[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
  UNACCOUNTABLE GOVERNMENT: GAO REPORTS SHOW FEDS STRUGGLING TO TRACK 
                         MONEY AND PERFORMANCE 

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

                                HEARING

                               before the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 10, 2013

                               __________

                           Serial No. 113-45

                               __________

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

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

                               ----------
                         U.S. GOVERNMENT PRINTING OFFICE 

82-273 PDF                       WASHINGTON : 2013 


              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
JOHN L. MICA, Florida                ELIJAH E. CUMMINGS, Maryland, 
MICHAEL R. TURNER, Ohio                  Ranking Minority Member
JOHN J. DUNCAN, JR., Tennessee       CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
PAUL A. GOSAR, Arizona               GERALD E. CONNOLLY, Virginia
PATRICK MEEHAN, Pennsylvania         JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee          MATTHEW A. CARTWRIGHT, 
TREY GOWDY, South Carolina               Pennsylvania
BLAKE FARENTHOLD, Texas              MARK POCAN, Wisconsin
DOC HASTINGS, Washington             TAMMY DUCKWORTH, Illinois
CYNTHIA M. LUMMIS, Wyoming           ROBIN L. KELLY, Illinois
ROB WOODALL, Georgia                 DANNY K. DAVIS, Illinois
THOMAS MASSIE, Kentucky              PETER WELCH, Vermont
DOUG COLLINS, Georgia                TONY CARDENAS, California
MARK MEADOWS, North Carolina         STEVEN A. HORSFORD, Nevada
KERRY L. BENTIVOLIO, Michigan        MICHELLE LUJAN GRISHAM, New Mexico
RON DeSANTIS, Florida

                   Lawrence J. Brady, Staff Director
                John D. Cuaderes, Deputy Staff Director
                    Stephen Castor, General Counsel
                       Linda A. Good, Chief Clerk
                 David Rapallo, Minority Staff Director



                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 10, 2013....................................     1

                               WITNESSES

The Hon. Gene L. Dodaro, Comptroller General of the United 
  States: Accompanied by Ms. Nancy Kingsbury, Steve Sebastian, 
  Gary Engel, Asif Khan, Robert Dacey, Chris Migm
    Oral Statement...............................................     4
    Written Statement............................................     7


  UNACCOUNTABLE GOVERNMENT: GAO REPORTS SHOW FEDS STRUGGLING TO TRACK 
                         MONEY AND PERFORMANCE

                              ----------                              


                       Wednesday, July 10, 2013,

                  House of Representatives,
              Committee on Oversight and Government Reform,
                                                   Washington, D.C.
    The committee met, pursuant to call, at 9:36 a.m., in Room 
2247, Rayburn House Office Building, Hon. Darrell Issa 
[chairman of the committee], presiding.
    Present: Representatives Issa, Mica, Turner, Duncan, 
McHenry, Jordan, Walberg, Lankford, Amash, DesJarlais, Gowdy, 
Woodall, Collins, Meadows, Bentivolio, Cummings, Maloney, 
Lynch, Connolly, and Duckworth.
    Staff Present: Ali Ahmad, Majority Communications Advisor; 
Molly Boyl, Majority Senior Counsel and Parliamentarian; 
Lawrence J. Brady, Majority Staff Director; John Cuaderes, 
Majority Deputy Staff Director; Adam P. Fromm, Majority 
Director of Member Services and Committee Operations; Linda 
Good, Majority Chief Clerk; Michael R. Kiko, Majority Staff 
Assistant; Mark D. Marin, Majority Counsel; Tegan Millspaw, 
Majority Professional Staff Member; James Robertson, Majority 
Senior Professional Staff Member; Katy Rother, Majority 
Counsel; Laura L. Rush, Majority Deputy Chief Clerk; Scott 
Schmidt, Majority Deputy Director of Digital Strategy; Peter 
Warren, Majority Legislative Policy Director; Rebecca Watkins, 
Majority Deputy Director of Communications; Jedd Bellman, 
Minority Counsel; Krista Boyd, Minority Deputy Director of 
Legislation/Counsel; Beverly Britton Fraser, Minority Counsel; 
Jennifer Hoffman, Minority Communications Director; Elisa 
LaNier, Minority Director of Operations; Dave Rapallo, Minority 
Staff Director.
    Chairman Issa. The committee will come to order.
    The Oversight Committee exists to secure two fundamental 
principles. First, Americans have a right to know the money 
takes from them is well spent. And second, Americans deserve an 
efficient, effective government that works for them. Our duty 
on the Oversight and Government Reform Committee is to protect 
these rights. Our solemn responsibility is to hold Government 
accountable to taxpayers, because taxpayers have a right to 
know what they get from their government. It is our job to work 
tirelessly in partnership with citizen watchdogs and the GAO to 
deliver the facts to the American people and bring genuine 
reform to the Federal bureaucracy.
    Imagine beginning every month not knowing how much money 
you have and not being able to track what money has been spent. 
Personally, in our family it is unthinkable. Yet month after 
month, year after year, that is exactly where the Federal 
Government operates. The American people are periodically 
reminded of this when we talk about the upcoming debt ceiling. 
And yet the debt ceiling seems to move not by hours or days, 
but by weeks and then months and often nearly a year, as money 
is somehow found and consumed that was claimed not to be there.
    That is not entirely a shell game, but rather the reality 
that until they go looking for it, they don't know where it is. 
When they find it, they often don't know how much they have. It 
is unbelievable, it is unverifiable. And it is unaccountable. 
We have no idea how much money is spent and how much we owe. We 
have yet close approximations.
    And more and more, President Obama keeps asking the 
American people to trust government and to give them more 
authority with your money. For all the promises of reform and 
modernization in government, the reality is, the promises have 
fallen short, no reform has occurred, and in fact, this 
committee has found that it is harder and harder to get 
execution of existing accountability.
    As chairman at this time, I have to remember that this is 
not a new problem. Is it a problem exacerbated by new 
government programs? Certainly the looming Affordable Care Act 
creates the likelihood that we will be administering over a 
large portion of our gross domestic product at a Federal level.
    In fact, later in this July session, we will be looking at 
whether we can secure the records of every American's taxes, I 
repeat, every American's taxes, when they are put out as part 
of the Affordable Care Act. This is a large undertaking, and 
one that involves huge privacy issues.
    Now, health care records and your income and financial 
spending wouldn't seem to be linked, except they are all linked 
by whether or not computer systems work. They are all linked by 
whether accounting systems work, and they are all linked by 
whether or not the system the government employs to authorize 
people to make entry, to oversee entry and to analyze the 
actual current state all is the same.
    So the accuracy of your health care, the protection of your 
privacy and whether we can track tax dollars all are 
effectively the same problem. But rather than looking at an 
individual who finds themselves with their entire health record 
on the internet, or perhaps millions of veterans who find that 
their personal information was taken home on a laptop and 
somehow the laptop was lost and as a result personal 
information can be available on millions of Americans.
    In the case of the GAO's look, and its blunt, 
straightforward analysis that this government is broken, allows 
us to see it quantitatively in dollars and cents. This is not 
to say that this problem began on this President's watch, but 
it is this President's watch, it is the ranking member's watch 
and it is my watch.
    So today, we want to say to the American people, don't 
expect miracles, but do expect government to begin performing 
basic math better. We live in the 21st century. There are 
companies who today are trying to figure out how to reacquire 
tens of billions of dollars that are stranded overseas from 
their profits that did not exist, I repeat, did not exist when 
many on the dais came to Congress. Companies have been formed, 
accounting systems created, vast capability to analyze and be 
accurate to the penny and meet the requirements of public 
accounting have occurred with companies that did not exist a 
decade ago.
    If we can create great institutions from scratch, tilt them 
up and make their information secure and available to seven 
billion people around the world and do it in the time that Mr. 
Cummings and I have served in Congress, then how is it that we 
are worse off, no better off when it comes to government 
accountability than we were at the time that my ranking member 
and I came to Congress? That is part of why we will hear today, 
and I recognize the ranking member for his opening statement.
    Mr. Cummings. Thank you very much, Mr. Chairman. And I 
thank you for holding this hearing.
    I want to thank you, Mr. Dodaro, for testifying today. I 
appreciate the work that you and your staff have put into the 
reports that form the basis for your testimony today. And I 
trust that you will express the appreciation of our committee 
for the very hard and excellent work.
    This hearing focuses on two areas that are the core of this 
committee's jurisdiction: government financial data and 
government performance data. In order to be efficient and 
effective, the government has to know how much money it has, 
how much money it is spending, and whether that money is being 
spent wisely. The Government Accountability Office performs an 
audit each year of the consolidated financial statements of the 
government, which are prepared by the Department of Treasury in 
coordination with the Office of Management and Budget.
    In January, GAO reported that it could not, could not 
express an opinion on the audit of the government's books for 
fiscal years 2011 and 2012. This is not a new problem. GAO has 
not been able to express an audit opinion on the government's 
books since it started performing these audits in 1997.
    The Department of Defense is one of the main reasons GAO is 
unable to give an audit opinion. The DOD is responsible for 
more than half of the Federal Government's discretionary 
spending, but it is unable to prepare auditable financial 
statements. GAO has included DOD financial management in its 
high risk list in 1995.
    In its 2013 high risk report, GAO said this: ``DOD is one 
of the few federal entities that cannot accurately account for 
its spending or assets. It is one of three major impediments 
that prevent GAO from rendering an opinion on the annual 
consolidated financial statements of the Federal Government. 
Without accurate, timely and useful financial information, the 
DOD is severely hampered in making sound decisions affecting 
its operations.''
    On the other hand, the Department of Homeland Security has 
made major improvements. For the first time, DHS received a 
qualified audit opinion for fiscal year 2012. This is the 
result of a concerted effort by the Secretary and other DHS 
officials to improve the Department's financial management. It 
is also the result of the work of this committee holding the 
Department accountable through hearings and briefings.
    Fiscal responsibility is about more than just balancing 
books. It is also critical for the government to know whether 
the money that is spent is doing what it was intended to do. In 
2011, the President signed into law the Government Performance 
and Results Modernization Act of 2010. That law was sponsored 
by Representative Henry Cuellar and it was approved on a 
bipartisan basis by this committee. The Act required GAO to 
conduct assessments of the law's implementation, and on June 
26th, GAO issued its report. GAO found that the government has 
made major strides through implementation of the law.
    John Kominsky, a senior fellow with the IBM Center for the 
Business of Government, offered this conclusion as his takeaway 
from the GAO report: ``The key story that stands out for me is 
that the conceptual framework of the GPRA Modernization Act and 
the actual use of its provisions, such as priority setting and 
data driven progress reviews, are seen as effective by agency 
managers.''
    GAO also found a number of areas that need improvement. For 
example, GAO found that agencies are not doing enough to track 
issues that cut across agencies, such as climate change and 
food safety. I look forward to hearing GAO's recommendations 
for how the government can do better, both in terms of 
financial management and performance management.
    With that, I yield back.
    Chairman Issa. I thank the gentleman. All members will have 
seven days to submit opening statements and extraneous 
materials for the record.
    We now recognize our panel. We recognize the Honorable Gene 
Dodaro, who is the Comptroller General of the United States. We 
ask the following GAO advisors accompanying Mr. Dodaro to stand 
and be sworn at the same time. And if there are any others 
other than the ones I mention, please let me know.
    Nancy Kingsbury, Gary Engel, Robert Dacey, Steve Sebastian, 
Asif Khan and Chris Mihm. Is that complete? Would you please 
rise and raise your right hand to be sworn?
    Do you solemnly swear or affirm that the testimony you are 
about to give will be the truth, the whole truth and nothing 
but the truth?
    [Witnesses respond in the affirmative].
    Chairman Issa. Let the record indicate that all witnesses 
answered in the affirmative.
    Mr. Dodaro, you have been here so often that to say please 
bear in mind that your entire statement will be placed into the 
record would be redundant. So I will dispense with that. The 
gentleman is recognized.

