[Senate Hearing 114-]
[From the U.S. Government Publishing Office]




 
         LEGISLATIVE BRANCH APPROPRIATIONS FOR FISCAL YEAR 2017

                              ----------                              


                         TUESDAY, MARCH 8, 2016

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.

    The subcommittee met at 3:04 p.m., in room SD-192, Dirksen 
Senate Office Building, Hon. Shelley Moore Capito (chairman) 
presiding.
    Present: Senators Capito and Schatz.

                      CONGRESSIONAL BUDGET OFFICE

STATEMENT OF DR. KEITH HALL, DIRECTOR

           OPENING STATEMENT OF SENATOR SHELLEY MOORE CAPITO

    Senator Capito. I think what we have decided to do is I 
will go ahead and give my opening statement, and then when the 
Senator arrives, we will move on. So good afternoon. The 
subcommittee will come to order. I would like to welcome 
everyone to the second of our fiscal year 2017 budget hearings 
for the various agencies under the jurisdiction of the 
Legislative Branch Appropriations Subcommittee.
    Today, we have with us the Director of the Congressional 
Budget Office, Dr. Keith Hall, welcome; and the head of the 
Government Accountability Office, the GAO, Mr. Gene Dodaro. 
Welcome.
    I appreciate the willingness of the witnesses to appear 
before the subcommittee today and look forward to your 
testimony.
    I would like to start by welcoming Dr. Hall to his first 
hearing before this subcommittee. Other than being the ninth 
director of the CBO, your resume boasts more than 25 years of 
public service. I hope you are settling in to the critical role 
that you now play, and I look forward to any initial 
assessments that you may have of your office and that you may 
be able to share with us after a year of being in that office.
    The total Congressional Budget Office request for fiscal 
year 2017 is $47.6 million or a $1.1 million increase of 2.4 
percent above the enacted level in 2016. This funding request 
supports the current full-time equivalent (FTE) level of 235 
plus an additional 3 FTE, devoted to analyzing Federal tax and 
spending policies, as well as for health-related work.
    The total GAO budget request for fiscal year 2017 is $567.8 
million, or a $36.8 million or 7 percent increase above the 
fiscal year 2016 enacted level. This funding request supports 
an increase in FTEs from 3,005 to 3,100, which would continue 
progress towards GAO's multiyear plan to rebuild its staff 
capacity to an optimal level of 3,250 FTEs.
    I believe everyone in this room is keenly aware that we are 
continuing to operate in a flat budget environment. Although a 
budget agreement was reached last year that provided a slight 
increase in total discretionary spending, that agreement 
increases all nondefense discretionary funding by only $40 
million in fiscal year of 2017.
    Since funding for our legislative branch agencies is 
approximately 80 percent personnel, the growth in salaries and 
benefits is quickly outpacing the growth in appropriated funds. 
Can we continue to keep asking our support agencies to do more 
with less or should Congress adjust its requirements to fit 
within the funding available? I look forward to exploring this 
question through the context of your agencies' requests.
    Before we go any further, I would like to take a moment to 
recognize Janet Airis with the Congressional Budget Office. Are 
you here? You do not look like you have been working 32 years 
anywhere.
    [Laughter.]
    Janet started her career as an analyst at CBO's 
Scorekeeping Unit, which tracks every appropriations bill, and 
soon became a star, eventually leading that unit for more than 
half of her tenure. Often working under exceptionally tight 
deadlines at all hours of the day and night, Janet did whatever 
was necessary to meet the needs of this committee, providing us 
with estimates and answering our questions always with grace 
and professionalism.
    Janet has set a wonderful example of the dedication to 
public service that is critical to the Senate's work. The 
Appropriations Committee thanks you deeply for your service. We 
will miss you.
    And now I would like to turn to my ranking member, Senator 
Schatz, for any opening remarks he would like to make.

                   STATEMENT OF SENATOR BRIAN SCHATZ

    Senator Schatz. Thank you, Chairman Capito.
    I am pleased to be here and thankful that we are moving 
forward with our second hearing on the Legislative Branch 
Subcommittee. I would like to welcome Dr. Keith Hall, Director 
of CBO, and Comptroller General Gene Dodaro of GAO.
    Dr. Hall, this is your first budget hearing on the Senate 
side with us as the Director of CBO, and we understand that 
before CBO you served as the chief economist at the Office of 
the United States Trade Representative (USTR). You bring 25 
years of experience as a public servant, and I look forward to 
working with you and learning from your wide breadth of 
experience and expertise.
    Mr. Dodaro, we have worked together before. I appreciate 
the great work of your organization and your leadership of it.
    As we all know, the budget caps are flat between this year 
and the next, and yet almost all of the budget requests within 
the legislative branch are for increases in fiscal year 2017, 
so this makes it that much more important for us to conduct our 
oversight responsibility.
    I am glad to have our esteemed witnesses here, who have 
consistently provided accurate and authoritative information to 
the Congress. We highly value your guidance as we make these 
tough funding decisions and conduct robust oversight. I look 
forward to our discussion.
    Thank you, Chairman Capito.
    Senator Capito. And with that, I would like to ask the 
witnesses, beginning with Dr. Keith Hall, to give a brief 
opening statement of approximately 5 minutes. As you know, the 
written testimony of each witness will be printed in full in 
the hearing record.
    Welcome, Dr. Hall.

                  SUMMARY STATEMENT OF DR. KEITH HALL

    Dr. Hall. Thank you. Madam Chairman, Ranking Member Schatz, 
and members of the subcommittee, thank you for the opportunity 
to present the Congressional Budget Office's budget request.
    The Congressional Budget Act of 1974 instituted a formal 
process through which the Congress could develop, coordinate, 
and enforce its own budget priorities and created legislative 
institutions to implement the new congressional budget process. 
To fulfill its mission to serve Congress, CBO does a variety of 
things. We analyze trends and recent developments related to 
Federal spending and revenues; We prepare projections of 
budgetary and economic outcomes for the coming decade and 
reports describing them; We estimate the cost of legislative 
proposals; We examine the effects of the President's budgetary 
proposals and numerous alternative policy choices for the 
budget and the economy; We conduct policy studies of 
governmental activities that have significant budgetary and 
economic impacts; and We provide testimony on a broad range of 
budget and economic issues.
    In 2015, for example, CBO produced multiple budget 
projections and economic forecasts, several hundred formal cost 
estimates and mandate statements, thousands of informal 
estimates, and more than 100 ``scorekeeping'' tabulations for 
appropriation acts. In addition, the agency released several 
dozen analytical reports and working papers.
    In carrying out its mission of serving the Congress during 
2016 and 2017, CBO will focus on meeting three goals: We will 
aim to continue to provide the Congress with budget and 
economic information that is objective, insightful, and timely. 
We will strive to continue to present and explain the 
methodology and results of CBO's analyses clearly and pursue 
opportunities to enhance the transparency of the agency's work. 
And we will seek to continue to improve CBO's internal 
management.
    CBO is asking for appropriations of $47.6 million for 
fiscal year 2017. That amount represents an increase of $1.1 
million, or 2.4 percent, from the $46.5 million provided to CBO 
for 2016. About one-third of the requested increase, $391,000, 
would fund three new full-time equivalent positions, which 
would boost the agency's staffing from 235 to 238 FTEs. The 
additional positions would be devoted to analyzing health care 
issues and the economic effects of Federal tax and spending 
policies (including the ``dynamic analysis'' of certain 
legislation, as required by the budget resolution).
    Interest in modifying or replacing the Affordable Care Act 
and considering changes to Medicare or Medicaid remains high, 
and CBO expects to devote considerable attention to further 
developing its capacity to conduct dynamic analysis in the 
coming year. Additional resources to address those needs would 
be helpful in producing, documenting, and explaining CBO's work 
in those areas.
    The remaining $746,000 (accounting for an increase of 1.6 
percent) would fund ongoing operations, driven largely by 
increased cost of pay and benefits. Of the requested funding 
for 2017, 91 percent would support pay and benefits, 6 percent 
would be for information technology, and 3 percent would go 
towards purchases of data, training, office supplies, and other 
items.
    In our budget request this year, we have requested two 
changes to administrative provisions aimed at increasing our 
ability to attract and retain highly capable staff. The first 
involves hiring employees with non-immigrant visas. This 
provision would authorize CBO to hire foreign nationals who 
have special skills and hold non-immigrant visas. Until 2010, 
we had the authority to hire foreign nationals from countries 
that were allies of the United States, and we hired a small 
number of them.
    In the past several years, CBO has struggled to fill 
crucial Ph.D. economist positions with people having skills in 
econometrics and financial modeling. However, the agency's 
options are limited because citizens and permanent residents 
constitute slightly fewer than half of recent graduates from 
Ph.D. economics programs in the United States. Expanding the 
pool of candidates to include foreign nationals with non-
immigrant visas would help us fill some of those key positions 
with highly skilled people.
    The second involves authorization for senior positions. CBO 
faces considerable competition in attracting and retaining 
highly educated and skilled employees. Currently, legislative 
branch entities, including the Congressional Research Service 
and the Government Accountability Office, and many executive 
branch agencies, including the Office of Management and Budget, 
have senior-level positions, Senior Executive Service 
positions, or both. This provision would permit CBO to 
establish positions that are comparable to those positions in 
those agencies and enhance the agency's ability to attract and 
retain highly skilled analysts and managers.
    In closing, I would like to thank the Committee for the 
support it has provided CBO over the years, enabling the agency 
to provide timely, carefully thought-out nonpartisan budgetary 
and economic analysis to the Congress as it addresses the 
critical issues facing the Nation.
    [The statement follows:]
                  Prepared Statement of Dr. Keith Hall
    Madam Chairman, Ranking Member Schatz, and members of the 
subcommittee, thank you for the opportunity to present the 
Congressional Budget Office's budget request. CBO is asking for 
appropriations of $47.6 million for fiscal year 2017. That amount 
represents an increase of $1.1 million, or 2.4 percent, from the $46.5 
million provided to CBO for 2016.
    About one-third of the requested increase, $391,000, would fund 
three new full-time-equivalent positions (FTEs), which would boost the 
agency's staffing from 235 to 238. The additional FTEs would be devoted 
to analyzing healthcare issues and the economic effects of Federal tax 
and spending policies (including the ``dynamic analysis'' of certain 
legislation, as required by the budget resolution). Interest in 
modifying or replacing the Affordable Care Act and considering changes 
to Medicare or Medicaid remains high, and CBO expects to devote 
considerable attention to further developing its capacity to conduct 
dynamic analysis in the coming year. Additional resources to address 
those needs would be helpful in producing, documenting, and explaining 
CBO's work in those areas.
    The remaining $746,000 (accounting for an increase of 1.6 percent) 
would fund ongoing operations, covering an increase of $807,000 in pay 
and benefits partly offset by a decrease of about $61,000 in nonpay 
expenditures. The proposed increase in pay and benefits reflects small 
increases in average pay and rising costs of benefits. The decrease in 
nonpay expenditures derives mostly from holding spending on information 
technology (IT) to the same amount that has been provided in 2016.
    Of the requested funding for 2017, 91 percent would support pay and 
benefits, 6 percent would be for IT, and 3 percent would go toward 
purchases of data, training, office supplies, and other items.
      cbo's funding history and its effects on staffing and output
    Because such a large share of CBO's budget represents compensation, 
the contours of the agency's budget and staffing levels have been and 
will continue to be closely linked.
    Between fiscal years 2003 and 2008, the number of authorized FTEs 
at CBO held between 233 and 235 (see Figure 1). During that period, 
CBO's budget generally rose slowly, as Federal employees received 
salary increases and the cost of Federal benefits increased. For fiscal 
years 2009 and 2010, the Congress approved larger increases in CBO's 
budget to support a step-up in staffing. That step-up was intended 
primarily to increase the agency's ability to analyze potential changes 
in Federal healthcare policy while maintaining its capacity to provide 
cost estimates and reports on other topics. CBO had sufficient funding 
for 254 FTEs in 2010.




