[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
  THE REFUSE OF THE FEDERAL SPENDING BINGE II: HOW U.S. TAXPAYERS ARE 
             PAYING DOUBLE FOR FAILING GOVERNMENT PROGRAMS

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

                                HEARING

                               before the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 3, 2011

                               __________

                           Serial No. 112-10

                               __________

Printed for the use of the Committee on Oversight and Government Reform



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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana                  ELIJAH E. CUMMINGS, Maryland, 
JOHN L. MICA, Florida                    Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania    EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio              CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York          GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona               MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho              DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania         BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee          PETER WELCH, Vermont
JOE WALSH, Illinois                  JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina           CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida              JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania

                   Lawrence J. Brady, Staff Director
                John D. Cuaderes, Deputy Staff Director
                     Robert Borden, General Counsel
                       Linda A. Good, Chief Clerk
                 David Rapallo, Minority Staff Director
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on March 3, 2011....................................     1
Statement of:
    Davis, Thomas M., III, director of Federal Government 
      Affairs, Deloitte and Touche LLP; Gene L. Dodaro, 
      Comptroller General of the United States, U.S. Government 
      Accountability Office; and Ryan Alexander, president, 
      Taxpayers for Common Sense.................................     7
        Alexander, Ryan..........................................    39
        Davis, Thomas M., III....................................     7
        Dodaro, Gene L...........................................    13
Letters, statements, etc., submitted for the record by:
    Alexander, Ryan, president, Taxpayers for Common Sense, 
      prepared statement of......................................    41
    Cummings, Hon. Elijah E., a Representative in Congress from 
      the State of Maryland, prepared statement of...............     5
    Davis, Thomas M., III, director of Federal Government 
      Affairs, Deloitte and Touche LLP, prepared statement of....    10
    Dodaro, Gene L., Comptroller General of the United States, 
      U.S. Government Accountability Office, prepared statement 
      of.........................................................    15


  THE REFUSE OF THE FEDERAL SPENDING BINGE II: HOW U.S. TAXPAYERS ARE 
             PAYING DOUBLE FOR FAILING GOVERNMENT PROGRAMS

                              ----------                              


                        THURSDAY, MARCH 3, 2011

                          House of Representatives,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:30 a.m., in 
room 2154, Rayburn House Office Building, Hon. Darrell E. Issa 
(chairman of the committee) presiding.
    Present: Representatives Issa, Platts, Mack, Walberg, 
Lankford, Amash, Buerkle, Meehan, DesJarlais, Walsh, Gowdy, 
Ross, Guinta, Farenthold, Kelly, Cummings, Towns, Maloney, 
Norton, Kucinich, Tierney, Clay, Connolly, Quigley, Welch, and 
Murphy.
    Staff present: Thomas A. Alexander, senior counsel; Michael 
R. Bebeau, assistant clerk; Robert Borden, general counsel; 
Will L. Boyington and Drew Colliatie, staff assistants; Molly 
Boyl, parliamentarian; Ashley H. Callen, counsel; Sharon Casey, 
senior assistant clerk; Benjamin Stroud Cole, policy advisor 
and investigative analyst; John Cuaderes, deputy staff 
director; Howard A. Denis, senior counsel; Gwen D'Luzansky, 
assistant clerk; Christopher Hixon, deputy chief counsel, 
oversight; Tabetha C. Mueller, professional staff member; Laura 
L. Rush, deputy chief clerk; Jeff Wease, deputy CIO; Lisa Cody, 
minority investigator; Carla Hultberg, minority chief clerk; 
Lucinda Lessley, minority policy director, Scott Lindsay, 
minority counsel; Leah Perry, minority chief investigative 
counsel; Dave Rapallo, minority staff director; Mark 
Stephenson, minority senior policy advisor/legislative 
director; and Cecelia Thomas, minority counsel/deputy clerk.
    Chairman Issa. Good morning. The committee meeting will 
come to order.
    As is the new tradition of this committee, we will begin by 
reading the Oversight mission statement. We exist to secure two 
fundamental principles. First, Americans have a right to know 
their money Washington spends and takes is well spent. And 
second, Americans deserve an efficient, effective government 
that works for them. Our duty on the Oversight and Government 
Reform Committee is to protect these rights. Our solemn 
responsibility is to hold government accountable to taxpayers, 
because taxpayers have a right to know what they get from their 
government.
    We will work tirelessly in partnership with citizen 
watchdogs to deliver the facts to the American people and bring 
genuine reform to the Federal bureaucracy. This is the mission 
of the Oversight and Government Reform Committee.
    Today's hearing is the second time this committee has met 
in 2 weeks to consider the effects of wasteful spending have on 
the Federal Government, the economy and the taxpayers. This 
week's GAO report exposes serious government breakdowns in 
effective, efficient use of taxpayer dollars. By conservative 
estimates, the duplication and fragmentation highlighted in the 
GAO report represents over $100 billion in annual losses.
    Yet, there was great consternation and 90 hours of hard 
debate in order to propose just $62 billion in cuts. The GAO 
report, unlike the cuts, is not about eliminating services. It 
is about standardizing, combining, and eliminating duplicative 
services that cost the American people money without serving an 
additional use. Meaning, if we cut the bureaucracy, if we cut 
so many of these programs that repeat and repeat, each of them 
having high paid and high ranking individuals, and IT groups, 
and separate publishing and, if you will, advertising 
campaigns, we can eliminate costs without the American people 
suffering one loss of the essential services believed to be 
done by these programs.
    I am sure in future times, we will have additional hearings 
on programs that should simply go away, whether it is one or a 
hundred within government. But today, we are going to meet with 
three very talented and very educated individuals, who are 
going to help us understand what should be a win-win for the 
American people. Win-win, because we are not talking about 
cuts. We are talking about cuts in bureaucracy. Cuts in 
bureaucracy save money, while delivering a better product to 
the taxpayers.
    And with that, I would like to yield the remainder of my 
time to the gentleman from Florida, Mr. Mack, for his comments.
    Mr. Mack. Thank you, Mr. Chairman. I appreciate the hearing 
today, and I look forward to hearing from our witnesses.
    But something strikes me as odd. That is, we have heard the 
President say over and over again that he is ``going to conduct 
an exhaustive line by line review of the Federal budget and 
seek to eliminate government programs that are not 
performing.'' That is something we can all agree with. Yet we 
have seen no action on the President's words.
    Then we have a hearing today where we invite the Director 
of OMB, which is a Presidential appointee, and he refuses to 
show up. So is the President serious about doing a line by line 
review? Is the Director of the OMB trying to hide or duck the 
questions?
    It is outrageous that we find ourselves at a hearing where 
we have an opportunity to do something good for the American 
people, and that is, cut spending and cut this budget and get 
rid of waste. Mr. Chairman, you talked about the duplication, 
and $100 billion, and the Director of OMB won't show up to give 
us an opportunity to ask questions and find out what we can do 
to cut this $100 billion, to find another $100 billion to cut, 
to try to bring this budget in line?
    I think it is outrageous that the Director doesn't show up. 
I think it shows a disregard to the legislative branch and the 
separation of powers. It says to me that the administration and 
the Director of OMB is more interested in talking a good game 
out in the public, but doesn't really want to get to the hard 
work.
    So Mr. Chairman, I look forward to this panel. I look 
forward to your leadership, but I am extremely disappointed 
that the Director didn't show up. I am not sure that this 
administration is serious about cutting spending, if they can't 
even send the Director.
    Chairman Issa. I thank the gentleman. Reclaiming my time.
    Our invitation to the Office of Management and Budget will 
remain open. I thank the gentleman for his comment.
    I now recognize the distinguished ranking member for his 
opening statement.
    Mr. Cummings. Thank you very much, Mr. Chairman, and I 
thank you for calling this hearing today.
    I just want to go immediately to what Congressman Mack just 
said. I don't think the President is hiding, or the OMB is 
hiding anything. The fact is that the President, in his State 
of the Union, made it clear that he is about the business of 
addressing these issues. And OMB is currently in the process of 
conducting its own analysis of effective ways of streamlining 
the government, improve services and cut unnecessary costs.
    This task is critical to ensuring Federal programs are 
working as effectively and efficiently as possible. That is why 
I signed the letter with the chairman requesting ongoing 
updates, as OMB takes on this monumental task. It is my 
understanding that letter will be going out as soon as we get 
the signatures of two Senators, Collins and Lieberman, I think 
it is.
    But I want to make it clear, and I do believe that again, 
one of the things about this chairman, I know he likes to do 
things effectively and efficiently. So I would think that OMB, 
there will come a time when OMB will appear before us and will 
be in the best position to provide some testimony that will be 
helpful.
    Now, Mr. Chairman, it is certainly good to see all of our 
witnesses here today. To Chairman Davis, it is a pleasure to 
see you again. Your name has been evoked quite favorably around 
here. So it is good to see you and Darrell.
    Chairman Issa. His picture is shining down on us, too.
    Mr. Cummings. Oh, my goodness. [Laughter.]
    And Ms. Alexander, it is good to see you again.
    Today we will hear the results of a report issued by the 
Government Accountability Office on duplicative programs and 
major opportunities to enhance Federal revenues. First, GAO's 
report demonstrates that there are real opportunities to 
streamline Federal programs, save taxpayer dollars and deliver 
services more effectively and efficiently. For example, GAO 
identified at least 31 entities within the Defense Department 
that are supposed to address the urgent needs of war fighters. 
GAO reported that there are challenges with the Department's 
fragmented guidance. And GAO raised concerns about the numbers 
and the roles of the various entities and processes involved.
    Solving these problems will take dedication, 
bipartisanship, but it will help both American troops and 
taxpayers. GAO's report also describes numerous areas where we 
can recover hundreds of billions of dollars in Federal 
revenues. For example, GAO highlights that the United States is 
essentially giving away up to $53 billion to oil companies that 
are not paying royalties on certain leases to extract oil and 
gas from Federal lands. That is our money.
    A lot has been said about what the taxpayers said during 
the last election. Well, one of the things they said is they 
don't want to be cheated of their own money. Congress passed 
legislation in 1995 to give oil companies so-called royalty 
relief. The goal of the legislation was to encourage production 
by exempting oil companies from paying royalties to the Federal 
Government. The legislation was supposed to require companies 
to start paying royalties when they recouped their investment 
and began making a profit.
    But the legislation was poorly drafted, and when oil 
companies challenged it in court, they successfully avoided 
paying any royalties at all. In its report, GAO concluded that 
this problem could result in $21 billion to $53 billion in lost 
revenue to the Federal Government.
    This windfall is going to an industry that is making 
staggering profits, despite the worst economic downturn since 
the Great Depression. Mr. Chairman, we need to do significant 
work on this, and you have. You have been a leader in this 
area. As a matter of fact, in 2009 you issued a report warning 
about what would happen if these companies won their lawsuit. 
You said, any company that entered a similar lease between 1996 
and 2000 could escape paying royalties. That was what you said.
    You also said this: ``The Fifth Circuit decision may force 
the Federal Government to reimburse companies who have already 
tendered royalty payments. Depending upon the market price of 
oil and natural gas, the total costs of foregone royalties 
could total nearly $80 billion.''
    Mr. Chairman, you warned about this problem, and I commend 
you, I really do, for that. But now we need to fix it. We have 
to fix it, and it is going to take a bipartisan effort. We just 
had a vote in the House where we had an opportunity to fix it, 
and we were not able to.
    And so I think, as Mr. Davis has said many times, this is 
one where we can come together, as Democrats and Republicans. 
It is a win-win situation, but it is a win-win. It is not a win 
just for Republicans, not a win just for Democrats, but most 
importantly, it is a win for the American people. And I just 
don't want to be sitting here 10 years from now saying the same 
things, having lost even more money.
    So I look forward to the hearing, Mr. Chairman. And I thank 
you. With that, I yield back.
    [The prepared statement of Hon. Elijah E. Cummings 
follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 

    Chairman Issa. I thank the ranking member. All Members will 
have 7 legislative days in which to submit their opening 
statements for the record.
    I now go to our distinguished panel. The Honorable Thomas 
M. Davis, III, former chairman of this committee, as the 
ranking member said. He looks down on us every day. Now the 
director of Federal Government Affairs at Deloitte and Touche, 
and the man who issued the subpoenas to the oil companies on my 
behalf in order to begin the process of doing the oversight on 
those flawed contracts that have cost the American people tens 
of billions of dollars. I want to thank you for that today 
publicly.
    The Honorable Gene Dodaro, the Comptroller of the United 
States, appearing I think for the second time as the confirmed 
Comptroller versus the many times that you appeared before us 
graciously as the Acting. Your work as a legislative branch 
employee, spanning both the Executive and legislative branch, 
providing more than 3,000 people who give us the non-partisan 
reports and fact-finding that we absolutely rely on.
    And Ms. Ryan Alexander, president of the Taxpayers for 
Common Sense, an often contributor, and welcome back.
    Pursuant to the committee's rules, all witnesses are asked 
to be sworn in before they testify before this committee. If 
you would please raise your right hands.
    [Witnesses sworn.]
    Chairman Issa. Let the record reflect that all witnesses 
have answered in the affirmative. Thank you. Please be seated.
    In order to allow time for discussion, and as my 
predecessor would say, a longstanding tradition is that you 
will have 5 minutes. There will be a green light for as long as 
you may talk freely. There will be a yellow light to warn you 
that your time is elapsing. And I will be understanding for you 
to complete your sentence or paragraph, but not much more once 
it turns red. And that will allow a healthy dialog afterwards.
    The chair recognizes Mr. Davis for his opening statement.

