[Senate Hearing 110-318]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 110-318
 
     IMPROVING FEDERAL FINANCIAL MANAGEMENT: PROGRESS MADE AND THE 
                            CHALLENGES AHEAD 

=======================================================================

                                HEARING

                               before the

                FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT
                   INFORMATION, FEDERAL SERVICES, AND
                  INTERNATIONAL SECURITY SUBCOMMITTEE

                                 of the

                              COMMITTEE ON
                         HOMELAND SECURITY AND
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 1, 2007

                               __________

        Available via http://www.access.gpo.gov/congress/senate

       Printed for the use of the Committee on Homeland Security
                        and Governmental Affairs

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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TED STEVENS, Alaska
THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
MARK L. PRYOR, Arkansas              NORM COLEMAN, Minnesota
MARY L. LANDRIEU, Louisiana          TOM COBURN, Oklahoma
BARACK OBAMA, Illinois               PETE V. DOMENICI, New Mexico
CLAIRE McCASKILL, Missouri           JOHN WARNER, Virginia
JON TESTER, Montana                  JOHN E. SUNUNU, New Hampshire

                  Michael L. Alexander, Staff Director
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
                  Trina Driessnack Tyrer, Chief Clerk


FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, FEDERAL SERVICES, 
                AND INTERNATIONAL SECURITY SUBCOMMITTEE

                   THOMAS CARPER, Delaware, Chairman
CARL LEVIN, Michigan                 TOM COBURN, Oklahoma
DANIEL K. AKAKA, Hawaii              TED STEVENS, Alaska
BARACK OBAMA, Illinois               GEORGE V. VOINOVICH, Ohio
CLAIRE McCASKILL, Missouri           PETE V. DOMENICI, New Mexico
JON TESTER, Montana                  JOHN E. SUNUNU, New Hampshire

                    John Kilvington, Staff Director
                  Katy French, Minority Staff Director
                       Liz Scranton, Chief Clerk





































                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Carper...............................................     1
    Senator McCaskill............................................     4

                               WITNESSES
                        Thursday, March 1, 2007

Hon. David M. Walker, Comptroller General, U.S. Government 
  Accountability Office..........................................     5
Hon. Linda Combs, Comptroller, Office of Federal Financial 
  Management, Office of Management and Budget....................     8

                     Alphabetical List of Witnesses

Combs, Hon. Linda:
    Testimony....................................................     8
    Prepared statement...........................................    74
Walker, Hon. David M.:
    Testimony....................................................     5
    Prepared statement...........................................    31

                                APPENDIX

Staff Memorandum.................................................    79
Letter from David M. Walker, Comptroller General of the United 
  States.........................................................    82
``Defense Aquisitions, Assessments of Selected Weapon Programs,'' 
  (GAO-07-406SP), March 2007.....................................    84


                      IMPROVING FEDERAL FINANCIAL
                   MANAGEMENT: PROGRESS MADE AND THE
                            CHALLENGES AHEAD

                              ----------                              


                        THURSDAY, MARCH 1, 2007

                                   U.S. Senate,    
          Subcommittee on Federal Financial Management,    
                Government Information, Federal Services,  
                                and International Security,
                            of the Committee on Homeland Security  
                                          and Governmental Affairs,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 3 p.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Thomas R. 
Carper, Chairman of the Subcommittee, presiding.
    Present: Senators Carper and McCaskill.

              OPENING STATEMENT OF CHAIRMAN CARPER

    Chairman Carper. The Subcommittee will come to order. I 
want to again welcome our two witnesses, General Walker and Ms. 
Combs. Is it Dr. Combs? I thought so. Dr. Combs. It is not Dr. 
Walker, is it?
    Mr. Walker. Dr. Dave.
    Chairman Carper. Dr. Dave. [Laughter.]
    Mr. Walker. I have a number of honorary degrees, which 
means it is Dr. Dave instead of Dr. Walker.
    Chairman Carper. Well, fair enough. We are delighted, 
whatever titles you bear, that you are here. Thank you for 
joining us.
    Senator Coburn has been in and out. He will be coming back. 
As I mentioned to our witnesses this afternoon, there has 
simultaneously been scheduled for this afternoon from 3 o'clock 
until 4:30 a classified briefing, usually a top-secret 
briefing, in this case by Secretary of Defense Gates, and the 
head of the Joint Chiefs of Staff, Peter Pace, over in a 
classified briefing room that we have in the Capitol. And so a 
number of our colleagues are there.
    In addition, others are on the floor as we debate and 
prepare amendments to offer to the legislation attempting to 
carry out the rest of our 9/11 Commission recommendations that 
have been unfulfilled to date. Our colleagues, will be drifting 
in and out as their other obligations allow them to do that. In 
the meantime, we will just proceed.
    While he is not here--Joe Lieberman likes to say one of the 
truest compliments that can be paid to somebody here in this 
body is if you are praised while you are outside of the room. 
So while Senator Coburn is outside of the room, I will say some 
nice things about him. Under his leadership over the last 
couple of years when I was privileged to serve as the Ranking 
Member of this Subcommittee, the Subcommittee has been very 
active. We have had some 50 hearings over that period of time. 
I just joked with General Walker the other day about him if he 
got paid by the number of hearings that he testifies before, he 
would be well paid. But he suggested that maybe a better 
approach was----
    Mr. Walker. I suggested, Mr. Chairman, if we received 1 
percent of our financial benefits, I would rather that go to 
GAO, and I think we would be rolling in dough.
    Chairman Carper. You probably would.
    I am grateful for the leadership that Senator Coburn has 
provided, and I want to thank his staff, and, frankly, my own 
small staff, represented today by John Kilvington, for their 
work and for bringing to light a number of serious financial 
management challenges that, for whatever reason, many of us 
here in Congress have not been inclined to spend much time 
thinking about in the past.
    I also want to pledge here today that I will use whatever 
time I have as Chairman to continue much of the work that we 
took up in the last Congress. I doubt that we will have as many 
hearings as we did before, but all of the agencies that are out 
there thinking that now that Senator Coburn is no longer 
Chairman they can get off the hot seat for their financial 
performance should not be thinking that we are going to simply 
let them off the hook just because Senator Coburn and I have 
traded places. We are going to continue to be vigilant, and I 
know he is going to be here sitting next to me to make sure 
that is the case.
    Let me now turn today to the topic that we are going to be 
examining, that is, the improvements that have been made in 
Federal financial management in recent years and the challenges 
that agencies still face in taking better care of the 
taxpayers' dollars that we entrust to them.
    It was not that long ago that observers, including GAO, 
were telling Congress that financial management was something 
that just was not a priority in many agencies. Some might say 
that is still the case, but it is clear, at least to me, that 
progress has been made.
    In 1990, you may recall that Congress passed the CFO Act. 
That bill for the first time was aimed to set up a qualified, 
professional, more businesslike financial management leadership 
structure across our Federal Government. It created the office 
that Dr. Combs now leads and put a Chief Financial Officer in 
each of the major Federal agencies. I might add that the lead 
Republican sponsor of that bill was my predecessor, Senator 
William Roth.
    We have built on the CFO Act significantly since 1990. 
Today there are CFOs in some 24 agencies under the CFO Act. 
They file annual audited financial statements, and they are 
responsible for applying sound financial management and 
accounting procedures throughout their agencies. More recently, 
they have also been asked to review their agencies' programs to 
determine their susceptibility to improper payments and to 
report each year on any improper payments made and what they 
plan to do to prevent those improper payments in the future.
    The work our predecessors put into the CFO Act and all of 
the other legislation that followed it has produced results, as 
has the leadership shown by past Administrations and by the 
current Administration. OMB reported in its updated Federal 
Financial Report for 2007 that agencies are now getting their 
audited financial statements in on time. That is good. Most of 
them are also getting clean opinions on their financial 
statements and are cleaning up financial weaknesses identified 
by auditors, and that we applaud.
    However, the work we did in this Subcommittee last year and 
the testimony before us today tells us that we still have a 
significant amount of work ahead of us. I like to say 
everything that I do, I can do better, and that is probably 
true for all of us.
    Financial management in Federal agencies has certainly 
improved markedly over the years, particularly since 1990. 
Agencies do look at financial management in a more professional 
and businesslike manner than they had previously. I would 
venture to say, however, that the financial management 
practices in place in some Federal agencies today, even in some 
of our better ones, might get some of our CFOs fired at a 
private corporation if they were serving there.
    As General Walker will point out in his testimony today, 
most agencies do not have the ability to present their 
leadership with the timely and accurate financial information 
that they need for day-to-day decisionmaking and for 
performance measurement. Weak internal controls lead to tens of 
billions of dollars in improper payments each year 
governmentwide. These and other problems have made it 
impossible for GAO to even issue an opinion at all on the 
Federal Government's consolidated financial statements for 10 
years running.
    Now, the good news is that these problems are all out in 
the open, and everyone agrees that they exist. And that is no 
small feat. I suspect that there is also some agreement on how 
to tackle them, and Senator Coburn and I look forward to 
continuing to work certainly with our two witnesses today--from 
OMB and GAO--and other agencies over the next 2 years to find 
solutions.
    Let me just close with something that I think I might have 
said at a number of our hearings in the last Congress, and I 
think it probably bears repeating here today. As all of us here 
know, every taxpayer dollar a Federal agency wastes is a dollar 
that cannot be used to reduce our Federal budget deficit or a 
dollar that is not available to spend somewhere else on a 
worthwhile program. We all have our own ideas about which 
programs are most worthy of all of our scarce resources. But I 
believe we can agree that poor financial management, whether it 
manifests itself through sloppy financial reporting or improper 
payments, is waste. And in such a fiscally challenging time in 
our Nation's history, waste is not something we can afford to 
tolerate.
    Before I introduce our witnesses, let me just say we have 
been bantering back and forth just a little bit. I just 
finished an opening statement, Senator McCaskill.
    We have been joined by our new Senator from Missouri, who 
is not just a good addition to the U.S. Senate but really a 
terrific addition to this Committee, and especially to this 
Subcommittee. In her most recent job working for the people of 
Missouri, she was their State auditor and, by reputation, quite 
a good one. And I encouraged her to seek a position on this 
Subcommittee. I am delighted that she has done that. She is a 
real auditor and brings a whole lot of expertise, good, and 
wise counsel to this Subcommittee.
    Before I introduce our witnesses, Senator McCaskill, if you 
would care to make a statement, you are more than welcome to do 
that. Welcome.