    The increase in staffing enabled CBO to conduct analyses of some 
particularly complex issues and to provide substantially more estimates 
and other analyses to the Congress. With the larger staff, CBO was able 
to, among other things, significantly expand healthcare analysis, 
substantially enhance financial analysis, considerably improve modeling 
of the economic effects of Federal tax and spending policies, issue 
several reports with options for changing Federal benefit programs, 
make significant gains in the transparency of the agency's analysis, 
and continue to produce high-quality cost estimates for legislation and 
analyses of numerous other topics.
    However, constraints on CBO's funding (following from constraints 
on discretionary appropriations as a whole) caused the agency's 
staffing to shrink in fiscal years 2011 through 2013. The agency's 
appropriation for 2013 was well below the amounts provided during the 
preceding year (see Figure 2). Those cuts, combined with small 
increases in average pay and rising costs of benefits and other items 
during those years, required a drop in the number of FTEs to only 225 
in 2013, the lowest level in more than a dozen years. In addition, the 
agency had to defer critical purchases of IT equipment and services and 
other items.




    CBO's appropriation for 2014 was significantly larger than the one 
for 2013, and the appropriation for 2015 equaled the amount provided in 
2014. Accordingly, the agency sharply increased its recruiting in order 
to return to its traditional level of staffing at 235 FTEs as quickly 
as possible and to catch up on deferred IT purchases. As a result, 
staffing stood at about 233 FTEs at the end of fiscal year 2015, and it 
is expected to be at that number or higher by the end of this year. 
CBO's funding for fiscal year 2016, which represented a 1.8 percent 
increase over the 2015 appropriation, will allow the agency to maintain 
current operations and to end the fiscal year with approximately 235 
FTEs.
   cbo's funding request and its consequences for staffing and output
    In fiscal year 2017, CBO will continue its mission of providing 
objective, insightful, timely, and clearly presented budgetary and 
economic information to the Congress. The requested amount of funding--
$47.6 million--would allow CBO to fulfill its mission and provide the 
following estimates and other analyses to the Congress:

  --More than 600 formal cost estimates, most of which will include not 
        only estimates of Federal costs but also assessments of the 
        cost of mandates imposed on State, local, and tribal 
        governments or the private sector;
  --Thousands of preliminary, informal cost estimates, the demand for 
        which is very high as committees seek to have a clear picture 
        of the budgetary impact of proposals and variants of proposals 
        before they formally consider legislation;
  --More than 100 scorekeeping tabulations, including account-level 
        detail for individual appropriation acts at all stages of the 
        legislative process and summary tables showing the status of 
        discretionary appropriations (by appropriations subcommittee) 
        and running totals on a year-to-date basis;
  --Three sets of detailed 10-year baseline budget projections and two 
        sets of 10-year economic projections, as well as long-term 
        budget projections (spanning 30 years), documented with 
        numerous files of data posted on CBO's Web site; and
  --More than 90 analytical reports and other publications-- generally 
        required by law or prepared in response to requests from the 
        Chairmen and Ranking Members of key committees--about the 
        outlook for the budget and the economy, major issues affecting 
        that outlook under current law, the budgetary effects of policy 
        proposals that could change the outlook, and a broad array of 
        related budget and economic topics, ranging from defense policy 
        to infrastructure to energy policy.

    Despite high productivity by a dedicated staff, CBO expects that 
that anticipated volume of estimates and other analyses will fall 
considerably short of the number of congressional requests. The demands 
on the agency remain intense: The Congress continues to be acutely 
interested in analyses of the Affordable Care Act and numerous 
proposals for further changes in Federal healthcare programs; and the 
now-required dynamic analyses of how certain legislative proposals 
would affect the economy and how those economic effects would, in turn, 
affect the Federal budget require complex modeling. Other issues arise 
frequently and create a heavy workload--including, for example, ones 
surrounding the Highway Trust Fund, immigration, defense authorization 
bills, farm legislation, unemployment benefits, trade agreements, trade 
adjustment assistance, and reform of the Postal Service. Analyzing the 
possibilities and proposals has strained the agency's resources in many 
areas. CBO regularly consults with committees and congressional 
leadership to ensure that its resources are focused on the work that is 
of highest priority to the Congress.

    The requested funds would be used as follows:

  --$32.2 million for pay of personnel--an increase of $918,000 (3 
        percent) over the amount that will be spent in fiscal year 
        2016. The increase would cover $0.3 million in pay for the 
        additional FTEs, as well as performance-based salary increases 
        for current staff and an across-the-board increase of 2.6 
        percent for employees making less than $100,000 (if such an 
        increase is authorized for executive branch agencies).
  --$11.0 million for benefits of personnel--an increase of $280,000 (3 
        percent) relative to the amount projected to be spent in 2016, 
        to fund an increase in the cost of Federal benefits as well as 
        the benefits for the three added staff members.
  --$4.3 million for other purposes--a decrease of $61,000 (1 percent) 
        from the amount appropriated in 2016. The funds would go toward 
        purchases of IT, data, training, and other items. The decrease 
        for 2017 is possible mostly because funding in fiscal years 
        2014 and 2015 allowed CBO to catch up on deferred IT purchases 
        and to make some purchases that reduced future needs.

    In closing, I would like to thank the subcommittee for the support 
it has provided CBO over many years, enabling the agency to provide 
timely, carefully thought-out nonpartisan budgetary and economic 
analysis to the Congress as it addresses the critical issues facing the 
Nation.



    Senator Capito. Next, we will have Mr. Gene Dodaro, who is 
the head of the GAO. Welcome.
                                ------                                


                    GOVERNMENT ACCOUNTABILITY OFFICE

STATEMENT OF HON. GENE DODARO, COMPTROLLER GENERAL
    Mr. Dodaro. Thank you very much. Good afternoon, Chairman 
Capito, Ranking Member Schatz.
    First, I want to thank the subcommittee for its support of 
GAO and provide a report on what we have returned for your 
investment in us.
    Last fiscal year, as a result of GAO's recommendations 
being implemented, there were over $74 billion in financial 
benefits derived to the Federal Government. That is $134 back 
for every $1 invested in GAO. In addition 80 percent of our 
recommendations have been implemented.
    We also achieved over 1,200 program and operational 
improvements, across the Federal Government. These improved the 
efficiency, economy, and effectiveness of the Federal 
Government's programs.
    We were instrumental in helping the Congress with major 
legislation last year. As a result of GAO's recommendations, 
over $30 billion was included in the Bipartisan Budget Act. 
This helped offset the need for sequestration and helped the 
Congress stay under the discretionary caps in what I would say 
is a smart way. The targeted savings did not have any 
unintended consequences on programs or the citizens that are 
served through the Federal Government's activities.
    The Consolidated Appropriations Act included a number of 
provisions that implemented GAO's recommendations for financial 
savings and mandated agencies to implement GAO's 
recommendations for greater economy, efficiency, and 
effectiveness. Also, we made major contributions to authorizing 
legislation in the defense area, cybersecurity, surface 
transportation, and education authorizations last year as well.

                          2017 BUDGET REQUEST

    I am asking for an increase of $36.8 million for three 
basic reasons. Number one is to have good succession planning 
at GAO. At the end of this fiscal year, 2016, 42 percent of our 
senior executives and 25 percent of our supervisory analysts 
will be eligible to retire. As we look in the out years, that 
number continues to grow as the baby boom generation moves 
toward retirement. We are a knowledge-based organization. We 
cannot provide the services that the Congress expects of us 
without a talented, knowledgeable, and experienced workforce.
    Second, we have an aged infrastructure in our IT area. Our 
basic document management system that controls all the 
documents that we work with in performing our audits and 
evaluations is over a quarter of a century old. It is at the 
end of its useful life. We need to make investments there and 
in other areas as well.
    Third, we believe with additional resources we can help the 
Congress further deal with the tight budget environment. We 
have a good record of accomplishments in this area, bringing to 
Congress's doorstep ways to stay within the discretionary caps 
in a way that does not have unintended consequences.

                           IMPROPER PAYMENTS

    The two areas I think we could do more on are improper 
payments in the Federal Government. These are payments that 
should not have been made or were made in the wrong amounts. 
Since Congress required reporting of these improper payments in 
2003, the cumulative number that has been reported by Federal 
agencies is over $1 trillion. This is a significant amount of 
money. The annual amount of improper payments has grown 
significantly each year from the 2013 amount of $105 billion; 
2014, $124 billion; and most recently for 2015, $136 billion. 
Much of this is occurring in the healthcare programs, which are 
among the fastest-growing programs in the Federal Government's 
budget. If the Government does not get on top of this, this is 
going to complicate the deficit and debt situation 
unnecessarily.

