[Senate Hearing 108-262]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 108-262
 
       OVERSIGHT OF GAO: WHAT LIES AHEAD FOR CONGRESS' WATCHDOG?
=======================================================================



                                HEARING

                               before the

                              COMMITTEE ON
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 16, 2003

                               __________

      Printed for the use of the Committee on Governmental Affairs









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                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
ARLEN SPECTER, Pennsylvania          RICHARD J. DURBIN, Illinois
ROBERT F. BENNETT, Utah              THOMAS R. CARPER, Delaware
PETER G. FITZGERALD, Illinois        MARK DAYTON, Minnesota
JOHN E. SUNUNU, New Hampshire        FRANK LAUTENBERG, New Jersey
RICHARD C. SHELBY, Alabama           MARK PRYOR, Arkansas

           Michael D. Bopp, Staff Director and Chief Counsel
                Bonnie Heald, Professional Staff Member
            Jennifer A. Hemingway, Professional Staff Member
      Joyce A. Rechtschaffen, Minority Staff Director and Counsel
                  Lawrence B. Novey, Minority Counsel
                      Amy B. Newhouse, Chief Clerk
















                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Collins..............................................     1
    Senator Voinovich............................................     8
    Senator Pryor................................................    16
    Senator Carper...............................................    17
    Senator Lautenberg...........................................    28
Prepared statement:
    Senator Coleman..............................................    33

                               WITNESSES
                      Tuesday, September 16, 2003

Hon. David M. Walker, Comptroller General, U.S. General 
  Accounting Office..............................................     3
Maurice P. McTigue, Director, Government Accountability Project, 
  Mercatus Center, George Mason University.......................    21

                     Alphabetical List of Witnesses

McTigue, Maurice P.:
    Testimony....................................................    21
    Prepared Statement...........................................   120
Walker, Hon. David M.:
    Testimony....................................................     3
    Prepared Statement...........................................    34

                                Appendix

GAO's Employee Advisory Council, prepared statement..............   127
Post-hearing Questions for the Record submitted to Mr. Walker by 
  Senator Fitzgerald.............................................   139

















       OVERSIGHT OF GAO: WHAT LIES AHEAD FOR CONGRESS' WATCHDOG?

                              ----------                              


                      TUESDAY, SEPTEMBER 16, 2003

                                       U.S. Senate,
                         Committee on Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:30 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Susan M. 
Collins, Chairman of the Committee, presiding.
    Present: Senators Collins, Voinovich, Pryor, Carper, and 
Lautenberg.

             OPENING STATEMENT OF CHAIRMAN COLLINS

    Chairman Collins. The Committee will come to order. Good 
morning.
    For more than 80 years, the General Accounting Office has 
worked with Congress to make Federal agencies and programs more 
accountable. The GAO works for Congress, but its beneficiaries 
are the American people, who rightfully expect the Federal 
Government to spend their tax money carefully. The GAO has 
played the role of auditor, overseer, investigator, evaluator, 
and watchdog. Today, we consider the GAO itself by examining 
its work, the results it has achieved, and the challenges it 
faces.
    This morning's hearing on the GAO, the investigative arm of 
Congress, has two purposes. First, we want to examine the GAO's 
efforts to support Congress in meeting its constitutional 
responsibilities to help improve the performance and 
accountability of the Federal Government. Second, we will 
discuss legislation pending before this Committee that would 
provide the Comptroller General, who leads this important 
agency, with greater flexibility in allocating and enhancing 
its workforce.
    When it was first established in 1921, the General 
Accounting Office provided the services its name suggests. It 
examined the legality, propriety, and accuracy of government 
expenditures. GAO clerks checked vouchers and approvals and 
whether the items purchased were actually received.
    Over the years, the GAO's mission has expanded far beyond 
these bookkeeping functions. To better meet its broadened scope 
of responsibility, in the 1970's, the GAO added physical 
scientists, social scientists, computer professionals, and 
experts in fields such as health care, public policy, and 
information management to its staff of accountants.
    In 1998, David Walker, who will testify before us today, 
became the Nation's seventh Comptroller General. Under his 
leadership, the depth and breadth of the agency's work on 
behalf of Congress have continued to expand along with the 
myriad challenges that confront the Federal Government. GAO 
auditors, investigators, and analysts have helped Congress 
address broad, challenging areas, such as military 
transformation, restructured energy markets, private pensions, 
prescription drugs, homeland security, and postal reform.
    The Senate Governmental Affairs Committee, along with the 
House Government Reform Committee, has a uniquely close 
relationship with the GAO. Last year, for example, nearly one-
third of the GAO's projects were completed for these two 
oversight committees. Currently, this Committee has made 32 
work requests of the GAO that are either pending or already 
underway. We depend on the GAO to help identify waste, fraud, 
and abuse in government programs. We look to the GAO for 
recommendations on making Federal programs operate more 
efficiently and effectively for the American people, whose 
hard-earned tax dollars support their government.
    The GAO's expanded role in the Legislative Branch of 
government also poses many challenges, which Mr. Walker will 
discuss today, including the agency's human capital needs. The 
GAO is requesting additional personnel flexibilities in order 
to assure quality service to the Congress, to continue leading 
by example in the government, and to attract, retain, motivate, 
and reward a high-performing workforce.
    I am pleased to have joined Senator Voinovich in 
introducing the GAO Human Capital Reform Act of 2003, which 
would allow the GAO to reward employees based on their 
knowledge, skills, and performance. This proposal is part of a 
larger program to strengthen the management systems and 
capacity of the GAO.
    I commend the Comptroller General and his human capital 
team for working collaboratively with GAO employees during the 
development of the proposed reform. In developing its reforms, 
the GAO undertook an extensive, phased approach that involved 
developing a proposal that was vetted broadly both externally 
and internally, and then it made adjustments based on employee 
comments and concerns raised during the process.
    The GAO worked closely with its Employee Advisory Council, 
which represents a cross-section of the agency, to obtain the 
feedback necessary as part of a successful process. I want to 
commend the GAO for taking that approach, which contrasts with 
the approach that some other departments and agencies have 
taken. I think that is why GAO's system has been more 
successful. That kind of collaborative, inclusive approach has 
worked well.
    The GAO's past use of management flexibilities and 
continued efforts to build the infrastructure necessary to 
responsibly shape its organization should serve as a model for 
the rest of the Federal Government. The GAO has demonstrated 
well how to be responsive to the concerns of its employees. As 
agencies move forward in implementing various human capital 
reform initiatives they should carefully examine this fine 
example.
    Before I turn to our first witness today, I just want to 
say that I don't know how this Committee would be able to do 
its work without the invaluable assistance of the GAO. We rely 
on the GAO in so many areas, and the breadth of expertise that 
the GAO now brings to Federal projects requested by Congress is 
truly impressive.
    I am very pleased to welcome our first witness today, the 
Hon. David M. Walker, the Comptroller General of the United 
States. Mr. Walker has been a very valuable contributor to the 
Committee's work on a variety of issues. I am particularly 
grateful for his recent assistance with the Committee-passed 
version of the civilian personnel reform legislation for the 
Department of Defense. Today, we will benefit from a discussion 
of GAO's performance as a whole, and we will use this 
opportunity to build a legislative record on the legislation 
that Senator Voinovich and I have introduced.
    So, Mr. Walker, we welcome you and you may proceed with 
your testimony.

