[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]


 
 THE PRESIDENT'S MANAGEMENT AGENDA: GETTING AGENCIES FROM RED TO GREEN
=======================================================================

                                HEARING

                               before the

                 SUBCOMMITTEE ON GOVERNMENT EFFICIENCY,
                        FINANCIAL MANAGEMENT AND
                      INTERGOVERNMENTAL RELATIONS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 15, 2002

                               __________

                           Serial No. 107-119

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform







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                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       MAJOR R. OWENS, New York
ILEANA ROS-LEHTINEN, Florida         EDOLPHUS TOWNS, New York
JOHN M. McHUGH, New York             PAUL E. KANJORSKI, Pennsylvania
STEPHEN HORN, California             PATSY T. MINK, Hawaii
JOHN L. MICA, Florida                CAROLYN B. MALONEY, New York
THOMAS M. DAVIS, Virginia            ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
BOB BARR, Georgia                    DENNIS J. KUCINICH, Ohio
DAN MILLER, Florida                  ROD R. BLAGOJEVICH, Illinois
DOUG OSE, California                 DANNY K. DAVIS, Illinois
RON LEWIS, Kentucky                  JOHN F. TIERNEY, Massachusetts
JO ANN DAVIS, Virginia               JIM TURNER, Texas
TODD RUSSELL PLATTS, Pennsylvania    THOMAS H. ALLEN, Maine
DAVE WELDON, Florida                 JANICE D. SCHAKOWSKY, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
ADAM H. PUTNAM, Florida              DIANE E. WATSON, California
C.L. ``BUTCH'' OTTER, Idaho          STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia                      ------
JOHN J. DUNCAN, Jr., Tennessee       BERNARD SANDERS, Vermont 
------ ------                            (Independent)


                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
                     James C. Wilson, Chief Counsel
                     Robert A. Briggs, Chief Clerk
                 Phil Schiliro, Minority Staff Director

    Subcommittee on Government Efficiency, Financial Management and 
                      Intergovernmental Relations

                   STEPHEN HORN, California, Chairman
RON LEWIS, Kentucky                  JANICE D. SCHAKOWSKY, Illinois
DAN MILLER, Florida                  MAJOR R. OWENS, New York
DOUG OSE, California                 PAUL E. KANJORSKI, Pennsylvania
ADAM H. PUTNAM, Florida              CAROLYN B. MALONEY, New York

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
          J. Russell George, Staff Director and Chief Counsel
                 Earl Pierce, Professional Staff Member
                        Justin Paulhamus, Clerk
           David McMillen, Minority Professional Staff Member







                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on February 15, 2002................................     1
Statement of:
    Everson, Mark W., Controller, Office of Federal Financial 
      Management, Office of Management and Budget; J. Christopher 
      Mihm, Director, Strategic Issues, U.S. General Accounting 
      Office; and Gaston L. Gianni, Jr., inspector general, 
      Federal Deposit Insurance Corp., vice chair, President's 
      Council on Integrity and Efficiency........................     7
    Sessions, Hon. Pete, a Representative in Congress from the 
      State of Texas.............................................     2
Letters, statements, etc., submitted for the record by:
    Everson, Mark W., Controller, Office of Federal Financial 
      Management, Office of Management and Budget, prepared 
      statement of...............................................    10
    Gianni, Gaston L., Jr., inspector general, Federal Deposit 
      Insurance Corp., vice chair, President's Council on 
      Integrity and Efficiency, prepared statement of............    43
    Mihm, J. Christopher, Director, Strategic Issues, U.S. 
      General Accounting Office, prepared statement of...........    27
    Sessions, Hon. Pete, a Representative in Congress from the 
      State of Texas, prepared statement of......................     5


 THE PRESIDENT'S MANAGEMENT AGENDA: GETTING AGENCIES FROM RED TO GREEN

                              ----------                              


                       FRIDAY, FEBRUARY 15, 2002

                  House of Representatives,
  Subcommittee on Government Efficiency, Financial 
        Management and Intergovernmental Relations,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:30 a.m., in 
room 2154, Rayburn House Office Building, Hon. Stephen Horn 
(chairman of the subcommittee) presiding.
    Present: Representatives Horn.
    Staff present: J. Russell George, staff director and chief 
counsel; Bonnie Heald, deputy staff director; Henry Wray, 
senior counsel; Earl Pierce, professional staff member; Justin 
Paulhhamus, clerk; Michael Sazonov, intern; David McMillen, 
minority professional staff member; and Jean Gosa, minority 
clerk.
    Mr. Horn. A quorum being present, the Subcommittee on 
Government Efficiency, Financial Management and 
Intergovernmental Relations will come to order.
    Improving the performance of the Federal Government is 
central to the jurisdiction of this subcommittee. Making the 
Federal Government work more efficiently and effectively has 
taken on renewed importance in the wake of September 11th.
    The Federal Government suffers from a host of seemingly 
intractable management problems that undermine its ability to 
deliver the performance that American taxpayers expect and 
deserve. These problems affect virtually every area of the 
Federal Government. They include critical computer security 
weaknesses, pervasive financial management woes, and the 
inability to demonstrate what most Federal programs accomplish.
    As a subcommittee chairman, I have spent the last 7 years 
examining these problems. What I find most frustrating is that 
the problems do not need to persist. For the most part, solving 
them does not require new laws or major infusions of money; it 
does require strong leadership at the highest levels of the 
government.
    Such leadership must be coupled with sustained commitment 
to focus on the problem and to hold people accountable until 
the job is done. President Bush and his administration have 
demonstrated an unprecedented commitment toward solving these 
deeply ingrained governmentwide problems.
    The President's management agenda, which was unveiled last 
August, targets five major areas that need well-focused 
attention: hiring and retaining a skilled and motivated Federal 
workforce; eliminating the government's pervasive inability to 
properly manage its money; ensuring that Federal programs 
achieve effective results from their massive investment of tax 
dollars; expanding electronic government; and the last of the 
five areas, increasing public-private competition for 
commercial types of Federal functions.
    The President's new budget contains a scorecard showing how 
Federal agencies rate in each of these five areas. The 
scorecard uses a traffic light approach: green for success, 
yellow for mixed results, and red for unsatisfactory. Not 
surprisingly, the scorecard is ablaze in red.
    The budget also includes a roadmap of specific goals to 
help agencies move from red to green.
    The Office of Management and Budget did the scoring. We 
understand that the President personally discussed the scores 
with agency leaders during their budget reviews. The Office of 
Management and Budget will evaluate agencies every 6 months on 
their progress toward improving their performance in each of 
the five areas. A new round of scores is to be in each part of 
the budget in the future.
    In addition to the management scorecard, the President's 
budget includes specific assessments of the effectiveness of 
selected agency programs and activities. Poor performers do not 
like scorecards. However, after using scorecards extensively as 
an oversight tool, I can attest they work. They focus attention 
on the problem, they provide a framework for assessing 
progress, and they promote accountability.
    The budget scorecard follows the approach the subcommittee 
used to focus the executive branch and agency attention on the 
Y2K computer challenge. With sustained attention, the scorecard 
can have similar success in resolving these important 
governmentwide problems.
    I welcome today's witnesses, and I look forward to working 
with each of you to ensure the success of the President's 
management improvement agenda.
    I am delighted to have as one of our Members today the 
gentleman from Texas, Mr. Pete Sessions, who is the head--and 
began it--of the Results Caucus. He has Members from both 
parties in the House of Representatives, and it is wonderful to 
have him here again. He was in this work for many years, and 
then he went to the Rules Committee.
    I am delighted to have Pete Sessions here, and if you would 
like to give an opening statement, please do. I have read it, 
so it is good.

