[Senate Hearing 110-322]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 110-322
 
                 GAO'S ROLE IN SUPPORTING CONGRESSIONAL
                OVERSIGHT: AN OVERVIEW OF PAST WORK AND
                  FUTURE CHALLENGES AND OPPORTUNITIES

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

                                HEARING

                               before the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 21, 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
                   Lawrence B. Novey, Senior Counsel
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
                    Jay W. Maroney, Minority Counsel
                 Melvin D. Albritton, Minority Counsel
                  Leah Q. Nash, Minority GAO Detailee
                  Trina Driessnack Tyrer, Chief Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Lieberman............................................     1
    Senator Collins..............................................     2
    Senator Voinovich............................................     4
    Senator McCaskill............................................    14
    Senator Akaka................................................    18

                                WITNESS
                       Wednesday, March 21, 2007

Hon. David M. Walker, Comptroller General of the United States, 
  U.S. Government Accountability Office:
    Testimony....................................................     6
    Prepared statement...........................................    29
    Letter sent to the Senate Select Committee on Intelligence, 
      dated March 1, 2007, from GAO..............................    53
    Questions and responses submitted for the Record.............    69


                        GAO'S ROLE IN SUPPORTING
                  CONGRESSIONAL OVERSIGHT: AN OVERVIEW
                        OF PAST WORK AND FUTURE
                      CHALLENGES AND OPPORTUNITIES

                              ----------                              


                       WEDNESDAY, MARCH 21, 2007

                                       U.S. Senate,
                           Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:30 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Joseph I. 
Lieberman, Chairman of the Committee, presiding.
    Present: Senators Lieberman, Akaka, McCaskill, Collins, and 
Voinovich.

            OPENING STATEMENT OF CHAIRMAN LIEBERMAN

    Chairman Lieberman. The hearing will come to order. Good 
morning, and welcome to everyone, particularly welcome to our 
Comptroller General, David Walker. We hope that this room seems 
like your home away from home, and we thank you for all the 
times you have been here and been so constructive.
    Today, instead of asking you to focus the light of your 
office on another government office, this Committee has asked 
you to help us focus on your office. And if I may paraphrase, 
normally we ask what GAO can do for us. Today we are going to 
ask what we can do for you because this Committee is not only 
grateful to you for the specific and substantial help you have 
given us in our work of oversight, but we are great admirers of 
your work, generally.
    You and your staff have helped us to evaluate and consider 
ways to improve the operation of agencies and programs 
throughout the Federal Government. Because this Committee has 
oversight of government responsibilities, we depend heavily on 
GAO, and as the Committee with jurisdiction over the Homeland 
Security Department, we have also depended on you in a 
different way, which is to help us help those in charge of the 
Department to transform this amalgam of 180,000 employees and 
22 agencies into a superior homeland security operation.
    In preparation for the hearing, my staff went back and 
looked at just the last 12 months, and we were quite struck to 
note that we, this Committee, have received over 200 reports in 
the last 12 months, either requested by us, the Committee or 
Subcommittees, or initiated by GAO and addressed specifically 
to us. That is quite a remarkable number. And the range of 
topics covered is in its way even more remarkable, from 
Hurricanes Katrina and Rita disaster relief to improving 
governmentwide financial management, to strengthening the 
privacy of health information, to the Department of Homeland 
Security's management of homeland security first responder 
grants, to securing and rebuilding Iraq. Our work--that is, 
this Committee's work--has benefited greatly from your output 
and so, I am confident, have the American people.
    This morning we have asked the Comptroller General to 
provide an overview of GAO's traditional work in supporting 
congressional oversight and also to describe GAO's efforts to 
provide Congress with what David Walker has called ``insight 
and foresight'' on approaches to problems that are still with 
us, unresolved, and where best practices should be applied.
    The Comptroller General has been particularly active in 
providing Congress and the public with an understanding of our 
long-term fiscal problems and the dangers that they present to 
the future of our country and really to every American. GAO has 
issued a number of significant and substantial reports in this 
particular area, most recently in its January 2007 report on 
fiscal stewardship. And now, like the hero of Henry Wadsworth 
Longfellow's poem, David Walker rides ``booted and spurred'' 
throughout the American countryside, sounding the alarm at town 
hall meetings as part of the Fiscal Wake-Up Tour led by the 
aptly named Concord Coalition, in which he is the central 
spokesperson.
    During the mid-1990s, coming back home to GAO, GAO suffered 
a 40-percent budget reduction and the loss of many full-time 
equivalent positions. Since the Comptroller General took office 
in 1998, he has transformed the agency into a more results-
oriented, client-focused, and very efficient operation. Last 
year, GAO determined that it had provided quite a remarkable 
return on public dollars invested, which is to say $105 saved 
for the taxpayers for every $1 spent on this office. Also, this 
is an office with very high client satisfaction ratings. And 
yet GAO's budget has declined by 3 percent after inflation over 
the past 4 years.
    So I look forward to hearing the Comptroller General 
testify about his fiscal year 2008 budget request, which 
includes additional funds to help the office meet the demands 
on it and maintain its high level of quality and effectiveness 
and cost-effectiveness. In a sense, you might say this is a GAO 
authorization hearing, that is, a budget authorization hearing, 
by the Committee to review what you have been doing, to take a 
look at what amount of money has been recommended for you next 
year and in the years ahead, and to see how we might help you 
better help us and the American taxpayers. Thank you.
    Senator Collins.

              OPENING STATEMENT OF SENATOR COLLINS

    Senator Collins. Thank you, Mr. Chairman.
    For more than 85 years, the Government Accountability 
Office has worked with Congress and for the American people to 
make Federal agencies and programs more accountable and more 
effective. The ``watchdog of Congress'' has served us well as 
auditor, overseer, investigator, and evaluator. I look forward 
to hearing the testimony today from the Comptroller General as 
the Committee considers GAO's work, its results, and its 
challenges.
    Let me make clear at the outset how much I appreciate the 
work of the GAO. Not only does the office perform yeoman's 
service in research, analysis, and evaluation, but it presents 
its work in a compact, coherent, and accessible form, and in a 
conscientiously nonpartisan way.
    GAO reports are authoritative and invaluable tools for 
lawmakers and for our staff. The professionals at GAO are 
entitled to feel a sense of great pride in the work that they 
undertake. Simply noting the range of recent GAO reports for 
this Committee suggests the value that they represent. They 
have done work for us on border security, Hurricane Katrina, 
homeland security grants, interagency contracting, immigration 
services, human capital reform, and, of course, the well-known 
high-risk list of government agencies and programs.
    I was, of course, very pleased that the GAO has removed the 
U.S. Postal Service from the high-risk list this year as a 
result of reform legislation that Senator Carper and I 
sponsored in the last session of Congress. I hope that the 
high-risk list may soon have another success story. S. 680, the 
Accountability in Government Contracting Act, which I have 
introduced with the Chairman, Senator Coleman, Senator Carper, 
and Senator McCaskill, will strike at many of the serious 
issues that GAO has identified in the acquisition and oversight 
processes that govern billions of dollars in Federal 
contracting each year. GAO's research findings and 
recommendations played a key role in the development of that 
bill.
    The GAO has also provided a great deal of valuable analysis 
and assistance on issues before this Committee, such as 
homeland security and disaster preparedness and response, 
issues that have accounted for much of this Committee's work 
during the past 2 years. Following Hurricanes Katrina and Rita, 
the GAO provided Congress with more than 30 reports and 
statements on FEMA, Federal grant programs, disaster housing 
assistance, medical expenditures, contracting, and disaster 
program waste, fraud, and abuse. All of this work was extremely 
helpful last year as the Committee conducted its extensive in-
depth investigation of the failed response to Hurricane 
Katrina.
    I understand, as the Chairman has indicated, that GAO has 
computed its fiscal year 2006 financial benefits of its work at 
$51 billion, representing an amazing return of $105 for each $1 
spent. That kind of return, not to mention the GAO's clean 
financial statement, should be the envy of both the private 
sector and government organizations. That GAO has been able to 
perform all of this work on a budget that is 3 percent lower in 
real dollars than just 4 years ago is truly impressive. I hope 
today's hearing will not only illuminate some of the fine 
service that GAO performs, but also spread Mr. Walker's message 
about the challenges of funding operations and human capital 
needs now and in the years ahead.
    Some of you may recall that Senator Voinovich and I 
collaborated in 2003 on authorizing some personnel reforms for 
the GAO, and I look forward to hearing about further needs in 
this area as well.
    Let me close with one more note of appreciation, and, 
again, it is an issue that our Chairman has mentioned.
    GAO's leadership in the continuing nationwide Fiscal Wake-
Up Tour on our long-term Federal budget problems strikes me as 
a particularly valuable public service. As demands for new or 
increased Federal spending multiply, the core fiscal reality is 
this: We are on an unsustainable path that cannot be remedied 
with simple solutions. This message needs forceful and repeated 
explanation and examination, and I commend Mr. Walker for 
working with a wide variety of groups across the political 
spectrum to spread that message in a responsible way that 
educates the public but does not prejudge policy choices or 
outcomes.
    In sum, Mr. Chairman, we have a wide variety of reasons to 
welcome Mr. Walker here today, and I commend you for scheduling 
this hearing.
    Chairman Lieberman. Thanks very much, Senator Collins.
    Senator Voinovich, who has worked so much on issues related 
to human capital management, unfortunately cannot stay very 
long, and I wanted to ask him at this point to perhaps make an 
opening statement.

