[Senate Hearing 108-168]
[From the U.S. Government Publishing Office]
LEGISLATIVE BRANCH APPROPRIATIONS FOR FISCAL YEAR 2004
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THURSDAY, MARCH 27, 2003
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 1:30 p.m., in room SD-124, Dirksen
Senate Office Building, Hon. Ben Nighthorse Campbell (chairman)
presiding.
Present: Senators Campbell and Durbin.
GENERAL ACCOUNTING OFFICE
STATEMENT OF DAVID WALKER, COMPTROLLER GENERAL
ACCOMPANIED BY:
GENE L. DODARO, CHIEF OPERATING OFFICER
STANLEY J. CZERWINSKI, CONTROLLER
ANTHONY CICCO, JR., CHIEF INFORMATION OFFICER AND DEPUTY CHIEF
MISSION SUPPORT OFFICER
OPENING STATEMENT OF SENATOR BEN NIGHTHORSE CAMPBELL
Senator Campbell. The subcommittee will come to order.
This is my first hearing as chairman of the Legislative
Branch Subcommittee, and today's hearing is the first of four
hearings we plan to have to review the fiscal year 2004
legislative branch budget request, which totals roughly $3.8
billion. Two of our three witnesses this afternoon are also new
to this subcommittee. This afternoon we will take testimony
from three agencies, the General Accounting Office, the
Government Printing Office, and the Congressional Budget
Office.
We will hear first from Mr. David Walker, Comptroller
General. Mr. Walker is accompanied by his Chief Operating
Officer, Mr. Gene Dodaro, and Mr. Stan Czerwinski, GAO's
Controller. GAO's budget request of $472 million will
accommodate all inflationary increases with no real significant
change in its operations. We do want to understand the urgency
of $4.8 million of your budget request, whether it is truly
needed in the supplemental, or whether it can await the fiscal
year 2004 appropriations.
GAO will be followed by witnesses from the Government
Printing Office, Mr. Bruce James, the new Public Printer, who
will appear for the first time before this subcommittee. Mr.
James will be accompanied by Mr. George Taylor, Deputy Printer,
Mr. Frank Partlow, Chief of Staff, and Ms. Judith Russell,
Superintendent of Documents.
Mr. James, we look forward to hearing about the changes you
are planning at GPO. We are very pleased to have underway a
comprehensive general management review by the GAO requested by
this committee, which we expect will help you as you make your
plans. GPO's budget totals $135.6 million, and does include $10
million for anticipated restructuring efforts.
Finally, we will hear from Dr. Douglas Holtz-Eakin, the
Director of the Congressional Budget Office, who will appear
for the first time before this subcommittee. He will be
accompanied by Mr. Barry Anderson, his deputy. The CBO's budget
of roughly $34 million would provide for some additional
employees and its cost of the Federal Accounting Standards
Advisory Board.
We are expecting a number of votes this afternoon, and so
we will not have you read your statements. We will put them in
the record, and Mr. Walker, you may proceed.
Mr. Walker. Thank you, Mr. Chairman, for the opportunity to
be here today and congratulations on your new position as
chairman of this subcommittee. In addition to Mr. Dodaro and
Mr. Czerwinski, I would also like to introduce Tony Cicco, our
Chief Information Officer and Deputy Chief Mission Support
Officer, who is also with me today. Now, to summarize a few
highlights for the committee. We realize that you face tough
budget choices this year and will continue to face them in the
years ahead. As such, we are requesting, for fiscal year 2004,
a modest increase of 4.1 percent in our current budget of $473
million. This request includes the $4.8 million supplemental we
previously requested for safety and security needs. If the
Congress is able to fund our fiscal year 2003 supplemental
request for security needs, we could reduce our fiscal year
2004 budget request accordingly to a net 3.1 percent increase.
Fiscal year 2002 was an outstanding year for GAO. We
achieved record or near record performance results in virtually
every key category. For example, over $37 billion in measurable
financial benefits, a return on investment of $88 for every $1
appropriated to us. Our performance results have increased
significantly over the last 4 years, and we continue to lead by
example. We are in the vanguard of the overall government
transformation effort and are positioning GAO for the future.
We also plan to work with our oversight committees and
possibly this committee to seek human capital legislation that
would make permanent some of the human capital flexibilities
provided to us by Congress in fiscal year 2001 and recently
extended to the executive branch in the homeland security
legislation. We also plan to file the required statutory report
on our fiscal year 2001 human capital legislation in the coming
weeks.
PREPARED STATEMENT
Mr. Chairman, we will just submit our testimony for the
record and would welcome your questions.
[The statement follows:]
Prepared Statement of David M. Walker
Mr. Chairman and Members of the Subcommittee: I am pleased to
appear before the Subcommittee today as the Comptroller General of the
United States and head of the U.S. General Accounting Office (GAO). GAO
is a key source of objective information and analyses and, as such,
plays a crucial role in supporting congressional decision-making and
helping improve government for the benefit of the American people. My
testimony today will focus on GAO's (1) fiscal year 2002 performance
and results, (2) efforts to maximize our effectiveness, responsiveness
and value, and (3) our budget request for fiscal year 2004 to support
the Congress and serve the American public. In summary:
--In fiscal year 2002, GAO's work informed the national debate on a
broad spectrum of issues including helping the Congress answer
questions about the associated costs and program trade-offs of
the national preparedness strategy, including providing
perspectives on how best to organize and manage the new
Transportation Security Administration and Department of
Homeland Security. GAO's efforts helped the Congress and
government leaders achieve $37.7 billion in financial
benefits--an $88 return on every dollar invested in GAO. The
return on the public's investment in GAO extends beyond dollar
savings to improvements in how the government serves its
citizens. This includes a range of accomplishments that serve
to improve safety, enhance security, protect privacy, and
increase the effectiveness of a range of federal programs and
activities.
--The results of our work in fiscal year 2002 were possible, in part,
because of changes we have made to transform GAO in order to
meet our goal of being a model federal agency and a world-class
professional services organization. We had already realigned
GAO's structure and resources to better serve the Congress in
its legislative, oversight, appropriations, and investigative
roles. Over the past year, we cultivated and fostered
congressional and agency relations, better refined our
strategic and annual planning and reporting processes, and
enhanced our information technology infrastructure. We also
continued to provide priority attention to our management
challenges of human capital, information security, and physical
security. We have made progress in addressing each of these
challenges, but we still have work to do and plan to ask for
legislation to help address some of these issues.
--GAO is requesting budget authority of $473 million for fiscal year
2004. Our request represents a modest 4.1 percent increase in
direct appropriations, primarily for mandatory pay and
uncontrollable costs. This budget will allow us to maintain
current operations for serving the Congress as outlined in our
strategic plan and to continue initiatives to enhance our human
capital, support business processes, and ensure the safety and
security of GAO staff, facilities, and information systems.
Approximately $4.8 million, or about 1 percent, of our request
relates to several safety and security items that are included
in our fiscal year 2003 supplemental request. If this
supplemental request is granted, our fiscal year 2004 request
could be reduced accordingly.
FISCAL YEAR 2002 PERFORMANCE AND RESULTS
Fiscal year 2002 was a year of challenges, not just for GAO but
also for the Congress and the nation. The nation's vulnerabilities were
exposed in a series of events--America's vulnerability to sophisticated
terrorist networks, bioterrorism waged through mechanisms as mundane as
the daily mail, and corporate misconduct capable of wiping out jobs,
pensions, and investments virtually overnight. As the Congress's
priorities changed to meet these crises, GAO's challenge was to respond
quickly and effectively to our congressional clients' changing needs.
With work already underway across a spectrum of critical policy and
performance issues, we had a head start toward meeting the Congress'
needs in a year of unexpected and often tumultuous events. For example,
in fiscal year 2002 GAO's work informed the debate over national
preparedness strategy, helping the Congress determine how best to
organize and manage major new departments, assess key vulnerabilities
to homeland defense, and respond to the events of September 11 in areas
such as terrorism insurance and airline security. GAO's input also was
a major factor in shaping the Sarbanes-Oxley Act, which created the
Public Company Accounting Oversight Board, as well as new rules to
strengthen corporate governance and ensure auditor independence.
Further, GAO's work helped the Congress develop and enact election
reform legislation in the form of the Help America Vote Act of 2002 to
help restore voter confidence.
In fiscal year 2002, GAO also served the Congress and the American
people by helping to:
--Contribute to a national preparedness strategy at the federal,
state, and local levels that will make Americans safer from
terrorism
--Protect investors through better oversight of the securities
industry and the accounting profession
--Ensure a safer national food supply
--Expose the inadequacy of nursing home care
--Make income tax collection fair, effective, and less painful to
taxpayers
--Strengthen public schools' accountability for educating children
--Keep sensitive American technologies out of the wrong hands
--Protect American armed forces confronting chemical or biological
weapons
--Identify the risks to employees in private pension programs
--Identify factors causing the shortage of children's vaccines
--Assist the postal system in addressing anthrax and various
management challenges
--Identify security risks at ports, airports, and transit systems
--Save billions by bringing sound business practices to the
Department of Defense
--Foster human capital strategic management to create a capable,
effective, well-managed federal workforce
--Ensure that the armed forces are trained and equipped to meet the
nation's defense commitments
--Enhance the safety of Americans and foreign nationals at U.S.
installations worldwide
--Assess ways of improving border security through biometric
technologies and other means
--Reduce the international debt problems faced by poor countries
--Reform the way federal agencies manage their finances
--Protect government computer systems from security threats
--Enhance the transition of e-government--the new ``electronic
connection'' between government and the public.
During fiscal year 2002, GAO's analyses and recommendations
contributed to a wide range of legislation considered by the Congress,
as shown in the following table.
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Table 1.--Selected Public Laws to Which GAO Contributed During Fiscal
Year 2002
Prescription Drug User Fee Amendments of 2002, Public Law 107-188
Best Pharmaceuticals for Children Act, Public Law 107-1092
No Child Left Behind Act of 2001, Public Law 107-110
Food Stamp Reauthorization Act of 2002, Public Law 107-171
Help America Vote Act of 2002, Public Law 107-252
Homeland Security Act of 2002, Public Law 107-296
Public Health Security and Bioterrorism Preparedness and Response
Act of 2002, Public Law 107-188
Aviation and Transportation Security Act, Public Law 107-71
Department of Defense Appropriation Act, 2003, Public Law 107-248
Department of Defense and Emergency Supplemental Appropriations for
Recovery From and Response to Terrorist Attacks on the United States
Act, 2002, Public Law 107-117
Bob Stump National Defense Authorization Act for Fiscal Year 2003
Public Law 107-314
Foreign Relations Authorization Act, Fiscal Year 2003, Public Law
107-228
Small Business Paperwork Relief Act of 2002, Public Law 107-198
Federal Information Security Management Act of 2002, Public Law
107-347
Sarbanes-Oxley Act of 2002, Public Law 107-204
National Defense Authorization Act for Fiscal Year 2002, Public Law
107-107
Legislative Branch Appropriations, Fiscal Year 2002, Public Law
107-68
Improper Payments Information Act of 2002, Public Law 107-300
Trade Act of 2002, Public Law 107-210
Terrorism Risk Insurance Act of 2002, Public Law 107-297
E-Government Act of 2002, Public Law 107-347
Source: GAO.
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By year's end, we had testified 216 times before the Congress,
sometimes on as little as 24 hours' notice, on a range of issues. We
had responded to hundreds of urgent requests for information. We had
developed 1,950 recommendations for improving the government's
operations, including, for example, those we made to the Secretary of
State calling for the development of a governmentwide plan to help
other countries combat nuclear smuggling and those we made to the
Chairman of the Federal Energy Regulatory Commission calling for his
agency to develop an action plan for overseeing competitive energy
markets. We also had continued to track the recommendations we had made
in past years, checking to see that they had been implemented and, if
not, whether we needed to do follow-up work on problem areas. We found,
in fact, that 79 percent of the recommendations we had made in fiscal
year 1998 had been implemented, a significant step when the work we
have done for the Congress becomes a catalyst for creating tangible
benefits for the American people.
Table 2 highlights, by GAO's three external strategic goals,
examples of issues on which we testified before Congress during fiscal
year 2002.
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TABLE 2.--ISSUES ON WHICH GAO TESTIFIED DURING FISCAL YEAR 2002
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Goal 1--Well-Being and Financial Goal 2--Changing Security Threats and Goal 3--Transforming the Federal
Security of the American People Challenge of Globalization Government's Role
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Aviation security A-76 competitive sourcing Contract management
Bioterrorism Anthrax vaccine Contracting for services
Blood supplies Ballistic missile defense Corporate governance and
Child welfare Chemical and biological preparedness accountability
Childhood vaccines Combating terrorism Debt collection
Coast Guard's security missions Compact with Micronesia DOD financial management
Customs' cargo inspections Conflict diamonds Electronic Government Act of 2002
Disability programs Debt relief for poor countries Electronic-government security
EPA cabinet status Encroachment on training ranges Enterprise architecture
FBI reorganization Export controls Federal budget issues
Federal property management Food aid Federal building security
reform Foreign language needs Federal financial management reform
Food safety Gulf War illnesses Federal rulemaking requirements
Highway trust fund Information security aspects of Freedom to Manage Act
Housing homeland security Human capital strategy
HUD management reform International trade Illegal tax schemes and scams
Identity theft Nuclear smuggling Intergovernmental aspects of
Immigration enforcement Organizational aspects of homeland homeland security
Indian tribal recognition security IRS modernization
Intercity passenger rail SEC's human capital challenges Medicaid financial management
Long-term care Strategic seaport protection NASA's management challenges
Medicare payments Terrorism insurance President's Management Agenda
Nuclear waste storage U.S. overseas presence Purchase card controls
Nursing homes Weapons of mass destruction Securing America's borders
Postal Service challenges U.S. government's financial
Public health aspects of homeland statements
security
Retiree health insurance
SBA's human capital challenges
Social Security reform
Transit safety and security
VA health care
Welfare reform
Wildfire threats
Workforce development
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Source: GAO.
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Congress and the executive agencies took a wide range of actions in
fiscal year 2002 to improve government operations, reduce costs, or
better target budget authority based on GAO analyses and
recommendations, as highlighted in the following sections.
Federal action on GAO's findings or recommendations produced
financial benefits for the American people: a total of $37.7 billion
was achieved by making government services more efficient, improving
the budgeting and spending of tax dollars, and strengthening the
management of federal resources (see fig. 1). For example, increased
funding for improved safeguards against fraud and abuse helped the
Medicare program to better control improper payments of $8.1 billion
over 2 years, and better policies and controls reduced losses from farm
loan programs by about $4.8 billion across 5 years.
In fiscal year 2002, we also recorded 906 instances in which our
work led to improvements in government operations or programs (see fig.
2). For example, by acting on GAO's findings or recommendations, the
federal government has taken important steps toward enhancing aviation
safety, improving pediatric drug labeling based on research, better
targeting of funds to high-poverty school districts, greater
accountability in the federal acquisition process, and more effective
delivery of disaster recovery assistance to other nations, among other
achievements.
As shown in table 3, we met all of our annual performance targets
except our timeliness target. While we provided 96 percent of our
products to their congressional requesters by the date promised, we
missed this measure's target of 98 percent on-time delivery. The year's
turbulent events played a part in our missing the target, causing us to
delay work in progress when higher-priority requests came in from the
Congress. We know we will continue to face factors beyond our control
as we strive to improve our performance in this area. We believe the
agency protocols we are piloting will help clarify aspects of our
interactions with the agencies we evaluate and audit and, thus,
expedite our work in ways that could improve the timeliness of our
final products. We also believe that our continuing investments in
human capital and information technology will improve our timeliness
while allowing us to maintain our high level of productivity and
performance overall.
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TABLE 3.--ANNUAL PERFORMANCE MEASURES AND TARGETS
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Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
Year Year Year Year Year Year 4-year Year Year
Performance measure 1998 1999 2000 2001 2002 2002 avg. 2003 2004
Actual Actual Actual Actual Target Actual Actual Target Target
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Financial benefits (dollars in $19.7 $20.1 $23.2 $26.4 $30.0 \1\ $37 $26.9 \2\ $32 $35.0
billions)............................ .7 .5
Other benefits........................ 537 607 788 799 770 906 775 \2\ 800 820
Past recommendations implemented 69 70 78 79 75 79 N/A 77 77
(percent)............................
New recommendations made.............. 987 940 1,224 1,563 1,200 1,950 1,419 \2\ 1,2 1,250
50
New products with recommendations (in 33 33 39 44 45 53 42 50 50
per- cent)..........................
Testimonies........................... 256 229 263 151 200 216 215 \2\ 180 200
Timeliness (in percent)............... 93 96 96 95 98 96 96 98 98
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\1\ Changes GAO made to its methodology for tabulating financial benefits caused about 11 percent of the
increase in fiscal year 2002.
\2\ Four targets published in GAO's performance plan for fiscal year 2003 were subsequently revised based on
more current information. Two were raised; two were lowered. The original targets were financial benefits, $35
billion; other benefits, 785; recommendations made, 1,200; and testimonies, 210.
N/A=not applicable.
Source: GAO.
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MAXIMIZING GAO'S EFFECTIVENESS, RESPONSIVENESS AND VALUE
The results of our work were possible, in part, because of changes
we have made to maximize the value of GAO. We had already realigned
GAO's structure and resources to better serve the Congress in its
legislative, oversight, appropriations, and investigative roles. Over
the past year, we cultivated and fostered congressional and agency
relations, better refined our strategic and annual planning and
reporting processes, and enhanced our information technology
infrastructure. We also continued to provide priority attention to our
management challenges of human capital, information security, and
physical security. Changes we made in each of these areas helped enable
us to operate in a constantly changing environment.
Congressional and Agency Relations
Over the course of the year, we cultivated and fostered
congressional and agency relations in several ways. On October 23,
2001, in response to the anthrax incident on Capitol Hill, we opened
our doors to 435 members of the House of Representatives and their
staffs. Later in the year, we continued with our traditional hill
outreach meetings and completed a 7-month pilot test of a system for
obtaining clients' views on the quality of our testimonies and reports.
We also developed agency protocols to provide clearly defined,
consistently applied, well-documented, and transparent policies for
conducting our work with federal agencies. We have implemented our new
reporting product line entitled Highlights--a one-page summary that
provides the key findings and recommendations from a GAO engagement. We
continued our policy of outreach to our congressional clients, the
public, and the press to enhance the accessibility of GAO products. Our
external web site now logs about 100,000 visitors each day and more
than 1 million GAO products are downloaded every month by our
congressional clients, the public, and the press.
In light of certain records access challenges during the past few
years and with concerns about national and homeland security unusually
high at home and abroad, it may become more difficult for us to obtain
information from the Executive Branch and report on certain issues. If
this were to occur, it would hamper our ability to complete
congressional requests in a timely manner. We are updating GAO's
engagement acceptance policies and practices to address this issue and
may recommend legislative changes that will help to assure that we have
reasonable and appropriate information that we need to conduct our work
for the Congress and the country.
Strategic and Annual Planning
GAO's strategic planning process serves as a model for the federal
government. Our plan aligns GAO's resources to meet the needs of the
Congress, address emerging challenges and achieve positive results.