    STATEMENTS OF THOMAS M. DAVIS III, DIRECTOR OF FEDERAL 
 GOVERNMENT AFFAIRS, DELOITTE AND TOUCHE LLP; GENE L. DODARO, 
   COMPTROLLER GENERAL OF THE UNITED STATES, U.S. GOVERNMENT 
ACCOUNTABILITY OFFICE; AND RYAN ALEXANDER, PRESIDENT, TAXPAYERS 
                        FOR COMMON SENSE

                STATEMENT OF THOMAS W. DAVIS III

    Mr. Davis. Thank you, Chairman Issa and Ranking Member 
Cummings and colleagues. Thanks for the opportunity to testify 
before you today. I am doing so in my capacity as a former 
Member of the House, and specifically chairman of this 
committee.
    I want to thank Gene Dodaro and his staff for putting 
together an outstanding report that formed the basis of today's 
hearing. Let me just say, I hope we can engage OMB before this 
is done. Because we are in this together, Republicans, 
Democrats, House, Senate, executive branch. We all caused the 
problem, and I think we all need to be there to solve it, as we 
look forward to this. At this point, they are not here today, 
but I think in the future we need to make sure they are 
engaged. They are doing some things over there we need to hear 
about.
    During my tenure, I examined how the Government could 
operate more efficiently, focusing on governance issues, 
procurement, IT policies, civil service, governmental 
organization. In this process, I have long said the way we try 
to extract savings from the Federal Government is to simply 
cutoff fingers and toes, rather than go after the fat that is 
molded throughout the body politic.
    I still believe that is the case. But as we see in the GAO 
report issued earlier this week, sometimes Uncle Sam does 
indeed have a few too many digits, and some surgery may well be 
in order.
    So where does the blame lie? As I noted, there is plenty of 
blame to go around. There are a lot of places to point the 
finger. Let me start with Congress. Duplicative and overlapping 
programs frequently exist because of the way that we in 
Congress legislate. Indeed, one of the earliest and most 
enduring lessons I learned upon my election to the House was 
that jurisdiction trumps all. So while two different Members 
believe there may be a need for a given Federal service, they 
will surely write the authorizing legislation with their 
individual committees in mind.
    For example, if a member of the Education Work Force 
Committee wants to enact a job training program, they will 
write the legislation to ensure it falls under an agency in 
that committee's purview. The same would be true of a member of 
the Veterans Administration. A member of the Financial Services 
might link job training to low income people in order to guide 
such a program to HUD.
    Thus, we find three different programs with essentially the 
same goal, job training, under three different agencies. Under 
this arrangement, they are all funded differently, measured 
differently and administered differently. Common sense suggests 
they should be combined to take advantage of economies of 
scale, or even just to make it easier for the citizens to know 
where the programs exist.
    We can blame the bureaucracy, but in many ways, Congress 
created the many-headed monster we bemoan in an attempt to 
protect our jurisdictional prerogatives.
    Another point that should be examined: in the quest to 
corral duplicative or overlapping programs, or to implement 
broad personnel reforms, the need to implement Government-wide 
solutions is often discussed. But while the executive branch 
has the ability to affect such efforts to a certain degree, 
again, the compartmentalization approach that Congress takes 
often prevents the type of holistic action required. This is 
especially true of the appropriations process in which all the 
subcommittees would have to agree to provide funding for a 
given initiative, a task akin to asking a cat to take a bath.
    Finally, there are areas where unnecessary duplication at 
the Federal level has ramifications at the State and local 
levels. Congress should examine the myriad reporting 
requirements of Federal programs, human service programs, 
educational programs and transportation programs, to see where 
we can make better use of consolidated systems. With existing 
technology, it seems unnecessary to have every State maintain 
its own reporting system for a given Federal program, when 
essentially the same information is required from everybody. 
Government-wide, in the executive branch, the same culture 
exists. Too many agencies have erected stovepipes for the 
delivery of IT services, personnel rules, and internal 
protocols. The result is that seamless congruencies in 
communications and information sharing are rare among 
government departments. Information gets lost, analysis becomes 
disjointed and operability becomes hindered.
    OMB can serve as an effective catalyst for establishing 
cooperation and communication between agencies, which could in 
turn lead to an exponential increase in efficiency. It has the 
authority and the mandate to do so. Unfortunately, under 
administrations of both parties, the Office of Management and 
Budget simply becomes the Office of Budget. The concentration 
falls on the budgetary aspects of agencies' spending, when in 
fact a management review could yield much more long-term 
savings.
    The key to success is focusing how services are delivered, 
how services are procured and how information is gathered and 
analyzed. In these areas, the executive branch seems to be 
deficient. Reorganizations, mergers and assimilation of 
redundant programs are not Government skill sets. Often, 
attempts to reorganize are thwarted by inadequate time 
constraints, unwilling employee participants and skeptical 
Federal managers, who know that a slow roll or wait it out 
approach will always rump the most ambitious change management 
efforts.
    So what can Congress do and what can OMB do to improve the 
situation? From the congressional standpoint, a complete 
restructuring of the committee system is unlikely. A first step 
to avoiding a program duplication or inefficiency, however, 
might be a CBO-like review of newly proposed programs prior to 
floor consideration.
    In closing, let me just say, there are good, dedicated 
people working in government. But upon examination of how they 
are employed, it is clear that some of them are doing tasks 
they don't need to be doing, performing under regulations that 
didn't need to be written, filling out forms that should not 
have been printed. I hope today's hearing marks the start of an 
effort, and a sustained effort, to address these issues.
    Again, I appreciate the opportunity to share my thoughts. I 
look forward to your questions and ask that my entire statement 
be put into the record.
    [The prepared statement of Mr. Davis follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Chairman Issa. Without objection, so ordered.
    Mr. Dodaro.

                    STATEMENT OF GENE DODARO

    Mr. Dodaro. Good morning, Mr. Chairman and Ranking Member 
Cummings, and members of the committee.
    I am very pleased to be here today to talk about the GAO 
report which outlines opportunities to tackle overlap and 
duplication, reduce costs and enhance revenue collections. Our 
report discuss 34 different areas of overlap and duplication 
and fragmentation. And it outlines a number of specific 
activities that need to be reviewed.
    I would highlight a couple of categories here this morning. 
One, there are multiple programs in specific areas that have 
developed over the years and that need to be tackled. For 
example, there are over 40 programs in employment and training 
areas. There are over 80 programs trying, at least in part, to 
improve teacher quality. There are 80 programs intended to 
improve economic development. Surface transportation has 
multiple programs as well.
    These programs have developed over the years, in some 
cases, decades. And in many cases, there is really not a lot of 
empirical evidence to show the outcomes of the programs or that 
they are operating effectively. This is a perfect opportunity 
for the Congress and the administration to look at these 
portfolio programs that we have outlined in our report, and to 
begin to rationalize the programs, prioritize what the role of 
the Federal Government should be, and give clear directions as 
to what is to be accomplished through the programs, how to 
measure their results and how to streamline delivery systems 
and also reduce administrative costs. I think there are a lot 
of opportunities here.
    We also outlined in the Defense area opportunities there, 
in medical commands, urgent needs, as was mentioned in the 
opening comments. And there are other areas where DOD and VA 
can leverage their purchasing power, for example, in purchasing 
of drugs. They are also pursuing parallel paths in developing 
electronic medical records that there are opportunities to 
conserve resources and get better results for less costs, we 
believe.
    In addition to the overlap, fragmentation and duplication, 
we also outline a number of other opportunities for cost 
savings and enhanced revenues, 47 areas are outlined in the 
report. Many of the cost saving opportunities go to the nuts 
and bolts of the Government and how it operates, as Chairman 
Davis outlined. There is a need to make sure there is more 
competition in contracting, that there are fewer contracting 
vehicles to help reduce the costs. We are paying to maintain 
unneeded Federal property. We are paying through improper 
payments for services that either are not rendered or are not 
well documented, that we have confidence that they are being 
saved or appropriately paid.
    And in the revenue area, there is a yawning gap at the tax 
level between taxes owed and collected. The last estimate is 
$290 billion. And there are areas that we believe through 
prudent use of increasing the electronic filing, using third-
party data to identify potential non-filers, and other 
activities that need to be looked at.
    Now, one of the things that we are going to continue to do, 
since this report is the first report that meets our statutory 
requirement to annually produce these types of reports, we will 
be looking at other opportunities going forward. Tax 
expenditures, for example, and how they might duplicate other 
things. For example, in this report, we mention the tax credit 
in the ethanol area duplicates the renewable fuel standards 
that are in place, and that Congress should take a look at the 
need to continue this ethanol tax credit, which is billions of 
dollars a year in foregone revenue.
    There is potential overlap between tax credits, loan 
programs and other Federal spending. So we will be looking at 
these areas in the future. We already have work underway for 
our next year's report, and we look forward to working with the 
Congress to help streamline the Federal Government's 
activities, to make sure it is operating more effectively, more 
efficiently and in the taxpayers' best interests.
    Mr. Chairman, that concludes my opening statement. I will 
be happy to answer questions at the appropriate time.
    [The prepared statement of Mr. Dodaro follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Chairman Issa. Thank you. The gentleman yields back 14 
seconds. [Laughter.]
    Ms. Alexander, please.