                       WITNESS STATEMENT

                    STATEMENT OF GENE DODARO

    Mr. Dodaro. Thank you very much, Mr. Chairman, Ranking 
Member Cummings, members of the committee. I am pleased to be 
here today to discuss GAO's Audit of the Consolidated Financial 
Statements of the Federal Government, and also our assessment 
of the initial implementation of the Government Performance and 
Results Modernization Act of 2010.
    As it relates to the financial management of the Federal 
Government, we reported 21 of the 24 largest departments and 
agencies were able to receive an unqualified opinion for fiscal 
year 2012 statements. However, as has been pointed out in 
opening statements, there are serious material weaknesses in 
internal controls and financial reporting that have prevented 
us from being able to give an opinion on the consolidated 
financial statements of the United States Government. The three 
major impediments are serious financial management problems at 
the Department of Defense, the inability to eliminate intra-
governmental transactions among Federal departments and 
agencies, and an ineffective process to compile the financial 
statements of the Federal Government.
    DOD, OMB and Treasury are all seeking to rectify these 
weaknesses. But our assessment is that much more work needs to 
be done in order to address these issues and put the Federal 
Government in a position where it can get an opinion on its 
consolidated financial statements.
    We were also unable to express an opinion on the statement 
of social insurance, which covers Social Security and Medicare 
programs, due to the uncertainties associated with the 
estimates for restraining cost growth under the Medicare 
program.
    With regard to other areas we pointed out in that report, 
we also pointed out that there were internal control weaknesses 
in improper payments and computer security across the 
government, and made other observations and recommendations.
    Now, with regard to performance management, the 
Modernization Act of 2010, the initial implementation of 
setting up the requirements for the Act has taken place. The 
Administration has set interim cross-cutting goals, the 
agencies have set priority goals. They have assigned 
responsibilities as outlined in the Act for performance 
officers in the departments and agencies, and they are 
beginning to hold quarterly progress reviews, performance 
reviews that are required under the Act.
    However, there are a number of significant areas that we 
pointed out where there are remaining weaknesses and 
opportunities for improvement. First of all, we find little 
improvement in the use of performance measurements and 
information from the survey we did for this work in 2012, 
compared to 1997. So there is a need to really increase the use 
of the information and the usefulness of the information there 
as well. We also pointed out where there are areas where there 
have been difficulties in measuring performance that have yet 
to be overcome, for example, in the grants and contracts area. 
So there is a lot of room for improvement and actually 
developing better, more complete and useful performance 
measures.
    We found there were missed opportunities in cross-cutting 
areas across the government where programs were included to be 
measured, but not tax expenditures. So the performance at tax 
expenditures needs to come under greater scrutiny as well as to 
whether it is achieving its objectives or not, and assessing 
government-wide priority goals as well.
    We also found the law requires that there be a public 
website set up to increase transparency. That has been done, 
but the website can be improved greatly in terms of its 
usefulness and transparency. We made recommendations that more 
work is done inassessing the needs of people in the Congress 
and the public to use that information to make it more 
transparent and useful to the American public.
    We also found little evidence of meaningful consultations 
with the Congress.
    Chairman Issa. Could you repeat that?
    Mr. Dodaro. Yes. We found little evidence that there were 
meaningful consultations with the Congress in this case, and 
made recommendations there be better documentation. One of the 
main objectives of this Act, even though the original 1993 Act 
required consultations with the Congress, the 2010 Act was to 
increase those consultations and require them to be documented 
by the agencies in their reporting. That hasn't been done to, 
we think, the intentions and the expectations of the Congress.
    So we made many recommendations in all these areas to OMB. 
They have agreed to implement all the recommendations, so we 
will be tracking their progress in our future reports on these 
areas as well as on the consolidated financial statement.
    So just in closing, I would say, and I want to underscore, 
meaningful improvement in financial management and performance 
management will not occur without greater leadership on the 
part of the Executive Branch and rigorous oversight by the 
Congress. It is needed in order to have financial and 
performance data that are commensurate with dealing with the 
significant problems we have in the Federal Government, both 
fiscal management and performance. I applaud the committee for 
holding this hearing, and I look forward to continuing the work 
with you and the Congress and the Administration in bringing 
about meaningful reform.
    Thank you.
    [Prepared statement of Mr. Dodaro follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Issa. Thank you.
    I will recognize myself for a series of questions. In your 
prepared statement, one of the things, and in the briefing that 
we received before this hearing, one of the things that you 
note is that when government does business with government, 
Federal Government agency to agency, something that we want to 
encourage in a number of ways.
    They actually do a very poor job of tracking that. This 
committee has passed previously the Data Act. It died in the 
Senate. Our belief is that it died in the Senate mostly because 
it pushed back on recipient reporting, that recipients of 
grants didn't really want to be held accountable. But those 
were, and maybe that is not completely unfair, they complained 
it was burdensome. But clearly, that was one of the areas that 
we have continued to work on to try to make it more acceptable.
    But had the Data Act been passed with government systems 
being required to have meaningful meta data, so that in fact 
there is a transparency, would that have improved this 
government to government accounting?
    Mr. Dodaro. Having data standards that are included in the 
Data Act and regular reporting would have been very beneficial 
to addressing these issues. That information then can be, and 
should be, tied to the financial systems and the agencies and 
having more rigor in place. I am very supportive of the Data 
Act that has been put forward. I commend the committee for its 
role in that area. I think without legislation, it won't 
happen. And I think that is very important, and would be 
helpful in addressing these issues.
    Chairman Issa. I might note for the record that a previous 
OMB director now in a new job is beginning to see the benefit 
of that information differently than when it was his task to do 
it without legislation.
    You mentioned the deficiencies in the government-wide 
website. Is part of that deficiency, in fact, that without 
meaningful structured data you are really not producing rich 
data in an automated way, but rather posting to the website as 
though it was an advertisement? I am not trying to belittle it, 
but isn't that a certain amount of what that website is, is 
manually grabbed information posted to try to make people aware 
of what is going on?
    Mr. Dodaro. The website, if you look at it, there is a lot 
of information on it, but it is hard to find exactly what you 
need. And it is not as searchable, for example, as the 
recovery.gov website. I think more effort needs to be put into 
making sure people understand how the public, Congress and 
other people want to use the information. It is not very user-
friendly.
    Chairman Issa. Let me ask you a question, and you may have 
to go to one of your assistants. When we are looking at the 
21st century, the word website versus data mineable data base 
available to the public, isn't there a huge difference in which 
a website is fine for a novice to go search and hopefully find 
the form they need or the information they need? Well, if we 
were to mandate truly data mineable bases, then companies and 
innovators who want to create these Apple apps and so on could 
in fact mine that data, that public data, and make it available 
in very easy format at no cost to the government?
    Mr. Dodaro. Exactly. I think there is great opportunity to 
make government data available to enhance the ability of 
people, researchers, companies and others, the public, to use 
that information. But the one thing we pointed out, whether we 
are looking at usaspending.gov, the Data Act or data.gov, 
performance.gov, is the quality of the information and the 
reliability and accuracy of the data. That I think is 
paramount. That always isn't really assured, Mr. Chairman. I 
think that is a real limitation.
    We can make a lot of data available. But if it is not 
reliable and it is not accurate, it is not as helpful as 
possible.
    Chairman Issa. We are trying to look for examples that do 
work. Would one of those examples perhaps be where the FAA 
opened up the core data of where aircraft are within the 
system, so that people could track their incoming flight with 
apps that were made available after the fact? That is my 
understanding, is both weather and FAA are examples of data 
that has become available for independent development.
    Mr. Dodaro. I would have to get back to you.
    Chairman Issa. I would appreciate if you would do that for 
the record. I would like to the greatest extent possible for 
the public to understand, and we will create a link to some of 
those examples, if we can work with your staff.
    Now, you mentioned food safety. This is the committee of 
oversight, but it is also the committee of reform. Some years 
ago, the President noted that food was controlled by multiple 
agencies in rather obtuse ways. If I remember right, his 
examples were, where salmon were swimming affected where they 
were under their control. And then of course, that was live. 
Then when you get into various foods and food groups, you could 
be at the FDA, Department of Agriculture, a number of others.
    Should this committee consider consolidated food safety a 
reorganizational plan that would make food a single point of 
accountability, whether or not it leveraged existing agencies, 
so that the American people could see food safety as a single 
point of accountability?
    Mr. Dodaro. Yes.
    Chairman Issa. Thank you.
    I love a great witness. For all of you here today, that is 
an example of a really great witness.
    [Laughter.]
    Chairman Issa. My time is expiring. I mentioned in my 
opening statement the challenge of data accountability under 
the Affordable Care Act. I know that that is not the primary 
concern of this hearing. But for the GAO, is this not by 
definition next year's high risk, the fact that in 70 days, we 
theoretically will implement the Affordable Care Act, and at 
that point, this IRS data and a confluence of other information 
to exchanges not even yet up and running, and in some cases not 
defined, will become law?
    Mr. Dodaro. That is an area we are definitely going to 
focus on. I have been concerned. In fact, we have computer 
security as a government-wide high risk area. And we have 
focused on that for a time. We have looked at the exchanges. 
Some of them are going to have difficulties making sure they 
are established on time, which leads you to believe they may be 
taking shortcuts to be able to get up and running on time.
    So I think it definitely has all the characteristics of a 
potential high risk situation.
    Chairman Issa. Thank you. My time is expired. I recognize 
the ranking member.
    Mr. Cummings. Thank you very much.
    I just want to follow up on what the chairman was just 
asking Mr. Dodaro. Tell me what form, tell me how that has come 
about that you are looking at the Affordable Care Act. Tell me 
what form that is taking. Do you follow me? I just want to know 
how that course of action started and what you are looking at.
    Mr. Dodaro. Right. We have been asked to look at a number 
of areas on implementation of the Affordable Care Act. For 
example, we were asked by the Congress to look at the status of 
exchanges that were set up either by the States who were going 
to run the exchanges, or the Federal Government's actions to 
set up exchanges for that, both for the general public, also 
for small businesses as well. We have issued a series of 
reports on those areas.
    We have looked at some of the initial implementation issues 
at the IRS, and I would ask Mr. Mihm to come up and explain a 
little bit about what we are doing there. But we are going to 
be doing a little bit more work on this in the future.
    Mr. Cummings. Mr. Mihm, would you tell us what kind of 
guidance, if any, you are giving to any agencies with regard to 
the Affordable Care Act?
    Mr. Mihm. Yes, sir. The primary areas that we have been 
focused on in regards to IRS has been the extent to which they 
have been using a disciplined approach to risk management in 
understanding the risks that they face in order to implement 
their responsibilities under the Affordable Care Act, whether 
or not they have identified those risks, have risk mitigation 
plans in place, the right set of leadership structure on that. 
We made a series of recommendations to them about how they 
needed to strengthen that, and in particular how they needed to 
work better with HHS.
    Now, this was a year and a half, two years ago. We need to 
follow up on that work again and go back and make sure that the 
recommendations that we had have been effectively implemented. 
But the last time that we looked, which would be about six 
months ago that they were making progress in those areas of 
understanding at least how they needed to manage risk in that 
regard.
    Mr. Cummings. And so when do you all plan to follow up to 