                              THE TAX GAP

    Second is the tax gap. As I mentioned, in many of our 
reports and discussions, the net tax gap right now is $385 
billion. That is an annual figure. So that quickly adds up to 
$1 trillion as well. We have a lot of money going out the door 
that should not go out the door and a lot of money that should 
be coming in to the Federal Government's coffers that is not 
coming in without changing any law, just by following the 
current rules that are in place. GAO can make a greater 
contribution and thus help Congress deal with these gaps if you 
make the investments in us that are necessary.
    Thank you. I know you will give our request careful 
consideration as always. I look forward to answering your 
questions.
    [The statement follows:]
               Prepared Statement of Hon. Gene L. Dodaro
    Chairman Capito, Ranking Member Schatz, and members of the 
subcommittee:

    On behalf of the U.S. Government Accountability Office (GAO), I 
appreciate the opportunity to discuss our fiscal year 2017 budget 
request. We also appreciate the confidence this subcommittee has shown 
in GAO by supporting our efforts to serve Congress and improve 
Government performance, accountability, and transparency.
    GAO provides an exceptional investment, returning about $134 for 
every dollar invested in us in fiscal year 2015. Last fiscal year our 
work resulted in $74.7 billion in financial benefits and 1,286 program 
and operational improvements across the Federal Government.\1\
---------------------------------------------------------------------------
    \1\ GAO's performance results can be found at: http://www.gao.gov/
about/perfaccountreport.html. Our Web site includes a summary of our 
fiscal year 2015 Performance and Accountability Report as well as the 
complete report. The annual report informs Congress and the American 
people about what we have achieved on their behalf with the funds 
entrusted to us. The report also includes additional information on 
selected testimonies.
---------------------------------------------------------------------------
    Our fiscal year 2017 budget request of $567.8 million in 
appropriated funds will support 3,100 full-time equivalent (FTE) staff, 
continuing progress toward achieving an optimal level of 3,250 FTEs. 
Our costs will be offset with $32.4 million in reimbursements, 
primarily from financial audits and rental income. We plan to bolster 
our staff capacity with entry-level and intern positions to provide a 
pipeline to help address succession planning and fill critical skill 
gaps, which will allow us to continue to meet the highest congressional 
priorities and produce financial benefits.
                             gao highlights
    Highlights of GAO-16-409T, a testimony before the Subcommittee on 
the Legislative Branch, Committee on Appropriations, U. S. Senate
                               background
    GAO's mission is to support Congress in meeting its constitutional 
responsibilities and to help improve the performance and ensure the 
accountability of the Federal Government for the benefit of the 
American people. GAO provides nonpartisan, objective, and reliable 
information to Congress, Federal agencies, and to the public. GAO 
recommends improvements across the full breadth and scope of the 
Federal Government's responsibilities.
    GAO continues to provide significant levels of service to the 
Congress. It responded to requests from 97 percent of the standing full 
committees, and almost 66 percent of the standing subcommittees of the 
Congress in fiscal year 2015.
    GAO issued 688 reports and testified before congressional 
committees 109 times. Congress used GAO's work in key legislation, 
including in identifying $30 billion in offsets or revenue enhancements 
for the fiscal years 2016 and 2017 budget agreement, and in overseeing 
and reforming Government programs in the fiscal year 2016 
appropriations bill and numerous authorization bills.
    Since fiscal year 2003, GAO's work has resulted in:

  --over $600 billion dollars in financial benefits; and
  --over 16,000 program and operational benefits that helped to change 
        laws, improve public services, and promote sound management 
        throughout Government.

    GAO is requesting a fiscal year 2017 appropriation of $567.8 
million to support a staffing level of 3,100 full-time equivalents to 
rebuild staff capacity, address succession planning, and meet workload 
needs.
                    fiscal year 2017 budget request
    In fiscal year 2015, GAO's work resulted in an unprecedented return 
of about $134 for every dollar invested in GAO, generating an estimated 
$74.7 billion in financial benefits. Implementation of GAO's 
recommendations also led to 1,286 program and operational improvements 
across the Federal Government and many important contributions to 
budget, appropriations and authorization legislation enacted by the 
Congress.
    To address congressional priorities, and fulfill GAO's mission, a 
talented, diverse, high-performing, knowledgeable workforce is 
essential. However, a significant proportion of its employees will be 
retirement eligible by the end of fiscal year 2016, including 42 
percent of GAO executive leadership and 25 percent of supervisory 
analysts.
    GAO's fiscal year 2017 budget request of $567.8 million in 
appropriated funds provides the resources to enable GAO to continue 
rebuilding its staff capacity and make critical investments in its 
information technology (IT) and security program. GAO expects to offset 
its costs by $32.4 million in receipts and reimbursements, primarily 
from financial audits and rental income.
    This request provides funds to enable GAO to continue rebuilding 
its staff capacity to achieve a level of 3,100 full-time equivalent 
(FTE) staff in fiscal year 2017 through a robust, targeted recruitment 
program. GAO plans to bolster entry-level and intern positions to 
provide a pipeline to help address succession planning and fill 
critical skill gaps, which will allow GAO to continue to meet the 
highest congressional priorities and produce financial benefits. GAO 
also plans to continue addressing succession planning needs through 
other human capital activities, such as training and development. These 
efforts will help ensure that GAO is able to recruit and retain a 
talented, diverse workforce and make progress towards an optimal 
staffing level of 3,250 FTEs.
    GAO also plans to make critical investments in its infrastructure 
operations, by modernizing GAO's aged IT infrastructure in such areas 
as security, telecommunications, information management systems, and 
software and hardware, to help improve engagement efficiency, increase 
staff productivity, enhance access to information, and help reduce 
operating costs.
    GAO has again been recognized as an employer of choice. In December 
2015, the Partnership for Public Service ranked GAO as one of the best 
places to work in the Federal Government. GAO is also ranked number one 
for its support of diversity, a position GAO has held since 2011.
    Additional information on the results of GAO's operations, the 
financial and operational benefits resulting from its work are provided 
in more detail in GAO's fiscal year 2015 Performance and Accountability 
Report.
                   assisting congress and the nation
    GAO continue to be recognized for our nonpartisan, firsthand, 
objective, professional, fact-based, and reliable analyses across the 
full breadth and scope of the Federal Government's responsibilities and 
the extensive interests of Congress. In fiscal year 2015, we responded 
to requests from 97 percent of the standing full committees of 
Congress, and almost 66 percent of the subcommittees. Our fact-based 
analyses and testimony inform congressional debate and decisions. We 
provide program and technical expertise to support Congress in 
overseeing the executive branch, evaluating spending priorities, and 
assessing information from outside parties.
    We remain steadfast in our financial stewardship responsibilities 
by providing high-quality work and identifying cost savings and revenue 
enhancements as Congress and the administration deliberate on both the 
Federal Government's immediate priorities and the Nation's long-term 
fiscal path. Through sound analysis and advice, we recommend solutions 
across a vast array of areas to foster Government efficiency, 
effectiveness, and responsiveness on high-priority challenges facing 
Congress and the Nation. In fiscal year 2015, we issued 688 reports and 
made 1,680 new recommendations. On average, about 80 percent of GAO's 
recommendations have been implemented over a 4-year period.
                 gao contributions to 2015 legislation
    Congress uses GAO's work extensively to inform its decisions on 
important legislation, which in fiscal years 2015 and 2016 resulted in 
financial and other benefits for the Government.
    Congress achieved billions in savings and revenue enhancements as a 
result of the Bipartisan Budget Act of 2015, $30 billion of which was a 
result of our work. These estimated savings and enhancements calculated 
by the Congressional Budget Office and the Joint Committee on Taxation 
include:

  --authorizing a 58 million barrel sale from the strategic petroleum 
        reserve to reduce the deficit, saving over $5 billion;
  --rescinding and permanently canceling $1.5 billion from the Crime 
        Victims Fund, which we reported had grown very high and from 
        which the Department of Justice has limited ability to obligate 
        funds;
  --making provider-based off-campus hospital outpatient departments 
        ineligible for inpatient payment reimbursements, saving $9.3 
        billion;
  --requiring agencies to increase civil monetary penalties and tie 
        those penalties annually to the consumer price index, 
        generating $1.3 billion;
  --streamlining and simplifying audit procedures for certain 
        partnerships, resulting in increased tax revenue estimated at 
        $9.3 billion;
  --requiring the Department of Commerce to identify spectrum that can 
        be auctioned, providing resources for this purpose, and 
        requiring the Federal Communications Commission to organize and 
        hold these auctions, which may generate more than $4 billion in 
        revenue; and
  --reforming Social Security Disability Insurance to prevent fraud and 
        streamline program administration.

    Our other contributions to the 2015 budget compromise bill related 
to our work on the Pension Benefit Guaranty Corporation's structure.
    GAO's work was also reflected in the fiscal year 2016 Consolidated 
Appropriations Act and report language, both through savings in 
specific programs and through oversight and reforms. For example, using 
our work, Congress:

  --Took steps to reduce spending for some programs, such as:
    --rescinding $215 million in fiscal year 2015 Air Force funding 
            that would not be needed for KC-46 Tanker Engineering 
            Change Orders; and
    --reducing funding requested for the Air Force, Navy, and Marine 
            Corps for F-35 Joint Strike Fighter Block 4 development 
            efforts by more than $126 million citing program growth.

  --Instructed agencies to implement our recommendations, such as:
    --instructing the Department of the Interior to reform its system 
            for administering Bureau of Indian Education schools and to 
            present a reorganization proposal in its next budget 
            request;
    --directing the Substance Abuse and Mental Health Services 
            Administration to provide a timeline and detailed plan 
            within 90 days to coordinate Federal programs related to 
            mental illness and to develop improved guidance for 
            awarding grants; and
    --directing the Department of Homeland Security (DHS) to implement 
            our recommendations regarding asylum fraud and brief the 
            Committees every 60 days until they are implemented.

  --Improved other efficiencies and consumer protection, such as:
    --lifting the 40-year ban on crude oil exports;
    --directing the Department of Education to develop a new student 
            loan servicing process focusing on improved service and to 
            conduct outreach to current borrowers who may be eligible 
            for alternate repayment options, including income driven 
            payment plans; and
    --directing the Federal Motor Carrier Safety Administration to post 
            disclaimers on its Web site and smartphone apps warning 
            users that its scores for truck company safety are not 
            necessarily reliable indicators of relative safety 
            performance and highlight our concerns and recommendations 
            in this regard.

    Also, the National Defense Authorization Act of 2015 reflected a 
number of GAO's reports and recommendations, including:

  --authorizing funding levels that included more than $1.7 billion in 
        reductions associated with DOD headquarters operations and 
        maintenance spending; the Consolidated Appropriations Act also 
        made reductions in this area;
  --saving more than $2.7 billion associated with bulk fuel purchases;
  --making several important acquisition reforms, including providing 
        DOD managers with flexibility to focus on program management by 
        streamlining existing required certifications at key 
        acquisition decision points, providing DOD managers greater 
        flexibility in ways programmatic risk can be addressed, 
        requiring in law an acquisition strategy, and requiring changes 
        to the tenure and accountability of program managers; and
  --requiring the military services to brief Congress on their efforts 
        to improve reliability of information and address our report 
        findings about non-major defense acquisition programs.

    The Cybersecurity Act of 2015 further reflected several of GAO's 
reports and recommendations. For example the Act:

  --allows the sharing of information about cybersecurity threats by 
        the Federal Government and industry partners; authorizes a 
        variety of new measures for detecting, analyzing, and 
        mitigating cybersecurity threats; and protects parties from 
        liability when threat information is shared. the act also 
        requires DHS to regularly update, maintain, and exercise the 
        Cyber Incident Annex of the National Response Framework and 
        requires a report on cybersecurity for the 10 U.S. ports 
        determined to be at greatest risk;
  --requires the development of a Federal intrusion and prevention 
        system for use by agencies and requires DHS to study the 
        security of mobile devices used by the Federal Government; and
  --authorizes the U.S. to consult with other countries to enhance 
        cooperation for apprehending and prosecuting cyber criminals.