Following the spirit of the Government Performance and Results Act, we
established a process that provides for updates with each new Congress,
ongoing analysis of emerging conditions and trends, extensive
consultations with congressional clients and outside experts, and
assessments of our internal capacities and needs.
At the beginning of fiscal year 2002, we updated our strategic plan
for serving the Congress based on substantial congressional input--
extending the plan's perspective out to fiscal year 2007 and factoring
in developments that had occurred since we first issued it in fiscal
year 2000. The updated plan carries forward the four strategic goals we
had already established as the organizing principles for a body of work
that is as wide-ranging as the interests and concerns of the Congress
itself. Using the plan as a blueprint, we lay out the areas in which we
expect to conduct research, audits, analyses, and evaluations to meet
our clients' needs, and we allocate the resources we receive from the
Congress accordingly. Following is our strategic plan framework.
Appendix I of this statement delineates in a bit more detail our
strategic objectives and our qualitative performance goals for fiscal
years 2002 and 2003.
We issued our 2001 Performance and Accountability Report that
combines information on our past year's accomplishments and progress in
meeting our strategic goals with our plans for achieving our fiscal
year 2003 performance goals. The report earned a Certificate of
Excellence in Accountability Reporting from the Association of
Government Accountants. We issued our Fiscal Year 2002 Performance and
Accountability Report in January 2003.
Our financial statements, which are integral to our performance and
accountability, received an unqualified opinion for the sixteenth
consecutive year. Furthermore, our external auditors did not identify
any material control weaknesses or compliance issues relating to GAO's
operations.
Information Technology
During the past year, we acquired new hardware and software and
developed user-friendly systems that enhanced our productivity and
responsiveness to the Congress and helped meet our initial information
technology goals. For example, we replaced aging desktop workstations
with notebook computers that provide greater computing power, speed,
and mobility. In addition, we upgraded key desktop applications, the
Windows desktop operating system, and telecommunications systems to
ensure that GAO staff have modern technology tools to assist them in
carrying out their work. We also developed new, integrated, user-
friendly Web-based systems that eliminate duplicate data entry while
ensuring the reusability of existing data. As the Clinger-Cohen Act
requires, GAO has an enterprise architecture program in place to guide
its information technology planning and decision making. In designing
and developing systems, as well as in acquiring technology tools and
services, we have applied enterprise architecture principles and
concepts to ensure sound information technology investments and the
interoperability of systems.
Human Capital
Given GAO's role as a key provider of information and analyses to
the Congress, maintaining the right mix of technical knowledge and
expertise as well as general analytical skills is vital to achieving
our mission. We spend about 80 percent of our resources on our people,
but without excellent human capital management, we could still run the
risk of being unable to deliver what the Congress and the nation expect
from us. At the beginning of my term in early fiscal year 1999, we
completed a self-assessment that profiled our human capital workforce
and identified a number of serious challenges facing our workforce,
including significant issues involving succession planning and
imbalances in the structure, shape, and skills of our workforce. As
presented below, through a number of strategically planned human
capital initiatives over the past few years, we have made significant
progress in addressing these issues. For example, as illustrated in
figure 3, by the end of fiscal year 2002, we had almost a 60 percent
increase in the percentage of staff at the entry-level (Band I) as
compared with fiscal year 1998. Also, the proportion of our workforce
at the mid-level (Band II) decreased by about 8 percent.
Our fiscal year 2002 human capital initiatives included the
following:
--In fiscal year 2002, we hired nearly 430 permanent staff and 140
interns. We also developed and implemented a strategy to place
more emphasis on diversity in campus recruiting.
--In fiscal years 2002 and 2003, to help meet our workforce planning
objectives, we offered voluntary early retirement under
authority established in our October 2000 human capital
legislation. Early retirement was granted to 52 employees in
fiscal year 2002 and 24 employees in fiscal year 2003.
--To retain staff with critical skills and staff with less than 3
years of GAO experience, we implemented legislation authorizing
federal agencies to offer student loan repayments in exchange
for certain federal service commitments.
--In fiscal year 2002, GAO implemented a new, modern, effective, and
credible performance appraisal system for analysts and
specialists, adapted the system for attorneys, and began
modifying the system for administrative professional and
support staff.
--We began developing a new core training curriculum for managers and
staff to provide additional training on the key competencies
required to perform GAO's work.
--We also took steps to achieve a fully democratically-elected
Employee Advisory Council to work with GAO's Executive
Committee in addressing issues of mutual interest and concern.
The above represent just a few of many accomplishments in the human
capital area. GAO is the clear leader in the federal government in
designating and implementing 21st century human capital policies and
practices. We also are taking steps to work with the Congress, the
Office of Management and Budget, and the Office of Personnel
Management, and others to ``help others help themselves'' in the human
capital area.
Information Security
Ensuring information systems security and disaster recovery systems
that allow for continuity of operations is a critical requirement for
GAO, particularly in light of the events of September 11 and the
anthrax incidents. The risk is that our information could be
compromised and that we would be unable to respond to the needs of the
Congress in an emergency. In light of this risk and in keeping with our
goal of being a model federal agency, we are implementing an
information security program consistent with the requirements in the
Government Information Security Reform provisions (commonly referred to
as ``GISRA'') enacted in the Floyd D. Spence National Defense
Authorization Act for Fiscal Year 2001. We have made progress through
our efforts to, among other things, implement a risk-based, agencywide
security program; provide security training and awareness; and develop
and implement an enterprise disaster recovery solution.
Physical Security
In the aftermath of the September 11 terrorist attacks and
subsequent anthrax incidents, our ability to provide a safe and secure
workplace emerged as a challenge for our agency. Protecting our people
and our assets is critical to our ability to meet our mission. We
devoted additional resources to this area and implemented measures such
as reinforcing vehicle and pedestrian entry points, installing an
additional x-ray machine, adding more security guards, and reinforcing
windows.
GAO'S FISCAL YEAR 2004 BUDGET REQUEST
GAO is requesting budget authority of $473 million for fiscal year
2004 to maintain current operations for serving the Congress as
outlined in our strategic plan and to continue initiatives to enhance
our human capital, support business processes, and ensure the safety
and security of GAO staff, facilities, and information systems. This
funding level will allow us to fund up to 3,269 full-time equivalent
personnel. Our request includes $466.6 million in direct appropriations
and authority to use estimated revenues of $6 million from reimbursable
audit work and rental income. Our requested increase of $18.4 million
in direct appropriations represents a modest 4.1 percent increase,
primarily for mandatory pay and uncontrollable costs. Our budget
request also includes savings from nonrecurring fiscal year 2003
investments in fiscal year 2004 that we propose to use to fund further
one-time investments in critical areas, such as security and human
capital.
We have submitted a request for $4.8 million in supplemental fiscal
year 2003 funds to allow us to accelerate implementation of important
security enhancements. Our fiscal year 2004 budget includes $4.8
million for safety and security needs that are also included in the
supplemental. If the requested fiscal year 2003 supplemental funds are
provided, our fiscal year 2004 budget could be reduced by $4.8 million.
Table 4 presents our fiscal year 2003 and requested fiscal year 2004
resources by funding source.
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TABLE 4.--FISCAL YEARS 2003 AND 2004 RESOURCES BY FUNDING SOURCE
[Dollars in thousands]
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Change--fiscal year
Fiscal Year Fiscal Year 2003 to 2004
Funding source 2003 2004 ------------------------
Revised Request Amount Percent
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Total budget authority....................................... \1\ $451,20 $472,627 $21,425 ..........
2
Less: offsetting collections \2\............................. (3,000) (6,006) (3,006) ..........
Direct appropriation......................................... $448,202 $466,621 $18,419 4.1
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\1\ Excludes request for supplemental funds of $4.8 million.
\2\ Offsetting collections include reimbursable audit work and rental income.
Source: GAO.
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During fiscal year 2004, we plan to sustain our investments in
maximizing the productivity of our workforce by continuing to address
the key management challenges of human capital, and both information
and physical security. We will continue to take steps to ``lead by
example'' within the federal government in connection with these and
other critical management areas.
Over the next several years, we need to continue to address skill
gaps, maximize staff productivity and effectiveness, and reengineer our
human capital processes to make them more user-friendly. We plan to
address skill gaps by further refining our recruitment and hiring
strategies to target gaps identified through our workforce planning
efforts, while taking into account the significant percentage of our
workforce eligible for retirement. We will continue to take steps to
reengineer our human capital systems and practices to increase their
efficiency and to take full advantage of technology. We will also
ensure that our staff have the needed skills and training to function
in this reengineered environment. In addition, we are developing
competency-based performance appraisal and broad-banding pay systems
for our mission support employees.
To ensure our ability to attract, retain, and reward high-quality
staff, we plan to devote additional resources to our employee training
and development program. We will target resources to continue
initiatives to address skill gaps, maximize staff productivity, and
increase staff effectiveness by updating our training curriculum to
address organizational and technical needs and training new staff.
Also, to enhance our recruitment and retention of staff, we will
continue to offer a student loan repayment program and transit subsidy
benefit established in fiscal year 2002. In addition, we will continue
to focus our hiring efforts in fiscal year 2004 on recruiting talented
entry-level staff.
To build on the human capital flexibilities provided by the
Congress in 2000, we plan to recommend legislation that would, among
other things, facilitate GAO's continuing efforts to recruit and retain
top talent, develop a more performance-based compensation system,
realign our workforce, and facilitate our succession planning and
knowledge transfer efforts. In addition, to help attract new recruits,
address certain ``expectation gaps'' within and outside of the
government, and better describe the modern audit and evaluation entity
GAO has become, we will work with the Congress to explore the
possibility of changing the agency's name while retaining our well-
known acronym and global brand name of ``GAO.''
On the information security front, we need to complete certain key
actions to be better able to detect intruders in our systems, identify
our users, and recover in the event of a disaster. Among our current
efforts and plans for these areas are completing the installation of
software that helps us detect intruders on all our internal servers,
completing the implementation of a secure user authentication process,
and refining the disaster recover plan we developed last year. We will
need the Congress' help to address these remaining challenges.
We also are continuing to make the investments necessary to enhance
the safety and security of our people, facilities, and other assets for
the mutual benefit of GAO and the Congress. With our fiscal year 2003
supplemental funding, if provided, or if not, with fiscal year 2004
funds, we plan to complete installation of our building access control
and intrusion detection system and supporting infrastructure, and
obtain an offsite facility for use by essential personnel in emergency
situations. With the help of the Congress, we plan to implement these
projects over the next several years.
CONCLUDING REMARKS
As a result of the support and resources we have received from this
Subcommittee and the Congress over the past several years, we have been
able to make a difference in government, not only in terms of financial
benefits and improvements in federal programs and operations that have
resulted from our work, but also in strengthening and increasing the
productivity of GAO, and making a real difference for our country and
its citizens. Our budget request for fiscal year 2004 is modest, but
necessary to sustain our current operations, continue key human capital
and information technology initiatives, and ensure the safety and
security of our most valuable asset--our people. We seek your continued
support so that we will be able to effectively and efficiently conduct
our work on behalf of the Congress and the American people.
As the Comptroller General of the United States, I am very proud of
how, in a time of uncertainty, GAO staff responded with a positive
attitude and did whatever their country required and demonstrated an
unwavering resolve to continue their work. Knowing this organization as
I do, I was not surprised. We at GAO look forward to continuing to help
the Congress and the nation meet the current and emerging challenges of
the 21st century.
Appendix I: GAO's Qualitative Performance Goals for Fiscal Years 2002
and 2003
This appendix lists GAO's strategic goals and the strategic
objectives for each goal. They are part of our updated draft strategic
plan (for fiscal years 2002 through 2007).
Organized below each strategic objective are its qualitative
performance goals. The performance goals lay out the work we plan to do
in fiscal years 2002 and 2003 to help achieve our strategic goals and
objectives. We will evaluate our performance at the end of fiscal year
2003.
Strategic Goal 1--Provide Timely, Quality Service to the Congress and
the Federal Government to Address Current and Emerging
Challenges to the Well-Being and Financial Security of the
American People
To achieve this goal, we will provide information and
recommendations on the following:
--the Health Care Needs of an Aging and Diverse Population
--evaluate Medicare reform, financing, and operations;
--assess trends and issues in private health insurance coverage;
--assess actions and options for improving the Department of
Veterans Affairs' and the Department of Defense's (DOD)
health care services;
--evaluate the effectiveness of federal programs to promote and
protect the public health;
--evaluate the effectiveness of federal programs to improve the
nation's preparedness for the public health and medical
consequences of bioterrorism;
--evaluate federal and state program strategies for financing and
overseeing chronic and long-term health care; and
--assess states' experiences in providing health insurance coverage
for low-income populations.
--the Education and Protection of the Nation's Children
--analyze the effectiveness and efficiency of early childhood
education and care programs in serving their target
populations;
--assess options for federal programs to effectively address the
educational and nutritional needs of elementary and
secondary students and their schools;
--determine the effectiveness and efficiency of child support
enforcement and child welfare programs in serving their
target populations; and
--identify opportunities to better manage postsecondary,
vocational, and adult education programs and deliver more
effective services.
--the Promotion of Work Opportunities and the Protection of Workers
--assess the effectiveness of federal efforts to help adults enter
the workforce and to assist low-income workers;
--analyze the impact of programs designed to maintain a skilled
workforce and ensure employers have the workers they need;
--assess the success of various enforcement strategies to protect
workers while minimizing employers' burden in the changing
environment of work; and
--identify ways to improve federal support for people with
disabilities.
--a Secure Retirement for Older Americans
--assess the implications of various Social Security reform
proposals;
--identify opportunities to foster greater pension coverage,
increase personal saving, and ensure adequate and secure
retirement income; and
--identify opportunities to improve the ability of federal agencies
to administer and protect workers' retirement benefits.
--an Effective System of Justice
--identify ways to improve federal agencies' ability to prevent and
respond to major crimes, including terrorism;
--assess the effectiveness of federal programs to control illegal
drug use;
--identify ways to administer the nation's immigration laws to
better secure the nation's borders and promote appropriate
treatment of legal residents; and
--assess the administrative efficiency and effectiveness of the
federal court and prison systems.
--the Promotion of Viable Communities
--assess federal economic development assistance and its impact on
communities;
--assess how the federal government can balance the promotion of
home ownership with financial risk;
--assess the effectiveness of federal initiatives to assist small
and minority-owned businesses;
--assess federal efforts to enhance national preparedness and
capacity to respond to and recover from natural and man-
made disasters; and
--assess how well federally supported housing programs meet their
objectives and affect the well-being of recipient
households and communities.
--Responsible Stewardship of Natural Resources and the Environment
--assess the nation's ability to ensure reliable and
environmentally sound energy for current and future
generations;
--assess federal strategies for managing land and water resources
in a sustainable fashion for multiple uses;
--assess federal programs' ability to ensure a plentiful and safe
food supply, provide economic security for farmers, and
minimize agricultural environmental damage;
--assess federal pollution prevention and control strategies; and
--assess efforts to reduce the threats posed by hazardous and
nuclear wastes.
--a Secure and Effective National Physical Infrastructure
--assess strategies for identifying, evaluating, prioritizing,
financing, and implementing integrated solutions to the
nation's infrastructure needs;
--assess the impact of transportation and telecommunications
policies and practices on competition and consumers;
--assess efforts to improve safety and security in all
transportation modes;
--assess the U.S. Postal Service's transformation efforts to ensure
its viability and accomplish its mission; and
--assess federal efforts to plan for, acquire, manage, maintain,
secure, and dispose of the government's real property
assets.
Strategic Goal 2--Provide Timely, Quality Service to the Congress and
the Federal Government to Respond to Changing Security Threats
and the Challenges of Global Interdependence
To achieve this goal, we will provide information and
recommendations on the following:
--Respond to Diffuse Threats to National and Global Security
--analyze the effectiveness of the federal government's approach to
providing for homeland security;
--assess U.S. efforts to protect computer and telecommunications
systems supporting critical infrastructures in business and
government; and
--assess the effectiveness of U.S. and international efforts to
prevent the proliferation of nuclear, biological, chemical,
and conventional weapons and sensitive technologies.
--Ensure Military Capabilities and Readiness
--assess the ability of DOD to maintain adequate readiness levels
while addressing the force structure changes needed in the
21st century;
--assess overall human capital management practices to ensure a
high-quality total force;
--identify ways to improve the economy, efficiency, and
effectiveness of DOD's support infrastructure and business
systems and processes;
--assess the National Nuclear Security Administration's efforts to
maintain a safe and reliable nuclear weapons stockpile;
--analyze and support DOD's efforts to improve budget analyses and
performance management;
--assess whether DOD and the services have developed integrated
procedures and systems to operate effectively together on
the battlefield; and
--assess the ability of weapon system acquisition programs and
processes to achieve desired outcomes.
--Advance and Protect U.S. International Interests
--analyze the plans, strategies, costs, and results of the U.S.
role in conflict interventions;
--analyze the effectiveness and management of foreign aid programs
and the tools used to carry them out;
--analyze the costs and implications of changing U.S. strategic
interests;
--evaluate the efficiency and accountability of multilateral
organizations and the extent to which they are serving U.S.
interests; and
--assess the strategies and management practices for U.S. foreign
affairs functions and activities.
--Respond to the Impact of Global Market Forces on U.S. Economic and
Security Interests
--analyze how trade agreements and programs serve U.S. interests;
--improve understanding of the effects of defense industry
globalization;
--assess how the United States can influence improvements in the
world financial system;
--assess the ability of the financial services industry and its
regulators to maintain a stable and efficient global
financial system;
--evaluate how prepared financial regulators are to respond to
change and innovation; and
--assess the effectiveness of regulatory programs and policies in
ensuring access to financial services and deterring fraud
and abuse in financial markets.
Strategic Goal 3--Help Transform the Government's Role and How It Does
Business to Meet 21st Century Challenges
To achieve this goal, we will provide information and
recommendations on the following:
--Analyze the Implications of the Increased Role of Public and
Private Parties in Achieving Federal Objectives
--analyze the modern service-delivery system environment and the
complexity and interaction of service-delivery mechanisms;
--assess how involvement of state and local governments and
nongovernmental organizations affect federal program
implementation and achievement of national goals; and
--assess the effectiveness of regulatory administration and reforms
in achieving government objectives.
--Assess the Government's Human Capital and Other Capacity for
Serving the Public
--identify and facilitate the implementation of human capital
practices that will improve federal economy, efficiency,
and effectiveness;
--identify ways to improve the financial management infrastructure
capacity to provide useful information to manage for
results and costs day to day;
--assess the government's capacity to manage information technology
to improve performance;
--assess efforts to manage the collection, use, and dissemination
of government information in an era of rapidly changing
technology;
--assess the effectiveness of the Federal Statistical System in
providing relevant, reliable, and timely information that
meets federal program needs; and
--identify more businesslike approaches that can be used by federal
agencies in acquiring goods and services.
Support Congressional Oversight of the Federal Government's
Progress toward Being More Results-Oriented, Accountable, and Relevant
to Society's Needs
--analyze and support efforts to instill results-oriented
management across the government;
--highlight the federal programs and operations at highest risk and
the major performance and management challenges confronting
agencies;
--identify ways to strengthen accountability for the federal
government's assets and operations;
--promote accountability in the federal acquisition process;
--assess the management and results of the federal investment in
science and technology and the effectiveness of efforts to
protect intellectual property;
--identify ways to improve the quality of evaluative information;
and
--develop new resources and approaches that can be used in
measuring performance and progress on the nations 21st
century challenges.
