- LEGISLATIVE BRANCH APPROPRIATIONS FOR FISCAL YEAR 2019

[Senate Hearing 115-411]
[From the U.S. Government Publishing Office]

LEGISLATIVE BRANCH APPROPRIATIONS FOR FISCAL YEAR 2019

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WEDNESDAY, APRIL 25, 2018

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

The subcommittee met at 3:30 p.m., in room SD-138, Dirksen
Senate Office Building, Hon. Steve Daines (Chairman) presiding.
Present: Senators Daines, Murphy, and Van Hollen.

CONGRESSIONAL BUDGET OFFICE

STATEMENT OF HON. KEITH HALL, DIRECTOR

opening statement of senator steve daines

Senator Daines. Good afternoon.
The subcommittee will come to order.
I would like to welcome everyone to the first of our fiscal
year 2019 budget hearings for the agencies under the
jurisdiction of the Legislative Branch Appropriations
Subcommittee.
Today, we have with us the Director of the Congressional
Budget Office, known as the CBO, Dr. Keith Hall; and the head
of the Government Accountability Office, the GAO, Comptroller
General Gene Dodaro.
I very much appreciate the willingness of the witnesses to
appear before the subcommittee today and look forward to their
testimony.
The total Congressional Budget Office request for fiscal
year 2019 is $50.7 million; an increase of $0.8 million above
the fiscal year 2018 enacted level.
This funding request supports the current full-time
equivalent level of 239, and an additional 10 FTE, eight of
which would be devoted to the areas of transparency and
responsiveness, and another two FTE would be added in the area
of healthcare analysis.
The total GAO request for fiscal year 2019 is $578.9
million, which is level with the fiscal year 2018 enacted
level. Though level funding, this request supports an increase
in FTE from 3,020 to 3,100 by shifting investments from one-
time information technology (IT) and infrastructure projects
being completed in fiscal year 2018 to personnel needs. This
growth in FTE would continue progress toward GAO's multiyear
plan to rebuild its staff capacity to an optimal level of 3,250
FTE.
I would like to thank you both for taking time last week to
meet with me and discuss some of the issues facing your
agencies. They were certainly valuable conversations. I enjoyed
the back and forth dialogue and I hope to expand on some of the
topics we discussed during today's hearing.
I also look forward to gaining a full understanding of your
agencies' needs and priorities for the coming year to better
serve the Congress and our great Nation.
And now, I would like to turn to my favorite Ranking
Member, Senator Murphy, for any opening remarks he might like
to make.

statement of senator christopher murphy

Senator Murphy. Thank you very much, Senator Daines.
Really a pleasure to be joining you as Ranking Member on
this subcommittee; we can build on some really great bipartisan
work that both Senator Lankford and I were able to do. This is
a fun subcommittee with people who are truly dedicated to
helping us do our jobs, and we have two fine examples of that
in front of us today.
To both of you, looking forward to your testimony. I am
glad that we were able to make progress on getting the GAO made
whole after a large 10 percent cut in staff over the course of
the sequester.
Dr. Hall, thank you for continuing to bear up amidst all of
the storms that get sent your way, as you provide analysis to
Congress that tends to hold up over time, but always comes with
a bit of controversy. We have to make sure, as a subcommittee,
that we are protecting CBO and allowing you to do the
nonpartisan, fact-based work that helps us do our jobs.
So looking forward to both of your testimonies here today.
Looking forward to working with the Chairman of the
subcommittee.
Thanks for being with us.
Senator Daines. Now, I will ask the witnesses, beginning
with Dr. Hall, to give a brief, opening statement of
approximately 5 minutes. The written testimony of each witness
will be printed in full in the hearing record.
Dr. Hall.