             OPENING STATEMENT OF SENATOR McCASKILL

    Senator McCaskill. Well, thank you, Senator Carper. It is 
great to be here, and I know that there are probably not a huge 
number of Senators that are clamoring to get on this particular 
Subcommittee, but I am thrilled to be here. This is the stuff, 
I think, that is most interesting and probably in the long run, 
if we can do better, maybe it is the most important work that 
can be done in the U.S. Senate.
    So I am thrilled to be here and look forward to the 
testimony and look forward to contributing in any way I can 
under your important leadership.
    Chairman Carper. Thanks so much, and we are thrilled that 
you are here. It is not a cheap thrill, either. It is a real 
thrill. We are delighted that you are doing this.
    Let me introduce, if I can, Linda Combs first. Dr. Combs 
was confirmed in June 2005--I remember your confirmation 
hearing to this day--to serve as the Controller at the Office 
of Management and Budget and the head of the Office of Federal 
Financial Management. She has previously served in this 
Administration as Assistant Secretary for Budget and Programs 
and Chief Financial Officer at the Department of the 
Transportation and as Chief Financial Officer in the 
Environmental Protection Agency.
    In previous Administrations, Dr. Combs has served in high-
level positions at the Department of Education, the Department 
of Veterans Affairs, and the Department of the Treasury. She 
has also had significant experience in the private sector and a 
number of public service positions in her home State of North 
Carolina. She is a graduate of Appalachian State University 
where her mathematics professor was Starr Stacy, my father-in-
law. It is a small world.
    David Walker is the seventh Comptroller General of the 
United States and began his 15-year term in October 1998. As 
Comptroller General, Mr. Walker serves as head of the 
Government Accountability Office. David Walker is a certified 
public accountant, has over 20 years of private sector 
experience and over 13 years of public service experience. I 
have no idea where he went to college or whether Starr Stacy 
was also his math professor. But wherever he went or whoever 
taught him, he learned a lot because he has brought a whole lot 
to the table and to the leadership of GAO. We are delighted 
that he is doing that, and I am going to call on him to offer 
his statement, and then we will call on Dr. Combs to give her 
statement, and then we will open it up for some questions. 
Thank you.
    General Walker.

  TESTIMONY OF DAVID M. WALKER,\1\ COMPTROLLER GENERAL OF THE 
        UNITED STATES, GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Walker. Chairman Carper, Senator McCaskill, it is a 
pleasure to be here before the Subcommittee to be able to speak 
on the progress that has been made towards achieving a more 
results-oriented and accountable Federal Government that 
exercises proper stewardship over taxpayer resources. I 
presume, Mr. Chairman, my entire statement will be included in 
the record, and I will just move to summarize.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Walker appears in the Appendix on 
page 31.
---------------------------------------------------------------------------
    Chairman Carper. Without objection.
    Mr. Walker. Thank you.
    Chairman Carper. You bet.
    Mr. Walker. Since the enactment of key financial management 
reforms, the Federal Government has made substantial progress 
in strengthening financial management. Since passage of the CFO 
Act, as you referred to, every Administration has made 
financial management reform a top priority. Improving financial 
management has been one of the cornerstones of President Bush's 
President's Management Agenda from the outset of the current 
Administration, and it is a key component of the Executive 
Branch management scorecard, which tracks the status and 
progress of agencies. It has also been an effective tool for 
driving improvement in performance.
    For fiscal year 2006, 19 of 24 CFO Act agencies received 
clean audit opinions on their financial statements, up from 
just six in 1996. Also importantly, all of these agencies 
reported within 1\1/2\ months after the end of the fiscal year 
as opposed to 5 months after the end of the fiscal year just a 
few years ago.
    There are six principal challenges remaining to fully 
realize the Congress' intent through enactment of financial 
management reform legislation.
    First, there is a need to transform financial management 
and business practices at the Department of Defense. Of the 27 
areas on GAO's high-risk list, 15 of 27 relate wholly or 
partially to DOD, and financial management is one of them.
    Second, improvements in financial and performance reporting 
practices are also needed for the remaining 23 CFO Act agencies 
so that unqualified opinions on financial statements become 
routine.
    Third, financial management systems must be modernized to 
provide a complete range of information needed for 
accountability, performance reporting, and effective 
decisionmaking.
    Fourth, the Federal Government continues to face a myriad 
of material weaknesses and reportable conditions and internal 
control which need to be addressed.
    Fifth, the Federal financial workforce that supports the 
business needs of today is not well positioned to support the 
business needs of tomorrow.
    Finally, there are three major impediments that have 
existed for the entire 10-year period that GAO has been 
required to perform this annual audit that continue to prevent 
us from rendering an opinion on the consolidated financial 
statements of the U.S. Government. They are: First, the deeply 
rooted, longstanding, and pervasive financial management 
problems at the Department of Defense; second, the Federal 
Government's inability to adequately account for and reconcile 
significant amounts of intragovernmental activity and balances 
between Federal agencies; and, finally, the Federal 
Government's ineffective process for preparing the consolidated 
financial statements.
    I am confident that the last two of these three can be 
addressed in a reasonably timely manner. The first one, dealing 
with the Department of Defense, will take a number of years. 
Overcoming these six principal challenges will be difficult, 
but they are all achievable over time.
    I think it is important to keep in mind that, in addition 
to addressing these six challenges, we have made great progress 
in this area during the past decade, the time has come to step 
back and to consider the need for further revisions to the 
current financial reporting model for the Federal Government. 
There are a number of key questions that I include on page 31 
of my testimony that I think need to be asked and answered. All 
too frequently, people try to force private sector accounting 
and reporting standards onto our sovereign Nation. In some 
cases, that makes sense when you are dealing with employer-
sponsored benefits like pensions and retiree health care. In 
some cases, it does not make sense where you are dealing with 
items like social insurance obligations, which only sovereign 
nations have and which no employer in their right mind would 
ever seek to have responsibility for.
    Successfully addressing the six primary challenges will 
undoubtedly help to strengthen the Federal Government's 
financial and performance reporting, and it will help to 
resolve many accountability and stewardship challenges that we 
have. This will become increasingly important because, as I 
have noted in our latest audit report on the financial 
statements of the U.S. Government, and given numerous speeches 
and been involved in a number of town hall meetings in 18 
states around the country, our Nation's financial condition is 
worse than advertised. We face large and growing structural 
deficits over the longer-term and there is no way we are going 
to grow out of them. We need to start making tough choices 
sooner rather than later, because the clock is ticking and time 
is working against us.
    In addition to considering the Federal Government's current 
financial condition, it is critical to look at other measures 
of our long-term outlook, and those are noted in the financial 
report that I recently sent up to every Member of Congress 
dealing with fiscal sustainability and also noted in our audit 
report that we issued on our last year's financial statements. 
I think it is important to keep in mind that we need to engage 
in a number of actions to improve transparency, to reimpose 
meaningful budget controls, to re-engineer the base of 
government, and to engage in certain other activities to put us 
on a more prudent and sustainable path.
    In closing, given the Federal Government's current 
financial condition and large and growing long-term fiscal 
imbalance, the need for the Congress and the President to have 
timely, reliable, and useful financial and performance 
information is greater than ever. Sound decisions on the 
current results and future direction of vital government 
programs and policies are more difficult, if not impossible in 
some circumstances, without such information. Until the 
problems discussed in my testimony are effectively addressed, 
they will continue to have adverse implications on the Federal 
Government and the taxpayers. Billions will continue to be 
wasted.
    By the end of my term as Comptroller General, I would like 
to see the civilian CFO Act agencies routinely produce not only 
annual audited financial statements that can pass scrutiny, but 
also quarterly financial statements and meaningful financial 
and other performance data to help guide decisionmakers make 
informed decisions on a day-to-day basis. For the Department of 
Defense, my expectations are not quite as high given their 
current status. Yet it is realistic for at least major portions 
of the Department of Defense's financial information to become 
auditable by the end of my term. Moreover, progress on 
developing meaningful financial and performance reporting in 
the Federal Government will be a key area that I will continue 
to champion. We need key national indicators for the United 
States--economic, safety, security, social, environmental--in 
order to be able to make more informed decisions with regard to 
spending and tax policy and in order to hold people accountable 
and link resources to results.
    I am determined to do whatever I can to try to help make 
this a reality, to continue to improve in the area of financial 
management and accountability, and I am dedicated to doing 
whatever I can to make sure that the baby-boom generation, 
which is my generation and I imagine yours as well, will not be 
the first generation in the history of this country to leave it 
not better positioned for the future, which is where we are 
headed right now.
    Last, and certainly not least, I want to thank this 
Subcommittee for its past, present, and future efforts. It is 
vitally important to maintain attention and congressional 
oversight with regard to this area. This Subcommittee has been 
committed to doing so in the past, and I am confident, Mr. 
Chairman, that under your leadership it will remain committed 
to doing so in the future.
    Thank you.
    Chairman Carper. General Walker, thank you for your 
testimony. Thank you for that last comment especially. And like 
most things that are successful, there are partnerships that 
are involved. And certainly Senator Coburn and I have been 
partners, along with our staff and our colleagues on this 
Subcommittee. And we regard you very much as a partner in this 
endeavor. But thank you for your statement.
    Dr. Combs.