--Analyze the Government's Fiscal Position and Approaches for
Financing the Government
--analyze the long-term fiscal position of the federal government;
--analyze the structure and information for budgetary choices and
explore alternatives for improvement;
--contribute to congressional deliberations on tax policy;
--support congressional oversight of the Internal Revenue Service's
modernization and reform efforts; and
--assess the reliability of financial information on the
government's fiscal position and financing sources.
Strategic Goal 4--Maximize the Value of GAO by Being a Model Federal
Agency and a World-Class Professional Services Organization
To achieve this goal, we will do the following:
--Sharpen GAO's Focus on Clients' and Customers' Requirements
--continuously update client requirements;
--develop and implement stakeholder protocols and refine client
protocols; and
--identify and refine customer requirements and measures.
--Enhance Leadership and Promote Management Excellence
--foster an attitude of stewardship to ensure a commitment to GAO's
mission and core values;
--implement an integrated approach to strategic management;
--continue to provide leadership in strategic human capital
management planning and execution;
--maintain integrity in financial management;
--use enabling technology to improve GAO's crosscutting business
processes; and
--provide a safe and secure workplace.
--Leverage GAO's Institutional Knowledge and Experience
--improve GAO's use of Web-based knowledge tools;
--develop a framework to manage the collection, use, distribution,
and retention of organizational knowledge; and
--strengthen relationships with other national and international
accountability and professional organizations.
--Continuously Improve GAO's Business and Management Processes
--improve internal business and administrative processes;
--improve GAO's product and service lines; and
--improve GAO's job management processes.
--Become the Professional Services Employer of Choice
--maintain an environment that is fair, unbiased, family-friendly,
and promotes and values opportunity and inclusiveness;
--improve compensation and performance management systems;
--develop and implement a training and professional development
strategy targeted toward competencies; and
--provide GAO's people with tools, technology, and a working
environment that is world-class.
Senator Campbell. You claim you have achieved over $37
billion in financial benefits, generating a return on
investment of $88 for every dollar appropriated to you by the
Congress. Can you explain what you mean by financial benefits,
how you determine these benefits, and provide examples of some
of your largest items?
Mr. Walker. GAO produces financial benefits when its work
contributes to actions taken by the Congress or the Executive
Branch to: Reduce annual operating costs of Federal programs or
activities; lessen the costs of multiyear projects or
entitlements; or increase revenues from debt collection, asset
sales, changes in tax laws or user fees.
The funds made available in response to GAO's work may be
used to reduce Government expenditures or reallocated by the
Congress to other priority areas. To ensure conservative
estimates of net financial benefits, reductions in operating
cost are typically limited to 2 years of accrued reductions.
Multiyear reductions in long-term projects, changes in tax
laws, program terminations, or sales of Government assets are
limited to 5 years. In addition, all financial benefits are
calculated in net present value terms.
GAO has established policies and procedures to guide the
reporting of financial benefits. Estimates must be based on
independent third party sources and reduced by any identifiable
offsetting costs. The third parties are typically the agency
that acted on GAO's work, a congressional committee, or the
Congressional Budget Office.
All accomplishment reports for financial benefits are
documented and reviewed by another GAO staff member not
involved in the work, and a senior executive in charge of the
work. Also, a separate independent unit (Quality and Continuous
Improvement) reviews all financial benefits and must approve
benefits of $100 million or more, which amounted to 93 percent
of the total benefits recorded in fiscal year 2002. Finally,
all benefits over $1 billion are reviewed by GAO's Inspector
General, which amounted to about 58 percent of our total
financial benefits for fiscal 2002.
The following table lists GAO's major financial benefits
included in our fiscal year 2002 Performance and Accountability
Report, followed by summary explanations of the work
contributing to financial benefits over $500 million.
[The information follows:]
GENERAL ACCOUNTING OFFICE FISCAL YEAR 2002 FINANCIAL BENEFITS
[In millions]
------------------------------------------------------------------------
Description Amount
------------------------------------------------------------------------
Financial Benefits Exceeding $1 Billion:
Preventing Inappropriate Medicare Payments: Advocated $8,100
Medicare program safeguards help recover or avoid improper
payments..................................................
Improving Farm Loan Programs: Improved controls over USDA 4,800
loan administration reduces risk of defaults..............
Reducing the Cost of Federal Housing Programs: Review of 4,800
unexpended balances at HUD recaptures funds...............
Adjusting Department of Defense (DOD) Estimates: DOD 1,500
officials reduced foreign currency exchange estimates.....
Reducing Nuclear Waste Treatment Costs: New DOE contract 1,500
for Hanford Tank Waste Project expected to achieve
significant cost reductions...............................
Retaining the Substantial Gainful Activity Level: 1,124
Preserving an inability-to-work test as a qualification
for SSA disability insurance payouts......................
--------
Subtotal--Financial benefits exceeding $1 Billion...... 21,824
========
Financial Benefits Between $500 Million and $1 Billion:
Consolidation Initiatives at Department of Defense Computer 859
Centers: DOD consolidation initiatives at its computer
centers result in estimated savings and cost avoidances...
Computerized Interfaces Identify Undisclosed Earnings: SSA 797
use of computerized interfaces with Office of Child
Support Enforcement database helps prevent or reduce SSI
overpayments..............................................
Delaying Full-Rate Reduction of the V-22: DOD restructuring 764
of the Marine Corps program reduces program costs.........
More Efficient Use of In-orbit Satellite Capabilities: DOD 702
reduces excess capacity...................................
Ensuring Contingency Funds are Spent Properly: DOD's fiscal 650
year 2002 contingency funding reduced by Congress.........
Reducing DOD Funding: DOD's fiscal 2002 working capital 639
fund request reduced due to overestimate of bulk fuels....
Targeting Tax Credits: Legislative changes in tax laws 564
related to earned income tax credit eligibility rules and
Section 936 tax credit achieve savings....................
Contributing to the Military Base Closure and Realignment 545
Process: DOD base closures and realignment result in cost
reductions................................................
Increasing Use of Excess Property: DOD improves inventory 526
controls..................................................
--------
Subtotal--Financial benefits between $500 Million and $1 6,046
Billion.................................................
========
Total of 100 Financial Benefits Below $500 Million....... 9,900
========
Grand Total.............................................. 37,770
------------------------------------------------------------------------
Return on Investment: $87.8 per dollar invested in GAO.
Financial Benefits Exceeding $1 Billion
Preventing Inappropriate Medicare Payments.--Responding, in part,
to a body of GAO work and recommendations, the Congress passed
legislation in 1996 that increased funding from fiscal 1998 through
fiscal 2003 for activities to help safeguard the Medicare program from
improper payments. With this increased funding, the Department of
Health and Human Services created a fraud and abuse control program and
a Medicare integrity program for a variety of abuse-constraining
activities. The increased funding for these two programs helped the
Medicare program control improper payments by an additional $8.1
billion for fiscal 2001 and 2002.
Improving Farm Loan Programs.--In 1990, GAO designated the
Department of Agriculture's Farm Loan Programs as a high-risk area
because of billions of dollars of losses attributable to significant
problems primarily with the department's direct loan portfolio. Since
then, the department has implemented many of our recommendations to
improve the program, and the 1996 Farm Bill incorporated our key
legislative recommendations. These changes eliminated the revolving-
door credit for which the department had become known and gave farmers
strong incentives to repay their loans rather than to seek loan
forgiveness or loan refinancing that included write-offs of delinquent
debt. During the 5 years following enactment of the 1996 Farm Bill,
improvements in the program were estimated to reduce losses on direct
loans by about $4.8 billion, compared with the losses for the 5
preceding years.
Reducing the Cost of Federal Housing Programs.--In response to GAO
reports and recommendations over the past several years, the Congress,
the Department of Housing and Urban Development (HUD), and the U.S.
Department of Agriculture's Rural Housing Service took actions that
produced financial benefits totaling $6.1 billion. Over $4.8 billion
resulted from GAO's recommendation that HUD review unexpended balances
in all of its programs to ensure timely expenditure of appropriated
program funds. The remaining benefits resulted from a series of actions
in response to our work. For example, the Congress (1) funded fewer new
programs or set-asides than HUD had requested, (2) terminated Operation
Safe Home, and (3) enacted legislation that replaced HUD's home
mortgage assignment program with less costly alternatives.
Additionally, the Rural Housing Service centralized its servicing for
rural single family housing loans.
Adjusting Department of Defense (DOD) Estimates.--GAO reviewed the
reasonableness of the DOD's requests for fiscal 2001 for contingency
funding. During internal DOD budget deliberations, DOD officials
reduced the agency's foreign currency exchange estimates based on
congressional action--due to GAO's efforts--by $1.5 billion for fiscal
2002 and 2003. These adjustments did not affect readiness, and the
Congress used the adjusted funds for other needs.
Reducing Nuclear Waste Treatment Costs.--In 1996, GAO reviewed the
Department of Energy's (DOE) Hanford tank waste privatization project
and found many unresolved technical and financial uncertainties. In
1998, GAO compared DOE's Hanford approach with several alternative
contracting and financing strategies and suggested that DOE reassess
its approach in light of significant cost growth. In June 2000, GAO
testified that DOE should reevaluate its Hanford approach and consider
other contracting and financing options. DOE subsequently terminated
the Hanford tank waste project, and, after evaluating alternative
contracting and financing options, awarded a new contract that is
expected to achieve significant cost reductions--about $4 billion--over
the life of the construction phase. The financial benefit for fiscal
2003, 2004, and 2005 is about $1.5 billion.
Retaining the Substantial Gainful Activity Level.--To establish and
maintain eligibility for disability insurance benefits, beneficiaries
must not only meet medical eligibility criteria but also demonstrate
that they are not earning above a certain amount--known as the
Substantial Gainful Activity (SGA) level. In March 2000, congressional
hearings focused on the role of earnings in determining initial and
continuing eligibility for disability benefits for individuals who are
blind or have other disabilities. Prior to these hearings, bills
introduced in the House and Senate had proposed eliminating the SGA
level for the blind. While an advocate organization for the blind
testified that it wanted the Congress to eliminate the SGA level for
the blind, GAO responded that doing so would increase the costs of
disability insurance and fundamentally alter the purpose of the
disability insurance program by removing the connection between
eligibility for benefits and the inability to work. As a result of our
testimony, the Congress retained the SGA for the blind, resulting in a
financial benefit of $1.124 billion in fiscal 2001 and 2002.
Financial Benefits Between $500 Million and $1 Billion
Consolidation Initiatives at Department of Defense Computer.--GAO
recommended that DOD deploy cost savings measures such as
consolidation, modernization, and outsourcing of computer center
activities and processes to make computer center operations more
economical and efficient. As a result, the Defense Information Systems
Agency--the agency responsible for managing Defense Enterprise
Computing Centers--undertook a major DOD project that led to savings or
cost avoidance over a 4-year period covering fiscal 1998 through 2001.
More specifically, DOD estimated savings or cost avoidances of $700
million from consolidation initiatives at computer centers, $39 million
from consolidating software licenses, and $19 million from optimization
of storage capabilities. The net present value of the estimated
financial benefit is $859 million.
Computerized Interfaces Identify Undisclosed Earnings.--In 1998,
GAO reported that an Office of Child Support Enforcement database,
known as the National Directory of New Hires, could be used to help
prevent or reduce overpayments of supplemental security income that
occur when recipients fail to fully disclose their earnings. We
recommended that the Social Security Administration (SSA) develop
computerized interfaces to access this database and detect undisclosed
earnings during initial and subsequent determinations of eligibility.
SSA developed these interfaces, gave all field offices direct access to
the database, and instructed field staff to use the database for cases
meeting specified criteria. These actions have resulted in financial
benefits of about $797 million.
Delaying Full-Rate Production of the V-22.--In January 2001, GAO
briefed the Secretary of Defense's V-22 Blue Ribbon Panel about our
findings on the aircraft. The Blue Ribbon Panel was formed to
investigate the V-22 after a fatal crash in December 2000, just prior
to the aircraft's planned full-rate production. The panel received
information from GAO about reductions in development testing, test
waivers, deficiencies identified during operational tests, and results
of an earlier April 2000 crash investigation that also involved
fatalities. Much of the information in our briefing about the V-22 had
not been previously disclosed. The panel used the information to
support its position that the V-22 was not ready for full-rate
production and that only a minimum production rate should be continued
during additional testing and evaluation of the aircraft. The Congress
subsequently rescinded $446.5 million from the fiscal 2001 supplement
request and reduced the fiscal 2002 request by $296.3 million. The net
present value of the two actions is $763.8 million.
More Efficient Use of In-orbit Satellite Capabilities.--In 1998,
GAO reviewed DOD's development of the Space-Based Infrared System
(SBIRS), under which the launch of the first SBIRS satellite was
planned for fiscal 2002. We reported that implementing this plan would
put eight excess satellites in orbit without providing sufficient
ground processing capabilities for the data the satellites generated.
We recommended that the Secretary of Defense review and assess launch
alternatives. As a result, DOD delayed the launch of the first SBIRS
satellite from fiscal 2002 to fiscal 2004 and subsequently delayed
other such launches. These delays, which allow DOD to use existing
satellites until the end of their expected lives and avoid 8 years of
excess satellite capability, saved about $702 million in satellite
costs.
Ensuring Contingency Funds Are Spent Properly.--Since 1991, the
Department of Defense has spent more than $25 billion in support of
military operations in the Balkans and the Persian Gulf. In assessing
DOD's use of contingency operations funds in fiscal 2000 and 2001, we
identified millions of dollars in questionable expenditures resulting
from limited guidance and oversight combined with a lack of cost
consciousness. In responding to our findings, the Congress reduced DOD
funding for those operations by $650 million in fiscal 2002. In
commenting on our report, DOD also stated its intention to improve its
guidance for and oversight over the use of contingency funds.
Reducing DOD Funding.--GAO reviewed the reasonableness of DOD's
fiscal year 2002 budget request for its Defense Working Capital Fund to
assist subcommittees in their appropriation and authorization
deliberations. GAO estimated the value of DOD's overstatement due to
bulk fuels. On the basis of GAO's findings, the Congress adjusted DOD's
budget request by $639 million.
Targeting Tax Credits.--Several GAO studies in the early and mid-
1990s evaluated aspects of the design of the possessions tax credit and
the earned income tax credit. As a result of these studies, the
Congress modified the tax code, replacing the possessions tax credit
with a less generous credit that will be eliminated in 2006 and
tightening the eligibility requirements for the earned income tax
credit. More current information on the 5-year impact of these changes
points to $564 million in revenue savings that GAO has not claimed
previously.
Contributing to the Military Base Closure and Realignment
Process.--Since 1979, GAO has issued a number of reports documenting
excess infrastructure within the Department of Defense and supporting
the need for a base closure and realignment process. The Congress
authorized such a process and enacted legislation requiring us to
provide it with a series of reports and testimonies validating DOD's
implementation. We monitored and assessed all phases of the decision-
making process, including executive-level sessions, for compliance with
congressional requirements. In addition, GAO staff assisted commissions
that recommended base closures and realignments in 1991, 1993, and
1995. The staff helped shape the commissions' decisions through
analyses of issues associated with closing or realigning specific
installations. Last year, we reported cost reductions of about $6
billion associated with our work. Updated DOD data indicate further
cost reductions of $545 million.
Increasing Use of Excess Property.--GAO reported that $2.7 billion
worth of military property recorded as shipped to disposal offices was
never recorded as received, resulting in losses and write-offs of the
property from the military services' books and inventory records. GAO
recommended changes that avoided the write-offs and kept the items as
part of the services' inventory records until the property was actually
disposed of. As a result, the inventory was available for use by DOD
customers during the period prior to disposal. For the first 2 years
that the changes were in effect, they resulted in savings of $526
million.
HUMAN CAPITAL FLEXIBILITIES
Senator Campbell. You spoke about what you called human
capital flexibility. What is an example of human capital
flexibility?
Mr. Walker. Two comments. First, in calendar 2000, this
subcommittee was instrumental in helping us to achieve our
first set of flexibilities. You gave us the authority to offer
targeted early outs and targeted buyouts to realign our
workforce rather than downsize our workforce. The Congress, as
you know, passed a similar provision for the entire executive
branch as part of the Department of Homeland Security Act. We
served as a beta or test case for the entire Government.
As far as looking forward, one of the things that I am
looking to do, Mr. Chairman, is right now we have to
automatically follow the executive branch for the across-the-
board pay increases that are mandated each year. I would like
some additional flexibility so we do not have to follow them in
lock-step. I want to make sure that our compensation is geared
more toward the skills, knowledge, position and performance of
our employees, rather than the passage of time and the rate of
inflation.
Senator Campbell. You are going to have to help me with
some of this. As I understand it, about one-third of the GAO's
resources go to support costs, which means activities that are
not directly in support of the work for Congress. What are some
of those support costs, and how does that compare with other
Government organizations?
Mr. Walker. I would respectfully suggest that everybody
that works at GAO is contributing to mission, and if they are
not contributing to mission, then we should not have them. It
is as simple as that. There are differences, though, between
the individuals who are actually doing the audits, the
investigations, the evaluations, rendering the legal opinions,
and adjudicating the bid protests versus those who are
providing support services. Our numbers of staff providing
support services are reasonable, and in line with other
agencies; in fact, they are coming down.
One of the things we have done over the last 4 years is
reduce the number of so-called support services staff by about
13 percent, while our overall number of staff has only gone up
about 1 percent. So, we have taken that 13 percent and
redeployed it to auditors, investigators and evaluators; those
who are directly providing services to the Congress. We will
continue to do that to the extent that we can.
FIELD OFFICES
Senator Campbell. You have 11 locations, including one in
my State, in Denver.
Where is GAO's Denver office located?
Mr. Walker. GAO's Denver field office is located in the
Cesar E. Chavez Memorial Building at 1244 Speer Boulevard,
Suite 800, Denver, Colorado.
We would love to have you any time you want to come.
Senator Campbell. Maybe I will try to visit that just so I
can learn a little more about your Denver operation. We have
terrible deficits and a lot of changes in our budget proposals,
as you know. Do you intend to keep those 11 open? What are your
plans, at least for the foreseeable future for your field
offices?
Mr. Walker. I do, Mr. Chairman. I think it is important to
note that back in the early 1980's, GAO had 42 offices,
including 3 overseas offices. When I came in, we had 16 offices
and none overseas. I conducted a very extensive review and
analysis, and we went from 16 to 11. I believe that these 11
offices are appropriate for the foreseeable future.
FIELD OFFICE CLOSURES
Senator Campbell. Did they just consolidate some of the
other ones?
Mr. Walker. We closed five offices, Mr. Chairman.
Senator Campbell. Has that been a substantial savings to do
that?
Mr. Walker. These office closures enabled us to free up
some resources to redeploy for other purposes and, therefore,
to minimize additional budget requests to the Congress. By the
way, some of the authorities Congress gave us helped us
tremendously to achieve that objective as well.
WALKER V. CHENEY
Senator Campbell. Now, I am not an attorney, so I do not
follow an awful lot of the court cases like some of my
colleagues, but tell me about the District Court's decision not
to hear the Walker versus Cheney case. How does that affect
you?
