S. 1120, introduced by Senator Robert Kasten, provides that the Secretary of the Treasury withhold 2 percent of all appropriated funds from a Federal agency until certain conditions are met. Further, every agency, by the start of the fiscal year, must submit to Congress a plan outlining what it intends to do to identify and eliminate that 2 percent in fraud, waste, and abuse. Agencies can apply to have all or part of the 2-percent money released if they are unable to find that amount of waste, fraud, and abuse. Much of the testimony essentially supports the bill, but a representative from the General Accounting Office had reservations about the bill accomplishing its intended objective of reducing fraud, waste, and abuse. It is noted that the only agencies that could not request a release of funds withheld would be those who reported they had saved 2 percent or more. Under these rules, the less fraud, waste, and abuse an agency reports, the greater will be the amount it can request to be restored. Some agencies could begin to look with disfavor on the timely reporting of their internal audit or inspector general organizations which show savings from countering fraud, waste, and abuse, because reported savings will be offset against the 2 percent withheld. A copy of the bill is included.