[Senate Hearing 112-257]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-257
 
                     HOW TO SAVE TAXPAYER DOLLARS:

                   CASE STUDIES OF DUPLICATION IN THE

                           FEDERAL GOVERNMENT

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

                                HEARING

                               before the

                              COMMITTEE ON

               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE



                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 25, 2011

                               __________

        Available via the World Wide Web: http://www.fdsys.gov/

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        Committee on Homeland Security and Governmental Affairs




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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri           ROB PORTMAN, Ohio
JON TESTER, Montana                  RAND PAUL, Kentucky
MARK BEGICH, Alaska                  JERRY MORAN, Kansas

                  Michael L. Alexander, Staff Director
                      Jonathan M. Kraden, Counsel
               Nicholas A. Rossi, Minority Staff Director
      J. Kathryn French, Minority Director of Governmental Affairs
                  Trina Driessnack Tyrer, Chief Clerk
         Patricia R. Hogan, Publications Clerk and GPO Detailee
                    Laura W. Kilbride, Hearing Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Lieberman............................................     1
    Senator Collins..............................................     2
    Senator Coburn...............................................     5
    Senator Johnson..............................................    18
    Senator McCain...............................................    20
    Senator Pryor................................................    24
    Senator Carper...............................................    26
Prepared statements:
    Senator Lieberman............................................    35
    Senator Collins..............................................    36
    Senator Coburn...............................................    38

                               WITNESSES
                        Wednesday, May 25, 2011

Hon. Eugene L. Dodaro, Comptroller General of the United States, 
  U.S. Government Accountability Office..........................     5
Hon. Daniel I. Gordon, Administrator, Office of Federal 
  Procurement Policy, Office of Management and Budget............     8
Vivek Kundra, Federal Chief Information Officer, Administrator, 
  Office of E-Government and Information Technology, Office of 
  Management and Budget..........................................    11

                     Alphabetical List of Witnesses

Dodaro, Hon. Eugene L.:
    Testimony....................................................     5
    Prepared statement...........................................    50
Gordon, Hon. Daniel I.:
    Testimony....................................................     8
    Prepared statement...........................................    81
Kundra, Vivek:
    Testimony....................................................    11
    Prepared statement...........................................    92

                                APPENDIX

Charts submitted by Senator Collins..............................    41
Wall Street Journal article titled ``Billions in Bloat Uncovered 
  in Beltway,'' submitted by Senator McCain......................    46
Responses to post-hearing questions for the Record from:
    Mr. Dodaro...................................................    99
    Mr. Gordon...................................................   102
    Mr. Kundra...................................................   106


                     HOW TO SAVE TAXPAYER DOLLARS:



                     CASE STUDIES OF DUPLICATION IN



                         THE FEDERAL GOVERNMENT

                              ----------                              


                        WEDNESDAY, MAY 25, 2011

                                     U.S. Senate,  
                           Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:03 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Joseph I. 
Lieberman, Chairman of the Committee, presiding.
    Present: Senators Lieberman, Carper, Pryor, Collins, 
Coburn, McCain, and Johnson.

            OPENING STATEMENT OF CHAIRMAN LIEBERMAN

    Chairman Lieberman. Good morning and welcome to this 
hearing. Thanks to our witnesses for being here, a 
distinguished group of witnesses.
    This hearing is on the recent report issued by the 
Government Accountability Office (GAO) whose title is 
``Opportunities to Reduce Potential Duplication in Government 
Programs, Save Tax Dollars, and Enhance Revenue.'' I do not 
know that there could be a more timely report issued, 
particularly as we urgently grapple with our runaway deficits 
and debt, and the worry among the American people that our 
great country is heading over a financial cliff grows more 
anxious and deep.
    The origin of this report will probably not be surprising 
to people who follow such things. The report is the result of 
an amendment that was introduced, and passed the Senate, by 
Senator Coburn, interestingly enough, to last year's request 
for an increase in the national debt limit.
    I am sorry that Senator Coburn is not here. He is on his 
way and we are going to give him the right to give an opening 
statement. I do want to thank him for what he did and this 
report really justifies his introduction of the amendment.
    The report lists a series of programs, agencies, offices, 
and initiatives with duplicative goals and activities within 
departments. In addition to listing 34 areas where there exists 
potential duplication, overlap, and fragmentation, the report 
also summarizes 47 additional areas where opportunities exist 
either to reduce the cost of government operations or enhance 
our revenue collections.
    The focus of today's hearing is on the duplication in 
Federal programs and agencies. The cost savings and revenue 
section, however, also provides very significant and 
interesting ideas, and for Congress and the Administration, 
opportunities to confront these twin problems of the deficit 
and the debt.
    I hope, Mr. Dodaro, that you will discuss the report in 
general, as well as the specific topic areas that we are going 
to focus on today. Just very briefly, those three topic areas 
are enterprise architecture, a key mechanism for identifying 
potential overlap and duplication; the consolidation of Federal 
data centers, providing opportunity to improve government 
efficiency and achieve significant cost savings; and collecting 
improved data on interagency contracting to minimize 
duplication in a way that could help the government leverage 
its vast buying power.
    So this is an excellent report. We have a great panel of 
witnesses to help us understand how we can assist the Congress 
and the Administration in implementing some of these ideas to 
reduce our deficit and our long-term debt. So I look forward to 
your testimony and the question and answer period.

              OPENING STATEMENT OF SENATOR COLLINS

    Senator Collins. Thank you, Mr. Chairman. There has never 
been any doubt that wasteful duplication is a serious problem 
in the Federal Government, but it was not until the GAO 
released its March report that we had such overwhelming, 
quantifiable evidence exposing just how serious this problem 
is. For that reason, I am grateful to the GAO, and also to 
Senator Coburn who, as the Chairman has mentioned, sponsored 
the amendment requiring this report and its subsequent annual 
updates.
    The findings of the report are not surprising since we have 
always known that there was waste and duplication. Still, GAO's 
conclusion that the 81 areas quantified have opportunities for 
eliminating duplication, reducing operational costs, or 
enhancing revenue is an urgent call for action. At a time when 
our country has an unsustainable debt of $14 trillion, there 
simply can be no excuse for such waste, duplication, and 
inefficiency.
    I also want to point out that this duplication and overlap 
not only does not serve the taxpayer well, but also it is not 
beneficial to participants in Federal programs. To cite just 
one example, a low income person with a disability may confront 
a bewildering maze of some 80 programs offering transportation 
assistance. So this kind of fragmentation, overlap, and 
duplication serves neither the taxpayer nor the beneficiary.
    What is the cause of such duplication? At times, the 
President, seeking to put his own imprint on the budget to 
demonstrate his priorities, proposes a new program despite the 
fact that similar ones already exist. In other cases, it is 
Congress that creates those silos without checking to see if a 
similar silo already exists.
    Committee jurisdictions contribute to the problem, as each 
committee wants to carve out its own program to respond to its 
constituency. There are no bad intentions here. Just the 
opposite. It is the proliferation of good intentions that has 
created the problem. We in Congress see a problem, we want to 
fix it, we introduce a bill, we fight hard to pass that bill, 
we work to see that our program is fully funded, and to 
implement it.
    Some of this duplication is actually happening within a 
single agency. In such cases, the agency head should help to 
sound the alarm and request the legislative fix. To address 
cross-agency redundancy, the President, in his State of the 
Union address, announced a plan to consolidate and reorganize 
programs in order to reduce duplication. But from my 
perspective, that important work appears to be proceeding at a 
snail's pace.
    Perhaps the greatest irony of all is the fact that 20 
agencies housing 56 different programs are all redundantly 
trying to improve the financial literacy of the American 
people. I would suggest that the American people could teach 
the Federal Government a thing or two about financial literacy. 
In difficult fiscal times, we should pay for something once, 
not dozens of times.
    And that is far from the only problem. The GAO found 
duplication across the government in a wide range of programs. 
In fact, it appears to me the GAO found duplication virtually 
everywhere that the agency looked. This duplication is hardly 
trivial in a financial sense.
    The duplication in programs to promote ethanol production, 
for example, deprives us of almost $6 billion every year. Not 
only is that unacceptable, given our $14 trillion debt, but 
also think of what that means for other competing priorities 
for scarce resources. Thousands of Americans with HIV/AIDS 
right now are on waiting lists for life saving medicines 
because the Federal program for people who cannot afford those 
medicines has run out of money.
    One topic to be covered today by the Comptroller General is 
the role of enterprise architecture as a tool that agencies 
should use to help identify and expose areas of duplication and 
waste. Now, enterprise architecture sounds like something out 
of Star Trek, but in reality, it is a blueprint that visually 
lays out the critical missions of an agency. And on top of that 
skeleton, agency officials then overlay the activities and 
programs that the agency is actually operating to see if they 
match those core missions.
    I would note, however, that enterprise architecture is 
being implemented only on an agency-by-agency basis. It cannot 
help eliminate duplication across multiple agencies unless 
someone is looking at all the blueprints at once.
    Another topic that we will hear about today is the use of 
the interagency contracts, strategic sourcing, and procurement. 
When properly used, the interagency contracts can save money 
and improve efficiency. By allowing agencies to order from 
other agencies' existing contract vehicles, the Federal 
Government is able to leverage its enormous purchasing power 
and it can provide for a streamlined, more cost-effective 
method of contracting.
    But I have long been concerned that there are too many 
interagency contracts across government for the same goods and 
services. Unchecked proliferation limits the potential to 
maximize purchasing power, and thus, increases the cost of 
doing business with the Federal Government.
    Now, I know this past December that the Federal Acquisition 
Regulation (FAR) was amended to require agencies to develop a 
business case to justify the creation of a new contracting 
vehicle, and my hope is that those reforms will minimize 
duplicative contract vehicles.
    There is so much here that we need to address. I am 
convinced that if we could eliminate redundancy, duplication, 
and overlap, that we can literally save billions of dollars, 
and we can do so in a way that would actually improve the 
delivery of government programs and services.
    So I thank the Chairman for holding this important meeting 
today and I look forward to hearing our witnesses.
    Chairman Lieberman. Thanks, Senator Collins. I agree with 
you. The results of the GAO study and the recommendations are 
really stunning and have enormous potential for exactly the 
kinds of savings that all of us are looking for. I was thinking 
that I hope somebody has given a copy of this to Vice President 
Biden and the bipartisan leadership group that is focused on 
the deficit and debt ceiling requirements.
    Mr. Dodaro, before I introduce you, we have blown up two of 
the charts,\1\ ``Duplication and Overlap in Teacher Quality 
Programs,'' and also ``Duplication in Economic Development 
Programs.'' There is a slightly modified Calvin and Hobbes 
cartoon there whose origin, I gather, may be the State of 
Maine. Is that true, Senator Collins?
---------------------------------------------------------------------------
    \1\ Charts submitted for the Record by Senator Collins appear in 
the Appendix starting on page 41.
---------------------------------------------------------------------------
    Senator Collins. This is true.
    Chairman Lieberman. In its original, the word Congress did 
not appear.
    Senator Collins. This is Carl's. I hope we do not get sued 
for copyright infringement.
    Chairman Lieberman. Well, no. I think it is in the public 
domain.
    The first witness is Gene Dodaro, Comptroller General, at 
the U.S. Government Accountability Office. This is another 
great piece of work by GAO and, Mr. Dodaro, we thank you for 
it.
    Senator Coburn, would you like to give your opening 
statement now?
    Senator Coburn. I will be happy to.
    Chairman Lieberman. Yes, go ahead, Senator Collins.
    Senator Collins. I was just going to make sure that Senator 
Coburn knew that you and I both praised him in absentia.
    Chairman Lieberman. We did.
    Senator Collins. And as you have said before, that is the 
clearest test of true praise, when the person is not in the 
room.
    Chairman Lieberman. That is what they told me in 
Washington. I do want to say, I was thinking, Senator Coburn, 
that though your membership in other groups may now be in 
doubt, we are always proud to have you as a Member of the 
Homeland Security and Governmental Affairs Committee.
    Senator Coburn. Well, I will be sure to let you know if I 
take a sabbatical from here.
    Chairman Lieberman. Sabbaticals from here are impossible. 
Thank you and we welcome your opening statement. Now, what we 
said was that your amendment to the debt ceiling vote last year 
is what required, and then resulted in this extraordinary 
report which arrives at exactly the right time. Senator Coburn.