Mr. Walker. We do not believe it will have a significant
adverse effect on GAO and our ability to do our job. That was a
case in which a Federal District Court Judge in Washington,
D.C. dismissed the case for lack of standing.
We believe it was wrongly decided, based in part on
material factual errors. However, I decided not to appeal the
case, primarily because it dealt with an area that only
represents a narrow percentage of our work, namely the work
dealing directly with the Office of the Vice President. Second,
this case was viewed by many as being more of a political
battle, and I do not want to get in the middle of a political
battle. Third, it would have taken years to pursue, even if we
had appealed the case. So, my view is the better part of valor
was to move on and look for a better case in the future. The
decision has not had an adverse affect on our access authority
since then.
Importantly, the judge did not directly address our
statutory rights to information. He did not decide who was
right or wrong. He just basically said that the judicial branch
should not have to decide this dispute between the executive
and the legislative branches. But we are monitoring the
situation closely, and to the extent that we believe that we
have any problems, we will come to the Congress for appropriate
action.
EMERGENCY WARTIME SUPPLEMENTAL
Senator Campbell. This week the White House submitted a $75
billion request for this war and homeland security, which
included $125 million for the legislative branch. Is any of
that money in there intended to go to the GAO and what would
you use it for?
Mr. Walker. Well, Mr. Chairman, I am glad you asked that.
We did ask for $4.849 million which will be used for
safety- and security-related improvements, not just for GAO and
our employees, but as you know, we are also a contingency site
for the House of Representatives. In fact, we housed the House
of Representatives during a 2-week period due to the anthrax
event that occurred in the fall of calendar 2001.
For the first time in history, OMB did not pass through the
entire legislative branch request to the Congress. That is
unprecedented. I believe it is inappropriate; it is a
separation of powers issue. I would respectfully hope that the
Congress would include that $4.849 million as part of the
supplemental, because we believe it is not just necessary for
GAO, it is also necessary because of our designation as a
possible contingency site for the U.S. House of
Representatives.
CLOSING REMARKS
Senator Campbell. Thank you. Was the anthrax issue 2 years
ago?
Mr. Walker. Time flies, Mr. Chairman.
Senator Campbell. Okay. I appreciate that. I have no
further questions.
Mr. Walker. Thank you, Mr. Chairman, and I would be happy
to answer any additional questions for the record.
Senator Campbell. Thank you. I think we may submit some,
particularly Senator Durbin, since he is not yet here.
GOVERNMENT PRINTING OFFICE
STATEMENT OF BRUCE R. JAMES, PUBLIC PRINTER
ACCOMPANIED BY:
GEORGE A. TAYLOR, DEPUTY PUBLIC PRINTER
FRANK A. PARTLOW, JR., CHIEF OF STAFF
JUDITH C. RUSSELL, SUPERINTENDENT OF DOCUMENTS
Senator Campbell. Our next panel is Mr. Bruce James, the
Public Printer, and he will be accompanied by Mr. George
Taylor, Mr. Frank Partlow, and Judith Russell, and I assume Mr.
James will be the only one making a statement, is that right?
Mr. James. Well, I am the only one making an opening
statement, Mr. Chairman, but I may call on my colleagues if
your questions are too tough.
Senator Campbell. Go ahead, Mr. James.
Mr. James. Well, I want to welcome you to the subcommittee,
too, and I am looking forward to a long and good working
relationship with you. As you know, I am the new Public
Printer. I have been here since the beginning of December, just
a little over 3 months, and have come to the conclusion that
this is going to be the best job I have ever had. The reason
is, it is the toughest.
This is an interesting situation. The first 2 days I was on
the job I spoke with our employees, gave five speeches over 2
days. We never close, as you know, so I was in at 4 o'clock in
the morning, I was in at 10 o'clock at night giving speeches,
and what I talked to our employees about was the fact that the
19th century was not going to return, and by that I mean that
printing as our middle name--the Government Printing Office--
may well get in the way of how we view ourselves and how we
viewed ourselves over the years.
The United States Government Printing Office has a mission
of making certain that we collect all Government documents, we
process those documents, we catalog those documents, we
distribute the documents to depository libraries throughout the
United States, and we preserve those documents in perpetuity.
The fact that some of our documents end up with ink on paper is
not the main purpose of our mission, and what we are seeing for
the first time is that the amount of material that is printed
is going to fall below 50 percent. We believe as much as 60
percent of the Government documents this year will be in
digital form. They will not see ink on paper.
It does not mean they will not be printed. They may well be
printed from a personal computer, but they will not be printed
at the United States Government Printing Office or by one of
our printers. Therefore, what that means is that it is
necessary that we face the future squarely, and that we design
a business model for the Government Printing Office that is a
21st century business model, and that is what we are starting
to do.
You probably noticed the article in this morning's
Washington Post which talked about the GPO reorganization. I
thought it was a good article. I thought they captured the
spirit of what we are trying to do. We are reorganizing the GPO
to be more flexible to provide much better customer service, to
be able to drive decisionmaking in our organization down to
lower levels, to increase the efficiency.
We have also embarked on a strategic planning process that
I think at the end of the day will result in a new GPO that is
absolutely attuned to the future. It is a three-stage process.
The first part of the process is what I call fact-finding, and
what we are doing is, we are talking to our customers, we are
talking to our employees, we are talking to the printers in the
United States, we are talking with librarians, and we are
trying to understand exactly where they are going in the
future.
We want to understand what our resources are truly, not
anecdotally, but what our true resources are, and after we
gather all these facts together it is my job to get everybody
on the same page and get everybody to agree that these are the
facts, and once we have agreement on the facts, then we will
move forward to make a plan, and we expect that that plan will
outline, as I say, a new business model for the GPO that will
be based around a digital infrastructure that will offer to
Congress solutions for some of the problems that we face
together.
As an example, if you today order a paper document from the
Superintendent of Documents, that document will be delivered to
you by the United States mail, it will come in a Government-
franked envelope, the penalty envelope. You tear that envelope
open, and you have in your hands what you have every right to
believe is an authentic United States Government document.
On the other hand, if you download that same document from
the Internet, you have no way of knowing today that that is an
authentic document, so one of the problems that we have to
address and solve is, how can we guarantee that information
downloaded from a Government Web site is an authentic U.S.
Government document?
At the other end of the scale, if we print a document on
paper, we have every reason to believe that document will be
here 500, 600, 700, 800 years from now. Unless paper documents
are exposed to direct sunlight, they will last forever.
On the other hand, if we record it only on magnetic media,
it may be gone in 10 years. So as long as Congress charges us
with the responsibility for making certain this material will
last in perpetuity, we have got to find a solution to this,
too, and I believe this will be both a technical solution as
well as a business solution.
So we have to end up structuring our organization to take
advantage of the new technological opportunities to make
certain that we are not just repeating the past, that we are
not living in the 19th century. A lot of that has to do with
reforming our business practices. I think that I can report to
you that at this point our labor organizations, our unions are
solidly behind the direction we are going. We are working
together in partnership to move this forward.
I can address and I will address our request from you this
year. As Mr. Walker said, we recognize, too, that Congress is
going to be limited in what you can appropriate to legislative
branch agencies this year, and we are mindful of that. We have
two major areas that we are requesting funds for. One is the
Congressional Printing and Binding Appropriation. That is to do
your work. We anticipate that your work this year will result
in a 1.7 percent increase over last year. That is what we are
asking for.
The second area is the Salaries and Expenses Appropriation
for the Superintendent of Documents, and that is for the
distribution of Government information throughout the country.
We are asking for a 3 percent increase there for continuing
operations, and that is basically to cover mandatory pay and
benefit increases, as well as slight price level increases.
We are also asking you to make two investments in the
Government Printing Office this year. One of those investments
is a $4.1 million allocation to allow us to replace 10-year-old
technology, computer technology used to distribute digital
information over the Internet. We simply have waited almost too
long to make this kind of investment. We are ready to make it.
We have the people in place to wisely spend the money.
The second area we are asking for is a special $10 million
appropriation to help us readjust our labor force. As you
undoubtedly know, we have been operating the last few years in
the red, and as I have examined the reasons why we have been in
the red, it is very clear that our labor costs are above what
is required to process the volume of work we have today, the
volume and mix of work we have today, and we believe that we
are in a position to reduce the labor force by about 10
percent, or 300 people.
We would like to be able to offer an incentive to our labor
force to induce some of the people that are eligible for
retirement to retire perhaps earlier than when they expected
to. We anticipate that a $10 million investment on your part
will result in an $18 million cost savings next fiscal year to
us, so those are the two areas that we are asking you to
participate with us in. I think that particularly these capital
investments, are modest. They are less than 2 percent of our
overall budget, probably should be higher than that, but I am
not going to come to you with any proposition that I cannot see
a clear payback to, and at this point I can recommend these to
you. You will get a payback.
PREPARED STATEMENT
I will be happy to answer any questions you might have, Mr.
Chairman.
[The statement follows:]
Prepared Statement of Bruce R. James
Mr. Chairman and Members of the Subcommittee, it is a great honor
to be here today to present the appropriations request of the U.S.
Government Printing Office (GPO) for fiscal year 2004. It is also a
great privilege. There are few posts in the Government and few Federal
agencies that have stood the test of time as well as that of the Public
Printer and the GPO. I intend to do my best to uphold the tradition of
the office while providing the leadership required to guide the GPO
into a new era, to ensure that it remains as relevant and necessary to
the information needs of Congress, Federal agencies, and the public in
the 21st century as it was for the first 140 years of its existence.
With just over three months on the job, I have begun to carry out that
promise.
GPO's Mission.--GPO has a proud history, one built on innovation,
craftsmanship, scale, flexibility, and a singular dedication to meeting
the printing needs of the Federal Government and the information needs
of the American people. It is one of the Nation's oldest and most
venerable agencies, within which the official version of every great
American state paper since President Lincoln's time has been produced.
Today we are responsible for the production and distribution of
information products and services for all three branches of the Federal
Government. Many of the Nation's most important information products,
such as the Congressional Record and all other legislative information
supporting the U.S. Senate and House of Representatives, are produced
at GPO's main plant, a 1.5 million square foot complex that is the
largest information processing, printing, and distribution facility in
the world. Working in partnership with the American printing industry,
GPO also maintains a pool of private sector vendors nationwide to
produce print and other information products for the Federal
Government, ranging from Supreme Court decisions to IRS tax forms and
crop reports for the Department of Agriculture.
GPO's middle name--a name we are going to change--gets in the way
of our true mission, which is keeping America informed by distributing
the official information products of the Government, thereby sustaining
one of the keystones of our 200-year old experiment in freedom: an
enlightened public. This is a mission that traces its origins to our
Founding Fathers. During the Constitutional Convention, James Wilson of
Pennsylvania said, ``The people have a right to know what their agents
are doing or have done, and it should not be in the option of the
legislature to conceal their proceedings,'' creating the grounds for
the constitutional requirement in Article I, section 5, that ``Each
House shall keep a Journal of its Proceedings, and from time to time
publish the same . . .'' Later, it was James Madison who eloquently
said:
A popular Government without popular information, or the means of
acquiring it, is but a Prologue to a Farce or a Tragedy; or perhaps
both. Knowledge will forever govern ignorance: And a people who mean to
be their own Governors, must arm themselves with the power that
knowledge gives.
Congress moved early to establish the ``means of acquiring''
information that Madison spoke of. GPO's mission today traces its roots
to an act of the 13th Congress, which provided for the distribution of
congressional and other Government documents on a regular basis to
libraries and other institutions in each state for that Congress and
``every future Congress.'' This farsighted act established the
antecedent for the Federal Depository Library Program, a program funded
through GPO's appropriations, which today serves millions of Americans
through a network of some 1,200 public, academic, law, and other
libraries located in virtually every congressional district across the
Nation. Along with that program, GPO today also provides public access
to the wealth of official Federal information through public sales,
through various statutory and reimbursable distribution programs, and--
most prominently--by posting nearly a quarter of a million Federal
titles online on GPO Access (www.gpo.gov/gpoaccess), GPO's award-
winning Web site that is used by the public to retrieve more than 31
million documents free of charge every month.
New Strategic Direction.--Just as GPO's middle name gets in the way
of understanding our true mission, the nature of what we do, printing--
once the world's only mass communications medium--has been eclipsed by
revolutionary changes in electronic information technologies,
principally the Internet. Where once printing predominated as the means
of communication between the Government and the public, new and ever-
evolving strategies of communications are not only possible but have
become mainstream practices, changing how America is kept informed.
While printing will not disappear in our lifetime, its role in our
lives--and in the lives of GPO's customers--has been forever changed.
We are now in a period where we need to sort out what continues to
belong in print and what best belongs in information retrieval systems
that allow the public to define their own information needs, then
search against databases of information that we construct to retrieve
only what they need, only when they need it. Therein lies the challenge
for GPO. Like every other manufacturing business in America, GPO must
reinvent itself if it is to remain relevant and viable for the future.
We must take a new look at the changing and emerging information needs
of our customers and develop a deeper understanding of our true
strengths so that we can plan for and build a new business model that
will allow us to meet the information demands of our customers in the
21st century. Then we must convince Congress and our customers to
support our plan. As Public Printer, I lead this effort.
To develop a plan that works, our first step is to determine the
facts regarding GPO's strengths and weaknesses and the problems and
opportunities facing us. We are already engaged in that process through
participation in a wide-ranging General Accounting Office study of
Federal printing and information policy, ordered by the Senate. In a
related effort, the GAO is also conducting a general management review
of our operations. When these studies are concluded later this year we
will have a factual basis on which to build a strategic plan.
The plan will present a new vision of GPO, establish specific and
measurable short- and long-term goals and objectives, and contain
budget and timetable details. Our next task will be to gain support for
the plan from Congress, the Administration, and our customers, from the
library and information communities, from the printing industry and the
labor unions, and from all those who have a stake in the future of the
goals of Federal information policy first articulated by the Founders.
Then we must carry out the plan, to transform GPO into an information
service equipped and staffed to meet the information demands of the
21st century: an agency whose mission will be to capture digitally,
organize, maintain, authenticate, distribute, and provide permanent
public access to, the information products and services of the Federal
Government.
Transformation Process Begun.--Since I took office in early
December, we have begun several initiatives to redirect the GPO's focus
and begin transforming our operations:
--Reorganization.--We have implemented an organizational model that
is relatively new to the Federal Government but widely used in
industry, wherein the chief executive officer (Public Printer)
focuses on organizational policy and long-range planning and
the second in command (Deputy Public Printer) serves as chief
operating officer focusing on the day-to-day operations of the
business. Working in collaboration with GPO's senior managers,
we have rolled out a new top-level organizational structure
that will be more responsive to the needs of our customers and
employees and serve in a transition phase over the next two
years.
--Focus on Employees.--Through a series of round-the-clock meetings
to cover all three shifts, I've met with most of our employees
and their union representatives in our central office, and to
date I've visited GPO operations in Laurel, Philadelphia,
Denver, and Pueblo. I've asked for their help in retooling GPO
from top to bottom into an organization that will make us all
proud. The response has been highly positive: our employees are
ready and eager for change, and I continue to be impressed by
the superior quality of the personnel who staff the GPO. We've
begun recruiting efforts at colleges and universities around
the country to begin reversing the decades-long drain on GPO's
talent. We've implemented the first new employee incentive
program at GPO in over a decade to reward creativity,
dedication, and initiative. We've expanded our workforce
development budget to $3 million--just 1.5 percent of our
overall budget, but 5 times the amount previously allocated--to
ensure that no one is left behind as we transform our
operations, and we've altered our workforce development policy
to emphasize training that is mission-related, not simply job-
related. We're expanding the use of digital communications
internally, and we've created a new Employee Communications
Office to provide employees with the information they need to
do their jobs effectively.
--New Image.--We've redesigned GPO's logo to create a new image that
moves us away from printing and into the 21st century area of
digital information processing and multi-media dissemination.
--Emphasis on Customer Service.--A principal goal is to redirect
GPO's operations toward customer service--helping our customers
meet their goals, rather than bending their needs to fit what
we provide. I've been meeting with Members of Congress, key
congressional staff, Federal agency heads, the heads of Federal
operations with congruent missions--such as the Postmaster
General, Director of the Bureau of Engraving and Printing, and
Director of the Mint, the library and information communities,
the printing industry, and others--to win support for the GPO
and increase our future business opportunities. I am especially
interested in exploring ways of helping Congress reinvent its
information products to help expedite its work.
--Resolution of Printing Controversy.--One of my earliest meetings
was with Office of Management and Budget (OMB) Director Mitch
Daniels, where we reached an agreement to set aside the
contention between our agencies regarding Federal printing
policy. Since then, OMB sent the U.S. Budget to GPO for
production and the proposed policy change in printing has not
been issued. I have asked Mr. Daniels to walk forward with me
as we establish the facts about printing and information policy
and devise a policy that fits the 21st century, and I look
forward to working with OMB on this important task.
--Technology Innovation and Partnerships.--I've also been meeting
with the top management of our suppliers--from printing
companies to equipment manufacturers--to explore the
opportunities for the GPO to assume a leadership position in
technological innovation in the digital information era. As
part of our reorganization I've created a new Office of
Innovation and Partnerships to get us moving on technology
opportunities. It will also guide us in the creation of
partnerships with other public and private sector entities to
carry out our mission. Partnerships--the use of which is
widespread in industry--will be critical to the transformation
of the GPO.
--Depository Libraries of the Future.--In meetings with members of
the library community at the American Library Association
Midwinter Conference in Philadelphia, and at the upcoming
Regional Conference of the Depository Library Advisory Council,
I have challenged all to help us in developing a new depository
library program model that recognizes that more than 50 percent
of the information coming into the program is now only in
electronic form, never reaching ink-on-paper. This is one of
the biggest challenges that confronts us today, and its
resolution will directly impact the appropriations that are
provided annually for this purpose.
--Contingency Planning.--Part of our reorganization was the creation
of a Contingency Planning effort, reporting to the Chief of
Staff, to plan for emergency preparedness, protection of our
employees, and continuity-of-government operations in concert
with similar planning efforts in Congress, Federal agencies,
the District of Columbia, and elsewhere. We are working
directly with the House and Senate to ensure continuity of
operations in the event of an emergency, and we are finalizing
operational improvements funded through the fiscal year 2001
emergency supplemental.
GPO's Appropriations.--The transformation of GPO will be a
collaborative process, one that involves all of GPO's stakeholders,
especially Congress. With the transformation we will provide Congress,
Federal agencies, and the public an agency equipped and staffed to
bring about change in Federal information products and services. In
order to make the transition happen, however, GPO needs funding not
only to continue product and service provision, but to begin making the
investments we know are needed now to position us for the future. Our
appropriations request for fiscal year 2004 is targeted at these two
objectives: maintenance of product and service quality, and investment
in necessary technology improvements and critical workforce
restructuring initiatives. With the proper funding, we will be able to
carry out the task of remaking the GPO.
GPO has three separate appropriation accounts: the Congressional
Printing and Binding Appropriation, and the Salaries and Expenses
Appropriation of the Superintendent of Documents, and the Revolving
Fund.