                  STATEMENT OF RYAN ALEXANDER

    Ms. Alexander. Good morning, Chairman Issa, Ranking Member 
Cummings, and members of the committee. Thank you for inviting 
me here to testify today.
    Our mission at Taxpayers for Common Sense is to achieve a 
government that spends taxpayer dollars responsibly and 
operates within its means. All of our work reflects our core 
belief that no one, no matter where they fall in the political 
spectrum, wants to see their money wasted.
    To that end, TCS has worked with the left and the right to 
achieve victories on stopping the bridge to nowhere, getting 
the earmark moratorium enacted, cutting funding for an 
alternate engine for the joint strike fighter and creating an 
inspector general for the Iraq war.
    We have testified before this committee several times with 
proven results for American taxpayers. We testified on the cost 
overruns and problems with the F-22 Raptor and that program was 
stopped. When Mr. Davis was on the dais, we testified on crop 
insurance waste, prompting the Agriculture Committee to take 
action. And working with you, Chairman Issa, we have testified 
on Army Corps of Engineers issues, and worked with the 
committee regarding lost royalty revenues from offshore oil and 
gas leases, both of which are in the GAO report we are 
discussing today.
    In addition to my written testimony, I would like to enter 
for the record our two recent reports detailing recommended 
budget cuts.
    In our more than 15-year history, TCS has worked on many of 
the programs and issues highlighted in the GAO report. We hope 
the increased scrutiny generated by this report, the current 
political will to tame the deficit and the good work of this 
committee will lead to meaningful and overdue reform or 
elimination of many of these programs.
    Obviously there is much too much to tackle in this 
voluminous report in 5 minutes or even 50, so I will just 
highlight a few issues.
    Across the Government, GAO found examples of duplication. 
Reforms to the acquisition process, governmentwide, could yield 
significant savings. This is particularly true in the Pentagon, 
where the risks of duplication across services are high. 
Efforts to acquire weapons like tactical wheeled vehicles 
should be coordinated across services. Encouraging competition 
and inter-agency contracting can help drive down costs by as 
much as $500 billion by GAO's estimate. And as Mr. Dodaro 
mentioned, coordinating between DOD and Veterans Affairs 
electronic health records systems and working together to 
control costs in the area of drug purchasing.
    Real property management by GSA also has enormous possible 
savings, both from disposing of billions of dollars worth of 
unnecessary Federal property, better fleet vehicle management, 
and better cost analysis of purchasing and leasing decisions. 
In addition to opportunities to reduce spending, the GAO report 
highlighted important ways to enhance revenue, another critical 
element of reducing our deficit. Giveaways to the oil and gas 
industry through royalty management and collection systems have 
been highlighted by the GAO numerous times and added to the 
high risk list this year.
    Chairman Issa, you know all too well from your work on 
these problems resulting from the royalty relief provided in 
the mid-1990's to oil and gas companies operating in the Gulf 
of Mexico the problems stemming from the Deep Water Royalty 
Relief Act, including a portfolio of leaseholders that pay no 
royalties at all for oil and gas exacted from Federal waters 
will cost taxpayers up to $53 billion in the next 25 years.
    The GAO report notes that almost $1 trillion in Federal 
revenue was foregone in fiscal year 2009 due to tax 
expenditures, what the Simpson-Bowles Commission called tax 
earmarks. The 173 tax expenditures are similar to spending 
programs and can be the same magnitude or larger than related 
Federal spending in some mission areas, except without the 
oversight. We believe this is an area for this committee to 
play a critical role in increasing accountability, examining 
effectiveness and saving taxpayer dollars.
    In its recent report, GAO says reductions in revenue losses 
from eliminating ineffective or redundant tax expenditures 
could be substantial. Tax expenditure performance is an area 
that would benefit from enhanced congressional scrutiny as 
Congress considers ways to address the Nation's long-term 
fiscal imbalance.
    Last year, for example, GAO recommended that Congress 
modify the research tax credit to reduce windfalls to taxpayers 
for research spending they would have done anyway. This report 
suggests changes to the new markets tax credit as well as 
reviewing the tax-exempt status of Government bonds. Evaluating 
these tax expenditures for effectiveness and value and 
eliminating the largest corporate tax loopholes would pave the 
way for simplifying the corporate tax structure, lowering 
overall rates and establishing an important level of certainty 
for the business community. Other tax expenditures, such as the 
mortgage interest deduction or deduction for State sales tax 
should also be considered.
    Reforming Federal activities related to corn ethanol would 
be a double whammy, eliminating redundant programs and 
enhancing revenue in one fell swoop. The use of ethanol is 
mandated, it is protected from foreign competition and it is 
subsidized. Any one of these redundant and market-distorting 
policy options might be proposed to help an emerging industry. 
It is indefensible that the mature corn ethanol industry 
continues to benefit from the decades-old refundable tax credit 
to blend ethanol, at a cost to taxpayers of more than $5 
billion per year.
    Clearly, the GAO has given Congress much to think about. 
Eliminating duplication and waste in government and responsibly 
enhancing revenue are the critical first steps to addressing 
our $1.65 trillion budget deficit.
    [The prepared statement of Ms. Alexander follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Chairman Issa. I thank the gentlelady. You beat Mr. Dodaro, 
you yielded back 18 seconds. This is probably a record for any 
committee.
    I now yield myself 5 minutes.
    Mr. Davis, the work you did while you were here continues 
on. But as you can see, there is more to do. When we start 
looking at duplicative programs, from your experience on this 
side of the dais, do you recommend that if the committee 
authors legislation that we use carrot or stick or both? For 
example, we could look at these programs and we could simply 
say, through appropriations, we are only going to fund X 
amount, now you have to figure out how to combine these, rather 
than perhaps only eliminating them when you run out of money, 
period.
    Or do we create legislative authority for pools of savings 
being combined, and thus create an opportunity in which there 
is a carrot for agencies that come together, such as the 
electronic medical records, if in fact DOD and our previously 
serving members, often known as veterans, can simply come 
together and realize they are dealing with the same people and 
yet dealing stovepipe with two different systems? How do you 
view those two options?
    Mr. Davis. I like the carrot better, simply because when 
you try to starve a budget, they look within their budget. They 
don't look at how they can share savings with another agency. 
It is just not in the nature of the beast. If you can 
incentivize groups to work together in those kinds of shared 
savings environments, you can do much better.
    Look, organizations are, you have to look at how they are 
incentivized. They are hesitant to give up the control or to 
partner, because they don't know what authority they may lose 
over the long haul. So when it comes to shared savings, we are 
not getting the sustainability we need.
    I would do something like mandating agencies to look at two 
or three lines of businesses within each one where they could 
share some of these instead of putting them into stovepipes. 
But just starving them doesn't incentivize them to work with 
other agencies, unfortunately. That is just not the nature of 
the beast.
    Chairman Issa. I appreciate that.
    Mr. Dodaro.
    Mr. Dodaro. I agree with Mr. Davis. I think the incentive--
--
    Chairman Issa. He is not chairman any more, you know, you 
don't actually have to agree with him. [Laughter.]
    Mr. Dodaro. In this case, I mean it. [Laughter.]
    I think there are disincentives in the budget process, for 
example, in the way the money is there. It is difficult to 
collaborate across agencies. And I think there could be more 
flexibilities that way.
    Also, the ideas that you posit there I think are also true 
at the State and local level, in dealing with Federal on 
grants. For example, we have recommended that the Federal 
agencies look at incentives for States to combine in the 
employment and training area. Now, a lot of these programs are 
delivered through State and local administrative structures. A 
lot of times they have to set up separate structures in order 
to deliver multiple Federal programs.
    So I think there is a lot of opportunities for incentives 
and some flexibility.
    Chairman Issa. Quick followup on that. Since so much of 
what is delivered in programs like that is in fact Presidential 
earmarks, often called grants and competitive grants and so on, 
should we require that the executive branch do that 
consolidation? Recognize that if you are going to give five 
pots of money that do substantially the same thing all from the 
executive branch and all on, many of them, non-formula, that in 
fact that they be combined? Do you think that is a wise piece 
of legislative, or should we try to work, if you will, to 
combine with the administration in their own best interest?
    Or last, should we give the States authority to essentially 
combine grants, so that no matter where they come from, they 
can merge them, which is something that Governor Barbour has 
talked about, where he gets different puddles of money, and 
each one is with different strings. How do you view those 
various options to try to get the efficiencies?
    Mr. Dodaro. I think all the options are very valid ideas. 
At the Federal level, I think there are opportunities to 
consolidate these various programs. For example, we understand 
in the administration's proposal for reauthorization in the 
education area actually 38 programs that we have identified are 
proposed to be consolidated into 5. There are some thoughts on 
surface transportation. Clearly, that.
    I do think the States should have some flexibility to show, 
and they can do it on a way to help reduce some of their own 
costs. As you know, they are struggling with their own fiscal 
stress. And give them some flexibility to combine, as long as 
there is proper accountability in place.
    One of the things we have said is that there is not enough 
tracking of unobligated balances in a lot of the grant 
programs. So I think all those could work.
    Chairman Issa. I appreciate that.
    Ms. Alexander, just a quick one. In your opening statement, 
when you took on one of the hardest pillars to take on around 
here, the ethanol subsidy, and I appreciate that, how do you 
propose that we begin the process of doing away with one of the 
obvious non-fossil fuel wastes in government? Do you suggest 
that we in fact take that $5 billion and simply force it to be 
put into renewable fuels more broadly, so there can be 
competition from what most would call the more promising fossil 
fuels? Or do you have an alternate suggestion?
    Ms. Alexander. Our preference would be to have that be 
savings, and that be savings that go to deficit reduction. That 
has been our preference in terms of the elimination of VEETC 
for several years. I think in many ways, the answer on VEETC 
for us is this just can expire. It is done at the end of this 
year. It could have been done last year. So we don't see a need 
for replacing it.
    There are lots of efforts to look at new and more promising 
fuels. But I don't think that they need to be tied to VEETC. 
That is just a failed policy that is redundant.
    Chairman Issa. Thank you very much.
    I recognize the ranking member for his questions.
    Mr. Cummings. Thank you very much, Mr. Chairman.
    Mr. Dodaro, one of the things that I found interesting 
about your report is, in the report it said DOD made major 
revisions to its acquisition policies. And you went on to say, 
more emphasis was placed on knowledge about the requirements, 
technology and designs. I found that when, as chairman of the 
Coast Guard Subcommittee, what we discovered, when we were 
dealing with the Deep Water project, when they were buying $25 
billion worth of hardware over 25 years, and had boats that 
didn't float, part of the problem, literally, literally, part 
of the problem was, the acquisitions process. In other words, 
they didn't have people who knew what they were doing with 
regard to specifications, with regard to putting together 
contracts, with determining when something, performance was 
done. They even had the contractors determining when bonuses 
would be given.
    And so I am just trying to dig deep in here with this DOD, 
because we see a lot of money going out the door there. How far 
have they gotten with that whole acquisitions process? You said 
they have made some movements. What do you see that, how much 
progress have they made, and do you see other things that could 
be done in that regard?
    Mr. Dodaro. I think basically, for example, in the weapons 
systems acquisition, they put in place, as a result of 
congressional laws the Weapons Systems Acquisition Reform Act 
of 2009, they put good policies and good practices in their 
regulations and manuals. But they need to implement them more 
consistently across the department.
    Mr. Cummings. How can we get them to do that? I guess that 
is the question.
    Mr. Dodaro. I think there is no substitute for regular 
congressional oversight.
    Mr. Cummings. And Chairman Davis, you talked earlier to me 
privately about, it has to be a sustained effort. How do we 
sustain, I know with the Coast Guard, we just kept bringing 
them back, over and over and over again. And we got things 
done. We saved, I am sure, a few billion dollars in a very few 
years. But I am trying to figure out, how do we keep that 
sustained effort, Chairman Davis?
    Mr. Davis. Two things. One of the difficulties in 
sustaining this in government is that you have people who are 
replaced over a period of time.
    Mr. Cummings. Right.
    Mr. Davis. They have a lot of other priorities. I liken it 
to mergers and acquisitions. In the private sector, when you 
merge, it is costs, you have to take those out, you need to 
stay competitive. You have strict time lines, you have 
management oversight from above. So many times in government, 
you have costs that look good at the front end, on paper, but 
by the time they are translated 2 or 3 years, it sometimes ends 
up costing you, because you have this wait it out atmosphere.
    One other thing on the procurement, we still don't have 
enough procurement officers. There is a paucity of procurement 
officers at the Pentagon. They need to hire and train more 
people in these areas. It saves money in the long term to have 
good people behind there.
    Mr. Cummings. Mr. Dodaro, I only have a few minutes left, 2 
minutes left. Your report also says the United States is 
essentially giving oil companies up to $53 billion because back 
in 1995, Congress exempted them from paying royalties on 
certain leases in the Gulf of Mexico. There are some oil 
companies today that are paying no royalties to the American 
taxpayers on certain leases. As part of this so-called royalty 
relief program, these companies are removing the oil and gas, 
which belongs to the American people, selling it and making 
record profits.
    So I am just trying to figure, this is our money, isn't it?
    Mr. Dodaro. Basically, we have recommended that, there has 
not been a comprehensive look in 25 years of what the Federal 
Government is charging for these leases. And when they are 
ranked, the U.S. Government is ranked against other countries 
and even some States, we rank very low as to what we are asking 
for on a regular basis for return on the leases for these 
lands.
    Interior has finally agreed to do that comprehensive 
assessment. It is supposed to be completed this year. I would 
encourage the Congress to review that study and to make sure 
that there are proper incentives.
    We have also said, Mr. Cummings, that there is not enough 
verification of the production that is occurring on those 
lands, in order to make sure the government is getting its fair 
return.
    Mr. Cummings. And you put this on your high risk list, is 
that right?
    Mr. Dodaro. That is correct.
    Mr. Cummings. And why was that?
    Mr. Dodaro. Well, we believe that there wasn't reasonable 
assurance that the Federal Government was getting the revenues 
that they were due as a result of those leases, for two of the 
reasons that I mentioned before.
    Mr. Cummings. In other words, we are being cheated?
    Mr. Dodaro. Well, I think it is not clear that we have 
reasonable assurance we are getting everything we should.
    Mr. Cummings. You say that in a very nice way, but the fact 
is, it is money that is due the American people, on our land, 
and we are not getting it. Let me tell you something. If that 
happened anywhere, if people were being cheated, folks would be 
going to jail in my district. Matter of fact, if somebody 
steals a $300 bike, they go to jail.
    So here we have billions drifting away, and at the same 
time, we are trying to find money to make sure that kids can go 
