bership group or this broad-based input. Then you had a subsequent step where the membership would take input or give input to a coordinating committee and they would establish policy and gain implementation consensus. Then you went from there to a board of trustees that took direction from this coordinating committee and from there it filtered down into the organization.

Mr. TAUKE. It seems to me part of our effort here should be trying to determine who was responsible for this. I serve_on_a couple of boards. I assume when I serve on those boards that I take some responsibility for the organization. In this case, it would appear as if—if I perceive the facts correctly-it would appear as if nobody was taking responsibility for the operation of this organization, and it prompts me to ask what happened to the board of trustees? Have they simply washed their hands of any responsibility for the operation of the organization and the expenditure of funds?

Mr. SPEIRS. I don't know. No one has come to me to ask about the project, to mention salvaging the project or taking the concept in any other direction.

Mr. TAUKE. Suppose it were private funds and that I and Mr. Kildee and you, have maybe a lot of money and decided to transfer some to this organization to carry out a task. I would assume that if this kind of thing had occurred that maybe the board of trustees hadn't done what it was supposed to do, and there might be at least a review of the legal responsibility of the board of trustees for the actions of the partnership.

Has your office-

Mr. SPEIRS. We have not.

Mr. KILDEE. Would you yield?

Mr. TAUKE. Yes.

Mr. KILDEE. Is there any possibility that you are aware of or any attempt that you are aware of trying to recover any of the money that was

Mr. TAUKE. That was the next question.

Mr. SPEIRS. What we have done was based on our financial review. And to answer your question shortly, no, we have not taken steps or made that as an option. What we have done, since I came on board, was to go in and look at the books. At that time $764,000 approximately was expended or obligated and that was gone.

At the rate of spending that continued within the final 2 months, you virtually had all the money expended. As far as looking to the expenditures or looking to what the money had gone for, within certain exceptions, the expenditures were allowable costs per the terms and conditions of the grant and other OMB circulars and regulations. So we could not go back and say-as far as the way the money was expended for the program-we could not reach in and say this was wrong. There where some exceptions that we dealt with.

Mr. TAUKE. About $80,000 in exceptions?

Mr. SPEIRS. Approximately $81,000 and we have looked at those and negotiated them out and it is down to quite an amount less than that.

Mr. TAUKE. What do you mean negotiated out?

Mr. SPEIRS. At first blush when we sent the comtroller's staff in to look at the expenditures, there were some areas that we questioned on cost and when they came back with explanations or when the Partnership took whatever remedial action was necessary, the bottom line was less than $81,000.

Mr. TAUKE. So if the money is misspent outside of the context of the grant, let's say, what happens then? Is there any way to recover that money?

Mr. SPEIRS. When you are dealing with a grant either it is viable and has a budget. If there is a misexpenditure, you disallow that cost, don't let them draw down or recover the money. In this case, the balance within the last week, there is $34,000 or $35,000 left out of the original $1 million.

Mr. TAUKE. You found this situation when you came aboard. What was going on before you came aboard?

Mr. SPEIRS. I cannot answer that because I don't know. I wasn't there.

Mr. TAUKE. Did it just come to you out of the blue, or when you came aboard did somebody say, "Hey, we have been looking at this and there is a problem here?"

Mr. SPEIRS. Basically, I was asked to take the office. One of the problems that I was told that I was going to have to step in and handle was the partnership, from several voices, such as the Comptroller's Office, and general counsel. It was indicated that I needed to look at this and very quickly get into a program review and look at the project.

At that time the administrator was gone and I stepped in.
Mr. TAUKE. Is this considered a contract?

Mr. SPEIRS. This is a grant. There is a formal grant document signed with the Government.

Mr. TAUKE. And somebody signed it on behalf of the national partnership?

Mr. SPEIRS. Yes.

Mr. TAUKE. Who did?

Mr. SPEIRS. Mr. Rex Thompkins.

Mr. TAUKE. What was his role?

Mr. SPEIRS. He was president of the partnership.

Mr. TAUKE. I presume that he on behalf of the partnership takes on certain obligations, contractual obligations?