TESTIMONY OF HON. DAVID M. WALKER,\1\ COMPTROLLER GENERAL, U.S. 
                   GENERAL ACCOUNTING OFFICE

    Mr. Walker. Thank you, Madam Chairman. It is a pleasure to 
be here. It has been almost 5 years since I became the seventh 
Comptroller General of the United States. Much has happened 
during that 5-year period of time and I look forward to 
providing an executive overview of what has happened, along 
with the changes, the challenges, and the opportunities that 
are before us.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Walker appears in the Appendix on 
page 34.
---------------------------------------------------------------------------
    I also would like to thank you and Senator Voinovich for 
your sponsorship of the GAO Human Capital Act of 2003. That is 
a critical piece of legislation and we are hopeful that the 
Congress can act on it this year.
    If I can, I would like for my entire statement to be 
inserted into the record and I will summarize now.
    Chairman Collins. Without objection.
    Mr. Walker. Thank you. When I came to GAO 5 years ago, I 
found an organization with a longstanding reputation, thousands 
of outstanding and dedicated public servants, and an 
organization that did many things right. At the same point in 
time, I found, like many organizations in the public sector, an 
organization that had not changed very much in a number of 
decades, who had gone through significant downsizing in the 
last several years and needed to reposition itself for the 
future in order to best serve the Congress, the country, and 
American citizens for the 21st Century.
    As a result, we embarked on nothing less than a fundamental 
transformation of the GAO, which has been ongoing now for about 
4 years. I think we have accomplished a tremendous amount, but 
much remains to be done.
    As you pointed out, Senator Collins, the GAO is very 
different today than it was in 1921 in so many different ways, 
although we are still faithful to our responsibility to assure 
accountability for the American people. I have benefited from 
the positive efforts of all of my predecessors, six 
predecessors, but in particular, Elmer Staats and Chuck 
Bowsher, who made major contributions to the agency over a 
number of years and I am pleased and proud to have succeeded 
them and to lead GAO.
    We are in a situation now where I believe we need to lead 
by example in helping the Federal Government and the Congress 
determine how best to position itself for the 21st Century. 
This includes what the government should do, how the government 
should be organized, how the government should do business, and 
in some cases, who should do the government's business.
    And to do that, I believe very strongly that as the leading 
performance and accountability organization in the United 
States and arguably the world, we have a responsibility to lead 
by example. We have a responsibility to be as good or better 
than any other entity that we evaluate, audit or investigate. 
Not only do I think we can and we should, I think it adds to 
our credibility by doing so. That way, we are practicing what 
we preach, walking the talk, if you will.
    Over the last 4 years, we have taken a number of steps and 
we have adopted what I would call a strategic and balanced 
scorecard approach to transforming the agency. As you know, any 
organization has to have a strategic plan. If you don't have a 
strategic plan, any road is going to get you to an uncertain 
future. You may go nowhere fast.
    I found at GAO that in the past, we had a number of 
individual plans, but we really didn't have a strategic plan. 
So we worked with the Congress in a very participative, 
partnership-oriented fashion to, in the year 2000, issue our 
first truly strategic plan that has four main goals, a 
foundation based on our core values, and identifies certain key 
trends and challenges that face the United States and many 
other countries to help drive our work.
    We used that plan to reorganize and streamline GAO. We 
eliminated a layer of management. We didn't lay off any of 
those management officials or their support staff. We 
redeployed them. But we eliminated a layer of management, which 
makes us more economical, efficient, and effective. We 
consolidated from 35 teams to 13. We went from 16 field offices 
to 11. We redeployed resources horizontally and to focus 
externally with our clients, with our accountability partners, 
and with other good government organizations.
    The result of that has been profound and positive results. 
If you look at the first factor of the balanced scorecard 
approach, results, our financial benefits, as evidenced by 
either savings achieved or resources freed up for redeployment 
to other high priorities, have gone up from $19.7 billion in 
1998 to $37.7 billion in 2002. That is an almost doubling. Our 
return on investment just for financial benefits alone has gone 
from $58 for every dollar invested in GAO to $88 for every 
dollar invested in GAO, and this doesn't count a whole range of 
other accomplishments as a result of adopting our 
recommendations that can't be measured in dollar terms. These 
deal with safety, security, and privacy issues, that can't be 
measured in dollar terms, but they are very important.
    And obviously, in the testimony, I have a number of other 
indicators. But results count.
    At the same point in time, we have tried to do a number of 
things with regard to our clients. We have had a continuous 
Congressional outreach effort. We sought feedback, first from 
this Committee, and then the House Government Reform Committee, 
on our testimonies and our products that we did for the 
Committee with very favorable outcome, over 90 percent positive 
ratings for both products as well as testimonies. We have now 
expanded that to other committees throughout the Congress. We 
would like the response rate to be a little bit higher, but the 
positive results are continuing. And so we are encouraged by 
that and we are going to try to do what we can to see if we can 
get the response rate a little bit higher.
    We have improved our timeliness. We are holding steady on 
200-plus testimonies a year for Congress. That is important, 
because if Congress thinks that our work is important enough 
for us to testify at a hearing, that is a good sign. It is an 
interim measure, it is not an outcome, but as you know, 
Congress through appropriations, oversight, authorization, many 
times will end up having hearings, and to the extent that our 
employees or our work is a subject of hearings, it increases 
the likelihood that we will have positive outcomes down the 
road.
    And last but not least, one of the things that we have done 
to try to help our clients on the other side of the Hill is 
because of the anthrax events, we actually became the home for 
the U.S. House of Representatives for about 2 weeks back in 
2001 and now we are one of several contingency sites. So we not 
only have to concern ourselves with the safety and security of 
our own employees and also those who we lease space to, namely 
the headquarters of the Army Corps of Engineers in our 
headquarters building, but we also have to be concerned with 
the potential safety and security of our clients in the event 
of a contingency.
    With regard to agencies, we have tried to employ a 
constructive approach with agencies, not just to point out what 
is wrong, but to acknowledge what is right, to benchmark them 
on progress, and to benchmark them against other agencies. I 
think this is a more constructive way to approach our role and 
we have had very positive results as a result of it.
    Last but certainly not least with regard to what we have 
done so far is our people. People, by far, are our most 
important asset. We are only as good as our people. We have 
arguably the most diverse, as to skills and knowledge, 
professional workforce of any entity, even in the private 
sector. And as I said previously, I am pleased and proud to 
lead them.
    We make people a top priority at GAO and we have led the 
way, I believe, in human capital reforms, both administratively 
and legislatively. That is part of what the bill is about 
today, is the next installment, which would be the third 
installment on our human capital reforms legislatively. But we 
also partner very much with our Employee Advisory Council and 
our employees to try to make a great agency even better.
    For example, every year, we ask our employees to fill out a 
confidential electronic survey asking them how we are doing, 
where we are making progress, and what is important to you. 
This past couple of months, we got the results back from the 
most recent survey. We had an 89 percent response rate on a 
voluntary survey, which is phenomenal. Two-thirds of GAO's 
employees wrote me a personal and confidential note, anywhere 
from two lines to two-and-a-half pages. I read every one of 
them during the first weekend that I had the information.
    Our positive results went up in 72 out of 83 areas. We are 
ahead of the Federal Government in 9 out of 11 areas and we are 
ahead of the private sector in all four benchmark areas. So we 
are making great progress, but we can always be better and we 
will continue to strive to do that.
    I know the Employee Advisory Council has a statement that 
they have prepared for the record and I appreciate your 
willingness to be able to insert it into the record at the 
appropriate time.\1\
---------------------------------------------------------------------------
    \1\ The prepared statement of the GAO's Employee Advisory Council 
appears in the Appendix on page 127.
---------------------------------------------------------------------------
    Let me last say that as noted within the last 2 weeks, one 
of the areas where we have also made tremendous progress is 
information technology. Specifically, within the last 2 weeks, 
GAO was recognized as one of the top 100 CIO organizations in 
the United States, and that includes the private sector.
    So we are making real progress on leading by example, 
serving the Congress and serving the country. Now, what about 
challenges? There are several challenges which I will hit the 
highlights on. Details are in my testimony.
    Our challenges include continuing our transformation, and 
continuing to build on our positive results and to make sure 
that they are sustainable. Some of our special challenges 
include unfunded mandates. We are concerned about unfunded 
mandates. Many times, when you are successful, Congress wants 
you to do more. It is fine if Congress asks us to do certain 
reports as a part of the legislative process. That is fine. But 
when Congress wants to expand the scope of our authority and 
get us in new lines of business, we think it is important that 
somehow there will be funding for it. Otherwise, we are 
diluting our ability to do our primary mission.
    Second, sometimes Congress will end up passing pay raises 
without fully funding the pay raises. That is very difficult 
when 80 percent of your costs are people costs. You can eat 
that maybe in 1 year, but you cannot eat that on a recurring 
basis without adverse outcomes.
    Supply and demand imbalances--when you are doing a good 
job, you get requests for more work. That is good news. The bad 
news is, you have a certain amount of resources. We have supply 
and demand imbalances that we manage very carefully. Some of 
them are particularly acute in areas like health care, which 
means that sometimes we are going to have to end up going back 
to leadership of the committees as well as overall to try to 
relook at what is in the in basket and see if we can 
reprioritize. Obviously, we are having to place more and more 
attention on committee and subcommittee requests and less on 
individual member requests because of that supply and demand 
imbalance.
    Access to records--while we had one highly publicized 
problem within the last couple of years, we have not had a 
proliferation of records access problems and, therefore, do not 
need any legislation at this point in time. We are hopeful that 
we will not have problems in the future.
    The Deputy Comptroller General position has never been 
filled since the law was enacted in 1980. The current process 
just doesn't work, and I would respectfully request that the 
time has come to reconsider that process and hopefully follow a 
process similar to what other supreme audit institutions around 
the world do, and that is to allow the Comptroller General, in 
consultation with certain parties on the Hill, to make that 
appointment or make a recommendation for that appointment. I 
think we need to do something because the current process just 
doesn't work.
    Performance and accountability community coordination--we 
are only part of a broader portfolio, the Inspector Generals, 
for example. This is the 25th anniversary of the IG Act. I 
think there is a need over the next year or so to look at what 
is working, what is not, how can we achieve economies, improve 
efficiency and effectiveness in that community, as well.
    Our bid protest volume is also continuing to increase.
    And last but not least, we are being asked to do more and 
more work for the Legislative Branch on the Legislative Branch. 
By that, I mean where we are being asked to do work on the 
Capitol Police, the Capitol Visitors Center, the Architect of 
the Capitol, the Government Printing Office, and a variety of 
other entities. Obviously, we are happy to help our client, and 
yet these engagements do create certain challenges that have to 
continually be assessed.
    Finally, S. 1522, the GAO Human Capital Reform Act of 2003. 
Again, thanks to both you, Senator Collins, and you, Senator 
Voinovich, for your sponsorship of this legislation. We believe 
that this is both a reasoned and reasonable proposal. We 
believe that it will make GAO a more effective place and a 
better place to work. We believe it will help us to continue to 
lead by example in this critically important area. We believe 
that we followed a model process and we believe that we have 
got a proposal that deserves your support and this Committee's 
support and hopefully the Congress' support this year.
    As I look forward, in closing, there are three areas that 
I, along with my colleagues at GAO, would like to help the 
Congress on in the next 10 years.
    First, help the Congress address our large and growing 
fiscal imbalance. The numbers just don't add up. Tough choices 
are going to be required. We are not going to grow our way out 
of this problem. I have a speech at the National Press Club 
tomorrow and I will talk more about this issue then.
    Second, helping to transform what the government does and 
how the government does business is critically important for 
the 21st Century. Right now, a vast majority of government is 
an amalgamation of programs, policies, functions, and 
activities over decades and the base has not been reviewed 
thoroughly for its relevancy in the 21st Century. The base is 
not OK and the base is unsustainable going forward, especially 
if the Congress wants flexibility to meet new demands that is 
placed on it.
    And last, to continue efforts to make GAO the Federal 
employer of choice and the gold standard for a world class 
professional services organization that just happens to be in 
the public sector.
    With that, thank you for your time. I appreciate the 
opportunity. I would be happy to answer any questions that you 
may have.
    Chairman Collins. Thank you very much, Mr. Walker.
    Before I turn to my questions, I would like to call on 
Senator Voinovich for any opening comments that he might have. 
As you are well aware, he is the Senate's expert on human 
capital issues, and he is the primary sponsor of S. 1522, which 
I was very pleased to join him in introducing. Senator 
Voinovich.