    The Fixing America's Surface Transportation Act includes provisions 
related to several GAO reports and recommendations, such as:

  --establishing the National Highway Freight Network, which identifies 
        key urban and rural corridors, and the National Multimodal 
        Freight Network, which will include network components from the 
        National Highway Freight Network, rail systems, airports, 
        shipping ports, and waterways;
  --requiring the development of a national freight strategic plan and 
        identification of key bottlenecks;
  --requiring the Department of Transportation (DOT) to review its 
        safety review program for new freight trucking operators for 
        its effectiveness in reducing crashes, fatalities, and 
        injuries; and
  --increasing transparency of highway spending by requiring DOT to 
        publicize the total estimated cost of all funded projects over 
        $25 million, the amount of Federal funds obligated, and other 
        information.

    The Every Student Succeeds Act incorporates several recommendations 
from GAO reports, including:

  --eliminating 19 Department of Education-funded programs focused on 
        teacher quality that we identified as possibly redundant; and
  --giving school districts the option, rather than requiring them, to 
        provide public school choice to students in low-performing 
        schools.

    The Grants Oversight and New Efficiency Act responds to GAO's 
reports on closing out grants by requiring the Director of the Office 
of Management and Budget to instruct agencies to report to Congress on 
grants whose performance period expired more than 2 years ago with 
undisbursed balances. The report should also describe challenges to 
closing out grants and explain why the 30 oldest grants have not been 
closed out.
              financial benefits to the federal government
    GAO's findings and recommendations regularly produce measurable 
financial benefits for the Federal Government. Examples include 
financial benefits from changing business operations and activities, 
restructuring Federal programs, or modifying entitlements, taxes, or 
user fees.
    In fiscal year 2015, our work led to about $74.7 billion in 
financial benefits, including:

  --generating net revenues exceeding $32.8 billion through the 2015 
        Federal Communications Commission spectrum auction we 
        recommended in past reports;
  --reducing costs by $4.9 billion annually from fiscal years 2015-
        2019, when Congress refrained from reauthorizing direct annual 
        payments to farmers regardless of crop output or income in the 
        Agricultural Act of 2014; and
  --saving about $1.3 billion, when Congress reduced DOD's 
        appropriations for fiscal year 2015 after our reviews of its 
        budget requests for the Defense Health Program and foreign 
        currency fluctuations identified potential reductions due to 
        both unobligated Defense Health Program balances and out-of-
        date foreign-exchange rates DOD used to develop its estimates.
           program and operational benefits due to gao's work
    Many of the benefits resulting from our work cannot be measured in 
dollars, but led to program and operational improvements across the 
Government. During fiscal year 2015, we recorded 1,286 of these other 
benefits.
    Examples of program and operational benefits reported in fiscal 
year 2015 include:

  --Ensuring foreclosure protection for servicemembers: In response to 
        our findings that servicemembers were not receiving the 
        foreclosure protections due to them under the Servicemembers 
        Civil Relief Act, several banking regulators have begun sharing 
        information among each other to improve oversight. This will 
        help ensure that servicemembers receive their mortgage related 
        benefits and help them keep their homes.
  --Improving the Transportation Security Administration's (TSA) rail 
        security incident data: In 2012, we identified weaknesses that 
        hampered TSA's ability to extract information from its rail 
        security incident data system, causing TSA to miss chances to 
        identify important trends or patterns. TSA has since 
        established processes and guidance to ensure the completeness 
        of incident data and minimize errors as well as a Surface 
        Compliance Trend Analysis Network that provides analyses of 
        rail security trends and potential threats. These actions will 
        help TSA develop recommended security measures for rail 
        agencies, as appropriate.
                              testimonies
    Senior GAO officials testified 109 times before 63 separate 
committees or subcommittees on issues that touched virtually all major 
Federal agencies. Figure 1 shows examples of topics we testified on in 
fiscal year 2015 organized by strategic goal.

          FIGURE 1: SELECTED GAO FISCAL YEAR 2015 TESTIMONIES

_______________________________________________________________________
Goal 1: Address Current and Emerging Challenges to the Well-Being and 
        Financial Security of the American People
_______________________________________________________________________

Indian Education Management Challenges
Rural Housing Service: Managing Loan Risks
Railroad Retirement Board: Reducing Fraud and Improper Payments
VA Health Care: Monitoring of Antidepressant Use and Accuracy of 
Suicide Data
Extending Federal Funding for Children's Health Insurance
Managing Federal Real Property
Improving Oversight of Motor Carrier Safety
Public Safety Communications: Establishing a Nationwide Broadband 
Network
Management Challenges Facing the National Nuclear Security 
Administration
      
_______________________________________________________________________
Goal 2: Respond to Changing Security Threats and the Challenges of 
        Global Interdependence
_______________________________________________________________________

DOD Support of Civil Authorities
Nuclear Nonproliferation: Minimizing Reporting Delays That May Affect 
Trade Sanctions
Defense Acquisitions: F-35 Joint Strike Fighter Program Progress
Afghanistan: Embassy Construction Faces Cost Increases and Schedule 
Delays
Improving Oversight of IT Acquisitions
Strengthening Oversight for International Cash-Based Food Assistance
Improving Oversight of VA Contracting
Observations on the State Department's Bureau of Counterterrorism
International Space Station: Utilization and Cost-Effectiveness
Addressing IT Cyber Threats and Security Breaches at Federal Agencies
Enhancing National Capacity for Biosurveillance
Border Security: Monitoring High-Risk Travelers and Maritime Cargo
      
_______________________________________________________________________
Goal 3: Help Transform the Federal Government to Address National 
        Challenges
_______________________________________________________________________

DATA Act Implementation Challenges
Need to Reduce Government-wide Improper Payments
Reducing Fragmentation, Overlap, and Duplication in Federal Programs
Patient Protection and Affordable Care Act Enrollment Controls
Improving Medicaid's Fraud Controls
Addressing Biosafety Lapses in High Containment Laboratories
Federal Retirement System IT Modernization
Cybersecurity Challenges Facing Federal Systems
Homeland Security Acquisitions: Gaps in Oversight and Information
Using Security Clearances Process to Aid Federal Tax-Debt Collection
High-Risk Update: Fiscal Year 2015
Environmental Satellites: Addressing Potential Gaps
----------
    Source: GAO.
                            high-risk update
    We issued the latest biennial list for Congress of high-risk areas 
in February 2015. The list focuses on Government operations that are at 
high risk of fraud, waste, abuse, and mismanagement, or need 
transformation to address economy, efficiency, or effectiveness 
challenges (Appendix 1).
    GAO's High Risk List comprises 32 high-risk areas, including two 
new areas we identified in 2015: Managing Risks and Improving Veterans 
Affairs Health Care, and Improving the Management of Information 
Technology Acquisitions and Operations across the government. Also, we 
expanded two high-risk areas due to evolving risks: (1) the tax law 
enforcement area now also focuses on the prevention of identity theft 
related to tax fraud, and (2) the risk area including the security of 
Federal information systems and cyber critical infrastructure now also 
includes protecting the privacy of personally identifiable information, 
in recognition of ongoing personal privacy challenges.
    The six broad areas of risk included in our list touch on every 
aspect of Government operations:

  --Strengthening the Foundation for Efficiency and Effectiveness, 
        including managing Federal oil and gas resources and 
        modernizing the U.S. financial regulatory system and the 
        Federal role in housing finance;
  --Transforming DOD Program Management, including financial management 
        and support infrastructure management, along with supply chain 
        management, DOD weapon systems acquisitions, and business 
        modernization and transformation;
  --Ensuring Public Safety and Security, including mitigating gaps in 
        weather satellite data and protecting public health through 
        enhanced oversight of medical products and food safety;
  --Managing Federal Contracting More Effectively, including at DOD, 
        the National Aeronautics and Space Administration, and the 
        Department of Energy;
  --Assessing the Efficiency and Effectiveness of Tax Law 
        Administration, which focuses on tax law enforcement and fraud 
        due to identity theft; and
  --Modernizing and Safeguarding Insurance and Benefit Programs, which 
        includes Medicare and Medicaid, two of the government's fastest 
        growing programs.