             OPENING STATEMENT OF SENATOR VOINOVICH

    Senator Voinovich. Mr. Chairman, thank you for holding this 
hearing. Comptroller General Walker, I just want to express my 
appreciation to you for all of the help and cooperation that 
you have given me since I have been a Member of the U.S. 
Senate. I think that history will record you as the most 
outstanding Comptroller General that we have had. I would agree 
with the statements made by the Chairman of the Committee and 
the Ranking Member of how you have contributed to improving the 
management of government here in the U.S. Senate and in the 
country, and also for your very responsible effort to awaken 
the American people to the looming fiscal crisis that we seem 
to continue to ignore.
    I am particularly interested in hearing from you about what 
you have done with the personnel flexibilities that we have 
given to you, in particular authorities to enhance your pay-
for-performance system, which is something that still is a 
controversial thing here. And last, but not least, some of the 
other ideas that you have on how you feel that you can improve 
GAO's operations.
    As mentioned, we get thousands of reports. Mr. Chairman, is 
that correct?
    Chairman Lieberman. We had more than 200 in just the last 
year directed to us.
    Senator Voinovich. I would be interested in your 
perspective, Mr. Walker, on how you decide where you put your 
emphasis and human capital.
    Mr. Chairman, thank you very much, and I would ask that my 
total statement be made a part of the record.
    Chairman Lieberman. Without objection, so ordered.
    [The prepared statement of Senator Voinovich follows:]

                PREPARED STATEMENT OF SENATOR VOINOVICH

    Thank you, Mr. Chairman, for holding this important hearing. Since 
its creation in 1921, GAO has worked with Congress to make Federal 
agencies and programs more accountable. GAO works for Congress, but its 
beneficiaries are the American people who rightfully expect the Federal 
Government to spend their tax dollars wisely. Today, we examine the 
results GAO has achieved and the challenges it faces.
    Under Comptroller General Walker's leadership, the depth and 
breadth of GAO's work on behalf of Congress has continued to expand. 
Congress has provided GAO with personnel flexibilities to recruit, 
retain, and reward the highly-skilled workforce necessary to get the 
job done. While there is always room for improvement in human capital 
management, I am pleased that GAO has led by example in managing its 
workforce. Comptroller General Walker has not lost the connection 
between good management practices and operational success.
    I commend GAO for its continued commitment to the high-risk list. 
This bi-annual report outlines governmentwide and agency-specific 
programs that are susceptible to waste, fraud, abuse, and 
mismanagement. In 2005, my good friend Senator Akaka and I began an 
extensive review of GAO's high-risk list, which to date has included 
eight hearings, as well as regular meetings with GAO and the Office of 
Management and Budget. Our work on DOD supply chain management and 
security clearance reform has helped DOD to better manage these areas 
which can have negative implications to our Nation's security and waste 
taxpayer's money. It is imperative that we continue our work to resolve 
the management challenges on the high-risk list.
    However, in some instances, improving the performance of a high-
risk program area requires more than implementing sound business 
practices and oversight from Congress. Transforming the Department of 
Homeland Security represents the single largest restructuring of the 
Federal Government since the creation of the Department of Defense in 
1947, and continues to be a top priority for me.
    That is why I am so pleased that S. 4, which recently passed the 
Senate, would create a Chief Management Officer at DHS. I believe the 
creation of a CMO is essential in addressing the critical management 
challenges facing the Department, and will generate the high-level 
attention and focus needed to produce results.
    I have been working closely, for some time now, with Comptroller 
General Walker on the issue of our Nation's fiscal health. America's 
fiscal situation is dire. And, it's getting worse by the day. In the 
simplest of terms, the Federal Government continues to spend more than 
it brings in. We are using our children and grandchildren's credit card 
for today's needs, knowing that the interest and debt will continue to 
accrue. We have an obligation to share with the American people the 
grim state of our fiscal health. That is why GAO's work on long-term 
fiscal challenges is so important. This is a call to action that no one 
who cares about the future of our Nation can ignore.
    I have said many times that I am concerned we are running out of 
time to face reality and do what is right. If we don't assume the 
responsibility of reversing our irresponsible behavior and nurse our 
fiscal system back into good health, how can any of us look our 
children and grandchildren honestly in the eye and pretend to be 
concerned about their future?
    Since I arrived in the U.S. Senate, the national debt has increased 
from $5.6 trillion in 2000 to $8.6 trillion today--an increase of more 
than 50 percent in just 7 years. This amounts to $29,000 of debt for 
every American. What is even more concerning, however, is that 55 
percent of the privately owned national debt is held by foreign 
creditors, including the Chinese government--and that's up 35 percent 
from just 5 years ago. Yet, these numbers, which represent our past 
behavior, pale in comparison with the budget problems looming in our 
future as the Baby Boom generation begins to retire less than a year 
from now.
    We have a moral obligation to restore the fiscal health of our 
Nation. I agree with Comptroller General Walker. Our commitments to the 
War on Terror, to defending our borders, and to investing in our 
national infrastructure of competitiveness, demand tremendous resources 
and require long-term financial obligations. The need for tax reform 
and entitlement reform has never been greater.
    That is why I am pleased to have partnered with Congressman Frank 
Wolf to introduce the Securing America's Future Economy Commission Act, 
which establishes a national, bipartisan commission to present 
solutions to place the Nation on a fiscally sustainable course.
    The Commission will hold town hall meetings throughout the country 
to engage in a national discussion with citizens and consider possible 
policy options and will produce a report to Congress with proposed 
legislation. Our bill establishes that the Administration and Congress 
will have 90 days to review the proposal and develop an alternative 
package of reforms if they believe it is necessary. The most important 
feature of the bill is the fast-track procedure to guarantee a vote in 
Congress on either the Commission's legislation or Congress's 
alternative.
    We, in Congress, need to do a better job of oversight, and will 
continue to rely on GAO to support our efforts. Together, we can help 
bring increased attention to the challenges facing our Nation. Thank 
you.

    Chairman Lieberman. Thank you, Senator Voinovich.
    Mr. Walker, Comptroller General, honorable friend, welcome.

