B-115398.33 August 5, 1977

B-115398.33 August 5, 1977

The Honorable Bert Lance Director, Office of Management and Budget

Dear Mr. Lance:

We wish to bring to your attention a matter that is of concern to us as well as some Members of Congress, Based upon recent experience, it appears that the executive branch has, at least on two occasions, adopted the policy of severely curtailing or terminating major Federal programs funded by lump-sum appropriations before formally notifying the Congress through the procedures of the Impoundment Control Act of 1974 and requesting a rescission of the budget authority deemed to be in excess of revised program needs.

Specifically, we refer to the Department of Defense's (DOD) recent actions regarding the B-1 bomber and Minuteman III Intercontinental Ballistic Missile (ICBM) programs.

We understand stop-work orders on production activities on the B-1 bomber were issued on June 30, 1977, and production termination orders were sent to the appropriate contractors on July 6, 1977. The decision to terminate work on the B-1 resulted in an amount of funds becoming excess to the Department of the Air Force's aircraft procurement needs during fiscal year 1977. Although the contracting parties were informed of the executive branch's decision to terminate the B-1 on July 6, 1977, the Congress was not formally requested, pursuant to the Impoundment Control Act of 1974, to rescind excess procurement funds until July 19, 1977, well after the decision and contract terminations were made. Rescission proposal R77-18.

With regard to the Minuteman III ICBM, DOD announced the decision to terminate the program on July 6, 1977. Stop-work and termination orders were sent to the major contractors on July 11, 1977. However, the President's request to rescind unneeded procurement funds was not sent to the Congress until July 26, 1977, almost 3 weeks later. Recession proposal R77-20.

Thus, in the cases of the B-1 bomber and Minuteman III ICBM, by the time the Congress was requested to rescind excess budget authority, steps had already been taken to dismantle the programs. The problem raised by this practice easily can be seen: should the Congress reject the two rescission proposals and direct continuation of these programs, the actions taken by the executive branch may seriously impair the ability of responsible Federal and private contractor personnel to resume the original program plans within the initial time and cost estimates. In effect, the practice of initiating program terminations prior to the time the Congress has had an opportunity to complete action under the Impoundment Control Act on the recession requests can operate to deny to the Congress meaningful review of the actions proposed -- as one Member of Congress indicated, presenting for congressional approval what may amount to a fait accompli.

Rather than continue this existing approach when the decision is made to terminate a program, we think it would be more in keeping with the spirit of the Impoundment Control Act of 1974, which we believe is that such major decision should be made jointly by the Congress and the executive branch, that proposed rescissions of major programs be submitted to the Congress contemporaneous with instructions only to suspend further program work, if such suspension is contractually feasible, pending congressional action on the purposed action. Then, if the Congress approves the proposed rescission (and thus, the termination) instructions could, at that time, be issued to terminate further work. Conversely, if the rescission is not approved, and the Congress specifically directs that the program be continued, the suspension could be revoked and program activities resumed with minimum disruption and additional costs.

As I stated, this matter is of concern t us and to the Congress and we would be glad to discuss it with you further.

Sincerely yours,

(SIGNED) ELMER B. STAATS Comptroller General of the United States