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Mr. Anderson pointed out that, apropos of these management improvements and the generally phenomenal growth in auxiliary activities, the Secretary recently discussed with the Regents the need for a thorough organizational and management review. Such a study might suggest the realignment of auxiliary activities into a consolidated and more professional organization unit. Later in the meeting, Mr. Acheson alluded to this forthcoming study and expressed the hope that the Audit and Review Committee will be kept apprised of major milestones in the process, including the description of areas to be studied, the selection of a consultant, preliminary findings, etc.

Mr. Fawsett discussed with the Committee the draft of the Inspector General's first semi-annual report to the Board of Regents and the Congress. In accordance with the Inspector General legislation, the report will be transmitted to the Secretary before November 1, will contain certain elements required of essentially all Federal Inspectors General, and will become releasable to the public 60 days after it is forwarded to the Congress. As drafted it cites the following significant findings in the last six months: (1) inadequate inventories of especially sensitive and valuable collections, particularly in the larger Smithsonian museums, (2) museum shop losses of inventory and cash at the registers, and (3) incidents of embezzlement of funds. After Mr. Fawsett described other aspects of the draft letter, the Committee observed that this was a good draft, one which is fully responsive to the Inspector General legislation. Mr. Fawsett suggested that the Committee consider the relationships between itself, the Inspector General, and the independent auditors; in discussion it was observed that these relationships should be sensitively maintained in the Smithsonian context and that by no means should the mandate of the Inspector General interpose a barrier to the open communications between these entities. In response to a question from the Committee, Mr. Fawsett stated that the level of personnel in the Office of the Inspector General is adequate for now, though he acknowledged that additional ADP expertise would be particularly beneficial.

Mr. Siegle described the complexities and costs inherent in the renovation of the National Museum of Natural History, given the size of the building (1.3 million square feet), age and monumental qualities of the structure, the presence of asbestos, the precarious condition of its mechanical systems, and the desirability of continuing staff and public activities within the museum with minimum disruption. He reported that after detailed review of five alternative schemes the staff has recommended one which is most cost effective in terms of both the renovation and the long-term needs of the Museum; this alternative calls for $116 million in renovation work and the building of an 80,000 square-foot structure within the East Court of the Museum at an estimated cost of $25 million. The new structure would provide essential swing space for the relocations of staff and collections during renovation and remain an integral addition to the Museum's permanent space. In discussion it was noted that this work accounts for a major proportion of the Institution's backlog of repair and renovation projects; while it is expensive, the cost of not performing the tasks on this invaluable building would be unthinkable. Following the conclusion of the Committee's meeting, Mr. Siegle led the members on a tour of mechanical rooms, showing the condition of electrical switchgear, and the East Court which now houses the chiller plant for the building.