    Solving these high-risk problems has the potential to save billions 
of dollars, improve service to the public, and strengthen the 
performance and accountability of the U.S. Government.
    GAO continue to monitor Federal operations designated as high risk 
and conduct outreach with the executive branch agencies to discuss 
progress in these areas. In fiscal year 2015, our high risk work 
resulted in 162 reports, 32 testimonies, $17 billion in financial 
benefits, and 435 program and operational benefits. The high-risk areas 
specific to DOD weapon systems acquisitions, tax law administration, 
and Medicaid produced the largest financial benefits.
    Details on each high-risk area can be found at http://www.gao.gov/
highrisk/
overview. We plan to issue the next update in February 2017.
                fragmentation, overlap, and duplication
    Our fifth report to Congress, issued in April 2015, identified 
Federal programs, agencies, offices, and initiatives that have 
fragmented, overlapping, or duplicative goals or activities. Our 
findings, as well as recommendations, must be reported annually in 
response to a statutory provision. We also identified additional 
opportunities to achieve greater efficiency and effectiveness by means 
of cost savings or enhanced revenue collection.
    The 2015 annual duplication report identified 66 new actions that 
Congress and executive branch agencies could take to improve the 
efficiency and effectiveness of 24 areas of Government. We identified 
12 new areas in which there is evidence of fragmentation, overlap, or 
duplication.
    We suggested, for example, that Congress repeal the statutorily 
required U.S. Family Health Plan, a decades-old component of DOD's 
Military Health System, because it duplicated the efforts of DOD's 
managed-care support contractors by providing the same benefit to 
military beneficiaries.
    We also identified 12 areas where opportunities existed either to 
reduce the cost of Government operations or to enhance revenue 
collections. For example, we suggested that Congress update the way 
Medicare has paid certain cancer hospitals since 1983. This could save 
an estimated $500 million a year.
    In addition to identifying new areas, we continued to monitor the 
progress Congress and executive branch agencies have made in addressing 
issues we previously identified. As we reported in April 2015, 76 
percent of approximately 440 areas we identified in our first four 
reports have been addressed or partially addressed; resulting in over 
$20 billion in cost savings and an additional $80 billion in cost 
savings anticipated in future years from these actions. Congress, the 
press, and the public can track the status of efforts to address the 
issues identified on our Action Tracker located on our public Web site 
under the ``Duplication and Cost Savings'' collection.
                           legal work update
    In fiscal year 2015, GAO handled more than 2,600 bid protest cases, 
issued almost 600 decisions on the merits, and published 9 
appropriations law products, including 8 appropriations decisions and 
letters.
    The Consolidated Appropriations Act, 2014, directed us to develop 
an electronic bid protest filing system, collect fees, and use them to 
offset the costs of that system. We have been working with the 
Department of Agriculture's Enterprise Application Services to develop 
a secure an easy-to-use Web-based system. We are currently testing it 
and expect to become operational this year.
    We are still evaluating the final fee. We continue outreach with 
the Congress and user groups, including small business and veterans 
groups, for their input on the system and the filing fee. We expect to 
publish a notice of proposed rulemaking in connection with the update 
of the GAO's bid protest regulations this spring, which will provide an 
opportunity to the public and the entire bid protest community to 
express their views and submit comments. We also provide regular 
updates on our progress to the Congress.
                  strategic plan for serving congress
    Our latest Strategic Plan: Serving the Congress and the Nation 
2014-2019 (GAO-14-1SP), describes our proposed goals and strategies for 
supporting Congress and the Nation. Our strategic plan framework 
(Appendix II) summarizes the global trends and the strategic goals and 
objectives that guide our work. The strategic plan identifies the areas 
of work we plan to undertake, including science and technology, weapons 
systems, healthcare, national and homeland security, the environment, 
and energy.
    Achieving our strategic goals and objectives requires collaborating 
with intergovernmental and international organizations with similar 
missions. Advisory boards consisting of members of Federal inspectors 
general, State and local audit organizations, and international 
government accountability and professional organizations helped us 
identify key trends, opportunities and challenges, and lessons learned 
that are factored into our planning, audit work, and operations.
    In this spirit, during fiscal year 2015 we strengthened our 
collaboration with domestic and international counterparts in the audit 
and accountability community to develop standards, share knowledge, and 
build audit capacity.
  managing workload by focusing resources on congressional priorities
    To manage our congressional workload, we continue to take steps to 
ensure our work supports the highest congressional legislative and 
oversight priorities while focusing on areas with the greatest 
potential for results, such as cost savings and improved Government 
performance.
    We actively coordinate with congressional committees in advance of 
new statutory mandates \2\ by identifying mandates in real time as 
bills are introduced, participating in ongoing discussions with 
congressional staff, and collaborating to ensure that the work is 
properly scoped and consistent with the committee's highest priorities.
---------------------------------------------------------------------------
    \2\ Congressional mandates include requirements directed by 
statutes, congressional resolutions, conference reports, and committee 
reports.
---------------------------------------------------------------------------
    In fiscal year 2015, we devoted 33 percent of our audit resources 
to congressional mandates and 62 percent to congressional requests. Our 
leaders regularly consult with chairs and ranking members of committees 
and subcommittees to hear firsthand feedback on our performance. Their 
priorities help ensure we maximize the return on your investment in us.
    We continued to collaborate with the Congress to revise or repeal 
our mandated reporting requirements which have, over time, lost 
relevance or usefulness. Specifically, we worked with responsible 
committees to have seven mandates repealed or revised as part of the 
2016 National Defense Authorization Act, which was signed by the 
President in December 2015. GAO has identified 14 additional mandated 
reporting requirements for revision or repeal and is working with 
appropriate committees to address them in the second session of the 
114th Congress.
                 gao's fiscal year 2017 budget request
    Our fiscal year 2017 budget request seeks an appropriation increase 
of $36.8 million, or 6.9 percent, to strengthen our staff capacity and 
to make critical improvements to our IT, building, and security 
infrastructures. Our costs will be offset with $32.4 million in 
reimbursements, primarily from financial audits and rental income.
    A significant proportion of our employees are currently retirement 
eligible. By the end of fiscal year 2016, 42 percent of our senior 
executive staff and 25 percent of our supervisory analysts will be 
eligible. Our fiscal year 2017 budget request therefore seeks funding 
to achieve an FTE level of 3,100 to help us fill critical vacancies and 
continue to replenish the much-needed pipeline of entry-level and 
experienced analysts to meet succession planning and workload 
challenges, while making progress toward an optimal staffing level of 
3,250 FTEs.
    The requested resources provide the funds necessary to ensure that 
we can continue to meet the highest priority needs of Congress and 
produce results to help the Federal Government deal effectively with 
its serious fiscal and other challenges. Table 1 provides a summary of 
our resources for our fiscal year 2010 baseline and fiscal years 2015-
2017.

        TABLE 1: FISCAL YEAR 2010 BASELINE AND FISCAL YEAR 2015 TO FISCAL YEAR 2017 SUMMARY OF RESOURCES
                                             [Dollars in thousands]
----------------------------------------------------------------------------------------------------------------
                                       Fiscal Year 2010   Fiscal Year 2015   Fiscal Year 2016   Fiscal Year 2017
                                            Actual             Actual           Estimated           Request
           Funding Source            ---------------------------------------------------------------------------
                                        FTE     Amount     FTE     Amount     FTE     Amount     FTE     Amount
----------------------------------------------------------------------------------------------------------------
Salaries and expenses appropriation.  ......   $556,325  ......   $521,517  ......   $531,000  ......   $567,825
Non-legislative-branch appropriation  ......     21,804  ......  .........  ......  .........  ......  .........
Reimbursements......................  ......     10,214  ......      5,018  ......     10,080  ......      9,000
Offsetting receipts.................  ......     10,892  ......     23,008  ......     23,645  ......     23,000
Bid protest user fees...............  ......  .........  ......  .........  ......  .........  ......        350
                                     ---------------------------------------------------------------------------
      Total budget authority........   3,347   $599,235   2,989   $549,543   3,005   $565,075   3,100   $600,175
----------------------------------------------------------------------------------------------------------------
Source: GAO.

    In hiring and developing our staff we continuously strive to be the 
employer of choice in the public sector. Our ranking as one of the top 
places to work in the Federal Government results from the dedicated 
efforts of our entire team and leadership for their commitment in 
continuing to make our agency one of the best places to work. Our 
management remains committed to work with our union (IFPTE, Local 
1921), the Employee Advisory Council, and the Diversity Advisory 
Council to make GAO a preferred place to work.
    We value our talented, diverse, and high-performing workforce. 
Diversity is essential in fulfilling our mission of supporting Congress 
and the Nation. We continue to effectively address critical human 
capital management challenges, including preparing for retirements of 
key subject matter experts, senior executives, and other key leaders; 
fostering a performance-based and inclusive culture that motivates and 
retains a talented and diverse staff; and maintaining workplace and 
work-life practices that meet the needs of an evolving workforce in an 
equitable manner.
                 priority areas for increased staffing
    We have identified areas that merit increased review and attention 
as additional staffing is made available, including:

  --Continued identification and reduction in improper payments: In 
        fiscal years 2014 and 2015, government-wide improper payments 
        were $124.6 billion and $136.9 billion, respectively, up from 
        $105 billion in fiscal year 2013.\3\ The Medicare Fee for 
        Service program continued to account for the largest portion of 
        the government-wide total in fiscal year 2015, whereas Earned 
        Income Tax Credit and Medicaid combined, accounted for 
        approximately a third of the government-wide total. Federal 
        spending in Medicare and Medicaid is expected to significantly 
        increase, so it is critical that actions are taken to reduce 
        improper payments in these programs.
---------------------------------------------------------------------------
    \3\ An improper payment is defined by statute as any payment that 
should not have been made or that was made in an incorrect amount 
(including overpayments and underpayments) under statutory, 
contractual, administrative, or other legally applicable requirements. 
Among other things, it includes payment to an ineligible recipient, 
payment for an ineligible good or service, and any duplicate payment. 
An improper payment also includes any payment for a good or service not 
received (except for such payments where authorized by law) and any 
payment that does not account for credit for applicable discounts. In 
addition, the Office of Management and Budget's guidance instructs 
agencies to report as improper payments any payments for which 
insufficient or no documentation was found.

     Identifying root causes of improper payments can help agencies 
target corrective actions, and with additional resources GAO could make 
more recommendations that could help reduce improper payments. 
Continued executive branch attention, along with congressional and GAO 
oversight, is needed to identify susceptible programs, develop reliable 
estimation methodologies, report as required, and implement effective 
corrective actions based on root cause analysis. Absent such efforts, 
the Federal Government cannot be assured that taxpayer funds are 
---------------------------------------------------------------------------
adequately safeguarded.

  --The tax gap: The tax gap (the difference between what is owed and 
        what is collected) has been a persistent problem for decades. 
        The current estimate for the annual net tax gap is $385 
        billion, which is equivalent to roughly one-third of total 
        Federal discretionary spending.\4\ We have identified a number 
        of opportunities for the IRS to get better data to do the 
        necessary comparisons and increase collections.
---------------------------------------------------------------------------
    \4\ In January 2012, IRS estimated that the net tax gap was $385 
billion in tax year 2006 (the most current estimate available).

     Additional resources would enable us to expand our work in finding 
ways to further close the tax gap, thus improving the government's 
---------------------------------------------------------------------------
financial position.

  --Science and technology: GAO provides critical oversight for the 
        nation's huge investments in emerging energy programs, weapons 
        systems, space program, satellite infrastructure, and other 
        critical research and development programs across Federal 
        agencies. As the Federal Government invests more in science and 
        technology, we will need to increase oversight to ensure 
        Federal spending is optimally targeted and produces desired 
        results.
                        operational efficiencies
    GAO's fiscal year 2017 IT budget includes $56.2 million--an 
increase of 15.3 percent over the fiscal year 2016 level. This level 
provides funds needed to maintain support of ongoing IT operations and 
critical initiatives to enhance program efficiency and protect GAO's IT 
assets. Our fiscal year 2017 costs remain below the fiscal year 2010 
level as a result of streamlining, reduced contractor reliance, and 
cost reduction efforts.
    In fiscal year 2017, GAO is seeking funds to continue modernizing 
outdated legacy tools and systems, including the:

  --electronic document management system;
  --content development and distribution system, New Blue;
  --tools used to provide voice, data communications and collaboration 
        capabilities to GAO staff (unified communications and 
        collaboration); and
  --data management and security for the network operations center to 
        ensure a more robust environment to support GAO's current 
        needs.

    We believe these efforts have the potential to yield long-term 
benefits to GAO, the Congress, and the Nation. The following are some 
highlights of these activities.