              OPENING STATEMENT OF SENATOR COBURN

    Senator Coburn. Well, thank you and I thank the GAO for 
their work. I think the report is obvious, and the report only 
covers about a third of the Federal Government, and it was the 
easiest report for them to do out of the two others that they 
have left and owe us. But their work has been phenomenal.
    I also might note that most of this work was previously 
done and Congress did not pay attention to it, and Congress 
paid attention to it when we put it all together, and I think 
that speaks to part of our problem. And I know my colleagues 
are aware of the problems in front of us today, but it just 
shows you the power of combining good information in one report 
that then has an impact.
    My real hope is not that we will get the rest of the 
information, I know we will, but that we actually do something 
with it. Our founders made our process hard to make changes, 
and what you saw in duplication in this report comes from 
compassionate people wanting to try to make a difference in 
people's lives, but not being compassionate enough about the 
dollars so they do not do a good enough job of oversight before 
they do additional things that are meant to do good.
    And so, the motivations are wonderful by our colleagues, 
but our techniques lack. My hope is that we can learn something 
from this, and that is why myself and several of our 
colleagues, 17, have said, We are not going to allow new bills 
to move through the Congress that do not eliminate things that 
are already doing the same thing, or we will make them better, 
put metrics on them, and are not going to eliminate another 
government program before they create a new one.
    So with that, I am appreciative of the work done. I am 
appreciative of the praise that the Chairman and Ranking Member 
have given me, but the Senate did that. I did not do it. The 
Senate agreed to that and when the Senate works together, we 
can accomplish good things. Thank you.
    Chairman Lieberman. Thanks, Senator Coburn.
    Comptroller General, we welcome your testimony now.

  TESTIMONY OF HON. EUGENE L. DODARO,\1\ COMPTROLLER GENERAL, 
             U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Dodaro. Thank you very much, Mr. Chairman. Good morning 
to you, Ranking Member Collins, Senator Johnson, Senator 
McCain, and Senator Coburn. It is a pleasure to be here this 
morning to discuss our recent report. In the report, as you 
noted in your opening statements, we had listed 81 areas where 
we believe there is duplication, overlap, and fragmentation in 
Federal programs. There are also other opportunities to reduce 
costs, save money, and enhance revenue.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Dodaro appears in the Appendix on 
page 50.
---------------------------------------------------------------------------
    The 81 areas touch hundreds of programs across the Federal 
Government and, indeed, touch virtually every major civilian 
agency, as well as the Department of Defense. Now, there are a 
couple of areas or categories I would point out this morning, 
the ones that you requested, Mr. Chairman, but also the first 
one is areas where there is potential duplication in Federal 
programs.
    This is an excellent chart that lists all these areas--
where there are similar programs trying to achieve similar 
objectives and, in many cases, serving similar populations. For 
example, there are 82 programs that, either in part or as an 
allowable activity, are trying to improve teacher quality. 
There are over 80 programs trying to improve economic 
development opportunities for people.
    There are 44 different programs in the employment and 
training area that overlap one another in trying to provide 
similar services to similar areas. And then in the 
transportation surface area, there are over 100 programs that 
have developed over time.
    Now, the important part here is alluded to in your opening 
statements. These programs accumulated over time; in fact, some 
of them over decades. There is also, what we found, limited 
information on the effectiveness of some of these programs that 
make it difficult to make decisions going forward.
    Now, in some of these areas, as you pointed out, Senator 
Collins, the Administration has made some proposals for 
consolidation. In the teacher quality and education area, for 
example, they proposed combining 38 programs into 11. They have 
made proposals to combine some of the employment training 
programs. In the surface transportation area, they made a 
proposal to combine 50 of the programs into 5.
    So I think that this is a perfect opportunity for the 
Congress and the Administration to work together to rationalize 
these portfolio of programs to really clarify what the Federal 
role is, what exactly are the outcomes that the Federal 
Government is trying to achieve, how to measure that over time, 
and to reduce costs. There are a lot of associated 
administrative costs with these programs, along with the cost 
of the actual program outlays, that I believe there is a lot of 
opportunity to make changes.
    Now, in addition, as you point out, Mr. Chairman, we have a 
lot of recommendations to deal with what is a yawning net tax 
gap of an estimated $290 billion of taxes that are owed under 
the current system that are outstanding and not paid.
    And we have a number of recommendations to improve 
activities of the Defense Department, which are important, 
particularly in their business operations. We have a department 
that consumes half of the total amount of discretionary 
spending, and I would be happy to talk about those in the 
question and answer session.
    But specifically in the information technology (IT) area, 
where there is about an estimated $80 billion spent annually on 
IT services, we point out three areas where there are 
opportunities for savings. First is in the data center 
consolidation area. In 1998, there were 432 data centers, 
estimated, in the Federal Government. Last year, there were 
over 2,000.
    As the Federal agencies have tried to modernize their 
operations and increase their capabilities, they have wanted 
more computing power, but it has just grown in a fashion that 
has not been well-coordinated. And as a result, there are 
redundant capabilities, under-utilized assets, and a 
significant amount of energy costs associated with running 
these data centers. There is a lot of money to be saved here.
    The Administration has started an initiative in this area 
which we support and are encouraged by, but our recent work for 
this Committee looking at the data center consolidations, have 
identified the fact that the inventories of the Federal 
departments and agencies are not quite complete. In other 
words, all the centers are not yet listed, and the inventory of 
the assets within the centers, both hardware and software, is 
not yet complete.
    So we think that needs attention, and if the Office of 
Management and Budget (OMB) and the agencies focus on this 
area, we can see actually a good case of where plans can be 
enhanced that could yield the proper outcomes in this area that 
everybody is desiring to achieve.
    Now, also, OMB has put a Dashboard in place to track major 
IT investments. We think this is a big improvement over prior 
oversight efforts, to make sure that the cost, schedule, and 
performance of IT investments remain on track and that do not 
spiral out of control, as we have all seen in the past.
    We think this effort is good. I know there have been 
proposals introduced by this Committee to codify that Dashboard 
in law. I think that would be a good idea. But also, what we 
have suggested is there needs to be more current information 
posted on the Dashboard so that people can clearly get a good 
look at the current state of each of these IT investments. And 
there are also opportunities to look across the government, not 
just within individual departments and agencies, to look for 
duplicative investments.
    Now, a third area is enterprise architecture, as Senator 
Collins mentioned in her opening statement, that is a blueprint 
of exactly what the business systems operations are now and how 
IT systems support the business operations, and then explains 
the current state of affairs and the desired state of 
improvement. This can be used as a reference to make sure 
investments are not duplicative and that there are 
opportunities to conserve resources along the way.
    We think this is a real work in progress across the Federal 
Government right now. The Federal Government is not getting the 
full advantage of having enterprise architectures in place.
    I was particularly pleased, after our recent report, the 
Secretaries of Veterans Affairs and Defense have now agreed to 
address one of the areas we point out where they are both 
pursuing electronic health records systems, multi-billion 
dollar efforts that were not well-coordinated.
    Now they have committed, including to have a joint 
enterprise architecture, so that those systems can exchange 
information quickly. We think this has potential for savings, 
and more importantly, providing good services to our veterans.
    Now, on the contracting area, we point out a number of 
areas, and this is important because this represents over $530 
billion a year in Federal spending. First is competition. 
Despite the advantages of competition, about 31 to 35 percent 
of the contracts over the past few years have been non-
competitive, and that does not count ones that only have one 
bidder.
    Now, in some cases, it is legitimate and properly used, and 
in other cases, we think that more competition will lead to 
lower costs for the Federal Government and this will be a very 
positive development. The Administration has a proposal to 
reduce high-risk contracting by 10 percent. We are looking at 
the agencies' progress in doing that over the last year and we 
will report to this Committee with our results.
    Also, we point out that award fees given contractors in the 
past have not been given for appropriate purposes. In fact, 
contractors have been paid award fees for sub-par performance. 
New procedures are in place now in the agencies in order to 
make sure that does not happen and the award fees are used 
appropriately, but they have to be adhered to. And as we have 
seen in the past, implementing good new policies is really 
something that would benefit from congressional oversight and 
would benefit from oversight by the Administration.
    The last two areas are interagency contracting and sourcing 
developments where the government could better utilize 
strategic sourcing and where they could better utilize their 
purchasing power. Now, the interagency contracting, as you 
point out, Senator Collins, works well when there is a good 
vehicle in place to do it.
    But right now, a lot of vehicles, particularly those where 
multiple agencies are getting together, not the government-wide 
vehicles that are already in place, and individual agencies are 
using enterprise-wide contracting. There is not a lot of 
visibility on these efforts.
    Now, OMB has put more requirements in place for business 
cases, but there really is not good information available 
across the Federal Government yet to make sure that these 
contracts produce good value, but are minimized, because too 
many of them can create increased procurement costs and stretch 
an already thin acquisition work force in terms of carrying out 
their responsibilities.
    Last, strategic sourcing has a lot of opportunities for the 
Federal Government, but again, better data is needed in this 
area.
    Now, as Senator Coburn mentioned, this is our first 
installment of our report. We are already working on year two, 
and there are many other areas where there is duplication, 
overlap, fragmentation in Federal programs. We are committed to 
finding those and reporting them to the Congress so that they 
can take action on these areas.
    Thank you for the opportunity to be here this morning, and 
I would be happy to answer questions at the appropriate time.
    Chairman Lieberman. Thank you very much for your testimony.
    Next we will go to Daniel Gordon, Administrator of the 
Office of Federal Procurement Policy within OMB. Good morning, 
Mr. Gordon.