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

    Mr. Walker. Chairman Lieberman, Senators Collins, 
Voinovich, and McCaskill, thank you very much for the 
opportunity to be here, and thank you for your kind remarks.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Walker appears in the Appendix on 
page 29.
---------------------------------------------------------------------------
    Let me say at the outset I am pleased and honored to be 
able to head the GAO. I work with over 3,000 of some of the 
brightest, best educated, and most dedicated public servants 
that exist on this planet, and while I am their leader, believe 
me, we are a team. I very much appreciate your kind comments, 
and I will take them as reflecting on the entire organization, 
as they should.
    I appreciate the opportunity to be here today to talk about 
GAO's role, to review a few of our recent major initiatives, 
and to talk about some of our current challenges and future 
directions. I think it is important to note that GAO is in the 
business of trying to improve government performance and 
assuring accountability for the benefit of the American people. 
We are in the oversight, insight, foresight, and adjudicatory 
business. And as I know every Senator here recognizes, GAO is 
truly a strategic asset for the Congress, in general, and for 
this Committee, in particular, as we try to go about addressing 
various sustainability challenges and transforming government 
to better meet the challenges and capitalize on the 
opportunities of the 21st Century.
    We have an ability to look longer range, to look across 
silos, and to employ a more integrated approach to a range of 
issues, and I might add this Committee has that same ability. 
You are uniquely positioned to be able to address a number of 
the current and emerging long-range and cross-cutting issues 
that exist and that face the United States in its position in 
the world.
    But also being the chief audit organization of the United 
States, I believe very strongly--and our employees and 
executives have risen to the challenge--that we have an 
obligation to lead by example, to be as good or better than any 
other government agency in every major area of management.
    Now, if I can, let me summarize some of our most recent 
significant publications that I think should be able to help 
you help the American people, and that is what we are all 
about--trying to make a difference. And I know that is what all 
of you are all about.
    In the area of oversight, on November 17, 2006, I sent to 
every Member of this Committee a list of 36 suggested areas for 
oversight. Believe me, it could have been much longer, but we 
have to try to prioritize. And these are areas that in some 
cases have received oversight in the past, and they need 
continued oversight. In some areas, they really have not had as 
much oversight as they deserve, and I would commend to you this 
document as you are trying to set the agenda for this Committee 
and for the respective Subcommittees.
    In January 2007--because clearly one of the biggest issues 
on the agenda in November in the minds of the American people 
was the challenges that we face in Iraq--we issued a special 
report on work that we have done in Iraq and suggested a number 
of areas that are in need of additional oversight with regard 
to that particular issue.
    At the end of January, we issued our new high-risk list, 
which has 26 areas on it, 15 of which relate to the Department 
of Defense directly or indirectly. It is clearly the most 
challenged entity in the Federal Government at the present 
point in time with regard to management, economy, and 
efficiency matters. In fact, many of you participated in the 
release of this, and I want to thank you for your interest and 
efforts in that regard. And I do want to note that two items 
came off the list. In particular, I want to commend this 
Committee, Senator Collins, Senator Carper, and others for 
their leadership in connection with postal reform legislation. 
There was a combination of efforts by the leadership at the 
Postal Service as well as achieving this landmark legislation 
that enabled us to take the Postal Service's transformation 
effort off the high-risk list. And that is an example of how we 
have to move beyond fraud, waste, abuse, and mismanagement. We 
should have zero tolerance for fraud, waste, abuse, and 
mismanagement, but it will never be zero. As you all know, 
there is no line item in the Federal budget that says fraud, 
waste, abuse, and mismanagement that you can just eliminate. In 
fact, arguably, the largest item of waste in the Federal budget 
is the $227 billion in interest on the Federal debt, which is 
over double what we spent in Iraq because we get nothing for 
interest. It is for past excess consumption. But the key is 
that we need to transform what government does and how it does 
business. There is much more money to be obtained in that, but 
we also should try to minimize fraud, waste, abuse, and 
mismanagement.
    On insight, we have issued a comprehensive framework on our 
work in conjunction with Hurricanes Katrina and Rita for this 
Committee. We have recommended a number of improvements to 
management structures--in particular, the need for a chief 
management official in selected departments and agencies to 
elevate, to integrate, and to institutionalize a number of 
major transformation efforts. In my view, this is highly 
desirable at the Department of Homeland Security and at the 
Office of the Director of National Intelligence. It is 
absolutely essential for the Department of Defense, in my view.
    We have talked about the need for a comprehensive human 
capital reform framework. We are in danger of seeing a 
fragmentation of the rules that apply to civil servants in this 
country. At present, many agencies are trying to pursue their 
own actions without a comprehensive framework that is necessary 
to make sure that we are making progress while preventing 
abuse. We have also talked about the need for this Nation to 
implement a set of key national indicators, outcome-based 
indicators to be able to assess our position, our progress, and 
how we compare to others.
    On foresight, our 21st Century Challenges document raises 
over 200 questions that need to be asked and answered to 
reengineer the Federal Government for the 21st Century. Our 
fiscal stewardship and sustainability report that was sent to 
every member of the Senate and House in January lays out in 
clear and concise terms where we are, where we are headed, and 
as Senator Collins said, the fact that we are on an imprudent 
and unsustainable fiscal path. As a result, we need to start 
making tough choices sooner rather than later. And our new 
strategic plan, which we are preparing in conjunction with the 
Congress, will be coming out at the end of this month. It will 
include various themes and challenges facing the United States.
    With regard to GAO, I am pleased to say that our executives 
and employees have risen to the challenge to lead by example, 
and we are in the forefront of government transformation as it 
relates to strategic planning, organizational alignment, human 
capital practices, financial management, information 
technology, performance metrics, and a variety of other areas. 
We are the leader or one of the leaders recognized by 
independent third parties in all of these areas. And in part, 
it is because of the authorization that this Committee gave GAO 
in the human capital area or other support that this Committee 
has provided.
    I also might note that we have of late experienced certain 
records or people access challenges which are in various stages 
of trying to resolve. In the case of the Department of Homeland 
Security, we have had a number of delays, not outright denials. 
They have an inefficient process for trying to be able to deal 
with requests from GAO, but I am pleased to say that within the 
last week I had a constructive conversation with Secretary 
Chertoff, and I am hopeful that we are going to see positive 
progress moving forward.
    With regard to the Department of Defense, we may be issuing 
our first demand letter since the Cheney litigation in the near 
future if we cannot achieve successful resolution of a couple 
of requests that have been pending for months at the Department 
of Defense.
    At the State Department, we have been seeking their 
approval for a number of months for GAO to be able to have 
three persons spend up to 3 months in Baghdad, in the Green 
Zone, at the request of the Congress to provide a continuing 
presence there as a supplement to projecting people in and out 
of that country on a periodic basis, and they have yet to 
approve our request. I am trying to resolve that.
    With regard to linking resources to results, Mr. Chairman, 
I am a strong believer in linking resources to results, 
although I would respectfully suggest that is totally 
inconsistent with how the appropriations process works for the 
Federal Government. And that is one of the reasons why we need 
key national indicators, so we know what the results are, what 
the outcomes are, and so the Congress can make better decisions 
in connection with authorizing, reauthorization, oversight, and 
appropriations matters.
    For GAO, since 2003, as you pointed out, our purchasing 
power has declined 3 percent, and our results have increased 
dramatically. But that is going to change if we do not get more 
support. We have done about everything that we can do to 
improve our processes, to leverage our technology, to try to do 
what we can within available resource levels. Our backlogs are 
real, and our supply and demand imbalance is going to get worse 
over time because of the tremendous pent-up demand to address 
some of the issues that I talked about. In that regard, this 
country is a great country, but it faces many serious 
sustainability challenges--fiscal, health care, Social 
Security, education, energy, environment, Iraq, and 
immigration. They are all sustainability challenges. Our 
present course is not sustainable. We need to make some 
changes, and we can help the Congress make timely, informed 
judgments in these areas.
    With regard to legislative proposals, there are several 
that we are going to be seeking your assistance on:
    First, GAO's authorities and human capital flexibilities. 
We have looked at our authorities and tried to ascertain where 
they need to either be reaffirmed or strengthened. And, we have 
looked at our human capital flexibilities, and there are at 
least a couple of things that we think would benefit our 
employees that we are going to ask for your consideration, 
specifically, for example, to eliminate the GS 15-10 cap for 
pay for some of our employees. That would not give us more 
money. It just means that we can end up paying what the market 
says that we should pay in some circumstances without being 
artificially constrained by that GS 15-10 cap. We will propose 
an alternative cap that would hopefully be acceptable to this 
Committee.
    And, second, as we move to a more skills, knowledge, 
performance, and market-based pay system, we want to make sure 
that, to the extent that we provide part of annual compensation 
in the form of a bonus that historically might have been paid 
in the form of base pay, it should not penalize somebody's 
``high three'' for pension purposes. I think that is very 
important, and we want to try to do that. It is very pro-
employee. I think you will find when you see what we are going 
to be asking for, it is all pro-employee, and I think that is 
important.
    We are going to be asking for authority to establish a 
Board of Contract Appeals for Legislative Branch contracting 
disputes. We are also going to be asking for your support to 
eliminate a number of mandates that have occurred over the 
years that do not pass a cost/benefit test, to put it plainly.
    And, last, we are going to work with this Committee and its 
Members to seek support for moving legislation that would 
improve transparency in accounting and budgeting matters. We 
clearly need to have more transparency with regard to our long-
range fiscal situation, in financial reporting, in the 
President's annual budget documents, and in the budget process 
that Congress goes through in discharging its constitutional 
responsibilities.
    In summary, Mr. Chairman, I think GAO is a very important 
agency. I think it is becoming more important as time goes on. 
I think it is clearly a strategic asset for the Congress, and 
in particular for this Committee. I want to thank you for all 
your past support. I want to seek additional support in this 
and other areas. And I am more than happy to answer any 
questions that you and the other Senators may have.
    Thank you.
    Chairman Lieberman. Thanks very much, Mr. Walker. Excellent 
opening statement. I guess we can do 7-minute rounds of 
questions to start off with.
    Let me focus for a moment on your budget. Just give us an 
overview of how many employees you have now and how much 
funding you received this year and what is the proposed funding 
for next year.
    Mr. Walker. We have about 3,200 employees. As you pointed 
out, we were downsized about 40 percent in the mid-1990s. We 
had a hiring freeze for about 5 years, limited promotions, etc. 
Our head count, as I look here before me, which I believe is in 
Appendix IV of my statement, was 3,194 for 2006. It is expected 
to be about the same for 2007. Our total budget was $484 
million in 2006. As you pointed out before, we generated $51 
billion plus financial benefits in that year. That is how you 
get to $105 billion.
    But if you look at Appendix IV, you will see that in 
purchasing power, the peak of our purchasing power since I have 
been Comptroller General was in 2004 at $495 million, and it 
has declined since then.
    Chairman Lieberman. Yes, that is what is really compelling 
about Appendix IV, which is that the line goes down, basically. 
Occasionally a little blip up, as from 2002 to 2003, but in 