to school and have teachers and all that kind of thing. But 
this has to be a priority. I know the chairman has made it a 
big issue, this is a big issue for the chairman. I am really 
looking forward to working with you, Mr. Chairman, as we tackle 
this problem.
    Thank you, Mr. Chairman.
    Chairman Issa. I thank the gentleman.
    We now recognize the gentleman from Florida, Mr. Mack.
    Mr. Mack. Thank you, Mr. Chairman.
    A quick note on the ethanol. Count me in on finding those 
savings. On a personal issue, the ethanol has been screwing up 
my boat motor. So count me in. [Laughter.]
    A minute ago, the ranking member said that the OMB wasn't 
here partly because they are planning and they are doing. But 
wouldn't it have been a great way to plan to actually come to 
the hearing and get some input and share their thoughts? And 
the ranking member also said that one of the ways that they 
were able to get some savings and be effective in another 
committee dealing with the Coast Guard was, keep bringing them 
back. Well, I would like for the OMB to show up for the first 
time, so we can keep bringing them back and figuring out ways 
to save some money.
    Let me start with this, Mr. Dodaro. Has the administration 
had any reaction to your report so far?
    Mr. Dodaro. I have not talked to them about the report. 
There are some areas in here in our high risk list that we have 
made a number of attempts to have discussions with OMB and the 
agencies on the high risk list and the GAO. So we are engaged 
in regular discussions on that.
    I do believe the announcement also yesterday that they were 
proposing a commission to deal with the Federal real property 
issue was in response to this report as well. I do plan to 
followup with them and try to create dialog to make sure that 
all these issues are addressed.
    Mr. Mack. But they haven't had a reaction? It would be nice 
if the Director of OMB was here so we could ask him that 
question.
    Mr. Dodaro. Yes. My understanding is yesterday that the 
deputy for management over at OMB, Jeff Zients, said that they 
are on the same page as we are.
    Mr. Mack. Mr. Davis, good to see you again. Isn't this 
really, I remember my first term here when we were in the 
majority, weren't the reports, and didn't President Bush at the 
time, didn't they come out with programs that were duplicative 
in nature, that could be done away with? So this is a real 
problem, this isn't the first report or the first time that we 
have learned that the Federal Government is wasting money by 
having duplicative programs.
    Mr. Davis. No, Mr. Mack, unfortunately, it is a soap opera. 
I think Mr. Dodaro would agree with that. There are things that 
have been on that high risk list for generations. It takes a 
sustained effort on the part of Republicans and Democrats up 
here working with the administration to get these done. The 
problem is just keeping your eye on the ball with everything 
else that goes on. And when you cut budgets, when you go 
through CRs, these are the kinds of things that fall through 
the cracks.
    You still have the Pentagon. Books aren't auditable. So how 
do you know where you are on these kinds of things? So yes, it 
is a soap opera.
    Mr. Mack. And Mr. Dodaro, can you give us any 
recommendations on what might be some of the low-hanging fruit? 
Mr. Chairman, if we could move on any of these, I think it 
would be a sign of moving in the right direction. So is there 
any kind of low-hanging fruit, things that are so either 
ridiculous in nature that by not acting, is kind of a shame?
    Mr. Dodaro. I think, my recommendation would be to first 
build off where there is pretty good consensus about the need 
to streamline. Like for example, in the areas I mentioned about 
multiple programs, there are some recommendations to the 
administration. For example, in the employment and training 
area, to reduce and consolidate some of the programs. In 
surface transportation, there is agreement. Teacher quality, 
improving those programs, consolidating in the education field. 
There is some common agreement there.
    So my suggestion would be to build off where there is 
consensus as a starting point. A number of these areas are 
also, as Mr. Davis mentioned, on our high risk list. There we 
have seen progress.
    I would say the real point, though, we took two areas off 
the list this last update. And both those areas had more than a 
dozen congressional hearings, and a lot of dialog with the 
administration to produce the results that were there. It 
requires top level attention, metrics on progress. But there 
are a lot of opportunities to do this.
    There are also opportunities in the real property area, 
Federal real property, that is not needed but needs to be 
disposed of. We are spending, by latest estimates, almost over 
$1.6 billion a year to maintain property that is under-
utilized. That doesn't make sense. There should be more 
competition in contracting. About a third of the contracts that 
were put in place either had no competition or only one bidder 
on the competition.
    There is also $640 million that is sitting in a Customs 
collection account for a number of years that there haven't 
been decisions on how to use. That could be clearly an easy and 
quick win there.
    And there is also a lot of money going out the door in 
improper payments that I think could be stopped. That is going 
to take some time and effort. We have talked about the use of 
technology there, but I think that is another area where the 
latest estimate, and not all programs have been estimated yet. 
The latest estimate is about $125 billion.
    So I think there are plenty of targets of opportunity, and 
we would be happy to work with the Congress and the 
administration to get results.
    Mr. Mack. Thank you very much, and thank you, Mr. Chairman.
    Chairman Issa. I thank the gentleman.
    We now recognize the gentleman from Ohio, Mr. Kucinich, for 
5 minutes.
    Mr. Kucinich. Thank you very much.
    Ms. Alexander, I would like to ask you, as president of 
Taxpayers for Common Sense, for your take on the American 
people giving the most profitable industry in the world a $53 
billion gift. I would like to break this down in laymen's 
terms. And if I have any misperceptions about this, maybe you 
could help me with it. Due to a flaw in the 1995 Outer 
Continental Shelf Deep Water Royalty Relief Act, numerous oil 
companies are now drilling in the Gulf of Mexico, in Federal 
lands, and paying no royalties to the Federal Government. Is 
that correct?
    Ms. Alexander. That is right.
    Mr. Kucinich. And as we have heard, GAO--could you say that 
louder?
    Ms. Alexander. My mic was not on. I am sorry. That is 
right. They are paying no royalties right now as a result of an 
error at Interior and the structure of the Deep Water Royalty 
Relief Act and subsequent court case.
    Mr. Kucinich. Thank you. Now, as we have heard, GAO reports 
that U.S. taxpayers could lose as much as $53 billion as a 
result of this. And it has already begun. In fiscal year 2011 
alone, the Bureau of Ocean Energy Management, Regulation and 
Enforcement estimates that we will lose $1.4 billion.
    In contrast, the oil industry is making staggering profits. 
For example, the top five oil companies reported profits of 
$485 billion from 2005 to 2009. ExxonMobil, the largest 
American oil company, reported a 53 percent increase in its 
fourth quarter profits. Chevron, the No. 2 American oil 
company, reported fourth quarter earnings were 72 percent 
higher than the preceding years. The third largest, 
ConocoPhillips, reported that its quarterly profit climbed 46 
percent.
    Now, Ms. Alexander, is this an industry that needs billion 
dollar giveaways?
    Ms. Alexander. Taxpayers for Common Sense has worked on 
this issue for a long time, and I think our position is 
perfectly clear that we do not think the oil companies need 
these subsidies or really any others. So we think this is an 
issue that is ripe for Congress to address. And because in some 
ways it is so outrageous, the problems with the Deep Water 
Royalty Relief, that there should be bipartisan agreement on 
it. These are taxpayer assets that people are taking. If any 
one of us owned those oil and gas reserves and said, yes, just 
take it, people would think we were a little crazy.
    Mr. Kucinich. Well, back in 2005, when the oil was at about 
$55 a barrel, President Bush addressed the American Society of 
Newspaper Editors. I want to quote to this committee what he 
said. ``I will tell you, with $55 oil, we don't need incentives 
to the oil companies and gas companies to explore. There are 
plenty of incentives. What we need is to put a strategy in 
place that will help this country over time become less 
dependent.''
    Ms. Alexander, would you agree with that statement by 
President Bush?
    Ms. Alexander. I would, and with oil at, last I checked, 
about $98 a barrel, it seems like it still applies.
    Mr. Kucinich. So his point makes more sense now, right?
    Ms. Alexander. Right.
    Mr. Kucinich. Recently, John Hofmeister, who retired from 
Shell in 2008, and now runs Citizens for Affordable Energy, 
told a national journal that big oil companies don't need 
government help. Would you agree with Mr. Hofmeister?
    Ms. Alexander. I would agree that big oil does not need 
government help.
    Mr. Kucinich. How could we modify this subsidy structure to 
encourage a transition of, let's say, clean, renewable energy 
sources?
    Ms. Alexander. Our position has always been, we know what 
we don't need and we can get rid of it. Congress can come 
together, develop a solution to the problem with the Royalty 
Relief leases and simply just, some of the bigger tax 
expenditures have significant benefits for oil and gas 
companies. There are subsidies for oil and gas companies 
riddled throughout the tax code and throughout different 
spending programs. So we think this is a big opportunity for 
there to be bipartisan action for reform that will help close 
the deficit, just one baby step, and let a mature industry 
stand on its own two feet. Many of these subsidies, the Royalty 
Relief is not 100 years old, but other oil and gas subsidies 
are as much as 100 years old, and it is a mature industry that 
doesn't need them any more.
    Mr. Kucinich. And these handouts don't do anything to help 
the American economy, is that right?
    Ms. Alexander. We think that these handouts are enriching 
very profitable companies.
    Mr. Kucinich. OK, thank you, Mr. Chairman. I yield back.
    Chairman Issa. Would the gentleman yield his remaining time 
for just a followup question?
    Mr. Kucinich. Sure.
    Chairman Issa. Ms. Alexander, you are nuancing, and I think 
it is important for everyone that wasn't here when Chairman 
Davis headed up our investigation, it is the leases that are 
flawed, not necessarily the law, isn't that correct? In fact, 
the leases did not properly have the language to trigger when 
fuel prices, when oil prices and natural gas prices reached a 
threshold to actually trigger the royalties. That is the reason 
that most of this money is not being paid.
    Ms. Alexander. My understanding is that there is a set of 
leases that were issued between 1996 and 2000 that are flawed. 
There was an error in the drafting. Then because they didn't 
have a price threshold in them, subsequently a court ruled that 
all the price threshold language in any leases in that period 
that contained them was flawed. So all of those leases are 
exempt from royalties right now. So it is a complex problem.
    Chairman Issa. And I do think there is bipartisan support, 
still, to try to fix that. I thank you.
    Mr. Lankford of Oklahoma.
    Mr. Lankford. Thank you. And thanks to you all for coming.
    We had talked earlier today about incentives for agencies 
to try to look for duplicative waste. Obviously everyone wants 
to have more staff, wants to do more things, wants to engage 
it, and everyone sees the problems, they want to help solve it. 
What incentives specifically do you see that you think, OK, 
this is an incentive to help? Because honestly, I have talked 
with several people that are Federal workers. They see it as 
well, they see the waste around them. They say, I can't believe 
we fill out this form, I can't believe we do this, someone else 
does this. They see it. How do we create incentives within that 
agency to that specific employee to say, when you see it, here 
is a way to be able to help us get out of it?
    Mr. Davis. I will give you a couple of examples. When I was 
head of the county government in Fairfax, I went to my agency 
heads at a budget time and asked them to cut their budget. They 
came up with nothing. When we said look, of what you can find, 
you can spend some of this your own way, within certain 
guidelines, they came up with a lot more.
    Mr. Lankford. Right.
    Mr. Davis. Who is interested in cutting their budget if it 
is going to go to somebody that overspent their budget, or if 
it is going to ``deficit?'' It is just not in the nature of the 
way things work. So that is one thing you could do.
    Another thing is, we could bring agencies in and ask them 
to take certain line of businesses and look for ways to share 
savings and report back. Just if it is two or three lines of 
business per agency, where right now they are stovepiped but 
they could work together. The best example of that is the 
health records between VA and DOD. There is no reason you have 
to do different sets of health records.
    Now, I will give you one other that affects the State, if I 
can just take a second. Right now, for State governments, they 
are spending a lot of money on just being able to authenticate 
their communications with the Federal Government. Security 
standards exist for States to authenticate users to access data 
in federally funded systems that are hosted by the State. But 
each Federal agency interprets the standards differently, so 
States have to meet each Federal agency standard, replicating a 
different process to various programs. That costs a lot of 
money.
    So Social Security uses technology for verification, 
Department of Justice will use a certain procedure and 
protocols on that. So they are having to do different things. 
They ought to have one standard across the board for these 
kinds of things.
    Mr. Lankford. That is terrific. Mr. Dodaro, do you want to 
comment on that as well?
    Mr. Dodaro. Mr. Davis talked about, within each agency, and 
I do agree with his suggestions in terms of forcing people to 
come up with recommendations. But many things that we point out 
in our report are multiple agencies involved in the same area. 
We believe the only way this is going to get solved is by high 
level attention within the administration. OMB needs to play a 
very critical role in this whole endeavor, and the Congress 
does as well, to provide the right type of incentives there.
    For example, one of the areas, it is not mentioned in here, 
what we are going to work on, it is on our high risk list, is 
modernizing disability programs. There are about 200 different 
disability programs. And because of our insistence in working 
with OMB on the high risk set of meetings I talked about 
before, we brought together all the agencies involved in that 
process. It was one of the first times they have ever met to be 
able to discuss that.
    So I think there are ways to build in incentives and deal 
with disincentives.
    Another area that we have recommended before is leasing 
versus buying. There is sort of a bias in the rules toward 
scoring that differently. We have recommended that be changed 
as well.
    Mr. Lankford. Let me ask you a specific question as well, 
Mr. Dodaro. You had mentioned about the contracting vehicles, 
and you are recommending fewer contracting. Have you compiled a 
list of contracting vehicles you say, these should be seriously 
looked at?
    Mr. Dodaro. Yes. These are contracts that are inter-agency 
contracts. What we have said is there is really not a list, the 
list ought to be compiled by the executive branch, it ought to 
be made visible, and people should make sure they----
    Mr. Lankford. So right now, we have a multitude of 
different contracts and systems of contracts for procurement. 
You don't have, at this point, a list to say, here are the 
different contracting vehicles we think are inherently 
inefficient?
    Mr. Dodaro. We have the types of vehicles that are 
inefficient, or pose more risks to the Federal Government. I 
would be happy to provide you that.
    Mr. Lankford. That would be terrific. I would like to be 
able to have that list as well.
    Is there a need as well, you were able to reach into all 
these different agencies and be able to research them in a way 
that most people cannot. What would you perceive as the need 
for individuals to be able to reach in and be able to search 
the data, so the agencies can get out their employment, their 
strategies, their program philosophies, to be able to go 
through data and to be able to actually search it? Not just a 
.pdf on some Web site, but actually searchable data, is there a 
need for that and is that possible to pull off?
    Mr. Dodaro. There is definitely a need for it. There is not 
enough of it. And it is possible to pull off.
    Mr. Lankford. That is one of the areas I look at and say, 
you have the opportunity to be able to do that. But there are 
lots of people at home that would like to be able to search 
that and research that, whether they be journalists, whether 
they be individuals. That is something I would like to see us 
continue to push on as a committee. I know it has been talked 
about before, to continue to find ways to be able to push and 
do that.
    And one last thought on it, sunsetting programs. Is there a 