  TESTIMONY OF LINDA COMBS,\1\ CONTROLLER, OFFICE OF FEDERAL 
     FINANCIAL MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET

    Ms. Combs. Mr. Chairman, Members of the Subcommittee, I 
thank you very much for the opportunity today to participate 
here. I thank you also for your continuing support for our 
important work, and it is indeed a pleasure to be able to work 
with people like David Walker and know of the commitment that 
we all share. I think that the important responsibility that 
government has to be effective stewards of the taxpayers' money 
is probably the most important responsibility that any of us 
could ever undertake, and I am honored to be a part of that.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Combs appears in the Appendix on 
page 74.
---------------------------------------------------------------------------
    It is certainly no surprise that this President came in and 
made financial performance improvement one of his top 
management priorities. With the launch of the President's 
Management Agenda in 2001, the President issued a call to 
action for Federal managers to achieve a series of critical 
financial management goals that, if attained, would help 
American citizens gauge whether their money, the people's 
money, is being properly accounted for and wisely spent, 
increased transparency into the fiscal health of the Federal 
Government, and provide reliable financial information to be 
used by Federal leaders to manage the day-to-day operations of 
the government more efficiently.
    With the rising cost of entitlement programs expected to 
create an unprecedented and enormous fiscal imbalance in the 
Federal Government in the coming decades, achieving our 
financial management goals is more critical than ever today, as 
Mr. Walker just indicated, is more critical than at any other 
time in our Nation's history, I believe. The fiscal management 
community is not only responsible for reporting on the extent 
and nature of our fiscal challenges, it also plays a very 
critical role in developing and implementing strategies to 
control Federal spending and otherwise ensure that the fiscal 
health of the Federal Government remains sound.
    I am pleased to report that the Federal financial community 
is indeed positioned at this point to meet these challenges, 
having achieved significant forward progress on the key 
indicators of the President's Management Agenda initiatives 
related to financial management. And we heard a few minutes ago 
that 19 of our major agencies representing more than 75 percent 
of all Federal outlays achieved a clean audit opinion. The 
number of auditor-reported material weaknesses was reduced by 
approximately 15 percent, from 48 down to 41, just in 1 year. 
And for the second consecutive year, every major Federal agency 
issued their audited financial statements within 45 days of the 
close of the fiscal year. And as we heard, prior to 2001, some 
of these major Federal agencies were taking as long as 5 months 
to complete their financial reports. Improper payments have 
declined to $36.3 billion for programs that originally reported 
the $45.1 billion. So that over a couple years represents a $9 
billion improvement in over 2 years.
    The Federal Government has disposed of more than $4.2 
billion in excess real property since 2004. But we indeed have 
a lot remaining to be done. It is truly now incumbent upon the 
Federal community to build upon the foundation of progress that 
we already have built upon, and we need to be prepared and even 
more prepared to address the challenges that lie ahead of us.
    As we set out to achieve new and better levels of financial 
performance and do so in a cost-effective manner, it is 
critical that the Federal financial community orient itself 
around a common set of priorities and agreed-upon plan of 
action, a clear, consistent road map for improvement. 
Therefore, pursuant to the Chief Financial Officers Act of 
1990, our office published the 2007 Federal Financial 
Management Report, ``A Framework for Improving Financial 
Performance,'' and released it in January of this year, and it 
indeed is intended to provide the public with a simple report 
on what we have done with the PMA, what we have done with 
certain reform activities, and with our core activities as 
well.
    When the CFO Act was signed into law more than 15 years 
ago, I was here at that time in the Treasury Department----
    Chairman Carper. As an intern?
    Ms. Combs. No. Thank you very much. I wish. [Laughter.]
    I am afraid I am one of those baby boomers, too. I 
responded to numerous financial management challenges at that 
time, and having been out for over 10 years and then coming 
back, I remember there was one agency at that time in 1990, 
probably in 1991, actually, that got a clean opinion on that 
first year of implementation. By 1996 we had 6, and now we have 
19. So while this has not been a revolution, it has been an 
evolution, and we are headed in the right direction.
    But the reform environment that was created by the law and 
other administrative actions and executive orders provides 
indeed a solid foundation for continual improvement in the 
Federal Government's stewardship of taxpayer dollars.
    One of the things that we are responsible for and take very 
seriously is that every single CFO understands their primary 
goal of meeting certain standards in order to get to the clean 
audit and resolving the material weaknesses in a timely manner, 
and implementing and maintaining their strong financial systems 
that meet these Federal standards. And the President's 
Management Agenda is a great vehicle that we have used. It is a 
great tool, and I think Mr. Walker indicated that as well.
    We have had a number of agencies that have moved to green 
in financial management, and they all know that it is very 
important steps for them to take to get from red to yellow to 
green. And having been one of those that did it when I was at 
EPA, it really is very helpful to know that it is certainly a 
doable activity.
    So, in addition to improving financial performance on the 
Financial Performance Initiative, we have put into the written 
testimony, which I have submitted for the record, not only some 
goals that we have right now and what our 2006 results have 
been, but we have put some targets out there for 2011 as well, 
because we think it is important to keep striving for good 
financial management--not now but also in the future. We talk 
about those reforms and those core activities in this report, 
and they are, of course, submitted for the record as well.
    One of the things that I think is very important is that we 
move forward toward what I call smarter, stronger, and 
sustainable accountability. While we have made significant 
progress since the enactment of the CFO Act in 1990 and we are 
executing a sound and transparent strategic plan, much still 
remains to be done before the government can truly say that it 
has achieved a level of financial management for which we are 
all striving. As we move forward on our plan, we will increase 
the reliability and transparency of the government's financial 
information while placing special emphasis on the principle 
that our improvement activities must have a positive return on 
investment for the taxpayer.
    To this end, the CFO Council and the President's Council on 
Integrity and Efficiency are currently joining forces to 
improve the cost-effectiveness of how we go about producing 
audited financial statements. The presentation of our financial 
data should be understandable, it should be useful, without 
becoming an excessive cost or drain on agency resources. The 
CFOC and PCIE will work together with the larger financial 
community and the Congress to determine if we are sharing the 
right information with government stakeholders and if the data 
are timely and in the right format for decisionmaking.
    Every tax dollar is far too precious, Mr. Chairman, for us 
and for the American taxpayers to take anything for granted on. 
We must use information to make well-informed decisions, and 
this Administration looks forward to continuing our partnership 
with Congress, with the General Accountability Office, and with 
others to pursue fiscal health by holding agencies accountable, 
improving financial management through the President's 
Management Agenda, addressing our long-term fiscal challenges, 
and striving for stronger, smarter, and sustainable 
accountability.
    We are going to build on our current successes. We are 
going to maintain and enhance our day-to-day core activities 
and incorporate a number of reform initiatives that move every 
agency to financial management excellence.
    We believe that we have set certain management priorities 
that are consistent, that the financial management community 
agrees upon, and we believe that we are indeed accountable for 
the wise spending of the people's money. We look forward to 
your continuing work with us through the initiatives and 
through the oversight, and we look forward to working with you.
    Thank you very much.
    Chairman Carper. Dr. Combs, thank you very much. Thank you 
both for excellent testimony and for the terrific leadership 
that you have provided in your current responsibilities, and to 
the work of those who serve with you in your respective 
agencies.
    I think we will set aside 7 minutes on this first round of 
questions, and I will take close to that, and then pass it off 
to Senator McCaskill if Senator Coburn has not returned by that 
point in time.
    When you look at the last 15, 16, or 17 years, in terms of 
compliance with the 1990 CFO Act, what do you feel especially 
good about and what do you not feel so good about at this point 
in time? If you want to start off, General Walker, go ahead, 
and then Dr. Combs.
    Mr. Walker. First, I think it is clear that across the 
Federal Government, agencies and the individuals who comprise 
those agencies are taking financial management much more 
seriously than was the case in 1990. Nineteen of 24 CFO Act 
agencies have achieved clean opinions on their financial 
statements. Annual financial reports are coming out 45 days 
after the end of the year rather than five or more months after 
the end of the year. That acceleration has not allowed agencies 
to engage in heroic measures where they basically re-created 
the books in order to try to achieve a Pyrrhic victory via a 
clean opinion on their financial statements 5 or more months 
after the end of the year, which was obviously not meaningful. 
So there are a number of positive things.
    The biggest concern that I have remains the Department of 
Defense. The Department of Defense is No. 1 in the world in 
fighting and winning armed conflicts. Nobody is even close. But 
they are poor on financial management and in many other 
business areas.
    Now, there are good people there that are taking it 
seriously. They have a much better plan of action today than 
they did 2 years ago. They did not have a plan of action when 
the CFO Act was enacted. They did not want to have a plan of 
action and, frankly, Congress did not hold them accountable for 
not having a plan of action. So they are taking it much more 
seriously, but it is going to take a number of years for them 
to get to where they need to be. They are a very challenged 
entity when it comes to financial management.
    Chairman Carper. Alright. Thank you.
    Dr. Combs, the same question. Looking back over the last 
16, 17 years, what do you feel especially good or proud about 
with respect to our compliance with and adherence to the law? 
And where are you especially disappointed?
    Ms. Combs. I could not agree more with General Walker. The 
thing I am most proud of is to see the caliber of the CFOs that 