real dollars you are down from a high of $602 million in 
support we gave you in 1992 to $479 million for 2007.
    Mr. Walker. And as you know, 80 percent of our budget is 
for compensation costs. And of the other 20 percent, a majority 
of it is for nondiscretionary items. They are contracting costs 
to maintain our computers; they are for rent; and they are for 
items that really are nondiscretionary. And so we have done 
everything we can to try to get as much as we can, but I fully 
also recognize that the Congress has constraints. We do have a 
fiscal challenge. At the same point in time, I would hope that 
in trying to constrain spending Congress would allocate 
whatever spending that is made to the agencies that generate 
results. So it is a reallocation rather than necessarily 
continuing to increase levels.
    Chairman Lieberman. Are you asking in the appropriations 
process for an increase beyond the amount recommended for next 
year?
    Mr. Walker. I testified last week before the Senate 
Legislative Branch Subcommittee. Senator Landrieu is Chair of 
that.
    Chairman Lieberman. Right.
    Mr. Walker. We had a very positive hearing, and I know she 
wants to try to be helpful. But I think the key is that while 
we are not asking for a head count increase this year, we are 
asking for about an 8.5 percent dollar increase in order to be 
able to do things that have been deferred for too long and in 
order to make sure that we are in a position to continue to 
improve our productivity and maintain our results and not 
increase backlogs.
    Chairman Lieberman. So that is an increase for overall 
spending, not in personnel.
    Mr. Walker. We are not asking for an increase in personnel 
with regard to fiscal year 2008. I did, however, say that, in 
my opinion, we are going to need to look at possibly an 
increase in personnel, in installments, over the next 6 years 
or so. As I look at existing supply and demand imbalances and 
what is likely to occur in the years ahead, the Congress is 
going to need more help to address a lot of these challenges, 
and we are well positioned to do it.
    Chairman Lieberman. So in dollars, how much more does 8.5 
percent come to?
    Mr. Walker. I think it is around $530 million in total 
authority.
    Chairman Lieberman. As opposed to $479 million, you are 
asking for $530 million?
    Mr. Walker. As opposed to $489 million, which includes $481 
million in direct appropriations and almost $8 million from 
reimbursements for selected financial audits and for lease of 
GAO building space.
    Chairman Lieberman. Right.
    Mr. Walker. It is about $489 million. But that includes 
reimbursements that we receive from financial audits and space 
leasing.
    Chairman Lieberman. Perhaps we as, in a sense, your 
authorizing Committee can work with Senator Landrieu, who, of 
course, is also a Member of this Committee.
    Mr. Walker. Which is helpful.
    Chairman Lieberman. It is. Let me ask you to just take a 
minute or two and give some detail and life to this remarkable 
return-on-investment number that I cited in my opening 
statement. Where is it coming from?
    Mr. Walker. One of the things that we do is measure success 
on four bases: Results; client feedback, which means the 
Congress; employee feedback, our most valuable asset; and 
partner feedback.
    On results, there are several measures, one of which is 
financial benefits. Financial benefits represent the amount of 
money that either is saved and/or freed up for redeployment to 
higher priorities as a result of either the Congress or the 
Executive Branch adopting a GAO recommendation. The latest 
summary annual report that we issued is this document, which I 
know has come up, and this document summarizes some of the 
greatest financial benefits for the particular year.
    Chairman Lieberman. Give us a few examples, please, if you 
can find them quickly.
    Mr. Walker. I will be happy to do that. For example, 
ensuring the continued monetary benefits from Federal full 
spectrum auctions, $6 billion; working with DOD to reduce 
unobligated funds in military service operations and 
maintenance budgets, about $4 billion; adoption of alternative 
payment methods to cut Medicare costs for durable medical 
equipment, about $3 billion.
    Chairman Lieberman. OK. Those are each responses to the 
investigation reports that GAO did.
    Mr. Walker. And specific related recommendations. 
Importantly, we achieved confirmation that the recommendations 
have been adopted, and we do not come up with the financial 
benefits. Those are from numbers that we receive from others, 
and any major financial benefit over a certain amount of money 
is also looked at by our Inspector General to make sure that 
she believes that we are appropriately taking credit.
    Chairman Lieberman. OK. That is truly impressive. Am I 
correct that there is a growing number of requests for action 
by GAO from Members of Congress?
    Mr. Walker. In the short term, no. But it is a timing 
difference. Let me clarify what is going on now. There were 
increasing requests until the change in control of Congress. As 
has historically been the case when there is a change in 
control, it takes a little bit of time for the Congress to be 
able to staff up, to decide what its agenda is going to be, and 
so we see a delay in new requests.
    The most recent statistics are as follows: We have had a 
significant increase in hearings that are based upon past GAO 
work and pent-up demand. We have seen a temporary decrease in 
requests, but we know based on past history that it is only 
temporary. And based upon conversations that we are having with 
people on the Hill, we know there is a lot in the pipeline that 
just has not come in the door yet.
    Chairman Lieberman. Very interesting. But skip back before 
this January 1. Over the preceding 5 years, was there an 
increase in requests?
    Mr. Walker. Yes, it varied by year, but here is the 
important thing, and I know that Senator Voinovich mentioned 
this before. We are much more discerning about requests that we 
accept. We are basically to the point that because of supply 
and demand imbalances, if it is not a Chair or Ranking Member 
of a committee or subcommittee with jurisdiction over the 
matter, we are having to say no because that is where we are on 
supply and demand. There are certain areas where we have 
significant supply and demand imbalances, including health care 
and certain aspects of homeland security, and we expect they 
are going to grow over time.
    Chairman Lieberman. Thank you. Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    Mr. Walker, I mentioned in my opening statement your Fiscal 
Wake-Up Tour, which I think is so beneficial as far as 
educating the American people about the tough budget challenges 
that we face. And you have made a convincing case that our 
current fiscal path is simply not sustainable. There is, 
however, still a lot of misconceptions about the path that we 
are on.
    In August 2006, the GAO put out a very interesting set of 
charts to accompany you on your tour, and one of the charts 
appears to show that neither slowing the growth in 
discretionary spending nor allowing tax relief to expire, nor 
both together, would eliminate the imbalance. Is that correct?
    Mr. Walker. That is correct.
    Senator Collins. And that suggests to me that Congress 
really needs to tackle entitlement reform, which is very 
difficult for us to do. Is that your conclusion as well?
    Mr. Walker. It is. Basically, here is my conclusion. In 
January 2001, based on reasonable assumptions, we had fiscal 
sustainability for 40-plus years. Today the same model that is 
used in order to calculate fiscal sustainability based on 
reasonable assumptions crashes in 40-plus years. We need to do 
several things.
    We need to reimpose tough budget controls, tougher than we 
had before: Pay-as-you-go rules on both sides of the ledger; 
discretionary spending caps while not exempting large parts of 
discretionary spending; mandatory reconsideration triggers when 
certain mandatory spending programs and tax preferences get to 
a certain size of the budget and/or the economy; and mandatory 
disclosure of the long-range affordability and sustainability 
of major tax and spending proposals before they are enacted 
into law. We need to reform Social Security, Medicare, and 
Medicaid; we need to reengineer the base of other spending; and 
we need to engage in comprehensive tax reform and get more 
revenue as a share of gross domestic product (GDP) than we do 
now. We need to do all those things.
    We are going to have to get the most money, in my opinion, 
out of entitlement reform. That does not mean eliminating these 
programs. It means better targeting them to those in need, 
considering more income-related premiums, and employing 
managed-care approaches to control cost, among other things.
    Similarly, we need to act on tax incentives. We need to 
target tax incentives better, as well. But we are also going to 
need to reengineer and constrain other spending, and ultimately 
we are going to need to engage in tax reform in a way that 
generates more revenues as a share of the economy than we now 
have. The numbers just do not work. They do not come close to 
working. And here is the sad thing. We have gone from total 
liabilities in unfunded commitments in this country of $20 
trillion 6 years ago to $50 trillion. In 6 years! It is going 
up $3 to $4 trillion a year on autopilot. So every year that we 
wait, it is going up $3 to $4 trillion a year. We are now at 95 
percent of the estimated net worth of every American household, 
and on our current path we are going to pass 100 percent within 
2 years.
    So that is a pretty compelling case.
    Senator Collins. It is indeed. When you look at the 
entitlement programs, if you were advising Congress on which we 
need to tackle first, is it the Social Security side or is it 
the health programs?
    Mr. Walker. I think we need to do the following--and, by 
the way, I know that Senator Voinovich and Congressman Wolf 
have a commission proposal. There are several other commission 
proposals up here. My personal view is the first thing that we 
need to do is reimpose budget controls; second, engage in 
comprehensive Social Security reform that will make that 
program solvent, sustainable, and secure indefinitely. And, 
believe it or not, that is easy. We can exceed the expectations 
of every generation--with or without individual accounts--you 
can make it work. And I am working with others on that. Third, 
round one of tax reform, including doing something about AMT. 
And, fourth, round one of health care reform, which includes 
considering the tax preferences for health care and income-
related premiums for Medicare, etc.
    If the Congress could do that, we could end up making a 
significant down payment on this $50 trillion imbalance. The 
Congress could end up gaining confidence and improving 
credibility with the American people. I really think that is 
possible. It is clearly necessary that it happens sooner rather 
than later. The question is: Will it?
    Senator Collins. I thank you for those responses. I think 
that the work you are doing in this area and particularly the 
educational tour are really important because it is only going 
to come about if we educate the public about the tough choices 
that are going to be necessary. I think only then will Congress 
summon the political will to tackle all of these issues in the 
broad and necessary way that you have suggested.
    I want to switch to a different issue. You and I have 
talked a little bit about a contracting reform bill that I have 
introduced, along with the Chairman and my colleague, Senator 
McCaskill. It is intended to respond to numerous reports that 
the GAO has done over the years as well as the IGs which 
highlight abuses in contracting and overreliance on sole-source 
contracts and poor management in general of contracts, and the 
result costs us literally hundreds of millions of dollars in 
waste, probably even more.
    I know that my staff is having discussions with you. I 
think now that you are going to have some suggestions for us. 
But overall, do you see a need for a contracting reform bill 
along the lines of what we have introduced?
    Mr. Walker. Senator Collins, we have done a lot of work in 
this area. There are serious challenges in this area. I think 
the contracting area is in need of fundamental reassessment and 
reform. Some of it will require legislation. Our staff is 
looking at the details. The preliminary feedback that I have 
received is a number of the proposals you have are consistent 
with some of the issues that we think need to be pursued.
    I am sure that we will have some potential suggestions for 
you, but I think clearly action is going to be necessary. And, 
frankly, I think one of the things that I would respectfully 
suggest that this Committee think about is whether or not it is 
appropriate to have a hearing to look at the contracting and 
acquisitions area. It is really out of control. I mean, we have 
strayed so far from where we were a few years ago as to who is 
doing what, on what basis, how are they getting compensated, 
and I think that your bill will address some of that. But there 
are issues that do not require legislation that need to be 
addressed that we need this Committee's help on as well.
    Senator Collins. Thank you.
    Chairman Lieberman. Thanks very much, Senator Collins. We 
will do that. We will hold a hearing because when you say the 
contracting and acquisition systems of the Federal Government 
are ``really out of control,'' that is enough. I think we know 
that, but your saying that is enough for us to make sure we 
hold a hearing.
    Mr. Walker. And one example, Mr. Chairman, is that we have 
come up with a list of 15 systemic acquisition and contracting 
problems. The illustrated case is the Department of Defense, 
but it applies beyond the Department of Defense. It costs 
billions every year.
    Chairman Lieberman. Thank you. Senator McCaskill.

