Monthly Review of Activities (Partial)

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Budget for Fiscal Year 1934 ‘0 On June 11 the House Committee on Appropriations recommended that AEC be granted $891,781,000 for operating expenses (a reduction of $38,219,000 from the revised estimate) and $166 million for plant and equipment. AEC appealed certain language provisions as passed by the House in hearings before the Senate Appropriations Subcommittee on June 22. The Congress passed a Joint Resolution on June 29 to provide funds for AEC pending enactment of the appropriation bill. The Financial Review Committee approved the initial financial plans for 1934 and the plans were presented to the Commission in staff paper 533/38 dated June 2b, 1953. A General Manager’s memorandum dated June 26 set forth the basis on which the 1954 financial plans were approved, the rules to follow in procuring equipment not included in construction, and the policy on program Budget Estimates for Fiscal Year 1955 Preliminary budget estimates for fiscal year 1955 were reviewed by the Financial Review Committee and presented to the Commission in staff paper 625/22, dated June 16. to the Bureau of the Budget on June 17, the estimates amounted to $1,289 million for operating expenses and $376 million for plant and equipment. As approved by the Commission and transmitted

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Negotiations with GAO and Treasury were concluded, and revised procedures were issued to provide (a) for financing integrated contractors on a more current basis with a resulting reduction in interest expense to the Government, and (b) for discontinuing the requirement that integrated contractors must submit reimbursement vouchers on the cash basis, substituting an annual accounting for their expenditures on the accrual basis. Audit Memorandum No. 2, Audit of Agency Cashier Funds by AEC Auditors, was rescinded June 24, 1953. The Treasury Department will conduct audits of these funds, and AEC operations offices in their internal auditing will review agent-cashier operations. To further Washington administration of the assist audit program, each finance director was requested to provide information on the audits that must be performed at a distance from his operations office. Two Washington audit staff members were assigned to SFOO to assist with the backlog of audit work. The Progress Report to the Joint Committee was transmitted on June 24 and an abstract of the report was prepared for the Chairman to use in discussions with the President. The President has requested AEX to prepare for the President and the National Security Council a semiannual report on the status of the atomic energy program. of 1953 w i l l be transmitted by August 1. The first such report covering the first six months Controller's Manual, Part IV, Insurance, was ready for distribuThe frequency of issuance of the chief financial statements from operations offices has been reduced from monthly to quarterly and that of certain supporting statements has been reduced from quarterly to semiannually. The community financial statements m d cost reports and the report on premium costs on construction projects will no longer be sent to the Washington office each month, but the data contained in these reports will be available to meet requests from Washington. A review of the methods being used in operations offices to account for appropriated funds indicates 'thatadequate control is being maintained and that most offices have abandoned the traditional Government allotment ledger and substituted a more economical inventory system.

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Revised budget and reporting classifications were issued for the Reactor Development and Community Operations programs. The Controller's Annual Financial Report has been outlined and year-end closing instructions have been issued. All finance directors were requested to investigate alleged discrepancies in financial data supplied on the utilization and disposal-of excess property and to report on the action necessary to correct such On June 26 the Commissioners reviewed the unit-product cost report, raised a number of questions, and offered comments that will be helpful in effecting improvements. Plans are under way for adding more data on major weapons components to this report. The investigation of the feasibility of a standard cost system indicates that this is not the time to establish such a system for all AEC production operations up to the point of weapons fabrication. The number of new plants in their initial stages of operation or coming into operation in the next year, and the number of plant additions being made means that performance knowledge necessary for establishing standards is lacking. Also, the rapidly changing technology of the production processes and the irregularity of raw materials receipts would interfere with firm production planning and the establishment of good standards. The study indicated, however, that a standard cost system is recognized as something that w i l l be beneficial when good standards can be established. Investigations and Inspections The need for administrative action was indicated by investigations into alleged irregularities in certain contractors' purchases; losses resulting from fabrication by vendors; possible duplication of materials and equipment by an operations office and a contractor; and a contractor's purchase of equipment on a restrictive basis. of the procurement practices of an HOO contractor. A complaint of ambiguous specifications resulted in the release of the supplier from his contract. An informative investigation was made into the termination of an employee by a contraotor. AEC made an investigation for the Interstate Commerce Commission in a case that required access to security information. Investigation disproved alleged favoritism in procurement by a contractor. An allegation by Senator McCarthy regarding an AEC employee was disproved. A second inspection was made