The Congressional Printing and Binding Appropriation covers the
estimated costs of producing the Congressional Record, bills, reports,
hearings, documents, and related products required for the legislative
process. This appropriation is critical to the maintenance and
operation of GPO's in-plant capacity, which is structured to serve
Congress's information product needs. It also covers database
preparation work on congressional publications disseminated online via
GPO Access.
The Salaries and Expenses Appropriation of the Superintendent of
Documents is used to pay for costs associated with documents
distribution and information dissemination functions required by law.
The majority of the appropriation is for the Federal Depository Library
Program (FDLP), under which Government publications and information
products are disseminated to 1,200 Federal depository libraries where
they are available for the free use of the public. Related statutory
functions covered by this appropriation are cataloging and indexing,
by-law distribution, and the international exchange distribution of
U.S. Government publications. Finally, this appropriation provides the
majority of funding for the operation of GPO Access.
The Revolving Fund is structured to provide working capital for
GPO's operations, and to fund routine improvements to equipment and
facilities. Non-recurring or extraordinary costs are met by
appropriations to the Revolving Fund for specific purposes.
Continuation of Services.--For the Congressional Printing and
Binding Appropriation, we are requesting $91.1 million for fiscal year
2004, an increase of 1.7 percent over the funding recently approved for
fiscal year 2003. This amount will cover all estimated congressional
printing requirements for fiscal year 2004, as detailed in our budget
submission.
GPO is fully prepared to assist the Secretary of the Senate, the
Clerk of the House, the leaderships of both Chambers, and Members,
committees, and staffs in efforts to improve the utility of
congressional information products and services to the legislative
process and reduce costs through the elimination of waste and
duplication of effort. Rather than solely responding to requests from
Congress, I view GPO's role as one of providing expert advice and
assistance to Congress in the area of legislative information products
and services, and we will be proactive in exercising this role. We are
also prepared to participate in the Legislative Branch Chief
Administrative Officers Council mandated by the conferees on the
Legislative Branch Appropriations Act for Fiscal Year 2003 (H. Rpt.
108-10).
For the Salaries and Expenses Appropriation of the Superintendent
of Documents, we are requesting an increase of 3 percent, or $871,000,
over the amount approved for fiscal year 2003 to cover mandatory pay
and benefits increases as well as price level changes.
The transition to a more electronic Federal Depository Library
Program (FDLP) is continuing in fulfillment of direction from Congress
that ``emphasis should be on streamlining the distribution of
traditional copies of publications which may include providing online
access and less expensive electronic formats.'' Nearly 60 percent of
the 34,800 new FDLP titles made available during fiscal year 2002 were
disseminated electronically. For fiscal year 2003 to date, nearly 60
percent of the new titles made available to the public through the FDLP
have been online. Through its electronic information dissemination
component, the FDLP now delivers more content to users than ever
before. However, in order to preserve public access, the distribution
of tangible formats--defined as print, CD-ROM, and microfiche formats--
continues for those titles for which there is no acceptable online
alternative. For fiscal year 2002, we distributed approximately 5
million copies of 14,000 titles in tangible formats; overall, tangible
formats comprised about one-third of all titles made available through
the FDLP.
Investment in GPO's Future.--To begin essential investment in GPO's
future, we are requesting additional funds above the levels required
for continuation of services. These funds, amounting to slightly less
than 2 percent of GPO's total annual budget, represent a new point of
departure for GPO.
An additional $4.1 million is requested for the Salaries and
Expenses Appropriation to replace obsolete technology used by the GPO
Access system by upgrading its search and retrieval system, now nearly
a decade old. These funds will also cover depreciation costs for GPO's
new Integrated Library System and for our GPO Access mirror site
operations, which are essential both to load-balancing for this
heavily-used system as well as continuity of government operations.
These are information technology investments that will yield proven
results as two-thirds of all new titles today are electronic and
significant growth in this area will continue.
Also essential to GPO's future is $10 million we are requesting to
be appropriated to the Revolving Fund to cover the costs associated
with necessary workforce restructuring under retirement incentive
authority established by law. This is an investment in human capital
that will enable GPO to manage the size, composition, and skills of our
workforce as required by our rapidly changing technology. The
efficiency of operations will depend largely on our ability to increase
the productivity of the workforce by developing needed skills,
replacing aging systems, reengineering work processes, and achieving
the right staffing levels. GPO last conducted a retirement incentive
program in fiscal year 1994, reducing employment levels by
approximately 350 at a cost of about $9.5 million.
Legislative Changes.--Along with our appropriations request, we are
seeking two technical legislative changes to Title 44, U.S.C., to
improve our ability to attract and retain leadership talent and give us
the authority to accept contributions of equipment and services as well
as transfer or donate surplus equipment to appropriate entities. Both
changes would significantly assist my vision of transforming the GPO.
--We have submitted language requesting a revision to 44 U.S.C. 303
to increase the statutory pay levels of the Public Printer and
Deputy Public Printer. The current levels have been in place
for more than a decade and are causing pay compression for
GPO's senior level service. The maximum salary available to
GPO's senior level service is capped at Executive Level IV,
$134,000. By contrast, 60 percent of the Senior Executive
Service in the executive branch is paid at the current cap,
$142,500 (the same as Executive Level III), according to a
recent new report from the National Academy of Public
Administration. Without the ability to compete on a level
playing field with executive pay for the rest of the Federal
Government, much less with executive pay in the private sector,
we will be unable to recruit and retain the talent we need to
bring change to the GPO.
While we have submitted language adjusting the pay Executive
Levels II and III, a more appropriate model exists in the pay
system for the Director and Deputy Director of the
Congressional Budget Office (CBO), adopted by Congress in the
Legislative Branch Appropriations Act for Fiscal Year 1999: the
Director is paid at ``the lower of the highest rate of
compensation of any officer in the Senate or any officer in the
House of Representatives.'' The Deputy is paid $1,000 less than
the Director. This model would satisfy our objective of
alleviating pay compression without raising the Public
Printer's pay to the level of the pay Members of Congress
receive.
--We are also requesting authority to accept contributions of
property and services on behalf of the GPO. Currently, GPO is
not authorized by law to accept uncompensated contributions of
property and services. This authority will allow us to accept
the placement of prototype equipment for beta-testing and
systems trials without requiring a significant Government
investment, providing us with the flexibility we need to
evaluate new and emerging technologies onsite in this period of
rapid technological change. It will also permit us to operate
intern programs associated with academic printing, technology,
and management programs, and to work with the private and non-
profit sector on the development of programs designed to
increase the public visibility of GPO's operations, such as the
creation of a printing museum similar to the U.S. Postal
Service Museum located nearby.
The authority we are requesting is similar to donation acceptance
authorities possessed by many Federal agencies, such as the
Library of Congress, the U.S. Court of Veterans Appeals, the
Department of Housing and Urban Development, the Consumer
Product Safety Commission, the Department of Commerce, the
Administrative Office of United States Courts, and the
Department of Labor. However, the language we have submitted is
primarily for placeholder purposes with the recognition that it
may be subject to further revision. Of course, acceptance of
contributions of property and services would be subject to the
usual limitations covering donations to the Government.
--Finally, we are requesting the authority to transfer or donate
surplus property. GPO's equipment profile will undergo
significant change in the coming period, and the appropriate
disposition of surplus property would be facilitated with the
authority to transfer or donate surplus property similar to
that possessed by the Administrator of the General Services
Administration. Currently, when any GPO property is declared
surplus it must be sold to the highest competitive bidder. In
addition to imposing an administrative burden in the conduct of
the sale, this process often results in a price that is
extremely low when compared to the actual value of the item
when in use. We are proposing language that would provide us
with discretionary authority to transfer or donate surplus GPO
property to specific governmental and non-profit entities such
as other Federal entities, educational or non-profit
institutions as defined by the Internal Revenue Code, or state
or local governments. In addition, it would allow us to donate
surplus publications rather than destroying them and selling
them as scrap paper.
Representation Allowance.--We are requesting an increase for GPO's
representation fund. The fund will be important in our effort to
promote the concept of changing the GPO. We need to re-connect with our
many vendors and customers as we attempt to regain our momentum and re-
establish ourselves as the premier agent for the collection,
dissemination, and preservation of the Government's information. Its
use also will afford the GPO many first hand opportunities to hear the
concerns and needs of the people and institutions we serve, especially
those that will be essential to our future success. The fund will be
subject to established limitations on its use. We will continue to make
it available for official councils and groups advising the Public
Printer, such as the Depository Library Advisory Council.
Mr. Chairman and Members of the Subcommittee, I truly believe GPO's
appropriations request for fiscal year 2004 represents a new departure
for this agency in preparing for the future. I thank you for your
support and encouragement of change at the GPO, and I look forward to
working with you and the Appropriations Committees in your review and
consideration of our request. This concludes my prepared statement, and
I would be pleased to answer any questions you may have.
Senator Campbell. I have a couple, but before I do, I would
like to invite Senator Durbin if he has any comments before we
go on.
Senator Durbin. I will just put my opening statement in the
record.
Senator Campbell. Your statement will be in the record
then.
[The statement follows:]
Prepared Statement of Senator Richard J. Durbin
Mr. Chairman, thank you for scheduling today's hearing, the
first of five budget oversight hearings to be held by the
Legislative Branch Subcommittee this Spring.
Mr. Chairman, I am happy to be working with you on this
important bill this year. I had a great working relationship
with your predecessor, Senator Bennett, and I am sure you and I
will work very well together, too.
This is an important Subcommittee. There are 12 other
Appropriations Subcommittees that fund all of the Executive
Branch Agencies and Departments. The Legislative Branch has
this one Subcommittee in which we need to fund all of the tools
and resources required of a co-equal branch of government.
As you know, I was Chairman of this Subcommittee for most
of the 107th Congress and believe that Senator Bennett, the
other Subcommittee Members, and I accomplished many great
things during the last few years.
In fact, one of my accomplishments as a Senator that I take
the most pride in is the student loan reimbursement program for
Congressional staff that was initiated by this Subcommittee.
We ask for tremendous sacrifices on the part of our staffs
up here. The hours are long and highly unpredictable. The work
is very demanding. And, frankly, the pay is not that great.
Despite all of that, Hill staff are the most loyal,
dedicated, and talented group of people I have ever met.
Anything we can do, however small, to encourage young people to
make public service a career is worth pursuing.
More and more Member Offices and Committees are taking
advantage of the student loan reimbursement program each year
and that pleases me to no end.
Today we are going to hear from three important Legislative
Branch agencies, the General Accounting Office, the Government
Printing Office, and the Congressional Budget Office. I join
Chairman Campbell in welcoming David Walker, the Comptroller
General of the United States, Bruce James, the U.S. Public
Printer, and Douglas Holtz-Eakin, the Director of the
Congressional Budget Office to today's hearing.
Gentlemen, all of you seem to be requesting, with one or
two exceptions, relatively modest cost-of-living increases for
your organizations this year. Obviously, this is prudent, up to
a point, during a time of both recession and war.
However, it is important to the Members of this
Subcommittee that you have the resources you need to do your
jobs effectively and efficiently.
To the extent that any of your budgets request have holes
in them that are going to negatively impact your performance
during fiscal year 2004, I hope you will share those concerns
with us.
Two points before I wrap up:
First, Mr. Walker, I hope you will spend several minutes
today discussing whatever plans or thoughts you have concerning
access to executive branch information in light of the recent
events surrounding the Cheney suit. We need to know what you
need from Congress in order for you to be able to continue to
be effective in your role as the investigative arm of Congress.
Let me also say that I appreciate the way you have chosen
to work with Congress on such a sensitive issue. This was a
very delicate matter and I thought you navigated it pretty well
under difficult circumstances.
Second, Mr. James, I want to express my appreciation to you
for your dogged determination to work with the OMB to try to
get a truce declared in their on-going war against public
printing. It seems that you are being given some time to make
your case to the Budget Director, so, for the moment, I am
willing to stand down on this issue. You showed up ready to
work on Day 1 as the Public Printer and I respect that.
I am looking forward to hearing your testimony about your
plans to modernize the Government Printing Office.
Mr. Chairman, I will conclude here and request that my
entire statement, as well as a series of questions, be made a
part of the record.
Once again, congratulations on becoming Chair of this
important Subcommittee.
Thank you.
REVOLVING FUND
Senator Campbell. Since we have one more witness before we
run to vote, let me just do a couple of short ones. You talked
about the losses you had and, as I understand it, those losses
have totaled, since 1988 through 2002--$44.6 million. How do
you operate with that many shortfalls over that number of
years, and I know you just came on board. You might not know
the total answer to that, but give me an idea.
Mr. James. I can certainly explain to you where the money
is coming from.
Senator Campbell. I can, too, from here.
Mr. James. I absolutely shake my head when I look back and
see the losses and the fact that they have continued year after
year after year. The enterprise has not been run as a business,
as you might expect, when you see these losses.
Senator Campbell. Is that what you would consider a major
weakness, that it has not been run like a business?
Mr. James. Absolutely. Absolutely. The losses have been
funded by our revolving fund. The revolving fund consists of
retained earnings. Those are earnings that have been built up
over 50 years. The purpose of those retained earnings is to
replace obsolete equipment, and what we have been doing instead
is funding these losses year after year and, in essence, eating
into our future.
GPO WORKFORCE
Senator Campbell. I understand about half of your workforce
is eligible for retirement. You talked a little bit about that,
but if you have that many that are eligible for retirement,
that means if you downsize on the number of people, you will
just not hire replacements. It will be kind of a painless way
of downsizing for the people that are working there, I assume.
Is that right?
Mr. James. Exactly. We are looking for a painless way to
downsize. Now, clearly we will be adding people back into the
organization, and I want to emphasize that, because for a
period of 20 years the GPO dropped from 9,000 to 3,000 folks,
and during that period they added almost no one into the
organization, so today I have almost no one from 30 to 50 who
is a manager in the organization, and that is seriously hurting
succession, so while we are reducing the force in total, we
will be selectively adding back in the skills that are required
for the future.
TECHNOLOGY
Senator Campbell. You also mentioned something about the
19th century practices. I am not a real high-tech guy, but I
will tell you that it seems to me every 2 years or 3 years the
things you were using 2 or 3 years ago are already obsolete, so
I can understand in your Department you are going to have to
have a major effort to stay ahead of the curve on new
technology.
I will submit the rest of my questions to you in writing if
it is all right with you, Mr. James.
I would like to invite my colleague and friend, if there
are any questions he has.
Senator Durbin. Thank you, Mr. Chairman. It is good to be
with you in your new capacity, and I look forward to working
with you, and you have a great assistant there who has helped
all of us over the years. Let me ask you, Mr. James, it sounds
like when you get to the GPO, coming out of the private sector,
it is not a business that you would have wanted to buy.
Mr. James. I would have not bought it except for the
opportunity. There is a tremendous opportunity here. It is what
got me to leave the hills of northern Nevada and a wonderful
living condition, the opportunity to come in here and look at
this enterprise and figure out how to take it into the 21st
century. What the Government Printing Office has accomplished
on behalf of the country in the last 150 years is truly
amazing.
If you think about this, we have the record of the
Government spread throughout the United States. There is no one
action that could ever wipe out the record of the Government.
We have people in every State in this Nation in the principal
population areas able to walk into a library and access any
document the Government has produced. It is a tremendous
legacy, and my fear is that if we are not very careful, that we
will leave this behind as we move into the digital world, and
we may well lose the record of the Government. It is worth
coming in and trying to figure this out.
PRIVATIZATION
Senator Durbin. So the people who say, privatize it, get
rid of it, it was inefficient and we can do this by contracting
out, would you disagree with that conclusion?
Mr. James. Well, I think they may be not well-informed, and
I say this to you, Senator, actually during the Second World
War the Government Printing Office became overwhelmed with the
amount of work they had, and for the first time began to
contract printing out to the private sector. They were amazed
at how well that went, and it has continued ever since. Today,
we contract out about 80 percent of the Government's printing
requirements to the private sector. Last year, we had more than
2,500 printing companies throughout the country in every State
as contractors to the Government Printing Office.
Senator Durbin. When you decided to bid on the 2004 Federal
budget and turned in a bid, according to the news reports, 24
percent lower than last year, was that to make a point, take a
bath, or did you find that much efficiency?
Mr. James. Let me say this, this transpired before I took
office. The bidding process was completed when I came in, and I
did have an opportunity to talk to Mr. Daniels about this
before he made a final decision.
In reviewing the bid that the Government Printing Office
made, I thought it was a very intelligent bid. You know, there
are two prices for a piece of printing. The first price is that
when you give a printer a set of specifications you say, I want
to print a 100-page book, it will be black and white, it will
have this number of copies, this is what the manuscript will
look like, and this is the date I need it.
The final price is based on how many pages there actually
were, how many changes you made to that manuscript, what kind
of overtime you required for it. So what the Government
Printing Office did was give the OMB a price for the
specifications that they gave us. It happened to be about
$100,000 below the year before. When the final bill is
rendered, my guess is it will be similar to what it was last
year.
Senator Durbin. Thanks a lot. Thanks, Mr. Chairman.
ADDITIONAL COMMITTEE QUESTIONS
Senator Campbell. Thank you, and as I mentioned before, Mr.
James, we will probably submit some questions in writing too,
if you could answer them, we would appreciate it.
Mr. James. Thank you, Mr. Chairman.
Senator Campbell. Give my regards to all our friends in
Reno, too.
Mr. James. I will definitely do that.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Ben Nighthorse Campbell
CHALLENGES AT GPO
Question. GPO faces many challenges--half of its workforce is
eligible for retirement, more agencies are using electronic means of
producing information rather than printed materials, the Administration
last year challenged the legal requirement that all government printing
be done through GPO.
How do you plan to address these issues and what is your vision for
GPO's future?
Answer. We have begun to transform the Government Printing Office
into an information service facility for the 21st century. With your
support, we will restore GPO's leadership in the graphic arts industry
and make GPO a reliable and responsive provider of Government
information. Through an inclusive process, we are redefining GPO's
mission and strategy to meet the challenges of today and the future. We
are working with our customers and stakeholders to identify their needs
and concerns. The demands of Congress, the agencies, and the public
will guide us in identifying the optimal technologies to employ to meet
those requirements. The GAO is presently conducting a congressionally-
mandated study of Federal Government information dissemination. The GAO
is also conducting a management audit of GPO, which I requested. These
studies will help us to focus on needed changes. The transformation of
GPO will require investment in people and systems. The results will be
improved effectiveness and efficiency and increased value to the
customers we serve.
Regarding OMB's challenge to the legal requirement to use GPO, I
have asked OMB to cooperate with us in leading the GPO into the 21st
century by addressing the issues most important to the future. For OMB
to allow agencies to by-pass GPO would be a policy change geared to
addressing the 19th century, not the 21st century. It is to the
public's benefit to keep the GPO intact to lead in the transformation
of the government's printing and information policy.
While printing technology and practices are changing, librarians,
historians, researchers, Members of Congress, and citizens will
continue to need an easy to use, organized, predictable gateway to
authenticated Government information and the knowledge that the
information will be available to the public in perpetuity. OMB and GPO
should cooperate in redesigning GPO to ensure the best interests of
taxpayers are met.
Question. How would you assess GPO's strengths and weaknesses? What
gaps does GPO face in the number, skills, and competencies of its
employees?