TESTIMONY OF HON. DANIEL I. GORDON,\1\ ADMINISTRATOR, OFFICE OF 
  FEDERAL PROCUREMENT POLICY, OFFICE OF MANAGEMENT AND BUDGET

    Mr. Gordon. Good morning, Chairman Lieberman, Ranking 
Member Collins, Senator Coburn, Senator McCain, and Senator 
Johnson. Thank you for the opportunity to be here this morning. 
I cannot help remarking at the beginning, I think you all know 
I worked at GAO for 17 years. I had the honor of working for 
and with Mr. Dodaro and with members of his team that are here. 
It is an honor for me to be with Mr. Dodaro in front of you 
today.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Gordon appears in the Appendix on 
page 81.
---------------------------------------------------------------------------
    I want to say, in terms of the report on duplication, that 
I think this is another instance of GAO doing a real service by 
reporting on areas of unjustified duplication in the Federal 
Government. We in the Administration have made much progress, 
but we very much appreciate the attention being brought to this 
issue, both by the GAO report and, of course, by this 
Committee's work.
    In the area of contracting, the challenges of interagency 
contracting that we see today are largely an unintended 
byproduct of the very good procurement reform efforts from the 
mid and late 1990s, efforts in which, I should say, Members of 
this Committee played a very important and positive role.
    In those reforms, agencies were, for example, encouraged to 
create multiple award, indefinite delivery, indefinite quantity 
(IDIQ), contracts under which task orders could be quickly 
issued, a feature that greatly facilitated interagency use. In 
addition, government-wide acquisition contracts (GWACs) for the 
purchase of IT were authorized, subject to a business case 
being submitted, of course, to the Office of Management and 
Budget.
    And third, I should mention that in the 1990s, as you know, 
the use of the General Services Administration (GSA) Federal 
supply schedules skyrocketed and we saw a phenomenon of more 
and more blanket purchase agreements (BPAs) proliferating under 
the schedule contracts. Those three tools were very much 
embraced by agencies, partly because it let them cope with the 
unhealthy combination of a declining and unsupported 
acquisition work force on the one hand, and dramatic increases 
in contracting spending on the other.
    However, as this growth occurred, our policy guidance and 
our management controls did not keep pace. A situation 
developed that some likened to the Wild West, and I believe 
that GAO was fully justified in putting interagency contracting 
on its High-Risk List in 2005.
    The good news is that we have made noteworthy progress in 
addressing the root causes of high risk in interagency 
contracting. That said, we very much agree with GAO, both in 
its duplication report and in earlier work that GAO has done, 
that we have a lot of work to do to reap the benefits of 
interagency and agency-wide contract vehicles. GAO has 
concluded that the ongoing challenges can be addressed by 
expanding the use of business cases and improving the quality 
of available data. We agree on both points.
    I should point out that while the issue of too many 
interagency contracts has gotten a lot of attention, during my 
year-and-a-half as the administrator, I have come to believe 
that we also need to be concerned, and perhaps more concerned, 
about situations where we do not have an interagency contract 
where one could eliminate duplication and save us money.
    Far too often separate and redundant contracts and BPAs are 
awarded by each agency component to serve a narrow customer 
base which duplicates effort and denies us the benefit of the 
Federal Government being the world's largest customer.
    As the Chairman and others have remarked, in these tough 
economic and budgetary times, we simply cannot afford the waste 
that this duplication represents. Let me briefly highlight 
three initiatives that we have underway to reduce the wasteful 
duplication. I want to talk briefly about business cases, 
strategic sourcing, and better data.
    First, we will soon be issuing guidance that requires 
agencies to develop business cases to support their decisions 
to create a new contract. While in many ways this is based on 
the success of the business cases we use in connection with 
government-wide acquisition contracts--by the way, a model that 
was commended and recommended for broader use by the 
Acquisition Advisory Panel a few years ago--the new business 
cases will expressly require that agencies consider whether 
their new contract might be causing duplication with existing 
vehicles, and they are going to need to justify why they think 
a new contract would be needed.
    Second, I have a few words about strategic sourcing that a 
number of the members mentioned. We are aggressively promoting 
strategic sourcing to leverage the government's buying power. 
As part of our initiative to reduce contracting costs, 
virtually every agency has been pursuing some form of strategic 
sourcing, but we are most focused on the government-wide front.
    Working with the various contracting agencies and working 
closely with my office, GSA established innovative government-
wide BPAs for office supplies last spring, and it is currently 
working on setting up government-wide contracts for other 
commodities, especially commodities in the IT space such as 
wireless services.
    And I should point out that my office is working very 
closely with Vivek Kundra and his office and his team, as well 
as with the agencies' chief information officers (CIOs) as we 
move forward in that area.
    Let me just point out one detail of the office supplies' 
BPAs and show you how different it is from what we have done in 
the past. For the first time, every Federal employee from every 
agency that uses a government purchase card to buy office 
supplies from the 15 vendors, most of whom are small 
businesses--it does not matter if they make the purchase over 
the Internet, in the stores, by telephone, they can go in any 
way they want: They can go through the Web sites of the 
government, they can go through the Web sites of the vendors. 
They will automatically get the discount--that never existed 
before. It is somewhat shocking that it never existed before, 
but the fact is we are now getting it. Not only that, we are 
requiring the 15 vendors to give us frequent reports on 
everything that is being purchased.
    So for the first time, we are getting weekly reports of 
data, and I can tell you that the sales under those 15 BPAs are 
going up at a very quick pace. We are making progress, but as 
GAO likes to say, much work remains to be done.
    A few words about data. We are working to improve the 
availability and quality of data. The example from the office 
supplies' BPAs is one specific case. We need to equip our 
agencies with good data so they can make well-informed 
decisions. In particular, I should say, I am personally 
troubled that we have this proliferation of agency and often 
component-specific BPAs. We do not know anything about them. If 
you ask me how many BPAs exist under the schedules, the answer 
is, I do not know. We have no visibility into BPAs, and as a 
result, we have started an effort several months ago where we 
are making some progress working with GSA so we will have a way 
for agencies to learn about BPAs. With improved visibility, I 
am hoping that we can reduce the duplication and consolidate 
our procurement volume.
    As I close, let me say, much still remains to be done. We 
need to consistently realize the full potential of interagency 
contracts. We very much look forward to continuing to work with 
this Committee and its Members, and with other Members of 
Congress, so that we can reduce duplication and achieve greater 
efficiencies and savings for our taxpayers.
    This concludes my oral statement, but obviously, I would 
welcome your questions when we get to the question and answer 
time. Thank you.
    Chairman Lieberman. Thanks, Mr. Gordon. I appreciate that 
report on what your office has been doing, and I agree with 
you, more does need to be done. When I think about it, since 
both you and Mr. Kundra are in OMB, and I know Jack Lew, the 
Director of OMB, is at the table in the negotiations on the 
budget going on now under the auspices of the Vice President, I 
just wanted to formally ask you to make sure that a copy of 
this report is before them because I think it can help them 
achieve some of what they want to achieve now.
    Mr. Gordon. Thank you. I suspect they have it, but I will 
be absolutely sure that they have it.
    Chairman Lieberman. Good. Thank you.
    The final witness on the panel is Vivek Kundra, Federal 
Chief Information Officer, Administrator of the Office of E-
Government and Information Technology. Thanks for being here 
and please proceed.

    TESTIMONY OF VIVEK KUNDRA,\1\ FEDERAL CHIEF INFORMATION 
OFFICER, ADMINISTRATOR, OFFICE OF E-GOVERNMENT AND INFORMATION 
          TECHNOLOGY, OFFICE OF MANAGEMENT AND BUDGET