particular plan that you have seen to say, this is a great way 
to sunset these things out?
    Mr. Dodaro. I think there needs to be regular 
reauthorization of programs. There are too many programs that 
are created that don't have a regular review and process in 
place. I do think the Federal Government needs to invest more 
in regular program evaluations. One of the things we find and 
we talk about in here is a lot of these programs have been 
operating for years, and there is really not a lot of empirical 
evidence of what the returns are and whether they are being 
effective. So I think the Federal Government has, in the past, 
shortchanged the program evaluation, and I think it needs to be 
more put in place on a regular basis.
    Mr. Lankford. Terrific. Thank you. I yield back.
    Chairman Issa. I thank the gentleman.
    We now recognize the gentleman from Virginia, Mr. Connolly, 
for 5 minutes.
    Mr. Connolly. Thank you, Mr. Chairman. Let me welcome the 
panel, in particular, our former chairman and my predecessor in 
this seat in Virginia, my good friend, Tom Davis. Welcome back, 
Tom.
    In fact, perhaps, Congressman Davis, we could begin with 
you. You talked about the fact that it would be a wise 
investment to expand the number of acquisition and procurement 
personnel within the Federal Government, so that we are looking 
for efficiencies and cost savings. Could you expand on that 
just a little bit? Because one of the things that certainly has 
struck a number of people is that Federal contracting increased 
enormously in the 1990's, but procurement and acquisition 
personnel within the Federal Government did not keep up with 
that.
    Mr. Davis. In fact, in some areas it declined during that 
time. It was a way to cut budgets. In fact, many times you go 
to a procurement meeting now, and what you have is a lot of 
contractors running the procurement. That is not all bad, but 
you need a cadre inside of Government who understands the tool 
box that they have, can figure out what gets the best value for 
the Government. And that needs constant training, it needs all 
of those kinds of things.
    And what has happened, many times, is we end up scrimping 
on procurement personnel, we lose good personnel to the private 
sector. And yet that is where you get your cost overruns, that 
is where you get contracts that are not performing well, 
because you don't have the appropriate oversight all along. 
That has been my experience.
    And I think it is money, for the most part, that is pretty 
well spent, provided you continue to train people once you hire 
them. I don't know if Gene agrees with that or not, but that is 
my observation.
    Mr. Dodaro. I think that is definitely the case. For 
example, at DOD, the amount of contracting of goods and 
services more than doubled over the past several years. And the 
acquisition work force grew less than 1 percent. There are 
efforts now to try to bolster that work force with proper 
training and proper oversight. It is a good investment.
    Mr. Connolly. I think that is a really good point. 
Sometimes we get carried away with things like refuse of 
Federal spending binge, titles like that. But sometimes we have 
to make strategic investments, in fact, if we are going to 
protect taxpayer dollars. Is that not correct, Mr. Dodaro?
    Mr. Dodaro. That is true. You need to look at the outcomes 
you are getting from the programs. But you have to make sure 
you have the proper oversight. Contracting is a particularly 
important area.
    Mr. Connolly. Congressman Davis, just one other thing. Just 
knowing your interest in the technology sector, right now the 
administration is looking at Federal data centers and trying to 
consolidate. There has been a big proliferation of the Federal 
data centers. What is your sense of the prospect of perhaps 
both achieving more efficiency, protection of data and cost 
savings for the taxpayers?
    Mr. Davis. You have over 2,100 data centers right now in 
the Government for 24 different agencies. I think you could 
save several hundred million dollars a year by consolidating. I 
think you ought to put this on a fast track.
    You need to look at the security as you do those kinds of 
things. But look, in so many areas, we are not sharing savings, 
we are stovepiping. And as Mr. Dodaro said, there are so many 
ways we could work across agencies to store these kinds of 
things. You get not only economies of scale in this, you get a 
lot of other savings along the way if we would learn, between 
agencies, to share these things. It has just not been the 
culture.
    Mr. Connolly. Thank you.
    Mr. Dodaro, going back to the subject of oil, and Ms. 
Alexander, in response to the chairman's question on Mr. 
Kucinich's time, he said the problem is really with the royalty 
agreements, not so much with the law. I thought I heard you 
say, well, actually there was a change, a flaw perhaps, in the 
law that was written in 1995 that had the effect, did it not, 
of pretty much exempting a lot of offshore oil drilling from 
any royalty payment at all.
    Ms. Alexander. It is my understanding there was a flaw in 
the execution of the leases at Interior in the 1990's. Whether 
or not there is a flaw in the law is a little more of an 
opinion matter. But I think it is a fact that there were errors 
in the drafting and execution of the lease agreements at 
Interior in the 1990's. We think there are problems with the 
structure in the law just because it then, subsequently in a 
court decision, moved all price thresholds in that context, the 
legal. But it is, the execution of the leases was a problem.
    Mr. Connolly. Yes, but with respect to this change in the 
law, that is something, obviously, within the purview of 
Congress.
    Ms. Alexander. Well, Congress can solve this.
    Mr. Connolly. That is right.
    Ms. Alexander. This is something that Congress can come 
together and figure out a solution for, and we hope that you 
do.
    Mr. Connolly. And finally, because my time is about to run 
out, Mr. Dodaro, any estimate on the lost revenue to the U.S. 
taxpayers in terms of the fact that we are 93rd out of 104 
countries in royalties exacted from the oil industry?
    Mr. Dodaro. I don't believe we have a current estimate in 
that regard. But I do think, as I mentioned earlier, that we 
don't have reasonable assurance that we are collecting as much 
as we should.
    Mr. Connolly. Thank you. I yield back, Mr. Chairman.
    Chairman Issa. Thank you.
    Mr. Kelly of Pennsylvania for 5 minutes. And would the 
gentleman yield for just a moment?
    Mr. Kelly. I will, sir.
    Chairman Issa. Thank you.
    I think the gentleman, Mr. Connolly, made a very good 
point, and his chairman, Mr. Lankford, that in fact this is 
probably one of the areas in which the subcommittee needs to 
take on, under procurement reform, and work together. Because I 
do believe that this is an example where these kinds of 
questions and answers here, we can provide your subcommittee 
some of the history, so that you could work on procurement 
reform to make it clear that we never write a law again that 
could be misinterpreted by Interior, written incorrectly and 
then ultimately not survive at the court. So I appreciate that, 
and I yield back.
    Mr. Kelly. Thank you, Mr. Chairman.
    Mr. Dodaro, good to see you again. It is nice to have 
Western Pennsylvania people in the room.
    One of my questions, from where I am, we do a lot of 
touring, and I have been to a lot of meat packing plants. My 
question has always been, and I don't understand this, and 
maybe you can shed some light on this. We start to talk about 
duplication and how many people we have in different places 
checking different things, a lot of them checking the same 
things at the same time and trying to come up with maybe some 
type of a lead on how to do it.
    But I know in meat packing plants, the USDA has an 
inspector there every day, is that not true?
    Mr. Dodaro. I believe so.
    Mr. Kelly. And again, I say this from being there. My 
question then comes, we have these folks there every day. And 
then we have a plan called the Hazardous Analysis Critical 
Control Point, and it is, let me just read this. Considered 
that its pure and scientific application is a state-of-the-art 
food safety system, every meat plant designs their own system, 
in accordance with USDA requirements, and must operate 
successfully under this system. We do not need an inspector at 
every plant every day. We operate the same facilities, the same 
systems, whether inspectors are present or not.
    And I would just say that, for what I have done in my 
lifetime, running footage is a lot more important than 
snapshots from time to time. So we have these folks in these 
plants every day, USDA inspectors. They are watching what these 
people do. In addition to that, we send in another group that 
comes in to go over what they have already gone over.
    Now, when that happens, these folks, and these are not 
large meat processors, in some cases, they are small places, 
have maybe 40, 50 employees. They have to stop what they are 
doing and spend a week going over the plan, which is gone over 
every day with the USDA inspector. I am just trying to 
understand, as we go through this, and we see the duplication 
of this and the cost to taxpayers, and really the cost benefit 
analysis, where in the end does it serve the taxpayer or the 
people in those businesses? Could you shed any light on that at 
all?
    Mr. Dodaro. Yes. We have pointed out, for a number of 
years, that the food safety system is completely fragmented. It 
is really not operating effectively. There is a need to go to a 
risk-based approach, and I think that is where you are pointing 
out the real need to do that. We have recommended that there 
be, Congress commission a study with the National Academy of 
Sciences or some blue ribbon panel to redesign this. A lot of 
our food now is coming from foreign sources, and we are still 
focused on domestic production a lot.
    So we have said that the system right now can be a lot 
better, and there needs to be a real look at it. The risk-based 
approach is really the way to go.
    Mr. Kelly. And I wonder about this. I come from private 
industry, I am not really well-hinged with government. I just 
keep wondering why we keep shooting ourselves in the foot and 
wonder why we are limping. We have these committees, we ask 
these questions, we keep going over and over and over again. 
And everybody comes up with the same answer. There are too many 
regulations from too many agencies, there is too much 
duplication, there is too much overlap. When does it stop? When 
do we fix it?
    Mr. Dodaro. I think you just have to figure out which 
priorities Congress wants to pursue and stick with it. There is 
not a lot of substitute for just rolling up our sleeves and 
focusing on these areas and making sure we get results. It 
requires sustained follow-through. There are cultures and 
incentives that will keep things in place until they are 
broken. And the only way they will be broken is through 
sustained efforts by the Congress and the administration in 
order to do it. Otherwise, it won't change materially.
    Mr. Kelly. Well, I am looking forward to working with you. 
We try to drive to those same conclusions and get things fixed.
    Thanks very much. And with that, Mr. Chairman, I yield 
back.
    Chairman Issa. I thank the gentleman.
    We now recognize the gentleman from Massachusetts, Mr. 
Tierney, for 5 minutes.
    Mr. Tierney. Thank you, Mr. Chairman.
    It is interesting, Mr. Dodaro, I heard my colleagues say 
that they would like to solve the problem having to do with the 
leases and the non-collection of royalties on that. Your report 
recommends that the Government obtain a fair return on oil and 
gas produced by Federal leases. It seems like a very common 
sense recommendation. Everyone on the panel says they agree 
with it.
    But interestingly, these no-royalty leases continue. And 
you agree that we are not getting a fair return currently, 
correct?
    Mr. Dodaro. There is not reasonable assurance we are.
    Mr. Tierney. And then we had the report last year from Mr. 
Issa and his colleagues tell us on page 4 that the total loss 
from offshore drilling may extend beyond the troubled 1998 to 
1999 leases. The paragraph goes on to culminate in the end 
saying, depending on the market price of oil and natural gas, 
the total costs of foregone royalties could total nearly $80 
billion.
    In fact, your report, Mr. Dodaro, says it is between $21 
billion and $53 billion, dumping from these oil companies into 
their pockets instead of paying down our debt. We have Shell 
and BP and Chevron and ExxonMobil, $485 billion in profits. And 
they have lost 10,200 jobs. So this is the situation we do, and 
we talk about wanting to understand the history. That is the 
history. Everybody knows what the problem is. Everybody knows 
what the consequences are.
    And I just want to make sure everybody knows there is a 
solution out there. My Massachusetts colleague, Ed Markey, has 
proposed a way to address this problem. First, he recognizes 
that you can't go back and void the leases without risking new 
litigation. His resolutions are an alternative to that. It 
would not allow any new leases to companies that are currently 
benefiting from no-royalty leases. Those companies have a 
choice, you either keep your no-royalty leases, or you can 
renegotiate them to begin paying a fair price and get new 
leases eventually on that. It is up to them.
    Now, my colleague has worked very closely with the 
Congressional Research Service to make sure there are no 
constitutional issues with this problem. So my question to you, 
Ms. Alexander, is does Taxpayers for Common Sense support Mr. 
Markey's legislation?
    Ms. Alexander. We worked with Representative Markey on 
that, and we support that, among other options. We just want to 
see this fixed.
    Mr. Tierney. But that would work?
    Ms. Alexander. That would work, yes.
    Mr. Tierney. Good. So now we have the history, and now we 
have everybody saying that they agree that they want to resolve 
the problem. And yet it is not resolved.
    Let me tell you that last week, last Friday, Mr. Markey 
offered that legislation on the House floor. Not a single one 
of our colleagues on the other side voted for it. All of the 
people on our side did. It was offered again this week as a 
floor amendment. And again, not a single one of our colleagues 
on the other side voted for it, and everyone one of the people 
on this side of the aisle voted for it.
    And last year, and the year before, let me go back. This is 
not a new idea for Mr. Markey, this is something he has 
repeatedly brought to the floor. So if we think that we all 
understand the problem, if we know the history, and if we all 
say we want to fix it, it always takes deeds to make things 
happen, not words. I hear a lot of words, we have seen no 
deeds.
    So Ms. Alexander, we can offer this over and over. But 
until our friends on the Republican side of the aisle really 
want to put deeds behind their words, we are not going to get 
much action on that.
    So what would you say to convince my Republican colleagues 
over here who are blocking the fix to this change, what would 
you say they should have in mind next time Mr. Markey brings it 
to the floor?
    Ms. Alexander. As I say, our position over time has just 
been, just get this done, just fix it. The Markey bill does fix 
it, so that is one way to do it, is vote for that. Come up with 
another solution if you have another solution that you think is 
better.
    Mr. Tierney. Well, tell them why the Markey Amendment 
works. Tell them why you support it.
    Ms. Alexander. We support it because we think that it is a 
constitutional approach, based on what we have read, to putting 
the leaseholders of the no-royalty leases in a position where 
they have an incentive to renegotiate. And simply put, we just 
want to not continue to give away those resources. So we are 
looking at lots of different options.
    Mr. Tierney. Thank you.
    So let me say to my Republican colleagues, we understand 
the problem, we share what you say. Is your intention you want 
to resolve it? We have provided you with a perfectly good way, 
a legitimate way and constitutional way to resolve it. Let's 
work on it, and next time it comes up, maybe you will vote with 
us on it and we will get the matter resolved, $53 billion back 
to our people, so we are not running around cutting matter from 
teachers and reducing Pell grants so students can't afford 
college, whacking job training so people who are unemployed 
can't get back to work. Let's get serious. Let's do something 
for real.
    Mr. Cummings. Will the gentleman yield?
    Mr. Tierney. I will yield.
    Mr. Cummings. Ms. Alexander, one of the things that the 
report said was that, in some instances, information was being 
provided by the oil companies erroneously. And there was self-
reporting. And in some instances, there was no reporting 
whatsoever.
    Could you comment on that, please?
    Ms. Alexander. The issue of self-reporting, this is 
basically an honor system, here is our oil, take it, tell us 
how much you have taken. We don't think that is the right way 
to do business. We don't think that is Congress and the 
administration treating taxpayers like they have a fiduciary 
responsibility to manage our assets aggressively.
    And I just want to give credit where credit is due, we do 
support the Markey fix, but we also have worked very closely 
with Chairman Issa. I think there is a real potential for a 
bipartisan solution on this. And from the taxpayers' 
perspective, it is just, move forward.
    Mr. Cummings. Thank you.