are in the departments and agencies now and how much they have 
to deal with and how appropriately they deal with it.
    I think we have come a very long way in terms of 
reengineering a lot of our financial processes in order to be 
able to report within the 45-day period. I think the 45-day 
period is something I am especially proud of because it drove 
good management practices throughout the year. As General 
Walker likes to talk about, it put the CFOs in a position--the 
CFO Act of 1990 did--from the back room to the board room. This 
is his term, not mine, but I like to use it because I think it 
depicts the difference in where we have come over the last 17 
years.
    But I am especially proud that there is additional 
oversight. I am especially proud that the internal controls are 
now in place. The CFOS particularly have done an excellent job. 
But the biggest concern I have as well is in the Department of 
Defense. I think their plan is a whole lot better than any we 
have ever seen. There are some very good people working 
diligently to make that plan happen. We and General Walker and 
a lot of other people are continuing to provide oversight as 
they move forward on that. And I think the transparency that is 
available today to Congress, to all of us, to the American 
people, about what is going on in the Federal departments and 
agencies is good. And it is also something we can continue to 
work on.
    Chairman Carper. General Walker.
    Mr. Walker. If I can mention one more thing, Mr. Chairman, 
I think the other thing you have to keep in mind is the 
Financial Accounting Standards Advisory Board (FASAB), which is 
the promulgating body for generally accepted accounting 
principles. The Federal Accounting Standards Board has been in 
existence for many decades. The Financial Accounting Standards 
Board has been in existence for quite a while, but not as long 
as the FASB. The FASAB has done a great job, I think, in 
promulgating a lot of authoritative standards in a relatively 
short period of time.
    I am also proud that we are working a lot more effectively 
together--OMB, Treasury, GAO, and as appropriate, OPM--in 
looking at Federal financial management on a more strategic, 
coordinated, and integrated basis, and we are also doing the 
same thing with the Public Company Accounting Oversight Board 
(PCAOB), and the Auditing Standards Board, with regard to the 
auditing standard setting--GAO and those two bodies.
    So it is a whole new ball game, and I think there is a lot 
that we can be proud of. But as you said at the beginning, 
there is much that remains to be done. It is like a typical GAO 
report: Progress made, but much remains to be done.
    Chairman Carper. When you look at the agencies that are 
still struggling to meet their requirements under the 1990 law, 
the Department of Defense is first and foremost among them. But 
there are some others as well, and one of them is a fairly new 
Department, Homeland Security, but just mention for us, if you 
will, the agencies that still struggle to comply with the law.
    Mr. Walker. Well, as far as the ones that have not achieved 
a clean audit opinion, which is only one element of the legal 
requirement, the Department of Defense is by far No. 1; No. 2, 
the Department of Homeland Security; others include the 
Department of Energy; the Department of Transportation, 
primarily because of the challenges associated with the FAA, it 
is my understanding; and then the National Aeronautics and 
Space Administration (NASA).
    Chairman Carper. Dr. Combs, does that sound like the right 
list?
    Ms. Combs. Yes. Those are----
    Chairman Carper. The usual suspects?
    Ms. Combs. Those are the five that I would point to as 
well. I think one of the things that--if you would like me to 
elaborate a little bit on some of the things that we are doing 
with what I consider to be--I call these our ``high-risk 
agencies.'' We use that term for a lot of things, and it helps 
with the general accountability, I think, and sensitizes a lot 
of people with that. And they are high risk for different 
reasons than some of the other things that we look at. But this 
is the time when I would like to also especially compliment the 
staff work that is done by OMB. It is my staff that goes out 
and meets with them on a very frequent basis and looks at their 
corrective action plans, demands that they have corrective 
action plans in place. And a collective effort goes on in OMB, 
both from the budget side as well as the management side, to 
make sure that these corrective action plans are taken 
seriously and that the agencies are making progress.
    So using the PMA framework to help hold these agencies 
accountable for making progress is very good, and the oversight 
from Congress helps as well.
    Chairman Carper. I am going to ask you to go ahead and 
finish that thought, and then I need to say something and then 
yield to Senator McCaskill.
    Ms. Combs. OK. Go ahead.
    Chairman Carper. When I come back for my next round of 
questions, I am going to return to this point.
    You both have used the word ``oversight'' in terms of the 
oversight that you exercise, whether at OMB or GAO, with 
respect to those agencies that still struggle to comply with 
the 1990 law. I do not know that we have done as much as we 
can, within this Committee and within this Subcommittee, to 
exercise our own oversight, particularly on the agencies that 
we have just mentioned. I am thinking about whether or not we 
may want to structure a hearing where we invite representatives 
to come from several, maybe all of these agencies, but also to 
invite people to come from agencies like the one that you help 
to lead, Dr. Combs, where you have gone red to yellow to green 
as you move toward compliance with the law.
    I like the idea of putting a spotlight on those that are 
doing an especially good job in terms of compliance and to sort 
of contrast it with those who can do better. Thank you.
    Senator McCaskill.
    Senator McCaskill. Thank you, Mr. Chairman.
    You know, there is a certain irony that this Committee is 
also home to Homeland Security and the fact that it is one of 
the high risk, and what I would like to do is talk a little bit 
about this accountability piece. It is my understanding--and I 
have not looked at the law specifically yet, but the Improper 
Payment Information Act of 2002 does not have penalties in it 
for the people who violate it, civil penalties or criminal 
penalties. I have begun to ask questions about the Anti-
Deficiency Act and what kind of penalties have been extracted 
from government employees who have violated the Anti-Deficiency 
Act. And at some point in time, the Department of Defense--and, 
General Walker, we have had a conversation about this, but when 
I read my first report, the IG report from DOD on acquisition, 
and then looked at the GAO report on acquisition at DOD, I was 
like shocked. I was startled at how bad it is. The idea that 
there is a culture where it is acceptable that you pay a 
contract in total before you have signed a contract, the 
culture where you are parking funds, and the culture where the 
IG tells you you are violating the Anti-Deficiency Act and then 
you do it 100 times, clearly something is wrong with the 
accountability piece. We are failing on accountability, because 
no one is getting fired, no one is being fined.
    In fact, I was told that at DOD that when they go back and 
look, if they can make the accounting entry to correct it, no 
harm, no foul.
    So if you step back from that, if you are a taxpayer and 
someone is violating the Anti-Deficiency Act, and then merely 
once they get caught, if they can go back and correct it with 
an accounting entry and it is OK, it seems to me we have not 
deterred much. And I would like, General Walker, for you to 
talk a little bit about consequences that are ultimately--since 
we do not have the incredible discipline of a bottom line as it 
relates to profit in government, the only way that we make 
government accountable is through your work but, more 
importantly, if your work--if the next step is taken and people 
who serve in this body and people who are in charge of these 
agencies do something to the people that embrace bad business 
practices. And this kind of throwing up our hands that we 
cannot do anything about DOD, I mean, I am frustrated. Is this 
structural or is it cultural?
    Mr. Walker. Thank you for your question, Senator McCaskill.
    First, my understanding is there are criminal and civil 
sanctions for violation of the Anti-Deficiency Act. The 
question is whether or not they are ever invoked.
    Senator McCaskill. If you find any, let me know.
    Mr. Walker. I understand.
    Senator McCaskill. Because I am trying to find one.
    Mr. Walker. You are raising an excellent point. A couple of 
comments.
    For any system to work--a governance system, a tax system, 
a health care system, whatever--you need to have three things: 
First, incentives for people to do the right thing, and that 
does not necessarily mean tax incentives or financial 
incentives; second, transparency to provide reasonable 
assurance they will; and, most importantly, what you just said, 
accountability if they do not do the right thing.
    I am sad to say that all too frequently that last one is 
not there, that when something goes wrong, the persons that are 
responsible are not held accountable, on a whole range of 
things, not just with regard to financial matters. Another 
example that comes to mind is when Congress passed the 
prescription drug bill and did not consider the long-term cost, 
the Chief Actuary of the Center for Medicare and Medicaid 
Services wanted to tell Congress that the cost of the bill was 
going to be a lot more than they thought. And that person was 
told they could not for fear of losing their job. That was not 
only unethical, it was illegal, and nothing was done about it.
    So my view is we have got to change the culture. There is a 
serious cultural problem, and there have to be rewards when 
people do a good job, and there have to be consequences when 
they do not. And whether that be contractors or whether that be 
civil servants or whether that be uniformed personnel, we need 
to do a better job at that.
    Senator McCaskill. Mr. Chairman, maybe this is something we 
ought to think about doing, too. I know you have some best 
practices, and do not get me wrong, I do get that the vast 
majority of people--in fact, probably everybody working in 
government is not in it for the money. People are not working 
for the government because they are trying to get rich. But the 
culture of getting around the rules and the immediate need of 
what you think is important is more important than the long-
term fiscal discipline is really the enemy here. My sense is 
that is kind of what goes on at DOD, that we can dance around 
these rules because our cause is noble and what we are doing is 
so important that these regulations are nothing but a pain in 
our you know what, and we can figure out ways to get around 
them because those people do not know what we are doing and we 
have a noble cause.
    Is there someplace that we can take a look at the best 
practices and who has done it and maybe reach out and hold the 
hearing that would be very effective to have one panel of the 
people from the agencies with the best practices, and in the 
next panel make the other guys listen while we have a panel of 
the people from DOD and Homeland Security to listen to and then 
talk to them about their very bad practices.
    Mr. Walker. If I can, first, picking up on what you said, 
and Chairman Carper earlier, I sent up 36 items of suggested 
oversight in November, and one of the things that I included in 
there was the idea of constructive oversight, which is exactly 