    Modernize GAO's Electronic Document Management System. GAO operates 
a critical system that is used daily by all GAO staff and houses all of 
GAO's documents, information obtained from agencies, and data analyses 
that form the basis of GAO's products. While this system has been a 
tremendous asset to the agency, it was initially implemented in the 
mid-1990s. Since the existing version of GAO's records management 
repository is at the end-of-life, GAO must embark on an effort to 
replace it in order to keep pace with technological changes. This new 
system would allow GAO to provide common capabilities which are 
currently associated with such systems, such as workflow and business 
process management, support modern file formats, including video and 
files, enhance security, provide enhanced functionality, and improve 
staff productivity and efficiency. GAO could also integrate the 
enhanced document repository with GAO's enterprise-wide systems, 
including the new engagement content management system under 
development, New Blue.
    In fiscal year 2016, GAO will study alternatives and begin a phased 
implementation in fiscal year 2017. An electronic records management 
system is vital to GAO's ability to manage information and meet Federal 
records management requirements.

    Content Development and Distribution System (New Blue). GAO has 
begun an initiative called New Blue to improve how it publishes GAO 
products. New Blue will modernize GAO's content development and 
distribution processes and its publishing systems to fully support end-
to-end processing of GAO products from New Blue through distribution 
channels, such as GAO's Web site. Once implemented, New Blue will 
enable time savings and improved productivity in the creation of GAO 
products as well as improve the efficiency of the publishing process. 
New Blue will provide the capability to deliver products in multiple 
formats, allowing greater flexibility in supporting client needs. The 
first phase of the project is completed and resulted in a prototype 
that demonstrated the system's technical capabilities. GAO is 
proceeding with full development of capabilities in advance of a 
planned pilot in fiscal year 2017.

    Unified Communications and Collaboration. Enhance GAO's mobile 
computing by providing resources for Voice Over Internet (VoIP) 
capability, video conferencing (VTC), and wireless infrastructure. This 
effort will modernize our suite of telecommunications tools, shifting 
from a PBX, host-based solution to a cloud solution which will 
facilitate greater staff mobility and data sharing, reduce redundant 
implementation and maintenance costs, and standardize the 
infrastructure which supports voice and data usage. This effort will 
also allow GAO to reduce risks for continuity events, and shift 
communications technologies from onsite to a service model.

    Network Operations Center. Since GAO consolidated and centralized 
its data and computing capacity in a single location, the data center 
requires increased 24/7 operational availability to adequately support 
the diverse work schedules of staff located in headquarters and GAO's 
11 field locations throughout the United States. The current data 
center does not adequately support GAO's needs. As such, GAO needs to 
improve data management operations and security. In fiscal year 2016, 
we will assess options to upgrade the equipment supporting the center 
to provide a modern computing environment in fiscal year 2017, which 
could reduce costs and enhance security, capacity, and availability.
                      center for audit excellence
    We established the Center for Audit Excellence with a mission to 
promote good governance and build institutional auditing capacity of 
domestic and international audit organizations by providing high-
quality training, technical assistance, and related products and 
services on a fee basis. Potential recipients eligible for training, 
technical assistance, products, and services include: Federal, State, 
local, tribal, and national audit offices in other countries.
    The Center's capacity-building efforts expand on and complement 
GAO's long-standing collaboration with the domestic and international 
accountability community. To preserve the independence of our audit 
work and minimize the impact on our routine audit and oversight work on 
behalf of Congress, the center has developed controls and coordination 
guidance to ensure projects and activities are appropriate for the 
center.
    Since the Center for Audit Excellence's opening in October 2015, 
domestic and international accountability organizations as well as some 
development agency donors have made inquiries regarding potential 
training and technical assistance services related to:

  --conducting performance, financial, and other specialized audits;
  --strengthening internal controls; and
  --enhancing institutional capacity in areas such as strategic 
        planning and quality assurance.

    Through initial discussions with interested organizations, the 
center has gained a good understanding of potential project 
requirements and associated costs for providing fee-based services. 
During fiscal year 2016, the center plans to finalize and implement 
several projects.
    For example, in the second and third quarters of fiscal year 2016, 
the center plans to provide two separate, customized trainings--one on 
Green Book Internal Control Standards and another on Performance 
Auditing-- expected to reach over 650 participants from across the 
audit community. The center continues to implement its business plan 
and seek opportunities to build the capacities of State, local, 
Federal, and international accountability partners.
    We have received a positive response from the audit community to 
the center's opening and are in the process of discussing several 
potential projects and associated fees with domestic and international 
audit organizations. Fees collected for projects will be used to 
support center operations after receiving appropriate congressional 
approval for their use.
                           concluding remarks
    In conclusion, we value the opportunity to provide Congress and the 
nation with timely, insightful analysis on the challenges facing the 
country. GAO's fiscal year 2017 budget request is a fiscally sound 
approach that will better position us to continue to support Congress 
and foster Government accountability, address long-standing challenges, 
and keep a watchful eye on the Nation's future.
    Our budget request includes funds to increase our staffing level 
and provide employees with the appropriate resources and support needed 
to effectively serve Congress. The requested funding will also allow us 
to continue efforts to promote operational efficiency, and begin 
addressing long-deferred investments and maintenance.
    This concludes my prepared statement. I appreciate, as always, your 
continued support and careful consideration of our budget. I look 
forward to discussing our fiscal year 2017 request with you.


                              GAO-16-409T




      

        EXPLANATION FOR THREE NEW FULL-TIME EQUIVALENT POSITIONS

    Senator Capito. Well, thank you. Thank you both. Boy, you 
were right on the dollar there. No wonder you are accountable 
to the 5-minute standard, so I appreciate that. Both of us do.
    I am going to go ahead and start the questions. I am going 
to go to the full-time equivalent (FTE) question because you 
both have increases. Dr. Hall, you have an increase of three. 
You say that there are presently--what did you tell me--230----
    Dr. Hall. Two hundred and thirty-five FTEs.
    Senator Capito. Two hundred and thirty-five. Is that how 
many you actually have working now or is that your cap?
    Dr. Hall. That is our cap. We are below that a little bit.
    Senator Capito. Do you have any idea how many?
    Dr. Hall. I think we are around 230 right now.
    Senator Capito. Two hundred thirty, so very, very close. 
And, you know, I talked in my opening statement obviously I 
think at the GAO you said--or maybe it was you that said 91 
percent of your expenses are in personnel. I known that was at 
the GAO. It is probably the same with you as well that, you 
know, as you are requesting more and more people working at the 
agencies, if we are in a flat budget environment, it makes it 
very, very difficult.
    So you mentioned the dynamic scoring issue and also health 
policy. Is that what you intend to have, three more--you need 
three more folks with those kinds of expertise? Is that what 
you are requesting?
    Dr. Hall. That is exactly right. With respect to dynamic 
scoring, we are finding that we are doing a bit more work on 
that than actually we had anticipated, and then we are 
anticipating----
    Senator Capito. Do you know why that is, I mean, I know we 
passed the requirement that you----
    Dr. Hall. Yes.
    Senator Capito [continuing]. Would have it, but what do you 
attribute that to?
    Dr. Hall. I think it has been an interest by the Budget 
Committee.
    Senator Capito. Yes.
    Dr. Hall. You know, the big pieces of legislation, we do it 
automatically, and then for some of the pieces that do not meet 
the criteria, they still have an interest in having us do the 
work. And that just takes some resources away from our 
macroeconomic group.
    Senator Capito. Right. And then the health issue, health 
care issue.
    Dr. Hall. Health issue, we have always had trouble keeping 
up staffing on that, but we would like to try to get that 
staffing up a bit more. We really do anticipate--we have had a 
lot of work. We anticipate a lot of interest in health issues, 
a lot of interest in proposals to repeal the Affordable Care 
Act (ACA) going forward, so we really could use some extra 
staffing there.

          HIRING FOREIGN NATIONAL WHO HOLD NON-IMMIGRANT VISAS

    Senator Capito. Let us talk a little bit before I go to the 
GAO on the same issue on the nonimmigrant visa language. It has 
been requested now for the fourth year in a row to no avail. 
And I do not know what is going to happen this year, but I 
would anticipate that it again would not make it across the 
finish line. I guess what kind of hardship is this putting on 
you? You are pretty much full right now. Are you not able to do 
the work without this talent or is it just taking longer? What 
is the issue there?
    Dr. Hall. We are able to do the work, and having this 
ability would probably help us out a little bit. We probably 
would not use it for many people. The real issue is that we do 
a lot of hiring of new Ph.D.'s, and literally more than half of 
new Ph.D.'s coming out of schools right now are not U.S. 
citizens, so we cannot hire them. So right away, we are 
starting job hunting for people where more than half of the 
available candidates we cannot hire. So it is affecting us in 
just certain areas. Econometrics and financial modeling has 
always been a challenge for us.
    Senator Capito. Is it a challenge, too, that it is not 
private sector?
    Dr. Hall. It is. Both those things are challenges.

                   AUTHORIZATION FOR SENIOR POSITIONS

    Senator Capito. Yes. You mentioned briefly about an 
authorization for senior positions. What would that give you to 
have that--what kind of latitude does that give you, getting an 
authorization for----
    Dr. Hall. Right.
    Senator Capito [continuing]. Senior positions?
    Dr. Hall. Well, right now, our senior managers and our 
senior people are sort of capped at a level that is below a lot 
of similar agencies. As I mentioned----
    Senator Capito. You are talking about salary-wise.
    Dr. Hall. Salary-wise, that is right. This would allow us 
to hire some senior executive positions and some senior 
positions, which would sort of help with our salary compression 
to be honest. We have not had an increase in our max salary for 
a while. And so we do have to compete with other Government 
agencies, let alone the private sector, and this would help us 
out in that respect.
    Senator Capito. And this may be a naive question, but is 
your salary cap capped to our salary as well, the stagnation on 
our salary?
    Dr. Hall. Yes, that is----
    Senator Capito. Yes.
    Dr. Hall [continuing]. Exactly right.

                            STAFFING LEVELS

    Senator Capito. Okay. All right. Mr. Dodaro, let me ask you 
that because you have obviously asked for a much larger 
increase, and, I mean, you have a larger agency, but a much 
larger increase in your FTEs. Last year, I believe we were able 
to give you some money to fulfill some of your requests in that 
area last year. Can you give me the status on that? Like where 
are you and your actual people working? How many of the ones 
that were budgeted for last year and actually appropriated for 
did you hire and have hired? So give me a status report, 
please.
    Mr. Dodaro. Sure. We are in the process of hiring people 
now. We have some of those people on board. We have others with 
offers that are expected to report. We are on track to meet our 
target of----
    Senator Capito. Which is?
    Mr. Dodaro [continuing]. 3,005 FTEs for the year.
    Senator Capito. And that includes what was appropriated 
from last year, correct?
    Mr. Dodaro. Yes.
    Senator Capito. And I believe----
    Mr. Dodaro. Right now, we have 3,010 people on board, so we 
will have some people leaving and then people coming in. We are 
hopeful that at the end of the year we will be close to our 
authorized level. And then we----
    Senator Capito. And then how many of those are new people 
that were hired under the appropriations that we passed at the 
end of the year? Do you have any idea?
    Mr. Dodaro. One hundred and three so far, I think, or----
    Senator Capito. Really?
    Mr. Dodaro. Yes. But we are going to hire more.
    Senator Capito. Right.
    Mr. Dodaro. And we have no problems hiring highly qualified 
people. Our mission is great. People come to GAO because they 
can make a difference in government. We have a great track 
record of actually making a difference. We do not just do 
studies and reports. Our recommendations get acted on. We are 
only limited by the amount of money.
    So we are working hard on hiring new staff. We have a plan 
to bring staff on board in order to be at our authorized FTE 
level for this fiscal year.
    Senator Capito. Okay. I am going to let----
    Mr. Dodaro. And I appreciate----
    Senator Capito [continuing]. Senator Schatz go----
    Mr. Dodaro [continuing]. Your support to do that.
    Senator Capito. Thank you.
    Mr. Dodaro. Yes.