             OPENING STATEMENT OF SENATOR VOINOVICH

    Senator Voinovich. Thank you, Madam Chairman. Comptroller 
General Walker, it is always a pleasure to see you and receive 
your testimony. I apologize, Madam Chairman, for not being here 
until now. I had a little plane problem.
    I want to thank you, Mr. Walker, for being a pace-setter on 
Federal strategic human capital management and for serving on 
my human capital working group. I appreciate your balanced 
review of the administration's proposed human capital 
performance fund and the Defense Department's national security 
personnel system, as well as your forthrightness about the 
Federal budget situation. We are hopeful that your comments and 
our legislation will make its way into the Conference Committee 
that is being held on the defense authorization bill.
    Mr. McTigue, thank you for being here, as well. I am 
grateful for the excellent analysis you and your colleagues at 
the Mercatus Center provide on Federal performance and 
accountability issues. Both of you have assisted in my efforts 
to reform the Federal workforce during my 5 years in the Senate 
and I look forward to making some other changes as we finish 
the year.
    Madam Chairman, as you know, I have a keen interest in the 
management of Federal agencies, and during my 5 years in the 
Senate, GAO really has played an integral role in providing 
comprehensive analyses and thoughtful recommendations on 
reforming the Federal Government's strategic human capital 
management, an issue that I have made a centerpiece of my 
efforts, as you mentioned, as Chairman of the Oversight of 
Government Management Subcommittee.
    I would say that, Comptroller General Walker, we have made 
some real progress. I remember being in my office 2 or 3 years 
ago when you indicated that reform was going to be very 
difficult. It is amazing when I think about how much change has 
occurred so far, and hopefully more will occur before the end 
of this year.
    In addition to receiving the benefit of GAO's excellent 
research on personnel and management issues, the Federal 
Government has in its own midst an examplar of excellent 
management practices. In the first 5 years of his 15-year term 
as Comptroller General, Mr. Walker has begun an important 
cultural transformation of his agency. Assisted in part by 
Congress' enactment of special personnel flexibilities in GAO 
in 1980 and in 2000, Mr. Walker is in the process again of 
restructuring GAO's workforce in order to maintain its mission 
both now and in the coming years. That makes GAO noteworthy not 
only for recommending to other agencies how to improve their 
management, but for setting an example for those agencies 
through its own practices. In other words, GAO is a best 
practices organization. It is difficult to go out and tell 
other people what to do if you are not doing them in your own 
shop.
    On July 31, I was pleased to introduced S. 1522, the GAO 
Human Capital Reform Act of 2003. This legislation, which was 
developed by GAO, I believe will further enhance those 
personnel authorities.
    Madam Chairman, I hope that we will be able to report out 
the bill at the Committee's next business meeting in October. I 
am pleased to note that the House Civil Service Subcommittee 
already has reported out a companion bill. Madam Chairman, Mr. 
Walker has often observed that for too long, Federal employees 
have been seen as ``costs to be cut rather than assets to be 
valued.'' I mentioned that yesterday when I spoke with a group 
of representatives from labor unions in the Federal Government. 
He has done a good job in changing that perception at GAO. I 
think, frankly, that perception has been changed during the 
last couple of years, from beating up on Federal employees to 
valuing them and you have been a great leader in that area.
    I thank you for your testimony, and Madam Chairman, thank 
you for giving me a chance to make this opening statement.
    Chairman Collins. Thank you, Senator Voinovich.
    Mr. Walker, in your testimony, you gave some impressive 
statistics on the return on investment. I believe you said for 
each dollar that GAO receives that there is a return of $88, 
and that is up from $58, which is very impressive.
    Could you quantify for the Committee how much money the GAO 
has saved the Federal Government through its recommendations 
being implemented during the past 4 years, and could you also 
tell us, since there are undoubtedly some skeptics out there, 
how GAO goes about estimating the savings?
    Mr. Walker. It would be around $100 billion or a little bit 
more, but let me clarify for the interest of full and fair 
disclosure. The financial benefits are a combination of two 
things. They are either outright savings, or they are resources 
that are freed up that Congress decides to redeploy to other 
priorities, which we don't control. Obviously, the Congress has 
the prerogative to do that. But we believe that it is a better 
utilization of taxpayer resources and, therefore, appropriate 
for us to count as a financial benefit, because if that had not 
occurred, then they may have spent both, if you will.
    The way that we go about it is we have a very disciplined 
process where the teams who want to claim these financial 
benefits have to be able to document what was the 
recommendation that we made and was it adopted by the 
department or agency or the Congress, can we demonstrate that 
we are the primary or a major reason why this change occurred 
as a result of our work, and then an estimation of what the 
financial benefits were as a result of adopting that 
recommendation, whether it is a one-time savings, whether it is 
a multi-year savings. If it is, we don't consider forever. We 
just consider several years and come back to a discounted 
present value.
    For this year, for anything that involves $500 million or 
more, our Inspector General independently reviews the estimated 
savings and either signs off or doesn't sign off, and if the 
Inspector General doesn't sign off, we don't count it. And if 
she does sign off, then we do count it.
    We also are going to be undergoing a peer review that is 
going to be led by the Auditor General of Canada. It will 
involve a consortium of other countries within a couple of 
years and we expect that they will probably take a look at 
this, as well.
    We are also trying to get our external auditors to take a 
look at our financial benefits. We have had a clean opinion, no 
material control weaknesses, no compliance problems with our 
financial management reporting for years. We are trying to get 
our external auditors to be willing to express an opinion on 
our performance statistics. That is something CPAs haven't done 
and I am trying to, frankly, get the profession to modernize 
itself and to lead by example in that area, as well, and I am 
hopeful that we will be able to get them to assume that 
responsibility. But right now, it is not in accordance with 
professional standards, so we need to update professional 
standards to make them more relevant for the 21st Century, as 
well.
    Chairman Collins. And as you know, the need for an 
independent outside evaluation is an issue Mr. McTigue has 
raised. Do you agree that it would be helpful?
    Mr. Walker. I agree, and we are very much on the case. We 
would like for our external auditors to do it. Again, it is 
going to take a change in professional standards for that to 
happen and we are also trying to explore whether or not as part 
of the peer review something might be able to be done. That is 
where our peers, other supreme audit institutions, are going to 
take a look at us.
    Chairman Collins. When the GAO makes recommendations to 
agencies, whether they would result in cost savings or simply 
better operation and more effective delivery of services, what 
percentage of those recommendations are adopted by agencies. 
Are agencies generally receptive to the recommendations, or is 
there a push-back and resistance?
    Mr. Walker. Well, first, that is an indicator. That is 
something that we follow, what percentage of our 
recommendations are adopted. For 2002, 79 percent of the 
recommendations that we made 4 years prior had been adopted by 
2002. Now, some were adopted immediately. Some are adopted 1 
year to 4 years later. We use 4 years because we believe that 
if you don't adopt it within 4 years, you are probably not 
going to adopt it. So 79 percent, which we think is very high. 
And then from that 79 percent, what were the financial 
benefits, the non-financial benefits which occurred, which we 
report, as well.
    As you know, they are not required to adopt our 
recommendations, but as a result of our constructive engagement 
approach, where we are trying to work with them on a much more 
constructive basis to make government work better for 
everybody, we have actually seen the percentage go up. 
Specifically, we have also seen the percentage of our 
recommendations implemented go up. This year, I think it may go 
up a little bit from what it was last year.
    Chairman Collins. That is encouraging to hear, as well.
    Could you give us some examples of major recommendations 
the GAO has made that have resulted in either significant cost 
savings or in significant program improvements?
    Mr. Walker. Well, we have made a number of recommendations 
in the area of acquisition practices and contract management as 
to how the government goes about engaging those types of 
activities that have resulted in significant dollar savings. We 
have also made--been involved in past base closure and 
realignment commissions and related activities to try to 
rationalize the excess infrastructure that the Federal 
Government has, which, by the way, is not just DOD, it is also 
the Postal Service, it is also VA, it is also a variety of 
other departments and agencies who are built on infrastructures 
and organizational systems for the 1950's rather than the 21st 
Century, in many cases.
    There is a whole list in our performance and accountability 
report, which is on our website, which is www.gao.gov.
    Chairman Collins. I am going to ask you one more question 
before I turn to my colleague, and then we will do a second 
round, and you led me into it nicely. The GAO, as you well 
know, issues a high-risk list of programs or activities in the 
Federal Government that are particularly vulnerable to 
mismanagement or not reaching their goals to limit waste, 
fraud, and abuse. One of the disturbing aspects of that list is 
while there are additions to it, such as the real property 
issue that you have just mentioned, there are also programs 
that have been on the list for over a decade--I think since the 
list was first formulated. Medicare, DOD contracting are 
examples of that.
    What can we do? This Committee really wants to play a role 
in ensuring that programs don't appear year after year on the 
high-risk list with no progress being made to remove them from 
the list by identifying management weaknesses and correcting 
them. I am going to try to follow up. We are working very 
closely with the GAO on the real property management issue, and 
we are going to have a hearing on it shortly.
    Mr. Walker. Sure.
    Chairman Collins. But what can we do so that we don't 
repeat this cycle, of seemingly making little or no progress?
    Mr. Walker. Well, several things. First, on Medicare, just 
to touch on that for a second, that is another area where there 
were significant financial benefits because we have done a lot 
of work with improper payments, and improper payments have come 
down from about $23 billion a year to about $13 billion a year, 
still unacceptable, but that is a $10 billion difference every 
year. We still need to make more progress.
    With regard to the items that remain on the list, there are 
a variety of things that I think Congress has to consider 
doing. First, hold agencies accountable as part of the 
oversight process. Second, consider as part of the 
appropriations process whether and to what extent they should 
be given incremental resources to solve a problem or resources 
should be pulled back when they are not making progress in 
certain areas.
    Let me give you an example of DOD, and I think it is a good 
case study. In my view, DOD is No. 1 in the world in fighting 
and winning armed conflicts. There is nobody even close. We are 
the gold standard. So they are an A-plus on fighting and 
winning armed conflicts.
    DOD is, however, a D on economy, efficiency, transparency, 
and accountability. They have 8 of 25 high-risk areas, and they 
probably would have had them for decades before we had the 
high-risk list. They haven't made much progress. I think there 
are several reasons that they haven't made much progress, one 
of which is they are in the line of business of fighting and 
winning armed conflicts, and as long as they do well there, 
there is not a whole lot of time and attention focused on the 
other and they still get what resources they want.
    I think the other reason is, is that if we look at 
leadership in the Executive Branch, we are talking about the 
need for cultural transformation. We are talking about changing 
how the government does business. Authoritative literature will 
tell you that is a 7-plus-year effort to do that and to make it 
stick, and yet the typical leader in the Executive Branch stays 