 STATEMENT OF HON. PETE SESSIONS, A REPRESENTATIVE IN CONGRESS 
                    FROM THE STATE OF TEXAS

    Mr. Sessions. Mr. Chairman, thank you so much. It is a 
great honor not only to be with you today, but a cadre of 
people who are assembled today for the purpose of not only 
having a better government and living up to that, but also for 
accountability within the U.S. Government.
    It is no surprise to me that the people who are here today 
are those that have been around for quite some time and have 
watched not only your leadership but your skill at making sure, 
Mr. Chairman, that this issue is in the forefront of not only 
the Members of Congress' minds, but also the administration.
    This administration, I believe, has a focus not only upon 
the things that this committee and this subcommittee have been 
attempting to accomplish for quite some time, but they came 
into the job with the knowledge that for our government to work 
effectively, it is not about throwing money in it; it is about 
throwing results and accountability, which will allow us the 
chance to have a government which, in the long run, works best 
when we need it.
    As I have stated many times, Mr. Chairman, the goal of all 
of this is for us to give every single dollar to the government 
that it needs, but not a penny more. And when we go about 
marrying up accountability with the budget process, then we 
will find that accountability, in fact, happens.
    Mr. Chairman, I do have an opening statement that I would 
like to ask unanimous consent to enter into the record.
    Mr. Horn. Without objection.
    Mr. Sessions. I would like to make several comments this 
morning about the nature of my participation.
    OMB Director Mitch Daniels said that the budget should not 
be merely how much but how well it accomplishes its goals. 
Results are now going to be the focal point of the Bush 
administration. I testify today in support of this portion of 
the administration's budget that offers a reform-based plan to 
ensure accountability to taxpayers.
    Now, more than ever, this government needs money to be 
spent properly. Now, more than ever, we need to make sure that 
the focus of the needs for that money go properly, and as we 
have seen demonstrated as a result of September 11th, the need 
stretches all across government. It is not just about FEMA, it 
is not just about welfare or assistance programs that we have, 
it is not just about making sure that our military has the 
things that they need to combat terrorism, it is not just about 
a sharing of information to ensure that our intelligence 
community is working properly, it is about making sure that all 
of these are done effectively and efficiently so that we are 
prepared to avoid the next problem; and certainly inefficiency 
by itself breeds inaction and the inability to be prepared.
    Mr. Chairman, I am sure you are aware of this, but there is 
a new example of this Congress taking the initiative on behalf 
of appropriators. In the House Appropriations Transportation 
Subcommittee, Hal Rogers has already made sure that he became 
engaged in this when he cut the bonus pool for fiscal year 2002 
at the Federal Aviation Administration by half and the bonus 
money of the Department of Transportation by one-seventh 
because these agencies failed to meet their target under the 
1993 Government Performance Results Act.
    Mr. Chairman, this is how you marry up with getting 
results. If we hold people accountable, if we give them the 
things they need and they do not measure up to what we have 
asked them to do and what they have committed to do, in fact 
there should be something at risk, and certainly a bonus pool 
is a quick way to do that.
    Mr. Chairman, as you know, our President has talked many 
times about the need to make sure that government is efficient; 
but in particular, I believe this administration has gone as 
far--or what I would say, further than perhaps what the roadmap 
would have talked about.
    Today we are going to hear a great deal of testimony about 
what is called the red light, yellow light, green light. And I 
believe that when you come into a job, any job, you should do 
an evaluation of where you are to know where you are going to 
head.
    In particular, I believe what is called the executive 
branch management scorecard is something that will offer us not 
just a red light, green light, or yellow light as to their 
total success, but rather to break it down into the categories 
that are necessary: human capital, competitive sourcing, 
financial management, e-Government, and performance and budget 
integration.
    These are the areas which I believe President Bush has 
focused on, and he will direct each of his Cabinet-level 
officers, and in fact the entire government, to make sure that 
it is not just a matter of living within the budget, it is not 
just a matter of looking at one part of the business, but 
rather a bold initiative and a plan which will offer his 
administration the ability to take resources, the meager 
resources, the humble resources, that come from the taxpayers, 
and make sure they are turned into action.
    I would like to quote the President because, by and large, 
this is what the President has said as part of the initiative. 
President Bush said, ``It is a bold plan, and it is matched by 
a bold agenda for government reform.''
    Mr. Chairman, for the first time in a long time, I can tell 
you that I believe that the Congress of the United States, much 
of it through your leadership and the leadership of Chairman 
Dan Burton, has offered an opportunity for this administration 
to work hand-in-hand so that this administration and every 
single government employee will recognize that we value their 
jobs, we value the time that they spend; but more importantly, 
that their time adds up to be a value-add for the taxpayer and 
for the effort of the American people.
    I am one person who believes that America's greatest days 
lie in our future; I do not believe they are behind us. But if 
we do not transform effectively and efficiently those things 
that we have, we will find that people will look to other 
sources, other than the government, because it will be 
inefficient and sooner or later become corrupt.
    I believe that our President and the people of this 
administration, as well as your leadership, offer a vision of 
hope and a real chance to say that if we continue down the path 
we are going, that when it is our time to leave and the 
President's time to leave, that we can say we did a job that 
was well done. I think that is the ultimate compliment and an 
ultimate goal which we should aim for.
    Thank you for allowing me to be here today.
    Mr. Horn. Without objection, we want you here and your 
statement.
    Mr. Sessions. Thank you. I want you to be aware that your 
leadership makes a huge difference, and I appreciate you very 
much.
    [The prepared statement of Hon. Pete Sessions follows:]
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    Mr. Horn. Thank you.
    I want to echo what you previsouly said and say that Hal 
Rogers did an outstanding job. I have never seen an 
appropriator or any authorizer--and when he got all of the 
airlines and different security groups these last few months, 
he brought them in at 10 a.m. and said, ``We are not letting 
you out of here until 5 o'clock, and we are going to find out 
what happens, and we want you to come back a week or so 
later.'' He did, and he went right down the line.
    I told him, ``I wish every authorizer and appropriator 
would do exactly what you are doing,'' because we finally got 
progress. People had to talk to each other. So that was very 
worthwhile, and he ought to get a statue somewhere around this 
Capitol.
    Now we are going to start with our fine witnesses here, and 
we, as you know, are an investigative committee, so we give the 
oath to our guests.
    If you will raise your right hands, and any of your 
assistants that are going to whisper in your ear, I want them 
under oath, too.
    [Witnesses sworn.]
    Mr. Horn. The clerk will note that all the witnesses 
affirmed the oath.
    Now we will begin with the Honorable Mark W. Everson, 
Controller, Office of Federal Financial Management, Office of 
Management and Budget. Mr. Everson has a very fine record, and 
we are glad to have him before us. This is exactly what is 
needed.
    The controller role in the Office of Federal Financial 
Management within OMB is a statutory office, and the work he 
can do will make a real difference in the executive branch.
    He is also vice chairman of the President's Management 
Council, and prior to coming to the Bush administration in 
August, Mr. Everson served as group vice president, Finance, of 
S.C. International Services, Inc., which is a $2-billion, 
privately owned, Dallas-based food services company with 
leading market positions in both airline catering and home 
meals solutions.
    If you had stayed there and turned that into security, you 
would probably be a billionaire. But that is one of our major 
problems. So we are delighted to have you. If you could, we 
have read your text, and if you could summarize it, we would 
appreciate it. A lot of people have airplane trips and whatnot. 
So please proceed.

 STATEMENTS OF MARK W. EVERSON, CONTROLLER, OFFICE OF FEDERAL 
   FINANCIAL MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET; J. 
  CHRISTOPHER MIHM, DIRECTOR, STRATEGIC ISSUES, U.S. GENERAL 
    ACCOUNTING OFFICE; AND GASTON L. GIANNI, JR., INSPECTOR 
     GENERAL, FEDERAL DEPOSIT INSURANCE CORP., VICE CHAIR, 
        PRESIDENT'S COUNCIL ON INTEGRITY AND EFFICIENCY