                           SALARY CAP AT CBO

    Senator Schatz. Thank you, Chairman Capito.
    Dr. Hall, how does the salary cap work for your agency? 
What is the cap?
    Dr. Hall. For our senior managers, I think the salary cap 
is $171,200, and then we have the deputy director, the director 
capped a little bit higher than that. But it is capped based on 
congressional salaries.
    Senator Schatz. And are a lot of these folks--let me ask 
the question this way. If they are considering private sector 
opportunities, what is the delta?
    Dr. Hall. It can be really large to be honest.
    Senator Schatz. Two or three times as much, fair to say?
    Dr. Hall. It depends on the area, but yes, it could be that 
much. And so really what we are talking about is getting people 
who are really interested in public service and interested in 
the topic and such. So the comparisons I am trying to make here 
a little bit is that there are other agencies within the 
Federal Government who have similar roles in public service and 
we are starting to fall behind those agencies.
    Senator Schatz. Are you asking for a change in the statute?
    Dr. Hall. Yes, this would be a similar change, I think, 
that has happened recently.
    Senator Schatz. Okay. Thank you.

                          RETURN ON INVESTMENT

    Mr. Dodaro, on this $134 to $1----
    Mr. Dodaro. Yes.
    Senator Schatz [continuing]. My question for you is where 
do we need to spend the money? Is it at GAO or in a lot of 
instances in terms of improper payments or uncollected 
revenues, I assume that the investments that need to happen 
actually need to happen throughout the government and----
    Mr. Dodaro. Right.
    Senator Schatz [continuing]. Not just at GAO, so how does 
that----
    Mr. Dodaro. Right.
    Senator Schatz [continuing]. All work out, and----
    Mr. Dodaro. Yes.
    Senator Schatz [continuing]. How do you inform both the 
authorizing and appropriating committees, you know, how to make 
those proper investments? Because it is not purely a matter of 
just identifying the potential savings, right?
    Mr. Dodaro. Basically, over $74 billion that I mentioned 
were in financial benefits last year were across the Federal 
Government. None of that was within GAO. These are areas, for 
example, spectrum auctions brought in tens of billions of 
dollars based upon our advice to the Congress to extend the 
auction program. There were cancellations of Federal programs 
like a BioWatch program----
    Senator Schatz. Yes, I got it----
    Mr. Dodaro. Yes.
    Senator Schatz [continuing]. But----
    Mr. Dodaro. Yes, okay.
    Senator Schatz [continuing]. I guess my question is, for 
instance, the spectrum auction was a relatively easy one, or I 
should not say easy but straightforward one----
    Mr. Dodaro. Yes, right.
    Senator Schatz [continuing]. But there are other executive 
agencies that actually need to make an investment in order to 
recoup some, you know, multiple of----
    Mr. Dodaro. Right.
    Senator Schatz [continuing]. Their investment.
    Mr. Dodaro. All our figures are net figures. They are the 
amount saved versus whatever it cost to implement them. I might 
add also these are not GAO figures. These are either CBO 
figures, the Joint Tax Committee, Taxation Committee, the 
agencies, or the Congress themselves in cutting appropriations. 
We use independent third-party estimates.
    Senator Schatz. In terms of the investment, I mean, I see 
the dollar amount that you are asking for, roughly $37 million 
more for GAO. When do we get to diminishing returns? Obviously, 
it is all the way up at least until $37 million, but if we were 
to imagine a world where, say, this is a private sector company 
and she is the CEO and I am----
    Mr. Dodaro. Right.
    Senator Schatz [continuing]. Her senior vice president and 
we can make choices in order to accrue as much savings as 
possible, you know, what is the outside number in terms of an 
investment that would still, you know, get you your money back 
and then some?
    Mr. Dodaro. Yes. We have consistently produced, over the 
last 4 years in a row over $100 back for every $1 invested in 
us. There are obviously limits. I have said that our optimum 
level would be at 3,250 people given the current budget 
environment. When I first started at GAO, we had over 5,000 
people in the agency. It is a big government, with a $4 
trillion budget and many opportunities to save money. I have 
limited our request to the 3,250 because I think we can 
maximize our efficiencies at that level.
    In the 17-year period, between 1996 and when we had 
sequestration, 13 of those 17 years we had close to or above 
3,200 people at GAO. My estimate at 3,250 is informed by this 
historical standard. I have been either the chief operating 
officer, or the Comptroller General now for 17 years. I have 
been through this and I know that with that level of resources 
we can meet the highest priority needs of the Congress and have 
a continual, steady return on that investment and financial 
benefits.
    It is needed more than ever given the discretionary caps in 
place between now and 2025. I am thinking about those every day 
in terms of what we do and what contribution we can make. That 
is why I have asked for 3,100 for this year as a move toward 
that 3,250.
    Senator Schatz. Well, I think we are going to be able to--
look, I do not know what we are going to be able to do in the--
--
    Mr. Dodaro. Right.
    Senator Schatz [continuing]. Appropriations process, but I 
will say this. You know, from a liberal Democrat and a 
conservative Republican, I think there is broad bipartisan 
consensus about the need for accountability. And it is easy to 
say that in the political context, but this is where we can 
show that we mean it. And I think GAO and CBO both deserve the 
resources to make sure that taxpayer dollars are spent in an 
accountable fashion, and I will certainly do whatever I can.
    Mr. Dodaro. Thank you.

                     DR. HALL'S OBSERVATION OF CBO

    Senator Capito. Thank you. I am going to start on a second 
round here.
    Dr. Hall, I am going to give you a little softball here. 
You have been there a year now, and I wanted to know if you 
have made any observations that you would like to share with us 
in terms of efficiencies, changes you would like to make, ways 
that you could either be more helpful to Congress in the 
budgeting or maybe ways that Congress could be more helpful to 
you in helping you determine those figures. I just wanted to 
hear what your thoughts might be.
    Dr. Hall. Sure. Well, two things come to mind. One is that 
we always have to anticipate legislation, and anticipating the 
work of Congress is not that easy, and sometimes we have to 
anticipate it quite a bit in advance. So allocating our 
resources around the agency is always a challenge. And there 
are times when we have really what I call peak load issues in 
terms of getting things done. But I think that is somewhat the 
nature of the job.
    The other thing I think is taking the time for transparency 
in what we do. We can sometimes do a great deal of work in a 
fairly short amount of time, and it is very hard to take the 
extra resources to go ahead and explain it fully and 
transparently. And I think that is actually part of the 
feedback I have gotten coming in that CBO could be more 
transparent. And so then it is a matter of, I think, 
reallocating resources as well, that we take the time to try to 
document things a bit more clearly.

                COMPREHENSIVE ADDICTION AND RECOVERY ACT

    Senator Capito. Thank you. So I am going to ask you to 
educate me because I have an amendment on the CARA bill, the 
Comprehensive Addiction and Recovery Act that we are working 
on. We have a facility in Huntington, West Virginia, that was 
created by the community really to take drug-addicted babies 
out of the hospital--born with drug addiction--into a facility 
to give them treatment and recovery out of the hospital 
Neonatal, Intensive Care Unit (NICU). And so the way I am 
looking at this--and then also to give the Medicaid coverage to 
that--it is called Lily's Place.
    So in putting this forward, I got hung up because according 
to the way the subcommittee looked at it, and I am sure in 
consultation with your experts, it was considered to be costing 
money because these babies are now in Lily's Place and getting 
reimbursed when the way I look at it is they are not in the 
Neonatal, Intensive Care Unit in the hospital, which has got to 
be a lot more expensive. And so we could never convince anybody 
to see it through my eyes. So how should I be looking at that? 
In other words, it could be a cost savings, and I think it 
would be a large cost savings.
    Dr. Hall. Right. Well, you know, our role is almost always 
to sort of predict the future on these bills and what is really 
going to happen, and this is quite often an issue, I think, 
with health care for us is if you make a change and it 
increases spending by Medicaid or somebody else, we have got to 
then look at the issue of, as you say, will it have some 
savings later on. And we try to spend some time and try to 
consult with that. We have spent a lot of time looking at 
literature and research to sort of come up with reasonable 
estimates of what will happen in terms of savings, things down 
the line. And we really do try to take that into account. But a 
lot of it for us is trying to find real evidence that that 
exists and that that is actually going to----
    Senator Capito. And if it has not occurred, you do not 
know.
    Dr. Hall. That is right. And we have to do our best to try 
to make a realistic estimate sometimes that is difficult.
    Senator Capito. Right. Well, I mean, yes. And I think that 
is the frustration that we feel sometimes on this side of the 
dais, that we feel like we are going in a direction that could 
actually result in saving the taxpayers dollars if we are 
looking equally at both sides. And what you are telling me is 
we have got to have evidence-based information to back up that 
data, and if it has never occurred, how would you really know?
    Dr. Hall. That is right. And one of the things we are 
willing to do is we are willing to take a look at the evidence 
that committees or Members have, what they have looked at or 
arguments that they have made because we really do try to take 
an independent look and look at all the evidence to try to make 
some sort of judgment. And in a sense, that is sort of why we 
exist is to make this sort of independent judgment that 
hopefully you find credible.