2 to 3 years. You can't transform an organization, you can't 
deal with the kind of issues that have to be dealt with in a 2- 
to 3-year period of time no matter how good you are. It just 
doesn't work.
    And so as a result, one of the things that we have thrown 
out is the idea that for selected departments and agencies who 
face major challenges--not everybody, and DOD is clearly one--
the concept of exploring the possibility of a chief management 
officer or a chief operating officer, a level two official 
whose job is to focus on these key management issues--strategic 
planning, organizational alignment, financial management, IT, 
human capital strategy, knowledge management, change 
management. This person would have a term appointment, ideally 
for five to 7 years, with a performance contract, who would end 
up focusing on these issues that just frankly don't get focused 
on.
    Now, I know under the current administration, we have the 
President's Management Council, which is comprised primarily of 
the deputies. But the problem is the deputies already have 
full-time jobs. Many of them have backgrounds and interests in 
the area that I am talking about, but most don't. But the fact 
is, even if they do, they don't have the time to be able to do 
what needs to be done.
    So I think that is a modest proposal. If you do that, I 
think you could then look at CFOs, CIOs, and some other 
positions. You might make this job a PAS and you may not have 
to have PASs on the others. I mean, you could actually 
streamline and simplify the process and expedite getting some 
good people in some of these other jobs. That is one example.
    Chairman Collins. Thank you very much.
    I know that I said we would do two rounds of questions for 
Mr. Walker, but now that we have been joined by two additional 
colleagues, we will do 10 minutes on this round and then go to 
our next witness.
    Senator Voinovich.
    Senator Voinovich. Thank you. I have been impressed with 
your comments about the fiscal crisis that is looming for us. I 
recall that when I became Governor, I said that gone are the 
days when public officials will be judged by how much they 
spend on a problem. The new realities dictate that public 
officials must work harder and be smarter and do more with 
less.
    It seems to me that with the budget problems that we have, 
we really need to do a comprehensive budget review, what I 
would refer to as an operations improvement task force in the 
Federal Government to look at the areas where we have the most 
opportunity to reduce spending. I would be interested, do you 
believe that the place to start on that would be to knock off 
those high-risk areas that the Chairman has spoken about?
    Mr. Walker. Well, I think you have to recognize that the 
high-risk areas represent an opportunity for improving economy, 
efficiency, and effectiveness. They are not just fraud, waste, 
abuse, and mismanagement. I mean, we have really made a 
concerted effort since 2001 to make that list more strategic. 
It includes a number of transformational challenges, like human 
capital, the Postal Service, disability programs, etc. I think 
if you look at the high-risk list, there is a lot of 
opportunity for savings----
    Senator Voinovich. In other words, is the high-risk list--
if you looked at the Federal Government, that list was 
reflective of what you think would result in the most savings 
for the Federal Government and improvement in efficiency?
    Mr. Walker. I would say that they represent an opportunity 
for significant savings and significant improvement. But one of 
the things that I am also asking GAO executives to do, which is 
new, is that our high-risk list is based to a great extent on 
work we have already done.
    One of the things that I am asking GAO executives to do is 
that given our fiscal challenge, and based upon their 
experience, expertise, and institutional memory, we are going 
to have some internal brainstorming sessions on areas that we 
may not have done work on yet but we believe represent 
opportunities that we want to bring to the Congress for 
exploration and consideration. This is more proactive than 
historically GAO has done. We need to do this in conjunction 
with the Congress. We don't want to do this on our own. But I 
think the time has come to do it.
    Senator Voinovich. I do, too. I think if you had a 
comprehensive list of things--if you surveyed the whole 
operation of the Federal Government, broke it down and 
prioritizing the areas where we would get the biggest return 
for the time that we would spend, that would be very helpful to 
us as we move through the next several years.
    I am a little bit concerned about the one statement that 
you made in terms of the Defense Department and we have talked 
about this before, saying that the only way that we can handle 
the high-risk list would be to have a chief operating officer 
who would have continuing responsibilities. It would seem to me 
that once people come on board at the Defense Department, you 
would have one group that would be concentrating on doing the 
war thing and then the other would be just strictly working on 
the management and dotting the ``i''s and crossing the ``t''s 
and following up on some of the recommendations that you folks 
have made.
    Obviously, they have been on there a long time, and so you 
are basically saying that under the current structure, it is 
not going to happen without something like what you are 
suggesting?
    Mr. Walker. I don't think that the chief operating officer 
or chief management official, or call it whatever you want, is 
a panacea, but I think it is a significant missing link, and in 
the absence of having that, I think it is not likely that you 
are going to be successful. I think you need to do other 
things, too, and some of which the Department of Defense, 
Secretary Rumsfeld and his people are trying to focus on now.
    I am an ex officio member of the Defense Department 
Transformation Advisory Board to the Secretary. I use that as a 
way to make sure they are aware of all the good work that GAO 
is doing, and I am pleased to say that they have liked a lot of 
our work and have made a number of recommendations to the 
Secretary to move on some of them. I also understand they are 
going to make a recommendation to Secretary Rumsfeld around 
this chief management officer/chief operating officer concept 
soon, and hopefully he will view that favorably, but it would 
take legislation to make it happen.
    Senator Voinovich. I am sure that this Committee would be 
interested in that.
    I would also like your thoughts on other things that we can 
do. We talked a couple of years ago about better oversight by 
Congress. One of the areas that was discussed, Madam Chairman 
and Senator Carper, was the area of the Appropriations 
Committee and the fact that they have the power of the purse. I 
believe they should be more involved in looking at what is 
going on in those agencies because all they do is come in and 
ask them for money. I just wonder how much real oversight is 
occurring while they are looking at the appropriations to these 
various areas.
    It seems to me that perhaps if we could come up with some 
kind of a process where the authorizing committees would work 
with the Appropriations Committees to talk about some real 
significant problems that we have in some of these agencies and 
really come together and say, we have a problem here, we have 
to get it taken care of, and use both the authorizing and the 
appropriations processes to really put the pressure on and get 
some action on these things that have been laying around for 
the last 5 or 10 years.
    Mr. Walker. Senator, I think you have put your finger on a 
very important issue. The old saying, money talks. And in this 
town, for years and years and years, it was ``get the money, 
spend the money.'' The fact is, I think there is a tremendous 
opportunity and a tremendous need for a partnering arrangement 
between the authorizing committees and the appropriators to 
focus on those areas of opportunity, because in the end, if 
there aren't consequences, if people aren't making progress and 
there's not consequences, then why should they pay attention?
    At the same point in time, sometimes to solve a problem, 
you need an investment. It may be a one-time investment, but 
that is something that has to be pointed out, as well.
    Senator Voinovich. Well, it is something and I think that 
we are really going to have to spend some more time on it if we 
are going to get any kind of action. I think a lot of people 
show up and we talk with them and importune them to do things 
and they walk out and say, well, they had their hearing and 
they just go back to doing what they have been doing before.
    I also think in the military area that we should recall 
Dwight Eisenhower's admonitions about the military-industrial 
complex. We have people leaving the Defense Department and 
going to the private sector. There is just a little club that 
is there. Even, I think, some of the members of the 
Appropriations Committee in that area have been around a long 
time and they know all the same people and they don't want to 
rock the boat or do anything to make anybody unhappy.
    I think it is long overdue that we really look at that 
area, particularly because of the money that we are putting in 
today for the defense establishment.
    Mr. Walker, in regard to your budget, how much has your 
budget increased in the last couple of years? I should know 
that, but I don't.
    Mr. Walker. Well, this year, do we have that number right 
off, how much the budget has gone up? While we are looking for 
that real quick, I can tell you that what we are asking for, 
which, I think, is another example of leading by example, for 
2004, we are asking for a 2 to 3 percent increase.
    Now, in fairness, in the interest of full and fair 
disclosure, our budget went down by $100 to $110 million the 5 
years before I came. In the 5 years since I have been here, our 
budget has gone up about $100 million, and part of that is to 
be able to reinvest in our people, to deal with pentup 
technology, safety, and security issues.
    But now we are in a situation where I think we have dealt 
with the most acute needs and what we are doing now is trying 
to tighten our belt, recognizing that we have got a situation 
where the Congress faces a growing deficit. We are holding the 
line on what we are asking for on future increases. We are 
having business cases, to the extent that we need something 
other than basic inflation and the mandates that Congress tells 
us that we have to comply with. And I just hope that the 
Congress will consider the results that they are getting from 
us and the return on investment when they are making resource 
allocations and decisions in the future so they don't take an 
across-the-board approach, which obviously is not the best way 
to do it.
    Senator Voinovich. And the budget is adequate, and you have 
the manpower to respond? Every time we turn around, there is 
another request. In fact, this is a little provincial, but I 
was shocked at the report that you folks came out with on 
medical malpractice. Frankly, I thought the conclusions were 
off the wall. I don't know if anybody reviews those before they 
are released. Do you do that?
    Mr. Walker. The Medicare--are you talking about the 
objective----
    Senator Voinovich. I am talking about the crisis that I 
have in my State with people dropping out of the medical 
profession because of the high cost----
    Mr. Walker. Medical malpractice?
    Senator Voinovich. Medical malpractice.
    Mr. Walker. Well, first, I think it is important to put it 
in context, Senator. I understand your frustration. The fact of 
the matter is, medical malpractice is a problem. There is no 
question that it is a problem. Is it the only problem? 
Absolutely not. Is it the same degree of problem on a State-by-
State basis? No. And so I think what our report is trying to 
say is, yes, medical malpractice is a problem, but it is not 
the only problem and the degree or the acuteness of that 
problem varies significantly depending upon what State you go 
to. In some States, it is not a big problem. In other States, 
it is a big problem.
    Senator Voinovich. Do you have a team that reviews those 
reports before they hit the street?
    Mr. Walker. The way that we deal with it, Senator, is that 
we do it on a risk-based approach. Depending upon the 
complexity and the controversy of the work, among other things, 
we have different levels of review within the agency and 
different entities within the agency involved.
    The other thing that we do, as you probably know, is that 
we also have stakeholders either within the government and 
sometimes outside the Federal Government--it could be State and 
local government, it could be other professions or whatever--
have an opportunity to comment if they are significant 
stakeholders before we finalize our report, and we consider 
their input and make adjustments as appropriate before we 
finalize our report.
    So we have a very thorough process and it is rare that we 
have any controversies associated with our report. But 
sometimes we do, especially on issues like health care.
    Senator Voinovich. My time is up.
    Chairman Collins. Thank you. Senator Pryor.