             OPENING STATEMENT OF SENATOR MCCASKILL

    Senator McCaskill. Thank you, Mr. Chairman.
    My friends are teasing me because they have come to my 
place--I am living here in Washington, and on the way to my 
kitchen every morning to get my cup of coffee, I look out my 
front window, and I look at the front yard of GAO. I am your 
next-door neighbor. And they are teasing me that I got that 
place to live in Washington so I could be close to GAO because 
they know how interested I am in this area.
    Let me start with talking about access issues. I was in an 
interesting hearing yesterday having to do with the levies on 
uncollected taxes for Medicare providers and listened to 
testimony that just made me want to tear my hair out about an 
access issue that GAO was having in getting data from CMS. And 
believe it or not, Mr. Walker, the testimony was, keep in mind, 
they got 9 months' worth of data, but then they would not give 
them any more data because the arm of GAO that was looking at 
this, which was the forensic investigatory arm, had not signed 
a data use agreement.
    Now, to me as an auditor, when part of government starts 
saying you have got to sign an agreement before we give you the 
information for you to do your audit, it is a giant red flag. 
Generally, that is done when you want to circle the wagons, 
when you want to make excuses, when you want to protect your 
turf. And I would really like to be more helpful on access 
issues. I would like to be prepared in every hearing I attend 
with any agency if there have been access issues or there are 
access issues. In fact, I addressed this issue with Secretary 
Chertoff when he was in front of this Committee about having 
lawyers sit in on interviews with employees at the Department 
of Homeland Security. And I was amazed that Secretary Chertoff 
said, ``Well, I think having lawyers there is important.'' And 
I said, Well, you understand the audit process. If there is 
information that is going to go in the audit, you are going to 
have an opportunity to review that, and you are going to have 
an opportunity to talk about legal issues, and GAO is not going 
to be interested in putting anything in an audit that is going 
to compromise any kind of security issues. What they are 
interested in is gathering information in the most open setting 
they can possibly gather it. And so I was frustrated at his 
unwillingness to recognize that putting a lawyer in the 
interviews is counterproductive to the process.
    Is there a way that you could notify Congress or notify 
Members of this Committee or even--I am certainly vitally 
interested in this--about the ongoing access issues you have as 
you are doing audits because they are incredibly expensive 
because they slow things down immensely.
    Mr. Walker. Senator McCaskill, first, I hope it is an 
inspiring view every morning when you look out and see GAO 
every morning.
    Senator McCaskill. It is inspiring. It puts a spring in my 
step.
    Mr. Walker. And you have upgraded our neighborhood by 
moving in.
    Senator McCaskill. There you go. [Laughter.]
    Mr. Walker. So I appreciate that.
    We are monitoring very closely records and people access 
challenges. In fact, ever since the Cheney case where we, 
unfortunately, had to sue the Vice President over a records 
access issue some years ago, every week in the managing 
directors' meeting that I chair, typically on a Friday, I will 
go around the table and ask: Are we having a records access or 
people access challenge? If so, what is it? What level are we 
dealing with? And sometimes I personally get engaged. I 
mentioned several examples earlier of where I am personally 
engaged right now in dealing at the secretarial or deputy 
secretarial level because we are having a problem.
    Typically, it is delays, not denials, and you are correct, 
having been a former State auditor, to understand that there 
are certain words and approaches that are red flags. Now, 
fortunately, in the case of the Department of Homeland 
Security, it was the exception rather than the rule that 
lawyers sat in. But, nonetheless, it can have a chilling 
effect.
    The other thing that I have found being in government in my 
position for a number of years, when somebody says that 
something is sensitive, I translate that to probably 
embarrassing.
    Senator McCaskill. Right.
    Mr. Walker. And, therefore, we will be happy to work with 
you and others to let you know when we are having problems 
because many times it makes sense for us to pursue our 
statutory rights to issue demand letters, etc. Sometimes it 
makes sense for Congress to exercise its constitutional 
responsibilities in order to try to be able to get this 
information as well.
    Senator McCaskill. Well, I certainly think it would be 
helpful if it has gotten to your level to get a heads up so 
that we have an opportunity at the appropriate moment--I am 
thinking particularly because the Department of Defense, the 
armed services issues, many of our members are members of the 
Armed Services Committee, I think it would give us an 
opportunity to bang on the right people about access at the 
appropriate moment.
    Mr. Walker. On that, if I can, Senator, the Armed Services 
Committees are aware of the records access problems that we are 
having right now to obtain information on transitional 
readiness assessments on Iraqi troops, where we are trying to 
assess the readiness of Iraqi troops that are prepared by U.S. 
forces. The U.S. Government has funded billions of dollars for 
this, and the Administration is now asking for several billion 
more for the same thing.
    Senator McCaskill. I would like to talk a little bit about 
consumption of your products. That is the challenge, in my 
opinion, is the work you do--I find it inspiring, and I am 
incredibly drawn to it, and I spend more time reading GAO 
reports than I spend reading anything else since I have arrived 
here. But I do understand that consumption is the issue and 
that we are spending--I think we should spend more on your 
agency, but if we are spending that kind of money on your 
agency and nobody is reading the stuff, that is a giant waste 
of money. And I would like to, as I read your stuff, I find 
sometimes I can easily find what I want to know. Sometimes it 
is more difficult for me in terms of getting into the report 
and finding what I want to pull out in order to ask the right 
questions and try to provide the kind of oversight that I think 
that we can help provide.
    If you would speak just a moment, because my time is about 
out, about consumption and what you do to try to facilitate 
getting Members of Congress to read this stuff. I questioned 
the Secretary of the Air Force this week at a hearing. I looked 
at their testimony last week on the acquisition of the systems 
and the big problems they have with identifying needs at 
certain junctures and how much money that is costing us. He was 
not even aware of this information, and he was the Secretary of 
the Air Force. I asked him, Have you read it? And he 
acknowledged--and credit to him that he was honest about it--
that he had not even read it.
    We have got a problem if the Secretary of the Air Force is 
not aware of the information that you all have uncovered. He 
was making a tanker his biggest funding priority, and you laid 
out in this report how the information they were relying on to 
buy that tanker was flawed.
    Mr. Walker. Well, Senator, thanks for asking that question. 
It is a challenge, and, unfortunately, that happens all too 
frequently, where the people at the right level are not 
familiar with some of this information. It does not get to 
them. It is not because we have not sent it over there, but 
there are so many layers, so many players, that it does not 
necessarily get to the right person. Here is what we have tried 
to do:
    First, several years ago I recognized that no matter how 
good GAO's report might be, a senator, a cabinet secretary, or 
people right below that level are not going to read something 
this thick. And so, therefore, several years ago we established 
a policy where every major testimony and report has a one-page 
summary that says here is what we did, here is who we did it 
for, here is why we did it, here is what we found. That has 
been tremendously successful. We have received positive 
feedback from members, from key staff, from the press, and from 
the public.
    One of the things you referred to is what I would call our 
``quick-look'' reports. One of the things that we issue once a 
year for the Defense Department are one-page summaries of where 
things stand on a number of major acquisition initiatives. 
Again, one page. It conveys a lot of really critically 
important information in one page with the hope and expectation 
that the key decisionmakers will have time to at least read one 
page. However, if they never get it, they cannot read it.
    So my view is the problem in that case is within the 
Department of Defense, that we are doing whatever we can to try 
to be able to present timely, reliable, useful information 
clearly and concisely, but it is not always getting to the 
right person.
    Senator McCaskill. Well, I am sure asking the question in 
every hearing, and hopefully we are going to inspire people to 
read more of them. But it would be interesting to do a study, a 
survey, on how many crucial people in these organizations that 
need to be consuming your product, how many of them are and 
what are the barriers they find in terms of being able to do 
it.
    Thank you very much.
    Mr. Walker. The last thing on this to help you is that I 
have sent the list of 15 systemic acquisition and contracting 
challenges in the Department of Defense to the Secretary, to 
the Deputy Secretary, and to the Under Secretary for AT&L and 
have asked for a meeting to be able to brief them on this issue 
because it has got to come from the top.
    Senator McCaskill. Thank you.
    Chairman Lieberman. Thank you. Senator Akaka.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. Thank you very much, Mr. Chairman.
    Senator Lieberman and Senator Collins, I want to thank you 
for your leadership of this Committee. In 2007, we are working 
more hours and trying to improve the way we govern. This is 
where GAO comes in.
    And I want to say, Comptroller General David Walker, that 
over the years it has been a real pleasure for me to work with 
you. You have helped us a lot on this Committee, and I look 
forward to continuing to work with you, and I thank you for 
your testimony today.
    I would like to get your opinion on the record concerning 
legislation that Senator Lautenberg and I introduced earlier 
this year--S. 82, the Intelligence Community Audit Act of 2007.
    First, to quote from a letter that you sent to the Senate 
Select Committee on Intelligence, a copy of which both you and 