    Mr. Everson. Certainly. Thank you, Mr. Chairman, 
Congressman Sessions. I would note, I just learned since my 
moving up here, he would have been my Congressman, I gather, 
shortly, with the changes in Texas. But thank you both for your 
interest in this subject.
    This is my first time before the Congress since I was 
confirmed, and I am delighted that it is on this subject, 
because your leadership, Mr. Chairman, on scorecarding, on 
accountability, is something that we are trying to emulate and 
further in the work that we are doing.
    I will cover two principal subjects in my brief remarks, 
and one third, on the particular initiative that I think merits 
some reflection.
    You both have well articulated the President's management 
agenda. There are five governmentwide initiatives that were 
selected to be focused upon because they are pervasive, they 
cut across all of the departments in terms of a lot of work is 
left to be done, no matter where you turn.
    That does not mean that we are not focusing on additional 
areas. As you know, there are nine additional initiatives that 
are department-specific that we are looking at, that the 
President is tracking as well. But the bulk of the commentary 
and the effort in the management scorecard that you have 
mentioned pertains to the five. They are the strategic 
management of human capital, competitive sourcing and improving 
financial management, expanding electronic government, and also 
budget and performance integration.
    The scorecard itself, as you indicated--and we have it over 
here--shows a lot of very poor marks. Eighty-five percent of 
the initial evaluations which we conducted as of the end of 
September 2001, this last fiscal year, were red. That means 
that against standards that we articulated, developed, and 
vetted with outsiders--financial management, for instance, we 
took them to the Comptroller General, to the Secretary of the 
Treasury, my boss, Mitch Daniels--it was not just an OMB, 
effort, though--to make sure that we did good, strong standards 
in each area.
    The way the scorecard works, to get the green you have to 
meet a whole series of what we call ``core criteria'' for well-
managed enterprises, a private-sector-like standard, if you 
will, applied in the government context. But on the other hand, 
you are red if you have any one of a number of serious flaws.
    Again, in financial management, my area, an example of that 
would be if the auditor is unable to express an opinion on your 
financial statements. So, unfortunately, in 85 percent of these 
measured categories, the government agencies and departments 
are red as of the end of the last fiscal year.
    I think there is a lot of opportunity for progress. We will 
be tracking the progress side. Agencies are currently 
finalizing their plans to get themselves out of the ditch, if 
you will. That is an active and ongoing discussion between OMB 
and also OPM, which is the leader in human capital, that 
initiative, and the departments and agencies.
    The second subject I would very briefly touch on is what 
you talked about, performance and results. You will notice as 
you go through this document--and I really do commend it to 
you, a whole new approach--we are trying to tie together 
performance of programs.
    As you know, GPRA had six principal objectives. One of them 
was certainly performance. This document for the first time 
goes through and highlights major programs, and not only those 
by any means, and takes a shot at an honest evaluation of the 
effectiveness of the program: Is the money getting the desired 
outcome that the taxpayer can expect?
    It is a first effort, it has a long way to go, and we 
welcome the input of the committee and other interested parties 
in helping us develop a performance budget-based concept.
    I want to close with just one particular--a plug for one 
particular initiative. It is in the accounting area.
    The budget has made a change in the accounting for certain 
of the retirement costs. There was an inconsistency in law. The 
bulk of the retirement costs under the first program in the 
military retirement system is already charged directly to 
programs, but some of the retirement costs for the older 
system, the predecessor system, were still held centrally. We 
have taken a first step, which was conceptually called for by 
the AIGA, the Association of Government Accountants, and 
endorsed in principle by the Joint Financial Management 
Improvement Program, which again includes the Secretary of the 
Treasury and the Comptroller General, to change this 
presentation so all the retirement costs for employees will 
actually be charged in the budget against programs.
    We think that is greater transparency, greater 
accountability, and an important first step in trying to marry 
up dollars and results.
    Those are sort of the three points I would like to 
emphasize this morning, Mr. Chairman.
    [The prepared statement of Mr. Everson follows:]
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    Mr. Horn. I am glad you mentioned that. I have asked the 
staff to take a look at the accounting practices of various 
regulatory authorities within the executive branch to see if we 
are making some mistakes here. You are apparently on top of 
that, and I am glad to hear about that.
    Mr. Everson. Thank you.
    Mr. Horn. I might say, since all you Dallas people are 
here, there is one important Dallas person that wanted to come 
here very badly, but he had a longtime commitment. But he has 
been with us from the very beginning on the GPRA, so-called, 
the performance and results, and that is the majority leader of 
the House of Representatives, Mr. Armey. He is retiring this 
year and I am retiring this year, and we would like to get a 
lot of things done before all these things happen.
    But he has been, from the very beginning, fighting for 
performance and results, so we are sorry he is not with us 
today. But Dallas seems to be doing good.
    Mr. Sessions. I will second that, Mr. Chairman.
    Mr. Horn. Gee, I thought you would. I have been in your 
fine city.
    Next is the gentleman from the General Accounting Office, 
our right arm, and that is Christopher Mihm, the Director for 
Strategic Issues in the U.S. General Accounting Office.
    For those that do not know, that office has been in the 
legislative branch since 1921, and the head of it is the 
Comptroller General of the United States. They do excellent 
work, and at every hearing we get into we try to give them a 6-
month or 4-month lead, and we always like to hear what they 
have to say on the issue at hand.
    Mr. Mihm, welcome here again.
    Mr. Mihm. Thank you, Mr. Chairman and Mr. Sessions. Once 
again, it is always a great honor to appear before you. Of 
course, I will take your guidance and just hit the highlights 
of my written statement.
    My major point this morning is that the administration's 
plan to use the scorecard to highlight the agencies' progress 
in achieving the goals embodied in the management agenda is a 
very promising first step. As we have seen by your example, Mr. 
Chairman, grading agencies on their progress can be an 
effective incentive to improve.
    Mr. Sessions, as your efforts in leading the Results Caucus 
have underscored, many of the challenges agencies face are 
longstanding and complex, and will require some inspired and 
sustained attention. Therefore, as this subcommittee has 
emphasized by the topic of this hearing, the value of the 
scorecard is not in the scoring, but in the degree to which the 
scores lead to demonstrable improvements.
    As you mentioned in your opening statement, Mr. Chairman, 
what we need now is leadership, hard work, and accountability 
until the job is done. With that in mind, there are three 
points that I just want to touch on very briefly.
    First, the President's five governmentwide initiatives 
cannot be successfully addressed in an isolated or piecemeal 
fashion, separate from one another or from other management 
challenges and in high-risk areas facing the agencies. The 
administration clearly appreciates this, as their budget 
documents demonstrate.
    We believe that the initiatives must be addressed in an 
integrated way to ensure that they drive a broader 
transformation of cultures within Federal agencies. At its 
essence, this cultural transformation must seek to have Federal 
agencies become less hierarchical, less process-oriented, less 
stovepiped and inwardly focused, and more flat, partnerial, 
results-oriented, integrated, and externally focused.
    This integrated thinking also needs to be applied to 
programs and mission areas, as you pointed out, Mr. Sessions, 
in your comments about government post-September 11th.
    My second point this morning is that while agencies will 
have to undertake the bulk of the effort in addressing their 
respective management weaknesses, the improvements needed have 
important implications for the central management agencies as 
well. OMB, OPM, the General Services Administration, the 
Department of the Treasury will need to remain actively engaged 
throughout the planning and implementation of the President's 
initiatives in order to ensure that the agencies bring to bear 
the resources and capabilities they need to make real progress.
    The central management agencies, therefore, need to ensure 
that they, too, have the capabilities in place to support and 
guide efforts. These will be critical to help agencies identify 
root causes of their management challenges, pinpointing 
specific actions, providing agencies with tools and additional 
support, including targeted incentives where needed, to address 
shortcomings and assist agencies in monitoring and reporting 
progress.
    Third and finally, in implementing the President's 
management agenda, it will be important to ensure that 
improvement plans and status information are made available so 
that Congress, other interested parties, and the public can 
help identify solutions and assess progress.
    It can only be through the continued attention of Congress, 
the administration and Federal agencies that progress can be 
sustained and, more importantly, accelerated. Transparency, 