               OPENING STATEMENT OF SENATOR PRYOR

    Senator Pryor. Thank you, Madam Chairman. I just have a 
couple of lines of questions here very quickly.
    One is, as I understand it, the GAO requested feedback on 
its proposal relating to human capital on its internal website. 
I was curious about what kind of feedback you received from the 
employees.
    Mr. Walker. With regard to our human capital proposal, 
there was two phases of the human capital proposal. The first 
phase was an initial straw proposal where we went out, and I 
had not even had an opportunity to explain it yet, and we got 
feedback at that point in time and then we got subsequent 
feedback through various mechanisms.
    Initially, I would say that most of the proposals were not 
controversial. There was one proposal that was very 
controversial and that was the proposal to decouple our annual 
pay increases from the automatic adjustments in the Executive 
Branch. That was by far the most controversial proposal.
    After putting out the straw proposal, there were a number 
of supplemental outreach efforts, listening sessions, talking 
to the Employee Advisory Council, the managing directors. I 
went out to a number of field offices, a variety of different 
mechanisms was used. Also, employees had the opportunity to 
make comments, either confidentially or associating their name, 
directly to me and to other parties, including the Employee 
Advisory Council.
    Based on that, we made a number of changes, clarifications, 
and commitments, such that, in my view, the only area where 
there is any degree of controversy still is the decoupling of 
pay. I believe I have gone about as far as I can go to deal 
with employee concerns, to the extent that they exist there, 
and still maintain the concept of we want to have a somewhat 
more pay-for-performance-oriented system. And so I believe that 
what we are asking for is reasoned and reasonable and I believe 
it will make GAO a better place.
    Senator Pryor. And the other question I had is somewhere I 
have read that you want to establish an executive exchange 
program with the private sector, which I actually kind of like 
that concept, but the question I have is, how do you do that 
and make sure that you are protecting yourself against 
conflicts of interest? How do you set that up?
    Mr. Walker. A very important point. First, let me clarify 
what we are asking for. We are asking for the authority to be 
able to have up to 30 people come into GAO at any given point 
in time and/or up to 30 people to go out of GAO at any given 
point in time for knowledge exchange, best practices, etc. 
Candidly, I expect that this is going to be more people coming 
into GAO than people going out of GAO for a variety of reasons. 
For example, supply and demand.
    Senator Pryor. Do you think those would be government 
people coming into GAO or private sector----
    Mr. Walker. It could be private sector or government 
people, if you will. We are very concerned with the conflict of 
interest issue. You raise an excellent point. That is 
particularly acute in the Executive Branch, because in the 
Executive Branch, they have responsibility for policy making 
and for enforcement. They are on the front line of actually 
making government decisions.
    In our case, we are doing audits, investigations, and 
evaluations. We are not the ones making the final call. We are 
the ones gathering facts and doing analysis. We are very 
sensitive to that and we will make sure that the assignments 
that they have are such that they would not present a real or 
perceived conflict of interest.
    Senator Pryor. That is all I have, Madam Chairman. Thank 
you.
    Chairman Collins. Thank you, Senator. Senator Carper.

              OPENING STATEMENT OF SENATOR CARPER

    Senator Carper. Thanks, Madam Chairman. General, how are 
you doing?
    Mr. Walker. It is good to see you again, Senator.
    Senator Carper. It is nice to see you, as well. Thanks for 
joining us today and thank you for your leadership and your 
stewardship.
    You talked a little bit about an Employee Advisory Council. 
Describe that council to me--who is on it, how do they get 
appointed, how long do they serve, that kind of thing.
    Mr. Walker. Well, it has evolved. The way that it is right 
now, it is a 23-member group. It is comprised of people from 
different levels of the organization, different occupations, 
and different locations. It is entirely democratically elected 
now. Depending upon the nature of the group, they could--for 
example, if it is an association dealing with Asian Americans, 
or African Americans where they have an association, then they 
will end up electing their representative. If it is a level, 
for example, supervisory personnel or senior analysts, if you 
will, then they will run an election to elect one or more 
representatives to represent them. So it is a fully 
democratically-elected body that is representative of the 
diverse workforce that we have.
    That body meets with the Executive Committee, which is 
myself, Gene Dodaro, Chief Operating Officer, Sallyanne Harper, 
Chief Mission Support Officer, and Tony Gamboa, our General 
Council--the four of us make up the Executive Committee--and 
others at least once a quarter to talk about issues of mutual 
concern and how to make GAO a better place. They set the 
agenda. We may add to it. We don't take items off though. But I 
think it is one of the reasons why we have been able to make 
real progress, is having this mechanism where we are partnering 
with our employees, partnering for progress.
    Senator Carper. Just describe for me, if you will, the 
evolution. How long have you been head of GAO now?
    Mr. Walker. It will be 5 years effective November 8, I 
think.
    Senator Carper. Just describe for us, if you will, the 
evolution of the relationship and the interchange between the 
leadership that you represent and the council.
    Mr. Walker. Well, when I first came in, we didn't have a 
collective council. We had individual councils. Specifically, 
we had councils representing various interest groups and we 
didn't really have a collective council.
    I looked at it and I said, we need to maximize progress for 
all rather than for segments. We don't have a union at GAO, but 
I believe very strongly that we need to have our employees as 
key players to help us figure out what we are doing well and 
how we need to make additional progress.
    And so we started out with a concept of let us create an 
Employee Advisory Council that has representatives from these 
previous councils that were more interest group councils and 
then let us make it more diverse and more representative. I 
initially appointed representatives for groups that didn't have 
representation. And then, believing in democracy and working 
with the council, we agreed to make this a fully 
democratically-elected body over time, and we did. About a year 
ago, we ran elections for the slots that I used to appoint and 
now it is a fully democratically-elected body.
    So it has been a mechanism that is in place now for several 
years. It is a very important mechanism because I talk to them 
at the same time as we talk to the managing directors, which 
includes the senior executives that lead the 13 teams. We are 
talking to them basically at the same time on important issues 
and give their input great weight.
    Senator Carper. I don't believe the council or 
representatives of the council are going to be testifying 
today.
    Mr. Walker. They have a statement for the record.\1\
---------------------------------------------------------------------------
    \1\ The prepared statement of the GAO's Employee Advisory Council 
appears in the Appendix on page 127.
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    Chairman Collins. They have submitted testimony, which will 
be included in the record.
    Senator Carper. Good. I have not seen their statement. If 
they were here, what might we hear from them?
    Mr. Walker. Well, they were at the House hearing and I 
would commend that statement to you. I think what they would 
say is basically what their statement says, is that with regard 
to what we are asking for, that our employees don't have a 
concern about a vast majority of the provisions, that the only 
area where there is still some concern is our proposal 
decoupling from the Executive Branch with regard to automatic 
pay adjustments.
    At the same point in time, they acknowledge that the 
process was a good process, that we have made changes, 
clarifications, and commitments to try to deal with employee 
concerns. They acknowledge that we need to continue to 
modernize our human capital practices, and they acknowledge 
that there is mixed opinions about changing our name. They 
don't take a position one way or the other on that.
    My view is, is that we haven't had a tremendous problem in 
the past, but you don't know who you miss because of your name. 
If you are trying to hire lawyers, if you are trying to hire 
Ph.D. economists, if you are trying to hire people who aren't 
accountants, you don't know who you miss. What I do know is our 
name is very confusing to the public. They think we are in the 
accounting business, and less than 15 percent of what we do has 
anything to do with accounting or traditional financial 
management. And so it is a problem.
    Senator Carper. As I understand it, what you are trying to 
do is put in place a pay-for-performance system, but one that 
does not undercut the ability of your employees to meet the 
rising cost of living. How do you do that? Have I 
mischaracterized that?
    Mr. Walker. Here is what we are trying to do. This is very, 
very important. First, unlike most Federal agencies, GAO has 
had a pay-for-performance system since about 1989. And so what 
we are trying to do here is to make it somewhat more pay-for-
performance oriented.
    Specifically, what we are looking to do is that while we 
have our own personnel system and we have broadbanding and pay 
for performance, we are still subject to the annual across-the-
board increase that applies to the Executive Branch, even 
though we are not in the Executive Branch under the current 
system, which means your best performer and your worst 
performer, even those individuals who are not performing at a 
satisfactory level, are guaranteed by law that across-the-board 
increase, irrespective of their skills, knowledge, performance, 
and irrespective of where they live.
    What we want to be able to do is to say that for the 97-
plus percent of our employees who are performing at an 
acceptable level or better, that we will protect them against 
inflation at a minimum; that we will consider differences in 
competitive compensation by locality, but based upon surveys 
that are more reflective of our workforce rather than how it is 
currently done; and that with regard to anything else, that the 
increases will be based on performance.
    And so what we are doing, basically, is taking what 
otherwise--there was a 4.1 percent pay increase last year that 
applied to everybody. Basically, what we would be saying is if 
you are not performing at a satisfactory level--that is less 
than 5 percent of our workforce--you are not guaranteed that. 
But if you are, then you will get inflation, consideration for 
differences by locality, and something on top of that for your 
performance, but that will vary based upon what your 
performance is.
    Senator Carper. I think you have indicated that GAO's 
responsibilities continue to expand. I know I asked you and 
your agency to do a variety of things, and I am sure other 
Senators do, as well. My understanding is that you are 
attempting to meet the requests that are made of GAO without 
adding to the number of employees that you have. Just talk a 
little bit about how you manage to balance all that.
    Mr. Walker. That is an excellent question. Here is what we 
do. We have a much more disciplined and transparent process 
with regard to what the rights of our clients are, what our 
responsibilities are to our clients, and what our engagement 
acceptance practices are.
    Basically, the priorities that we have are if it is a 
mandate by law, including something that is in the Committee 
report, we consider that top priority because the Congress as a 
whole has spoken. We monitor potential mandates a lot closer 
because sometimes there are mandates that may not represent a 
good use of your resources and the taxpayers' resources and so 
we will try to intervene before they become law. But if they 
become law, they are our top priority.
    We are also required, in accordance with current law, to do 
work for committees. Therefore, if we get a request from a 
committee chair or a subcommittee chair, we are bound to do it. 
As a matter of policy, and in accordance with our wanting to be 
professional, objective, and nonpartisan in nature, we accord 
the same priority to ranking minority member requests, even 
though as a matter of law they don't have the same legal 
standing. And so as a matter of policy, we give them the same 
priority. We give them the same rights.
    The next level would be individual member requests, which, 
candidly, we are not doing a whole lot of individual member 
requests. We tell members that they need to go to a chair or 
ranking member for two reasons. One, we have a supply and 
demand imbalance. And two, in order for our work to be able to 
benefit the Congress, the country and the taxpayers, 
realistically, you are probably going to have to have it go 
through a committee or subcommittee. And so what we are trying 
to do is to have more chair and ranking member requests. We are 
also trying to encourage bipartisan requests. They have gone 
up. We can't require that, but they have gone up, as well.
    And so we have a much more disciplined and transparent 
process and we are getting a lot more results out of the same 
level of employees. But that can only go so far.
    Senator Carper. And that is only so far as my time goes, 
too. It has expired. Thanks very much.
    Mr. Walker. Thank you, Senator.
    Chairman Collins. Thank you, Senator Carper.
    Mr. Walker, I want to thank you on behalf of the Committee 
for your testimony this morning, but also for your first-rate 
leadership of the GAO. Under your leadership, the GAO has 
continued to make great strides in the work that it does. It is 
very important work, particularly to this Committee and to the 
American taxpayers. So I thank you for your excellent 
leadership and look forward to continuing to work with you.
    Mr. Walker. Thanks, and if I could just say for the record, 
I am pleased and proud to lead this agency. We have a great 
executive committee and executive team and a lot of very bright 
and dedicated public servants. We look forward to working with 
this Committee and others in the future. Thank you very much.
    Chairman Collins. Thank you.
    Our next witness this morning is the Hon. Maurice McTigue, 
the Director of the Government Accountability Project at George 
Mason University's Mercatus Center.
    As a former cabinet minister and member of Parliament in 
New Zealand, Mr. McTigue has a unique perspective on issues 
relating to government management, and more specifically, 
results-oriented government.
    From 1984 to 1994, Mr. McTigue led an ambitious and 
successful effort to restructure New Zealand's public sector. 
In his current position, Mr. McTigue conducts annual 
evaluations of how Federal agencies are performing. He reviews 
their performance plans and reports required under the 
Government Performance and Results Act. For the last 2 years, 
the Comptroller General has asked Mr. McTigue to conduct a 
similar evaluation of GAO's performance reports, and that will 
be the subject of his testimony today.
    Mr. McTigue, we very much appreciate your appearing today, 
and I look forward to hearing your statement. Please proceed.