Answer. GPO has great strength in the quality of employees and
their dedication to GPO's mission. However, we need to ensure that GPO
employees are trained in the right skills and motivated by an
organization that promotes change, encourages initiative, and
recognizes accomplishments. I have increased employee training
significantly and we are now rewarding performance and initiative. Our
workforce needs to develop more of the skills required to use the best
available technologies to meet customer needs. This requires that the
workforce become more highly trained with emphasis on digital formats,
databases, and electronic communications. We have also begun to examine
the constraints and excess costs associated with the building in which
we operate. It is not suitable to efficient manufacturing operations.
Question. How do you see the mission of GPO evolving in response to
changing technology?
Answer. GPO ensures the public's access to Government information.
Since 1813 the Government has been gathering its information and
documents, organizing and cataloging them, and making them available to
the general public. GPO has carried out this mission with printing,
then microfiche, later CD-ROMs, and now with online distribution of
digital titles. Our mission is unique; no other agency of the Federal
Government is charged with this responsibility or would begin to
understand how to collect documents from all three branches, how to
organize and catalog the documents so they are usable, how to
distribute them to the 1,200 depository libraries, how to sell them to
the public, and how to preserve permanent public access to Federal
information and documents. We see a continued decline in the volume of
paper documents and an increase in the use of electronic databases to
access Government information. Increasingly, our role will be to
capture digitally, store, authenticate, convert, and channel Government
information to the public in all relevant media.
Question. How will your interim reorganization help GPO move in the
right direction? What are the objectives of the reorganization and how
it will impact the services provided to Congress?
Answer. The reorganization is designed to provide a greater
customer focus, delegate decision-making, provide an enterprise view of
technology, and make GPO more adaptable to change. Our principal goal
is to redirect GPO's operations toward customer service--helping our
customers meet their goals, rather than bending their needs to fit what
we provide. We are especially interested in pursuing our vision of
helping Congress to reinvent its information products to help expedite
its work.
Question. What actions will you take to make GPO operate in a more
business-like manner?
Answer. At this Committee's request, GAO is presently conducting a
study of Federal Government printing and information policy. The GAO is
also conducting a management audit of GPO, which we requested. These
studies will help us to focus on needed changes. Over the next several
years, the transformation of GPO will require investments in people and
systems. The results will be improved effectiveness and efficiency and
increased value to the customers we serve. We are implementing a buy-
out program to increase efficiency.
Question. What actions does Congress need to take to help GPO
operate in a more business-like manner?
Answer. We urge that Congress support our request for $10 million
for a separation incentive program that will result in a reduction of
300 positions. More than half our workforce is eligible to retire. This
investment is necessary to reduce costs and will result in a savings of
about $18 million per year. An additional $4.1 million is requested for
the Salaries and Expenses Appropriation to replace obsolete technology
used by the GPO Access system by upgrading its search and retrieval
system, now nearly a decade old. A new search engine must be acquired
and the databases brought forward to take advantage of the new
technologies and ensure that data will not be lost through
technological obsolescence.
GPO OPERATING AT A LOSS
Question. GPO is losing money in each of its business lines--a
total of $44.6 million since 1988 through 2002, and $3.8 million for
the first quarter of fiscal year 2003.
How do you operate with these shortfalls?
Answer. The shortfalls were funded from retained earnings, which
otherwise would have been available to replace and modernize equipment
and systems.
Question. What are the principal reasons for your losses?
Answer. The principle reason for the losses in the past was GPO's
inability to adapt its operations and cost structure fast enough to
respond to the rapid pace of changes in technology and how customers
produce and access Government information. Moreover, GPO's building is
not suited to the purposes employed, causing excess cost to be
incurred.
Question. When will you run out of money in the revolving fund?
Answer. If we did nothing, GPO would run out of available cash in
about 12-15 months. GPO is adopting new business models, proposing a
separation incentive program, and taking other actions to bring revenue
and expense into balance.
Question. What assurance can you provide that appropriated funds
are not supplementing the cost of providing printing services to
executive agencies?
Answer. An independent CPA firm audits GPO financial statements
annually. GPO receives unqualified opinions--the highest assurance an
auditor can give. GPO has an accounting system, that properly controls
cost reporting in the revolving fund and maintains separate accounting
over each of its appropriations.
CONTRACTING COSTS
Question. GPO contracts out more than 80 percent of its work to
private contractors.
What is the basis for GPO's 7 percent surcharge for the
administrative expenses it occurs for contracting on behalf of
agencies?
Answer. The surcharge covers all GPO expenses to administer our
Printing Procurement Program. No funds are appropriated by Congress
directly to GPO to support this program. GPO printing contracts are
developed and carried out by knowledgeable printing experts via a
package of procurement support services. This program saves agencies
much more than the surcharge.
The surcharge covers the cost of a wide variety of services: GPO
reviews requisitions and offers suggestions for economizing; develops
specifications; competes, awards, and administers contracts; performs
press inspections and other on-site reviews to assure quality; performs
quality control reviews utilizing a unique program that quantifies
quality ranking factors that has become widely recognized throughout
the industry; provides voucher examination and payment services;
provides legal advice on contracting; and makes available a dispute
resolution service through GPO's Board of Contract Appeals. These same
services would have to be provided by each executive agency if they
procured printing themselves, leading to huge additional costs for
duplication of effort.
Question. I understand this surcharge does not cover your costs in
the procurement program. Why?
Answer. In fiscal year 2002, our Printing Procurement Program lost
$3.8 million on revenue of $470 million, a loss of about eight-tenths
of one percent. This loss is because GPO has not reduced operating
costs commensurate with the decline in printing procurement volume of
over 30 percent in the past three years. Our plans are to reduce costs
to turn these results around. We are developing a new business model
that involves replacing legacy systems and implementing electronic
commerce. Our planned separation incentive program will also help to
reduce costs.
Question. Is GPO exploring increased use of streamlined procurement
vehicles to reduce GPO's transaction costs for smaller print
procurements?
Answer. We purchase excess press capacity throughout the Nation by
allowing any of 13,000 GPO certified printers to compete for any job
they are equipped to handle. The result is very inexpensive printing,
perhaps less than half the cost that would be paid by a private sector
purchaser or Government agency acting in its own behalf. The difficulty
in purchasing extremely low cost printing as the GPO has traditionally
done is that the originating Government customer can't pick the vendor
nor the location where it's printed and therefore frequently feels
isolated from and unable to control the process to ensure their desired
results.
Partially as a consequence of this dissatisfaction, GPO four years
ago launched a test program we call Simplified Purchase Agreement
(SPA). This program allows agencies to directly bid and purchase
printing up to $2,500 from their choice of local printers without the
requirement to accept the low bid. GPO provides only a limited palette
of services such as pre-approving printers, bill payment, and
depository requirements. Last year, the 43 Federal agencies that have
adopted this program purchased 12,000 printing jobs directly on their
own using this system. Early indications are that both agency
satisfaction and the cost of printing are measurably higher.
IN-PLANT CAPACITY
Question. GPO has a very large in-plant print operation--at least
half of which is used to serve congressional print needs.
What percent of the plant's capacity is utilized? What plans do you
have for downsizing GPO's in-plant print capacity to the level
required? Are GPO's current facilities and equipment sufficient for the
21st century?
Answer. Measured on the basis of 24 hours per day, 7 days per week,
potential availability, capacity utilization of equipment is about 10
percent. GPO is not staffed to run the equipment on a 24/7 basis but
this is the predominate metric in the private sector. Our plans are to
gear capacity to meet peak workload demands of the Congress. This will
require the elimination of some equipment and this process has already
begun. New technologies are being explored. It will be necessary to
substantially retool the agency for the 21st century.
OFFICE OF INNOVATION AND PARTNERSHIPS
Question. Please explain your new Office of Innovation and
Partnerships, including its goals and approach and how you plan to
obtain and use external scientific and technological expertise.
Answer. As part of our reorganization, a recently renamed new
Office of Innovation and New Technology has been established to
identify, evaluate, and plan for the adoption of technology
opportunities. It will also guide us in the creation of associations
with other public and private sector entities to carry out our mission.
Such associations, the use of which is widespread in industry, will be
critical to the transformation of the GPO. We have been meeting with
the top management of our suppliers--from printing companies to
equipment manufacturers--to explore the future possibilities for
technological innovation in the digital information business.
FEDERAL DEPOSITORY LIBRARY PROGRAM
Question. What are the implications for the Federal Depository
Library Program of the trend towards electronic documents? Why are
libraries pulling out of this program? What do you see as the future
for this program?
Answer. GPO is spending a great deal of time talking to the
libraries that participate in the program about its future and seeking
their advice on the essential services that we need to offer to support
the depository libraries as the FDLP becomes an increasingly electronic
program. GPO is the only Federal agency charged with cataloging and
ensuring both timely and permanent public access to the full spectrum
of Federal information from all three branches of the Government. This
mission will be increasingly important in an environment where
Government information is posted to many web sites in many formats,
making it difficult for the public to locate it initially and over
time.
Authentication of electronic Government publications is a key issue
for all of our depository libraries. GPO is working on Public Key
Infrastructure (PKI) security services initiative to address this
concern by enabling Congress, the Judiciary, and Federal agencies to
identify and mark official documents. This would enable users inside of
Government and elsewhere, including depository libraries, to confirm
the validity of the publications GPO makes available on the Internet
for permanent public access. PKI technology will also enable secure
electronic transactions among agencies as well as with consumers of
Government services and make it easier to safeguard official Federal
Government information.
Fugitive documents are an increasing problem as fewer documents are
printed through GPO and we must reach out to locate digital copies on
agency web sites and through other sources. In the past, most of the
documents were identified and obtained through the printing process.
That is no longer true and, as a result, we need new tools and
additional staff with different skills to locate and acquire
publications for the program.
Maintaining GPO Access as a state-of-the-art service on which
Congress and other parts of the Government, depository libraries, and
the public can rely for current and permanent public access is
essential. When GPO Access began in 1994, GPO identified the necessity
to refresh periodically the software and hardware that support the
service and to migrate the data forward to take advantage of future
generations of technology. The initial platform selected for GPO Access
has been enhanced and expanded through the years to support the
service, but it is now at least two generations behind state-of-the-art
systems. A new search engine must be acquired and the databases brought
forward to take advantage of the new technologies and ensure that data
will not be lost through technological obsolescence. GPO is
establishing and will need to maintain backup and mirror sites to
ensure public access and to avoid interruptions in service in the event
of a catastrophe. GPO must also create appropriate metadata to
facilitate identification and preservation of government information.
We have requested $4.1 million for that purpose in fiscal year 2004.
We have 53 regional depository libraries, which receive and
permanently retain all publications distributed by the FDLP. At their
own expense, they provide public access and preserve the record of the
nation as well as ensure permanent public access to the paper and other
tangible publications distributed by GPO. That critical group of
libraries has remained stable for many years, but they are increasingly
feeling economic pressures that cause them to re-evaluate the enormous
expense of maintaining large paper and microfiche collections of
Government documents. We have begun a dialog with the regional
libraries about the value of shared regional collections to reduce the
burden on individual libraries, a central collection at GPO to assist
them and serve as a library of last resort, and retrospective
cataloging and digitization projects that would increase the
utilization of the pre-1976 collections and allow selective reduction
in the paper and microfiche collections.
We also have about 1,200 other depositories, which take only a
portion of the tangible items based on the needs of the constituents
they serve. That group, which we call ``selectives,'' always has some
fluctuation as the resources of the libraries and needs of their
communities shift. 48 libraries withdrew from the FDLP between
September 2000 and February 2003. 30 (62.5 percent) of these libraries
were small academic and public libraries in economically disadvantaged
areas. In response to this data, we are developing a pilot project that
will help comparable libraries that remain in the FDLP to focus their
collection and services on Government publications that are
specifically applicable to community economic development. We will
combine that recommended collection with specialized training on the
utilization of the resources and seek training and other assistance
from agencies with responsibility for small and minority business
development. We may also provide workstations to these libraries since
they may not be able to afford the initial investment in appropriate
equipment. We hope this program will provide a strong economic benefit
and real incentive for such libraries to remain in the program and
utilize information available from the Federal Government to assist
their communities.
We have just returned from Reno, Nevada, where we participated in a
meeting of the Depository Library Council and over 250 other members of
the depository library community. That meeting focused heavily on the
future of the program and the range of products and services that GPO
needs to offer in the 21st century. On the way to Reno we stopped in
Tucson to visit the University of Arizona, which has a major initiative
underway to become the first all electronic depository library. The
rapid transition to electronic publications, which now make up over 60
percent of all items available through the FDLP, has challenged the
depository libraries. The response has varied from library to library.
Given the range of types and sizes of libraries in the program, it is
not surprising that some have adapted rapidly and well while others are
still struggling to adjust to the increased demands for training and
user support necessitated by searching databases and handling
electronic files in a wide variety of formats. We are providing as much
support and training as we can, and we are planning a pilot project to
place GPO staff in the field to work more directly with libraries to
meet their training needs and advise them about best practices for
managing a depository library.
ADDITIONAL SUBMITTED STATEMENT
[Clerk's Note.--The subcommittee has received a statement
from the American Association of Law Libraries, American
Library Association, and Association of Research Libraries
which will be placed in the record at this point.]
Prepared Statement of the American Association of Law Libraries,
American Library Association, and Association of Research Libraries
On behalf of the American Association of Law Libraries (AALL), the
Association of Research Libraries (ARL) and the American Library
Association (ALA), we write in support of the fiscal year 2004 budget
request of the Government Printing Office (GPO). Collectively, these
three associations represent thousands of individuals and institutions
serving communities throughout the Nation, including the nearly 1,300
federal depository libraries located in nearly every congressional
district.
AALL is a nonprofit educational organization with over 5,000
members dedicated to promoting and enhancing the value of law
libraries, fostering law librarianship and providing leadership and
advocacy in the field of legal information and information policy. ARL
is an Association of 123 research libraries in North America. ARL
programs and services promote equitable access to and effective use of
recorded knowledge in support of teaching, research. ALA is a nonprofit
educational organization of 64,000 librarians, library trustees, and
other friends of libraries dedicated to improving library services and
promoting the public interest in a free and open information society.
Fiscal Year 2004 Budget Request Essential
We are pleased to submit a statement for the record on the fiscal
year 2004 appropriations for the Government Printing Office and the
Superintendent of Documents Salaries and Expenses. We urge your support
for the Public Printer's fiscal year 2004 budget request of
$135,567,000 for the GPO that includes $34,456,000 for the Salaries and
Expenses (S&E) Appropriation of the Superintendent of Documents and
$91,111,000 for the Congressional Printing and Binding (CP&B)
Appropriation. The S&E request includes $28.5 million to fund the
Federal Depository Library Program (FDLP), $4.9 million for the
Cataloging and Indexing Program, $.8 million for the International
Exchange Program and $.2 million for the By-Law Distribution Program.
This amount includes necessary increases to support the continued
operation of the FDLP, its continuing electronic transition plans and
the increased demands upon GPO Access.
We urge you to approve the full S&E appropriations request for
fiscal year 2004. The majority of the S&E appropriation is for the
Federal Depository Library Program (FDLP), by which congressional and
other important Government publications and information products are
disseminated to the nearly 1,300 participating academic, public,
Federal, law and other libraries nationwide. We find the request of
$4.1 million to replace obsolete technology and upgrade the retrieval
system for GPO Access to be of crucial importance, since each day
thousands of Americans rely on the GPO Access system to locate the
important electronic government information they need.
The FDLP and GPO Access are vital to the dissemination and access
of Federal government information to our citizens. We believe that the
fiscal year 2004 S&E budget request is essential to the continued
transition to a more electronic program and the continued success of
GPO Access. Since GPO is responsible for permanent public access to the
content of its Electronic Collection, funding to strengthen digital
archiving and migration capabilities is a critically important
component.
Growth of GPO Access and the Electronic Collection Impressive
The FDLP is a unique program and one of the most effective,
efficient and successful partnerships between Congress and the American
public. The FDLP provides your constituents with equitable, ready,
efficient and no-fee access to Federal government information in an
increasingly electronic environment. Today Congress, government
agencies and the courts increasingly are relying on state-of-the-art
technologies to create and disseminate government information through
the Internet.
One of the critical keys to GPO's successful transition to a more
electronic program has been the growth of the GPO Access system, a
central access point within the GPO for electronic government
information that today makes available to the public approximately
225,000 titles. Created by Public Law 103-40, GPO Access has grown into
a unique digital collection of official government databases from all
three branches of government including the Congressional Record, the
Federal Register and the Code of Federal Regulations. Currently an
average of 31 million documents are downloaded by the public each
month, a substantial increase from last year that attests to the
importance and value of this award-winning system to the American
public.
GPO has continued to make excellent progress over the past year in
enhancing its Electronic Collection. GPO constantly adds new data and
products to the system, building a current collection of valuable new
electronic resources. At the same time, GPO provides permanent access
to core legislative and regulatory information and to agency
information managed by GPO on GPO servers. Each year, this historic
electronic collection grows, requiring GPO to meet its responsibility
for ensuring permanent public access. This function presents probably
the most difficult challenge of the networked electronic environment.
Just as the government has an affirmative obligation to provide current
access to its information, in the digital arena this obligation extends
to ensuring the preservation of and permanent public access to
electronic government publications.
FDLP Libraries' Significant Services and Investments
Each participating federal depository library makes significant
investments to ensure that the public has effective access to
government information. For example, FDLP libraries invest in
technologies to assist in accessing electronic government information.
These investments exemplify the substantial costs that participating
depository libraries incur in order to provide your constituents with
equitable, ready, efficient and no-fee access to government information
in both print and electronic formats. These costs include providing
highly trained staff, adequate space, necessary additional materials,
expensive equipment and Internet connections. The success of GPO Access
cannot be measured without acknowledging the substantial costs covered
by libraries.
Federal depository libraries serve as important channels of public
access to government publications and contribute significantly to the
success of this Program. The government's responsibility to make
government publications in both tangible and electronic formats
available to depository libraries is successful because of the
necessary partnerships developed between the Federal government, the
GPO, and the Federal depository libraries. In order for GPO to continue
to increase the amount of government information available for current
and future public access through the Internet and in order for the
Federal Government to fulfill its responsibilities for this
partnership, it is critically important that Congress provide adequate
funds to support the transition to a more electronic program.
Importance of Full Funding for the CP&B
We also urge your support for the Public Printer's request of
$91,111,000 for the Congressional Printing and Binding (CP&B)
appropriation. Broad public access to legislative information,
including the Congressional Record, the text of bills, as well as
committee hearings, reports, documents and other legislative materials,
is crucial to the ability of our citizenry to engage in the political
process. Indeed, recent polls have demonstrated the public's increasing
awareness of and thirst for information from their government,
including Congress. Full support for the CP&B request will ensure the
necessary electronic infrastructure to make congressional materials
available in a timely manner for permanent accessibility through GPO
Access and will maintain GPO's inplant printing operation for Congress.
Chairman Campbell, we are very grateful to you and to members of
the Subcommittee for your past support of GPO Access, the Federal
Depository Library Program and GPO's Congressional Printing and Binding
services. The investment in systems and services to provide the public
with government publications in all formats will ensure that valuable
electronic government information created today will be available and
preserved for future generations. We respectfully urge your continued
support by approving the Government Printing Office's fiscal year 2004
appropriations request in its entirety. We ask that you please include
this statement as part of the recent hearing record. Thank you very
much.