summary statement of hon. keith hall

Dr. Hall. Chairman Daines, and Ranking Member Murphy, 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 $50.7 million for fiscal year 2019. That
amount represents an increase of $800,000 or 1.6 percent from
the $49.9 million provided to CBO in fiscal year 2018. Of the
total amount, nearly 91 percent would be used for personnel
costs.
Increases of $2.6 million for three priorities--to pay for
current staffing, to bolster responsiveness and transparency,
and to expand analytical capacity--would be significantly
offset by one-time savings of $1.8 million this year. With the
requested funding, CBO would be able to add 13 new employees to
augment its capabilities.
To fund current staffing levels in 2019, CBO requests an
increase of $1.2 million. That amount would be used for a small
increase in employees' average salary and benefits to keep pace
with inflation. If such funding is not provided, CBO will need
to shrink its staff and consequently provide less information
and analysis to the Congress in 2019.
CBO proposes to hire 20 new staff members by 2021 to
bolster its responsiveness and transparency. In 2019, the
agency would hire 10 of those new employees at a total cost of
$1 million, mainly for salary and benefits. The agency has
shifted resources already to undertake such activities and has
plans for further shifts, but many initiatives of great
interest to the Congress could be undertaken only with more
employees.
With additional resources, CBO would be able to pursue
three main strategies to produce cost estimates more quickly:
First, the agency would hire more assistant analysts, who
could move from one topic to another and provide support to
more senior analysts when demand surged for analysis of a
particular topic, such as healthcare, natural resources, or
banking.
Second, CBO would hire analysts to develop deeper expertise
in certain topics, such as cyber security and higher education
policy, so that the agency was better positioned to analyze new
proposals in those areas.
Third, the agency would hire analysts to expand its use of
team approaches in which work on large and complicated
proposals is shared.
CBO is actively exploring ways to provide additional
information about its modeling that would be useful to
Congress. The agency has released new publications this year
describing its processes for producing economic forecasts,
budget baselines, and cost estimates. Key staff are making
presentations to congressional staff about these processes. In
the coming months, efforts to bolster transparency will include
the following:
Publishing detailed information about key aspects of CBO's
updated model for simulating health insurance coverage,
including computer code, and about how analysts use the model
preparing estimates;
Developing a version of CBO's model for projecting spending
on discretionary programs to allow for replicating roughly 40
percent of the agency's formal cost estimates;
Releasing technical documentation and computer code
explaining how key parts of CBO's long-term budget model work
and how they contribute to the agency's analyses;
Providing information online enables users to examine how a
large variety of changes in baseline economic projections can
affect projections of the Federal budget; and
Posting on the agency's website a tool for examining the
cost of different military force structures.
Added resources would also allow CBO to produce other kinds
of information that would aid transparency. For instance, CBO
could provide more information about the basis for key
parameters that underline the results of models. Additional
funding would also help the agency turn its internal
comparisons of projections and actual results--for the economy,
revenues, spending, deficit, and debt--into public documents.
CBO proposes to expand its analytical capacity primarily by
adding three new healthcare analysts in 2019. The total cost
would be $400,000. Congressional interest remains high in
modifying or replacing the Affordable Care Act, and changing
Medicare or Medicaid, and the new analysts would help the
agency examine new approaches to do so.
The increase for the three priorities are offset by $1.8
million in savings resulting from being able to use fiscal year
2018 funding to cover one-time costs for the migration of the
agency's datacenter and contractors' supported of transparency
efforts and to pay for some multiyear contracts to acquire data
and to install new communication lines.
The requested amount of funding would allow CBO to provide
estimates and other analyses to the Congress such as:
More than 600 formal cost estimates and thousands of
preliminary, formal cost estimates;
About 80 analytic reports and papers; and
More than 100 scorekeeping tabulations, including account-
level detail for individual appropriation acts at all stages of
the legislative process as well as summary tables showing the
status of discretionary appropriations (by appropriations
subcommittee) and running totals on a year-to-date basis.
In closing, I would like to thank the Committee for its
longstanding support of CBO. That support has allowed CBO to
provide budget and economic analysis that is timely,
thoughtful, and nonpartisan as the Congress addresses issues of
critical importance.
[The statement follows:]
Prepared Statement of Dr. Keith Hall
(See the full report ``Testimony, CBO's Appropriation Request for
Fiscal Year 2019'' in Appendix A at the end of the hearing.)

Chairman Daines, Ranking Member Murphy, 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 $50.7 million for fiscal year 2019. That amount
represents an increase of $0.8 million, or 1.6 percent, from the $49.9
million provided to CBO for 2018. Of the total amount, nearly 91
percent would be used for personnel costs.
reasons for the requested increase in funding
Increases of $2.6 million for three priorities--to pay for current
staffing, to bolster responsiveness and transparency, and to expand
analytical capacity--would be significantly offset by onetime savings
of $1.8 million this year. With the requested funding, CBO would be
able to add 13 new employees to augment its capabilities.
Paying for Current Staffing
CBO requests an increase of $1.2 million to fund current staffing
levels in 2019. That amount would be used for a small increase in
employees' average salary and benefits to keep pace with inflation. If
such funding is not provided, CBO will need to shrink its staff and
consequently provide less information and analysis to the Congress in
2019.
Bolstering Responsiveness and Transparency
CBO proposes to hire 20 new staff members by 2021 to bolster its
responsiveness and transparency. In 2019, the agency would hire 10 of
those new employees at a total cost of $1.0 million, mainly for salary
and benefits. (The additional staff members would be hired partway
through fiscal year 2019, so the addition in terms of full-time-
equivalent positions, or FTEs, would be 8 rather than 10.) The new
staff would help CBO respond to requests for information more quickly
when there is a surge in demand. They would also allow CBO to supply
more information about its analysis and models without reducing the
valuable services that it provides to the Congress at its current
staffing level. The agency has shifted resources already to undertake
such activities and has plans for further shifts, but many initiatives
of great interest to the Congress could be undertaken only with more
employees.