see whether they have been implementing those things? In other 
words, the status of your suggestions or recommendations?
    Mr. Mihm. We have routine requirements in GAO that we have 
to follow up periodically on them. Obviously, given the 
interest of this committee we will make sure that it is the 
very highest priority.
    Mr. Cummings. Very well.
    Mr. Dodaro. We have had, Mr. Chairman, if I might elaborate 
a little bit further, we had a number of mandates in the actual 
Patient Protection and Affordable Care Act for us to do certain 
work. I would be happy to provide a complete listing to this 
committee of the work that we have done so far, and what our 
plans are going forward.
    Mr. Cummings. I would appreciate that.
    Now, Mr. Dodaro, as your report notes, the Defense 
Department is responsible for more than half of the 
government's discretionary spending, but it has never been able 
to produce a reliable financial statement. Twenty years ago, in 
1993, GAO issued a report with the following conclusion: ``In 
our opinion, efforts to address deficiencies and improve 
financial management have been slow with DOD.''
    Four years later, in 1997, GAO issued a similar report that 
said this: ``Longstanding serious weaknesses in the 
Department's financial operations continue not only to severely 
limit the reliability of DOD's financial information, but also 
have resulted in wasted resources and undermined the 
Department's ability to carry out its stewardship and 
responsibilities.''
    Another four years later, in 2001, GAO examined DOD's plan 
for reliable financial statements and said this: ``This plan 
presents the military services and DOD's components stovepiped 
approaches to information and financial management and does not 
clearly articulate how these various efforts will collectively 
result in an integrated DOD-wide financial management system.''
    Yet another four years later, in 2005, GAO said this: ``To 
date, tangible evidence of improvement has been seen in a few 
specific areas. DOD is still in the very early stages of a 
department-wide reform that will take years to accomplish.''
    You see the pattern.
    Mr. Dodaro. I have seen it first-hand.
    Mr. Cummings. Yes. Here we are in 2013, and you are still 
telling us again the DOD still cannot get a clean audit. Why is 
that? I kind of think the American people would be shocked that 
we can't get that done. What seems to be the problem? Is it a 
matter of will? Is it too big to account for? What is it?
    Mr. Dodaro. There are several different factors that we 
have observed. We have had it on our high risk list since 1995, 
DOD financial management.
    Mr. Cummings. So it is getting ready to reach its 20th 
anniversary.
    Mr. Dodaro. Yes. There are a couple of issues. One, they 
operated for many years, and decades, without a requirement to 
produce audited financial statements. The first requirement 
that was ever in effect was for fiscal year 1996, across the 
Federal Government. So they operated many years, so their 
systems were developed and still are in existence that aren't 
able to communicate with one another, they don't have common 
data standards across the department, et cetera. So you have a 
huge enterprise that has operated without fiscal discipline for 
many, many years.
    Secondly, right after the Act was passed, I don't think 
that their commitment was anywhere near as strong as it was 
today. I think the Congress has become increasingly concerned, 
and now has mandated that they be auditable by 2017, and their 
statement of budgetary resources by 2014. So Congress has 
gotten more involved, but it needs to stay more involved in 
these efforts. They finally have a good plan, they are focusing 
on budget data right now.
    I think originally the department managers didn't believe 
they needed audited financial data in order to carry out their 
responsibilities. So right now, they have focused on budget 
information, which everybody agrees they need and should have, 
and the existence and completeness of assets, which they need 
to carry out their mission.
    So I am hopeful this will produce the results. But they 
have very serious problems. And it is not going to happen 
overnight. It won't happen without continued focus.
    Mr. Cummings. To the chairman's credit, and to the credit 
of this committee, we have constantly tried to concentrate on 
efficiency and effectiveness. I am just trying to figure out, 
how bad a problem is it? In other words, is it such a crucial 
issue that we may be losing billions of dollars and not even 
know it?
    Mr. Dodaro. Yes. It is a very serious problem. I think it 
undermines not only accountability, but the ability to operate 
efficiently and effectively. There is reportedly about a third 
of the Federal Government's assets that are at the Department 
of Defense.
    Mr. Cummings. So if we were to accomplish anything that 
would be a part of our legacy of being in Congress, if we got 
that done, that would be major?
    Mr. Dodaro. Exactly. I am trying to do my part to get it 
done before my tenure ends. I think it is one of the most 
important things that we could collectively do.
    Mr. Cummings. Thank you very much, Mr. Chairman.
    Chairman Issa. For the record, Gene, you have what, over 
eight years left?
    Mr. Dodaro. I have twelve. Twelve and change.
    Chairman Issa. It is not that optimistic.
    Mr. Dodaro. I know. I know. But I am being realistic, given 
the track record. I said before, I didn't say at the very end.
    [Laughter.]
    Chairman Issa. Well before, we would like to hear.
    But for the record, the ranking member did repeatedly say 
that the Department of Defense is the largest discretionary. 
But actually, isn't it true, it is the third largest spender 
compared to Health and Human Services and Social Security? If 
you compare Medicare and Medicaid, obviously that is larger.
    And the question I want to make sure gets on the record, 
didn't Health and Human Services and Social Security, to a 
certain extent, get qualified or unqualified audits, even 
though they had some major gaps?
    Mr. Dodaro. They received an unqualified audit on their 
financial statements. There is a separate financial statement 
for social insurance.
    Chairman Issa. And they flunked big time?
    Mr. Dodaro. That we did not give an opinion on.
    Chairman Issa. Great.
    Mr. Dodaro. The uncertainty of achieving the cost estimates 
that are expected in the Affordable Care Act, the trustees 
pointed out the uncertainties, CMS actuary pointed it out, the 
auditors for HHS pointed it out. So it wasn't just us. And 
there are a lot of uncertainties there.
    Chairman Issa. Thank you. And I thank the ranking member. 
It is one of those areas in which we know we have to work on 
DOD, we also know we have to work on the entitlement oversight.
    Mr. Mica?
    Mr. Mica. Thank you. Welcome back, Mr. Comptroller.
    Your report indicates that only a little over a third of 
the Federal managers have actually conducted performance 
evaluation of their programs. I think 37 percent, is that 
correct?
    Mr. Dodaro. That is correct. And that was in any one of 
their programs over a five-year period.
    Mr. Mica. Well, from my perspective, having been here a 
while, you see these agencies, government in general, spinning 
out of control, not getting a decent evaluation of their 
performance or even their agency being auditable. We really 
can't perform an audit of the Federal Government or most of its 
agencies, isn't that also correct?
    Mr. Dodaro. Most of the agencies can now get an unqualified 
opinion. But the big ones, DOD and DHS, cannot.
    Mr. Mica. The worst, you say, is DOD, one of the worst. I 
think the chairman referred to others that have spun out of 
control. The problem you have, though, is you don't get these 
agencies to respond. I have passed specific provisions, I know 
some at least three times since 2002, to get certain things 
done, and perform. And the agencies ignore law.
    Now, we do have you, we have inspector generals, and OMB. 
It appears to me that we have to tie performance into some 
penalty or some reward. I am wondering if we should give OMB or 
someone, Congress obviously can't do it or doesn't do it. We 
are hit and miss. We get our appropriations done, this 
committee actually is the one who is evaluating some of that 
performance, because we are conducting continual oversight. But 
you have those that authorize programs, and then fund them.
    So I am wondering if OMB might be the agency, or if you had 
any suggestions as to who you could get to wield a hammer and I 
guess withholding funds. They don't seem to, we call them in 
and they ignore you, you just don't get the attention.
    It is surprising, too, with the military, usually the 
military works on commands, and they are usually one of the 
most responsive. But again, we are not getting their attention. 
Any ideas on having OMB being able to withhold funds or some 
penalty?
    Mr. Dodaro. I think OMB would be a good place to start, 
along with the Congress, particularly the appropriation 
committees.
    What I think is fundamentally broken is the incentive. 
Right now, if you want to stop a Federal program or you want to 
curtail it, the onus is on those that come up with evidence to 
do it. There is no evidence-based approach to this. In other 
words, a program should have to demonstrate their having a 
positive effect in order to get continued funding.
    Mr. Mica. Yes, that is sort of a self-evaluation, too. It 
is not an evaluation in comparison to how a task or 
responsibility could be accomplished by some other means, 
either the private sector or by some more efficient method.
    It is my guess that we have probably done overpayments in 
the billions, multi-billion dollar area because of this. Would 
that be a correct assumption?
    Mr. Dodaro. Yes, well, we point out the improper payments 
as the material weaknesses across the Federal Government. There 
are four agencies with ten programs that still aren't 
performing.
    Mr. Mica. We are looking at a multi-billion dollar----
    Mr. Dodaro. Well, the latest estimate was $107.7 billion in 
improper payments for fiscal year 2012. That is not complete, 
not everybody has reported. So it is a huge problem.
    Mr. Mica. It is an astounding number. And again, we have no 
means of bringing these agencies under control. Again, we haul 
them in, we question them, we put caveats and report language 
into appropriations language. You modify authorization and 
still things don't get done.
    So I think we have to look at some hammer and maybe giving 
OMB some ability to withhold funds. That does get people's 
attention. They know they can mess around with Congress, 
because half the time we are doing CRs, and you get sort of a 
general, the last five or six years, you just get a general 
appropriation. They don't pay much attention to us. But someone 
has to gain control of bureaucracy that has spun out of 
control.
    Mr. Dodaro. One other suggestion I have, the Government 
Performance Results and Modernization Act of 2010 requires OMB 
now to list programs that aren't effective.
    Mr. Mica. Listing is nice, but I think we need to give them 
some teeth to bite.
    Mr. Dodaro. Well, I agree, but I think it is a platform for 
this committee to then hold hearings and have them determine 
why other programs, where we have some evidence of not being 
effective, aren't on the list. But I agree with your 
fundamental issue. I am just saying there is another avenue.
    Mr. Mica. Thank you.
    Mr. Lankford. [Presiding] Thank you. Mr. Lynch?
    Mr. Lynch. Thank you, Mr. Chairman.
    And to Mr. Dodaro, good to see you again. I certainly 
appreciate the work you are doing. We have had a chance to work 
together in the past, and I think you are doing the right thing 
at GAO. I appreciate the work of your staff as well.
    Unfortunately, in this committee sometimes, and in Congress 
generally, the degree of oversight that we conduct as a 
Congress is dependent on blameworthiness. In other words, we 
lurch from scandal to scandal and it is the same when the 
Republicans are in the majority versus the Democrats, we would 
both hear the same thing. We seize upon issues to conduct 
oversight based on our ability to embarrass the other side, or 
if there is a President of the other party in office, then the 
party that has control of this committee generally goes after 
issues that can put that Administration in a bad light.
    And so that leads me to a great concern on this issue. 
Because this has been so widely fumbled over Administrations 
for a long, long time, our ability to get this data correct and 
then make it transparent so that we can exercise meaningful 
government oversight is greatly, greatly inhibited. So I am 
worried, because there is no blameworthiness here that we up 
here won't focus on this at all, that we will have this hearing 
and we will go look for some other issues that will get us 
headlines where this work is really meaningful and it will, if 
we get it right, it will greatly help us on a lot of issues 
across the board.
    I am greatly disappointed, still, over our inability to get 
DOD to get their act together. It is a huge amount of our 
resources going to the Defense Department. And it boggles the 
mind that the NSA can tell me how many times Aunt Margaret 
calls Aunt Matilda, yet I can't get a verifiable audit from the 
Defense Department on how much money they are spending. It just 
blows my mind.
    I actually think that sometimes the complexity and the 
pushback that we get from DOD is purposeful. They don't want us 
to be able to track what they are spending. I know now in this 
age of sequestration that they are sort of changing their 
attitude a little bit and coming up with some new ideas. But I 
would just ask you to stay on that piece, because that is a 
black hole right now. We cannot figure out what they are 
spending.
    It is as important to them that we get that information as 
it is to the American people and to the taxpayer. Because if we 
assume that they are still getting barrels of money, we are 
going to cut. We are going to keep cutting and cutting and 
cutting, and we won't know when we get to the bone with the 
Defense Department if we continue to operate in this way. We 
have a sense that they are spending a lot of money and we will 