what the two of you are talking about. It is important to be 
able to conduct oversight hearings where you take a topic and 
you highlight people who are doing well.
    Senator McCaskill. Right.
    Mr. Walker. So that you recognize and reward them and 
figure out what the best practices are and share them, and then 
bring up the ones who are not doing as well and to hold them 
accountable.
    Candidly, one of the reasons that DOD has the problems that 
it has in the area that you talked about with acquisitions is 
because Congress has not held them accountable either.
    Senator McCaskill. Right.
    Mr. Walker. They get pretty much whatever money they want, 
especially in a time of war. So I think Congress has to change 
some of its behavior as well in this regard.
    Senator McCaskill. The last thing I would like to ask real 
quickly, if I could, Mr. Chairman, is about the single audit. 
Having been responsible for a single audit in my State and 
knowing the role that the Chairman played in making sure that 
that legislation came to pass, I understand the efficiencies 
that are gained by this single audit. But I was thinking about 
it the other day, how helpful it would be to me now in my 
capacity to see some kind of compilation of single audits from 
around the country. I know where we found weaknesses. I know in 
Missouri the programs that we found where Federal monies were 
at risk and there was improper conduct in the way that was 
done. But I do know this: That people who do what I do, it is 
important to force feed us the information. And I think it 
would be important--I would like to see results of single 
audits from across the country, because I think the resonance 
that would have for members if they saw that in their own 
State--and I bet most of the members of the Missouri delegation 
do not even know what the single audit is, to tell you the 
truth.
    Mr. Walker. Sure. First, it is my understanding there is a 
database, and this is something that I think would provide a 
basis to do that analysis. My personal view is the Executive 
Branch ought to do that. As you know, these single audit 
reports go to the Executive Branch. But I think it is a great 
idea. I think it is something that is desirable to be done.
    I chair the Intergovernmental Audit Forum, as you know, 
which is Federal, State, and local auditors, as well as the 
IGs. We also have a domestic working group of some thought 
leaders in the accountability community nationally and 
globally. So if that was done, we could use those mechanisms to 
try to help share that information through the community.
    The last thing, on the issues of acquisitions and 
contracting, there are two angles. One is best practices, which 
I agree ought to be pursued. The other is I have identified--my 
very capable staff at GAO have identified 15 systemic 
acquisition and contracting problems at the Defense Department. 
We know what the problems are.
    Senator McCaskill. Right.
    Mr. Walker. We know what needs to be done. And there needs 
to be much more focus on addressing those because we are 
talking billions and billions of dollars every year.
    Senator McCaskill. People think that $12 billion in cash 
missing in Iraq is the problem. They have no idea how big the 
problem is.
    Mr. Walker. Right, and that, as you know, was Iraqi money, 
which we had a fiduciary responsibility over, so we should 
still be concerned about it. It was not U.S. taxpayer money, 
but we should be concerned about it.
    Chairman Carper. Thank you.
    Senator McCaskill. Thank you.
    Chairman Carper. Thank you very much.
    A question for Dr. Combs, and then I am going to ask, 
General Walker, if you care to comment, please do. While 
agencies are getting their audited financials submitted in a 
more timely manner, I understand there has been a problem at 
least with some agencies needing to restate their statements 
later on down the line to address problems that they uncover 
after submission. And that is probably not entirely surprising, 
but I think some of these restatements involve fairly 
significant amounts of money.
    I would just ask any thoughts that you might have on these 
restatements.
    Ms. Combs. Mr. Chairman, may I take a privilege for just 
one moment before I talk about restatements----
    Chairman Carper. Sure.
    Ms. Combs [continuing]. To let Senator McCaskill know that 
I chair the CFO Council, the Chief Financial Officers Council, 
and there is right now a joint project going on between the CFO 
Council and the PCIE, which are all of the Inspector Generals, 
on the single audit. And I welcome your involvement. You will 
be a great person for us to reach out to on that. But I did 
want to just take the privilege, if you did not mind, of 
letting you know that.
    Senator McCaskill. Thank you.
    Ms. Combs. Thank you.
    Chairman Carper. We talked earlier, when I introduced Dr. 
Combs, about how she is a graduate of Appalachian State 
University, where my father-in-law was a math professor, 
physics professor, for 40 years and happened to be one of her 
professors. A small world.
    And another small world, I think the House sponsor of the 
Single Audit Act was me.
    Ms. Combs. Right.
    Chairman Carper. And the person who probably knows the most 
about it in the Senate, certainly in the Congress today, is 
Senator McCaskill.
    Ms. Combs. Well, between your father-in-law and me and 
Senator McCaskill and you, we have just got the world wrapped 
right here today, don't we?
    Senator McCaskill. Just don't make me talk about physics. 
[Laughter.]
    Ms. Combs. Back to restatements, OK. One of the things that 
I am proud of is that the number of restatements is continuing 
to decrease. I think we had something like 11 restatements in 
2003, and I think we have gone from maybe seven in 2004 down to 
three in 2005 that were restated in 2006. And you are exactly 
right that there are--some of these sometimes the magnitude is 
great, and it is definitely----
    Chairman Carper. Give us some idea when you say ``great.'' 
Just a rough idea.
    Ms. Combs. The State Department, for example, I think, had 
a restatement of something like $160 million.
    Chairman Carper. That is ``great.''
    Ms. Combs. And that is ``great,'' and so it is a concern. 
The General and I have talked about this on occasion before. It 
is definitely a concern. And I think the more we work on our 
internal controls, the more we root out those internal 
deficiencies in our financial processes, the less serious these 
are going to become. But it is troublesome. It is a concern to 
us as well.
    Chairman Carper. Alright. General Walker, any comment?
    Mr. Walker. If I can, Mr. Chairman, first, we issued a 
Kaplan report in October 2006 dealing with restatements. We 
made a number of recommendations to OMB, which I know they are 
looking at, among other things, as to how guidance might be 
able to be improved in this area.
    The other thing that we have done recently, which I know 
Senator McCaskill will be familiar with, is that we have 
updated the Yellow Book, which is generally accepted 
governmental auditing standards, and one of the things that we 
have done is we have made it clear that when there is a 
restatement of a prior-year financial statement, the auditor 
has a responsibility to note in their audit report that because 
of that restatement, that had they been aware of that in the 
prior year, they would not have received a clean opinion.
    I think one of the things that I would respectfully suggest 
that OMB needs to think about in connection with the 
President's Management Agenda is if somebody has a restatement 
of their prior-year financial statements, by definition that 
means it is material, it is significant, or else you would not 
do a restatement. You should not be able to be green.
    One of the concerns that I have is that sometimes people 
want to present, well, gee, I got a clean opinion last year, I 
got a clean opinion this year, but I had to restate last year's 
financial statements. Well, it means you should not have gotten 
a clean opinion last year. And we have made that clear, that 
the auditors now have that affirmative responsibility to make 
that clear in their audit report. And I would ask that OMB 
think whether and to what extent that should affect how people 
are rated on the President's Management Agenda for transparency 
and accountability purposes.
    Chairman Carper. Yes. Dr. Combs, do you want to respond to 
that thought?
    Ms. Combs. Obviously, it is a concern, and one of the 
things that we have to continue to look at is agencies and 
their audit on their balance sheet and their overall audit. And 
as we have talked about this movement that we have made from 
1990 to now, we are still evolving over the course of how we do 
business. I think it is really important that we hold those 
green standards up there, and it is obvious that we are being 
very strict because we do not have but nine agencies right now 
that are green in financial management.
    I think it is more important for us to encourage these 
departments and agencies to root out these deficiencies rather 
than slapping them on the hand if they do something wrong. Some 
of these restatements would be material. Some of them would 
not. And I think we have to handle that on a case-by-case 
basis. But we are looking at the report.
    Mr. Walker. I would just say, if it is not material, you do 
not necessarily have to restate, by definition. You may choose 
to restate, but you are not required to restate.
    Chairman Carper. Good. I am going to yield again to Senator 
McCaskill, but I want to telegraph my next pitch--a year or two 
ago, Senator Coburn and I held a field hearing. I am trying to 
think, was it Chicago? Where was it? Yes, it was in Chicago. We 
visited a Postal Service facility, right across the street from 
a very large, long-abandoned postal processing plant that the 
Postal Service was spending a whole lot of money to maintain. 
And we learned at that hearing that there were a number of 
similar situations in other agencies where that kind of thing 
happens. In fact, in some agencies, they do not even know what 
property they own, let alone know what they are paying to keep 
them up.
    I want to come back in my next round and explore that. I 
think, Dr. Combs, you mentioned how much money that agencies 
had recovered collectively in the last several years on the 
sale or disposal of surplus property. I want to just talk about 
how we do better.
    Alright. Senator McCaskill.
    Senator McCaskill. This may be a little bit touchy because 
the subject is a little touchy, but one of the things that I 
have tried to focus in on is the way that the budget is put 
together and the way that appropriations actually come to pass 
in Congress. I would welcome either one of your comments about 
the whole earmarking process and the lack of accountability 
that there is, and from a financial management standpoint what 
kind of example we should be setting in the Senate. It is kind 
of hard for me to get too righteously indignant and pound my 
fist on the table about DOD and some of their practices if we--
and it is my understanding--and correct me if I am wrong, but 
by virtue of the way these are done, there has to be basically 
sign-off by the agency for the earmarks, that the agency does 
not have to honor the earmarks.
    And so from the Executive Branch's perspective, if the 
earmarks do not have to be honored, why is the Executive Branch 
honoring them? Why isn't the Executive Branch saying to the 
agency heads, don't do it, don't fund these projects that are 
being put in the bills without appropriate authority through 
either the authorization or appropriation process? And, 
certainly, do you all have a sense of where all these earmarks 
are and what they are? And is there a reason why we are having 