    Mr. Kundra. Good morning, Chairman Lieberman, Ranking 
Member Collins, Senator McCain, Senator Johnson, and Senator 
Pryor. Thank you for the opportunity to testify this morning.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Kundra appears in the Appendix on 
page 92.
---------------------------------------------------------------------------
    During the State of the Union, President Obama spoke about 
overlapping programs and redundant spending across the Federal 
Government. The President stated that we live and do business 
in the information age, but the last major reorganization of 
the government happened in the age of black and white 
television. This Administration is focused on bringing the 
government into the information age, to drive up efficiencies 
and drive down costs.
    The main challenge is not new. The way projects are funded, 
agency by agency, bureau by bureau, program by program, 
prevents us from leveraging powerful and innovative 
technologies across the government. With these institutional 
silos, the best intended efforts for cooperation between and 
even within agencies often meet organizational friction.
    We need to look no further than the very infrastructure 
that powers our IT systems to see the evidence of wasteful and 
duplicative investments. The government operates more than 
2,000 data centers that power more than 24,000 Web sites, more 
than 500 human resource systems, and more than 500 financial 
management systems. These are staggering numbers and, without a 
focus on reform, would continue to grow.
    Today I would like to highlight three elements of our 
approach to reverse these unsustainable trends and to stop this 
madness. First, eliminating duplicative IT infrastructure, 
requiring agencies to shut down the very data centers that have 
allowed these redundant systems and applications to sprout like 
weeds.
    We are leading the largest data center consolidation effort 
in history to eliminate at least 800 data centers in the next 4 
years. As Mr. Dodaro mentioned, since 1998, the number of data 
centers has more than quadrupled from 432 to more than 2,000 
data centers. Under this effort, 137 data centers will be 
closed by the end of this year, of which 39 have already been 
shut down.
    Shutting down data centers will free up resources to 
support mission critical activities, reduce the government's 
overall energy and real estate footprint, and improve our IT 
security posture. In addition, starving this duplicative 
infrastructure, combined with a shift of the cloud, will help 
prevent the unchecked growth of systems. Already 15 agencies 
have identified approximately 100 collaboration systems serving 
950,000 users that will move to the cloud.
    On May 9, GSA issued a request for proposals that pools the 
government's purchasing power and enables us to consolidate 
these hundred-plus collaboration systems. The request for 
proposal is estimated at about $2.5 billion, which was 
developed in partnership with State and local governments and 
will be available for their use as well.
    Second, we are reforming IT management. To remove the 
structural barriers that get in the way of consistent 
execution, we developed a 25-point plan to reform Federal IT 
management. The plan is grounded in our efforts, since day one, 
to transform the management of Federal IT by shining a light on 
the performance of how these IT projects perform, and to also 
make sure that we are holding government managers accountable 
for the performance of these IT initiatives.
    In June 2009, we launched the IT Dashboard, making 
information on the performance of IT projects such as budget 
and schedules publicly available for the first time, with a 
picture of every CIO right next to the IT project that they are 
responsible for. Using the Dashboard, we targeted wasteful IT 
projects through TechStat accountability sessions. These are 
face-to-face sessions where we bring in senior agency 
leadership to review the performance of these projects.
    We have already reduced life cycle costs of major IT 
investments by $3 billion and decreased the average time to 
deliver meaningful functionality from over 2 years down to 8 
months. So far, agencies have conducted their own TechStat 
accountability sessions. There have been over 80 of these 
sessions that have led to accelerated deliverables and major 
changes in management of how these projects are being run.
    Enterprise architecture can be another valuable tool for 
lowering the cost of government operations. For example, 
architecture was used to cut the cost of connecting local 
police records management systems to a nationwide system from 
$250,000 to $10,000 per system, saving the government millions 
of dollars.
    Yet, too often, as practiced, architecture is an aimless 
paperwork exercise, churning out artifact after artifact that 
serves only to fill metal cabinets across Washington. That is 
why, as part of our reform efforts, we are re-purposing the 
architecture community to find and eliminate duplication and 
move agencies to shared services.
    Third, we are streamlining service delivery to keep pace 
with the public's demand for online services. The Federal 
Government must deliver services better, faster at a much lower 
cost. Today there are more than 24,000 Web sites of varying 
design, navigation, usability, and accessibility. Many of these 
are redundant, outdated, poorly maintained, or all of the 
above.
    Last month, President Obama issued an Executive Order 
directing agencies to streamline service delivery and improve 
the experience of their customers. As part of this effort, 
agencies are identifying Web sites that can be consolidated or 
eliminated to simplify access to government services and to 
lower the cost of government operations.
    In conclusion, eliminating duplicative IT infrastructure, 
reforming Federal IT management, and streamlining service 
delivery are at the core of the Administration's approach to 
root out waste throughout government. Our focus on execution 
has already produced results from terminating redundant 
investments to eliminating wasteful infrastructure.
    I appreciate the Committee calling this hearing today, and 
it will require all of us to work together to address the 
magnitude of this problem from all levels of government, from 
the Legislative to the Executive Branch of the government. 
Thank you for the opportunity to testify. I look forward to 
answering any questions you may have.
    Chairman Lieberman. Thanks very much, Mr. Kundra. We will 
have 7-minute rounds of questions.
    The GAO report makes clear, and Mr. Dodaro did in his 
testimony today, that it is too often difficult to provide 
precise estimates of the extent of unnecessary duplication 
among government programs because of the lack of good program 
performance data.
    In many instances, the report makes clear the lack of data 
also appears to be a cause of duplication; in other words, many 
of the Federal agencies do not seem really to know what 
resources they currently have available to them. Data centers 
and interagency contracts that we have been talking about are 
two good examples.
    And because of that information gap, a program or agency is 
more likely, of course, to duplicate existing resources than 
efficiently using what already exists. So I want to focus in on 
this and first ask you, Mr. Dodaro, why do you think OMB and 
the Federal agencies have had such a difficult time 
accumulating this information?
    Mr. Dodaro. It needs to be a priority.
    Chairman Lieberman. Right.
    Mr. Dodaro. It has not been a priority in the past and 
there needs to be a concerted effort. There is turnover in 
officials. There are not incentives necessarily in place in all 
cases to collect the data. And it is not that difficult. In the 
program evaluation area, I have been concerned for some time 
that the government's capacity was basically downsized in the 
1990s with other administrative support functions and there was 
not a lot of priority given.
    I was pleased to see that the Administration recently has 
provided some opportunities for people to have funding to be 
able to make investments. So having good information requires 
making good investments. Having good investments means there 
has to be a priority for spending, and, quite frankly, it has 
not reached that level. It is also one of the first areas to be 
cut in the downsizing environment. But without the information, 
you are prone to either have more duplication or you are going 
to miss opportunities for efficiencies.
    Chairman Lieberman. Thanks for that.
    Mr. Gordon, please respond to that, and let me phrase it 
this way. The Committee has had testimony for years about 
problems with interagency contracting, and yet, it still is a 
practice. GAO makes clear that we do not actually have a 
comprehensive and accurate record of which agencies are using 
interagency contracts or even, in some cases, which interagency 
contracts exist.
    So respond, if you would, both to what Mr. Dodaro has just 
said, but also to why has it been so difficult--and I know you 
are relatively new where you are--to create a useful dataset on 
interagency contracting?
    Mr. Gordon. Thank you, Mr. Chairman. It is a very important 
question. It is a question that I have spent quite a bit of 
time worrying about in my year-and-a-half as the administrator. 
Several thoughts. One, as Mr. Dodaro said, there is the issue 
of making it a priority. I can assure you we are now making it 
a priority.
    Two, bringing together data IT systems can be expensive and 
time-consuming. We are trying to consolidate data. Many places 
in our procurement system we have all different databases and 
they are not interlinked, and as a result, our overwhelmed, 
overworked acquisition work force has to enter the same data 
again and again, and it is often hard to get the data.
    We are making significant improvement in terms of sharing 
data so that we can quickly find out. For example, through the 
new Federal Awardee Performance and Integrity Information 
System, we can now find out whether a company has been 
debarred. Our contracting officers can learn about the past 
performance far more easily in the past. We can get other 
information to help us. There are lots of challenges we could 
all point to, but we are making progress.
    Let me say a couple of words, if I could, sir, about 
interagency contracts in particular, because what I have 
learned and what we have learned is that there is some 
misunderstanding about the volume. If you look at the excellent 
Acquisition Advisory Panel report from a few years ago, you 
will see reference to $200 billion. That is a very high figure.
    When we drill down, we learn that all that represents is 
IDIQ contracting. It does not represent interagency or 
multiagency contracting. Our best estimate today is that we are 
talking not about $200 billion, but about $50 billion. That is 
a lot of money. But $50 billion is a much smaller universe and, 
it turns out, we have much better visibility than we thought we 
did because we thought there was $150 billion into which we did 
not have visibility.
    Of the $50 billion, if you look at it, something short of 
$40 billion is the schedules. We have lots of visibility in the 
schedules. Several billion dollars are the GWACs for IT. We 
have very good visibility there. What is left over is a small 
number of contracts.
    And we have been talking about putting together a 
centralized database. It has been a recommendation of GAO's and 
it is something we have looked at seriously. I am somewhat 
concerned about the cost of putting that together, especially 
because we recently learned that there is at least one 
commercial company that has a database that many of our agency 
personnel have access to through a subscription.
    When we compared that commercial database to the GAO's 
report identifying interagency contracts it turns out the 
commercial database picks up every one except for a couple 
that, in fact, had expired. So that it looks like the 
visibility is better than we realized in the past, but I in no 
way want to under-estimate the challenge of getting the 
information out, sharing the information, and training our work 
force.
    Chairman Lieberman. So that is a really interesting answer. 
So is your thought now that you are going to more broadly use 
the commercial database than develop something new yourselves?
    Mr. Gordon. We are looking into it. We want to be sure that 
we use taxpayer funds wisely, as you can appreciate, Mr. 
Chairman.
    Chairman Lieberman. Right.
    Mr. Gordon. It could be that it does not make sense to 
create a new government database that would, in a sense, be 
duplicating what the commercial database has. But I will tell 
you there is one huge gap. It is not interagency contracts or 
multiagency, it is single agency contracts. Way too often we 
will have a situation where the Department of X or a component 
within the Department of X does a contract for something where 
another component in the very same agency already has a 
contract and they do not know about it.
    Chairman Lieberman. Yes. Well, that is unacceptable.
    Mr. Dodaro, did you want to add something?
    Mr. Dodaro. Yes. I would just want to say for the record, 
we do not really care where they get the information from.
    Chairman Lieberman. Right.
    Mr. Dodaro. It ought to be done in a cost-efficient manner. 
So I just wanted to make that point. Our point was, if you need 
a database, you can either build it or buy it. It does not 
matter.
    Chairman Lieberman. Thanks. My time is up. Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    Mr. Gordon, I know that you were listening intently to the 
Comptroller General's testimony this morning. Did you agree 
with his statement that more competition for Federal contracts 
helps to lower costs and improve quality?
    Mr. Gordon. As is often the case, I fully agree with the 
Comptroller General. On the particular point of competition, I 
agree and then some. Competition does more than lower costs and 
improve quality. It can bring us innovation, it can increase 
opportunities for small businesses, and it protects the system 
in terms of integrity. We are pushing hard for competition and 
the fact is, we are getting results.
    As you know, we have given the agencies a goal of 10 
percent reduction in the dollars going into high-risk 
contracts. We include both sole-source contracts and a 
different kind that GAO has been very helpful in highlighting, 
and that is one-bid contracts where you had a competition, but 
received one bid. The results are pretty good, but we still 
need to push harder.
    Senator Collins [presiding]. Mr. Gordon, in light of that 
statement, I find it very hard to understand why the 
Administration has considered two Executive Orders that would 
have exactly the opposite impact. They would drive up the cost 
of Federal contracting by shrinking the pool of bidders, and 
they would put small businesses at a particular disadvantage 
under the first Executive Order that I am going to discuss with 
you. That is the so-called High Road Draft Executive Order.
    Under this Executive Order, the Administration was 
considering giving extra points depending on the wages and the 
benefits that a company paid its employees. Now, there are 
small businesses that are very eager to do business with the 
Federal Government that could provide very good costs, 
excellent quality, the best value to the taxpayers, but that 
would lose points under the system the Administration was 
proposing because they were unable, at that point in their 
development, to reach the wage standards that the 
Administration would deem appropriate.
    A second Executive Order that the Administration has under 
consideration would actually require any entity that is bidding 
for any Federal contract to disclose political contributions 
from the previous 2 years. That, too, would discourage many 
businesses from applying to do work for the Federal Government.
    For example, if a business--and this applies to the 
executives, to the directors, to the affiliates of this 
business--supported conservative causes or Republican 
candidates, that business might well conclude that it is 
pointless to submit a bid for the contract. After all, why 
would this information be required if it were not going to be a 
factor in the source selection?
    Similarly, if there is a change in Administration and it is 
a Republican Administration, a firm that has been very active 
in supporting Democratic candidates and liberal causes might 
well conclude that since this information is being required, 
that it is pointless to bid. Both of these Executive Orders 
would have the result of shrinking the pool of bidders.
    So given what you have just said about the benefits of 
competition and having as healthy and robust competition as 
possible, which I totally agree with, why would the 
Administration be considering these two Executive Orders?
    Mr. Gordon. Senator Collins, I am not going to be speaking 
about draft Executive Orders. Neither I nor anyone in the 
Administration believes it is appropriate for us to be 
discussing drafts. But I will tell you the bottom line.
    The bottom line is that we are committed to increasing 
competition. We are committed to increasing opportunities for 
small businesses in Federal contracting. We are committed to 
strengthening the professional character of our wonderful 
acquisition work force.
    We are committed to protecting the integrity of our 
contracting system so that we never have the reality or the 
appearance of anything other than the appropriate evaluation 
factors being taken into account in source selection. We will 
protect our contracting system from any appearance of political 
influence.
    Senator Collins. Well, Mr. Gordon, I am asking you to 
discuss the policies underlying these Executive Orders, and you 
are the head of the Office of Federal Procurement Policy. You 
are intimately involved in setting procurement policy. Let me 
ask you a broader question. Are you aware of information that a 
contractor is required currently to submit with its proposal 
that is not intended to be used by the agency to make its 
decision on which contractor provides the best value?
    Mr. Gordon. There is information that we require from 
vendors competing for contracts even though we would not take 
it into account. That is information about lobbying activities. 
It is information about the executive compensation for their 
executives. Those factors are not taken into account, as you 
know, Senator Collins, because you have a depth of knowledge in 
this area that is very beneficial, I can tell you, to us in the 
procurement system.
    The only factors that are taken into account are the 
factors that are set out in what we call Section M, the 
evaluation criteria. There could be other information that is 
submitted, such as the ones I gave you.
    Even though it is submitted, even though there is 
disclosure, whether it is in the bid or elsewhere, that 
information cannot affect the award decision, and if it did, if 
there was information outside the evaluation criteria, as you 
know, a disappointed bidder that lost and felt that the wrong 
information was considered or improper information considered, 
can file a bid protest either at GAO or at the Court of Federal 
Claims.
    Senator Collins [presiding]. Well, let me make a very clear 
distinction here. The certification on lobbying that the FAR 
requires, is to certify that no appropriated funds are 
associated with trying to influence the outcome of the specific 
contract. That certification is to ensure that unlawful 
behavior does not occur. It is not unlawful, 2 years before 
bidding on a contract, to have contributed to a candidate or 
cause of your choice.
    The point that I am trying to make is, even if you could 
somehow require the reporting of political contributions and 
yet say that they should not be considered in the source 
selection, which to me raises the question of why you are 
requiring them to be reported, then you are missing the earlier 
point, which is that businesses are going to decide that the 
system is stacked against them and not bother to submit a bid, 
because otherwise, why would this information be required?
    My time has expired, but I may well come back to this. I 
hope that you will take a hard look at both of these Executive 
Orders and the policies behind them because if, in fact, this 
Administration is committed to expanding competition, as you 
eloquently said, it should not be issuing Executive Orders that 
is going to do exactly the opposite.
    I have taken over the gavel temporarily. Senator Johnson is 
next, then it will be Senator McCain, then Senator Pryor.