Mr. SPEIRS. The obligations spelled forth in the grant plus any special conditions, yes.

Mr. TAUKE. I believe in other areas of Government we would be beating up on people to, first of all, pinpoint responsibility, and second, to try to recover the money. I understand the problem that you have with the recovering of the money. I guess I still go back to the board of trustees. It seems to me that the board of trustees did not carry out their fiduciary responsibilities to the organization and therefore have some responsibility for the failure of the organization to meet its contractual obligations. I am not sure this is a fair question, you can tell me if it isn't, but why has no consideration been given to checking that out? Is that just not the policy of Government?

Mr. SPEIRS. I can't say it is not the policy of OJJDP. I don't think the track we were following was back to the board of trustees. We

were looking to the officers of the corporation or to the entity that received the grant. And that was the partnership, a legally constituted not-for-profit organization that was the recipient of the grant. To make that connection back to the board of trustees, at this point would not be appropriate, in my judgment.

Mr. TAUKE. Let me just observe, Mr. Chairman, I am not sure that I will accomplish anything by continuing to hammer this to death, but we do set a fairly bad precedent if we suggest that there is kind of an unknown entity out there that does have responsibility, but the people who run it don't have the responsibility.

In this case, the people who run the entity, it seems to me, were those members of the board of trustees. It appears as if there was a terrible leadership problem and management problem within the national partnership. If there is a leadership and management problem, that is the responsibility of the board.

Now, the board, it occurs to me understood that they were taking money from the Government in order to carry out certain responsibilities, and if they are unable to fulfill those responsibilities, they have two choices: They ought to either, change the management so they can; or, B, stop the expenditure of the money and send it back to the Government. I am not sure that in this instance what all of the legal possibilities might be, but I think that somewhere along the line we should send signals to those who have responsibility, whether they be board members of a nonprofit or a profit organization that they do have some obligation when they receive Federal funds to see that those funds are expended appropriately.

So I guess as you carry on with the activities of the ŎJJDP, that I hope that that is reviewed. I suppose I hope, too, that you take a look at what the potential responsibility of the board in this case might be. Somebody should rattle their cage a little bit is the bottom line.

Thank you, Mr. Chairman.

Mr. KILDEE. Thank you.

In going over the peer review panel worksheets, we notice that one of the peer reviewers in evaluating this group on organizational capability, which in retrospect seems to have been somewhat deficient, before the grant was given, while doing the peer review, out of 15 points, gave 5 points.

Now, that is-I am a teacher. That would be flunking. Is that considered flunking in your agency?

Mr. SPEIRS. I can't tell you-I will say that that was a very low score on that capability. I don't know what the scale was that they were using, but it was obviously a very low score.

Mr. KILDEE. Total points were 15; they got 5. That would be about one-third. In my Latin classes I would have advised the student to take another course. I recognize, Verne, that you came in after the fact and you were not involved-we may want to be calling other witnesses later on to find out what was happening at the time this was given.

I want to go back to what I consider really a moral obligation that goes beyond a legal obligation; that is, to be really careful custodians of taxpayer dollars. I think it is a real moral obligation and I think that those that we bring into Government should have that sense of morality, which goes beyond the sense of legality.

This certainly is in no way direct or indirect criticism of you, because I am aware of the chronology here.

While I have the chance, I would like to say we in Government have an obligation to morally spend the taxpayers' dollars. I think that is a very important thing to do.

I last year returned $47,000 to the Treasury which I did not need to spend. At all times, but particularly in these times of very, very high deficits we should try to have that moral attitude, and again that is not directed at you because I know very well the chronology of these events here.

How extensively did the OJJDP use ASPEN Systems to perform tasks and incur costs associated with the national partnership?

Mr. SPEIRS. ASPEN Systems, Mr. Kildee, was involved earlier in the formative and organizational activities of the partnership, providing technical assistance dating back into May 1984, and up until the time of the grant award, possibly some activities afterwards.

It was responsible for organization of meetings, putting on the meetings, the four constituency groups that we talked about, it worked with those groups and worked with the organization of the meeting in Williamsburg, which seems to be the hallmark of the formation of the partnership and it worked until after the actual awarding of the grant.