to work so hard with S. 1 to make them transparent? Why can't 
they be made transparent from the agency?
    Mr. Walker. First, not all earmarks are good, and not all 
earmarks are bad.
    Senator McCaskill. Right.
    Mr. Walker. Transparency is a powerful force, and I believe 
that clearly there needs to be more transparency with regard to 
earmarks. And I would respectfully suggest you probably want 
more transparency with regard to earmarks before they are 
enacted into law, because once they are enacted into law, the 
decision is already made.
    Second, merely because you have an earmark does not mean 
that you have increased spending, and merely because you 
eliminate an earmark does not mean you have decreased spending, 
because what an earmark does is it says that for the amount of 
money that has been appropriated, you must spend X amount for Y 
purpose. And sometimes those earmarks can be waste because you 
are directing an agency to spend part of their appropriation 
for a purpose that might not stand the light of the day, might 
not pass a cost/benefit test from the standpoint of value and 
risk.
    My understanding is that if it is in the statutory 
language, then agencies are supposed to follow it. But many 
times they are not in the statutory language. They are in the 
conference reports or whatever else. And as you mentioned 
before, Senator McCaskill, a lot of times people do things 
because of culture and because of longstanding practice rather 
than because they have to do it by law.
    My understanding is that many earmarks are not statutory. 
They are in the conference report or other instruction 
language. But there has been a longstanding practice on behalf 
of many agencies to follow it as an accommodation to the 
Congress. At the same point in time, they are also concerned 
that if they do not follow it, what might happen to the 
appropriation the next year.
    We believe more transparency is needed here up front, and 
one of the things that people talk about from time to time is 
line item vetoes. The Supreme Court has struck that down as 
unconstitutional. But I think one of the things that Congress 
ought to be considering in the area of fiscal responsibility is 
allowing for a line item rescission, an expedited line item 
rescission that would be subject to an up or down majority vote 
by the Congress, a simple majority, so it is not a veto, simple 
majority as a supplement to this.
    The last thing, one of the concerns about earmarks is--and, 
again, they are not all bad, they are not all good--is that 
when you are talking about a time of constrained resources, if 
the top line is getting more constrained with regard to what 
your budget is, the worst of all worlds is where you get more 
earmarks telling you what to do with a limited amount of money, 
where those earmarks may not be based upon value and risk. That 
is a very high-risk strategy.
    Senator McCaskill. Let me make sure I understand, though. 
So the earmarks that are--the ones that I kind of 
affectionately say the ones that get there through the secret 
knock, like if you know the knock--it is not written in the 
bill. It is in the conference report. There is nothing in the 
law that keeps the President from directing agencies not to 
fund those, correct?
    Ms. Combs. That is correct, and the Director of the Office 
of Management and Budget, Rob Portman, has recently issued a 
letter basically saying that.
    Senator McCaskill. I am a little disappointed that only 
came after November of last year, that directive only came 
then. It seems to me that if these earmarks are not required by 
law and if the President is going to include in his State of 
the Union speech how bad the earmarks are, it seems to me that 
the Executive Branch has an obligation not to fund those 
projects that have, in fact, not been put into the law but that 
are, in fact, discretionary on the part of the Executive 
Branch. And I do not think the American people even understand 
how that works. Frankly, I am having trouble figuring out how 
it all works.
    Mr. Walker. I have asked my staff to prepare a special 
publication on earmarks to help people understand what they are 
and what they are not, because I think there is a lot of 
confusion here. And, it is something that I think we could help 
to try to be able to help people better understand this area.
    Senator McCaskill. I think it would be great, and I think, 
candidly that if we did that--and as you say, transparency is 
the key here. Certainly the more quickly that we quit using 
that term for projects that are authorized and appropriated, 
the better, because now it has gotten a connotation that it is 
a bad thing. And it is not. I mean, we need to be investing 
Federal dollars in infrastructure and, I would argue, higher 
education at public universities--I have not seen a whole list. 
I have seen a partial list. There is some stuff on there that I 
think if it was public, they would not happen.
    Mr. Walker. The other thing is that on the issue of 
earmarks with regard to financial reporting, one of the things 
that I have recently sent a note to the chairman of the Federal 
Accounting Standards Advisory Board is that they ought to 
rethink the terms that they are using for financial reporting, 
because in financial reporting, there is separate reporting for 
so-called earmarked revenues. Now, what ``earmarked revenues'' 
means, it means things like payroll taxes and Social Security, 
premiums for Medicare.
    Senator McCaskill. Right.
    Mr. Walker. Things where they are designated for a 
particular purpose. Well, the word ``earmark'' does not have a 
positive connotation.
    Senator McCaskill. People are going to get confused. Right.
    Mr. Walker. Whereas, in this context, it is really more 
restricted funds, if you will, or at least they are supposed to 
be restricted. But as we know, Congress spends all the Social 
Security surplus. That is a whole different topic we can get 
to.
    Senator McCaskill. Maybe we should call it ``hope they are 
restricted.''
    Mr. Walker. Yes.
    Senator McCaskill. They ought to be restricted.
    Mr. Walker. Well, it ought to be restricted, or at a 
minimum, one of the things that does not happen right now 
dealing with Federal financial management reporting, the bonds 
that are in the Social Security and Medicare trust funds, which 
are backed by the full faith and credit of the U.S. Government, 
which are guaranteed as to principal and interest, are not 
considered to be liabilities of the U.S. Government. And that 
is just dead wrong, and that ought to change, and we are trying 
to get that changed.
    Senator McCaskill. Goodness gracious.
    Ms. Combs. I was just going to add that we are all working, 
I think, for the right goal here, which is to make Federal 
spending more transparent in every way. Transparency and 
accountability to the public is what we are all about.
    Senator McCaskill. Thank you, Mr. Chairman.
    Chairman Carper. Thank you.
    I do not recall with great specificity how our first bill, 
S. 1, the ethics bill, addresses earmarks. But as I recall, 
there is some language in there that gets to the issue of 
transparency, and in a very good, positive, and constructive 
way.
    Ms. Combs. Right.
    Chairman Carper. So it is important that what comes out of 
the conference report, the compromise version of the House and 
Senate bill, also is strong in that regard.
    I want to just follow up briefly before we turn to some of 
this excess Federal property and how to deal with that. General 
Walker mentioned the notion of enhanced rescission powers and 
something that I call ``statutory line item veto powers.'' In 
the early 1990s, the House of Representatives actually adopted 
a measure providing for enhanced rescission powers to the 
President. It is kind of interesting. Senator McCaskill said 
that, as you probably know now, the President has the right to 
propose rescissions to rescind spending that has been 
appropriated, but the budget can and usually chooses just to 
ignore it.
    And the legislation we passed by about a 3:1 margin in the 
House of Representatives in 1991 or 1992 restricted somewhat 
what the President could rescind. If programs were fully 
authorized, he could rescind no more than, I think, 25 percent. 
If programs were not authorized, his ability to propose 
rescissions was unlimited. But the Congress had to vote on the 
rescissions. The President had to submit them within a certain 
amount of time. The Congress then had to vote on them, up or 
down within a certain amount of time. And rather than having a 
two-third required vote to override the President's rescission, 
it was simple majority, 51 in the Senate, 218 in the House. And 
it passed by a big margin in the House of Representatives. It 
died in the Senate and did not come up for a vote here. The 
House and Senate subsequently passed legislation that was 
deemed to be unconstitutional.
    The other thing that was different about the House version 
was there was a 2-year test drive, as I recall. The President 
got the authority for 2 years. If he or she abused the 
authority and used it to intimidate House Members or Senators, 
the President would probably lose that authority.
    So, anyway, I think we are going to revisit that issue. 
There is probably going to be legislation proposed by the 
author of the House bill, proposed by the same person who is 
now a Senator, and might want to work with you to see if it is 
something you would be interested in working with us on.
    Let me come back to the surplus property. It is actually 
real money, and we are not just talking about a couple million 
dollars or tens of millions of dollars or hundreds of millions 
of dollars. I think, Dr. Combs, you indicated that the amount 
of money that had been recovered from disposing of surplus 
property was several billion dollars over the last couple of 
years. And I think one of the goals that you may have laid out 
in your revised financial report for fiscal year 2007 is a 
sell-off of at least $11 billion in Federal property between 
now and, I think, 2011. That is a laudable goal, but I am just 
not sure how we get there.
    Let me just ask, do you think that agencies have the 
incentives that they need to sell, whether it is vacant 
buildings or other surplus properties?
    Ms. Combs. I like to use the word ``disposal'' of the 
properties, because some of them may not result in sales. But 
we have had a terrific effort going on across the Federal 
agencies through the real property community, and agencies have 
been very eager to participate in the management and planning 
of how this is best handled. And the Executive order that was 
issued on Federal Real Property Asset Management defined pretty 
clearly some common standards for defining specific data 
elements, including what performance measures are being used. 
And there is an inventory now for the first time of performance 
data that captures more than 1.2 million assets governmentwide. 
And when we use the key data elements such as condition and 
utilization and agencies have identified and defined whether or 
not these properties are no longer necessary to meet their 
agency mission and they are prioritizing those assets for 
condition improvement or whether they are actually needed at 
all or not, we come up with something like a replacement value 
right now of something like $1.2 trillion.
    Chairman Carper. Is that trillion with a ``T''?
    Ms. Combs. With a ``T.'' So you can see that there is a lot 
of opportunity out there to do the right thing, and our goal 
for disposing of 11 billion of those properties by 2011 could 
be through sale, could be through demolition, could be through 
a public transfer from one entity to another.