they graciously provided to me, and you wrote, ``. . . the 
Executive Branch has not provided GAO the level of cooperation 
needed to conduct meaningful reviews of elements of the 
Intelligence Community. This issue has taken on new prominence 
and is of greater concern in the post-9/11 context, especially 
since the Director of National Intelligence has been assigned 
responsibilities that extend well beyond traditional 
intelligence activities.''
    I want you to know that I agree with your statement, which 
is why I introduced S. 82, to reaffirm GAO's authority in this 
area.
    I would ask consent, Mr. Chairman, to place into the 
hearing record GAO's letter to the Intelligence Committee.\1\
---------------------------------------------------------------------------
    \1\ Letter to the Senate Select Committee on Intelligence, dated 
March 1, 2007, from GAO, appears in the Appendix on page 53.
---------------------------------------------------------------------------
    Chairman Lieberman. Without objection.
    Senator Akaka. One of the principal recommendations of the 
9/11 Commission was to encourage improved oversight by Congress 
of the intelligence community. And I would observe that 
Representative Hamilton and Senator Gorton, when they testified 
before this Committee in January, endorsed the intent of my 
legislation. To quote Representative Hamilton, ``The 
intelligence community in turn would benefit from its agencies 
being held to the same high standards of performance as other 
agencies of the Federal Government.''
    I want to, at this point, mention to Senator McCaskill that 
I share your concern over GAO's access issues, which leads me 
to my first question.
    Mr. Walker, what areas do you believe that this Committee, 
in fulfilling its oversight responsibilities, could benefit 
from the GAO conducting audits and evaluations of the 
intelligence community that the GAO currently is unable to do 
because of obstacles presented by the DNI?
    Mr. Walker. Well, first, Senator Akaka, let me thank you 
for your interest and efforts in this regard. I do believe that 
your legislation has strong conceptual merit, and I think it 
would help tremendously if the Congress ends up moving 
legislation along the lines of what you have suggested.
    In my view, the three biggest transformation challenges 
that exist in the Federal Government from a management 
standpoint are: The Department of Defense, the Department of 
Homeland Security, and the intelligence community. The 
intelligence community wants to say that it is different. In 
reality, it is not that different. The intelligence community 
needs to have strategic planning, organizational alignment, 
human capital strategy, information technology, financial 
management, acquisitions/contract management, change 
management, knowledge management, etc. Every agency needs that.
    We have had broad-based authorities to do work in the 
intelligence community for many years; however, as a matter of 
policy, going back two prior comptroller generals, we have not 
done much work in the intelligence community because, after the 
Intelligence Committees were set up in the Congress, there was 
resistance from the intelligence community for us to do any 
work, and we did not receive any requests from the Intelligence 
Committees to do any work. And since we had a huge supply and 
demand imbalance--we had more people wanting us to do work in 
areas where we were getting congressional support and weren't 
facing resistance--my predecessors made a conscious decision 
not to allocate GAO resources there unless and until we either 
received more support from the Intelligence Committees or a 
more cooperative attitude from the intelligence agencies.
    The irony is there is no question we can help the 
intelligence agencies. You may know, our No. 1 competitor for 
new hires is the CIA. We hire the same kinds of people--highly 
educated people to do analytical work. They just do different 
kinds of analytical work.
    So when you talk about a lot of the things that we have 
done at GAO, they have to do some of the same things there. We 
can help them. But, second, I know for a fact that the 
Intelligence Committees and others are having challenges in 
trying to oversee a number of their acquisition efforts, a 
number of their knowledge-sharing efforts, etc. And I think we 
can be helpful.
    The key is we have people with all the necessary 
clearances. To my knowledge, GAO has never had a leak of 
classified information, never in its 86-year history. And so I 
think there is both a need and an opportunity for us to be able 
to do more work there, and I want to thank you for your related 
interest and efforts.
    Senator Akaka. Well, thank you for your response, and I 
want you to know that I am looking forward to working with you 
more closely on those issues.
    I think we can both agree that Congress relies heavily on 
the solid work of GAO employees. Although I plan to hold 
hearings with the House Federal Workforce Subcommittee in the 
near future with Senator Voinovich, I have a few questions that 
I would like to ask you today about GAO's new personnel system.
    I understand that GAO based its decision on Band 2 
restructuring on a study completed by Watson Wyatt, a 
consulting firm, which found that many GAO analysts were 
overpaid compared to employees with comparable skills and 
experience in other agencies and in the private sector. Could 
you please describe the materials Watson Wyatt provided you on 
its study and how you evaluated its recommendations?
    Mr. Walker. First, I want to thank this Committee for its 
leadership that led to the passage of the GAO Human Capital 
Reform Act of 2004. That legislation gave GAO a number of 
authorities: To decouple from the Executive Branch across-the-
board annual increase. In the Executive Branch under the GS 
system, those agencies that follow it, 85 percent of annual pay 
adjustments have nothing to do with performance. They are on 
autopilot. They are based on the passage of time. That is 
obviously not a modern compensation practice or theory.
    What we did after the passage of that legislation was we 
conducted the first ever professional and independent pay study 
of GAO's employees. We hired one of the top four firms in that 
business to do the work. It was done through a competitive 
process. They ended up conducting a compensation study to be 
able to understand what competitive compensation was for, in 
this particular case, our analysts--they have done it in other 
areas, but in this particular case analysts--for considering 
the type of organizations that we compete with to hire people 
and considering the type of organizations that we lose people 
to.
    The focus was primarily on Washington because that is where 
70 percent of our people are, but they also did work to 
understand salary differentials in the 11 other cities that we 
have employees because we have employees in 12 different cities 
in the United States.
    The result of that study was, by and large, positive with 
one exception. The study came back and said for most of our 
employees GAO's pay ranges were competitive. For roughly 29 
percent of our employees, we actually should raise our pay 
ranges, raise our pay ranges for attorneys, information 
technology specialists, and certain so-called Band 2 or mid-
level personnel who were supervisors and leaders on a recurring 
basis, that we should raise their pay ranges, and, in fact, we 
did that.
    But what it also came back and said is in 2006 about 10 
percent of our workforce, based upon their roles, 
responsibilities, etc., they were paid above market, in some 
cases by $10,000 or more.
    So what I did in that particular case is, looking at the 
statutory provisions that underlie the Human Capital Reform Act 
of 2004, which said, among other things, that I should consider 
equal pay for work of equal value, I should consider pay 
disparities and pay rates for individuals on the competitive 
basis in markets that we have people, I decided that it was not 
appropriate to provide across-the-board pay adjustments for 
people who were paid above market, in many cases by $10,000 or 
more. And at the same point in time, I decided not to freeze 
their pay across the board, which I had the authority to do 
under the law, because I wanted to provide an incentive for 
them to perform. And so we did make available to them an 
opportunity to earn performance-based pay increases and bonuses 
based upon how they do as compared to their peers.
    Nobody's pay was cut, and if these individuals end up 
getting promoted to the next level or placed at the next level, 
they will have an opportunity to earn over $10,000 more than 
they ever could have earned under the old system. So we have a 
temporary problem. This year about half of the people that did 
not get an across-the-board increase last year did not get one 
this year. So we are already down about 50 percent in 1 year, 
and it is a temporary issue.
    Senator Akaka. Well, thank you very much for that response, 
and let me just finally conclude with this: Does GAO have a 
list of the outside organizations that GAO was compared to when 
Watson Wyatt developed their data? And will you submit for the 
record a copy of this information that Watson Wyatt provided to 
you?
    Mr. Walker. I would be happy to do that. In fact, I am in 
the process right now of responding to a congressional request. 
Some of this information we have already provided to our 
employees. Some of it we have already provided to the Hill. But 
I am happy to do that.\1\
---------------------------------------------------------------------------
    \1\ GAO response to Senator Akaka appears in the Appendix on page 
70.
---------------------------------------------------------------------------
    And just to help you understand, Senator Akaka and other 
Members, what Watson Wyatt did was they looked at roles and 
responsibilities, they looked at the type of organizations that 
we compete with for talent, they picked compensation surveys 
that included those types of roles and responsibilities and 
those types of employers, and they did their work based upon 
the surveys. This is standard and the generally accepted 
methodology used for both the public sector and the private 
sector, but what I think some people are concerned about is we 
do not have individual pay ranges for individual employers. 
That type of information is not available. Plus it might cause 
antitrust or competitive concerns if that kind of information 
was provided on a recurring basis.
    Senator Akaka. Thank you. Thank you very much, Mr. 
Chairman.
    Chairman Lieberman. Thanks, Senator Akaka. Senator 
Voinovich, welcome back.
    Senator Voinovich. Thank you, Mr. Chairman.
    I would like to pursue what Senator Akaka has been 
questioning you about--GAO's performance management system. The 
fact of the matter is that it is not easy to follow up on the 
