward its fee schedules during the fiscal year 1962 to include the cost of Government-owned space in charges made to industry for certain certification services. It is estimated that the adjustment in fees will realize additional revenue of about $60,000 annually. The FDA also transferred to the general fund of the Treasury the sum of $91,525 representing the cost of Government-owned space devoted to certification services during the fiscal year 1961. Moreover, it took or promised to take action on suggestions in our report relating to the accumulation of fees in the certification reserve account in excess of costs and relating to insufficient coordination between its inspection force and State and local regulatory groups. BUREAU OF FAMILY SERVICES We reviewed selected aspects of Federal participation in the cost of administering State public assistance programs for needy aged, blind, and disabled persons and for needy dependent children. Under the Social Security Act, the Federal share of administrative costs is 50 percent of such State and local expenditures as the Secretary of HEW finds necessary for the proper and efficient administration of the programs. Our field work was completed in six States and was in progress in four States at the end of the fiscal year. In June 1962 we issued a report to the Congress on our review of the federally aided public assistance programs under the general administrative direction of the HEW Kansas City regional office. Our principal comments were on savings in Federal contributions to the program which could be made through greater efforts by the States to collect support payments from divorced fathers whose families are on public assistance under the aid to dependent children program and through better compliance with State plans providing for support from responsible relatives. We also issued a report in June 1962 to the Regional Director of the HEW New York regional office dealing principally with possible reduction of the federally shared cost of automobiles used in administering the public assistance programs in one State. BUREAU OF OLD-AGE AND SURVIVORS INSURANCE Our audit work in the Bureau of Old-Age and Survivors Insurance (BOASI) during the fiscal year 1962 was performed at the central office in Baltimore and at the payment centers in Chicago, Kansas City, Philadelphia, and San Francisco. Our reviews were concerned principally with the procedures for recovering overpayments of insurance benefits, the policies and practices relating to employees' field conferences, and the installation of automatic data processing equipment at the payment centers. In this last review we examined the leasing arrangements at the Philadelphia payment center. We also reviewed practices regarding employee travel and the granting of administrative leave. We reported to the Congress in July 1961 on our review of procedures for recovering overpayments of insurance benefits. The procedures provided for recovery in some cases but not in others, thus resulting in inequities. We recommended that |