therefore, will be crucial to making lasting and effective 
changes.
    In summary, Mr. Chairman and Mr. Sessions, highlighting 
attention to longstanding management weaknesses through the 
President's management agenda and the executive branch 
management scorecards are certainly important steps in the 
right direction.
    At the same time, it is well recognized that consistent 
progress in implementing these initiatives will be key to 
making real improvements in performance and management across 
the Federal Government.
    We are pleased that this subcommittee and others in 
Congress have turned to GAO for assistance on Federal 
management issues, and of course, we look forward to continuing 
to assist Congress and agencies in this regard, and would 
certainly be pleased to provide any additional assistance that 
you may request.
    I would be happy to take any questions that you may have.
    Mr. Horn. Well, thank you very much.
    [The prepared statement of Mr. Mihm follows:]
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    Mr. Horn. We have one more witness, and then we will go to 
questions.
    The Honorable Gaston L. Gianni is Inspector General, 
Federal Deposit Insurance Corp., vice chair of the President's 
Council on Integrity and Efficiency. We are glad to have you 
here. Thank you.
    Mr. Gianni. Thank you, Mr. Chairman, Mr. Sessions. It is a 
pleasure to be here today to discuss the President's management 
agenda and the role of the Inspectors General community in 
accomplishing this agenda.
    Specifically, this morning, I would like to share with you 
some information about the community's expertise, the views of 
the agenda itself, and then our role in overseeing, as well as 
facilitating, the accomplishments and progress under this.
    Almost 24 years ago, the Congress created the IG concept 
and developed and enacted it into law. While the act has been 
amended several times over the years and added new IGs and 
clarified reporting responsibilities, the basic tenets of the 
act's intended mission have remained constant and strong.
    The role of the IG is to protect the integrity of 
government programs through traditional audits and other 
reviews; improvement of program effectiveness; and preventing 
fraud, waste, and abuse.
    The Offices of Inspector General bring to bear a 
longstanding historical perspective on the challenges and 
opportunities facing our government. Offices of Inspector 
General offer stability and broad-based knowledge and expertise 
on individual agencies and the government as a whole.
    In addition to our agency-specific reports, each OIG 
summarizes its report semiannually to the Congress. The 
community recently has provided assistance to the House 
Committee on Government Reform, and played a significant role 
in advancing the implementation of the Government's Performance 
and Results Act.
    Many Offices of Inspector General have been providing 
independent assessments, as well as insights and advances, to 
help promote this important legislation. We envision the 
implementation of the management agenda to be quite similar to 
the GPRA effort, and because of past contributions, believe we 
are well qualified to offer our assistance.
    We recently put together a strategic framework which lays 
out our mission and operations for the next 3 years, which will 
try to be providing support to our agencies and leadership in 
government. Our annual report to the President last year 
detailed the pivotal role IGs have played in the area of 
information technology, GPRA, financial management, and program 
integrity. Through our results, we have uncovered potential 
savings of $9.5 billion, and identified $5.5 billion as 
possible recoveries.
    For the past 3 years, we have been summarizing the 
management challenges facing our agencies and submitting that 
report to the Congress. We are prepared to support and help the 
administration make progress on our agencies achieving results 
in the five areas.
    Members of the IG community believe that major management 
challenges are not only for their respective entities, but also 
within their own organizations. The theme of our recent Journal 
on Public Integrity emphasizes the challenges for the 
government in the area of human capital. In the March 2001 
management's challenges summary, 18 of 27 IGs cited human 
capital as their top agency challenge, compared to 7 in the 
previous year. Many Offices of Inspector General are addressing 
this.
    In the competitive sourcing area, as the Federal Government 
increases its competitive resource programs, oversight of 
agency contract activities will take on added importance. As a 
note of caution, the Federal Government has been lax in its 
contracting oversight. Our annual report to the President lists 
example after example of poor oversight. More than 27 IGs 
identified this as a major challenge.
    We note that appropriate internal controls and oversight in 
these areas must be in place to ensure that the goods and 
services are not only meeting the needs of the government and 
the public, but that they are provided in the most cost-
effective manner.
    In the financial management area, since the 1990's, we have 
been working with our CFOs to help them get to a clean opinion. 
Last year, 18 of the 28 CFOs reached a clean opinion status. We 
are continuing to work with our CFOs and to assist them to move 
to the green.
    One area of caution: As the administration pushes and has 
setup a goal for more timely financial statements, this is 
going to put on an added burden and challenge for the 
government agencies. We are working with the CFOs to think 
through these challenges and how this goal might be 
accomplished.
    In expanding electronic government, Offices of Inspector 
General have a substantial amount of expertise in this area. 
Appropriate controls, again, need to be in place to safeguard 
sensitive data and critical systems of our government. All 27 
IGs have identified this as a major challenge.
    We have helped the Congress with both the GPRA as well as 
the Y2K, and we are positioned to help again to see that the 
management agendas are initiated.
    In the area of budget and performance, the IG community 
continues to consider GPRA implementation a significant agency 
challenge. Last year, we provided to Chairman Burton an 
analysis of each of our agency's management objectives under 
GPRA, and whether those goals were quantifiable and how they 
might better achieve them.
    Overall, we believe the initiatives contained in the 
President's management agenda are a promising first step. 
Having said that, success of these initiatives can only be 
achieved through updated, integrated information systems. As 
such, agencies will need to invest in updating their financial 
and program information systems and ensure that these systems 
are developed and approved in accordance with standard system 
architect programs.
    We are in a position to help. We stand ready. Our strategic 
framework tasks us to be ready and responsive to our agencies 
and their needs. We are working with the CFO community as it 
addresses the erroneous payments situation.
    Individually, IGs build relationships with their agency 
heads and strive to be influential forces in identifying 
vulnerabilities and facilitating excellence. Simply put, our 
job is to oversee operations and recommend ways to make them 
better. We view ourselves as agents of positive change. An IG 
is clearly in a position to oversee the progress an agency 
makes in moving from red to green on the scorecard, and to 
offer them insights on opportunities to further advance the 
agency's progress.
    Depending on the need of the individual agency, an OIG can 
offer feedback on the scorecard measures and verify and 
validate the measures and processes. An OIG can target its 
audits to advance the agenda that would be of the greatest help 
to its agencies.
    While challenge and vulnerability and risks have affected 
the focus of Offices of Inspector General's work and priorities 
over the year, we have adapted to these challenges and these 
changes and remain relevant and on point. I believe that the 
management agenda offers us another opportunity to align our 
forces.
    While I cannot speak for each IG or how they will approach 
their work, I am confident that each IG is mindful of the 
importance of the management agenda, and will develop 
strategies to provide the most valuable input to their 
agencies.
    In summary, IGs were given the authority to be independent 
voices of economic efficiency and effectiveness within the 
Federal Government. We take this authority and responsibility 
very seriously as we are committed to promoting integrity, 
accountability, and transparency within our respective 
agencies.
    As always, Mr. Chairman, we appreciate your support of the 
IG mission and the community, and look forward to a continuing 
dialog to maintain a constructive relationship with you and the 
committee.
    Mr. Horn. Thank you very much. That is a very thorough 
statement.
    [The prepared statement of Mr. Gianni follows:]
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    Mr. Horn. We'll now go to questions. The questioning will 
be by my colleague, the gentleman from Texas, Mr. Sessions.
    Mr. Sessions. Thank you, Mr. Chairman. I will remind this 
group, and I hate to do this, I do have a plane to catch. 
Unfortunately or fortunately, I chose to spend the night, but 
my son has a campout this afternoon, and I promised to help him 
pack. Boy, that road to being an Eagle Scout is a long one, and 
it does take parents to be involved.
    My questions have now been provided to Mr. Everson. I would 
like to run through those very quickly. I am going to leave, 
but will be interested and will read this testimony.
    First of all, I would like to say that when you walked in 
today, you were preceded by a staff that is second to none. The 
opportunity that you have to come from Dallas, TX, from the 
private sector is an incredible opportunity for the President 
of the United States to take your expertise directly from where 
efficiency and the models of success come from.