Most of its work was from a technical assistance aspect.

Mr. KILDEE. Would you provide us a record of the details of all ASPEN Systems tasks and costs relating to the national partnership, beginning with the January 1985 meeting in Williamsburg?

Let me ask you this question, too. The award to the national partnership was made October 1. It was backdated to August 1 and was terminated on July 1 of the following year.

Let me ask, first, why was it backdated and is that commonly done in awarding grants like this?

Mr. SPEIRS. In this particular case, the reason for backdating, apparently was that there were some preagreed-upon costs. Basically, there were four consultants who eventually became senior vice presidents in the organizational structure and there were some costs related to those individuals. The preagreement was that they would go back to August 1 to cover some of those costs.

I can't say it is common; I have seen it done, where there are allowable expenditures that are directly related to the project. That can be covered if the backdating takes place.

Mr. KILDEE. I would say that whenever one does predate something that one should be well prepared to give compelling reasons why such predating takes place, because that is, I would say, not considered standard operating procedure in dealing again with the taxpayers' dollars.

In conjunction with a question Mr. Tauke asked earlier, of the $1 million, he asked what was it spent for, and it was for, you replied, various types of expenses.

Do you have any breakdown as to the type of expenses? Was it for travel? For meals? For entertainment? Do you have any breakdown available for the committee as to how those expenses occurred?

Mr. SPEIRS. I can give you a breakdown as of the end of June. We are still calculating or the bookkeepers are calculating to the end

of the grant period because there are minor things that need to be cleaned up. As of the end of June, personnel, right at $285,000; fringe benefits, $47,000; travel, $40,000; equipment, $13,000; supplies, $22,000; consulting and contractual fees, almost $190,000; other expenses-and I am not sure what all that includes-about $141,000.

Mr. KILDEE. Other expenses, $141,000?

Mr. SPEIRS. Yes, and taxes, interest, and insurance, et cetera, $10,000 plus, with a total figure of right at almost $750,000.

Mr. KILDEE. The other expenses seems to be the bigger item?

Mr. SPEIRS. Well, outside of your personnel and your consultant, because your personnel is $284,000 and your consultant is $188,000 for a total of $473,000.

Mr. KILDEE. Mr. Tauke.

Mr. TAUKE. In testimony Mr. Keker is offering on the next panel, he suggests that part of the problem with this operation was that the efforts to recruit key, full-time staff came to a standstill presumably at the request of the prospective chairman that was coming aboard any day.

Who was selecting the chairman of the board of this operation? Mr. SPEIRS. I believe that the board of trustees had the final vote on who was going to be chairman-the decision had to go through the board of trustees.

Mr. TAUKE. But who was really out recruiting the chairman?

Mr. SPEIRS. The only person I knew of involved with that was a gentleman by the name of Mr. Baldwin, who was interim chairman of the board of trustees. That is the only person I talked to who talked about a full-time chairman.

Mr. TAUKE. As I read some of the other testimony, one gets the impression that the board was brought together with the assumption that maybe this was an honorary-type operation, that the OJJDP was going to take over the responsibility of setting this up and ensuring that there was management for the national partnership.

Is there any truth to that perspective?

Mr. SPEIRS. I can't say that OJJDP was going to step in and manage the program. I can say that was not an appropriate function and I don't see that in documents that I have.

Mr. TAUKE. There was apparently some fairly famous and wellknown American who was being recruited for this position of prospective chairman. I get the impression that that person was being recruited by the administration, not by the board of trustees of this organization.

Mr. SPEIRS. The only time this individual was mentioned was when I came on in June. My question was where are they and the indication was that this individual had made the decision not to be associated with the partnership.

Mr. TAUKE. What is the OJJDP doing giving a grant to an organization that has no chairman of the board and no president?

Mr. SPEIRS. I think as far as the structure, OJJDP thought it was going to be in place. They had a president of the partnership. They had the formal organization as put together by the partnership.

When you get into the board of trustees or the coordinating committee, I don't know that that was focused on. I think the focus