recommendations that come back. I was faced with a similar 
situation as mayor of the city of Cleveland, and it was very 
difficult. But we did find a lot of our people were overpaid 
for the positions that they had. I would suspect, Mr. Chairman, 
if we did that for Federal workers, we would find there are a 
lot of categories in the Federal workforce that are getting 
paid much more than their counterpart in the private sector and 
that we would find the same thing that you found, that about 20 
percent of them maybe were underpaid for the jobs that they 
were doing.
    But it might be something that we should look at. But it is 
tough to undertake it and do it.
    I had the misfortune of having to freeze the pay of two of 
my directors--that was not easy. We did the same thing you did. 
These individuals did not get automatic pay increases, and over 
a couple of years the market caught up to them. But for the 
time being, there was a little heartburn. That is just part of 
the way it is if you are going to do this thing correctly.
    I am very frustrated by the fact that it does not seem that 
we are moving as quickly as we should be with the high-risk 
list. This Committee is in its third year of overseeing the 
Department of Defense's supply chain management system. I am 
real concerned that Ken Krieg has left and question whether or 
not we are going to see the benefits of our oversight. That is 
why I think that having a Chief Management Officer at the 
Department of Defense would be good. If we do not have that, I 
am afraid that we will lose the momentum that we have, and that 
supposedly, if it comes out the right way, could save $24 
billion a year. It has been on the high-risk list since 1990.
    I am equally concerned with our system for security 
clearances, though I understand we are making some progress 
there. However, when I was at Wright-Patterson Air Force Base 
earlier this year, I learned they are 18 months behind on 
security clearances for people that work on the base.
    Mr. Walker, I would like you to comment on how you think we 
could improve upon getting these various agencies off the high-
risk list because we are talking about waste, fraud, abuse, and 
mismanagement of taxpayer dollars, and it just seems like we 
are not making the progress that we should be. We have 26 
programs on the high-risk list right now, and if we are not 
careful, we will have 30. What can we do to do a better job? If 
you were advising our leaders and Members of this Committee, 
what would you say to us? How do we get some action?
    Mr. Walker. Well, thank you, Senator Voinovich. The first 
thing I would say is I touched on a number of documents that 
GAO has issued within the last several months, one of which was 
the new high-risk list. Others included, for example, the 36 
areas that are in need of additional oversight.
    I would suggest that the leadership of both the Senate and 
the House as well as the respective committees and 
subcommittees need to focus on those, need to target their 
efforts on those items, as well as selected issues in our 21st 
Century Challenges document that was issued in February 2005.
    In the case of the Defense Department, it is the most 
challenged agency in government from the economy, efficiency, 
transparency, and accountability perspective. And we may be 
great on the battlefield, we may be unparalleled with regard to 
fighting and winning armed conflicts, but we are a D on those 
factors--15 of 26 high-risk areas.
    Now, we are making progress in several areas, some more 
than others. With supply chain management, we have made some 
real progress. There is a possibility, if they can maintain 
momentum, they could come off in 2 years. It's a possibility. 
But you point out one of the real challenges we face. Many of 
these high-risk areas have been there for years, and it is 
going to take considerable and sustained effort over an 
extended period of time to deal with the problem. And that is 
why I feel that a Chief Management Officer or official at the 
Department of Defense is absolutely essential. It is not highly 
desirable. It is absolutely essential.
    In fact, I am pleased to say that not only has GAO 
recommended it, but, in addition to that, the Defense Business 
Board has recommended it, the Institute for Defense Analysis 
has recommended it, and McKinsey, in a broader study, has also 
recommended it.
    There are differences as to what level. There are 
differences as to reporting lines. There are differences as to 
terms of appointment. But there is agreement that this is 
necessary. And it needs to happen if we are going to see this 
area and others come off the high-risk list within a reasonable 
period of time.
    Senator Voinovich. Let's pursue that because I have had 
several conversations with Deputy Secretary Gordon England 
about this issue, and he was supposed to get back to me in 
regard to his decision. It is my understanding--and maybe you 
are familiar or not familiar--that one of those reports 
recommended a CMO, and it somehow got kind of taken out of that 
report. Are you familiar with that?
    Mr. Walker. Well, here is my understanding of where things 
stand: That GAO recommended a Level 2 official reporting 
directly to the Secretary, working in partnership with the 
current Deputy Secretary, that would have a 7-year term 
appointment, that would focus on the business transformation 
process and would not be an additional layer for day-to-day 
operations.
    Defense Business Board (DBB) recommended 5-year, Level 2, 
reporting to the Deputy Secretary, if you will. But, again, 
they recommended a term appointment and Level 2, but a 
different reporting line.
    And the Institute of Defense Analysis recommended that they 
have a deputy to the deputy, that it be Level 3, and that it 
have a 5-year term appointment. That is my understanding.
    Now, only government would have a deputy to a deputy. I 
mean, that does not make sense. So there is agreement that 
there is a need, but you and I know, especially those of you 
who are on the Armed Services Committee, that rank matters in 
the Pentagon. And whether you are a civilian or whether you are 
military, rank matters. It is one of the most hierarchical 
organizations that exists. If this person is not a Level 2 
official, they will not be able to operate on a level playing 
field with the service secretaries. That is essential because 
they do not need to just deal with the under secretaries, they 
need to deal with the service secretaries in order to get 
things done.
    Senator Voinovich. Mr. Chairman, I would like to suggest 
that we really spend some time on this and see if there is a 
possibility that we can make recommendations in some of these 
bills that are going to be before the Senate, such as the 
Authorization Act, to make sure this happens because there 
seems to be a reluctance at the Department of Defense to move 
forward with it. I think we have an excellent opportunity to 
really see some significant change made over there. And I would 
hate to see 3 years of hard work on the supply chain go down 
the tubes because of the fact that we do not have someone that 
is going to stay on this as we transition to the next 
administration.
    I really believe that, just as in the Department of 
Homeland Security where we have suggested a CMO, if we got that 
legislation passed, we could find someone who could do the job 
and who would be acceptable to both Republicans and Democrats. 
Somebody who is a real professional, in whom we have 
confidence, and no matter who is elected President, we can say, 
``There is a competent individual, and I am glad they are doing 
the job,'' and let them continue their important work. I really 
believe that is why we have had all these things on the high-
risk list since 1990.
    Mr. Walker. Can I suggest for this Committee--I think it is 
within your jurisdiction to think about. I think government 
needs to step back and recognize that there are really three 
kinds of presidential appointees with Senate confirmation. 
There are policy players, which clearly ought to serve at the 
pleasure of the President. There are operational players, which 
in some circumstances you want a professional who may be a 
political appointee, but you do not want a partisan. You want 
somebody who is going to help make government more economical, 
efficient, effective, ethical, and equitable. And in that 
circumstance, you may want to have statutory qualification 
requirements. You may also want to have a term appointment, and 
there are some term appointments. And then there are 
adjudicatory and oversight professionals. Those are different 
jobs, and yet in many cases we treat them all the same. And I 
think that is part of the problem.
    We need to step back and re-analyze, put them in different 
buckets, approach them in different ways. I think it will help 
us a lot.
    Senator Voinovich. Thank you, Mr. Chairman.
    Chairman Lieberman. Thanks very much, Senator Voinovich. 
Your idea is a good one, and we ought to work on this together 
as the relevant bills work their way through the Senate.
    I want to propose that we do one more 3-minute round each, 
maybe one question each, and then thank you and move on.
    On the Senate floor this week, we are considering the 
budget resolution. The budget resolution has a pay-as-you-go 
provision in it. I know that you have advocated such provisions 
in the past. I wanted to ask you if you have had a chance to 
look at the language of this one and if you think it does what 
it ought to do?
    Mr. Walker. I have not looked at the language, but I will 
and I will get back to you on it.
    Chairman Lieberman. Very good. Well, I am going to stop at 
that one question and set a good example. [Laughter.]
    Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    Mr. Walker, between 1991 and 2001, the total number of 
Federal civilian acquisition personnel decreased by 22 percent, 
and of the remaining acquisition workforce, approximately 38 
percent will be eligible to retire by the end of this fiscal 
year. Now, during the same period of time, the number of 
procurement actions has risen by more than 12 percent. Studies 
have correlated this decrease in the trained expert acquisition 
workforce with the rise in the number and complexity of 
procurement actions and concluded that this is in part 
responsible for some of the poor procurement outcomes that we 
are seeing.
    Have you looked at this issue? And do you have any 
recommendations on how we can counter the trend of a declining 
procurement workforce to deal with an exploding workload?
    Mr. Walker. Senator Collins, you are correct that the 
number of contracts has gone up and the complexity has 
increased, while at the same point in time the number of 
personnel in the acquisition workforce has gone down. And in 