              OPENING STATEMENT OF SENATOR JOHNSON

    Senator Johnson. Thank you, Senator Collins. I also want to 
thank you for raising this issue. I am every bit as concerned 
and alarmed about these two Executive Orders as you and I hope 
the Administration rethinks those very rapidly.
    But I will tell you that I am concerned about something 
else this Administration is doing. I have been watching 
Washington for 31 years running a manufacturing plant and from 
my standpoint, this place is pretty broken. Our budget process 
is broken. Evidence of that is the fact that we have not passed 
a budget in the Senate for 756 days now.
    It seems like this Administration is assuming that they are 
just going to automatically get an increase in the debt 
ceiling. I think that is a very irresponsible assumption. 
Monday, I went to the floor of the Senate and asked this 
Administration to start laying a contingency plan just in case. 
I think it is the responsible thing to do.
    I guess, Secretary Timothy Geithner, this morning said that 
their plan is for the Congress to pass a debt limit. Their 
fall-back plan is for Congress to pass a debt limit. And their 
fall-back fall-back plan is for Congress to pass a debt limit. 
Again, that is a very irresponsible assumption. So today, I 
will be sending a letter formally asking this Administration to 
develop some contingency plans just in case the debt ceiling is 
not increased.
    I guess I want to start out my questioning with members 
from OMB that are here. Is there any plans underfoot at all to 
start prioritizing essential service spending just in case the 
debt ceiling does not get increased?
    Mr. Gordon. Senator Johnson, I appreciate the importance of 
the question. It is not an area in which I feel comfortable 
responding.
    Senator Johnson. Having been in government awhile, this is 
not the first time we have ever started coming up against these 
deadlines. Has there ever been any kind of contingency plan 
developed in terms of prioritizing essential spending within 
the agencies just in case?
    Mr. Gordon. I can tell you that it is just not a question 
for the Administrator of Federal Procurement Policy to answer.
    Senator Johnson. Within OMB, who would be the person I 
would be calling to find out?
    Mr. Gordon. We are happy to relay the question back to our 
colleagues within the Office of Management and Budget.
    Senator Johnson. Well, Mr. Dodaro, let me ask you in terms 
of GAO's efforts in something like that. Have you ever seen 
that type of prioritization just in case?
    Mr. Dodaro. I am not aware of that outside of the Secretary 
of Treasury's extraordinary authority to take measures so that 
the debt ceiling is not breached.
    Senator Johnson. Obviously you are a creature of Congress 
here, as is the Congressional Budget Office (CBO). Would those 
be the two agencies that would try and develop those types of 
plans, just in case? How would you work with CBO to figure out, 
if this happens? From my standpoint, if we do not get a debt 
ceiling increase, we will be looking at operating under about 
$2.6 trillion, I guess I would call it, a debt ceiling budget. 
That is what this Administration has estimated revenue will be 
in 2012. Is there any effort, or how would we go about 
prioritizing spending under that type of scenario?
    Mr. Dodaro. Well, that would be basically a policy decision 
by the Congress and by the Administration to take. I mean, 
there is really not an analytical answer to that question. It 
is really a policy matter. And we pointed out in legal 
decisions, the Secretary of the Treasury has the authority and 
broad discretion to be able to do that.
    Senator Johnson. One of the reasons I raise it in this 
hearing is you have laid out a list of duplicated programs 
here. Within that list have you prioritized, and I know you 
have said that it has been difficult to figure out how 
effective they are, but still, have you at all prioritized the 
effectiveness of those programs?
    Mr. Dodaro. We have listed out which programs have had 
evaluations and have been proven to be effective and which ones 
have not had any evaluations at all. For example, in the 
domestic food assistance area, there are 18 different programs. 
Seven of those programs, including food stamps and the women's 
and infant children's area, have had performance evaluations 
and have proven to be effective in stemming hunger and 
achieving their objectives. But 11 of the 18 programs have not 
been evaluated and there is limited information available.
    In the employment and training area, of the 47 programs 
only 5 have had evaluations of impact of the programs since 
2004. So there is very limited information available on those 
programs that makes it hard to make decisions. As I testified 
before you and other members of the two subcommittees on the 
Government and Performance Results Act Modernization, hopefully 
the requirement for OMB and the agencies to produce performance 
measures will yield better outcomes in the future. But right 
now, you have a really mixed hand that you are having to deal 
with.
    Senator Johnson. So what would be the most effective and 
efficient way to get the agencies to start actually taking a 
look at this? Because again, I am just highly concerned that if 
nobody is looking at this now, we will be in a crisis if we do 
not increase that debt ceiling, and we can potentially avoid 
that if we plan.
    Mr. Dodaro. My suggestion would be to use the 
Administration proposals already for consolidation of the 
programs as a starting point for discussions. Also, we need to 
really ask tough questions about what is known about programs 
that do not have empirical evaluations with evidence, and what 
are the options for covering those services under broader 
programs so you reduce administrative costs.
    Senator Johnson. But again, that would be relying on the 
Administration, correct?
    Mr. Dodaro. Well, no. Congress would have the ultimate 
decision. In the 81 areas that we have outlined in our report, 
well over a third of them will require legislative action to 
implement. The Administration could not implement them alone.
    I am just saying, to address your question of where do you 
start, I think that would be a helpful place. But I think the 
Congress ought to start by asking hard questions where there 
have not been evaluations and a lot of money is being spent and 
more is proposed to be spent, is it really worth the risk?
    Senator Johnson. I mean, should potentially this Committee 
issue a letter to GAO, possibly CBO, to start that process of 
prioritizing? Again, just in case. Would that be helpful?
    Mr. Dodaro. Well, again, I think that those decisions have 
to come from the Congress and the Administration. I mean, they 
are basically policy calls. We can tell you what is known about 
the existing portfolio programs to help you make those 
decisions, but it is really not our role to make those priority 
decisions.
    Senator Johnson. Mr. Chairman, I am new here, but again, I 
would suggest that potentially this Committee issue a letter to 
these agencies and ask them and request them to prioritize 
essential services just in case this debt ceiling does not get 
increased so that we can avoid a crisis in case that happens. 
Thank you.
    Chairman Lieberman [presiding]. Thanks, Senator Johnson. I 
will be glad to work with you on that. There are two parts to 
this. I do not want to take really any more time on it, but one 
part is, if the debt ceiling is not increased, which I think 
most people think it ultimately will be--what kind of budget 
will we have based on projected revenues for next year?
    And then the other is how do we make sure we do not default 
on existing debt. And, of course, that is a question of 
prioritizing how you spend the $2.6 trillion in revenue. 
Presumably, one of the priorities for that spending would be to 
make payments on existing debt so as to not raise any questions 
about the full faith and credit of the United States.
    Senator Johnson. And again, I am not recommending this. I 
hope it does not happen, but if we are faced with what I would 
call a debt ceiling budget of $2.6 trillion, we would be able 
to pay for all the interest on the debt, about $256 billion; we 
can pay for all Social Security, which would be about $760 
billion; and that would still leave $1.6 trillion for essential 
defense, security, health, and safety, and that budget itself 
would be over $800 billion larger than we were spending just 10 
years ago under Bill Clinton's last budget.
    So again, I am concerned that we are trying to fear-monger 
here, we are trying to scare the American public, and if we 
plan for this, it would not be pleasant, but it would not have 
to be a crisis if we plan.
    Mr. Dodaro. The one other factor that just occurred to me, 
in many programs that are entitlement programs like the 
Medicare program, for example, the law dictates that money be 
spent to pay those services. So the law would have to be 
changed in order to deal with some of those situations other 
than the discretionary part of the budget.
    Chairman Lieberman. That is a good point. Senator McCain.