    Chairman Issa. I thank the gentleman.
    We now recognize the gentleman from Pennsylvania, Mr. 
Meehan, for his comments, for 5 minutes.
    Mr. Meehan. Thank you, Mr. Chairman, and thank you for the 
presentations from the entire board.
    Mr. Dodaro, I didn't know for sure, but I was listening to 
the language. And I thought I picked up the Pittsburgh. Is Jim 
Dodaro your brother?
    Mr. Dodaro. No.
    Mr. Meehan. OK, but it's the Pittsburgh in the voice.
    Thank you for your presentation today. I come to this 
committee with a background that includes times as a U.S. 
attorney. In that capacity, I came in just after September 
11th, when we were dealing with the issues of terrorism. We 
each share responsibilities in other committees as well, and 
one of those committees on which I serve is Homeland Security.
    As a result, I think as each of us went through your very 
comprehensive assessment of Government spending in various 
capacities, but also the duplication, I was really struck for 
two reasons. One, with respect to sort of the bureaucratic 
overlay of so many agencies, but also what is at stake with the 
issue of bioterrorism. So I take a minute to read from your 
report at least five departments, eight agencies and more than 
two dozen Presidential appointees overseas, $6.4 billion 
related to bioterrorism.
    Then on the front end of this, we are saying there is no 
broad, integrated, national strategy that encompasses all of 
the stakeholders with biodefense responsibilities to identify 
the risks systematically, access the resources that are needed 
to do it, and then to prioritize and allocate the investment 
across the spectrum. So that is on the front end, to prevent an 
incident.
    Then you conclude, there is no national plan to coordinate 
Federal, State and local efforts following a bioterror attack. 
And the United States lacks the technical and operational 
capabilities required for an adequate response.
    This could be Katrina all over again. We are really on the 
front end of a remarkable challenge. And from my work on the 
Homeland Security Council, bioterrorism is a very real threat. 
Can you take a minute and comment on this very, very important 
aspect of this report?
    Mr. Dodaro. Yes, I would, thank you.
    Following September 11th, there was a lot of focus on 
protecting the transportation system, particularly the airline 
industries. Then what we were trying to focus on, and I think 
the 9/11 Commission, was, what are the other potential risks to 
the country, what are other avenues that could be pursued. For 
example, smuggling information or threats over the border 
physically, other modes of transportation.
    But the biodefense area is one that we felt, for a number 
of years, wasn't getting enough attention, and understanding 
what the threats were, having an appropriate plan in place to 
be able to do it, it is like a number of areas that really 
requires multiple agencies to be involved. And there really 
hadn't been a means to coordinate that.
    We tried to elevate this to the Homeland Security Council 
and the National Security Council, which are well postured to 
be able to do this. We haven't gotten as much response as I 
would have liked from them in this area, to provide the proper 
leadership. So I do think this is an area where congressional 
oversight is warranted, and from my perspective, would be very 
welcome, to bring about some of the very important things that 
could be done to make sure we are in a position to detect and 
prevent something, not only in a position to be reacting after 
the fact.
    Mr. Meehan. Mr. Davis.
    Mr. Davis. Mr. Meehan, let me just say, if you think that 
is tough, you ought to look at cybersecurity, where you have 
Intel, DHS, DOD, and every agency doing a different approach to 
FISMA, the Federal Information Security Management Act. I think 
it would be even more alarming.
    Mr. Meehan. Well, I only have 50 seconds, but I am going to 
ask both of you, in response to this, would you tell me how we 
look at creating the kind of mechanism where there is a 
national strategy and a focal point where we can get a single 
point of response that enables us to both be prepared on the 
front end, to coordinate these assets, and as importantly, in 
the event that we have an incident, to be able to respond 
effectively on the back end? We have asked for attention to be 
paid. I understand maybe you can tell me the history here. But 
what is the solution? What works best in terms of how we 
organize and then seek accountability?
    Mr. Davis. I will take a quick stab. One of the problems at 
the executive branch level is jurisdiction and turf over who is 
going to be in charge. This is going to take engagement from 
the Congress, from both parties, with the administration in 
figuring out a path and moving ahead. We haven't had FISMA 
revisions since 2002, long overdue. But I think it is going to 
take a lot of dialog and a lot of bipartisan cooperation to 
move this ahead. But it has to be done.
    Mr. Dodaro. I agree with that completely. This needs top 
level congressional and administrative support to be able to do 
it. You can't work with the agencies on a peer level and expect 
that they are going to create this type of mechanism. That is 
the fundamental problem.
    Mr. Davis. And I would just add, I didn't grow up in your 
district, but I had two of my kids who went to Swarthmore 
College in your district.
    Mr. Meehan. Well, they are obviously very bright children. 
[Laughter.]
    Chairman Issa. Ending on that high note, the gentleman's 
time is expired.
    We now recognize the gentleman from Vermont, Mr. Welch, for 
5 minutes.
    Mr. Welch. Thank you very much, Mr. Chairman.
    Mr. Dodaro, that is a great report. I really want to thank 
you for it. I thought what, among other things, was terrific 
about it is it was balanced, it looked at the whole problem, 
not just the loss from duplication, but also the loss from 
inappropriate tax subsidies, improper payments, the error rate 
in our payments. So it was quite comprehensive and extremely 
helpful.
    Mr. Chairman, I want to thank you, too. I think the focus 
of this inquiry is really important. Mr. Ranking Member, I 
really appreciate it.
    I am asking a little bit about the oil subsidies, because 
it is an easy target for us, but astonishing that it isn't 
taken care of. Your report indicated $53 billion would be saved 
by taxpayers if we eliminated that oil subsidy for royalty-free 
drilling at a time of $100 a barrel oil. So you fully support 
eliminating that subsidy for the oil companies, so we can save 
money for the taxpayers?
    Mr. Dodaro. We were asked to calculate what it would be if 
that had been in place properly during that period of time.
    Mr. Welch. Right. I would ask you what you support, if it 
would be $53 billion.
    Mr. Dodaro. I believe that is the high end of our estimate. 
But what we are trying to focus on----
    Mr. Welch. Let me just go on, I will come back to you in a 
minute.
    Ms. Alexander, you indicated that was, again, I applaud you 
because you are taking a comprehensive approach, you are 
looking at all the elements of how the taxpayer is getting 
hammered unnecessarily. But that oil subsidy was something you 
spoke about as well, that we should get rid of. The oil 
companies disagree, and they spent about $340 million in the 
past 2 years lobbying to retain this taxpayer help.
    Ms. Alexander. It is the oil companies' job to make money 
drilling oil and selling it. It is Congress' job to have a 
fiduciary role and take care of taxpayer dollars. We are 
looking out for the taxpayers, and we think there is room for a 
fix.
    Mr. Welch. Is it your view that if there are going to be 
taxpayer subsidies, and that is an expense to every taxpayer in 
the country, but the intention is to create jobs, that subsidy 
should go to emerging technologies and industries, not mature 
and profitable industries?
    Ms. Alexander. We take a skeptical look at all subsidies, 
and certainly, as a starting point, we want to know what we are 
getting for our tax dollars. If we are putting a dollar into an 
industry, we want to know why we are doing it and what our 
goals are. Are we trying to get jobs out of it and we are not 
getting jobs? Then it is an ineffective subsidy. If it is a 
very profitable industry that is mature and should be able to 
take care of itself, then it shouldn't need subsidies.
    We are going to be skeptical about subsidies to new and 
emerging technologies, and set very high performance standards. 
There is a reason and a timeframe.
    Mr. Welch. And basically, that skepticism is appropriate. 
It should be applied to a tax expenditure, which costs the 
taxpayer money, just as it should be applied to any line item 
expenditure in the budget, correct?
    Ms. Alexander. We see it that way, yes.
    Mr. Welch. Mr. Davis, some people say you are a real smart 
politician. I am going to ask you really for some advice.
    Mr. Davis. I am a reformed politician. [Laughter.]
    Mr. Welch. In this room, we have the Democrats who tend to 
hammer away on what we see as tax giveaways. And a lot of times 
the other side of the aisle is focusing on duplication. My 
view, we are both right. Where there is duplication, we ought 
to eliminate it. Where there is a freebie tax subsidy, we ought 
to eliminate that. But we are sort of arrayed on opposite sides 
of the line here, and I know that the chairman and the ranking 
member want to save taxpayers' money. That is the ultimate 
goal.
    I wonder what you would think of us trying to pair off 
areas where we agree. In other words, Mr. Lankford is doing 
good work in his subcommittee. You mentioned, for instance, 
duplication that makes no sense, VA and DOD records. Why don't 
we have one set of medical records. What if we paired that 
with, say, getting rid of the ethanol subsidy, where there does 
seem to be some bipartisan support, and you are doing them 
together? Or another pairing might be these oil subsidies that 
just serve no purpose and cost the taxpayers $53 billion, and 
we pair that with following your advice, where we have 
different Federal agencies requiring the States to accommodate 
each one of their different standards for verification? It 
makes absolutely no sense.
    So how do we, my frustration here at times is that it seems 
like it is a political impediment that inhibits us from taking 
appropriate action that can make real progress. And in your 
testimony, you suggested to us that we look in the mirror. 
Frankly, I think that is pretty good advice.
    And my goal here would be to save taxpayers' money. Where 
there is duplication, we can agree on, it ought to be 
eliminated, let's do it. Where there is a tax expenditure that 
is just a ripoff from the perspective of the taxpayer, let's 
eliminate it. From a moving ahead, making progress on what the 
chairman and ranking member want to accomplish here, do you 
think that makes some sense?
    Mr. Davis. It not only makes sense, it is essential if we 
are going to move ahead. You have a Democratic administration, 
you need an administration buy-in. You have a Congress that is 
divided. And when it comes to waste, you say one man's pork is 
another man's steak, but on a lot of these efficiency issues, I 
think we ought to be able to come together on this committee, 
sit down, we are not going to agree on everything.
    But there are enough things we agree on, put together that 
report and then you have to drive it. Then you have to go to 
the administration, you have to go to the floor. And look, 
let's face it, there are interest groups outside of this 
committee room that want to weigh in on some of these subsidies 
and the like. It is easy to talk in a vacuum where you have 
your bean counters here, these are the numbers. But when you 
get outside, it becomes a little more difficult.
    So this committee, I think, could play a very vital role in 
coming together with a strong bipartisan report and pushing 
that, holding hearings on that. I think you could get everybody 
back again, once you get some agreement on this and trying to 
drive it.
    The frustration I felt up here in 14 years in the House is 
just, there is no sustainability to this. You get a report, you 
have a hearing, you get a little momentum, and you forget about 
it and you move on to the next new thing. But this is something 
this committee was empowered to do when it was formed back in 
the 1950's. I think it is something that, we are not going to 
agree on everything. But there are enough things we agree on, 
we could put together a pretty juicy report, and I think save 
the taxpayers hundreds of billions of dollars. So I think it is 
a good suggestion.
    Chairman Issa. I would give you more time if I possibly 
could, because you were on all the right message. I thank the 
gentleman.
    We now recognize the gentleman from Pennsylvania--we are 
very Pennsylvania-oriented committee, as you know--Mr. Platts, 
for 5 minutes.
    Mr. Platts. Thank you, Mr. Chairman. I certainly thank all 
three of our witnesses. It is great to have all of you here, 
and your insights.
    Mr. Davis, I actually, with all respect to the current 
chairman, I always want to say, Mr. Chairman, great to have you 
back as well.
    Chairman Issa. Let it out, just keep letting it out. 
[Laughter.]
    Mr. Platts. Your insights are certainly very helpful to us. 
I want to commend Senator Coburn for having sponsored the 
legislation and the result in this report, and the important 
work of GAO and now following through on the assignment. Really 
what I see is the beginning of the process, the first of what 
will be hopefully a lot of dialog between GAO, this committee 
and its important work. Tom, you touched on it perfectly, 
sustainability, that we don't just talk about these things, but 
we follow through.
    As when you were chairman and now with Chairman Issa, I 
have the privilege of chairing the Subcommittee on Government 
Organization, Efficiency and Financial Management. I assure 
you, we will do our best as a subcommittee to sustain this 
effort from the legislative side and working with all the 
parties.
    On a specific issue, when you think about what is in the 
report, what is highlighted, and the inefficiencies, the 
duplication, the waste of resources, teacher quality, education 
of our kids, employment training, especially with unemployment 
over 9 percent for almost 2 years, DOD, Homeland Security, 
these are all top priorities for our country and for our 
citizens. Yet, we know we can do a lot better with the 
resources we are putting into them.
    Two first questions, Mr. Dodaro, to you, and this probably 
will be maybe in a followup hearing with you or staff on the 
subcommittee level, as you looked at some of the duplication 
such as the $4 billion on teacher quality, is there any ability 
to give even a guesstimate of savings, administrative savings, 
if we took those 82 different programs into even half that 
number? Any ability to give a guesstimate of that $4 billion, 
how much could we likely save from eliminating the duplication?
    Mr. Dodaro. I will go back and take a look and work with 
the team. I don't think we were able to do it, because there 
are a lot of limitations on the amount of information that is 
available on what it costs to administer some of these 
programs, particularly those in this case that are administered 
through the State and local level. But we do believe there is 
plenty of opportunity here to consolidate programs. And as I 
mentioned earlier, in the administration's proposal for 
education reform, they are already proposing to consolidate 38 
of these programs into 11. So I think there are a lot of 
opportunities. I don't have a cost estimate. I wish I did.
    Mr. Platts. And I think that is a positive sign here, your 
reference to Secretary Duncan and DOE, looking at trying to be 
proactive in that consolidation effort to be more efficient.
    A follow-on, and I think it is a similar answer, that you 
don't have the ability to have the details at this point, and 
that is, I am going to stay with teacher quality, teacher 
preparation, those 82 programs, I don't think you probably have 
the data available to you right now to do a cost benefit 
analysis to say, all right, we have these 82 programs, these 5 
over here we can show have really done a great job. These other 
77 are struggling. Is that accurate, that at this point you 
don't have the data or info to be able to get to that detail, 
that cost benefit analysis?
    Mr. Dodaro. That is correct, especially for the smaller 
programs. We do mention in the report that a number of the 
smaller programs are so small, it is hard to evaluate them.
    Mr. Platts. That under $50 million number, what the 
administrative costs, what the savings would be?
    Mr. Dodaro. Right. That is correct.
    Mr. Platts. In looking ahead to the hearing process, I have 
to tell you, the temptation is to try to make the point about 
the duplication, to invite one representative from all 82 
programs on just teacher education to come. We would fill the 
room, there wouldn't be any seats left, to make the point that 
your report does, that we need to do a lot better here.
    An additional question I am going to try to squeeze in 
here, improper payments, huge issue, you reference $125 billion 
as probably the low end. That is what we know or think we know 
about it, who knows how much is really out there. Any specific 
recommendations? Because when we think of how to balance the 
budget and deficit reduction, it is entitled reform. And two of 
the biggest areas of improper payments are Medicaid and 
Medicare. Any specific areas you want to put us toward 
regarding improper payments and those two programs?