   TESTIMONY OF MAURICE P. McTIGUE,\1\ DIRECTOR, GOVERNMENT 
     ACCOUNTABILITY PROJECT, MERCATUS CENTER, GEORGE MASON 
                           UNIVERSITY

    Mr. McTigue. Thank you, Madam Chairman and Senator 
Voinovich. I am honored to have been asked to present myself 
before you today and to give to you some of the knowledge that 
I have acquired in the 6 years that I have been here in the 
United States at George Mason University's Mercatus Center, 
working with your government, and in particular the experience 
that I have had in working with GAO.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. McTigue appears in the Appendix 
on page 120.
---------------------------------------------------------------------------
    Madam Chairman, when we talk about GAO, we have to 
recognize that we are talking about the best of the best. It is 
my considered opinion that GAO is certainly the premier 
organization in government. Also, I think that in David Walker, 
you have an extraordinary leader who stands head and shoulders 
above most in the public sector.
    However, when you are looking at the best of the best, it 
doesn't mean that there is no room left for improvement, and I 
certainly think that there are areas in which GAO can continue 
to show improvement on the role that it has played in the past.
    First, I want to really look at the perception of GAO. What 
is its role? Many people might look at it as the research arm 
of Congress, and that would be true. They might look at it as 
the government's auditor, and that would be true. They might 
look at it as the government's accountability office, and that 
also would be true.
    But of all things, I think that the most important 
contribution that GAO makes is that it maintains the public 
confidence in the institutions of government. Any erosion of 
public confidence in the institutions of government is 
detrimental to all of us.
    How does it do that, because GAO does not actually have any 
power to instruct organizations to do things? It doesn't have 
any power to compel people to do things. It just has the power 
of influence, and that power of influence is directly 
proportional to its reputation. So for GAO, continuously 
enhancing its reputation is a high priority.
    In enhancing its reputation, I think that there are 
important values that are involved. The first of those is the 
quality of the work that it does. If it doesn't meet a very 
high standard, then its reputation is damaged, and it seems to 
be able to continually excel itself in improving on the quality 
of its work.
    It is the integrity with which it does that work. It is the 
fairness with which it does its work. It is also the perception 
of fairness by those who are examined and the public at large.
    It is the fearlessness with which it approaches its job, 
because it must not be put off from examining something that 
might be controversial or difficult because it fears 
consequences for itself. And it is the reliability with which 
it produces its information.
    One of the areas of reform that occurred in my country 
while I was in government was a reform of the equivalent of the 
GAO, which we called the Auditor General's Office. We rewrote 
its law between 1984 and 1994. We made it very independent so 
that it is answerable only to the Parliament, it is not able to 
be compelled by any particular party or the government to do 
anything. The Auditor General makes his or her own decisions as 
they think appropriate.
    It still does much of the investigative research for the 
government and it still does two-thirds of the auditing for 
government, but not all of it, and that is a deliberate policy 
so that there is a chance to compare what private sector 
auditing produces as opposed to what is produced by the Auditor 
General's Office.
    It also has the liberty to examine issues of its own 
volition, because the auditor general perceives them as risks 
or failures. It might be why certain social problems have not 
responded to the investment that the government has made in 
those social problems, or, indeed, the programs used have not 
produced results.
    This is my view in an area of inquiry that is going to 
become increasingly more important for GAO as the U.S. 
Government moves to results accountability. I want to touch on 
that a little bit more in a moment or two, but there are two 
other things that I think are important and that I see as 
challenges for GAO.
    The first of those is the world post-September 11. Given 
GAO's role in maintaining public trust in the institutions of 
government and given the necessity for the U.S. Government to 
take unto itself additional powers that in many ways compete 
with or infringe on the rights of individuals, being able to 
maintain public trust in how those powers are used may be an 
important part of protecting trust in the institutions of 
government.
    Looking at how the Immigration Service uses its extended 
powers, looking at how the FBI uses its extended powers, and 
accepting that some of this inquiry may have to be done in 
confidence, GAO could indeed examine the use of those extended 
powers, assure itself that the use of the powers was 
appropriate, and then give such an assurance to the public 
without having to disclose things that might be damaging to our 
security. This is a different world. GAO has to have both the 
resources and the time to be able to examine these powers or a 
dangerous erosion of confidence could occur.
    While thinking of that expanded role for GAO, it raises 
another issue, and that is the changing world of government. 
GAO, like all other government organizations, is going to have 
to manage its human capital, to produce the capability 
necessary to accomplish its mission.
    I think that your move to give to GAO more flexibility in 
how it manages its human capital is a good move. I think that 
GAO should use that opportunity to set itself up as a role 
model for the rest of government setting up a template that can 
be copied by other government organizations.
    I want to make a comment here about the concept of human 
capital. Many people think about human capital in the way in 
which they have thought about human resources in the past. In 
my view, that is incorrect.
    Human capital encompasses two concepts. The first of those 
concepts is the concept of being a good employer. Do we do all 
of the things that we should for our staff? Everybody knows the 
principles of being a good employer and should be able to 
practice them.
    The new and more important concept is that human capital is 
really a reflection of the capability of the organization. Do 
the people, the skills, and the talents necessary to do the job 
exist? How do we manage that capability? How do we assess what 
capability we need in the future? How to develop policies that 
will bridge the gap from the organizations capability now and 
the capability needs of the future?
    For example, the expanded role that GAO will have to play 
in examining how enhanced security measures are utilized inside 
the American Government may well require capabilities they 
don't have today. The Congress should be cognizant of that and 
should allow them both the latitude and the resources to be 
able to accomplish that task.
    Another area of challenge, in my view, is the world of 
results managed government. A few moments ago, Senator 
Voinovich asked David Walker about the challenges on the fiscal 
side of government and how they might actually be addressed. In 
my review, results-based management of government is one of the 
best ways of addressing that.
    Having been a member of Parliament and having sat where you 
sit from time to time, Madam Chairman, one of the challenges we 
faced was that we were very badly served with the information 
necessary to make good decisions about allocating scarce 
resources. We didn't know what was being achieved in public 
benefit trends by different activities. Minus that knowledge 
and often minus the knowledge also of what it cost to do that, 
we couldn't make very good decisions.
    As that capability improved and we were to compare these 
activities results against those activities results, it became 
possible to strategically move funding into those activities 
that worked better. Consequentially it became possible to 
enhance public benefit with considerably less in resources.
    In my view, the U.S. Government is in the early 
evolutionary stages of this process at the moment. You will not 
see the full benefits of this change until about the 2005 or 
2006 fiscal year. It will take that long to get the full 
results-based information necessary to be able to compare 
activities and reallocate resources accordingly.
    GAO will play a significant role in determining the 
validity of measures used by agencies. If I can just, as an 
example, Madam Chairman, use something that David Walker 
mentioned in his testimony and you questioned him on, and that 
was the recoveries of $37 billion made by GAO last year.
    It can be said, that is a fine achievement. It is an 
increase of $11 billion over the year before. However, those 
recoveries were able to be made because there was some 
inappropriate practice, malfeasance, misallocation, or 
misappropriation of monies or resources inside government. 
Success should be measured in terms of whether that number 
comes down as a result of GAO's actions. The public benefit 
would then go where Congress intended. Over time it should 
become more difficult for GAO to be able to find those monies. 
This would then become a measure of the outcome. The 
complained-of behavior is gradually being eliminated.
    In exactly the same way when looking at the recommendations 
made by GAO the fact that they are accepted by agencies is an 
important interim measure, but the final measure is, did they 
cure the complained-of behavior. Achieving the cure is what we 
need to know if we are going to focus on outcomes. To me, GAO 
playing a role in examining government organizations and 
determining what result was achieved would be a major 
contribution towards good government here in the United States.
    That is the conclusion of my comments, Madam Chairman, I 
would like to ask that my written statement be included in the 
record. Thank you.
    Chairman Collins. It will be entered in full, without 
objection.
    Mr. McTigue, thank you very much for your testimony and 
also the very important work you are doing in this area, not 
only with the GAO but also with other agencies in evaluating 
their performance reports.
    We looked long and hard to try to find an expert who could 
comment on the GAO. The GAO comments on everybody else, and we 