              OPENING STATEMENT OF SENATOR MCCAIN

    Senator McCain. Thank you, Mr. Chairman. I thank the 
witnesses.
    Mr. Dodaro, I am looking at a Wall Street Journal article 
that I am sure you probably saw.\1\ It is titled, ``Billions in 
Bloat Uncovered in Beltway,'' as a result of your 
investigation. I am sure you are aware of that. It said, GAO 
highlighted 80 different economic development programs at the 
Department of Commerce, Department of Housing and Urban 
Development, and Department of Agriculture (USDA); $6.5 billion 
last year overlap. It goes on to highlight a number of 
programs, including some of the military programs that you have 
identified. It says there are 130,000 military and government 
medical professionals, 59 Defense Department hospitals, etc., 
and clinics that could benefit from consolidating 
administrative management and clinical functions. And it 
identifies some other Department of Defense programs.
---------------------------------------------------------------------------
    \1\ The article submitted by Senator McCain appears in the Appendix 
on page 46.
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    But on these duplicative Federal programs, has there been 
any change? Has there been any consolidation, to your 
knowledge, since this report was made?
    Mr. Dodaro. Not to my knowledge, no.
    Senator McCain. Not a one?
    Mr. Dodaro. Not one.
    Senator McCain. Now, why is that, Mr. Gordon? It has been 
well-known now for some period of time. Can we not consolidate 
one program somewhere in one of these agencies?
    Mr. Gordon. Senator McCain, these are programs outside of 
the world of procurement, but I can tell you that in the world 
of procurement, GAO's report on duplication talks about the 
improvements that we have made in addressing duplication in 
issue after issue. And I think that we are making progress, but 
we certainly----
    Senator McCain. Tell me one duplicative procurement program 
that has been eliminated.
    Mr. Gordon. It is not a procurement program that is being 
eliminated, sir. It is strategic sourcing so that we are buying 
government-wide instead of----
    Senator McCain. Well, tell me one program that has been 
consolidated.
    Mr. Gordon. In procurement, it is not a matter of 
consolidation. It is buying----
    Senator McCain. It is if there is duplication in 
procurement, Mr. Gordon. I am familiar with procurement 
procedures. If, for example, the Marine Corps is paying $85,000 
for mine rollers and the Army mine roller costs between $77,000 
to $225,000, that is duplication, Mr. Gordon. Tell me one that 
has been eliminated, one duplicative program that has been 
eliminated.
    Mr. Gordon. By creating government-wide BPAs, agencies are 
not needing to contract on their own.
    Senator McCain. So there is presently duplication in 
Defense procurement that I know of for sure that I can identify 
for you. Would you tell me one that has been consolidated?
    Mr. Gordon. I am not aware of specific programs.
    Senator McCain. Thank you. That is what I thought. In all 
due respect, Mr. Chairman, we see these and it makes headlines 
and everybody's eyebrows are raised at all of these programs 
and duplication that the GAO has, at our insistence, identified 
and yet, there is no change. Nothing happens. Kicking the 
thousand-pound sponge.
    So maybe, Mr. Chairman, we ought to have Mr. Lew come over 
here and testify since apparently these witnesses are unable to 
answer the questions, and clearly Mr. Gordon, even in the area 
of his specific responsibility, is unable to identify a single 
duplicative procurement program that has been eliminated.
    So, here our taxpayers see the results of very important 
studies and they are astonished by it, and yet, we hear really 
good testimony, but we do not hear of any specific actions that 
have been taken to eliminate what has been highlighted by the 
GAO.
    Do you know, Mr. Dodaro, of duplicative programs that have 
been eliminated?
    Mr. Dodaro. No. The only area that I know some action has 
been taken on that I can recall offhand, as I mentioned in my 
opening statement, the Secretaries of Veterans Affairs and 
Defense have agreed to take some action to try to bring their 
two multi-billion-dollar procurements for electronic record 
systems under a joint architecture and a joint program.
    Senator McCain. They have agreed to try to take action?
    Mr. Dodaro. Right. They have agreed to do that. So I am 
aware of that. I might also say, Senator McCain, that in each 
of our future annual reports we will be providing an accounting 
of exactly what happened from the recommendations that we made 
in the prior year. So we are planning to keep a running list 
and a scorecard on what actions have been taken to address 
those problems so that Congress has a good record of that.
    Senator McCain. Well, it is terribly frustrating and you 
have to wonder what needs to be done to eliminate some of the 
82 different teacher quality branches of different 
bureaucracies. Maybe we have to start line-by-line 
authorization bills of eliminating them ourselves since clearly 
the Administration is not acting.
    I just would like to mention, Mr. Gordon, I was entertained 
by your answer to Senator Collins about how information 
gathered would have no impact on the decisionmaking process and 
the award of contracts. That, sir, is really entertaining. Then 
why in the world would they want to get that information if it 
was not used? And would you support gathering that same 
information from unions that compete for government projects?
    Mr. Gordon. Senator McCain, you have me in a situation 
where I would be commenting on a draft Executive Order and I am 
not going to do that.
    Senator McCain. I see. Are you confirmed by the Senate?
    Mr. Gordon. Yes, sir.
    Senator McCain. And it is part of the questioning, that if 
you are asked for your personal opinion, you will give it to 
the Committee?
    Mr. Gordon. I do not recall the question, but if I was 
asked that----
    Senator McCain. That is part of the Armed Services 
Committee. Well, I will not pursue it.
    Mr. Gordon, for you to say that information that is 
gathered by businesses, especially along the lines of political 
contributions, would not be used in determining the award of a 
contract, of course, is something that some of us who have been 
around too long, have to accept that kind of assertion.
    The only other question that I had, Mr. Chairman, is 
concerning the Alaska native corporations and the tribally-
owned firms that get exceptions from the $4.5 million and $6 
million caps from small businesses. Are you familiar with that 
practice, Mr. Dodaro?
    Mr. Dodaro. Yes, Senator McCain.
    Senator McCain. And do you think that is fair to other 
small business owners?
    Mr. Dodaro. Well, there are policies in place. About 4 
years ago, we issued a report on that area saying that the 
oversight needed to be put into place to make sure that what is 
passed by the Congress and then the regulations are 
implemented.
    We are currently looking again, at the request of Congress, 
into that program. We just had a team back from doing field 
work in Alaska. We are planning to issue a report in October 
and we would be happy to have you briefed on that.
    Senator McCain. Thank you, I appreciate it. As you know, 
the Washington Post and other media have exposed really some 
incredible abuses of this program, which has been made non-
competitive, and has increased dramatically the cost to 
taxpayers, not only besides the fact, I guess, it has enriched 
lobbyists here in Washington who have no tribal allegiance or 
identification except that they are lobbyists. One of them was 
exposed to have made $500,000 a year off this contracting 
business, which obviously goes back to cost the taxpayers.
    Do you have a comment on that, Mr. Gordon?
    Mr. Gordon. Yes, sir. Senator McCain, we take the concerns 
very seriously. As I am sure you know, the Small Business 
Administration (SBA) has recently revised its regulations so 
that we could be more certain that the benefits are going to 
the communities that Congress intended when Congress legislated 
these special arrangements.
    In addition, SBA has been cracking down. We have had 
companies suspended for fraud in this area. We need people to 
understand that these are statutory privileges, but they are 
not to be abused, and when they are being abused, we will crack 
down.
    Senator McCain. I am glad to hear that. Unfortunately, in 
the past both this and previous Administrations--apparently 
there have been significant abuses.
    I thank you, Mr. Chairman. I thank the witnesses.
    Chairman Lieberman. Thanks, Senator McCain.
    I think that I will talk to Senator Collins about this, but 
I think it is quite appropriate for the Committee to, after 
this hearing, write to OMB and the relevant agencies to ask 
them what their response to the report is. In other words, what 
actions they are taking now to eliminate some of the 
duplication in these Federal programs. We will do a draft of a 
letter and then circulate it to members of the Committee.
    Mr. Gordon. We would welcome that opportunity, Mr. 
Chairman.
    Chairman Lieberman. Good. We will do that. Senator Pryor.