    Mr. Dodaro. The first thing I would say, in the Medicare 
area, there needs to be an estimate for the prescription drug 
component. Right now there is not, so the estimate is 
incomplete.
    There are opportunities to use more information technology 
up front to help detect, and we are looking at and evaluating 
opportunities right now. We talked about it at the high risk 
hearing with Chairman Issa. So we are looking at that issue.
    I think the Improper Payments Elimination and Reporting Act 
that was passed by Congress last year is a very important 
vehicle. It lowers the thresholds, it requires accountability, 
it requires regular reporting, setting of targets and followup 
and transparency in reporting. So I do think this is a really 
important area that, with sustained attention, that we can make 
a lot of progress on going forward.
    Mr. Platts. Hopefully we can sustain that effort with you. 
Chairman Davis, did you have something to add?
    Mr. Davis. I would just add, improper payments I think has 
been constantly a problem for government. And this legislation 
helps. There are so many great software items out there on 
fraud detection, anomaly detection and the like that aren't 
being utilized. I think you need to continue to push that from 
here.
    And I would just add, share and savings contracts are 
something the Government needs to look at in some of these 
areas. That is basically that you don't pay anything unless you 
get a return, and then you can do a percent from that, and it 
is negotiated down. They are legal under the FAR, but they are 
rarely used. But it is a great way to get something out there 
quickly. It doesn't have to come out of budgets at this time. 
It is a net-net to the Government. I throw that out for 
discussion.
    Chairman Issa. I thank the gentleman.
    Mr. Platts. Thank you, Mr. Chairman.
    Chairman Issa. The gentlelady from the District of 
Columbia, Ms. Norton, for 5 minutes.
    Ms. Norton. Thank you very much for this hearing, Mr. 
Chairman, it is a very important and helpful hearing.
    I have a question for Mr. Dodaro, and my good friend, Mr. 
Davis, my regional neighbor and good personal friend. But I am 
going to give you a pass on the topic du jour. I am not going 
to ask about oil subsidies. In fact, I am going to ask you 
about a subsidy that lies way beneath the surface.
    I am ranking member of a committee that has to do with 
property and property disposal, also with building and leasing. 
I note, Mr. Dodaro, that among your lists of areas identified 
was, and I would like you to elaborate upon it, because it is 
stated so tersely, ``improve cost analyses used for making 
Federal facility ownership and leasing decisions could save 
tens of millions of dollars.''
    Let me give you an example. We just built a beautiful 
Department of Transportation building just a few years ago. It 
is huge, it was state-of-the-art. Guess what? We built the 
Department of Transportation, it will always be there, it is a 
headquarters building, we built it, built by a developer, we 
have a 15-year lease on it. When that lease is out, we probably 
shall have bought the building. Then we will start buying the 
building again.
    I believe this has a lot to do with scoring. What changes 
do you think should be made and who should make it? We run up 
against these humongous losses, it is not tens of millions, it 
is billions of dollars, because we don't do real estate the way 
the private sector does it. How should we change scoring? Who 
should do it? Is it administrative? Does it take an act of 
Congress?
    Mr. Dodaro. We have recommended that OMB come up with a 
proposal to be able to deal with this issue. That has not been 
done yet. But it is a combination of action by OMB, working 
with CBO and the budget committees that really would have to 
make a change in the scoring rules. I think it is appropriate. 
There needs to be flexibility. It is not always one way or the 
other, but there needs to be a good cost benefit study, and the 
government and the taxpayers would benefit.
    Ms. Norton. Yes, all I am asking for is that the Federal 
Government not have one way of doing real estate transactions, 
while the rest of the country does it another way. The first 
thing you have to look at is, why does everybody else do it 
that way? Why do you buy a home with the mortgage, and if you 
are the Federal Government, you have to put the money straight 
down? Why is that better for the taxpayers?
    Mr. Davis, I was interested, in light of your, this is so 
Davis-like, win-win approach to things, this notion of trying 
to find ways to work together on these things, I noted that in 
property disposal, I have just signed a letter with the 
chairman of the subcommittee, in which we are asking GSA for 
access to their database on excess property. Now, the President 
has a whole study on excess property going on, and now you see 
our committee interested as well.
    So you see the administration, you see this committee and 
you see the appropriate subcommittee all going at the same 
issue, all seeing that there are dollars there. What role, Mr. 
Davis, having been chairman of this committee, do you think the 
committee should play now that there are so many actors 
interested in this low-hanging fruit?
    Mr. Davis. Well, and there is an initial actor. Martha 
Johnson, the Administrator at GSA, has put a team together, her 
own advisory committee on this subject, too, of doing away with 
surplus properties. You have a lot of cooks in the kitchen 
right now. This committee needs to drive an outcome. I think 
you need to hold their feet to the fire. We need to put some 
time limits on this. This has been around a long time, before I 
came to Congress, trying to dispose of property or utilize 
dilapidated properties in a way that we can rehabilitate them, 
use them, sometimes share it with the private sector.
    What we need to do here at the subcommittee level is 
continue to hold hearings and drive it and keep their feet to 
the fire. You have to put time limits on this, or the clock 
runs out. I think Mr. Dodaro's report shows a lot of savings in 
this, if we can get it right.
    I would just add one other thing on the scoring. I hate to 
mention this, but you get frustrated, Congress can always 
direct scoring, too, if you don't get any action out of the----
    Ms. Norton. What do you mean, direct scoring?
    Mr. Davis. You can direct scoring. You can write the rules 
for scoring. We have done it, I don't say we do it all the 
time, but we have done it with some frequency.
    Ms. Norton. Save a lot of money. I yield back, thank you.
    Mr. Platts [presiding]. The gentlelady yields back, and 
another former chairman of the committee, Mr. Burton, 
recognized for 5 minutes.
    Mr. Burton. Tom, it is good seeing you again. I understand 
you are out there in the private sector making lots of money. 
So it is good to see you. See, he is blushing.
    Mr. Davis. Not this morning. [Laughter.]
    Mr. Burton. Well, anyway, welcome back. It is good seeing 
you. This picture simply doesn't do you justice.
    But anyhow, I would like to make a brief comment about Mr. 
Tierney's remarks a few minutes ago when he was here. I wish he 
was still here. We checked on the issue that he raised on that 
recommital motion. The reason that recommital motion failed was 
because they were, in effect, I don't like to use the term 
blackmailing, but blackjacking the oil companies into 
renegotiating leases that had already been agreed to in order 
to get a new lease. And that is something that I think most 
people would agree is a violation of law. The leases, some of 
them are for 20, 25, 30 years.
    And there was a case, and I am stating all this for the 
record, there was a case, the Kerr McGee case in 2007 that went 
to court, where they tried to force a renegotiation of the 
contract, and Kerr McGee won because the contract was valid and 
the government had no right to go back and insist on a change 
in that, simply because they wanted to get more back from the 
company.
    Now, I think there is a way that we can do this in the 
future. We have talked about this up here. That is, we can 
encourage them, when we negotiate new leases, not threatening 
the old leases, but when we renegotiate, when we negotiate new 
leases, to create a better way to get those funds back that 
would help bring more money into the Treasury and reduce the 
debt.
    I would like to go into this a little bit further, this is 
a little off the subject at hand but I think it is extremely 
important. We have been talking about this, and I noticed on 
the news in the last few days, there are more and more 
commentators and ``experts'' that are talking about it, and 
that is, our dependence on foreign energy. It plays into what 
we are talking about in an unusual way.
    We import about 63 percent of our energy. Back in 1972, 
when we had the oil embargo, it was about 25 or 26 percent. So 
we have more than doubled our dependence on Middle Eastern oil, 
oil coming from Mexico, Canada and Venezuela, the communist 
dictator down there, Chavez. So we are in a position right now 
where if these oil supplies were in jeopardy, we could see the 
cost of oil per barrel go through the roof and the cost of 
gasoline and other things that we use oil for, as far as energy 
is concerned, go through the roof.
    I got some gasoline last night, which may not be of 
interest to anybody, but it was regular gasoline, and it cost 
me $3.57 a gallon. And that was the lowest that I could find on 
the entire George Washington Parkway. So the cost is higher 
than that here in D.C., and it is going up. Some people say 
that there is a disruption of the oil supplies coming in from 
the Middle East alone, if we had a blockage of the Suez Canal 
or the Straits of Hormuz, or the Persian Gulf, that we would 
see oil and gas costs go through the roof. You could see $5, $6 
a gallon gas.
    Now, we deliver, in this country, a great deal of our 
resources by truck. T. Boone Pickens was in to see me about a 
week or two ago, and he told us if we converted or got all of 
the 18 wheelers to use natural gas, we could cut our dependence 
on foreign oil by 50 percent within the next decade. That one 
thing. And yet we are not drilling or doing anything to explore 
for energy in this country. We can't get new oil leases, we are 
getting all kinds of environmental issues raised that way, we 
can't drill here, we can't drill there. We have trillions of 
gallons of coal shale that could be converted to gas to oil, we 
have oil all over this country, in the ANWR and off the 
continental shelf and in the Gulf of Mexico. We have trillions 
of cubic feet of natural gas, and we are not doing anything.
    So we are in effect creating a greater dependency on 
foreign energy than we ever have in the history of this 
country. We have gone from 25 percent to 60 some percent 
dependence on foreign energy, since we had the oil embargo, 
where people were walking four blocks to get a can of gas to 
get to work.
    If you would just give me another 30 seconds, Mr. Chairman. 
I think it is extremely important, and I know this is off the 
subject and I really appreciate your being tolerant of my 
comments here. But I think it is really important, when we are 
talking about renegotiating or negotiating oil leases or gas 
leases or whatever we are talking about that we realize, we 
have a huge dependency on foreign energy. And this country, 
from an economic standpoint, and a defense standpoint, could be 
in a terrible situation if we don't move toward energy 
independence.
    I think all of us, all of us on this dais and all of us, 
regardless of whether we are Democrat or Republican, ought to 
be talking about ways that we can move in this direction as 
quickly as possible. Because if we don't, and things go south 
in the Middle East or in Venezuela or elsewhere, we could 
really see problems, lights off, gasoline going through the 
roof, the cost of all the goods and services that are trucked 
going through the roof, an inflationary spiral that could kill 
this country.
    With that, I thank you very much, Mr. Chairman.
    Mr. Platts. Thank you.
    Mr. Davis. Mr. Burton, can I react to that for just a 
second? I think you are on, but can I just make one comment?
    Mr. Platts. Sure.
    Mr. Davis. You have to remember, the stone age didn't end 
because they ran out of stones. Our dependency on oil, it is 
not because we run out of oil. There are going to be 
alternative fuels developed. That, I think, continues to be the 
long-term strategy.
    What is the most frustrating is about Congress' inability, 
and I was part of this, to come to grips with some kind of 
defined energy policy that has more domestic production, as you 
have noted, more research and incentives into alternative 
fuels, which we have started to do, and then more conservation. 
It is a three-pronged deal. The parties should be able to come 
together on this or exactly what you say is going to happen.
    Mr. Burton. Mr. Chairman, let me just make one brief 
comment. That is, the things that Chairman Davis just mentioned 
is absolutely accurate. We need a comprehensive approach.
    But a lot of these things they are talking about are going 
to take time, it is going to take 5, 10, 15 years. We don't 
have the luxury of time. We need to get moving on energy 
independence right now.
    Thank you very much.
    Mr. Platts. The gentleman yields back. Having had the 
privilege to serve under both former chairmen, how could I not 
agree with both of you. You make great points when we talk 
about energy independence. It is economic security, it is 
national security. They are all intertwined.
    With that, I yield 5 minutes to the gentleman from 
Missouri, Mr. Clay.
    Mr. Clay. Thank you so much, Mr. Chairman. Let me first 
welcome Mr. Davis back. Your portrait and Mr. Burton's 
certainly look good in this freshly painted hearing room, don't 
you think?
    Let me start my questioning with Mr. Dodaro. Thank you for 
your testimony, and recommendations on ways we can make the 
Federal Government more efficient and save taxpayer dollars. I 
would like to focus on the Department of Defense.
    I am concerned about DOD's pattern of negative appearances 
in GAO reports. As we continue to increase DOD's budget, the 
agency continues to be plagued by inefficiencies, duplicative 
programs, waste and in some cases fraud. In your report, you 
identified the DOD's military health system as an area of 
concern for duplication and redundancy. The report states that 
the DOD military health system has no central command authority 
or single entity accountable for minimizing costs and achieving 
efficiency. That is very troubling, given its mission.
    Can you share with the committee the annual costs of DOD's 
military health system, and what are the projected cost 
increases through 2015?
    Mr. Dodaro. It is about $50 billion.
    Mr. Clay. Fifty billion for the health care. Wow.
    Mr. Dodaro. Right. We point out in the report, too, that 
health care costs at DOD, just like they are in other parts of 
our economy, are growing. The area that we mention in terms of 
military health care commands is something that has been 
studied by the Defense Science Board and others, or 
recommendations within DOD to do it. And they pursued a 
strategy that had minimal changes involved. We think if they 
pursue a broader strategy, it would be very important.
    Also in the health care area, Congressman, is the cost of 
prescription drugs, which is a fast growing component of health 
care. We think that DOD and VA working together, which they 
were doing a few years ago, could yield some benefits by 
leveraging their purchasing power as well. They have agreed to 
start revisiting that issue.
    Mr. Clay. Thank you for that response.
    What impact do you think the system's redundancy and 
command structure issues have on those costs?
    Mr. Dodaro. The estimates that were made at the time, 
savings could be achieved between $250 million and I think over 
$400 million a year, depending on the nature of the 
consolidation.
    Mr. Clay. OK, so that would kind of help save taxpayers, if 
they took the recommendations and implemented them?
    Mr. Dodaro. That is correct.
    Mr. Clay. And right now, they are pretty much ignoring 
them?
    Mr. Dodaro. They have made some minimal changes in that 
regard. But we think they could do more.
    Mr. Clay. OK, and you have recommended alternative concepts 
that have been on the table for a while, in addition to your 
report, the Center for Naval Analysis did one in 2006. And you 
also report that DOD officials generally agree with the facts 
and findings of your analysis on their health system. With 
rising costs in the billions, with DOD's health system and 
clear inefficiencies, do you think DOD is doing enough right 
now to make improvements?
    Mr. Dodaro. I think they can do more, as we pointed out in 
our report. We have encouraged them to do so. We will continue 
to do studies, basically outlining what some of the options 
would be. For example, a single military command is an option. 
There are other options that could be pursued. But this is a 
case where there is cultural stovepiping by the services, and 
there needs to be some broader leadership brought to bear. I 
think it is warranted, giving the fast-rising health care 
costs.
    Mr. Clay. Thank you for that response.
    Mr. Davis, going back to an efficient energy policy, one 
argument we hear is that eliminating these subsidies would cost 
jobs. I note that from 2005 to 2009 the top five oil companies 
have reduced their U.S. work force by more than 10,000. What 
would happen if we shifted these subsidies from oil to wind or 
