gaged in the administration of pay and allowances and that a continuing high overpayment error rate be an important factor in evaluating the work performance of the individuals assigned to these duties. The Assistant Secretary of Defense (Manpower) advised us on June 14, 1963, that the action we recommended was being initiated.

Shipments of Household Goods for Military Personnel

In a report submitted to the Congress in March 1963, we stated that the Government bore unnecessary costs of about $190,000 annually because the Air Force, Navy, and Marine Corps did not charge servicemen a proportionate share of packing and unpacking costs when shipments of their household goods exceeded prescribed weight allowances. We found that the Army was charging such costs to its personnel. In response to our proposal, the Joint Travel Regulations of the uniformed services was revised. Effective July 1, 1963, a proportionate share of packing costs will be recovered from service members whose household goods shipments exceed weight allowances.

DUPLICATION OF FACILITIES

We reviewed the utilization and operating costs of military hospitals in the San Francisco Bay area. In our report submitted to the Congress in June 1963, we stated that unnecessary costs of about $8.2 million would be incurred annually under a plan to continue separate operation of Letterman Army Hospital and Oakland Naval Hospital. We stated further that plans being considered by the Department of Defense for construction of separate new hospitals at these two locations would result in costs of about $10 million more than necessary to provide adequate hospital facilities for joint service use. These unnecessary expenditures could be avoided by constructing a single modern hospital in the Oakland-Alameda area and an addition to the Travis Air Force Hospital, and by effective joint use of these facilities. Effective joint use can be achieved through (1) eliminating the unnecessary transfers of patients to the San Francisco Bay area, (2) making greater use of available

civilian hospitals for the care of dependents, and (3) eliminating the requirement for construction of facilities to care for retired personnel, their dependents, and others entitled to treatment only if space is available.

In view of the magnitude of the possible savings, we recommended that the Secretary of Defense take the necessary actions to consolidate military hospital services in the San Francisco Bay area into one modern replacement hospital of 1,000 beds in the Oakland-Alameda area and the modern facility at Travis Hospital with an addition of 200 beds. We recommended also that the Secretary of Defense require the military departments to improve the management of the patient workload to accomplish more effective joint use of existing hospital facilities and to assure realistic planning of military hospital construction on the basis of full joint use of all available military hospital facilities.

AUTOMATIC DATA-PROCESSING EQUIPMENT

We made a study of the financial advantages of purchasing over leasing of electronic data-processing equipment in the Federal Government. The Department of Defense and the military departments are the principal{users of such equipment. Our study showed that very substantial amounts of money could be saved if the Federal Government purchased, rather than leased, more of its data-processing equipment needs. Our report on this study, submitted to the Congress in March 1963, is discussed in more detail in Chapter Three, “Assistance to the Agencies," beginning on page 52.

In addition to the Government-wide study cited above, we examined into selected aspects of the management of dataprocessing equipment in the Air Force and the Navy. Our reports on these examinations were submitted to the Congress in April and June 1963.

Our review of 14 electronic data-processing systems leased by the Air Force revealed that about $1.3 million would be unnecessarily expended by June 30, 1963, because the Air Force failed to take advantage of reduced sales prices, offered by the manufacturers in 1961 and 1962, to buy the systems.

708-040-63- -10

135

The Assistant Secretary of the Air Force (Financial Management) agreed that savings could have been realized by purchasing the systems and stated that the Air Force was taking steps to identify data-processing systems of all manufacturers which it would be advantageous to purchase.

Similarly, the Navy failed to take advantage of reduced sales prices offered by the manufacturer for certain leased components of the automatic data-processing systems installed at two of its shipyards. Had the Navy purchased the components at the time the offer was made in 1961, it would have realized savings of about $339,600 over the period the shipyards intended to retain them. At the time of our review, a major portion of the potential savings had been lost. However, as a result of our bringing this matter to the attention of the Navy, the Navy purchased the components being used at one of the shipyards. This action should result in savings of about $70,300.

COMMUNICATIONS

In a report submitted to the Congress in April 1963, we pointed out that the military departments incurred unnecessary costs for transmission of long-distance message communications by commercial means. We estimated that more than a million dollars, about one-third of the annual cost of such messages, was being unnecessarily expended each year. This occurred because the military departments did not make the fullest utilization of existing military communications networks and, in those instances where commercial transmission was necessary, did not use the most economical type of message. We recommended to the Secretary of Defense certain actions to assure more economical transmission of long-distance messages. In reply to our report the Assistant Secretary of Defense (Installations and Logistics) informed us on June 17, 1963, that the Defense Communications Agency had prepared a plan, to be made effective on October 1, 1963, which the Department of Defense estimates should result in annual savings of about $750,000.

CIVILIAN PAY

The civilian payrolls and related records of the military agencies and installations in the United States, including Alaska and Hawaii, are examined at the sites by our regional offices and our Washington office. An off-site examination of oversea Army, Air Force, and attaché payrolls is made by our Washington staff, and a similar examination of oversea Navy payrolls is made by our staff at the Navy Finance Center in Cleveland. These examinations are made on a selective basis. In our site exaimnations, we also review procedures and internal controls as part of our evaluation of the effectiveness of civilian payroll administration.

As a result of our selective examinations, we continued to find and report to installation officials many instances of misinterpretation and misapplication of laws and regulations which gave rise to erroneous payments and erroneous credits and charges for leave. The principal deficiencies found during the fiscal year 1963 involved erroneous salary rates, improper payments for holiday and overtime work, improper processing of periodic and longevity rate increases, inadequate administrative control of overtime, and various inaccuracies in the leave records. These instances were brought to the attention of appropriate officials and corrective action was taken.