               OPENING STATEMENT OF SENATOR PRYOR

    Senator Pryor. Thank you. Mr. Chairman, that was one of my 
first questions. I was going to follow up on what Senator 
McCain was asking.
    In my conversations with some of the agencies, which is not 
exhaustive at all, the response has generally been that they 
are looking at the GAO report and they are ``considering what 
that might mean for that agency.''
    And my question for Mr. Gordon and Mr. Kundra is, are you 
seeing agencies moving out of the consideration stage and 
actually doing things, implementing things, and taking action 
to try to save taxpayer dollars? Mr. Gordon, do you want to 
take that first?
    Mr. Gordon. Sure. But I know my colleague will also have 
points to raise. Absolutely. As I mentioned, Senator Pryor, the 
GAO report recognizes the progress that we are already making. 
We have fewer GWACs than we had a few years ago. We have better 
oversight into contracting than we had previously. We have 
government-wide BPAs which we never had in the past so that we 
had these duplicative BPAs.
    Senator Carper. Could I just interrupt for a second? GWACs, 
BPAs. We go through acronyms every day. Could you just not use 
so many acronyms, please? Thank you.
    Mr. Gordon. Thank you, Senator Carper. I appreciate that. 
You know, I used to be a law teacher and when I was a law 
teacher, I always said it is important to avoid acronyms. I 
apologize for slipping up on that very point.
    In the 1990s, we were authorized by statute to allow 
agencies to hold government-wide acquisition contracts for IT. 
I get to say IT, right? But they proliferated. We had too many. 
We had a Wild West atmosphere out there. We are now taking our 
role, in terms of approving business cases, much more seriously 
so that you now have very few of these government-wide 
acquisition contracts, and the ones you have we are supervising 
much more closely.
    And again, as I said in my opening comments, in the world 
of strategic sourcing, you now have situations where any 
Federal employee can get the benefit of these government-wide 
blanket purchase agreements where, in the past, these were 
always agency-specific and even component-specific. So there 
are direct examples of duplication which we have fixed over 
these past 24 months.
    Mr. Kundra. When it comes to information technology, there 
are a couple of big things going on to eliminate duplication. 
First is data centers, where agencies are collaborating in 
shutting down these 800 data centers. We have already shut down 
39 of the data centers. There are 137 data centers that will be 
shut down by the end of this calendar year, which will be a 40 
percent reduction at the end of all these data centers being 
shut down.
    Second is joint procurements. Fifteen agencies have come 
together to move collaboration systems. These are 100 systems 
that are going to be moved to the cloud saving the government 
millions of dollars.
    Third, the Federal CIO Council, which is a council made up 
of CIOs across the Federal Government, has convened to share 
best practices and to discuss which systems they can leverage 
from each other rather than beginning with a new procurement or 
starting with their own unique system.
    Fourth, what we have done over the summer is that we were 
able to halt about $20 billion worth of financial systems, 
terminating some of these financial systems and also creating 
an environment where agencies are going to be leveraging each 
other's systems rather than going out there and building a 
brand new system.
    Senator Pryor. So, Mr. Kundra, all those great things you 
have enumerated there, do you have a sense of how much money 
that will save the taxpayer every year?
    Mr. Kundra. With the data centers consideration, we expect 
a minimum of about $3 billion in savings in the first year. And 
the consolidation effort continues over the next 5 years.
    When it comes to cloud computing, we are forecasting 
potentially up to $5 billion in savings. Now, a lot of this 
will be a function of the procurements that are going to be put 
out on the street and the competitive nature of those 
procurements, but we expect to save at least $5 billion through 
that process.
    Senator Pryor. Mr. Gordon, let me ask you, you mentioned a 
few moments ago blanket purchasing agreements, which all sounds 
good, but in your drive for efficiency and avoiding 
duplication, which I think we all agree we need to pursue, are 
you, in effect, squeezing out opportunities for small 
businesses to do business with the government?
    Mr. Gordon. Senator Pryor, it is an extremely important 
consideration for us. Let me tell you an answer that is very 
concrete. On those office supplies' blanket purchase 
agreements, when we worked with GSA, we said to GSA from day 
one that not only do you need to be talking to other agencies 
to be sure what you are doing meets their needs, you need to 
talk to industry, large and small, you need to work with the 
Small Business Administration. And the results prove that it 
was worth that focus on small businesses.
    Of the 15 vendors that won the competition for office 
supplies' blanket purchase agreements, 13 of them are small 
businesses, including service disabled vet-owned small 
businesses, and too often in the past when small businesses got 
schedule contracts, they never got any money under them. They 
had the piece of paper, but they were not actually getting 
sales.
    We watch this week by week. As of last week, sir, I can 
tell you the small business vendors were getting 74 percent of 
the dollars cumulatively under those blanket purchase 
agreements. This is a win for our small businesses. We would 
not have this be otherwise. We are getting savings of 
approximately 10 percent over what the agencies had been 
spending on office supplies, and at the same time, we are 
getting more dollars to small businesses.
    If I could give you one other example of duplication and 
consolidation that is helping our small businesses? I have to 
tell you it sometimes seems that the information out there is 
scattered in such a way that we are preventing small businesses 
from getting into the Federal marketplace.
    Just a few weeks ago, we consolidated, at the Federal 
Business Opportunities Web site, a whole cluster of information 
that small businesses otherwise had to go hunting for all 
around different agencies' Web sites. We need to help our small 
businesses get into the Federal marketplace and win Federal 
contracts.
    Senator Pryor. Thank you. Thank you, Mr. Chairman.
    Chairman Lieberman. Thanks very much, Senator Pryor. Now we 
know what BPAs are for the record. Have we defined GWACs?
    Mr. Gordon. I tried, sir. I must say, Senator Carper got me 
at something that I am so sensitive about. I apologize for 
that. Government-wide Acquisition Contracts. They are only for 
IT and they have been in existence for about 15 years now.
    Chairman Lieberman. And they are different from airborne 
warning and control systems (AWACs).
    Mr. Gordon. Very different.