    But your ability to transform the laws that have been 
passed, and the intent of this Congress for the last few years, 
the flavor and spirit of which we are attempting to accomplish, 
is embodied directly by each of your staff members. I know many 
of them personally and have worked with them, and they are men 
and women of high caliber.
    It is my hope that when we have some time in the near 
future, I will have a chance to sit down with you, now that you 
have gotten your feet on the ground.
    The essence of my three questions that I would like to have 
you at least ponder--and if you would like to provide written 
feedback later, I'm sure the chairman would be pleased to 
include that in the record.
    Mr. Horn. Without objection.
    Mr. Sessions. Thank you, Mr. Chairman.
    They are boiled down to three points.
    No. 1, I would like to know what your evaluation schedule 
is on yellow, green, and red-light. What do I mean by this? You 
are taking this as an initiative that does not override the 
laws of the U.S. Congress. This is the Bush administration's 
plan about how they are going to offer their own initiative to 
get them on track to then comply with GPRA and other laws that 
the Congress has mandated.
    But I am interested in hearing from you something that we 
then will put as a marker in our file to get back with you, to 
find out what you have done. We do not want you to trudge along 
this path without two things, No. 1, a mark that you have set. 
You are here today establishing not only a precedent about 
where the Bush administration will be, but also a roadmap for 
us. We don't want you to trudge a mile in your own sandals, we 
want to help you along, so that evaluation period would help 
us.
    No. 2, I am interested in the feedback to GAO that is the 
arm of the U.S. Congress on being held accountable on your 
plan. How should we look at you? How are we going to evaluate 
you? It is one thing for you to come up here and to talk about 
the administration, but I believe we should hold you 
accountable for your words and your expectations, also.
    I believe Mr. Mihm is very astute at not only carefully 
understanding this, but establishing something where we might 
have a working relationship.
    I would like for you, too, to establish what those goals 
and objectives will be, because you will be before us, 
hopefully, many times to offer that. And unfortunately, in this 
offer and evaluation, Mr. Mihm is our scorekeeper. I trust him, 
and I think it is fair to establish that goal up front: once 
again, feedback to the GAO on how you want to be held 
accountable on your plan, the President's plan.
    Last, for quite some time I have been concerned about the 
integration of Inspectors General into the overall management 
of an organization. There are certainly, over the years, 
opportunities where there are success models, and there are 
opportunities where there have been unsuccessful role models.
    I am interested in hearing from you, even if it is in 
written testimony to follow this up, on your plan, the 
administration's plan, about the use of IGs. Their role which 
is as defined in law is something you will have to deal with. I 
am interested in an open and honest evaluation, how they can 
become value-added in a new role, not in a different way, but 
in a new way for them to become more integrated, so that this 
administration can accomplish those goals.
    I will tell you that the three of you who are on this panel 
before us are honest people who are not only well-intended, but 
who I expect to be very successful. So I say this with a sense 
of hope and optimism, not with a sense of reluctance or a 
challenge that cannot be met.
    But I encourage you to make sure, Mr. Everson, that we are 
hearing from you as the President's lead initiative person on 
how we are going to hold you not only accountable, but to work 
through this.
    And last, please tell us what we can do to help you out, 
because it would be insincere of me to say ``Go get them'' 
without me saying that we are here to help, also.
    With that said, Mr. Chairman, unfortunately I am going to 
leave. I have teed up three or four issues and provided them to 
Mr. Everson in writing, scratched out on a pad, but I believe 
that he has a good sense of the spirit of what I am asking.
    I want to thank you, Mr. Chairman, for allowing me the 
opportunity to be in front of this subcommittee today. I want 
to thank Henry Wray, who is the gentleman to my right, who is a 
kind and caring gentleman who has a long background in 
government efficiency. I am delighted that he is with this 
subcommittee today.
    Mr. Horn. Thank you. We are delighted, and may you have a 
good trip.
    We are now going to go to some questions.
    One of the things that interests me is, I put a non-tax-
delinquent debt situation in the public laws about 4 or 5 years 
ago, and I notice on your page 5, at the bottom, Mr. Gianni, it 
says that ``Last year, 21 of 27 Inspectors General considered 
financial management as a continuing management challenge,'' 
and I am delighted to see that.
    One area where the IG community identified a governmentwide 
problem in financial management and provided recommendations 
was on the Federal collection of the non-tax-delinquent debt 
that amounted to over $46 billion. Now, does that pretty well--
that did come back into the Treasury?
    Mr. Gianni. Mr. Chairman, that money has not yet come back 
into the Treasury. There are a variety of reasons. We 
identified some of the reasons in our initial study, and made 
some recommendations to the respective agencies as to how they 
could improve the overall collections of those.
    We still have some agencies that have yet to take a hard 
look at how the debt is being collected, but I go back to the 
President's management reform on erroneous debt. They are 
focusing on trying to figure out a methodology of estimating 
that debt, and then once that methodology is arrived at and 
agreed upon, agencies will then determine how they can best go 
back collecting that debt.
    So we are taking a more thoughtful process, and the IGs are 
working with the CFOs on this Presidential initiative.
    Mr. Horn. One of the things that I have tried to get when I 
was looking at this from the IRS view, which is the tax debt--
and what got me into this was when I saw one pile of money, 
$100 billion, that they had not collected. The then-
Commissioner said, ``Well, I have $60 billion that maybe we 
could collect.'' I said, ``Did you ever think about private 
collectors?'' ``Oh, my heavens, it is privacy.''
    Well, it isn't privacy. Give them the address, tell them 
what the IRS says they owe, and if they have some objection to 
how they did it, then fine, get the IRS personnel there to do 
that. But we need to pick it up, and it is just crazy to have 
all of the rest of us in the United States pay our taxes and 
these people get away with it.
    I have never seen any executive branch suggestion with us 
on the tax debt. I would hope that the President, since we need 
to scrape around here for a little money for all the things we 
have got--a war in Afghanistan, $40 billion to try and help the 
city of New York, and so on and so on and so on--now we ought 
to be going after that tax debt.
    Commissioner Rossotti is a very fine person, and I was 
delighted that the administration kept him over, because we 
asked President Clinton to look for somebody who really knew 
what they were talking about in computers and taxation and so 
forth. He has been that. But what we have to do is collect that 
tax debt, and that is what has not been done. I would hope 
President Bush and OMB would zero in on it.
    In terms of the non-tax debt, Secretary Rubin was the one 
that helped us the most. He got the executive branch, under 
President Clinton, and we had some pick-ups of money to the 
tune of billions. I have not talked to the Secretary of the 
Treasury, but I think he would be of the same view, to tell his 
colleagues in Education, in Agriculture, in HUD, all of those 
where there is a lot of defaulting, that we need to do 
something about it.
    What is your feeling on that? Maybe you have not had a 
chance to look at it, Mr. Everson.
    Mr. Everson. I think you are raising important issues that 
go to the heart of financial management, and those are at the 
core of what obviously are two thrusts in the improved 
financial management initiative. One is accurate and timely 
information that you use for financial purposes and operating 
purposes to make decisions about what you are doing and whether 
you are going to spend money on A or B, but the second is 
clearly just controlling the funds. Debt recovery is a very 
real element of this.
    We have not yet focused on that specific element to the 
degree that I believe we will down the road. We are starting 
with the erroneous payments component of this, which is the 
current generation of overexpenditures in programs, or in some 
cases, underexpenditures where a beneficiary is not receiving 
the moneys that they are entitled to.
    As my panel colleague indicated, we have moved forward and 
I think sort of--it gets to Congressman Sessions' question in a 
collaborative manner where OMB asked the CFO counsel to work 
jointly on erroneous payments with the PCIE. I am not sure, 
Gaston, that has been done too often in the past in a very 
deliberate, joint committee structure, but that is an important 
initiative, just to start on that process.
    We are going to--we have over 53 programs where we are 
tracking the error rates, and we have plans that have been 
developed. We are going to work with the agencies to see how 
they improve the controls over the expenditure of funds and 
drive down those error rates.
    Going to the debt recovery itself is another element that 
is covered in one instance in the specific initiative of the 
Education Department on the student loans, where recovery is 
something we are working for. You are suggesting it be 
broadened, and I think we should consider that.
    Mr. Horn. Mr. Gianni, do you have any thoughts on that? You 
are involved with the President's Council on Integrity and 
Efficiency, and I just wondered, what is your look at that in 