thought it would only be fair to have an outside group. I 
suggested to my staff that they contact your organization, the 
Accountability Project. I was delighted to learn that you had, 
indeed, done work in this area, and I give David Walker credit 
for asking you to do this work, as well.
    We heard today the Comptroller General's discussion of how 
the GAO prioritizes the requests it receives from Congress. As 
a committee chair, needless to say, I like the priority the GAO 
gives to requests that come from committee chairmen and their 
ranking members. But I understand you have a slightly different 
perspective on how the requests should be prioritized. I would 
invite you to share that with us today.
    Mr. McTigue. Madam Chairman, if I was sitting in your 
chair, I would feel exactly the same way that you do. 
[Laughter.]
    And certainly, I think that the bulk of what GAO does is 
going to continue to be the work that it does for Congress. But 
Congress itself may well have to start to think about the 
prioritization of that work so that low-value work from 
Congress isn't setting aside some other things that GAO might 
be looking at that would be very much more valuable.
    I think the visionary role that GAO plays is very important 
in identifying risks to the American Government, doing work on 
those risks, and then starting to publicize that activity or 
lead that debate.
    I would pose the question that if David Walker had not 
spent so much time on commenting on the crisis in human capital 
in the Federal Government, would it have got the attention that 
it has received to date and would the American Government be 
taking action on it? And I think the answer is probably no, or 
it might have been postponed 2 or 3 years into the future.
    I think the work that he is leading now in taking a long-
term look at the fiscal crisis so that there are more options 
available to government before the crisis becomes incurable is 
work that is extremely valuable. Congress does need to weigh 
the value of these tasks against the requests that Congress is 
making and accepting some prioritization.
    The reassurance of the American people about the 
trustworthiness of institutions of government is incredibly 
important, particularly at a time of crisis of security 
accompanied by some erosion of civil liberties. The guarantee 
that new powers are used with the greatest propriety is very 
important. To me GAO has the reputation and credibility to give 
those assurances.
    So what I am really saying is that in allocating to GAO 
tasks, I think Congress has to be cognizant of the fact that 
there is a limited resource, there are other activities that 
are carried out by GAO that are very important for the quality 
of government. Congress should not crowd those activities out 
with requests that are of a lower priority.
    I think David Walker's suggestion that from time to time 
members are going to have to work through committees rather 
than making individual requests is a good one. I think that 
making collective requests rather than partisan requests is a 
good one.
    Chairman Collins. Thank you. The other issue I want to have 
you comment on is the GAO's high-risk list. I have found this 
list to be useful in directing our attention to problem areas 
in the Federal Government, but I am troubled by the fact that 
programs stay on the list year after year after year. How could 
the GAO change its assessment of the high-risk list to make it 
more useful to Congress and to Federal agencies?
    Mr. McTigue. In my view there are a variety of approaches 
that could be given consideration. Madam Chairman, there are 
activities in government that are inherently high risk and 
might need to be included all the time. For example, in the 
field of taxation, the collection of revenue is always 
something that is subject to attack by clever lawyers and 
accountants who want to find legal ways for their clients to 
minimize their taxes. So a risk exists that there will be 
continuing erosion to the tax base and there needs to be 
protective measures taken to deal with that. That might mean 
that tax collection is something that inherently remains on a 
high-risk list.
    Other activities currently on the high-risk list may be 
making significant progress towards getting off the high-risk 
list. It would be good to know that significant progress is 
being made.
    It is of concern that some risks are there for 12 or 13 
years. These are things that should be readily manageable, like 
contract management, acquisitions. There is plenty of 
experience around the United States on how you do those things 
well. The fact that it takes 12 or 13 years to eliminate these 
risks is unacceptable.
    Perhaps GAO has to be more aggressive in detailing the 
unacceptable nature of these failures. GAO may need to say to 
Congress, there needs to be legislative action to eliminate 
this problem.
    Chairman Collins. Thank you. Senator Voinovich.
    Senator Voinovich. It is interesting that that last 
question you asked was one that I had on my list. [Laughter.]
    From your experience in government, and based on my 
comments to General Walker about getting the Appropriations 
Committee involved in coming up with some kind of strategy 
where they really could lean on some of these agencies to get 
done what needs to be done.
    What would your reaction be if this Committee was going to 
pick out a couple of areas, get letters off to the heads of 
those agencies, let them know that we are dead serious about 
something being done, drag them in here, and then let them know 
that every 2 months, we are going to drag them back in here 
until we start to see some kind of action taken as a result of 
that and maybe highlight some of these issues to the point 
where they will feel they have to do it because they are being 
pressured.
    The point around here is you don't know the number of 
letters I have sent to some of these agencies, and it takes 
them 5 months to get something back to me. They just ignore 
them. They just figure it is going to go away. If you don't 
stay on them over and over and over again, you don't get any 
action from them. What is your reaction to that?
    Mr. McTigue. I don't really have an opinion, sir, about the 
recalcitrance of agencies in answering your questions, but what 
I do have some views about is one of the areas in which you 
might move that would help to relieve some of these problems.
    I think that you have already ``put in train'' by passing 
in 1993 the Government Performance and Results Act something 
that is having a quiet revolution throughout the Federal 
Government but which you at Congress level have not yet become 
the beneficiaries of. Gradually, you will get information that 
tells you that a variety of different activities are addressing 
the same outcome, but they have a huge range of success rates 
in addressing that outcome and they have very different costs.
    What would happen if you were to invest in the most 
successful of those activities and to either give the others 
the chance to perform at that level or to lose their funding? 
That would make a big difference. I think that Congress will be 
doing business in this manner by the 2005 or 2006 fiscal year.
    Regarding Congress itself, it would be worthwhile to study 
the reforms of legislatures around the world. Many have dealt 
with the disconnect between the processes of policy 
decisionmaking, authorizing and oversight, and the 
appropriation process.
    Many legislatures have reformed their operations by using 
their committee structure as fact finding opportunities to 
inform the appropriation process. Direct recommendations coming 
from those committees require that appropriators take note. 
Certainly, the New Zealand legislature made reforms of that 
nature. Those reforms made the work of the Parliament much more 
meaningful.
    For Congress, there are issues that need to be addressed so 
that appropriators take note of the work that goes on in your 
other committees. Otherwise, if they don't, why do you do 
oversight and why do you do authorization work?
    Senator Voinovich. This has been raised by some of the 
appropriators. I know I have talked to Senator Stevens about 
this on a couple of occasions. The spirit is willing but the 
flesh is weak. We just have so many other things that we are 
doing, we just never get to it and I am afraid that the people 
who are supposed to do it know it. [Laughter.]
    That is the problem.
    In your written testimony, you said Congress should ensure 
that the GAO has the freedom and the flexibility to be a role 
model in human capital management. Could you comment on how the 
flexibilities contained in S. 1522, the GAO Human Capital 
Reform Act, could assist GAO in further improving its workforce 
management as an example for other Federal agencies?
    Mr. McTigue. Senator, while you were out of the room, I 
made some comments, some of which I will need to repeat now.
    Senator Voinovich. I apologize.
    Mr. McTigue. What GAO has to deal with is developing 
different capabilities as it addresses some of its tasks. Those 
capabilities are going to require different skills, some of 
which it will have internally, but some of which it may have to 
go out into the marketplace and buy. It needs to be able to buy 
those skills because its credibility is very important to its 
main task, which is reassuring the American people that they 
can trust the institutions of government, particularly as they 
examine the utilization of the new powers required to maintain 
the security of the homeland and whether they are being used 
appropriately.
    GAO needs to become a 21st Century employer, recognizing 
that we as individuals, will approach work in a very different 
way. We will move frequently in our jobs. We will work from 
different locations. GAO has to have the flexibility to be able 
to acquire talent, to let talent go and to bring it back again 
if necessary. Being able to reward the performance of high 
achievers, is going to be an essential part of employing in the 
21st Century if you are to keep your high performers working 
for you.
    Senator Voinovich. Thank you.
    Chairman Collins. Thank you, Senator. Senator Lautenberg.
    Senator Lautenberg. Thank you very much, Madam Chairman, 
Senator Voinovich. It is always a pleasure to work with my 
colleagues here, even when they are wrong sometimes. 
[Laughter.]
    But it is a pleasure to be here and to welcome you, Mr. 
McTigue.
    Madam Chairman, do I have just a couple of minutes for an 
introductory statement?
    Chairman Collins. Certainly. We are expecting a vote very 
shortly, so you are going to be the last, but please, go ahead.