CONGRESSIONAL BUDGET OFFICE
STATEMENT OF DOUGLAS HOLTZ-EAKIN, DIRECTOR
ACCOMPANIED BY BARRY B. ANDERSON, DEPUTY DIRECTOR
Senator Campbell. And our third and last panel will be Mr.
Douglas Holtz-Eakin, Director of the Congressional Budget
Office, accompanied by Barry Anderson, his Deputy Director,
too. As with the other panels, Mr. Holtz-Eakin, if you would
like to just make a verbal statement, we will put your complete
written statement in the record.
OVERVIEW OF THE CONGRESSIONAL BUDGET OFFICE'S BUDGET REQUEST
Mr. Holtz-Eakin. Thank you, Mr. Chairman. I will submit my
written statement for the record and just summarize briefly.
You have our request before you. You know it is for just under
$34 million, which represents a 6.6 percent increase over the
previous year. I should note, however, that of that request,
1.1 percent is funding for our contribution to a partnership in
the Federal Accounting Standards Advisory Board. Excluding
that, we have a core increase of 5.5 percent devoted to current
baseline increases of 3.8 percent and then additional resources
of 1.7 percent.
Stepping back a bit, if you look at the CBO budget as a
whole, what you see is the budget basically covers people, and
our budget submission is configured to ensure that those people
can be put in a position to meet our congressional customers'
needs in what I think is a timely, flexible, and high-quality
fashion.
We have attempted to make sure that we devote enough
resources to our baseline receipts estimation so as to overcome
the difficulties over the last few years in anticipating
fluctuations in tax receipts that are not fully explained by
the status of the economy, and I can explore that in greater
detail with you.
We have tried to devote resources to ensure that we can
hire in a successful fashion in some areas of the labor market
which are quite difficult, in particular, specialists in the
areas of health economics and financial economics. We have
attempted to make arrangements so that we have flexibility with
respect to visiting scholars, post-doctoral fellows, and a
variety of intern kinds of appointments.
This allows us to redeploy resources quickly as
congressional needs require, develop relationships with
possible sources of permanent hires, and improve our ability to
maintain the kind of workforce that is essential for the
Congressional Budget Office. And then we continually attempt to
improve the level of communication with Congress. This year, we
have undertaken to designate a senior member of the
Congressional Budget Office staff, Sandy Davis, to a job as
special assistant to the director, where he has primary
responsibility for ensuring that we are in continuous and top-
flight communication with Congress on its needs and on
timetables so that we can be responsive with the different work
products that are important to Congress and be timely in our
responses.
We hope to build that enhanced communication into a
strategic plan so that we are looking ahead to Congress' needs,
building those anticipated needs into our work plans in a
systematic fashion, and trying to upgrade the traditional
practice of making sure that staff stay in communication--to
regularize this process and to feed it into both the hiring
process and decisions on things like visiting scholars.
And finally, a portion of the budget is devoted to
supporting our people at CBO in the areas of technology, where,
in fact, the budget reveals cost savings from movements to more
advanced forms of technology; disaster recovery, should we need
to continue operations in unfortunate circumstances; and
ongoing training and management training as well. So I think if
you step back from the particulars of each of the budget items,
what you will see is a budget that is really about the people
at the Congressional Budget Office, and our strategy in
constructing that budget is to make sure that those people
respond quickly, accurately, and flexibly to the needs of
Congress in fulfilling the job of the CBO.
PREPARED STATEMENT
And with that quick overview, I would be happy to take your
questions.
[The statement follows:]
Prepared Statement of Douglas Holtz-Eakin
Mr. Chairman and Members of the Subcommittee, I am pleased to
present the fiscal year 2004 budget request for the Congressional
Budget Office. The mission of CBO is to provide the Congress with the
objective, timely, nonpartisan analysis it needs about the economy and
the budget and to furnish the information and cost estimates required
for the Congressional budget process.
OVERVIEW OF CBO'S BUDGET REQUEST FOR FISCAL YEAR 2004
The Congressional Budget Office's fiscal year 2004 budget continues
to be driven by the need to be competitive in a specialized labor
market, with the added challenge of completing and maintaining an
effective disaster recovery process. We are requesting $33,628,000 for
CBO's operations during fiscal year 2004, an increase of 5.5 percent
over 2003. In addition, funding CBO's portion of the cost of operating
the Federal Accounting Standards Advisory Board (FASAB) adds 1.1
percent (or $365,000) to our request, but that expense should be offset
by cost reductions for other sponsoring agencies--the Treasury, GAO,
and OMB--whose annual contributions will decrease. Together, those
requirements total $33,993,000, or a 6.6 percent increase over our
appropriation for fiscal year 2003.
Of the 5.5 percent increase needed for CBO operations, 3.8
percentage points represent a current-services baseline, while the
remaining rise of 1.7 percentage points would fund three new positions
and allow us to focus more resources on improving our economic
forecasts and baseline projections of tax receipts. Mandatory increases
in personnel costs alone would have required a 5.2 percent baseline
budget increase, but they were offset somewhat by a 1.4 percent
decrease resulting from savings in technology spending and other
operating costs.
In fiscal year 2004, CBO will focus on its core functions of
scorekeeping, budget analysis, and economic and revenue forecasting.
Our request will allow us to fund 236 positions--the same level
originally requested for 2003. The three additional positions, along
with some reallocation of existing positions, will allow us to increase
the level of effort applied to improving our receipts baseline and
enhancing our responsiveness to the Congress. We will also continue our
visiting scholars program for postdoctoral fellows and midcareer
academics with expertise in areas such as health economics, financial
analysis, and macroeconomics. And we will continue to pursue a number
of internal management initiatives to improve our human resources
management, technology, publication quality, facilities, and business
processes.
Specifically, the fiscal year 2004 budget would:
--Support a workload estimated at 2,300 legislative cost estimates
and mandate cost statements, 30 major analytical reports, and
40 other publications, and allow us to meet our obligations for
Congressional testimony.
--Fund 236 full-time-equivalent positions (FTEs), adding three
positions for staff and visiting scholars to improve our
ability to make economic forecasts and project tax receipts.
--Provide a pay adjustment of 3.7 percent for staff below the level
of senior analyst, consistent with the increase requested by
other legislative branch agencies and providing parity with the
military pay raise.
--Fund a combination of promotions and merit increases for staff and
provide performance-based pay increases for managers and senior
analysts who no longer receive automatic annual across-the-
board increases.
--Continue to support process redesign and automation initiatives in
publishing, human resources, financial management, and other
areas.
--Use reductions in spending for technology and equipment to offset
the cost of the three new positions and a portion of projected
price increases for administrative expenses.
--Enable us to complete tasks related to our disaster recovery
strategy, including purchasing some equipment and moving
mission-critical servers and other IT infrastructure to the
Legislative Branch Alternative Computing Facility early in
fiscal year 2004.
This request also includes a change in our legislative authority
that would allow our appropriation to be available to pay an
appropriate share ($365,000) of the costs of operating the Federal
Accounting Standards Advisory Board.
SUMMARY OF CBO'S BUDGET REQUEST FOR FISCAL YEAR 2004
[Dollars in thousands]
------------------------------------------------------------------------
Staff Amount
------------------------------------------------------------------------
Calculation of Base Appropriation, Fiscal Year 233 $32,101
2003..........................................
Plus Supplementals......................... .......... ...........
Minus Rescissions.......................... .......... (209)
------------------------
Budget Base, Fiscal Year 2003............ 233 31,892
========================
Proposed Changes for Fiscal Year 2004:
Mandatory Pay and Related Costs............ .......... 1,668
Price-Level Changes........................ .......... 89
Program-Type Changes:
Legislation............................ .......... ...........
Workload:
Improve revenue estimates.......... 3 519
FASAB expenses..................... .......... 365
Net of other changes............... .......... (518)
Equipment, Alterations, Maintenance, .......... (22)
Repairs, etc..............................
------------------------
Total Proposed Changes................... 3 2,101
========================
Fiscal Year 2004 Budget Request.......... 236 33,993
------------------------------------------------------------------------
Note: Columns and rows may not add up to totals because of rounding.
The total fiscal year 2004 budget request in this table is $543,000
higher than the amount submitted to OMB for inclusion in the
President's budget as a result of information available after the OMB
deadline. CBO will submit an amendment to OMB to reflect the change in
our request.
ACCOMPLISHMENTS IN FISCAL YEAR 2002
In fiscal year 2002, as part of its contributions to the
Congressional budget process, CBO issued its annual report on the
budget and economic outlook in January, which was based on the first of
three sets of baseline budget projections prepared during the year. The
outlook was followed by an analysis of the President's budgetary
proposals.
CBO also prepared about 750 formal cost estimates during 2002 and
an even larger number of informal estimates for proposals or options
being considered by the Congress. Legislation with a significant
budgetary impact included the Economic Security and Assistance for
American Workers Act of 2001, the Farm Security and Rural Investment
Act of 2002, the Bob Stump National Defense Authorization Act for
Fiscal Year 2003, the Medicare Modernization and Prescription Drug Act
of 2002, the Terrorism Risk Insurance Act of 2002, and the Energy
Policy Act of 2002.
At the request of the Senate Budget Committee, we prepared a
special analysis of the estimated cost of activities related to U.S.
military operations in Afghanistan. In addition, we developed estimates
of the cost of possible military operations in Iraq. We assisted the
Budget Committees in their development of proposals for a Congressional
budget resolution for fiscal year 2003.
Our staff also responded to numerous committee requests during 2002
on the status of obligations and outlays for funding provided in 2001
for homeland security and for assistance to New York in the aftermath
of the September 11, 2001, terrorist attacks.
We also provided regular economic forecasts and detailed analyses
of the state of the economy and of the Administration's economic
forecast to the House and Senate Budget Committees as well as to other
committees. A major focus was on how changes in taxes affect the
economy.
CBO testified before the Congress 16 times in fiscal year 2002 on a
variety of budgetary and economic issues. A few examples are the Budget
and Economic Outlook for the House Budget Committee, Projections of
Medicare and Prescription Drug Spending for the Senate Finance
Committee, and Social Security: The Challenges of an Aging Population
for the Senate Special Committee on Aging.
Responding to requests from Congressional committees for analyses
of budgetary, economic, and programmatic issues is an important
function of the agency. CBO studied a broad range of policy initiatives
and legislative proposals in 2002 and issued 23 program analysis
reports and more than 40 other publications.
Medicare and Other Health Issues.--This area continues to put great
demands on CBO, particularly work related to Medicare reform and
prescription drug benefits for seniors and low-income individuals. To
respond, we have reallocated resources from elsewhere in CBO. In 2002,
we increased the number of analysts working full time on health care
from 19 to 21 and concentrated more effort on Medicare reform and
prescription drug issues. We also increased contractual support and
spending for data. We now have 24 analysts devoted to health care and
are working to increase that number to 27 (a net gain of eight analysts
over 2001). We will also continue to shift more of the health staff to
Medicare and drug-related work and by year-end will have nearly doubled
the resources devoted to those priority areas as compared with 2001.
In fiscal year 2002, a major effort was the examination of several
complex proposals to add a new prescription drug benefit to Medicare,
``modernize'' other features of Medicare's benefit package, and promote
competition among providers of Medicare services. CBO provided
information to committee staffs in both the House and Senate on the
impacts of those options on federal costs and the consequences for
other parties. CBO also presented testimony on prescription drug
spending and prepared an important study, Issues in Designing a
Prescription Drug Benefit for Medicare, which was released in October
2002.
In addition, we analyzed several other important health issues,
including proposals to reform market-exclusivity rules in the
prescription drug market to promote quicker entry by generic drugs; the
federal costs and revenues and the effects on malpractice and health
insurance premiums of options to reform the nation's medical
malpractice tort system; and the federal budgetary and private-sector
effects of proposals to regulate the operation of private health plans
and health insurance providers (for example, ``patients' bill of
rights'' legislation and parity in the coverage of mental health and
medical/surgical benefits.)
Social Security.--In fiscal year 2002, CBO continued to develop an
analytical framework for examining proposals to restructure and
partially privatize Social Security. In addition to using standard
actuarial projection techniques (such as those employed by the Social
Security Administration), we made significant progress in constructing
a dynamic microsimulation model to produce long-term budget
projections. The model helped CBO prepare several of its Fiscal Policy
Briefs, prepare Congressional testimony on the long-term budget
outlook, and analyze long-term options for CBO's 2003 Budget Options
volume.
National Security.--Defense-related accomplishments during fiscal
year 2002 included supporting the Congress through direct assistance
and published reports. Published reported included The Long-Term
Implications of Current Defense Plans, an analysis for the Senate
Defense Appropriations Subcommittee; Estimated Costs and Technical
Characteristics of Selected National Missile Defense Systems;
Increasing the Mission Capability of the Attack Submarine Force, a
study of alternatives for that force produced at the request from the
Senate Armed Services Committee; Accrual Budgeting for Military
Retirees' Health Care, a paper for the House Budget Committee;
Estimated Costs of a Potential Conflict with Iraq, an analysis for
Senator Conrad and Congressman Spratt; and The Budgetary Treatment of
Leases and Public/Private Ventures.
Domestic Economic, Tax, and Financial Issues.--Significant
publications in this area included a policy brief examining the sharp
drop in revenue collections experienced in 2002; two reports that
reviewed the effects of the September 11, 2001, terrorist attacks on
the insurance industry and analyzed proposals for federal reinsurance
risks from both terrorism and natural disasters; a review of recent
productivity growth in the economy, its relationship to improvements in
computer technology, and the prospects for such growth in the future;
estimates of future investment needs for drinking water and wastewater
infrastructure; the risks facing U.S. banks from their exposure to
foreign financial losses; and the implications for banks and depositors
of raising the limit on federal deposit insurance coverage.
PRIORITIES FOR FISCAL YEARS 2003 AND 2004
CBO's primary objectives will, as always, be to provide technical
assistance and analytical support to the Congress in its work on annual
budgets. That effort will include the preparation of baseline spending
and revenue projections, analyses of the condition of the economy, cost
estimates for authorization and direct spending legislation, and outlay
estimates for appropriation bills. CBO will undertake studies of
budgetary, economic, and programmatic issues that meet the needs of
individual committees. During the next two years, CBO will also
undertake major efforts to improve its baseline projections of tax
receipts, to become more responsive to our Congressional clients, and
to continue internal management improvements, including strengthening
our planning process.
Improving Economic Forecasts and Baseline Projections of Tax Receipts
The drastic swings in federal revenues that have occurred over the
past decade have placed a premium on improving the state of the art in
receipts forecasting. In the second half of the 1990s, when receipts
rose faster than anticipated, and in the early 2000s, when the opposite
occurred, CBO labored (along with other forecasters) to revise its
revenue models and estimating methods. But we (and others) were
hampered by the long lags between revenue collections and the
availability of useful data on the nature of those collections, and by
the fact that relationships between incomes and tax collections are
more complex than previously appreciated. During 2003 and 2004, we plan
further efforts toward improvement in that area and will add at least
three staff-years in 2004 by hiring permanent staff, adding expert
consultants, reallocating resources, and utilizing visiting scholars.
Specifically, we will:
--Review our current revenue models and estimating methods to
determine whether better procedures are available and identify
areas for further development.
--Acquire additional expertise in the areas of revenue estimating and
related macroeconomic issues through additional hiring,
visiting scholars, and consultation with outside experts.
--Attempt to get better and quicker access to IRS tax data and
utilize private-sector financial information to improve our
understanding of how changes in the economy and the markets
influence federal receipts.
--Consult broadly with federal, state, and private forecasters who
are working on the same problem. For example, we will explore
bringing in a visiting scholar who has experience with
projecting tax receipts in a large state such as New York or
California.
We will emphasize transparency in all of our analyses, estimates,
and projections, but particularly in the revenue area, so that external
experts can understand and critique our methods.
Responsiveness and Communications with Congressional Committees
Another area we will begin to emphasize in 2003 will be our direct
assistance to the Congress. We plan to do that in several ways:
--Assigning a senior analyst with a broad knowledge of budget
analysis and the budget process to provide liaison to the
Congressional committees with whom CBO works.
--Involving the Budget, Appropriations, House Ways and Means, and
Senate Finance Committees, as well as other frequent users of
CBO's services, in substantive discussions during our planning
process.
--More generally, taking careful note of the timing and information
needs of all of our customers, working hard to meet delivery
dates, and keeping all committees for whom we work advised of
the status and progress of projects of interest to them.
Strategic Planning
During the past few years, we have experimented with a variety of
planning approaches for our mission work, as well as for our internal
management agenda. The results of those planning efforts, as well as
the resulting accomplishments, have been reflected in internal plans
and to some extent in our annual budgets, appropriation testimony, and
the fiscal year 2002 operating plan. During the next six months, we
will begin a more deliberate strategic-planning process that will
involve a comprehensive and careful assessment of customer needs, a
deliberate weighing of customer priorities in relation to CBO's mission
and capabilities, the selection of broad work areas and individual
projects, and the setting of supportive internal management goals. We
expect to have our plan available for inclusion with the submission of
our 2005 budget.
Specific Work Priorities for Fiscal Years 2003 and 2004
Medicare and Other Health Issues.--Reforming the Medicare program
appears to be a continuing focus of Congressional interest. We expect
to analyze a wide range of legislative proposals both to expand
Medicare benefits and to modify existing program rules. Topics are
likely to include adding a prescription drug benefit to Medicare,
promoting greater competition among health plans in the program, and
modifying Medicare's payments to providers in the traditional fee-for-
service sector. With Medicare's long-term budgetary difficulties
gaining greater prominence, we also plan to focus efforts on developing
a long-term model for estimating Medicare's future costs.
Options for expanding health insurance coverage are also likely to
be a major focus of legislative interest. We will issue a report
providing alternative estimates of the number of people without
coverage, and we expect to be called on to analyze a range of specific
proposals in the areas of providing tax inducements for insurance
coverage, expanding Medicaid and the State Children's Health Insurance
Program, reforming rules regulating private health insurance, and
requiring employers to offer coverage.
Social Security and Employment Policy.--CBO continues to develop
its capacity to produce cost estimates and impact analyses of Social
Security for both current-law and reform proposals. With recent
extensions of temporary unemployment benefits and the scheduled
reauthorization of the Workforce Investment Act, CBO expects to
continue to provide the Congress with analyses of legislative options
to extend unemployment insurance benefits.
Homeland Security.--Providing for homeland security and the
creation of the Department of Homeland Security remain challenges for
the Congress and priorities at CBO. We will continue to track homeland
security spending through the budget and appropriations processes and
will assist the Congress in making such spending transparent. We will
also examine a number of issues related to public spending for homeland
security and the provision of incentives to the private sector to
mitigate risks associated with terrorist attacks.
National Security.--Current work is focused on several broad themes
and individual projects:
--Expeditionary Forces.--Analyzing alternative approaches to
replacing current overseas forward basing of U.S. forces with
so-called expeditionary forces.
--Aftermath of a Conflict with Iraq.--Assessing the implications of a
long-term occupation of Iraq for active-duty and reserve U.S.
military force structure.
--Army Transformation.--Examining the Army's plans to transform its
forces to meet 21st-century threats, and alternatives to those
plans that might mitigate technical and budgetary risks.