terms of both tax debt and non-tax debt?
    Mr. Gianni. Certainly, Mr. Chairman, I think all my 
colleagues would be interested in ensuring that their agencies 
have active programs to collect the debt that is owed them. 
Interestingly enough, at the Federal Deposit Insurance Corp., 
we do have a substantial amount of debt and restitutions that 
have been ordered to be paid to the corporation. The 
Corporation does have a program that continuously is seeking to 
try to collect those funds.
    In addition to that, we partner with the Corporation, my 
investigative staff--in those instances where individuals for 
some reason happen to be misleading the Corporation about the 
size of their funds, the locations of their funds, and lie to 
the Federal Government, my investigative staff have been 
successful in working with the Corporation in identifying these 
revenues and bringing additional revenues back to the 
Corporation.
    So I think it is possible for more to be done, and I 
certainly will take your concerns back to my colleagues at the 
IRS and make known your concerns about the tax debt that needs 
to be collected.
    Mr. Horn. Yes. We used to have a sort of 6-month review of 
the IRS, and Commissioner Rossotti has been very supportive. 
And Finance in the Senate, Ways and Means, the House, 
Government Reform, Government Relations, and so forth, we would 
get to this and put a little heat on it once in a while; and I 
have not seen that happen in the last few months. They seem to 
be just drifting off and letting all these things go right and 
left.
    But I am delighted that the IGs are involved, and I think 
that certainly is something that is just sad. If they are not 
involved and are not getting results out of the bureaucracy, 
then I think that is something that ought to be going to the 
Comptroller General, going to Congress and the authorizers as 
well as the appropriators, and say, hey, get with it. So I am 
glad the IGs are doing this.
    And again, the private collectors need to be involved. 
There is no reason they cannot be used. I think it was 1994-
1995, and the IRS at that time, much before Mr. Rossotti, they 
had a hokey little operation, when they said, we will give them 
that little teeny-weeny bundle and they can go out and collect 
it. What they gave them was a 5-year-old debt, and they didn't 
do anything about it. They hadn't received letters, and all the 
rest.
    Of course, if you do not get after the debt, pretty soon 
everybody says, ``Gee, that was a good grant they gave me.''
    We can do better than that. We have to do better. We have 
balanced the budget, but we have got a lot of expenditures that 
have not been met, and we need to get at this when we have 
people who are going into bankruptcy and everything else.
    I want to help the farmer who has a problem with 
bankruptcy. I grew up on a farm, and I cry when people in South 
Dakota, North Dakota and Iowa have problems. But I do not cry 
when these jokers come and milk the Federal Government, milk 
the taxpayers, and they just--it is wrong. I would hope this 
administration will be vigorous on that and tax scofflaws, I 
guess. When I was in Bangladesh, that is what they used to call 
a lot of these people. Anyhow, we ought to work at that.
    Let me ask you about another area that this subcommittee 
has been very active on, and that is computer security. What is 
the situation with the IGs on that? Because we had a number of 
major agencies and independent departments and all that, and we 
could do better than that. So what are we getting at under the 
rubric of financial management? How about computer security, 
because a lot of that relates to how do you manage something, 
where you keep hackers out and all the rest of it? What can you 
tell us about OMB's thinking in this area?
    Mr. Everson. I think you are probably familiar, Mr. 
Chairman, that one of the first things that Mitch Daniels did 
when he came in was he wanted to provide greater attention to 
IT in general, and computer security is certainly a central 
element of that. He appointed Mark Foreman Associate Director 
for Information Technology.
    Clearly, one of the major thrusts of what Mark has been 
doing, as we organized that area, is to build on the work that 
you have done in the past, and others, in this important area--
it is another area--as in those that we have already discussed 
this morning, where we are very deficient across the 
government. The stakes are clearly higher now because of recent 
events, and I think there is more of an understanding and more 
of an impetus to have true change.
    I can only tell you that as we go through on the e-
Government piece in each of our discussions with the agencies, 
an adequate security plan is a central piece of what we are 
requiring. So it is a subject that is being aggressively 
attacked even on the President's Management Council.
    We have scheduled for our April meeting a forum on this 
very topic so that the Chief Operating Officers, the Deputy 
Secretaries, if you will, focus on what their proper role is 
from a managerial point of view. It's not going to be 
presentations on the technical issues, of course, but just how 
do you make sure that they have the proper information to 
assess the management of this critical area.
    So we are clearly attentive to it, Mr. Chairman.
    Mr. Horn. Well, I am delighted to hear that. So you have 
obviously made an impact.
    Mr. Everson. We haven't made an impact yet. We're going to 
make an impact.
    Mr. Horn. The Deputy Secretaries are the ones that really 
have to be responsible for this, but it doesn't bother me 
having an IG looking over their shoulders.
    Mr. Gianni. Mr. Chairman, I might just add that last year 
Congress did pass the Government Reform Information Security 
Reform Act, which required all of the IGs to put together with 
their chief information officer a report on their government 
computer security. We've completed the first round of reports, 
provided that information to OMB. OMB has recently issued a 
consolidated report on government security, the condition of 
our security within the government agencies, and the IGs are in 
the process right now of working on the second round of reports 
that will come out later this year.
    Mr. Mihm. Mr. Chairman, I guess what you can add onto that 
is that one of the things that the administration committed to 
in the report that came out earlier this week on information 
security was to better inform security concerns within the 
President's scorecard. It's kind of implicitly covered both in 
the e-Government and certainly in the financial management 
areas, but now it will be an explicit mention as--at least as I 
read the report that came out.
    Mr. Horn. Was that a blue book that you gentlemen----
    Mr. Mihm. This was an OMB report.
    Mr. Everson. Yes. It just indicated it--what it does is, it 
pulls together a lot of Gaston's colleagues and some of our own 
internal assessments and it runs through the major agencies.
    Mr. Horn. Well, can we get copies of that for those of us 
that have an interest in this?
    Mr. Everson. I certainly think we can get those copies to 
you, yes, sir.
    Mr. Horn. OK.
    Now, how can we be sure that the Federal Government is not 
vulnerable to some of these so-called ``potential Enron 
situations?'' For example, what are the safeguards that protect 
against evaluation and accounting gimmicks in agencies' 
financial statements?
    Mr. Everson. I want to tread carefully here. Enron is 
obviously a subject that is subject to very intense scrutiny at 
this time. I think it's important, that we on the government 
side, who are looking at the financial management of the 
government, draw back and reflect very carefully before trying 
to make a comparison between what happened there and our own 
situation.
    First, I would say that the most important thing that is 
happening there right now--and it started even before these 
recent events--was a new and strengthened focus on financial 
management. This is due in part, I would say, largely, to the 
players themselves; and I must commend here the leadership of 
General Walker who, as the chairman of the Joint Financial 
Management Improvement Program, pretty well insisted that a 
group that had been, if you will, dormant for decades but was 
in--established in statute in the 1950's, consisting of the 
Secretary of the Treasury, the Director of OMB, and the head of 
GAO, get together and start to tackle these issues.
    So the first thing that will avoid an Enron-like situation 
is commitment from the top that financial management matters.
    I think we have that now; so I think that all the parties 
would agree that--and we've met, I would say to you, three 
times just since my arrival. There was a meeting in August and 
a meeting in October and a meeting just 3 weeks ago where we 
have developed a long laundry list of things to tackle. It's 
preliminary, but an example of this was the decision that was 
taken that the Comptroller General mentioned recently in 
principle to explore audit committees for departments and 
agencies. This is another pressure point to hold people like 
Gaston and myself accountable.
    The question came from Congressman Sessions, how do you 
hold OMB accountable? Well, one way you do it is to have 
independent parties not tied either to the Department or the 
people who are auditing the Department or the people who are 
monitoring the Department, meaning folks such as myself, take a 
fresh look and say, well, do the books and records and does the 
conduct of the audit--does this make sense to those independent 
parties?
    We are going to move toward that model, and we're going to 
do other things as well to make sure that the disclosures are 
adequate. And, clearly, one of the problems whether you believe 
that the accounting was correct in terms of off-balance-sheet, 
the disclosures clearly were inadequate if the financial 
community couldn't understand the financial information. I 
think that we don't have that problem as much in government.
    The accounting and the integration, as we spoke before, on 
the retirees' side is one small example. We want to make 