other domestic producing energy initiatives? Wouldn't that spur 
job creation in this country?
    Mr. Davis. I am just not an expert on those areas. I am one 
who would let the marketplace set that, rather than some of 
these incentives. But we are starting to incentivize wind, we 
are starting to incentivize some of these other areas. It is 
having an effect, not just on job creation, but pre-positioning 
us for the future, and a global economy.
    Chairman Issa [presiding]. I thank the gentleman.
    Before I recognize Dr. Gosar, we have a request from two 
Members who have had to leave the dais that there be unanimous 
consent for the General to revise and extend your report. I 
understand there is some additional detail that has been 
requested your people say they could give us in supplemental 
for this report. Is that amenable to you? We will leave the 
record open for you to supplement with any additional details, 
for example, the 80 programs and four agencies, naming them, 
those sorts of things.
    We realize that is not easily put together in 1 day.
    Mr. Dodaro. Yes, we will do that.
    Chairman Issa. I thank the gentleman.
    Dr. Gosar is recognized for 5 minutes.
    Dr. Gosar. Mr. Davis, I am currently co-sponsoring 
resolution 606, which establishes a bipartisan Presidentially 
appointed sunset commission that identifies failed programs and 
those that are not achieving their goals, to review them and 
subject them for termination. I suspect the commission would 
review this committee's work.
    With your experience, what are your thoughts on this, if 
this legislation were enacted into law?
    Mr. Davis. If I were in Congress, I would co-sponsor it. I 
think that is a good place to start.
    One of the things you have to remember is when you start 
talking about programs that don't work or that have expired and 
the like, that there are a lot of interest groups out there 
that really don't care about efficiency. And they push Members, 
and they have their say in this by the time it is over.
    So it is great to have a GAO or a commission like this that 
can call the balls and strikes. And then it gets harder for 
some of these groups to defend some of these subsidies and some 
of these programs that may not be doing well. So I think it is 
a wonderful idea. It is another starting point on this.
    The only point I would make is that in all of this, it is 
sustainability, keeping the momentum going. It is a lot easier 
to make government work more efficiently and to take costs out 
of government in terms of delivering services than it is to cut 
programs. That is where our focus needs to be.
    Dr. Gosar. Thank you.
    Ms. Alexander, would you see this as a real benefit that 
taxpayers could get behind?
    Ms. Alexander. We supported different forms of sunset 
commissions in the past. It is something that, we would look at 
the details of your resolution, but certainly we are open to 
the idea.
    Dr. Gosar. Good. Mr. Dodaro, to Mr. Mack's earlier 
questions, you mentioned real property owned and maintained by 
the Government that are unnecessary and not being used. In your 
view, what is the best method to get the agencies to part with 
this property and sold to the private sector? What are our next 
steps to make this happen?
    Mr. Dodaro. We have recommended in the past, OMB chaired, 
and they do have a real property council at this point in time. 
I think Congress should require regular reports on a quarterly 
basis from OMB about what the plans ought to be to dispose of 
property. Right now, there are over 45,000 buildings that are 
under-utilized. That has grown over the past year by 1,800 
buildings. The cost to maintain under-utilized properties, over 
$1.6 billion a year. So I think there needs to be plan.
    Now, the administration has set goals to try to dispose of 
property by the end of 2012. But I think it is part of 
Congress' responsibility to hold them accountable for what 
progress they are making toward achieving those goals.
    Dr. Gosar. Thank you very much. I yield the balance of my 
time.
    Chairman Issa. Would the gentleman yield?
    Dr. Gosar. I would yield.
    Chairman Issa. Thank you. Mr. Dodaro, have you looked at 
some of the excess property in sufficient detail to look at 
things, for example, I was out at Moffett Field on a committee 
fact-finding. We discovered that NASA was utilizing a 
relatively small portion of it, leasing out a small portion of 
it profitably, and then leasing out for de minimis amounts 
large amounts of it for non-core business that was important to 
the community.
    Have you looked at those sorts of things, of whether or not 
agencies holding land that is not technically under-utilized, 
but being utilized for non-core functions, did you look at any 
of those sorts of items?
    Mr. Dodaro. I would have to go back and check with my team 
and I will provide you an answer for the record, Mr. Chairman, 
on that.
    Chairman Issa. I appreciate that.
    One additional one is, you talked in terms of, the other 
side was asking questions, and I think it was very insightful, 
you were almost saying we need a second Goldwater-Nichols, that 
we need to go further in merging the command structures of the 
military from the standpoint of spending. Is that pretty much a 
succinct part of your report?
    Mr. Dodaro. I think there needs to be some outside 
intervention, in order to break some of the stovepipes down at 
DOD.
    Chairman Issa. Chairman Davis, you have certainly seen this 
and you were here for the BRAC process. Would you say that in 
fact, that is one of the things that committee should look at, 
is lessons learned and failures, if you will, post-BRAC, when 
they no longer belong to the military, yet they are still 
costing the taxpayers?
    Mr. Davis. Well, one of the problems, the McKinney Act was 
passed, I think, with the greatest of intentions. But at the 
end of the day, I think the priorities have shifted from how do 
we use this land in the community in some cases to how do we 
put this back on the tax rolls. Which also helped those 
communities, and how do we get money back to the Federal 
Government. We are borrowing 40 cents on the dollar. It is just 
not sustainable. We have to start looking at costs. I agree.
    Chairman Issa. Thank you. And one last question, as a 
followup, Ms. Alexander, you have been very supportive of many 
fixes. I remember that your organization and several others 
were supportive of us stripping the courts of the ability to 
make the decision that they unfortunately made that puts us 
with these billions being lost through oil leases that were 
flawed. And I know that we agree to disagree on whether or not 
Mr. Markey's fix would be held constitutional, or whether it 
would fall into that punitive.
    But more broadly, have you looked at what could be gained 
by Congress taking all of the various subsidies, oil being one 
of them, but there are other energy subsidies, and requiring 
them to be brought together, something that follows the theme 
that we have been talking about here today?
    Ms. Alexander. We haven't specifically looked at how to 
package all the energy subsidies together. We tend to, our work 
has been to look at individual subsidies. But certainly, we 
recognize the need for a comprehensive energy policy, and to 
look at whether or not each dollar is going toward a common 
goal. So that is something we would be happy to work with the 
committee on. We have looked at lots of different energy 
subsidies across different fuels. We try to look at them 
together, but we understand the difficulty of looking at them 
all side by side. We certainly don't think that we have apples 
to apples comparisons coming out of the administration or 
Congress as often as we would like.
    Chairman Issa. We look forward to working together on that.
    With that, we recognize the gentlelady from New York for 5 
minutes.
    Mrs. Maloney. First, I would like to welcome my former 
colleague, Tom Davis, who did an extraordinary job as chairman 
of this committee, on which I was honored to serve. He was 
always a good fighter for the partisan cause, but also 
reasonable and listened to the minority and we worked together 
on a lot of good bills. It is good to see you, we miss you, 
Tom, welcome back.
    Mr. Davis. Thank you.
    Mrs. Maloney. I want to thank Mr. Dodaro for your excellent 
report. It is really very helpful, and the chairman, for 
focusing on it. This is a time that we need to look at ways to 
protect taxpayers' dollars and start reducing that deficit and 
debt.
    Your report says that some oil and gas companies are not 
paying what they owe under existing leases. I think that is a 
little bit of an understatement. Your investigation examined 
royalty reports for 2006 and 2007, and found that many were 
simply missing. They also found many sales reports were 
erroneous.
    Specifically, your report states that you found numerous 
instances in which oil and gas production data were missing or 
sales data appeared to be erroneous. Is that correct?
    Mr. Dodaro. That is correct.
    Mrs. Maloney. For just these 2 years alone, 2006 and 2007, 
your investigators found that oil and gas companies may have 
withheld $117 million in uncollected royalties. That is a 
staggering amount. Your report indicates that one reason this 
may be happening is because we rely on oil companies to self-
report.
    Mr. Dodaro. There needs to be more verification by the 
Interior Department of the data to make sure that the Federal 
Government is getting, there is reasonable assurance that they 
are getting the revenues that are there. So there is a set 
schedule for verifications that are supposed to occur. But the 
Department was way behind in maintaining that schedule.
    Mrs. Maloney. Well, why in the world are we relying on them 
to self-report, when we have documentation that they are not 
capable of self-reporting accurately? Why in the world don't we 
have the royalties reported, what is due, by the agency, or at 
least a third party? Why in the world are we relying on the oil 
and gas industry that is not reporting accurately, according to 
your own study after study after study?
    Mr. Dodaro. Our recommendation is that there is more 
verification that needs to be done by them.
    Mrs. Maloney. But you are still letting the companies 
verify, correct?
    Mr. Dodaro. No. Interior needs to verify.
    Mrs. Maloney. Interior needs to verify.
    Mr. Dodaro. Having self-reported information can work if 
there is verification by the departments of the checks and 
balances, rather than go out and have people independently 
measuring it. So it can work, but the Department has to do 
their part to protect the taxpayers. That is what you are 
saying and that is what we have said in our recommendations.
    Mrs. Maloney. Well, also in your recommendation your report 
proposes that the Federal Government use independent third 
party data to provide greater assurance that royalties are 
accurately paid. But my question is, do you think it is better 
to have a third party or just have Interior do a better job 
verifying?
    Mr. Dodaro. Well, Interior needs to do a better job 
verifying it. They can use their own verification, they can use 
other third parties to corroborate as well. That is what we do 
in doing our audits and verifications. You should use 
everything that is available to you to corroborate data, to 
make sure that the reporting is as complete as possible and 
that taxpayers are protected and we are getting the revenue 
that we deserve.
    How much do you estimate we would be able to bring in if 
they verified it in an appropriate way?
    Mr. Dodaro. We don't have an estimate right now.
    Mrs. Maloney. And why is it taking so long? Are they 
verifying now in a better way? Have they taken the steps to 
respond to your recommendations?
    Mr. Dodaro. They are starting to, from the team. We are 
going to be following up and staying on this, and we will 
provide regular reports to this committee.
    Mrs. Maloney. Do you think it is important that maybe we 
need to legislate that they verify, to make sure it happens? 
What do we do to make sure this happens?
    Mr. Dodaro. I think you ought to have Interior up here and 
explain what they are doing and the importance of doing it. I 
think a regular oversight is important. We have done work. The 
Inspector General has done work over there. We are continuing 
to do our part. So I think that it is good to have sustained 
followup with the department that is responsible for handling 
these matters.
    Mrs. Maloney. Well, I regret that there was an amendment 
that I authored in another committee, and the debate went on 
just until now. So I missed a great deal of your testimony. In 
the 21 seconds left, I would like to ask you, in your report, 
what other area in government can we manage better and save 
funds? Obviously the oil and gas has historically been an area 
of tremendous abuse, particularly on oil extracted from 
federally owned lands. But what other category in government do 
you think, if we managed it better, we would be able to save 
taxpayers dollars and make a dent in this terrible deficit we 
have?
    Mr. Dodaro. Our report discusses opportunities virtually 
across government. The Department of Defense is an opportunity 
there, I think, for significant savings. I also mentioned the 
need to focus on revenue collection, where we are not cutting, 
we are actually getting more than we are owed in from a revenue 
standpoint, beyond the Interior issue. I think the IRS can and 
should implement a number of our recommendations to take that 
area on.
    I think we have also recommended that tax expenditures be 
brought under regular review. That is almost as much as 
discretionary spending in a year, in revenue foregone.
    So I think all those are really good opportunities, to be 
able to save moneys and to be more efficient. But in tackling 
our deficit, efforts there have to go beyond just these 
programs and to entitlement spending as well.
    Mrs. Maloney. My time is expired. Thank you.
    Chairman Issa. I thank the gentlelady.
    Mr. Davis, I think you wanted to respond to that also.
    Mr. Davis. I just wanted to, Mr. Issa had asked a question 
earlier where he talked about, he asked something similar. 
There is a lot of savings between agencies, where they can 
chart sharing services. I know they allude to that in the 
report. It wasn't just the focus of this report. But agencies 
can share services. Right now it is just very stovepiped in 
terms of the way they look at it, the way they are budgeted. 
And they are reluctant to do that.
    But you could save literally billions of dollars, probably 
tens of billions, if they could share services between 
agencies. As we talked about, the best illustration being 
medical records between VA and DOD. There is no reason you need 
two separate lists.
    But that is the kind of thing, the collaboration between 
agencies, that is not really existing now that could save a 
lot.
    Chairman Issa. I thank the gentleman.
    In closing, actually for the gentlelady's edification, too, 
because I think Mr. Dodaro did it very well when he was 
explaining something to us, this third party data that we want 
to explore further with the GAO, the idea of when an oil 
company takes oil, they put it onto a tanker that is weighed 
and measured. They offload it and it is metered. This is all 
third party data, that if we gathered it all, it would be 
almost impossible not to see any discrepancies between what is 
reported and so on.
    This is also, earlier, what they said about the IRS. The 
fact is that if somebody says, I don't have any money, and yet 
you see credit card receipts saying they are spending money, if 
that data is compared within the Internal Revenue Service, that 
third party collaboration, because remember, IRS is voluntarily 
reported, too. But some people don't quite report accurately, 
as they discovered when people were saying what they lost in 
Louisiana, and it didn't match anything that they had ever 
declared.
    So I look forward to working with the gentlelady on that.
    In closing, particularly for Mr. Dodaro, our intention in 
the committee is to have you back on a roughly quarterly basis. 
I hope that either you or a designated representative would be 
able to do that, so we can continue this dialog in a way to 
stay on top of what you are doing and of course, on top of what 
the administration is agreeing to do.
    Additionally, I want to again repeat for the record that 
the commitment to go after a number of areas you have covered 
here today, including natural gas and oil, and find 
constitutional ways to keep from losing the money that we are 
losing, and particularly, we are going to have the new agency, 
the Ocean Energy Management, the old MMS, we intend to have 
them back. Out of deference to the reorganization that was 
announced by Interior, we are trying to give them a reasonable 
amount of time. But Carolyn, we are going to have them in, 
specifically, as we did when Chairman Davis had them in 
repeatedly.
    So I want to thank the witnesses today. I would like to 
have you all back. I suspect, because of your expertise, we 
will have you all back. And this committee stands adjourned.
    Mrs. Maloney. And my statement in the record. I ask 
unanimous consent.
    Chairman Issa. Oh, sorry, and unanimous consent that your 
statement and all statements may be placed into the record, for 
up to 7 legislative days.
    And all of you, by unanimous consent, may revise and extend 
for that same period of time.
    We stand adjourned.
    [Whereupon, at 12:45 p.m., the committee was adjourned.]

                                 
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