                              THE TAX GAP

    Senator Capito. Yes, and I think you can appreciate in this 
budget environment that for us to have what we think is a good 
idea that would actually be better treatment, better results 
for the child, the family, and everything else, and possibly be 
able to save Medicaid dollars at the same time, the 
frustration--because any time you try to tag something on as an 
amendment, then the price tag then on your good idea goes out 
the window because of the budget environment that we are in. 
You know all that. I am just sort of reinforcing it.
    So let me ask you, Mr. Dodaro, about the tax gap. Those are 
startling figures that you give, and I think you and I have 
talked about this.
    Mr. Dodaro. Yes.
    Senator Capito. Three hundred billion dollars. What is the 
problem there? Why can we not get this money? Who has fallen 
down on the job and what----
    Mr. Dodaro. Yes.
    Senator Capito [continuing]. Would you--I would like to 
make that a priority obviously. We all want to feel like we are 
paying our fair share, and when we hear that many people are 
not, it is frustrating to the American public.
    Mr. Dodaro. Yes. I am frustrated as well.
    Senator Capito. Yes, you are paying your fair share.
    Mr. Dodaro. It is a broad-based problem. Actually, 84 
percent of the $385 billion tax gap is due to people 
underreporting their income. Another 10 percent are people who 
are not----
    Senator Capito. Is that 80 percent, you said?
    Mr. Dodaro. Eighty-four percent are----
    Senator Capito. Okay.
    Mr. Dodaro [continuing]. Underreporting. Six percent are 
people not filing at all. The other 10 percent are people where 
they have calculated the correct amount of taxes but they have 
not paid it all.
    Senator Capito. Okay.
    Mr. Dodaro. The problem is in every tax that we have, 
individual income, corporate tax, employment taxes that are 
coming in, payroll taxes, as well as estate taxes and excise 
taxes. So it is broad-based. It is a multifaceted problem. The 
voluntary compliance rate right now as it has been for a number 
of years is 83 percent. Basically 83 percent of the American 
people are paying their taxes appropriately.
    We have made many recommendations to Congress for statutory 
changes. Congress just implemented two, one as part of the 
Bipartisan Budget Act, which is to simplify auditing for 
partnerships and make it more timely. That as estimated by 
Joint Committee on Taxation will bring in over $9 billion. I 
have encouraged Congress and they have now allowed IRS to begin 
collecting the W-2 information from employers in January rather 
than April. Historically they just get it in April.
    When people have to file their taxes, IRS does not have 
their W-2 information. This has allowed for identity fraud. The 
crooks file early. A couple years ago the IRS estimated they 
missed about $6 billion in making fraudulent payments due to 
identity fraud. This will help on the earned income tax credit 
too. There is fraud in that area, as well as a high degree of 
improper payments. It is third right behind Medicare and 
Medicaid in the list of improper payments. We have encouraged 
greater electronic filing for corporations. We have encouraged 
more information-matching at IRS.
    Where you have the greatest degree of people not paying 
their taxes is in situations without wage withholding. Where 
you have people who have their taxes withheld based on their 
wages, like most of the people, there is a high degree of 
compliance. It is where you have business income, sole 
proprietors, partnerships, and others.
    Senator Capito. You pay quarterly and all that----
    Mr. Dodaro. Right, right----
    Senator Capito. Yes.
    Mr. Dodaro [continuing]. But you do not have it withheld at 
the source of the income. So if you plot what degree of 
withholding there is versus the degree of compliance, it goes 
from a pretty high level of compliance down the scale to very 
low level of compliance in this area.
    We have recommended that Congress regulate paid tax 
preparers. For example on the earned income tax credit back in 
2014, GAO and the IRS found that almost two-thirds of the 
returns are prepared by paid tax preparers, most of which are 
not regulated by the IRS right now. The IRS found 40 to 50 
percent made errors in their returns. We sent undercover teams 
around to 19 tax preparers, and only 2 of the 19 gave us 
accurate estimates on the amount of taxes that were really 
owed. Some of them were so far off they would have been subject 
to penalties at that time.
    Oregon as a State has had regulation of tax preparers for a 
number of years. We found that a return filed by an Oregon tax 
preparer was 72 percent more likely to be accurate than a 
comparable return filed by a paid preparer anywhere else in the 
country. There is a good experience at the State level that 
could be expanded at the Federal level.
    IRS did this. They acted on their regulations but they got 
sued and they lost in court. So they really need legislation to 
safely go about regulating paid tax preparers.
    With regard to math authority, Congress could give IRS more 
authority if something does not match their administrative 
records that the government holds, they could fix the tax 
problem right at the beginning without starting an audit. 
People would have the ability to appeal at the time.
    We have lots of recommendations. There is much more that 
could be done. That is what I would use additional resources on 
because you have this problem at every type of tax and----
    Senator Capito. What is the percentage of people that file 
electronically? It is quite high in individuals.
    Mr. Dodaro. In 2015, IRS processed 145 million individual 
tax returns of which 125 million or 86 percent were filed 
electronically.
    Senator Capito. I think it is----
    Mr. Dodaro. But it has been going up. It has been going up.
    Senator Capito. I think it is.
    Mr. Dodaro. That has helped a lot, but if IRS does not have 
the W-2 information to match against the electronic return, 
they are at a disadvantage.
    Senator Capito. What about in the area of subsidies in 
health insurance for underreporting of income? Have you done a 
study on that?
    Mr. Dodaro. We are going to be looking at that now. There 
has not been much of experience yet----
    Senator Capito. Right, we just got through----
    Mr. Dodaro [continuing]. With the filing, the delay of the 
mandates, but we will be looking at that.
    Senator Capito. Yes. I think that is going to be a large 
figure as well.
    Mr. Dodaro. Yes.

                      CENTER FOR AUDIT EXCELLENCE

    Senator Capito. I think that is what we are anticipating.
    Let me ask you about the Center for Audit Excellence. It 
was authorized in fiscal year 2015 in the enacted bill.
    Mr. Dodaro. Right.
    Senator Capito. I think you and I have talked about this.
    Mr. Dodaro. Yes.
    Senator Capito. How is that going? Are you getting as many 
customers as you thought? Are you collecting fees?
    Mr. Dodaro. Yes. We developed a business plan Congress had 
requested that was approved. We opened for business in October 
2015. This month and next month we will be delivering seminars 
and training to State and local auditors. We have discussions 
underway with national audit offices on three different 
continents, Europe, Asia, and Africa. We have met with the 
State Department and USAID and we are about ready to sign an 
agreement with USAID to provide a mechanism for us to provide 
services to USAID missions throughout the world and with the 
State Department as well.
    We will be collecting fees. It is about what I expected. We 
are also getting requests domestically. We have discussions 
underway with a State government audit organization and a U.S. 
territory to provide services as well.
    We are going through the process of getting the mechanisms 
in place to sign the agreements. There are complications. 
International organizations are used to signing contracts with 
people. Well, we cannot sign a contract.
    Senator Capito. Right.
    Mr. Dodaro. So we are working through the mechanics and it 
is going well. I am pleased so far, and I think it will be 
achieved. The goal is to be self-supporting through the fees. 
It is not causing any interference with our ability to provide 
service to the Congress. We are using re-employed annuitants to 
provide the services.
    Senator Capito. Okay. So how does that work? You contract 
with them and then----
    Mr. Dodaro. Well, I have the authority to hire them----
    Senator Capito. Hire them temporarily----
    Mr. Dodaro [continuing]. Directly as--so they are temporary 
GAO----
    Senator Capito. Yes.
    Mr. Dodaro [continuing]. Employees.

                           DUPLICATION REPORT

    Senator Capito. Yes. Okay. On the duplication report, the 
2015 duplication report identified 66 new actions that Congress 
or executive branch agencies could take to improve efficiency 
and effectiveness. Since this was issued in 2015, have you done 
a follow-up with that to see how much of that has been 
followed?
    Mr. Dodaro. Yes.
    Senator Capito. I mean, that is another frustration, I 
think----
    Mr. Dodaro. Yes.
    Senator Capito [continuing]. Not just for the taxpayer but 
certainly for those of us policymakers to feel like you are 
just loading and duplicating on not really creating the 
efficiencies. What would you say about that?
    Mr. Dodaro. First, as it relates to the 66 new areas, as of 
November last year, 40 percent had either already been 
addressed or were partially addressed going forward.
    Senator Capito. How many, 47?
    Mr. Dodaro. Forty, forty percent.
    Senator Capito. Forty.
    Mr. Dodaro. Forty percent as of November. We will be 
reporting our annual update on April 13. We will give a further 
update of the progress that has been made. I am very pleased. 
You will see actions reported last year. About 30 percent have 
been already addressed by the Congress. We estimate, as a 
result of implementing our recommendations, there have been $20 
billion saved, about another $80 billion that will be saved. 
About $100 billion so far. We will be updating that. It is 
going to be more. A number of these suggestions have been 
embedded into the Bipartisan Budget Act and the Consolidated 
Appropriations Act.
    Now, there are many open recommendations. There are plenty 
of opportunities to be frustrated about things that should be 
done that are not done yet. There are tens of billions of 
dollars in additional savings that could accrue as a result of 
implementing the open recommendations. We keep an annual 
scorecard. We have a public website, an action tracker that 
tracks all these things so Congress and the public can go there 
and see exactly what the status is and our regular updates.
    Senator Capito. Well, as a follow-up to that, I know you 
put out an annual report every year. Now that you have sort of 
a dynamic dashboard sort of thing on here----
    Mr. Dodaro. Right.
    Senator Capito [continuing]. Do you find that the annual 
report is still really necessary or is that creating a lot of 
maybe antiquated work?----
    Mr. Dodaro. Yes.
    Senator Capito [continuing]. How do you feel about the 
annual report?
    Mr. Dodaro. We have been working with the appropriate 
committees to get agreement that we would publish a biennial 
report. We do our regular list of high-risk programs----
    Senator Capito. Right.
    Mr. Dodaro [continuing]. Across the Government with the 
beginning of each new Congress. In the off year we do the 
overlap and duplication report.
    Senator Capito. Right.
    Mr. Dodaro. In the meantime, we would keep the Web site up-
to-date so Congress can always tap that if it would like to 
implement the recommendations to save money.
    Senator Capito. All right. Well, that makes sense. That 
makes sense.
    So I have learned that Senator Schatz is not going to be 
returning, so I could sit here all day but we do not really 
need to do that. I appreciate both of you coming.
    In terms of transparency, Dr. Hall, thank you for your 
commitment to that for the future, and we can work together 
with all the relevant committees to make sure we all understand 
the very complicated process that you go through and the great 
help that you do for us.
    And thank you for saving the taxpayers. We have still got a 
lot of work to do there, but hopefully, we can be supportive of 
maybe not all your budget requests but a great deal of it.
    So this would conclude the Legislative Branch 
Appropriations Subcommittee hearing regarding fiscal year 2017 
funding for the CBO and the GAO.
    Thank you both, and the hearing record will remain open for 
7 days allowing members to submit statements and/or questions 
for the record, which should be sent to the subcommittee by 
close of business Tuesday, March 15, 2016.

                          SUBCOMMITTEE RECESS

    The next hearing of this subcommittee will be held on 
Tuesday, March 15, at 3:00 p.m., in room SD-192, Dirksen Senate 
Office Building, where we will hear testimony from the Library 
of Congress and the Architect of the Capitol regarding fiscal 
year 2017 budget requests for those agencies.
    Until then, the subcommittee stands adjourned.
    [Whereupon, at 3:48 p.m., Tuesday, March 8, the 
subcommittee was recessed, to reconvene March 15, at 3:00 p.m.]