progress there, but I do believe that the issue of Enron itself 
is not an exact parallel because we have good disclosure here; 
the issues are known with the watchdogs that we have sitting 
beside me, their--and CBO also from your side of the 
government, looking at these issues.
    So I think we've got a lot more tools. They just have to be 
pulled together in some of the ways I mentioned.
    Mr. Gianni. Mr. Chairman, I might add, one other thought is 
that the General Accounting Office recently issued standards. 
They issued the standards for auditing in the Federal 
Government and the Comptroller General took a stand and issued 
a stronger standard on independence and the mixing of auditing 
and other services. So I think the government is out in front 
on this particular issue and has a rather stronger concept and 
approach to ensuring that the difficulties won't arise. You 
have the GAO, you have the IGs, you have OMB, as well as the 
oversight from the Congress, which apparently isn't as strong 
in the private sector.
    Mr. Horn. The group of us that care about management up 
here and care about any type of honesty and all, we look toward 
those IGs that you are representing here. That was about 20, 22 
years ago, the bipartisan basis, then the Chief Financial 
Officers, then the Chief Information Officers, so forth and so 
on; and I was delighted when last year I was told that the 
Comptroller General and the Secretary of the Treasury and the 
Director of OMB get together and talk about these things. That 
hasn't happened for 50 years.
    We've had a few people of the old type in GAO with Mr. 
McCarl and others in the 1940's. We don't want to go back to 
that, but when Congress put programmatic reviews, Mr. Rayburn 
wasn't happy with that and Mr. Cannon, head of Appropriations, 
wasn't happy with that. But after they died, things changed, 
and the GAO has done an outstanding job.
    I couldn't think of a better person than Dave Walker to be 
Comptroller General of the United States. He's a straight-
shooter, and he does things that probably upset a few people, 
but that is the way it is, and that's the way the Congress 
created GAO. And so we thank you all for the GAO work that you 
have done.
    As I said earlier, I'm interested in seeing what the 
Federal Government has to do with accounting and if they 
brought it up to date and----
    Mr. Everson. If I could just mention one other thing that I 
neglected to indicate that is pertinent to this, one of the 
decisions we took in August and formalized it in this last 
January meeting after discussion to change the composition of 
something called a Federal Accounting Standards Advisory Board 
from a government-dominated majority of 6-3, to flip that so 
that the private sector membership would be in the majority, 6 
to 3. It's toward this same end of having a greater 
independence and a clearer integrity in the process so that it 
isn't just a spat between GAO and OMB on what the proper 
accounting, or CBO, that there is an independent frame of 
reference that is addressing all of these issues. And that is 
the starting point on the technical side, and if we marry it up 
with the change in the audit committees, I think we can go 
through and address the issues you're getting at.
    Mr. Horn. Yes. I haven't spent any time on the Enron thing 
except for my own constituents, but we've got committees all 
over this place that do that.
    But here's one that certainly relates to good management 
and bad management: What safeguards protect against conflicts 
of interest by outside firms that both audit agency books and 
provide consulting services to those agencies? What do you 
feel? Is there a feel on this?
    Mr. Mihm. The Comptroller General recently issued an 
amendment to the yellow book standards, which are the generally 
accepted standards for government auditing. This amendment had 
been in the works for 3 years or so, and there had been 
extensive public comments. Basically, it requires much more 
independence, stronger firewalls between the auditing sides of 
organizations and the side providing consulting services.
    In essence, audit agencies are not to be, first, engaged in 
management decisions; and second, they're not to be providing 
consulting services on things that are within the scope of 
their audit. We are allowed to make available our information 
to audited entities, but we are not to be consulting with them. 
So this greater degree of independence was recently underscored 
by the new requirements.
    Mr. Horn. And you didn't have to put a 60-day look at it?
    Mr. Mihm. No, sir. I mean, it did go through extensive 
comment, including some push-back from the private sector, but 
the Comptroller General held firm on this. I mean----
    Mr. Horn. Good.
    Mr. Mihm [continuing]. He does not believe that firms 
should be providing management consulting services on the 
issues that are directly the subject of their audits.
    Mr. Gianni. Mr. Chairman, I was on the advisory board, the 
Comptroller General's advisory board that worked on those 
independent standards for the past 3 years. My term is up. I 
put in my 3 years on the advisory board. I'm just happy that we 
were able to get those standards on the street.
    But they did go through a process that exposed them 
preliminarily to the public, considered the comments, reexposed 
it to the public, and then recently came out with the final 
revision.
    What this does is that it prevents auditing firms in a 
substantial and a material way of having consulting-type 
activities, and it sets-up a process, a criteria that the firms 
must meet if they're going to do any of this type work. And if 
it does hit the materiality standpoint and they're also doing 
the financial statements, they just--it's prevented, it's 
prohibited under the new standards.
    Mr. Horn. Let me ask just a couple more questions and--you 
have done such a good job with your statements that we're very 
proud to see them.
    The General Accounting Office reviewed the criteria for 
success in improving financial management that are used in the 
budget scorecard. Now, did GAO review the criteria for the 
President's other four governmentwide initiatives, and what do 
you think of these criteria?
    Mr. Mihm. We've looked generally at the criteria across the 
board, and we were very pleased that OMB had a staff level 
turned to us when they were in draft and asked for our input 
and took some of our input. Of course they had to make their 
own judgments about what worked and what didn't work.
    Clearly, our guidance and products, the OMB scorecard, 
other messages that the agencies are seeing from Congress; the 
important thing is that they're all pulling agencies in the 
same and similar directions, and that's the important issue as 
far as we're concerned.
    For example, in the human capital area, the issues that OMB 
lays out on the need for integration between people 
considerations and program decisionmaking is exactly a point 
the Comptroller General has been making for some time.
    You and Mr. Sessions mentioned in your opening statements 
about the need for greater accountability and instilling a 
greater performance culture within agencies. That's in the 
President's scorecard. That's certainly something that we spend 
a great deal of time looking at.
    In summary, we've looked at the scorecard criteria in a 
broad sense and they're certainly consistent with where we've 
been taking our message and where we're urging agencies to 
move.
    Mr. Horn. I've got a personal interest here where about 2 
years ago I put in a bill--and it is law now--the Chief 
Financial Officer in the Executive part of the Presidency; and 
that individual, I think, has been appointed now.
    I don't know if you can, but the question would be if you 
have a CFO in the Executive Office of the President, will that 
CFO be involved with the other CFOs, or will they be looked at 
in the Presidency to be the person that would have a lot of 
things to say about CFOs? Usually in control agency kinds of 
things like OMB, that certainly goes on the CFO agenda, and I 
am just curious if anything has occurred so far.
    Mr. Everson. I think you probably know, Mr. Chairman, one 
of the things the administration is trying to do is to draw 
together the Executive Office of the President, and that is one 
of the budget proposals that be a specific--one account or a 
lot of--simplified, so that it can be pulled together and you 
can get just that kind of professional approach to it where you 
have a Chief Financial Officer--as you say, one has been 
appointed--and to pull that all together and make that kind of 
good, smooth operation happen.
    And obviously, in my capacity as the acting Chair of the 
CFO Council, the input of that person is certainly something 
that is desirable and should be done; and I will make sure that 
they participate fully in what we are doing governmentwide to 
support the management agenda and to help share best practices 
and to attack all of these areas that we've been talking about 
this morning.
    Mr. Horn. We had, as you know, a lot of different 
investigations, like the Travel Office and all that----
    Mr. Everson. Yeah.
    Mr. Horn [continuing]. And it sure was simple that we 
needed some people to really get the accounts down there and 
make some sense.
    Mr. Everson. Yes.
    Mr. Horn. And so the Clinton administration said, we won't 
have any--we don't want a CFO. And I said, well, how about the 
next President? Oh, sure, he can do that.
    So that is one way we get things done around here, to put 
it off and the time is here.
    Mr. Everson. Well, this is an administration--you mentioned 
earlier that the President himself has been using these 
scorecards. That is correct. I was at a meeting of all senior 
appointees earlier this week and he mentioned them again. So 
you have an administration that is entirely in line with 
accountability, strong support of the functions that are 
represented on this panel with me to just try and bring a 
spotlight on these issues.
    Mr. Horn. Along this line, will you provide the scores of 
progress assessments and agency improvement plans to the 
Congress and the public?