    I think the mere fact that we have disposed of more than 
4.2 billion over the last couple of years says that surely by 
2011 we can get to the 11 billion. And I think what it is going 
to take to get us there is this continuing focus that we now 
have where we actually continue to push agencies and 
departments who have the asset management plans in place now to 
continue to work toward the goals that are set out there.
    We have green standards. The progress that people are 
making on this is monitored through the PMA scorecard. And as 
you recall, the President's 2008 budget actually includes a 
real property disposal pilot that would do what Mr. Walker 
talked about a while ago and set up some incentives for these 
agencies to retain part of the proceeds; 20 percent of the 
proceeds would be retained, and 80 percent of those proceeds 
then would go to the Treasury.
    I think there are some things that we can do together as we 
move forward on this.
    Chairman Carper. Good. General Walker, do you want to talk 
a little bit more about those incentives? I think if you run a 
Federal agency, you have this surplus of unused property, and 
you know if you dispose of it, you do not get any proceeds, it 
does not help you do your jobs any better, meet your mission 
any better, there is not a great incentive to do anything about 
it.
    Mr. Walker. Well, several things. As you know, Mr. 
Chairman, we have excess Federal real property on our 
governmentwide high-risk list, and this is something that we 
have added in recent years. It is clearly a major challenge. 
There are billions of dollars involved. It is not just the 
issue of saving unnecessary expenses, but it is also realizing 
revenues from these properties, and also in many cases 
facilitating redevelopment and better utilization of this 
property by the local communities, if you will.
    I do believe that, coming back to what we talked about 
before, we need incentives, transparency, and accountability. 
Now, there are two incentives that theoretically they have. If 
they are expending parts of their appropriation to try to 
maintain and secure these buildings, then to the extent they 
get rid of it, they will not have to use those funds. But it 
would be nice if they could have another financial incentive 
where they might be able to keep a piece of the proceeds as a 
further incentive for people to be able to do the right thing. 
And in the end, you may have to think of some type of BRAC type 
process because I would imagine that some of these may be ones 
that there might be some controversy associated, although there 
should be less here. There should be less here because in many 
cases, as you mentioned, in Chicago I have seen that facility 
more than once. It is an abandoned, very large facility, almost 
an entire, if not an entire city block in downtown Chicago. I 
have to believe that is probably worth some money.
    Chairman Carper. A big building, you are right.
    There are a number of references in your testimony, General 
Walker, and I believe in previous GAO work, about agencies with 
troubled financial management systems. Is this a reference to 
IT systems or to basic accounting and management procedures? 
What are agencies doing wrong in this area?
    Mr. Walker. There are a number of challenges with regard to 
information systems and security associated with information 
systems. There are a number of agencies that have material 
weaknesses dealing with such matters. I imagine that is 
probably what that refers to.
    Chairman Carper. OK. Senator McCaskill, let me yield to you 
if you would like to ask some more questions, and I may have 
one more round, and we will wrap it up.
    Senator McCaskill. Do you have any suggestions I would 
appreciate them to my office. I am also on the Armed Services 
Committee along with Homeland Security, so I have got a great 
opportunity to ask questions. And one of the things I have 
tried to do is figure out what percentage of the purchasing 
that is going on at DOD--and I have not had an opportunity to 
ask this of Homeland Security yet--what percentage of it is 
competitive. And I am having a hard time with DOD because they 
are--it appears that different people at DOD have a different 
version of what is and what is not competitive.
    Have you, General Walker, ever tried to help Congress and 
all of the Executive Branch in defining what is a competitive 
purchase and what is not? And I certainly would appreciate any, 
along those same lines about competitiveness, requests for 
proposals as it relates to professional services and the ``very 
scary world of consultants.''
    Mr. Walker. First, I do not recall off the top of my head, 
Senator, as to whether or not we have done work in defining the 
term ``competitive.'' I will go back, find out, provide it to 
your office.
    I do know that this is an example of something that we were 
recently asked to do--and maybe we should do it here. I was 
recently asked to come up with a definition of ``waste,'' and I 
did, in conjunction with the Inspector General of Defense, the 
Inspector General of State, and the Special Inspector General 
of Iraq, because it came up in the context of a hearing on Iraq 
contracting. And I did, and I will be happy to provide it for 
the record, because it is interesting and it is informative, 
because it is acts of commission and omission by both the 
Executive Branch, contractors, and the Legislative Branch in 
circumstances where the taxpayers do not get value for money, 
and I give specific examples. By the way, some earmarks could 
fall into the category of waste, but not all earmarks would 
fall into the category of waste. And I will be happy to provide 
that to your office and anything else that I can find out on 
the other.\1\
---------------------------------------------------------------------------
    \1\ The information provided by Mr. Walker appears in the Appendix 
on page 82.
---------------------------------------------------------------------------
    And if I may for the record, while you are both here--
because I know you are getting short on time--I would like to 
make a pitch--and I will send it to both of your offices. We 
are trying to work with a number of interested parties, 
including members on both sides of the aisle and both ends of 
the Hill, to push potential legislation for transparency and 
accounting and budgeting. There is a clear need for more 
transparency here, and I would like to be able to have 
permission to send that to your offices and to be able to talk 
to you about it.
    And the second thing is with regard to our Nation's 
financial and fiscal condition, I was just advised by CBS News 
that there will be a special segment in ``60 Minutes'' this 
weekend--the lead segment, I believe--on the work that we at 
GAO and others have been doing to try to help educate the 
public for the need for dramatic and fundamental reforms in 
order to put our Nation on a more prudent and sustainable 
fiscal path.
    Senator McCaskill. That is great because I think the more 
the public understands the train wreck is coming, the more 
political elbow room we will have in Congress to do the right 
thing.
    On the competitiveness--this is Homeland Security, the 
Coast Guard boat--I forget the name of it.
    Mr. Walker. It is Deepwater.
    Senator McCaskill. Deepwater.
    Mr. Walker. The Deepwater project, which is a number of 
different platforms.
    Senator McCaskill. Deepwater, but then you look over at DOD 
and some of the weapons systems, and what they are saying to me 
is, well, if you begin the process with competitiveness, then 
once you pick someone to build the system, then we are getting 
banged for it not being competitive when in reality it was 
competitive at the beginning, but it does not make sense 
fiscally for it to continue to be competitive.
    I am trying to figure out how we provide oversight under 
those circumstances, because, first of all, it is hard to say 
with authority, if you either are not an auditor who has a lot 
of experience in looking at those systems and how that works or 
unless you actually have working knowledge of the weapons 
systems, and I do not think most of us around here do. So that 
competitiveness, particularly at DOD, I think, aside from the 
part they do not know what is being bought competitively with 
interagency contracting--which they do way too much to avoid 
the rules as opposed to find efficiencies. That is why I really 
would like to see some clarification from GAO as to what you 
consider competitive.
    Mr. Walker. Well, Senator, I think it probably makes sense 
for me to come up to your office and talk to you about a number 
of these issues. I can tell you that based upon the information 
that I have seen, a significant majority of the major contracts 
are competitive at some point in time. Sometimes, for example, 
when you have a contingency operation--and by that I mean it 
could be Iraq, it could be Hurricane Katrina. You have an 
unexpected catastrophic event or a contingency operation. You 
can see circumstances in which initially they may not be 
competitive, but then later on they are competed.
    In most circumstances, for major weapons systems they are 
competed. The problem is not as much that as it is we are 
trying to buy wants versus needs; we are not nailing down what 
we are expecting to get. We are trying to push things too 
quickly, and we are paying bonuses in circumstances where we 
are not--where we are over budget, behind schedule, and not 
getting results. And I would love to be able to sit down with 
you and talk to you because I think you are extremely well 
positioned, being on the Armed Services Committee as well as 
Homeland Security and Governmental Affairs, to be able to 
address some of these challenges that can save the taxpayers a 
lot of money.
    Senator McCaskill. When you all classify improper payments, 
are you including bonuses paid within contracts where any 
objective analysis would say the contract has not been 
performed well?
    Mr. Walker. Well, we are not the ones that classify whether 
or not they are improper payments. In my opinion, that is not 
appropriate, but I doubt very seriously that it is being 
classified as improper.
    Senator McCaskill. Who is classifying improper payments?
    Mr. Walker. The Executive Branch is.
    Ms. Combs. The Executive Branch does that.
    Senator McCaskill. And is that included in your 
classification of improper payments when bonuses are paid on a 
contract where any cursory look at the requirements of the 
contract would see that it had not been met?
    Ms. Combs. Contracting is looked at, and I am not sure that 
specific example in every case would be looked at. But, one of 
the things that we would offer, too, as well, is the 
opportunity to work with you. Our office is at the Office of 
Management and Budget. Obviously, in addition to the improper 
payments, we have folks there who stress competition in 
procurement in our policies, and our policies do address many 
of those things. And I am sure those specialists would be more 
than happy to come and work with you as well.
    Senator McCaskill. That would be great. Thank you.
    Mr. Walker. Of the ones that I am familiar with, for 
example, one of the things that we do that for I know you are 
going to be interested in, we do once a year a quick look 
report that talks about the status of major weapons systems on 
cost, timing, and quality. We have also done reports on the 
payment of incentive and award fees.
    Senator McCaskill. Right.
    Mr. Walker. And we can make that available for your office, 
and we will do that. Of the ones that I am familiar with, they 
were not categorized as improper payments because they were not 
illegal, they were not inconsistent with the contract terms, 
but in my view, they were in many cases inappropriate.
