Greater federal oversight of the national flood insurance program - a controversial shift loudly opposed by Congress as recently as a month Ago - was mandated yesterday by Housing and Urban Development Secretary Patricia Roberts Harris with the support most of the early opponents.
Sources from the Senate and House Banking Committees said yesterday the turnabout was triggered by the bottom line. "We'll be saving $15 million a year it's as simpe as that," one staffer explained.
The Hill aide was referring to the new contract, which is expected to be signed shortly with EDS Federal Corp a Texas firm controlled by millionaire II Ross Perot. During recent bidding on the contract to operate the flood program during 1976, EDS bid $11 million - or $15 million less than the bid by the consortium of 132 insurance companies which currently runs the program.
The consortium, the National Flood Insurer's Association, has operated the program since 1969 for 1.2 million policyholders in flood plain areas. NFIA reportedly has made $2.7 million in profits annually on its contract with HUD.
NFIA operates a so-called Part Aprogram under which it puts up $48 million of capital at risk in addition to administering the program and writing policies.
The Part B program announced yesterday by Harris will mean that the new operator, EDS will be a fiscal agent only with no capital at risk, HUD itself will exert considerably more control over the budget and administration of the program under this setup.
A Senatt Banking Committee source said yesterday that the $15 million discrupancy between the proposed budgets of EDS and NFIA primarily was due to NFIA's expenses for regional processing centers.
A Senate Parking Committee members of NFIA's executive committee, which runs the association, operate the regional processing centers. "There's a certain amount of [WORD ILLEGIBLE] involved, you might say," he said.
House and Senate sources agreed that the strongest critics of HUD's plans to move to a Part B program - Reps. Thomas L. Ashley (D-Ohio), Garry Brown (R-Mich.), Edward P. Boland (D-Mass.) and Lawrence Coughlin (R-Pa.), as well as Sen. William Proxmire (D-Wis.) - now support the HUD decision.
Hearings sceduled next week by the Senate Appropriations Committee into the program may raise questions about NFINs operation of the program during the past 8 years. Hill sources said.
"That wasn't the intent of the hearings, but you can bet that NFIA is now going to find itself on the carpet about these figures," a House staffer noted.