just keep cutting. You see that on the votes of the House, more 
and more members are willing to cut the Defense Department, 
because there is this unverifiable sense that they have huge 
resources there. If we continue to cut away, I think at some 
point we do get to the bone.
    But what I want to ask you is about government oversight. 
We have a core responsibility here in Congress to make sure 
that we conduct meaningful oversight of executive operations in 
the bills that we pass on a regular basis. And during the 
sequestration, we are getting a lot of pushback, members on 
this committee trying to do oversight, whether it is drug 
interdiction coming out of Colombia, whether it is what is 
going on in Afghanistan, what is going on in Syria, Lebanon. 
Our ability to conduct oversight is being denied because of 
sequestration. I just want you to talk a little bit about the 
importance of Congress fulfilling their constitutional 
responsibility to conduct meaningful oversight.
    Mr. Dodaro. I think rigorous oversight by the Congress is 
of paramount importance. If you look at the history of our high 
risk list, which we do for this committee and the Senate, most 
of the areas that have come off the high risk list have come 
off in large part because of continued Congressional oversight. 
And the preparations for the last Census, there were 12 
hearings that were held. I can give you many other examples.
    But unless there's top attention by top officials in the 
executive branch and rigorous Congressional oversight, these 
difficult problems will not get solved. We have ample evidence 
of that. I am convinced of it. But it can't be just the one 
hearing once a year where they can just say, okay, we will go 
up there and sort of answer the questions one time. There has 
to be a sustained series of hearings with interim milestone of 
progress that would be assessed.
    Because as you said, part of the problem with the Defense 
Department, they have always had long-term goals. We will get 
there in five years, ten years or whatever. Now the Congress 
has set some interim goals. And I think a series of hearings 
could be held on why they are not meeting the interim goals if 
they don't meet them. And I think that lays the groundwork for 
more meaningful Congressional oversight.
    But unless that happens, I am not that optimistic.
    Mr. Lynch. Thank you, Gene. Thank you, Mr. Chairman. I 
yield back.
    Mr. Lankford. Thank you. Mr. McHenry?
    Mr. McHenry. Actually, I want to follow up on what Mr. 
Lynch asked. It is a solid line of questioning.
    Now, there is a different emphasis today, we are talking 
more broadly on our side of the aisle on government spending 
and the other side of the aisle is about DOD. It is just more 
of an emphasis. But we all share the same concern. I think Mr. 
Lynch, when you talk about the wider bipartisan agreement now, 
but we have to look at Defense spending as well. We have to 
make sure every dime we spend there is appropriate and actually 
meeting the objective.
    Now, that for a long time has been driven by your side of 
the aisle being adverse to Defense spending and our side of the 
aisle embracing it. Now, the realities are setting in; we 
actually need to make sure that every penny, regardless of 
where it is in government, is very, very well spent and not 
just simply honoring our commitment to Defense. I certainly 
appreciate and concur with you on that.
    We also are on the Financial Services Committee. What we 
see there is with rule implementation, you don't have 
harmonization between the CFTC and SEC, for instance. And I 
would like to thank GAO for the report they produced as a 
mandate within the JOBS Act on the utilization of Reg A, which 
is the smaller dollar offering, so that businesses can raise up 
to $5 million.
    This was well-utilized up until maybe a decade or two ago, 
where companies would raise up to $5 million, utilizing this 
option. And then what we found was, in 2011, you had one 
offering. And the SEC didn't look at this and say, hey, maybe 
this is the problem. We need to make sure that businesses can 
get the capital they need.
    So the question I have for you is, do you see, and based on 
your experience, based on the work you put together, that 
Congressional oversight has led agencies to actually meet their 
goals?
    Mr. Dodaro. Oh, definitely. Yes. There are many examples of 
doing that. And so I think that is critical, in order to do 
that, either through hearings, requirements and authorization 
bills and appropriations bills, et cetera. Congressional 
oversight can bring about many constructive changes and help 
agencies to achieve those goals by eliminating, in some cases, 
barriers, by creating legislative vehicles and by strategically 
making good investments where the agencies need to make those 
investments. Absolutely.
    Mr. McHenry. How can we enhance collaboration between 
agencies?
    Mr. Dodaro. That is an issue. Now, the Results Act of 2010 
requires more consultation across the agencies. What one of our 
findings was in this recent report was that when the cost-
cutting goals are now set, and there are 14 interim ones that 
are set by the Administration, all the agencies that should 
have been involved in those cross-cutting goals weren't 
involved. So we identified some additional opportunities for 
collaboration.
    I think the Congressional challenge is where those cross-
cutting goals cross multiple jurisdictions, I would recommend, 
and have recommended that there be more joint hearings between 
selected committees in the Congress, both within each chamber 
and perhaps even across chambers. Because otherwise, there 
won't be a totality and a good picture to look at over a period 
of time.
    Mr. McHenry. Well, we hear you on that. And on the 
Oversight and Government Reform Committee, we have done, I 
think, a pretty good job of actually teaming up with other 
committees, and even at the subcommittee level, making sure we 
have joint hearings. That is more so where it is done.
    Mr. Dodaro. Right. We have also published the best 
practices guide on how to promote more collaboration among the 
agencies. It is particularly important when you have these 
inter-agency groups that there is clear responsibilities, there 
is clear structure, they set goals, they set milestones. A lot 
of times, we find that inter-agency groups are created, but 
they really don't set rigorous milestones.
    Now, sometimes Congress has done that legislatively for 
them, either require these groups to be formed or to set 
particular goals for them. So that is another avenue. But I 
would be happy to provide this committee our best practices 
report on collaboration and provide any other support we can to 
help you in that regard.
    Mr. McHenry. We appreciate the work the General 
Accountability Office, the GAO does. We certainly appreciate 
the good folks you have working for you and behind you today, 
and behind them, that are in that dungeon-like bunker that is 
the GAO headquarters.
    Mr. Dodaro. The sturdy building.
    [Laughter.]
    Mr. McHenry. Quite sturdy. Intended to be the National 
Archives, if I remember correctly, an Archives facility. So we 
need to get you a little more natural light over there. But we 
certainly appreciate the light you shine on important agencies.
    With that, thank you, Mr. Chairman.
    Mr. Lankford. Ms. Duckworth?
    Ms. Duckworth. Thank you, Mr. Chairman. And Mr. Dodaro, I 
just want to say that having been over in that building, it is 
filled with a lot of warmth from your workers. That makes up 
for the lack of light.
    [Laughter.]
    Mr. Dodaro. We will continue with the theme, absolutely.
    Ms. Duckworth. Yes, exactly.
    Mr. Dodaro, in your written testimony, you noted that 
Federal entities reported estimates of improper payment amounts 
that totaled $107.7 billion for fiscal year 2012. Does that 
include the DOD's estimates as well, in that number?
    Mr. Dodaro. Some of the DOD estimates aren't included in 
there. There were problems with their estimating process, I 
believe. So OMB did not include them and some other agencies in 
there.
    There are also some big programs that aren't in there yet, 
Congresswoman Duckworth. The Temporary Assistance for Needy 
Families, the TANF program, the direct loan education program 
is not in there yet. So that estimate is not complete.
    Ms. Duckworth. Okay. That is what I was trying to get to, 
because DOD is responsible for more than half of the 
Government's discretionary spending, and yet in your testimony 
you highlight the improper payment estimates, the shortcomings 
of DOD's financial management.
    If DOD can't even properly estimate its own improper 
payments, doesn't that heighten the government's overall 
exposure to waste, fraud and abuse?
    Mr. Dodaro. Definitely.
    Ms. Duckworth. And some of those specific weaknesses that 
GAO has identified include DOD's failure to do the following 
things. They have not yet developed an appropriate sampling 
methodology for estimating improper payments, they have yet to 
produce a statistical estimate for its largest program, the 
DFAST program, which is of course personnel pay, commercial 
pay. And also they have failed to maintain key documentation 
supporting improper payment estimates. Is that correct?
    Mr. Dodaro. Yes.
    Ms. Duckworth. How concerned are you with DOD's failures in 
these areas?
    Mr. Dodaro. I am very concerned. And I have been for years. 
That is why we have put them on our high risk list in 1995, to 
try to shine a light on this problem, both for this Congress 
and to underscore to the Executive Branch how concerned we are 
about the situation over there. I think not only not only do 
you not have good accountability, but they are hampered in 
their ability to effectively make good timely decisions over 
there, because of the lack of good, reliable information.
    Ms. Duckworth. So what do you think is keeping them from 
developing some of these processes that are in place at other 
agencies, such as the statistical estimating and some of the 
tools that are being used? Why is DOD unable to do this?
    Mr. Dodaro. As you know, they are a very decentralized, 
large agency. And there needs to be central direction and 
management and leadership there to really bring this problem 
home. Because a lot of the data crosses across multiple parts 
of the Department in order to be able to pull the information 
together. For example, DFAST makes the payments, but you have 
the personnel records in another part of the Department. They 
don't match. They can't be reconciled appropriately.
    So there hasn't been in the past, they are trying to do it 
now, but really top level management attention and authority 
that can enforce the change across the entire Department.
    Ms. Duckworth. So until some sort of centralized management 
or process is established at DOD, knowing that that is not 
there, how is DOD doing with regard to cutting waste and fraud 
by reducing the amount of improper payments, even if it is very 
decentralized in how they are going after it?
    Mr. Dodaro. Let me bring up, Asif Khan is focused on DOD 
financial management. I have given him the unenviable job of 
trying to make sure there are improvements over there.
    Mr. Khan. Thank you, Congresswoman Duckworth. That problem 
is going to continue to happen. It really has to be fixed at 
the local level, where the transaction originates. It is going 
to be some time before they begin to address that problem.
    Ms. Duckworth. Is the improper payments also tied to, this 
committee had testimony in previous hearings on just not 
keeping track of how we are paying contractors, what we are 
being charged by contractors is not accurate. Is that all part 
of this, especially overseas, Afghanistan?
    Mr. Khan. Yes, it is.
    Ms. Duckworth. It is, okay.
    Mr. Dodaro. Yes, but on the waste, fraud, potential 
mismanagement issues, DOD occupies about one-third of the 30 
areas on our high risk list. Because it is not only financial 
management, we have inventory management, contract management 
on there, weapons systems acquisition. And all those areas are 
susceptible to problems. That is why we have them on our high 
risk list.
    Ms. Duckworth. Thank you, gentlemen. Thank you, Mr. 
Chairman.
    Mr. Lankford. Thank you. I would like to recognize myself.
    Mr. Dodaro, thank you as well, and your whole team, for the 
work that you do. I am trying to find out what we do know at 
this point and what we can know and what we don't have a 
capability to find out. So just let me run through a couple of 
things.
    Can we at this point identify a list of all government 
programs that we have a list of, we know the agencies, the 
actual programs that exist at those agencies, does such a list 
exist that we can actually track and go through and compare?
    Mr. Dodaro. Not yet in any complete reliable way. I will 
ask Mr. Mihm to come up. The Modernization Act of 2010 required 
OMB to come up with such a list. They have produced now a list 
for each major department and agency, just recently, within the 
last month or two. Many other agencies have yet to report their 
list. We are looking at the list to make sure. Each agency was 
left to decide the definition of a program. So I don't know if 
there is consistency yet across what is there or not.
    But it is in process now. It is very much needed, but I 
don't believe it is complete yet.
    Mr. Mihm. That is exactly right. There is, the list is out 
there, at least the first part of the list is out there. There 
is not comparability across agencies. One of the things that we 
are evaluating is under a mandate that we have under the 
Modernization Act to periodically report is we are looking at 
that list and will be reporting to this committee and others on 
it.
    Mr. Lankford. Will that list include a number of employees, 
and the administrative costs of the program, or just an actual 
list of the program itself?
    Mr. Mihm. At this point, sir, we are a bit away from being 
able to get to the programmatic cost data on that. We are just 
working, or OMB is just working on, let's just identify what 
government does in a consistent way.
    Mr. Dodaro. One of the limitations we have had when doing 
that overlap and duplication work is the lack of cost 
information, budgetary information for many of these programs. 