    Mr. Everson. Yes. We're going to be working with this tool 
on a quarterly basis, and our expectation is that twice a year 
we will actually make the evaluations public, probably at the 
midsession review, which will take place this summer.
    An important point that I'd like to make is that just as we 
did in the budget document, where the management agenda is 
imbedded in the text itself, the midsession review takes a look 
at how you're doing in terms of your financial projections. 
That's the right time to do it again.
    We want to emphasize again and again to everybody that this 
management focus is closely aligned to program delivery. If you 
don't improve the efficiency of the government, you're not 
going to be able to sustain program delivery. So you're going 
to see these things linked each time.
    So I imagine we'll be seeing where we stand publicly and 
asking for your help on--maybe if there are any laggards out 
there, come this summer.
    Mr. Horn. I'll tell you, when we were in the Y2K bit--and 
it took us 2 years to get the President then, Mr. Clinton, to 
finally face up to it, and so we did have these scorecards; and 
one Cabinet member of his, who was a good friend of mine, he 
said, ``Steve, put as many as you can in that score.'' He said, 
``I am banging mine on my door, and every single member of this 
particular department when they go through to see me, they're 
going to see we got an F, and what are they going to do about 
it?''
    So they used this to beat a few of these people over the 
head and think about it.
    So we're obviously glad to help, and Dr. Raines was very 
supportive of all this in OMB; and I said, hey, it's your job 
to do that inventory. We've been doing it; if you do it, we'll 
look at it. And he did, and we had regular quarterly reports 
that way.
    And, you know, trying to keep ahead of hackers on computer 
security is a real problem.
    Mr. Everson. Yes.
    Mr. Horn. And I hope, gentlemen, that you look at the CIA 
operation. We can't get them to respond. We've got five 
subcommittees here that are hurt by their lack of respect for 
the Congress, and I think that ought to upset a few people down 
there; because if they feel that way about Congress, I wonder 
what they feel about the Presidency. So that bothers me.
    And Chairman Burton isn't happy, and about three or four of 
the subcommittee chairs, including me, are not happy about this 
computer bit. We don't know what they're doing.
    But some of the services are doing terrific jobs in the 
Department of Defense. The Air Force has done a marvelous job 
over the years, and especially on Y2K they really--when Defense 
was going down the drain, the Air Force was getting A's.
    And so we'd like to have your thoughts on what we can do to 
be helpful, and if you have any other points you want to make 
now and like to get on the record, we're glad to have it, and 
we'll wrap it up.
    Mr. Everson. I really have nothing to add from what's 
already been stated very eloquently by yourself and Congressman 
Sessions and then what we said as a panel. I think they'll say, 
``Well begun is half done.'' I'd to think that's where we are 
right now.
    For the first time, rather than just responding to GAO 
watch lists and congressional investigations, the executive 
branch is articulating standards that should govern the way we 
manage our business. That's the first step.
    We have fostered a climate of accountability. That is 
coming from the top, from the President himself. That's the 
second step. The rest is just mechanics. Now, that is a lot of 
mechanics, obviously, but the pieces of this are starting to 
engage. I see it because I go around in my capacity as vice 
chair of the President's Management Council and speak at the 
Department of Education to all the senior appointees, they're 
using the scorecard and more detailed scorecards on all of 
their management initiatives.
    So this is starting to happen, and with your help and the 
help of my colleagues on the panel, putting the spotlight on 
it, I don't think that this will slip. The reason I suggest 
that is because, look what happened 5 months ago in September. 
That was a watershed point. This initiative, this agenda, could 
have died in the delivery room, but it didn't. It gathered 
steam because of the events of September and because people 
recognized we have to manage ourselves better to be able to do 
all the things that are so central for our government.
    So I'm optimistic, and I thank you.
    Mr. Horn. Well, I thank you because that is exactly what 
Congress wants, which is, keep at it in terms of management. We 
have to. We can't--it isn't something that we can just say, oh, 
well, push it aside. And I'm delighted to hear your eloquent 
statement that you didn't push it aside, and the President is 
deeply involved in it.
    Mr. Mihm.
    Mr. Mihm. I think, Mr. Chairman, there've been, 
interestingly, three broad themes that have been coming out of 
here this morning, that we're all in agreement on; and I think 
that you touched on them right in your opening statement.
    And that is leadership, and that we've got to be serious 
and keep going forward with this and keeping drilling into 
agencies how serious we are about this.
    Second, it's going to take plenty of hard work and that 
there are roles for certainly the agencies, the central 
management agencies, Congress, GAO and the IG community to play 
constructively, recognizing that we have different 
institutional arrangements, but these are issues that we can 
work together on.
    I think third and most important, as you underscored, is 
the importance of accountability, that we need to start making 
clear that there are consequences of success and there are 
consequences of failure on this. People who are making progress 
and organizations making progress will be rewarded 
appropriately. There are new regulations within the last year 
or so that the Office of Personnel Management has issued for 
performance appraisals for senior executives which are, as I 
mentioned in my written statement, a ready-made vehicle for 
taking the President's scorecard and drilling them right into 
organizations and drilling them into the contracts that we have 
for our senior executives.
    And as you mentioned, Chairman Rogers is interested----
    Mr. Horn. Well, on that point, I think every single 
executive in the executive branch, when they go out to make a 
speech somewhere on their program, they ought to go to a 
community college or a college, private and public, and say, we 
have need for talent, we have a----
    Mr. Mihm. Absolutely.
    Mr. Horn [continuing]. Lot of people that are retiring, and 
you have great opportunities to serve your country, be it in 
uniform or be it in civilian clothes.
    The military groups have done this for the last 50 years to 
increase the talents of their people, and that is getting them 
into schools to get them a Master's degree, or Ph.D. We have 
generals all over the place that have a Ph.D., and the reason 
is, they know that if you don't improve your human capital, 
then you can't get this agency to do what needs to be done.
    So we ought to be doing that. I am going to try to do it 
everywhere I am holding a hearing, and I am holding a number of 
them across the country. So I would hope that your people could 
get out there and put themselves in, just let young people say, 
well, gee, you know, I didn't know the Federal Government had 
these good opportunities. They're marvelous. They're marvelous.
    Any thoughts, Mr. Gianni?
    Mr. Gianni. I would agree with you, Mr. Chairman, from the 
standpoint of, I have an optimistic view on the youth of 
America. I think if we present the mission of the government to 
the youth of America, they will come and they will serve just 
like I did and just like my colleagues did, to step forward to 
serve our country.
    I think if we present the government and the important 
responsibilities of our government in providing services to the 
public--it's a mission; it's a noble mission--they will step up 
to the challenge.
    Unfortunately, for too long, the Federal Government hasn't 
done a lot of hiring, and we've lost touch with our colleges 
and universities. But as the workforce has matured, we now find 
that we are in this crisis situation, and I think we'll start 
getting back to the colleges and campuses to educate our youth 
on the important mission and service that they can provide to 
our country.
    I just want to thank you, Mr. Chairman, for inviting me 
here today and let you know that the IG community stands ready 
to serve; and we'll continue our individual license and help 
the agencies make progress in this important area.
    Mr. Horn. We ought to have OMB have different little 
booklets that they can give to one of the senior civil servants 
when they're out doing this work, so we sing from the same 
hymnal; and I would think that they've got a printing press 
down there in OMB.
    So I want to thank you all for coming. It's been very 
useful.
    And I want to thank my staff that put this together and put 
everything together. J. Russell George, staff director and 
chief counsel; Bonnie Heald, deputy staff director, right next 
to help; and you all know Henry Wray. And Pete certainly did; 
he helped him a lot in the Results Caucus. And Henry Wray is 
the senior counsel here and he has been great help over the 
years in the executive branch and the Senate committee. We're 
delighted to have him here, and we're delighted he put this 
together.
    Earl Pierce, professional staff--where is Earl? He isn't 
around today. And Justin Paulhamus, the majority clerk; and 
Michael Sazonov, intern. They're back working.
    Minority staff, David McMillen, he's a regular and we count 
on him for a lot of help and work. We thank you for being 
there; and Jean Gosa, the minority clerk, is also very helpful 
to us.
    And our court reporters today are Leanne Dotson and Lori 
Chetakian. So thank you very much, and with that, we are 
adjourned.
    [Whereupon, at 11:58 a.m., the subcommittee was adjourned.]
    [Additional information submitted for the hearing record 
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