The government spent $250 million and 5,800 staff years in 1984 to identify potential areas of waste, fraud and abuse -- most of which had been identified previously through routine measures, according to the President's Council on Management Improvement.

Each potential target of waste, fraud and abuse cost more than $1 million to identify and generated "mountains of paper work," council vice chairman Gerald R. Riso told a House Government Operations subcommittee yesterday.

"When I saw the numbers I was appalled," Riso said in an interview, "but clearly, upon reflection, some very positive things came out of the process that were not immediately apparent."

The effort began in 1982 when Congress passed the Federal Managers' Financial Integrity Act to identify procedures and programs susceptible to abuse. The Office of Management and Budget issued 89 pages of guidelines for implementation that generated a "high pitch" of complaints, Riso said.

"People were questioning whether we had created another federal paper mill, whether the benefits outweighed the costs, and whether we were attempting to make accountants out of everyone," he said.

The council, made up of top-level officials in 23 major departments and agencies, concluded that implementation in 1984 took 1.2 million staff days and 1.6 million pieces of paper -- "approximately 13 original pages per minute, 780 per hour, or 6,240 per working day." The staff required "approximates the size of the GAO [General Accounting Office] and is larger than the Office of Personnel Management and many federal bureaus."

Forty-two percent, 231, of the areas vulnerable to abuse eventually reported to the president were identified through the laborious OMB process.

"The other 58 percent were found through audits, management studies and other conventional processes," Riso said. "In addition, nine inspectors general . . . reported they had prior knowledge of all material weaknesses [vulnerable areas] reported by their agencies, while another six reported knowing at least 60 percent of them."

The National Aeronautics and Space Administration reported that it did not have a single vulnerable area, according to Joseph R. Wright Jr., OMB deputy director. The Department of Agriculture reported 385.

In testimony before the committee, Comptroller General Charles A. Bowsher cited "material weaknesses" remaining at several agencies:

*"Flaws in the armed services' management of its inventories of explosives and ammunition have resulted in untold waste, loss and theft."

*"The Federal Aviation Administration has not maintained records of what airlines it has inspected, what types of inspections it performed, or what it found. Consequently, the agency cannot say with assurance whether airlines are complying with safety regulations."

*"Massive amounts of funds were allegedly diverted, misused or transferred out of the Philippines, highlighting longstanding concerns over the adequacy of controls governing economic assistance to foreign countries."

Wright told the committee that the OMB would revise its guidelines to "streamline the process." Committee Chairman Jack Brooks cautioned, however, that "while we all want to avoid unnecessary paper work" in implementing the act, every agency must evaluate its management controls and test them appropriately.

OMB spokesman Edwin L. Dale Jr. said many agencies had managed to implement the law without "excessive paper work."

One congressional aide said that the figures cited by the council are too high because they represent "start-up costs" and do not reflect management improvements made as the OMB regulations were implemented.

Riso, assistant Interior secretary for policy, budget and administration as well as a council official, said it is "legitimate to worry about waste, fraud and abuse, but there is no question we can do it in an easier manner, less expensively."

"We have been substituting a paper process for judgment," he said.