--Long-Range Strike Capacity.--Analyzing the cost-effectiveness of
alternatives to improve the ability to strike large numbers of
targets at long range.
We will also study the effects of reform initiatives on aircraft
logistics management and analyze the budgetary implications of trends
in the use of contractors to perform military support functions.
Tax Issues.--Work on federal tax policies will examine and report
on a wide variety of issues involving the efficiency, complexity, and
equity of the income tax system, including the growing effect of the
alternative minimum tax and the use of tuition tax credits versus other
alternatives for supporting higher education.
Other Domestic Economic and Financial Issues.--Examples of current
and planned work are:
--Climate Change.--A report on the economics of climate change will
be issued soon, while ongoing work examines the macroeconomic
effects of reducing emissions of greenhouse gases.
--Resources for Baby Boomers in Retirement.--This report will
describe sources of funds available to the baby boomers in
retirement and put in context concerns about the cost of Social
Security and Medicaid.
--Transportation.--A report is being prepared on options for
passenger rail. Work will support Congressional committees as
they reauthorize federal highway, transit, and aviation
programs.
--Administrative Costs of Private Retirement Accounts.--Nearing
completion, this paper analyzes how program design can raise or
lower the administrative costs of private accounts intended to
supplement or replace Social Security.
--The Internet and Intellectual Property.--Two studies are ongoing.
The first analyzes policy proposals to speed deployment of
high-speed Internet connections. The second looks at possible
changes to copyright law in light of the growth of digital
technology.
--Tort Reform.--Topics being studied include the economic costs and
benefits of the tort system, the implications of tort reform
for economic growth, and an assessment of the economic effects
of state-level tort reforms undertaken from the mid-1980s to
the present.
INTERNAL MANAGEMENT STRATEGY: PROGRESS AND PRIORITIES FOR FISCAL YEARS
2003 AND 2004
In addition to focusing directly on its mission, CBO, like any
successful organization, must devote resources to attracting talented
people, developing their skills, and equipping them properly. It must
also organize its key work processes to be as efficient as possible and
capitalize on technology whenever possible.
Enhancing Recruitment and Retention
During fiscal years 2003 and 2004, we will continue to pursue the
same goals and initiatives in order to identify, hire, and retain a
highly talented and diverse workforce.
1. Strengthen Recruitment Strategy.--Our goal has been to focus our
efforts on quickly filling key vacancies, particularly in hard-to-
attract disciplines, while building a more diverse workforce.
Our emphasis here stems from the general difficulty of filling very
specialized positions with highly qualified staff and from the
experience of the late 1990s, when CBO experienced an unusual number of
vacancies and was unable to replace employees quickly. As a result, we
devised a recruitment and retention strategy that allowed us to fill
vacancies faster and begin meeting our annual staffing goals. To
achieve those ends, we raised offering salaries for new Ph.D. and
master's degree candidates, simplified our application process and
drastically shortened the time from application to job offer,
advertised critical vacancies more aggressively, began using
recruitment bonuses for hard-to-fill specialities, and implemented an
awards program for outstanding performers.
In fiscal years 2003 and 2004, our college and university
recruitment program will remain focused on graduate students in
economics, public policy, and related programs at a variety of schools
and continue to add more schools with diverse student populations. We
will also:
--Continue to develop and expand our competitive ``scholars,''
focusing on hard-to-staff areas such as macroeconomics,
financial economics, tax, and health economics;
--Provide training to managers and staff on effective recruitment
techniques and interviewing skills; and
--Add an on-line job-application module and additional job
information to our Web site.
2. Improve CBO's Training Program.--Our goal is to improve
management and job skills by investing in our people through training,
education, and professional development.
CBO has always invested in the job skills of its employees, but the
amount we spend on job training and professional development has been
far less than that of other high-impact organizations, and much less
than management and training experts recommend. In recent years, we
have increased our training expenditures by 30 to 40 percent while
eliminating less cost-effective training and providing skill training
to a much higher percentage of our staff. In fiscal year 2002, roughly
70 percent of CBO employees received training. And during the past
three years, we have provided more than two-thirds of our managers with
training in leadership and communications skills.
During fiscal years 2003 and 2004, we will:
--Continue to provide management training to our senior staff and
provide management-development training to up to a dozen high-
performing analysts with leadership potential;
--Develop training plans for new employees and find ways to deliver
critical skills training to newer employees more quickly.
3. Modernize and Revitalize the Working Environment.--Our goal has
been to reconfigure and renovate much of our space to use it more
efficiently and provide a high-quality work environment for new
employees and those who were in inadequate space.
Most of CBO's space was configured shortly after the agency's
creation over 25 years ago--in a building designed primarily for file
storage. At that time, there were no desktop computers, many more
support staff, less specialization, and a less competitive employment
marketplace. Consequently, a significant percentage of our space was
configured for clerical staff, and many analysts had work space that
was in passageways or open bays. In cooperation with staff of the
Architect of the Capitol and the Superintendent of House Office
Buildings, we developed strategies to address our space problems with
modest expenditures. Thus, by the end of December 2002, we finished
reconfiguring roughly 57 percent of our usable floor space. The result
is about 134 offices renovated, with a net gain of 47 private offices
and three conference rooms with modern audio-visual equipment.
During fiscal years 2003 and 2004, we plan to renovate another 50
offices and, in the process, essentially eliminate remaining
substandard offices, while realizing a net gain of 10 private offices.
Streamlining Operations and Redesigning Key Processes
As mentioned above, we have also devoted significant attention to
automating and modernizing our internal processes.
4. Process Redesign and Automation.--Our goal has been to modernize
and automate key internal processes to provide better services and
information electronically, while reducing the time needed to use and
support administrative functions.
In fiscal year 2002, we began a major thrust to modernize our work
processes, with a wide range of process redesign and automated system
development efforts. Several new systems were completed during the
year, including a tracking system for projects, a Web-based ordering
system for supplies, a reservation system for our conference rooms, and
a tracking system for job applicants. We also implemented an innovative
Intranet site, which is now our primary information source for internal
policy guidance, new application programs, internal services,
databases, and Internet-based journals and research tools.
In fiscal years 2003 and 2004, we will:
--Develop and implement a new publication distribution system;
--Design and implement a Human Resources Information System (HRIS);
--Install an asset management system;
--Implement a service-request software system for computer
assistance; and
--Upgrade our financial management system in cooperation with the
Library of Congress.
Publishing and Communications Priorities
The value of CBO's work to the Congress and the public derives from
the quality, readability, and availability of its publications.
Although the demand for printed publications remains strong, the use of
electronic versions is growing every year.
5. CBO's Publications and Production Processes.--Our goal is to
produce high-quality publications that are easily identifiable as CBO
products and to reengineer our production processes to become more
timely and efficient.
As usage of CBO's Web site has increased, we have been able to
print fewer copies of reports and reduce inventory costs. Increasingly,
we are targeting the distribution of our reports to put them in the
hands of policymakers and other interested readers but avoid excess
printing. Instead, we are relying more on electronic notification and
distribution. To provide Congressional offices with advance access, we
began e-mailing them some shorter publications and Internet links to
some longer documents. We also finished modernizing the format and
production process for our reports so that they all have a consistent
and professional look readily identified with CBO. We also designed and
began issuing a new product line--Policy Briefs--which capture the
important aspects of major policy issues, such as the budgetary impact
of society's aging population, in just a few pages, for use by busy
staff and Members.
In fiscal years 2003 and 2004, we will implement a PC-based report
distribution system to replace the current mainframe system. The new
distribution system will target distribution more precisely, to those
who want specific kinds of publications; improve staff productivity;
and support e-mail notification and distribution of reports. We also
plan to further improve our graphics production process, take advantage
of the improved print quality made possible by printing directly from
electronic files, and eliminate some production rework. In addition, we
will expand the use of Policy Briefs to cover more areas of CBO work
and issue them more frequently. Finally, we plan to survey users of CBO
documents to glean suggestions for additional improvements in our
written products.
6. CBO's Web Site (www.cbo.gov).--Our goals are to respond to the
growing demand for electronic products and to enhance the site's
functionality and accessibility.
Use of CBO's Web site continues to increase dramatically each year,
from about 2.3 million page requests in 2001 to about 4.9 million last
year. Although the site was quite serviceable, we undertook a
comprehensive redesign. On the basis of suggestions from users, we
developed a better search function, recatalogued publications on the
site, and improved navigation.
In fiscal years 2003 and 2004, our Web site will continue to
evolve. Anticipated improvements include adding new sections, such as
one with extensive information on the federal budget, a notification
system for job applicants, and a comprehensive searchable archive of
all CBO publications dating back to 1975. That archive will make some
1,100 reports and nearly 900 testimonies available on-line and on CD
and will allow us to ``print on demand'' as Members, staff, and the
public request hard copies. Our redesign of the on-line versions of our
various publications will also be completed.
Technology
Highly effective organizations must build a staff of skilled
employees and then provide them with the technology they need to do
their work. That is especially critical at CBO because the broad scope
of our work and the tight deadlines under which we often operate
necessitate modern information and computing tools.
7. Maintain CBO's Technological Edge.--Our goal is to use the best
technology systems economically available to support the agency's
mission while improving the performance of those systems and raising
employees' productivity and satisfaction.
In fiscal year 2002, we replaced our oldest desktop systems,
upgraded network infrastructure, and improved network security. To
reduce timesharing costs, we moved most statistical processing and data
storage from the Library of Congress to an in-house platform. We also
made substantial progress in replacing our mission-critical Budget
Analysis Data System, which is more than 20 years old, with a PC-based
application. That new application will provide improved capability and
yield operating-cost savings.
In fiscal years 2003 and 2004, we plan to:
--Complete the redesign and implementation of the Budget Analysis
Data System during 2003; and
--Consolidate a variety of existing data backup processes into one
enterprise-wide backup system.
We will also continue to replace our oldest workstation hardware
and software, upgrade important routers and switches, replace some
high-speed printers, and continue to support process redesign and
automation efforts with programming assistance.
8. Prepare for Disaster Recovery.--Our goal is to refine existing
plans and develop resources that would allow the prompt restoration of
CBO's mission-critical support to the Congress.
The events of September 11, 2001, and the closure of the Ford House
Office Building a month later reemphasized the importance of disaster
recovery. Those events caused us to rethink our response strategy. The
nature of the closure of the Ford building left our network, systems,
and data intact, permitting us to quickly restore essential services to
the Congress, but with considerable difficulty. In 2002, we improved
our data system backup, moved surplus IT equipment to off-site storage,
and devised a robust emergency recovery strategy.
In fiscal years 2003 and 2004, we will complete the implementation
of that strategy as we:
--Mirror our CBO Web site, our internal Intranet, and other mission-
critical databases and programs at a secure off-site facility;
--Provide staff with highly secure remote access to e-mail
application programs, analytical data, and the CBO Intranet,
which contains hundreds of journals, research tools, and useful
Internet links;
--Strengthen our emergency wireless communication capabilities; and
--Upgrade our e-mail and network operating systems to be more fault-
tolerant.
We will also complete the planning for and make the move to the
Legislative Branch Alternative Computing Facility, establish reciprocal
agreements for emergency work centers with the Library of Congress and
other federal entities, and increase the quantity of off-site
emergency-use hardware we have available.
9. Enhance Network Security.--Our goal is to strengthen network
security for the core network as well as for the separate network
established to store and process sensitive data from the IRS, Social
Security Administration, and Department of Health and Human Services.
Some of CBO's analyses and model-development efforts require access
to sensitive government data. Generally, that sensitivity forces us to
adhere to strict security procedures dictated by the providing agency.
As our use of sensitive data has grown, so has our need to increase
security measures.
In fiscal year 2003, we plan to substantially complete this effort
by implementing automated auditing of secure data access to ensure that
we are complying with all data- use agreements, completing an internal
audit of network security and addressing any issues identified, and
verifying that remote work sites are adequately safeguarded. We will
then periodically perform data-security audits.
CONCLUSION
Mr. Chairman, in recent years, CBO has worked very hard to meet the
needs of the Congress and to rebuild its staff during a period of great
competition in the labor market. To do so, we have raised starting
salaries for new graduates and undertaken a variety of efforts to make
CBO a more desirable employer for talented economists and policy
analysts. The recent budget increases provided by this Committee, along
with our extensive efforts to reduce our nonpayroll costs, have allowed
us to return to full strength while modernizing our products,
processes, technology, and facilities.
Nonetheless, we continue to have the same concerns as all federal
employers: our salaries are not always competitive, many new graduates
shun government service, anticipated retirements are worrisome, and
replacing staff in high-demand disciplines is neither easy nor quick.
Our new recruitment and retention initiatives, for which we need your
continued support--the visiting scholars' program, performance and
recruitment bonuses, training and professional development authority,
and student loan repayment--will provide us with additional tools we
can use in our efforts to attract the best and the brightest to serve
the Congress.
Finally, the additional staff resources that we have requested are
critical to my efforts to improve CBO's economic forecasts and revenue-
estimating processes.
CHANGES SINCE TERRORIST ATTACKS
Senator Campbell. It seems to me that almost every agency
that we deal with has had some major changes since 9/11, kind
of foisted on them, obviously, but CBO has a little bit more of
a buffered existence. Have there been any major changes with
your workload or internal agency changes since 9/11, as there
has been with so many other agencies?
Mr. Holtz-Eakin. Well, I can let Barry Anderson, who has
actually been at the Congressional Budget Office during the
entire period, respond to that most directly.
Mr. Anderson. The workload, no. I would have to say our
workload is about the same. We have answered more requests,
about, for example, the potential cost of the war in Iraq, and
we also were called by the budget committees--and, in fact,
volunteered to them right after 9/11--to talk about the
potential economic damage that 9/11 could have caused for the
economy. But that was a relatively small amount of work with
respect to the entire workload. The budget process, Mr.
Chairman, just seems to go on and on, ever more complex, but
not much impacted by that.
With respect to the actual working conditions, though, it
has, I would say, relatively dramatically affected the staff.
First of all, it has affected them psychologically. The fact
that we work on Capitol Hill--the fact that one of those planes
could have been headed directly our way--has had a major
impact. In the Ford House Office Building in which we are
located, there is a day care center, and that really has had an
impact, particularly right after the event.
Senator Campbell. Is that day care center still there?
Mr. Anderson. It is still there, and there have been a
number of security provisions implemented in the building and
in the area around it that were not in effect on 9/11; and
people see that, and they recognize that, and they act
differently.
Second of all, right after 9/11, as you may recall, there
was the anthrax, and we were out of our building for almost 3
weeks because of that, too. That dramatically changed our
disaster recovery procedures. When that happened back in
October of 2001, I think we had only three or four laptops in
the agency. Now we have 60 or 70.
Senator Campbell. Where were you working when you had to
vacate your offices during the anthrax scare?
Mr. Anderson. We had six different locations. We went, hat
in hand, to agencies, almost every one of which was very
generous with us in giving us space.
Senator Campbell. They were all downtown here somewhere?
Mr. Anderson. Some of them--the Library of Congress
provided some; the Department of the Interior, NASA,
International Trade provided some. OMB staff had a space that
they had vacated, that they had reserved in case they had to
vacate the Old Executive Office Building, an entire floor of
1800 G Street, and that provided the biggest amount of space. A
third or more of our staff were there for several weeks.
However, the space was one thing; the computers were another.
And I would have to say, looking back, that is where we were
least prepared. We were able, sort of by the skin of our teeth,
to continue to provide services to the Congress during that
time. Were that or anything like that to happen again, we would
be so much better prepared now. It has drastically changed the
way we think about things--backing up materials, backing up
databases, being able to access materials off-site, those types
of thing.
Senator Campbell. Thank you. Senator Durbin.
RESOURCES TO IMPROVE BASELINE FORECASTING
Senator Durbin. Thank you very much.
Mr. Holtz-Eakin, may I ask you, in your statement, you said
that you are going to devote more resources to improving
economic forecasts and projections of tax receipts. I would
like to ask how much of that is just an effort to be more
accurate and how much of that reflects this new philosophy of
dynamic scoring, where we have to look at the world through
different eyes than we have during the course of the history of
the Republic?
Mr. Holtz-Eakin. This really reflects an effort to be
better in our baseline forecasting, independent of any issues
associated with dynamic scoring. The revenue swings over the
late 1990s and the most recent couple of years involve a nexus
of macroeconomic performance (a boom and a bust), financial
performance (changing compensation patterns, movements toward
more bonuses, options, profit-sharing plans), and integration
of the receipts from the corporate and individual income taxes
and from their respective alternative minimum taxes. This has
presented a really difficult technical challenge in trying to
anticipate receipts in each year. The request is meant to
reflect our needs for specialists in those areas, including
those visiting scholars who may bring to us some wisdom from
the States that rely heavily on those kinds of receipts,
California and New York.
Senator Durbin. So virtually all the forecasters have been
wrong pretty consistently. Has the CBO been more in error or
less in error than most of the forecasters in the past few
years?
Mr. Holtz-Eakin. Although I have been here only 2 months, I
can proudly say that the CBO's record is outstanding and that
the agency has made smaller errors in absolute value than most
forecasters.
STUDENT LOAN REPAYMENT PROGRAM
Senator Durbin. So you do not think any restatement from
CBO would call for--never mind. I will not go any further with
that.
You talked a lot about the brain drain in Federal
Government. This is not unique to your agency. In fact, Senator
Voinovich, our colleague, has really focused on this as a major
part of his Senate activity in the Government Affairs
Committee, and you also noticed here a student loan repayment
program, and I might say to the chairman, this is one of the
things that came out of a year or two of my chairmanship of
this, or my chairmanship of this subcommittee to try to retain
and recruit very good people to Government service, where there
are many disincentives. Student loan repayment turned out to be
one of the incentives. Now, are you using that now? I see in
your statement you refer to it.
Mr. Holtz-Eakin. I want to thank you for your efforts. To
walk into a situation where you have this kind of recruiting
tool is a big advantage.
The repayment provisions have not yet been used. We have
set up a program where individuals can get up to $6,000 each
year, a total of $40,000. Should they accept this incentive,
they would be required to stay at CBO 3 years; otherwise, they
would have to pay it back.
During fiscal year 2002, we did not use that. We did not
have a budget until late in the year, and it was not necessary
to deploy the incentive. We have built into our 2004 request a
larger use of the incentive. We are looking for the right
opportunities in the recruiting process to deploy it in a way
that enables us to take a relatively modest program at its
outset and hire strategically, especially in the tough areas I
mentioned.
Senator Durbin. I thank you for that, and I think many of
us are coming to learn, as we look at the debt that our kids
are carrying out of college, that this is a new reality when it
comes to job search, and if you do not deal with it, you are
likely to be a victim of it, and I think it is good that we are
starting to open our eyes to that.
Thank you very much, Mr. Chairman.
SUBCOMITTEE RECESS
Senator Campbell. I want to thank our witnesses. You got
done just in time. You heard the beepers. We are going to have
to go vote. We will stand in recess until April 10 at 1:30,
when we will take testimony from the Library of Congress.
Thank you so much for being here. The subcommittee is
recessed.
[Whereupon, at 2 p.m., Thursday, March 27, the subcommittee
was recessed, to reconvene at 1:30 p.m., Thursday, April 10.]