            OPENING STATEMENT OF SENATOR LAUTENBERG

    Senator Lautenberg. I do thank you for holding this hearing 
on this very important department of government. Usually, we 
see Comptroller General Walker here to testify about government 
policy or another Federal agency, but today we are here to 
discuss the management and performance of his Department, GAO.
    And by all accounts, GAO is a model agency. In 2002, their 
programmatic and policy recommendations have helped Congress 
and the Executive Branch to achieve nearly $38 billion in 
financial benefit. That is a return of 88 cents on each dollar 
invested in GAO, and that is a pretty good return. I come out 
of the corporate world and I know a good one when I see one and 
that is good. We can only hope that other government 
investments, such as an administration's tax cuts for people 
who don't need it, and I had a good run in some years of 
business.
    Frankly, I like investing where I get a good return, and 
investing, in my view, in government, where we have the ability 
to do things that no one else has for our society, sounds like 
a good idea to me. I think I do a lot better for my children 
and my grandchildren and over the years ahead if we continue to 
build our internal strength even as we protect our security 
from external attempts to disrupt it.
    The value of GAO should not only be measured in dollars. 
Waste, fraud, abuse don't just cost money. They erode the 
public's confidence in government. That confidence, that faith, 
is something too precious to calculate. The fact is that GAO, 
Comptroller General Walker and his 3,200 employees help 
Congress meet responsibilities to the American people by 
improving the accountability, efficiency, and the overall 
performance of the Federal Government.
    One particular matter does concern me, and I think it is 
regrettable that we don't have administration cooperation with 
GAO's investigation of the White House's secretive energy task 
force. And if the stories are true, it is regrettable that the 
administration supporters here in Congress have threatened 
GAO's funding because of the investigation.
    Congress needs to stick up for GAO. They are an arm or a 
tool for us, a resource for us to really understand what is 
taking place, even when the agency has some unpleasant truths 
to tell us. We shouldn't stand idly by while people who might 
be discomforted by what GAO might try to cow it into 
submission.
    So I just have a question, because we are seeing changes 
that are contemplated, and Mr. McTigue, I wanted to get your 
response. According to GAO's performance and accountability 
report for fiscal year 2002, GAO conducted its first voluntary 
early retirement of 52 employees. They also implemented new 
performance appraisals, revised pay, promotion and rewards 
system. And now they are working on implementing a broadband 
pay-for-performance system for administrative professionals and 
support staff. I understand that GAO also wanted to eliminate 
locality pay.
    I mentioned the fact that I had some experience in the 
corporate world, and the company that I helped found is a 
company today that has more than 40,000 employees, and when I 
left to come to the Senate, we had 16,000, not a small company, 
but it also shows you what happens when progress comes with new 
leadership. [Laughter.]
    But the fact is, I had a lot of experience in the kind of 
bonuses and natural expense increases that we had to be 
concerned with.
    We couldn't, in our earliest days in business--my company 
is called ADP--we could transfer people willy-nilly and just 
say, hey, you are going to--I don't want to name the cities, 
but those that are less desirable, let us say, than San 
Francisco or Washington, D.C., or Portland, Maine, of course, 
and they would go. But as time went on and people assessed the 
value of family life in a different way, they would say to me, 
``Yes, Frank, I would like to go, but I am going to need 
something more than just a transfer to take care of my family 
needs, etc.,'' and I approved of that.
    I approve it when we have tension-filled jobs like those in 
the control towers, to take someone from a quiet area with not 
too many flights each day, put them into the New York region, 
Chicago region, Los Angeles and say, OK, you are going to go to 
work there. Yes, expenses are higher, but it is service for 
your country. That is not good enough.
    So all of that is a preface to what I want to ask you. Mr. 
McTigue, did you assess the morale within GAO in contemplation 
and in expectation of these changes that might be made?
    Mr. McTigue. The answer, Senator, to your question is, no, 
we didn't do a specific assessment of morale. I could comment, 
though, from my observations because we work closely with GAO 
in a wide range of areas. GAO has some of the most capable 
people that you have in the civil service in the United States. 
They also are people who have skills that are in very high 
demand in the private sector and there is no indication that 
there is a significant exodus from GAO.
    Modern human capital management, sir, I think is going 
through some major evolutions, and a wise manager today is 
going to recognize that the ability of his organization to 
function successfully is going to be directly attributable to 
the skills and talents of the people who work for him or her 
and being able to keep those people is going to be one of the 
most essential tasks that you would carry out as a manager.
    Acting in a way that is contrary to the best interests of 
people means that you are going to lose them, because we are 
talking about people who will not have difficulty finding other 
jobs. They are people who are already in high demand. They have 
high quality skills where there is plenty of demand for them. 
So you don't have the liberty to be able to say, I can make 
these decisions without there being a consequence. There will 
be a consequence.
    And at GAO, we did not see a high exodus rate. So in my 
view, GAO have people who find the work rewarding, they find 
the management acceptable, and they find the rewards 
acceptable. Otherwise, there would be a significant exodus. 
Morale is not something that GAO can be complacent about, 
though, because the expectations of the workforce will change 
over time and management has to be astute enough to be able to 
meet those changed expectations as they develop.
    Senator Lautenberg. I would ask you this. I am sure that 
the people who do their work there really like working for the 
U.S. Government, as I see in staff personnel all around, 
whether it is Committee personnel or my own staff personnel, 
and having worked in the private sector for as long as I did 
and being able to make a comparison about the dedication to 
service is quite striking, and that is that people will work 
for the government for less money, for less often recognition, 
but because there is an inner satisfaction that is drawn from 
doing the right thing.
    However, if you want to transfer somebody, no matter how 
much they love their job, is it fair to say, OK, you are going 
to go into this high-cost area and that is where you are going 
to be located and carry out this responsibility. Do you think 
that would have any effect on one's view of the transfer that 
might occur for a family who is trying to get by, educate their 
children? There isn't anybody--there are few in government that 
are paid excessive amounts of money, and it would be terribly 
political for me to suggest otherwise, but the fact--I am 
teasing, obviously.
    But people have to live and they have to be able to be paid 
on a relative basis so that they can sustain themselves and 
their families. And even though they can go get jobs in the 
private sector, it does mean some kind of a disruption. It does 
mean some kind of a risk. It does necessitate change of some 
significance.
    Mr. McTigue. Unless I knew the specific circumstances, sir, 
I don't think I can give you a definitive answer, but I can 
give you this answer, and that is that if you are thinking as a 
manager about transferring somebody to somewhere else, 
particularly if it is a more expensive place to live, it is a 
more densely populated city, the presumption is that there is 
probably a promotion, as well. And unless you compel the person 
to move, then it seems to me that it is going to be a matter of 
choice by you, the manager, to ask them to move and they, the 
employee, to decide to move.
    If they decide to turn it down, then I presume that they 
have to accept the consequences for that. It would mean that 
perhaps they don't get the increase in pay that might have gone 
with the move and perhaps it may also impact their ability to 
be able to achieve promotion in the organization.
    But as long as you are not constrained in terms of the 
choices that you make and you are able to make those choices 
open and freely, then I think that that is something that 
between the employer and the employee they are going to have to 
work out and it may be different decisions for each employee.
    Senator Lautenberg. We don't have the liberty of saying, in 
my view, that a lateral transfer, which is graded based on the 
civil service system, at the same level of pay, is 
automatically the province of the manager. There are other 
conditions that dictate what happens, and I think when you try 
to put someone in a high-cost area, much higher costs than they 
have, and if they are family-bound, that is a tough decision 
and I, frankly, am very wary of those proposals to limit that.
    Thank you very much, and thank you, Madam Chairman.
    Chairman Collins. Thank you, Senator.
    We do have a vote in progress, so I am going to thank Mr. 
McTigue for his testimony. We may have a few questions for the 
record that we may submit for either you or Mr. Walker. The 
record for this hearing will remain open for 15 days for the 
submission of any additional materials.
    But I want to thank both of our witnesses this morning. I 
think this was a very useful oversight and legislative hearing 
on the General Accounting Office, and I thank you both for your 
participation.
    After the vote, we will resume with the second hearing of 
the day. It will be a new hearing on the nomination of Suzanne 
Mencer to be the Director of the Office for Domestic 
Preparedness for the Department of Homeland Security.
    This hearing is now adjourned.
    [Whereupon, at 11:16 a.m., the Committee was adjourned.]
                            A P P E N D I X

                              ----------                              


                 PREPARED STATEMENT OF SENATOR COLEMAN
    Thank you Chairman Collins for holding this hearing.
    At the outset, Mr. Walker, I want to take a brief moment and 
commend you for your teams that are working closely with my staff on 
two oversight matters. The GAO team headed by Gene Aloise is assisting 
in the Permanent Subcommittee on Investigations' continued review of 
the Federal Government's response to nuclear terrorism, particularly 
the deployment of radiation portal monitors by the Bureau of Customs 
and Border Protection, Second Line of Defense and the Department of 
Energy. The GAO team headed by Rich Stana is assisting us in our 
assessment of the Container Security Initiative and the targeting 
techniques employed by Customs at our nation's ports and borders. In 
addition, Marjorie Kanof's team has already produced one investigation 
concerning SARS and is currently working on another looking at 
infectious disease surveillance. You are well served by these three 
individuals and their teams. Please ensure that they have the resources 
and cooperation to continue their vital work with us.
    As the members of this committee know, in order for Congress to do 
its job, it needs to be adequately informed on the issues before it. Of 
course we rely on our staffs for a great deal of advice, but on more 
complex issues the role of specialists is crucial. The General 
Accounting Office, along with the Congressional Research Service and 
the Congressional Budget Office play a vital role in helping us fulfill 
our Constitutional duties. GAO is especially important to this 
committee and the Permanent Subcommittee on Investigations, which I 
chair, since we are responsible for overseeing government itself.
    GAO has already undergone significant structural transformation in 
order to adapt to changes in finance, technology, society, and 
politics. It has had to develop expertise in new skills while 
struggling to replace an aging workforce. It has had to adapt to the 
creation of independent inspector generals who are tasked with 
performing many of the type of investigations it traditionally handled. 
Yet it retains a vital role in keeping us informed.
    Like any tool, GAO's ultimate value depends on how well it is 
maintained and used. I commend both the Chairman and Sen. Voinovich for 
introducing S. 1522, the ``GAO Human Capital Reform Act of 2003.'' It 
is my understanding that this legislation reflects extensive external 
and internal research on GAO's part, including consultation with both 
its Employee Advisory Council and the Office of Personnel Management. I 
intend to cosponsor it and look forward to voting for its passage.



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