Once you get the list, that is really the next thing that needs 
to be put in place.
    Mr. Lankford. Okay, step one, to know every building we 
have in Washington, D.C., and who is actually in there.
    Mr. Dodaro. Right.
    Mr. Lankford. Step two, is a list of all the different 
departments that are within it. Step three, getting a chance to 
get a list of all those programs. And then we have to move to 
how much is the administrative cost for that program, how many 
employees are dedicated to that program.
    Do we have any ability at this point to then take to that 
program, what are the metrics that you are using to find out if 
this is effective? It may have a great title for the program, 
but does it actually do anything? And is it accomplishing 
anything?
    You had mentioned several points about metrics and 
standards and evaluating. How far away are we at this point, or 
is there any requirement that is out there that we actually get 
metrics for these different programs?
    Mr. Dodaro. There are requirements in the Government 
Performance and Results Act. But our work basically shows that 
is very uneven across the Federal Government. There may be 
metrics, but some of them are not outcome based, where you know 
the results of the program. You might know program activity. 
For example, how many people have been trained. But you won't 
know exactly how many people actually got a job or the results 
of that.
    So I think that is a work in progress. But we point out in 
our reports much more needs to be done in measuring 
performance, both outcome, and then evaluating performance with 
program information that looks at trends and metrics over time, 
why you are falling short, how can it be improved.
    So there is a ways to go until you have uniform, good, not 
only metrics, but good results across Federal Government.
    Mr. Lankford. What is needed for that from us? Is that an 
OMB issue that they need to work out? Is there a statutory 
requirement that needs to be put in place to help provide a 
push to say, we have to have some way to be able to evaluate 
effectiveness or programs and to even know how many 
beneficiaries? You mentioned we don't know how many people are 
trained for a job, but we don't know how many people actually 
got a job.
    I am not even sure, when I look through some of the 
programs, I can't even find out how many people were even 
trained for a job. It is just, this is the program that exists, 
no definition, no staff, no metrics, no number of 
beneficiaries, anything.
    Mr. Dodaro. And the real question, even if they did get a 
job, did that training help them get the job, or maybe many 
other factors had an influence on their ability. So unless you 
have that information, you don't know whether you are getting a 
good return on your investment. But Congress can do a lot more 
both through the consultation process under GPRA where they are 
required to be. I have recommended to the Congressional 
committees that you outreach to the agencies and say, hey, you 
are supposed to be consulting with us. Let's talk about these 
things. These are the measures we would like to see put in 
place and improvements being made.
    Then there is the oversight process and legislative 
process. Chris, anything else?
    Mr. Mihm. No, I think on the consultation, it is a 
particularly important opportunity for this committee and other 
committees. These consultations should be starting this summer 
on the goals, on the strategic plans that are to come out with 
the President's next budget, as well as the agency priority 
goals. Those are the four to six top priorities that each 
agency is to establish. They have to consult with the Congress 
on those. And it is a very important opportunity to try to get 
a common understanding about what are we trying to achieve and 
how are we going to measure that performance.
    Another big opportunity, and this is really one of the 
great insights of the Modernization Act, is it requires 
quarterly meetings to be held in the agencies on each of these 
agency priority goals. And then to discuss where are we, what 
do we need to do to improve and then rigorous follow-up to take 
place after that. It is modeled after what happened in New York 
City in the early 1990s called CompStat, and it has been used 
in CityStat and StateStat, the so-called Stat model. That data 
is to be published or is being published on performance.gov. 
That provides another great oversight opportunity. Because 
those are the priorities that the agency has established and so 
you can really follow up with them and say, where are you in 
terms of achieving those goals.
    Mr. Lankford. Thank you.
    Mr. Davis just walked in. Mr. Davis, I think you are up to 
bat next. Are you ready for questions, or do you want to defer? 
You just walked back in, so let me do this. Mr. Meadows.
    Mr. Meadows. Thank you, Mr. Chairman. And thank you for 
being back with us, I thank each one of you for your hard work. 
I know that it is the support team that makes a big difference, 
as you will acknowledge.
    I am troubled that we have hearing after hearing after 
hearing and really nothing happens. When you talk about over 
$100 billion in really unaccounted for spending, it is one-
tenth of our deficit. When we put it in perspective, that is 
one-tenth, we are sitting here trying to scramble, as members 
of Congress, to find $86 billion. And you have found more than 
that just in funds.
    I set up new offices, and when I did that, I found, I went 
out and negotiated with governments to make sure that we didn't 
have to pay for leases. So I am sitting there scrimping for 
$250 or $500 or $1,000, so it is very frustrating when I see 
it, and I know you empathize.
    One of the things that came up that gave me great concern 
though is we started sending rental payments to one of those 
vendors that never was authorized by us, we didn't even give an 
amount. So they just started making up an arbitrary payment. We 
wouldn't have known about it unless the government agency 
called us and said, I thought we were giving you this space for 
free. And we are paying for it. So this unaccountability is 
across, it is systemic.
    So I want to get to your earlier point. You talked about 
motivation and performance. Really, if we don't control the 
purse strings, we don't have any control. And if we don't have 
a motivation where if you do a bad job you lose your job, or if 
you do a bad job you get your budget cut, how do we fix that?
    This is not, I would agree with my colleague opposite, Mr. 
Lynch, this is not based on this Administration or the prior. 
It is a systemic problem within government. So how do we fix 
that? And is it true? And I will ask this last one and I will 
let you comment on both of those.
    My understanding is that, until about 10 or 15 years ago, 
we controlled probably 95 percent of the spending. Now 
congressionally we are only controlling about 35 percent. Is 
that a true statement?
    Mr. Dodaro. Yes, that is true. That is because most of the 
spending right now is through mandatory programs, whether it is 
Medicare, Medicaid or Social Security. The only way Congress 
can control that spending is by changing the requirements of 
who is eligible and what types of payments are made. If you add 
interest on the debt, of those three things, mandatory spending 
is taking up about 66 percent or so.
    Mr. Meadows. Have we exacerbated the problem, though, by 
allowing agencies, when they get away with earmarks, we allow 
them to reprogram and we authorize the spending so they can 
move it around and have little penalties there as well? Have we 
exacerbated the problem with that?
    Mr. Dodaro. Well, I don't think necessarily that would have 
increased the problem. Because they are supposed to report what 
they are changing in most cases, and the Congress has an 
ability to inquire on that issue.
    Mr. Meadows. We have the ability to inquire but not really 
stop. That is what I am finding, is when I call these agencies, 
they will talk to me, they have their congressional liaison and 
they will talk to you. But really, they are not afraid. Would 
you agree that most agencies are not afraid of Congress 
anymore?
    Mr. Dodaro. I don't know about that. It depends upon if 
somebody is just leaving the witness table and you ask them 
that question.
    [Laughter.]
    Mr. Dodaro. But I do think there needs to be more teeth in 
place. To go to your very first question, what I have seen be 
effective is when we point out a problem, many times Congress 
will fence the money, that means saying, okay, we are going to 
appropriate this money but you can't spend it until we get a 
report from the GAO or some other thing that convinces us that 
you have a good plan in place, that you fixed earlier problems. 
So Congress has effectively used that. It could do it much 
more. And I think it would be more appropriate.
    So Congress has the power of the purse strings. It has to 
be willing to use it effectively to leverage change.
    Mr. Meadows. Can your staff report back to us on what we 
can do to highlight it so we can put more teeth into it? 
Because I think it is time that the American people may want 
teeth. We look forward to your help there.
    Mr. Dodaro. We would be happy to do that.
    Mr. Meadows. Thank you. Mr. Chairman, I yield back.
    Mr. Lankford. Thank you. Mr. Connolly
    Mr. Connolly. Thank you, Mr. Chairman. Welcome back, 
General.
    Mr. Dodaro. Thank you, Congressman.
    Mr. Connolly. I want to talk to you about two things. I 
know my colleague Ms. Duckworth asked some questions about 
improper payments. But in the previous subcommittee, in the 
last four years, we had a series of hearings on improper 
payments. What is the estimate, the global number every year we 
think fall into that general rubric?
    Mr. Dodaro. The latest was $107.7 billion. But that 
estimate, in our opinion, is not complete. There are four 
agencies and ten programs that are not yet reporting, including 
the large Temporary Assistance for Needy Families. Then there 
were another six agencies where their estimates were not good 
enough for OMB to report.
    Mr. Connolly. So it is north of the official figure?
    Mr. Dodaro. I believe so, yes.
    Mr. Connolly. If we were to say it was rounded out to $125 
billion a year, would that be a fairly safe rounded-out number, 
do you think?
    Mr. Dodaro. Given how these numbers vacillate, Congressman, 
I hesitate to give a guess on that.
    Mr. Connolly. Well, if we just took that number for a 
minute, we could take $107 billion, too, but times ten, that 
number of improper payments over a ten-year period exceeds 
sequestration. Is that correct?
    Mr. Dodaro. Oh, sure. Yes.
    Mr. Connolly. And how well do you think the government is 
doing in trying to address that program? In theory, if you 
could get it to zero, which ought to be the goal, we will never 
quite attain that goal, but if you can give yourself a stretch 
goal, incredible things can sometimes happen, how well would 
you assess, General, that the Federal Government is doing in 
putting in place mechanisms to bring their respective numbers 
down?
    Mr. Dodaro. I would say there is a fair amount of activity, 
not much results yet.
    Mr. Connolly. One example, of that total, the lion's share 
is Medicare fraud, is that correct?
    Mr. Dodaro. Yes. Medicare, Medicaid, yes.
    Mr. Connolly. About $50 billion a year?
    Mr. Dodaro. Forty billion dollars, $50 billion, yes.
    Mr. Connolly. Do you believe that there is evidence that 
the U.S. Attorneys' offices around the Country, of which I 
believe there are 99, are sufficiently seized with this mission 
to bring that number down through prosecutions, investigations 
and prosecutions?
    Mr. Dodaro. I know that the HHS Inspector General's office 
works with them. They really focus on that area. I don't have a 
basis for answering that question, beyond knowing and seeing 
there are prosecutions in some cases. I really don't have 
empirical evidence to answer that question.
    Mr. Connolly. Okay, well, I will give you a data point. One 
U.S. Attorney's office, New England, just one, is accountable 
for identifying and helping to recover $3 billion of Medicare 
fraud. One. There are 98 others. Now, not all of them may be 
that big. But one of the things I would urge you to look at is, 
as part of this, are U.S. Attorneys' offices sufficiently 
seized with this mission? Because if every one of them 
replicated the zeal and the commitment of talent that this one 
did, we could bring that $50 billion number down considerably.
    Mr. Chairman, we were just talking about improper payments 
and some of the work this committee has done the last four 
years on a bipartisan basis to identify the problem and to try 
to get Federal agencies seized with this mission. I was 
pointing out, Mr. Chairman, that if you round it out at $125 
billion a year, and that could be a low figure, actually, but 
we will take that one, times ten, it exceeds sequestration.
    So without raising anyone's taxes, without slashing any 
investments, here is low-hanging fruit, in a sense. And it just 
seems to me for want of a champion, for want of some focus, we 
are not making the kind of progress we need to be making.
    Mr. Dodaro. And I think, on your point, we will look into 
the U.S. Attorney's priorities on that. But that is one end of 
the problem, is to keep trying to get it back once it has gone 
out the door. The other side is preventing it. And I think for 
example, we have a recommendation that they establish surety 
bonds up front with new providers. So if you find payments 
later, the government has some money that they can offset up 
front, that hasn't been fully implemented yet as well.
    So there are a whole range of things.
    Mr. Connolly. In addition to management, and my time is 
about to run out, but the Chairman and I co-authored a bill 
that is now part of the Defense Authorization Act and hopefully 
will become law. It is designed to provide some rigorous tools 
for Federal agencies to upgrade their management of IT. 
Acquisition, maintenance, personnel management. The Chairman 
identified that, for example, in the top 26 Federal agencies 
there are over 250 people with the title of CIO, which means 
this, right, no one is in charge, no one is accountable. Our 
bill is designed to try to at least have one main person called 