              OPENING STATEMENT OF SENATOR CARPER

    Senator Carper. GWACs are gliders.
    It is nice to have all of you here. Mr. Kundra, it is 
really unfortunate that Senator McCain could not stay and hear 
your response to the questions that he raised. I think the very 
encouraging work that you and your colleagues are doing with 
respect to consolidating the number of data centers we have and 
reducing them, I think you said, from about 2,000 down to 
around 800 over the next 5 years or so, that is $3 billion. 
That is a lot of money. That is real money and we appreciate 
that.
    My Subcommittee had a hearing, colleagues, a couple of 
weeks ago and Mr. Kundra was good enough to join us at that 
hearing. We talked a little bit about cloud computing and how 
we can save money there. For a lot of people in the country who 
think when we talk about cloud computing it must have something 
to do with meteorological forecasts, why do you not just give 
us cloud computing 101 and tell us how this is going to save 
money?
    Mr. Kundra. Sure. So the way to think about cloud computing 
is to think of it in the same context as you would water or 
electricity. It used to be that in the early days, that every 
house had its own well or had to generate its own power. And as 
technology evolved, we ended up building these grids, whether 
it was the electricity grid or it was the ability to distribute 
water centrally.
    In the same way as technology, if you think about how it is 
being deployed, every single agency is going out there and, for 
that matter, in many cases, if you looked at these 82 programs, 
they are going out there building their own data centers, 
putting behind it significant resources to power the computing 
infrastructure. So what we are trying to do is lower the cost 
of government operations by making sure that by shifting to the 
cloud, we are using technology much more like a utility, very 
much like electricity or water.
    On something as simple as email, when GSA and USDA decided 
to move email to the cloud, they were able to save about $40 
million. Now, imagine as you scale that to far more complicated 
systems like financial systems, human resource systems, and 
some of the other infrastructure that the government leverages, 
we have an opportunity to save billions and billions of dollars 
across the Federal Government.
    Senator Carper. Good work. Thank you for all the leadership 
that you are providing in this regard. I am going to follow up. 
And also, thank you for responding to my recent letter about 
the cuts to the Electronic Government (E-Gov) Fund, which was 
part of the 6-month continuing resolution. I am happy to hear 
that USAspending.gov and the IT Dashboard are still in 
operation. They say that sunshine is the best disinfectant and 
it is a pretty good one.
    I think shining a light on how the Federal Government is 
spending our taxpayer dollars is of benefit to just about 
everybody who is concerned about our current budget situation. 
I am also told that the Electronic Government Fund helps 
agencies consolidate their data centers.
    I just want to ask you if you could take a moment to 
discuss that piece of the Electronic Government Fund and how it 
has been affected by the recent budget cuts, and maybe what we 
need to do as a next step in that regard.
    Mr. Kundra. Sure. Originally there were about $34 million 
in the E-Gov fund and it was cut from $34 million down to $8 
million. Now, every program that was supported by that fund has 
been affected.
    Whether it is USAspending.gov or the IT Dashboard, what we 
were doing in terms of performance of a lot of these programs, 
the resources we had dedicated out of that $34 million to 
advance data center consolidation and cloud computing, the 
priority for the Administration is obviously to make sure that 
we are in compliance with the statutory requirements such as 
USAspending.gov, and also to make sure that we continue to 
advance some of the high value initiatives like the IT 
Dashboard, which has led to billions of dollars in savings.
    The President's budget in 2012 includes the $35 million 
request or $34 million request for the E-Gov fund, and part of 
that funding is to make sure that we continue to improve the 
platforms that have been deployed, whether it is shining light 
on $80 billion of IT investment, or with USAspending.gov, 
making sure that we are getting all the sub-award data, whether 
it is in contracting or in the grants world.
    The reality is that transparency is not free. It costs 
money and it takes resources. So we are doing our best with the 
$8 million funding that we have, but as an Administration, we 
are committed to advancing these open government initiatives 
because not only do they save taxpayer money, but they also 
create an ecosystem of innovation, in the case of data.gov, 
where we are able to tap into the ingenuity of the American 
people to help us develop third-party applications that would 
end up costing us millions of dollars.
    Senator Carper. I would just say to my colleagues, one of 
the things we try to do on our Subcommittee on Federal 
Financial Management, Government Information, Federal Services, 
and International Security, is to leverage the effectiveness of 
a small Subcommittee, and as part of a powerful full Committee, 
and we leverage that by partnering with GAO and partnering with 
OMB, by partnering with the inspector generals across the 
government, and by partnering with a number of non-profit 
organizations, an organization like Citizens Against Government 
Waste, but also others.
    And one of the things we found, I really learned this, I 
think, first from Senator Coburn, that one of the maybe most 
cost effective ways to leverage our interest in changing the 
culture around here from a culture of spendthrift to a culture 
of thrift, in trying to figure out how do we get better results 
for the same amount or less money, is to more effectively use 
the kind of transparency that is provided through some of the 
work that Mr. Kundra is doing.
    It is not much money. In looking at a budget that is in the 
hundreds of billions, trillions of dollars, and the spotlight 
this enables us to put on spending and to weigh if we have 10 
programs, which are good, which are not, which are delivering. 
We are trying to do something like this with respect to energy 
consumption by the Federal Government and to use that 
transparency to help us.
    Really, bringing a lot of other folks, from the media, from 
people that are just out there on their own watching to see 
what we are doing and what is effective makes sense. It is 
really good stuff and my hope is that we can restore the 
money--it is a very modest amount of money--and help us so that 
we can do that and be supportive of your efforts.
    I just want to say again to you, Mr. Kundra, thank you so 
much for the great leadership that you are providing in this 
area. I know Mr. Gordon does as well. Mr. Dodaro I have a 
chance to work with on a regular basis and value what he does 
very much. Thank you all for being the good stewards that you 
are.
    Chairman Lieberman. Thanks, Senator Carper. Thanks for the 
good work that your Subcommittee is doing. We appreciate it, 
though it is not as powerful as the full Committee. [Laughter.]
    Senator Carper. We aspire to be. That would be the tail 
wagging the dog.
    Chairman Lieberman. You do very well, really. We will do a 
quick second round here.
    Mr. Dodaro, I wanted to go to a slightly different focus, 
but also in the report, something you mentioned in your opening 
statement, and that is Department of Defense. As you know, 
there is a significant overlap in membership between this 
Committee and the Senate Armed Services Committee. We are 
really committed across party lines to protecting our national 
security. It is one of our constitutional responsibilities.
    But we understand that there will be pressure on spending 
in the Department of Defense. As you have seen, I am sure, in 
the last couple of days, Secretary Gates has given two speeches 
in which he has warned against cutting so deeply in defense 
that we begin to jeopardize our national security. So I wanted 
to ask you if you could talk a little bit about what some of 
the thoughts and recommendations GAO came up with regarding the 
Department of Defense budget.
    Mr. Dodaro. I would be happy to, Senator. First, one of the 
areas we pointed out was the ability to consolidate medical 
commands. Right now, each of the services has their own medical 
command and there is an Under Secretary for Health as well that 
has a separate infrastructure as well.
    Here, the Department of Defense itself came up with 
recommendations several years ago of the amount of savings that 
could be realized from consolidation. But they could not agree 
on the recommendations. I am sure this is no surprise to you 
that have served on the Armed Services Committee, but they have 
taken some modest steps.
    Chairman Lieberman. Right.
    Mr. Dodaro. But if they implemented the more significant of 
the alternatives there--we updated their estimates that were 
done by the Center for Naval Analysis, and they could save $250 
to $400 million a year by consolidating commands. And there are 
four or five different options for achieving that. Their 
medical costs are growing significantly. They went from $19 
billion awhile back to about $42 billion. They are estimated to 
go to $60-some billion in the out years. There would be no 
sacrifice in quality here.
    Also, in a number of areas like urgent need requests coming 
out of the wars in Iraq and Afghanistan, there have been a 
proliferation of vehicles for achieving those. We have made 
recommendations to consolidate those which would better 
streamline the process.
    And gathering of intelligence, surveillance, and 
reconnaissance information has proliferated. There is not a 
good efficient means there and they need a better roadmap in 
that area. They have agreed with us in all these areas, by the 
way, and I think it is just a matter of the Department of 
Defense executing on the ideas going forward.
    Tactical wheeled vehicles is another area where we think 
that they are pursuing a separate procurement, as Senator 
McCain mentioned, when they already have existing vehicles and 
are not looking at it in a comprehensive way.
    We also reiterate a number of things that we have had on 
our High-Risk List for a while about spare parts and inventory. 
There are billions of dollars that they end up in inventory 
that are not needed to meet current requirements, and they need 
to be able to better forecast their requirements in those areas 
and to share information. Their systems are really antiquated 
in a lot of areas and they are not able to share information 
which would result in better information.
    They have over 2,300 business systems in place, and we have 
made recommendations for enterprise architectures there. They 
have begun developing them, but they have not federated them 
down to the individual services yet effectively as well. And, 
of course, we mentioned the weapons acquisition area is another 
area where they need to use portfolio management. I am 
encouraged by what the Secretary has done in that area.
    Chairman Lieberman. Right.
    Mr. Dodaro. But they also need to implement reforms 
successfully. We see some signs of improvement in more recent 
procurements, but the implementation will still be challenging. 
So those are a few of the areas at the Department of Defense.
    I might add, on your point about sending letters to the 
agencies, I think it is a really good idea, but in these 
program areas, the agencies individually can only take so much 
action. I will illustrate with teacher quality. Of the 82 
programs, the Department of Education has the bulk of it, but 
by no means has control over the other programs. There are 10 
different agencies that have those programs.
    So in most of these areas, in addition to the agencies and 
what they could do, the Administration really needs to take a 
cross-cutting approach across the agencies. OMB has to take a 
leadership role.
    Chairman Lieberman. But it has to come from OMB.
    Mr. Dodaro. Yes, but I just offer that.
    Chairman Lieberman. No, it is very helpful as we go forward 
and prepare those letters. And I assume that in some cases, 
this will require congressional action, too, because a lot of 
these programs are authorized by law.
    Mr. Dodaro. Definitely. Many will require legislative 
change. In fact, a number of these areas are up for re-
authorization.
    Chairman Lieberman. Right.
    Mr. Dodaro. The education area and surface transportation--
so there are perfect opportunities here now to really make some 
headway.
    Chairman Lieberman. Yes. I am going to look at that and 
maybe one of the other things we want to do here is to 
circulate the report, pull the report apart and circulate parts 
of it to the relevant committees, the subject matter. Like send 
the teacher quality section to the Education Committee, which 
is supposedly attempting to come up with an agreement on re-
authorizing the so-called No Child Left Behind Act.
    Mr. Dodaro. I am very encouraged by it. A number of 
committees have asked us for testimony on discrete pieces. I 
testified before the House Education and Work Force Committee 
on teacher quality and employment training programs. So we 
would be happy to work with you on that and support you.
    Chairman Lieberman. Good. I note that in all the ideas you 
gave about defense, there was nothing that I would consider 
that would really jeopardize our national security. In other 
words, those are efficiencies, elimination of waste, 
duplication. So I appreciate that.
    Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    Mr. Dodaro, let me follow up where the Chairman left off 
and ask your advice on where should we start? This report is 
overwhelming in many ways because it does transcend agencies. 
There are so many programs. You found problems virtually 
everywhere you looked. OMB clearly needs to take the lead 
because of the cross-cutting nature of this. But as far as low-
hanging fruit, where should Congress start?
    Mr. Dodaro. There are a number of areas that we recommend 
that either bills have been introduced or the Administration 
has made legislative proposals. For example, in the government 
pension offset area, this is an area where, for Federal 
workers, under survivor benefits, the pension is offset to 
account for the fact that Federal workers do not contribute to 
Social Security. Well, neither do some of the State and local 
entities.
    But the Social Security Administration does not have the 
information necessary to be able to offset those pension costs. 
We have recommended and the Administration has proposed 
legislation to require the Internal Revenue Service to collect 
simple information. They can add one line to a form. That is 
estimated by CBO to ultimately save the government $2.4 to $2.9 
billion. So I think that would be good.
    You mentioned in your opening statement the ethanol tax 
credit issue and we estimate, as you correctly point out, it is 
close to $6 billion, $5.7 billion. That is well-developed. 
There have been bills introduced to be able to adress that.
    There is $640 million sitting at the Customs Service based 
on a temporary increase in a fee years ago--it has been almost 
a decade, I believe, it has been many years--that the Congress 
has not authorized the use of those funds. They could be used 
to offset future costs going forward as well. I think the other 
area is in the program areas where the Administration has 
already made proposals for consolidation.
    Those are good starting points to go forward. And there are 
other areas as well. I can provide a quick hits list to you to 
elaborate on those lists. But those are just a few off the top 
of my head that I think are ready to go. It is just a matter of 
pushing the legislation through and gaining, obviously, 
consensus and the proper amount of support.
    Senator Collins. Thank you. Mr. Kundra, I want to ask you 
about the consolidation of data centers that you discussed 
briefly. At our request, the GAO has been conducting a review 
of the Federal Government's efforts to consolidate data 
centers. I was amazed to learn from the GSA that a typical 
Federal Government data center utilizes approximately 27 
percent of its capacity, and that is far lower than the average 
for the private sector counterparts. In fact, GSA estimates 
that the manufacturer's average utilization is 79 percent. So 
clearly, we have a lot of excess capacity.
    Tell me more about how the Administration is proceeding to 
consolidate these centers to ensure that we do not have 
thousands of centers that are only partially used.
    Mr. Kundra. Sure. So one of the biggest problems in 
information technology is that as its infrastructure has been 
built out, the central processing unit (CPU) utilization, which 
is what you are referring to, is below 27 percent. Actually, 
the private sector, in some cases, is worse, and the reason is 
because they actually upgrade their infrastructure faster than 
the Federal Government does. So in many cases, the Federal 
Government has a higher utilization per CPU because we have not 
really upgraded that infrastructure.
    What is worse is if you look at storage utilization that 
is, on average, under 40 percent. What we are trying to do, and 
the reason we have been very focused on consolidating all this 
infrastructure is because it makes absolutely no sense, when 
you have two megatrends that are going the opposite way. So one 
is going from 432 data centers to 2,094-plus in about a decade. 
Second is utilization is so low on all these assets.
    So what we are doing is we are actually very focused on not 
only consolidating these data centers, but also making sure 
that we are moving agencies to the cloud where we can leverage 
shared services, because one of the advantages of cloud 
computing is that you can actually pool a lot of resources and 
provide storage and compute power on demand, rather than just 
building all this capacity that is never utilized.
    So the example I used, it is very much like electricity at 
home, that you only pay for what you use rather than having an 
entire power plant that is being run without it ever being 
used.
    Senator Collins. Clearly that move to cloud computing does 
offer the possibility of enormous savings. I am going to share 
with you the chart that we got from the GSA,\1\ and I know you 
cannot see it from there, but just to look at the bars. The 
smallest one is the typical Federal Government server, and 
these tall bars are manufacturing capacity utilization not just 
in the United States, but in France, Germany, Brazil, and 
Canada. So there is really quite a contrast that suggests that 
there are a lot of possibilities for saving money and 
consolidation in that area.
---------------------------------------------------------------------------
    \1\ Chart submitted by Senator Collins appears in the Appendix on 
page 45.
---------------------------------------------------------------------------
    Mr. Kundra. Absolutely. And that chart is actually a 
presentation that I put together at GSA.
    Senator Collins. Well, then, you are familiar with it.
    Mr. Kundra. I am very familiar. I put that chart together.
    Senator Collins. Well, it is an excellent chart.
    Mr. Kundra. Thank you. And the big point we were trying to 
make there is that if you look at IT where you have asset 
utilization that is under 27 percent compared to the 
manufacturing sector, in most countries, if you look at the 
entire European Union, Canada, Brazil, and the United States, 
asset utilization in the manufacturing sector is about 79 
percent. The question we are asking is, why is it that in 
information technology it is OK for us to accept a 50 percent 
differential from the manufacturing sector?
    Senator Collins. Exactly.
    Mr. Kundra. That is why we are forcing a lot of this 
consolidation.
    Senator Collins. Thank you. And I thank our witnesses, 
also, but most of all, Mr. Chairman, I thank you for holding 
this hearing today.
    Chairman Lieberman. Thanks, Senator Collins. Thanks for 
your partnership in this, also. It has been a productive 
hearing.
    The GAO report is an important one. It provokes us, 
challenges us, and most of all, it challenges, obviously, the 
Executive Branch. I always resist the business/government 
analogies because they are not quite perfect because government 
is held to other standards than businesses.
    And yet, I think part of what we need to feel now, and the 
budget crisis we are in really demands it, is that the people 
in charge of running the government are going over the way we 
are operating, the whole question. I appreciate, Mr. Kundra, 
some of the examples you have given which were very 
encouraging--of whether we are taking maximum advantage of 
advances, for instance, in information technology, which is 
what any chief executive officer of a company would demand of 
the people under him. In that case, they are accountable to 
their stockholders.
    But really, we are all accountable to the taxpayers, to say 
the obvious, and it is going to take a couple of big things, 
but a lot of small things, or seemingly small in a large 
budget. They include not just cuts, but better management, 
better use of IT, and reduction or elimination of duplication. 
And so, we are in this together.
    I would like to commit, and I know Senator Collins would, 
to stay on this and we are going to follow with the letters we 
have talked about. I think it might be a good idea that we all 
reconvene later this year and just see what you can tell us 
then by way of a progress report. I know you are going to do 
another report of this kind next year.
    Mr. Dodaro. Right. But we can be in a position later this 
year to give a scorecard on what has happened so far.
    Chairman Lieberman. That would be great. We will keep the 
record of this hearing open for 15 days for additional 
questions and statements. I thank the witnesses very much. The 
hearing is adjourned.
    [Whereupon, at 11:55 a.m., the Committee was adjourned.]


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