    Senator McCaskill. But if they are inconsistent with the 
contract terms, if the contract says you do A, B, and C, and if 
you do, you get a bonus, and they do not do A, B, and C and 
they get a bonus, it seems to me we ought to be classifying 
that as improper payment.
    Mr. Walker. But, Senator, the problem is that is not what 
the contract says. The contract all too frequently says ``best 
efforts,'' and ``cost plus.'' The government ends up not being 
very clear to the contractor as to what you want by when, and 
the government many times ends up changing the terms or the 
requirements, which that is why I look forward to sitting down 
with you.
    Senator McCaskill. I see.
    Mr. Walker. It is a shared responsibility. It is not just 
the contractor. It is also the government. And it is a lot of 
money.
    Ms. Combs. And if there are duplicative payments or 
payments for services that were not rendered, those indeed 
would be classified.
    Senator McCaskill. I am going to try to see if we cannot 
get that other kind in there.
    Thank you, Mr. Chairman.
    Chairman Carper. You bet.
    Senator McCaskill. I unfortunately have to leave you now. I 
have to go to the floor.
    Chairman Carper. Before you walk out, let me just mention 
one thing because it pertains to what you have just been asking 
in having this discussion. The notion of us paying bonus 
payments to contractors for weapons systems that did not then 
meet the terms of expected performance seems foolish and 
anathema to me.
    My colleague from Delaware, Congressman Mike Castle, and I 
offered language to, I believe, the defense appropriations bill 
last fall, adopted in the House version, adopted in the Senate 
version--I believe it is now law of the land--that says that 
bonus payments cannot be paid to weapons contractors for 
projects that do not meet the terms of the mandated level of 
performance.
    I would just ask for the record if maybe Dr. Combs could 
just let us know how that law is being implemented and made 
effective. I know it was adopted by the House and Senate. I am 
almost positive it survived the conference, and I would just 
like to know how it is working. If you could submit that, that 
would be great.
    Ms. Combs. We will be glad to get back to you on that.\1\
---------------------------------------------------------------------------
    \1\ The GAO report submitted for the record appears in the Appendix 
on page 84.
---------------------------------------------------------------------------
    Chairman Carper. Good. Thank you.
    Senator McCaskill. Thank you.
    Chairman Carper. I can just say, this is your first hearing 
with us here, Senator McCaskill. I think you are going to be a 
valuable Member of this Subcommittee. And you know what? I 
think you are going to enjoy it.
    Senator McCaskill. I had fun.
    Chairman Carper. That is good. Thanks for joining us today.
    Two more questions, and then I am all finished, and any 
last comments you all have would be appreciated.
    Dr. Combs, General Walker, I think, argues in his written 
testimony that the Financial Management Workforce--in at least 
some agencies--sometimes does not have the skills that are 
necessary to meet future needs. I am sure that many on the 
Financial Management Workforce are close to retirement as well, 
just like many of our best people in other areas across the 
Federal Government. In the U.S. Senate, they are never close to 
retirement. We serve here seemingly forever. But what steps has 
OMB taken in partnership with the agencies that you oversee to 
find solutions to this problem?
    Ms. Combs. I could not agree more with the Comptroller 
General on this important issue, and I know this is something 
he has spoken out on for many years, and it certainly continues 
to deserve our careful look.
    There are some added advantages for us looking at this 
issue because when I talked about smarter accountability in my 
statement earlier, if we continue to take more cost-effective 
approaches and continue to work through a number of things that 
would help our workforce, we keep coming back to how can we 
standardize things so that we can use people across agencies 
and in the entire Federal workforce in financial management.
    Right now, because things are not as standardized as we 
would like them, one person in a financial management capacity 
cannot necessarily just pick up and move to another financial 
management job. So that would help tremendously to optimize the 
workforce that we currently have.
    We have reached out to various colleges and universities, 
folks like the AGA----
    Chairman Carper. What is AGA?
    Ms. Combs. Association of Governmental Accounting.
    Chairman Carper. Are those Aggies? No. [Laughter.]
    Ms. Combs. And we have looked to have them help us develop 
more effective training and recruitment programs, too, because 
it is not just training the people that are here who are now 
maybe two or three levels below the number of baby boomers that 
we are about to lose. They need to be retrained in various 
skills. But we also need to recruit some MBA type people who 
need to be able to take on these larger roles and 
responsibilities.
    So we have looked and we talk with the private sector on a 
monthly basis. We have a CFO that comes to the CFO Council 
meeting, which I chair, and these people are from the Fortune 
500 companies. Invariably, they say the same thing that David 
Walker and Linda Combs are saying to you. They have the same 
serious problems of filling their financial management 
workforce as well.
    So it is not just a government problem. It is also an 
industry problem. And because industry has some added 
advantages that they can have relating to other incentives they 
can offer in terms of salary or many other things, we often 
come up short in the Federal Government.
    Chairman Carper. Alright.
    Mr. Walker. Can I add something?
    Chairman Carper. General, go ahead.
    Mr. Walker. Mr. Chairman, there are serious workforce 
challenges in the Federal Government, and those challenges are 
particularly acute in several areas: Financial management, 
acquisitions, information technology, human capital strategy, 
and also certain science and engineering fields. I think that 
this Committee, meaning Senate Homeland Security and 
Governmental Affairs, as well as your House counterpart, really 
needs to take a look into that particular area and what, if 
anything, needs to be done in order to try to address these 
serious challenges, which are only going to get worse with the 
passage of time, in part because of supply and demand 
imbalances.
    You are only as good as your people, and we have great 
people that are very dedicated, but we have got a lot of them 
who are going to be leaving, and we do not have enough of them.
    Ms. Combs. Correct.
    Chairman Carper. That are going be leaving?
    Mr. Walker. No, we do not have enough. [Laughter.]
    Mr. Walker. That is not what I intended but thank you for 
clarifying.
    Chairman Carper. I just wanted to clarify that point.
    Final question, and this is for Dr. Combs, and if you want 
to comment on it, General, that would be fine. But I know that 
OMB has been working on an initiative to consolidate certain 
financial management functions into something--I think they are 
called ``shared service centers,'' I assume in agencies or 
divisions of agencies that do a better job than others in 
managing their money.
    What do you hope that this initiative will accomplish? How 
will it address some of the remaining challenges in financial 
management that both you and General Walker agree need to be 
addressed?
    Ms. Combs. I think shared service arrangements have been 
around for a while, and they perform a vital function within 
the government itself. I think one of the things that a shared 
servicing arrangement does, it helps us to take something that 
a government entity does especially well and optimize what they 
are doing already and doing it very well and sharing it, in 
essence, with other government entities.
    We also now have some private sector entities that have 
taken on certain roles and responsibilities that CFO offices 
are happy to shed from them, that they do not have to do these 
things directly. One of the first arrangements in this 
Administration had to do with payroll. As you recall, we went 
from 19 systems down to three payroll systems. That was an 
example of a shared service arrangement.
    We are trying to further embark into what are the shared 
services--or what are the services that do not need the 
immediate attention but they need the oversight of the CFO. So 
the goal is to shed some of the responsibilities from the CFO 
offices directly and let somebody else perform those routine 
duties. And we have come a long way with doing that, but we 
have a long way yet to go.
    Chairman Carper. OK. General Walker, any concluding comment 
on that point?
    Mr. Walker. No. I think that is fine, Mr. Chairman. That is 
an Executive Branch responsibility. I do think it makes sense 
to try to encourage shared service arrangements where possible 
for economies of scale, consistency, and a variety of other 
reasons.
    Ms. Combs. I think the other thing that is important to 
note here is, again, what we have learned from our CFO Council 
meetings and the CFOs that we talk to in the corporate world, 
is they are doing that model themselves, because they realize 
that with those economies of scale, that they can take that 
footprint that they have--that is costing them money and having 
that work more effectively.
    In fact, my staff just reminded me that one of----
    Ms. Combs. They are very good. They do not want me to miss 
anything.
    One of the things that we were especially pleased to have 
was a CFO from DuPont last week at our CFO Council meeting. He 
was very effective. And so being from Delaware, I thought you 
would appreciate that.
    Chairman Carper. That is good to hear. And we had the CEO 
of the company here just this past month talking about U.S. 
Climate Action Partnership that the Dupont Company and a number 
of other big companies, utilities, and environmental groups 
have sort of joined together to try to encourage us to get 
started on climate change in ways that are cost-effective and 
will not torpedo the economy and will not cost consumers an arm 
and a leg. It was just very constructive, so thanks for 
mentioning them.
    Let me just close by thanking you on behalf of Dr. Coburn 
and myself and Senator McCaskill and others for being here 
today. Thank you for the testimony that was prepared and 
presented. Thank you for the gravity with which you approach 
these issues. This is not the first time that you have 
testified before this Subcommittee. It will not be the last 
time, I hope we will have the opportunity to talk with you both 
on-line and off-line and to continue this work.
    When you are a country as big as ours and you are running a 
huge budget deficit, and as we look ahead and our generation, 
the boomers, prepare to retire, we know that there is going to 
be enormous stress on our budgets and our ability to pay for 
things. And to the extent that we can identify ways to save 
some money, a lot of money, we will be better off as a country 
and as a people.
    I would say that the hearing record is going to be open 
for, I think, 2 weeks for submission of additional statements 
and questions. I would just ask our witnesses and your staffs 
for your cooperation in making sure that we get prompt 
responses to any questions that are submitted for the record.
    This hearing is adjourned. Again, my thanks to each of you.
    [Whereupon, at 4:40 p.m., the Subcommittee was adjourned.]


























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