CIO who is infused with responsibility, authority and 
accountability.
    The other thing behind this bill, though, is IT, if we are 
going to have to live with sequestration or something like it 
for 10 years, if you don't simply want an absolute contraction, 
a zero sum game, IT has promise, if properly managed, to help 
us on so many fronts, one of which is this, too. So I hope we 
can also look at how is IT being deployed so that we are not 
making the errors that are part of this hole.
    Mr. Dodaro. We are looking at that. We are looking at that, 
and you are absolutely right. I am very supportive of the 
provisions in that bill.
    Mr. Connolly. I just end with this, this is a subject this 
committee has done some real trail-blazing work on, I think, 
through Congress. It is not a sexy topic, but it has real 
promise. I would hope, General Dodaro, that we can work 
together and try to create some metrics for Federal agencies. 
Because without metrics, it is aspirational. We need to move 
from the aspirational to the productive.
    With that, Mr. Chairman, I yield back.
    Chairman Issa. [Presiding] I thank the gentleman.
    I would say that our legislation really is as close to the 
swimsuit edition as you can get in legislation. So I am not 
sure I go with the gentleman that there is no appeal to it. I 
think it is pretty attractive.
    Mr. Connolly. I stand corrected.
    [Laughter.]
    Chairman Issa. Mr. Bentivolio.
    Mr. Bentivolio. Thank you, Mr. Chairman. Thank you, 
Comptroller General. Thank you for being here today.
    After listening to your testimony today, I can't help but 
remember a story a constituent told me, it is called government 
accounting, how you tell the story. Perhaps you have heard it, 
but just bear with me, about the three gentlemen walking down 
the street. It starts to rain, they each have $10. So they pool 
their money together and get a hotel room for the night. And 
the hotel manager later discovers that he overcharged them $5.
    So he calls over the bellhop and wants the $5 returned to 
the three gentlemen who pooled their money together to get the 
room. On his way up to the room, he pockets $2 and he hands 
each of those three gentlemen back $1. They each originally 
contributed $10, minus $1 is how much?
    Mr. Dodaro. Nine.
    Mr. Bentivolio. Nine, three times nine?
    Mr. Dodaro. Twenty-seven.
    Mr. Bentivolio. Plus the two in the bellhop's pocket?
    Mr. Dodaro. Right.
    Mr. Bentivolio. Where is the other dollar?
    [Laughter.]
    Mr. Bentivolio. That seems to be the question. I find it 
startling how much taxpayer money we have seemingly lost track 
of in the Federal Government. Many government programs are on 
auto-pilot when it comes to their budget. Every year it is 
assumed that they need more money with zero-based budgeting, 
which would force agencies to justify every penny of taxpayer 
money they get to spend every year to help agencies account for 
the money that they receive.
    Mr. Dodaro. Pardon me, I am not sure I understood the 
question. I am still trying to figure out where the $2 went.
    [Laughter.]
    Mr. Bentivolio. One dollar.
    Mr. Dodaro. One dollar, right.
    Chairman Issa. Well, we would be thrilled if there was only 
$1 that was unaccounted for.
    [Laughter.]
    Mr. Bentivolio. Government accounting could add up to 
billions.
    Mr. Dodaro. Yes, definitely
    Mr. Bentivolio. When I explain that, it seems to me that is 
how government agencies account for their money, that is how 
they tell the story. We all know 25 plus 2 plus 3 is 30. So we 
can account for the money. But it seems that the government 
doesn't understand that. And they seem to lose a lot of money. 
It seems to me that if we got rid of the waste and abuse, we 
could probably afford a lot more or pay down our national debt.
    But my simple question is, would zero-based budgeting, 
which would enforce agencies to justify every penny it takes of 
your money they get to spend every year, help agencies account 
for the money that they receive?
    Mr. Dodaro. I think that that effort has been tried a bit 
in the past. I think it has some potential value if it is 
implemented with a lot of less administrative sort of burden. 
But the idea though, of justifying the programs by showing good 
results, I would support that ahead of time. In other words, 
you have to justify the program's achieving its objectives with 
some empirical data that has been independently validated. I 
think that is the way to go.
    Mr. Bentivolio. Zero-based budgeting?
    Mr. Dodaro. It would justify what you are going to spend 
the money for if you have good information. I mean, a part of 
this is, you can send people to go through all the 
requirements, they will generate volumes of information, but it 
may not be accurate, it may not be good information and it may 
not be convincing. So it embarks on a big process where, at the 
end of the day, Congress is still left, even though it may be 
generated from a zero basis, with a lot of information that 
really doesn't help them make a decision on how to fund the 
money.
    So to me, it would be better to focus on having them 
demonstrate results of the programs and justify the 
expenditures for the results that they are receiving. Right 
now, that doesn't happen. If you want to try to curtail a 
program or limit it, you have to prove it is not working and 
have data to do that. That is exactly the opposite of the way 
it should be, in my opinion. I think that would be a more 
effective way and a more efficient way for Congress to go about 
making its decisions.
    Mr. Bentivolio. Thank you very much.
    Chairman Issa. Would the gentleman yield?
    Mr. Bentivolio. Perhaps I could restate part of his 
question, which is not as much on this hearing, but I think it 
is germane to the gentleman from Michigan's question. If 
Congress in its appropriation were to have all appropriations 
not subject to CR unless specifically shown, in other words, 
when we authorize something and we authorize it for one year, 
and as you know, when we go into CRs, which happen often, 
essentially we keep money trapped in things which should have 
expired.
    If we changed our bias toward, you must specifically have 
essentially an X next to something that says, this continues 
unless amended automatically, you could end up with, perhaps in 
discretionary spending, and even some that would be considered 
less than discretionary, you could end up with perhaps as 
little as 80 percent of the budget subject to CR, where you 
have an automatic cut to all these programs.
    So instead of a CR, representing a continued resolution, 
substantially at the same rate unless you agree, you would have 
a cut automatically in all those programs with no replacements 
unless in fact the budget process used those funds with new 
appropriations. Wouldn't that move the bias toward what we 
would call automatic sequestration that is predetermined? 
Something that before sequestration we perhaps never thought 
of?
    Mr. Dodaro. I would have to think about that a little bit. 
I will give you a definitive answer. Offhand I would say that 
it holds promise to do that.
    The other thing is that there ought to be mandatory, in my 
opinion, mandatory sunset provisions for every Federal program 
with a positive reauthorization act approach. What you are 
suggesting kind of goes in that direction. And for that reason 
I think it holds some promise.
    Chairman Issa. Thank you. You have looked at this in the 
past. Perhaps if you could dust off some of that and put those 
two together so that this committee could look to our brethren 
on appropriations with a mind toward current appropriations 
anticipating, if you will, sunset where appropriate under 
appropriations and then to the other authorization committees, 
the sunset inherent in authorization that could put this into 
play.
    Mr. Dodaro. Yes.
    Chairman Issa. Thank you. With that, we go to the gentleman 
from Illinois, Mr. Davis.
    Mr. Davis. Thank you very much, Mr. Chairman.
    Mr. Dodaro, how are you?
    Mr. Dodaro. I am fine. Nice to see you.
    Mr. Davis. It is good to see you.
    GAO reported in its audit of the government's consolidated 
financial statements that it gave a disclaimer of opinion on 
the statement of social insurance for 2012, 2011 and 2010 
because of significant uncertainties primarily related to the 
achievement of projected reductions in Medicare costs. Some of 
those uncertainties relate to whether projected statements from 
the Affordable Care Act would be fully achieved, is that 
correct?
    Mr. Dodaro. Yes, that is.
    Mr. Davis. But there are other uncertainties related to 
Medicare savings that contributed to the disclaimer of opinion, 
such as estimated reductions in payment rates for physicians, 
is that correct?
    Mr. Dodaro. That is correct, and that is, as you know, 
probably for the last ten years if maybe not longer, Congress 
has always waived these provision cuts that should be in place. 
Last year I think they were estimated to be about a 31 percent 
reduction.
    Mr. Davis. So I get to my point, I want to put this in 
perspective. GAO is not saying that savings won't be achieved 
under the Affordable Care Act. You are saying that the amount 
of Medicare savings in the future is not a certainty, it is not 
absolutely known?
    Mr. Dodaro. That is correct. And I might point out, 
Congressman, it wasn't just GAO. The Social Security trustees, 
which includes the Secretary of the Treasury and Secretary of 
HHS, said there were uncertainties and reported that with the 
estimates as well as CMS' actuary and the auditors there as 
well. So there is a general consensus. But you are right, we 
are saying it is uncertain. Because it is uncertain there are 
alternative estimates that were made also, which show a swing 
of about $10 trillion over this period of time on that $27 
trillion original estimate.
    So it is potentially significant.
    Mr. Davis. And even so, there are those who, in fact, try 
using that point to suggest that the Affordable Care Act is not 
going to save money, when in fact, if I am correct, it already 
has achieved significant savings. For example, in February, the 
Department of Justice and HHS announced that they had achieved 
$4.2 billion in Medicare fraud recoveries. This is the highest 
three year returns on investments in the history of health care 
fraud and abuse programs.
    I guess it is basically due to new tools to crack down on 
fraud and new ways of looking at it and ferretting it out. Is 
that correct?
    Mr. Dodaro. I would have to get back to you on that issue 
and supply something for the record. I will do that.
    Mr. Davis. Bottom line, I mean, we are certain, in a real 
sense, that the Affordable Care Act has provided for savings 
and we can be fairly certain as we project that we are going to 
see additional savings as time goes on. Is that pretty close to 
how one can view what the data has shown?
    Mr. Dodaro. Our focus was on the future projections for the 
program, and what the assumptions were and the basis for those 
assumptions. That is what has led us to the uncertainty issue, 
and others that have looked at those areas. We have not looked 
at the counterpoint that you are raising right now. So I don't 
have an analytical answer for you on that issue. It is 
something that we can take a look at.
    Mr. Davis. We would be pleased if you would do that. Thank 
you very much. And I yield back.
    Chairman Issa. Would the gentleman yield for a question? My 
staff tells me that recovery is based on legislation from 2006 
that increased the audit. Are you speaking of some other aspect 
in the Affordable Care Act that would have led to that recovery 
increase?
    Mr. Davis. Well, the legislation was done in 2006. So we 
were already privy to having it. And the Affordable Care Act, 
of course, makes use of it. So we still see the savings.
    Chairman Issa. I don't understand how the Affordable Care 
Act makes use of the Medicare, the Affordable Care Act hasn't 
taken effect, and the audits that are leading to greater 
recovery I think are coming out of that effort by Congress. 
They are both good efforts when it comes to trying to control 
costs. I just want to make sure the record is clear, and I 
think Mr. Dodaro can make it clear for us, where he thinks that 
savings or recovery has come from, what efforts and what 
statute.
    Mr. Davis. And if I might, Mr. Chairman?
    Chairman Issa. Of course.
    Mr. Davis. Just as we cannot be sure of how much savings 
there would be, we don't have any reason to suggest that there 
will be no savings. So I think what the Comptroller is saying, 
we haven't had enough experience yet to be able to make that 
determination. That is what he will look into.
    Chairman Issa. I look forward to discovering that with you.
    Mr. Davis. Thank you.
    Chairman Issa. I thank the gentleman.
    We now go to the gentleman from Georgia, Mr. Woodall.
    Mr. Woodall. Thank you, Mr. Chairman.
    I want to follow up on a question that Mr. Lynch was asking 
earlier, talking about the importance of Congressional 
oversight, how folks were able to make a difference.
    One of my great frustrations is that we seem to sometimes 
be Republicans against Democrats or House against Senate, as 
opposed to Article I versus Article II. Tell me about the 
effectiveness of oversight in the years that you have had a 
chance to watch it. Has it been Article I doing oversight over 
Article II, or has it been, as Mr. Lynch suggested, the 
Republicans doing good oversight over Democrats, and Democrats 
doing good oversight over Republicans but not necessarily 
houses of the same party doing good oversight over their 
Executive Branch president?
    Mr. Dodaro. Over the years I have seen a variety of 
oversight techniques that fall into all the different 
categories that you talk about. The most effective is when 
Congress is united in its oversight over an Executive Branch 
function or activity, and even when there is support from GAO 
or even OMB, in some cases, on the need to make improvements, 
when there is a consensus, where facts have been developed, 
there is a clear record that there is a problem that is sort of 
an unimpeachable kind of a problem statement. People may 
disagree on how to solve the problem. But at least you have the 
facts.