some cases, it is not just the number. It is whether they have 
the right kind of skills and knowledge to deal with the new 
type of contracting arrangements that we have.
    This is one of the reasons that contracting is on GAO's 
high-risk list. So the workforce is clearly a subset of this 
challenge. I might also note that in the 15 areas that I noted 
that were systemic challenges, which, if you would like, I 
would be happy to provide for the record, one of which is the 
workforce issue, that we need to do an analysis of how many 
people do we need, with what type of skills and knowledge, 
because it is as much a qualitative factor as it is a 
quantitative factor that we have to address, I believe.\1\
---------------------------------------------------------------------------
    \1\ GAO response to Senator Collins appears in the Appendix on page 
73.
---------------------------------------------------------------------------
    Senator Collins. Thank you.
    Chairman Lieberman. Thanks. Senator McCaskill.
    Senator McCaskill. We had a discussion in our markup about 
the single audits that are done by all the States, and when we 
were doing the single audit every year, it always struck me 
that a lot of what we found in the single audit would have been 
of more value to Congress than it would have been to people at 
the State level because we were uncovering problems in the 
systems of these Federal programs.
    I am curious if you have ever considered trying to look at 
all of the 50 single audits that are done on an annual basis 
and try to cull out some commonality among all the States 
because I think if you found the same kind of things in a dozen 
or more States, that would be a real help to us in terms of 
looking at those programs and how they are actually being 
administered in terms of the Federal dollars at the State 
level.
    Mr. Walker. Well, Senator McCaskill, as you know, the 
single audit reports go to the Executive Branch, normally the 
Inspectors General. In fact, one of the things that we are 
trying to do is we are trying to work with them more to try to 
benefit from the knowledge that each of us gains so that we can 
end up not just using it within our respective agencies but 
also share it with the Congress and others as appropriate.
    One of the provisions that we are seeking potential action 
on is to create an intergovernmental accountability forum 
similar to the Joint Financial Management Improvement Program. 
But I think that is a good idea, and let me see if I can take 
that back as part of our coordination efforts with the IGs and 
see what we might be able to do there. I am going to be 
addressing all the IGs here within the next month or two, and I 
think that is an item that I can end up putting on the agenda.
    Senator McCaskill. I know that I would be very interested 
in problems that were found. And, frankly, I think there are a 
lot of Members of Congress that may not be aware of the tool of 
the single audit. And it is a way that if they are curious 
about how some of the Federal programs in their own States--I 
know that there is maybe even some duplication that is out 
there because in Congress we say, well, let's have people 
audited. They do not realize that there is a mechanism right 
now where these State auditors, or whatever they are called in 
their various States, can actually look at what is going on in 
their State through the mechanism of the single audit. I would 
have welcomed a suggestion from one of the Senators of Missouri 
as to things that they would like to be included in the single 
audit along with the requirements that we had in terms of 
single audit programs we were looking at.
    Mr. Walker. Thank you.
    Senator McCaskill. Thank you.
    Chairman Lieberman. Thanks, Senator McCaskill. Senator 
Voinovich.
    Senator Voinovich. Thank you. A couple of things.
    Has the GAO done a study on the issue of executive 
appointments requiring confirmation by the Senate?
    Mr. Walker. I think we have done some prior work on that, 
Senator, but I would have to go back and look for sure as to 
when we did it. May I provide that for the record?\1\
---------------------------------------------------------------------------
    \1\ GAO response to Senator Voinovich appears in the Appendix on 
page 69.
---------------------------------------------------------------------------
    Senator Voinovich. Yes. I know this was a hot issue 2 or 3 
years ago, and Senator McConnell and Senator Reid were working 
on it, and all of a sudden it evaporated. I do not know why.
    Mr. Walker. We have done some work, and let me, if I can, 
put on the table another concept for you to think about. I gave 
you one concept. Another concept is if you have something like 
a chief management official, then there could be a layer below 
that--such as chief human capital officer, chief financial 
officer, chief information officer. One of the things that the 
Senate may want to consider is if you have statutory 
qualification requirements that people have to meet for these 
positions because they are not policy jobs, they are more 
operational jobs, the possibility of having an advance 
notification requirement to the Senate that says, ``I plan to 
appoint X person to a PA job for this position, I believe they 
meet these statutory qualification requirements,'' without 
necessarily requiring Senate confirmation, in other words, make 
them PA rather than PAS. You know as well as I do that there 
are a lot of ways that Senators can end up making things happen 
or not happen other than just through the confirmation process. 
I think that is something that needs to be thought about as 
well.
    Senator Voinovich. OK. The last one is a hot potato here, 
and that is the TSA. We are in the midst of a big controversy 
over whether or not we should put TSA back under Title 5. As 
you know, we gave TSA unique flexibility when they were 
created, the idea being that they had to stand up about 55,000 
people. One of the things that TSA has done with its 
flexibility is establish a pay-for-performance system. I looked 
into all of the other benefits provided to screeners. They get 
all the benefits of the Federal employees, including TSP and 
FERS. Have you looked at what TSA is doing and how that system 
is working? It is the largest example of pay for performance, I 
believe, that we have in the Federal Government today. Have you 
folks looked at that?
    Mr. Walker. To my knowledge, we have not. But I will go 
back--I think that is a good suggestion, if we have not, to 
look at that. I will provide something for the record as to 
whether or not we have, and if not, maybe work with you on 
something there.
    Senator Voinovich. I have been going out and talking to 
some of the screeners, and they can belong to the union. A 
union can represent them on grievances that come up. There are 
a couple of suggestions on giving them statutory authority to 
go to the Merit Board and the OSC. They have informal groups in 
local airports that represent employees.
    The creation of workforce flexibilities for TSA was not one 
of these things that we rushed into, and I did not want to rush 
into it because of the fact that the unions were concerned 
about it. One of the biggest mistakes we made is that we should 
have had binding arbitration at the end of the negotiations 
between the union and the departments in terms of some of those 
rules and regulations. There is still heartburn about it. But 
at least there would have been finality to it. What I am 
worried about is if the President vetoes this bill, we are 
going to lose everything that we have worked so hard on to get 
into the 9/11 bill that we spent time on.
    If you could look at TSA's personnel system, I would 
appreciate it.
    Mr. Walker. I will look at that and get back to you. If I 
can, Mr. Chairman.
    Chairman Lieberman. Please
    Mr. Walker. Let me tell you a lesson that I think that we 
have learned in our efforts. You obviously have a concern with 
human capital reforms throughout government, at TSA, GAO, and 
elsewhere.
    First, I believe very strongly that there is a need to have 
reasonable flexibility in this area with regard to 
classification and pay. But you need to have adequate 
safeguards to help ensure consistency and prevent abuse. In our 
case, we have statutory criteria that the Comptroller General 
is required to consider in connection with annual pay 
adjustments and things of that nature, so it provides 
reasonable flexibility, but it also provides things that have 
to be considered that ultimately I am held accountable as to 
whether or not I adequately and reasonably did that or not.
    There are three lessons that we learned in moving to pay 
banding and pay for performance.
    First, you really have to be careful in determining how 
many pay bands you should set up based upon the difference in 
the roles and responsibilities that your people have. In our 
case, we should have set up an additional one back in 1989, and 
we did not.
    Second, you should not assume that the GS system is 
reflective of market. In some cases, it is under market; in 
some cases, it is over market. You need to do market-based 
compensation studies.
    Third, you need to make sure you have a modern, effective, 
credible, and preferably validated performance appraisal 
systems to evaluate people as a basis to make informed 
decisions. And we need to recognize that government is very 
different than the private sector. Everything cannot be at 
risk; that if people perform at ``meets expectations'' or 
better, if they are paid within market levels, they ought to 
get some across-the-board adjustment, but that the pay-for-
performance should do two things: One, if you are not meeting 
expectations you do not get any raise; two, but if you do meet 
expectations and you are paid within market, you get something, 
but on top of that you should get more based upon how you do 
relative to your peer group, with the truly top performers 
getting the most and people that are doing a good job but not 
as well not getting as much.
    That is a hybrid system, and it is one that I think can 
work in government, and it is one that an overwhelming majority 
of our employees are benefited by, but not all. And you tend to 
hear from the squeaky wheels.
    Chairman Lieberman. Thanks a lot. It has been a refreshing 
morning. Always great to hear you. You have got tremendous 
knowledge and a lot of fresh ideas.
    We are going to try to go from here. First, we wanted to 
send you a message of appreciation from the Committee. And, 
second, we hope to do anything we can to support your work, 
including most directly in the appropriations process this 
year.
    I thank the Members of the Committee who came out. I thank 
you for your time. The hearing is adjourned.
    [Whereupon, at 11:04 a.m., the Committee was adjourned.]


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