    I think those types of oversight vehicles are the most 
effective.
    Mr. Woodall. Does it take two houses in Congress doing 
oversight to achieve those goals, or can you do it in a 
unicameral way?
    Mr. Dodaro. You can do it in a unicameral way. Unless the 
solution is rooted in legislation that needs to be put in 
place, then obviously you need both houses involved. But a lot 
can be accomplished without legislation.
    Mr. Woodall. Well, as you go through that high-risk list 
and you look at things that have been accomplished, you do see 
the effective list of things that could be done strictly within 
an Administration and those things that require Congressional 
activity. My recollection is we don't do nearly as well on 
those things that require Congressional action to get them 
done.
    Let me talk about Medicare for just a moment. I put that 
doc fix in the category of things I tell my constituents back 
home, if I tell you I am going to solve this in years eight, 
nine and ten of the ten-year budget window, you should just 
ignore me altogether. The question is, what am I willing to do 
this year to make things happen.
    I tell my friends in the physician community that they 
should stop lobbying for the doc fix, they should let those 
cuts go into effect and they should let my mom and dad begin to 
lobby to have the doc fix fixed. Because at the end of the day, 
when you reduce the payments the physicians are receiving, it 
is reflected in the quality of care that my mom and dad on 
Medicare receive.
    Thinking about effective oversight that changes things, do 
you have any examples in the time that you have been leading 
where the American people have led in getting a change 
implemented? I always think about catastrophic care, and 
Chairman Dan Rostenkowski, back in the day, having his car 
rocked by angry seniors. And guess what, that got wonderful 
results here on Capitol Hill. Have you seen the American public 
being the partner of GAO in good accountability?
    Mr. Dodaro. Yes, definitely. I think the example you gave, 
the other one was when the premiums were raised on Part B. 
During that period of time, there was a huge backlash. Another 
example, just at the GAO, we have a hotline where people can 
call in from the public and suggest areas where they think 
there is fraud, waste and abuse. The ones that we find that are 
credible are the kinds of tips we follow up on and save money 
in a couple of cases.
    So the public can be better informed, and I think if they 
are better informed they can be very helpful in providing that 
type of oversight that you are speaking about.
    Mr. Woodall. And if I were to call CMS today and say, my 
mom and dad received a $100 charge for a doctor they never saw, 
could it possibly be a legitimate charge, I am sure they would 
tell me that they are working on billion dollar fraud cases and 
they don't have time to look into my $100 fraud case. Is there 
a threshold as the public calls in with those tips for all that 
you have to do with the limited staff that you have to do it 
with, what rises to the level?
    Mr. Dodaro. We will evaluate it. We wouldn't want to do 
something where we spend more money than what we potentially 
could save on those areas. But I would say that, to CMS, we 
spend the money $100 at a time, we need to take a look at 
everything.
    Mr. Woodall. When we are talking about trying to have 
effective government and efficient government, I just want you 
to know how much fun it is for me to watch your team behind you 
as these questions come out and you answer them. It is not just 
one head as a subject matter expertise that is nodding behind 
you, it is four or five heads, all of the know exactly what is 
going on and say, yes, this is what that is.
    Mr. Dodaro. Thanks for that feedback. I find that 
encouraging. I don't usually find out until after the hearing 
how well they did.
    [Laughter.]
    Mr. Woodall. Thank you very much. Thank you, Mr. Chairman.
    Chairman Issa. I thank the gentleman.
    I believe the gentlelady from California, Ms. Speier, is 
next. I am sorry, Ms. Kelly.
    Ms. Kelly. Thank you, Mr. Chair.
    Thank you for being here. One of the challenges in 
evaluating whether agencies are duplicating efforts is the fact 
that until recently there was no inventory of agency programs. 
OMB is now required to publish a list of all agency programs. 
They just released this first list in May. The list of agency 
programs can be found on the website, performance.gov.
    Do you believe that requiring agencies to provide 
information about what programs they have will help Congress 
and the public hold agencies more accountable?
    Mr. Dodaro. Yes, definitely. And we would be enhanced 
better if we get the complete list and it is accurate.
    Ms. Kelly. Okay. One of the significant improvements made 
by the GPRA Modernization Act was the establishment of 
performance.gov. It is a government-wide website that will 
allow the public to access information about government 
performance.
    Do you believe this has improved the transparency of 
information about agency performance?
    Mr. Dodaro. I think it is a good start. But as we point out 
in our report, there are a lot of opportunities to have that 
website become much more effective and helping promote 
transparency and accountability and by becoming more 
searchable, user-friendly, et cetera. So it is a beginning.
    And I think a lot of the efforts that have been legislated 
by the Congress over the years, usaspending.gov, recovery.gov, 
the performance.gov, is important and helpful. I would 
encourage the Congress, as we have been discussing a little bit 
earlier, to think about ways that that could be even improved 
further, and that the Data Act would require that.
    Ms. Kelly. Also, GAO issued a report last month titled 
Managing for Results: Leading Practices Should Guide the 
Continued Development of performance.gov. One of the points 
that this report makes is that moving forward, OMB should 
increase its outreach to stakeholders. GAO uses Maryland's 
Governor O'Malley's performance website, StateSat, as an 
example: ``Following the initial creation of the State's 
performance reporting website, officials in Maryland analyzed 
the website's performance metrics to get a sense for how people 
were using the site, as well as the information they were 
searching for. They also employed usability testing to collect 
insight into the navigation and content of the website. From 
these insights, they identified the need to make information on 
related State programs and resources more easily accessible 
through the website, which is now reflected in its design.''
    Do you feel that OMB evaluated the lessons learned from 
State and local websites, such as Maryland's StateStat or 
Boston's About Results, or is there something OMB should be 
doing to improve performance data?
    Mr. Dodaro. I will ask Mr. Mihm to answer that.
    Mr. Mihm. OMB was certainly aware of these other websites. 
As to whether or not they did a rigorous evaluation, the answer 
to that is no. And one of the things that we recommend is, as 
you pointed out, that they look at those websites, they look at 
howto.gov, which is the Federal Government's best practice 
guide for government websites, and make sure that they are 
consistent with those standards there.
    The key thing they had with performance.gov, as you 
mentioned, it has an awful lot of information in there, a lot 
of very valuable information in there. But it is really at this 
time set up for inside baseball, that is, you have to be a Fed 
looking for other Federal information. It is not very forward-
facing to citizens or to the Congress. That is the next step 
that they really need to take.
    Ms. Kelly. I am very happy to hear that. Thank you very 
much.
    Ms. Cummings. Would the gentlelady yield?
    Ms. Kelly. Yes, I will yield.
    Mr. Cummings. I am very familiar with the Maryland system 
that you just talked about. Because Governor O'Malley was my 
mayor, and now of course my Governor. One of the things that 
the system did bring was accountability. We were able to track 
the performance of government, how effective and efficient 
government was being. But you see value in that, though, right?
    Mr. Mihm. Oh, yes, absolutely, sir.
    Mr. Cummings. Because before that, you didn't know what 
trash wasn't being collected, what things were not being 
addressed. Now you could actually say, okay, on zone three of 
the police department we have X amount of things going on, this 
was the response. And basically they would flash it up. We 
could come in as members of Congress or anybody, sit there and 
see exactly how government was functioning.
    I don't know how much with regard to cost that it went. But 
in regard to effectiveness and the use of the taxpayers' 
dollars, I thought it was a very good thing on the part of the 
Governor.
    Mr. Mihm. Yes, sir. In fact, a few moments ago, we were 
talking about how under the Modernization Act, it took the 
model that has been used in Baltimore with CityStat, StateStat, 
and that is now a Federal requirement. That type of information 
has to be available on performance.gov as well.
    We evaluated the Federal efforts on that, and actually 
looked at it from two different perspectives. First is that the 
question each time as you have moved up the stat model, from 
CompStat to CityStat to StateStat is, does it scale. Governor 
O'Malley had a great line when he became Governor of Maryland, 
he said it was a bigger ship but smaller rudder. He figured out 
how it changed the government at that level.
    So we were looking at that at the same level, at the 
Federal level, at the stat meeting scale, do they work at the 
Federal level and do they work for cross-cutting programs. We 
found it does scale, that is, Federal managers and leaders of 
agencies, and this is a leadership strategy, are using them. 
What we did not find but are looking forward to finding as we 
do additional work is, are they actually using them to 
coordinate cross-cutting programs.
    As you know, the extent in Maryland, the beauty of that is 
the Governor also set up his priority goals for the State and 
those are actually what brought together a variety of State 
programs. Those are reported on the website. You have BayStat, 
which brings together various jurisdictions and levels of 
government to talk about the health of the Chesapeake Bay.
    So this is a very powerful device as a leadership strategy, 
if it is actually used to drive performance.
    Mr. Cummings. Thank you very much, Mr. Chairman.
    Chairman Issa. I thank the gentleman.
    We now go to the gentleman from Tennessee, Mr. Duncan.
    Mr. Duncan. Thank you very much, Mr. Chairman.
    You talked about savings in Medicare. In 1990, after 25 
years, Medicare cost 12 times more than the original 
projections when it first passed. Now the costs on Medicare 
have quadrupled since 1990. So Medicaid has a similar history. 
All these Federal medical programs, the Congress has always 
received very lowball estimates on the front end. Then the 
costs have just exploded. Already I have read articles saying 
that the so-called Affordable Care Act, which I refer to as the 
Unaffordable Care Act, the cost projections are two and three 
times when we originally passed.
    I notice, I am sorry I had to be in another committee, and 
I wasn't here for most of your testimony, but in your 
testimony, Mr. Dodaro, you say the Federal Government was 
unable to demonstrate the reliability of significant portions 
of its consolidated financial statements. And then you say 
another place that our work has found that the information 
provided to Congress is not always useful for Congressional 
decision-making, because the information was ``not clear or 
directly relevant or sufficiently detailed.''
    Mr. Dodaro. Right.
    Mr. Duncan. Then I looked at the back page of your report, 
and I see almost every agency, the opinion expressed by the 
agency auditor, almost all of them say unqualified. I am not an 
accountant, so I am not really clear. What exactly does that 
mean?
    Mr. Dodaro. For 21 of the 24 departments and agencies, they 
got an unqualified, clean opinion. So they are fine. Where you 
have problems is DOD and DHS and another agency, they did not 
give any clean opinions. But DOD accounts were over a third of 
the Federal Government's assets.
    Mr. Duncan. I saw that figure, 34 percent.
    Mr. Dodaro. Right. And over 20 percent of spending on the 
part of their programs. So it is a huge obstacle to getting an 
opinion on the consolidated financial statements.
    There is a lot, also, of activity where agencies have to do 
business with one another or have transactions. Treasury can't 
net those out effectively and balance the statements. In fact, 
they have to add in a $20 billion net sort of plug figure in 
order to make the statements balance.
    And then the government-wide statements aren't effectively 
reconciled to the audited financial statements of the agencies 
that you are holding there in your hand. So there is a 
discrepancy, and an inefficiency and ineffectiveness in how the 
consolidated statements of the Federal Government are compiled. 
So that is the reason for the differences in the statements in 
that listing of agency audits.
    Mr. Duncan. And there is a deadline, the Department of 
Defense has been given a deadline of 2017, is that correct?
    Mr. Dodaro. That is correct, for a full auditability, 2014 
for an audit of their statement of budgetary resources, which 
would account for how they account for their budget.
    Mr. Duncan. All right. Let me ask you something else. We 
always hear, I read so many different articles about these 
unfunded future liabilities. And I see all these figures that 
are way up there in the megatrillions. Do you feel like we have 
a good handle on that? Where are we headed with these unfunded 
future liabilities for all the different things we promised the 
American people?
    Mr. Dodaro. Basically, in addition to doing the audit or 
the consolidated financial statements, we do long-range 
simulations of the Federal Government's budget. And our 
conclusion is while the Budget Control Act and the American 
Taxpayer Relief Act provided some help in bringing down the 
deficit, that long term, over the next sort of 70-year period, 
maybe even shorter than that, the Federal Government is on a 
long-term unsustainable fiscal path that right now, debt held 
by the public is at 73 percent of gross domestic product.
    Historically, the 40-year average has been about 39 
percent. The demographic wave, and the main reason is for the 
unsustainable path, or the changing demographics, between now 
and 2029, every day, it will be on average about 10,000 
Americans turning 65. They will be hitting the Medicare 
program.
    So we are going to go into this demographic wave. Heath 
care costs, while coming down a bit, are still rising faster 
than gross domestic product. And the combination of those 
factors, I mean, the trustee estimates predict Medicare trust 
fund will exhaust in 2026, Social Security trust fund will be 
exhausted in 2030, the disability component of the Social 
Security trust fund will be exhausted in their predictions in 
2016. We are showing, unless something happens on the short 
term, the annual deficits coming down from where it was in the 
past several years, which is a good thing, but we still have a 
deficit which is adding to the cumulative debt.
    So we are going into, some of our projections show between 
2028 and 2034, under any scenario, we potentially, unless 
changes are made, will have debt held by the public higher than 
100 percent of gross domestic product, which means we would be 
owing more than we are producing in the entire economy. We have 
only hit that historic high, it was during World War II, which 
was 109 percent. So I am very concerned about the future 
financial path that the Federal Government is on.
    Now, we report that every year, these statements, and then 
we do updates every two years. We have actually got now an 
accounting standard put into the consolidated financial 
statements that requires a fiscal sustainability projection, a 
model, which is included in this report. So the Administration 
agrees that we are on an unsustainable path, and so does CBO.
    Mr. Duncan. My time is up, but I heard in a meeting just 
this morning that Turkey, for instance, has a debt to GDP ratio 
of 35 percent. And now we have this $17 trillion debt. And I 
think about $15 trillion or $16 trillion economy. It is just 
mind-boggling. And we keep spending money like there is no 
problem, or like there is no tomorrow.
    Thank you. I really appreciate the efforts that you are 
making in that regard, and the way that you are trying to be a 
Paul Revere about this situation. Thank you very much.
    Chairman Issa. I thank the gentleman.
    We now go to the gentlelady from California, Ms. Speier.
    Ms. Speier. Thank you once again, Mr. Dodaro, for your 
outstanding leadership. I am sure sequester is impacting you as 
well. And if there is one agency that pays for itself over and 
over again, I would suggest it is your agency.
    What is the impact of sequestration on your agency?
    Mr. Dodaro. We have been reduced in staff size about 14 
percent since 2010. Now, of course that was earlier than 
sequestration but sequestration compounded that. So we are at 
our lowest staffing level since 1935.
    Ms. Speier. The lowest staffing level since 1935?
    Mr. Dodaro. Yes.
    Ms. Speier. And how has our budget grown since 1935?
    Mr. Dodaro. Oh, quite a bit. And government is a lot bigger 
than it was since then.
    Fortunately we have been able to handle it by downsizing. 
So I haven't had to lay anybody off or furlough people. But we 
just don't have enough staff to get to all the requests in a 
timely manner than we have. So I am hopeful this year we will 
do well. Last year we returned $105 for every dollar spent in 
GAO, over $55 billion in documented financial benefits as a 
result of our work, let alone all the work we did to inform the 
Congress for oversight purposes.
    Then we had over 1,400 other non-financial benefits changes 
and laws, et cetera, that have helped improve public safety and 
improve management.
    Ms. Speier. Okay. In your report, you reference the lack of 
accountability in the Army's payroll system. In fact, you say 
the Army and Defense Financing and Accounting Service could not 
readily identify the full population of payroll accounts 
associated with the Army's $46 billion active duty military 
payroll because of these deficiencies.
    Does that mean that the Army doesn't know how many people 
it is paying for?
    Mr. Dodaro. I will ask Asif Khan, who has been focusing on 
this.
    Mr. Khan. That is correct. At times the Army does not know 
exactly how many people they are paying, because of the lack of 
systems and the lack of processes and controls.
    Ms. Speier. Does that mean that the Army is not able to 
reliably match a soldier's personnel file to their payroll file 
to make sure that they are being paid the correct salary?
    Mr. Khan. That is correct. That is a condition there.
    Ms. Speier. So maybe we should alert everyone who is 
serving in the Army that they should check their payroll stubs 
very carefully, because they could be being paid the wrong 
salary.
    Mr. Khan. That is correct. There could be overpayments and 
underpayments, based on our experience and the work that we 
have done.
    Ms. Speier. This is pretty outrageous, isn't it?
    Mr. Dodaro. This is not what you expect.
    Ms. Speier. All right. You have also identified that 
certain inter-governmental accounts were not in agreement to 
the tune of hundreds of billions of dollars, despite the fact 
that OMB and Treasury required CFOs of 35 significant Federal 
entities to reconcile, on a quarterly basis, their inter-
governmental activity and balances with their trading partners.
    Are there any consequences for the failure to perform these 
year-end reconciliations?
    Mr. Dodaro. No meaningful ones, no.
    Ms. Speier. Okay, so if a CFO of a major corporation failed 
to reconcile their books, presumably they would be fired and 
face action by the SEC. But because they are doing business 
with the government, they don't have to reconcile their books, 
and there is no consequence. Is that reality?
    Mr. Dodaro. That is reality. That is exactly where it is. 
That is why I think there needs to be more rigorous 
Congressional oversight. In fact, and Gary, correct me if I am 
wrong, in about 14 cases the CFO said they don't even know why, 
they are not even given an answer.
    Ms. Speier. Can you provide the committee with those 
companies and those CFOs?
    Mr. Dodaro. Yes, we can.
    Ms. Speier. And I really think that this is pretty 
outrageous. And if we are doing business with companies that 
can't reconcile their books and refuse to do so, then why are 
we doing business with them? There should be consequences to 
not complying with the requirement to reconcile the balances 
with their trading partners. What would you recommend as a 
penalty? Loss of a contract? A thousand dollars a day? What 
would be appropriate?
    Mr. Dodaro. I think there has to be some link to the 
agency's appropriation process in order to do that. It becomes 
a tricky issue. But my first recommendation is that we start 
with Congressional oversight, make them explain it, and give 
them a deadline in which they have to rectify the problem. Part 
of the issue right now is there is not enough pressure on them 
to cause them to do this. Treasury tries to control them and to 
work with them and to support them.
    But there really isn't enough, in my opinion, Congressional 
pressure. I am also trying to make sure that it becomes a 
higher level attention within the Administration as well. But 
then there has to be some penalties in places you are talking 
about. That part I can provide something for the record on, 
what we found to be effective.
    Ms. Speier. Would you also provide it to my office?
    Mr. Dodaro. Yes.
    Ms. Speier. Thank you.
    Chairman Issa. I thank the gentlelady. We now go to the 
gentleman from South Carolina, Mr. Gowdy.
    Mr. Gowdy. Thank you, Mr. Chairman. Because of your work on 
this issue, and your leadership, I am going to yield my time to 
you for continued questioning.
    Chairman Issa. You have a great future with this committee.
    [Laughter.]
    Chairman Issa. Mr. Dodaro, I have just a couple of wrap-up 
questions on this time. One of them is, following up on Ms. 
Speier's question, now that there is no longer a Circuit City, 
I will use them as an example. When I was in business, I did 
tens of millions of dollars with Circuit City. Their receiving 
system was such that they would receive eight boxes one day and 
two boxes the next day. They would record the eight boxes with 
two short, and then the next day when they received the two, 
they would put them in inventory and never count them against 
the two they reported short.
    So over a period of years, I ended up with millions of 
dollars of money they didn't pay me, and we were constantly 
showing proofs of delivery and so on. Now, Circuit City was 
easy to do business with compared to the Federal Government. So 
one of the questions I have is, within this report, these 
plugging in of numbers, isn't some it inherent with these 
contractors delivering and the frustration of how the 
government receives and accounts for the goods? In other words, 
doesn't it take two to end up with this problem?
    Mr. Dodaro. Definitely, yes.
    Chairman Issa. I wanted to make that clear, because I think 
the gentlelady was right, that we do have to be less tolerant. 
But I think we have to be less tolerant of both sides.
    Mr. Dodaro. Yes. I will give you a classic example. The DOD 
systems, their legacy financial management systems, don't even 
identify who their trading partner is. So that is a big part of 
the problem, is DOD. So that is a classic case of where you 
can't necessarily automatically fault the other party, because 
the counter-party is potentially causing most of the problem.
    Chairman Issa. I appreciate that. We will try to work on 
both sides.
    In closing, on page 25 of your report, where it is Appendix 
I, it says, Chief Financial Officers Act, and it shows the 
audit results by agency. So for example, Commerce got an 
unqualified agency audit by KPMG. And just to give you one 
more, Ernst & Young did not give an unqualified audit on Health 
and Human Services. And PriceWaterhouseCoopers, I want to get 
all of them in here somewhere, I don't see them.
    The fact is, next to most of these unqualified, and not 
unqualified, with the exception of Justice, Labor and the 
National Aeronautics and Space Administration, National Science 
Foundation and the Nuclear Regulatory Commission and the Office 
of Personnel Management. Those were all the exceptions. And the 
Department of Energy.
    With the exception of those I just named, all these others 
have a check mark that I want to make sure we say what it 
means. It says, ``Agency auditor reported material weakness or 
non-compliance.'' Now, I oversaw both public and private 
companies. So I am very aware of what my audit is, and I know 
that there is always something that can be improved.
    But when it says material weaknesses and non-compliances, 
that really is not truly an unqualified audit. That is an 
unqualified except for this qualification, isn't that true? 
These are not clean audit results.
    Mr. Dodaro. These are a separate reporting that is required 
under the Federal Financial Management Improvement Act, where 
the agencies have to demonstrate that they can record things 
that is a standard general ledger transaction and transaction 
levels, and that their systems will comply with accounting 
standards. And what this basically means is that the agencies 
compile their year-end financial statements, many using manual 
procedures and documentation. But their systems are not up to 
standards in producing timely, reliable information throughout 
the year.
    Chairman Issa. Let me put this into terms the private 
sector might understand, and you correct me if I am wrong. For 
example, at Commerce or Defense, any number of these agencies 
that have these unqualified but material weaknesses, one, 
material weakness may mean that fraud can go undetected. You 
might have balance sheet that is accurate, but you may have 
been ripped off, that proper accounting for whether people 
actually put in time or don't put in time, they get paid, and 
you know how much they got paid, but they may not have actually 
done the work.
    All of those are examples, or some of those are examples of 
material weaknesses in that yes, you have given us a financial 
statement that shows where you are, how much you have spent and 
how much you have, but you through haven't actually told us 
whether the money is flying out the back door through waste, 
purchases that are paid for on products not received, those are 
all material weaknesses that can be and are likely included in 
many of these reports, isn't that true?
    Mr. Engel. That is correct. Essentially what the 
unqualified opinion on financial statement tells you is that 
they have a process in place to produce a set of financial 
statements at year-end that will appropriately account for the 
activity in accordance with generally accepted accounting 
principles. It does not speak for the condition of their 
underlying internal controls.
    Chairman Issa. So I think for the public, at the close of 
this, I want to say, as chairman, that I look forward to us 
having all the agencies, including the Department of Defense, 
have unqualified financials. But it actually bears little, it 
is only a starting point, for accounting for every penny for 
the American people so that we know it is actually being 
exchanged in return for the value that was agreed to, isn't 
that correct?
    Mr. Dodaro. Yes, that is exactly correct. And actually, the 
original legislation, the Chief Financial Officers Act, goes to 
that very point about having timely, reliable information, good 
controls, and the audited financial statements are only a step, 
a tool to achieve that longer term, more complete goal.
    Chairman Issa. I thank you for your testimony today. It has 
been extremely valuable. I won't say that it is as optimistic 
and uplifting as we would like. But as always, you give us the 
truth, even if it isn't what we would love to hear.
    And we stand adjourned.
    [Whereupon, at 11:36 a.m., the committee was adjourned.]

                                 
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