(The amount in CBO's original budget request for 2019, submitted before
the recently established appropriation for 2018, was $0.8 million.)
Expanding Analytical Capacity
CBO proposes to expand its analytical capacity primarily by adding
three new healthcare analysts (a number equivalent to two FTEs) in
2019. The total cost would be $0.4 million ($0.3 million in personnel
costs and $0.1 million in nonpersonnel costs, mostly for interagency
agreements). Congressional interest remains high in modifying or
replacing the Affordable Care Act and changing Medicare or Medicaid,
and the new analysts would help the agency examine new approaches to do
so.

(In CBO's original budget request, the amount for ``Expanding
Analytical Capacity'' was $0.6 million, but a portion of the
requirement has been funded from the 2018 appropriation. So CBO has
redirected $0.2 million from the originally proposed amount to address
the priority ``Bolstering Responsiveness and Transparency.'')
Applying Offsetting Savings
The increases for the three priorities are offset by $1.8 million
in savings resulting from being able to use fiscal year 2018 funding to
cover onetime costs for the migration of the agency's data center and
contractors' support of transparency efforts and to pay for some
multiyear contracts to acquire data and to install new communication
lines.
cbo's budget request and its consequences for staffing and output
In fiscal year 2019, CBO will continue its mission of providing
objective, insightful, timely, and clearly presented budgetary and
economic information to the Congress. To fulfill that mission, the
requested funding of $50.7 million would be used for personnel costs
(that is, salaries and benefits) and nonpersonnel costs for IT
(information technology) and other items, such as training, as follows:
Funding Request for Personnel Costs and Consequences for Staffing
CBO requests $45.9 million for salary and benefits, which equals 91
percent of its funding request. Those funds would support 249 FTEs. The
requested amount represents an increase of $2.5 million, or 6 percent.
The total requested amount would break out this way:
--$34 million would cover salaries for personnel--an increase of $1.8
million, or 6 percent, from the amount that will be spent in
fiscal year 2018. The increase would include $0.9 million in
pay for 13 new staff members, 10 of them to bolster CBO's
responsiveness and transparency and 3 to expand analytical
capacity. (The addition in terms of FTEs would be 10.) The
increase would also cover performance-based salary increases
for current staff and an across-the-board increase of 2.6
percent for employees earning less than $100,000.
--$11.9 million would fund benefits for personnel--an increase of
$0.7 million, or 6 percent, from the amount projected to be
spent in 2018. The increase would cover an increase in the cost
of Federal benefits, as well as benefits for the 13 new staff
members.
Funding Request for Nonpersonnel Costs
CBO requests $4.9 million for nonpersonnel costs, which equals
about 10 percent of its funding request. Those funds would cover
current IT operations--such as software and hardware maintenance,
software development, purchases of commercial data, communications, and
equipment purchases--and would pay for travel, training, interagency
agreements, facilities support, printing and editorial support, expert
consultants, financial management auditing support, and subscriptions
to library services. The requested amount represents a net decrease of
$1.7 million, or 26 percent, but would allow CBO to fund support costs
for the 13 new staff members, covering travel, training, furniture, and
IT for them ($65,000).
Consequences for Output
The requested amount of funding would allow CBO to provide
estimates and other analyses to the Congress in roughly these
quantities:
--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 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, as well as summary tables showing the
status of discretionary appropriations (by appropriations
subcommittee) and running totals on a year-to-date basis;
--About 80 analytic reports and papers--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 range of related budget and
economic topics in such areas as defense policy,
infrastructure, Social Security, and housing;
--Numerous files of data documenting detailed 10-year baseline budget
projections, 10-year economic projections, long-term budget
projections (spanning 30 years), and other information
underlying analytic reports--all of them posted on CBO's
website; and
--Descriptions of policy options that would reduce budget deficits,
as well as publications that increase the transparency of CBO's
work and communicate that work graphically.
Despite high productivity by a dedicated staff, CBO expects that
the anticipated volume of estimates and other analyses will fall
considerably short of the number of Congressional requests. The demands
on the agency remain intense. For example, the workload associated with
the analysis of appropriations has been heavy, and the Congress remains
acutely interested in analyses of proposals affecting health insurance.
Other issues arise frequently and create a heavy demand for analysis;
for example, over the past year, CBO analyzed legislation related to
immigration, veterans' health, water rights, opioid abuse, education,
and nutrition. 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.
how additional funding could improve cbo's responsiveness,
transparency, and analytical capacity
In response to proposals that CBO provide information more quickly
and transparently than is possible with its current staffing--while
continuing to meet its goal of providing objective, insightful, high-
quality information--the agency proposes to dedicate additional
resources to doing so. As explained, CBO proposes to hire 13 new
employees in 2019, and it proposes bringing on a total of 20 new
employees over the next 3 years--or more quickly, if the Congress
chooses to appropriate the necessary funding more quickly than CBO is
asking. Some proposals related to CBO's speed and transparency would
require even more resources than the agency is requesting.
Responsiveness
Last year marked the highest number of formal cost estimates in a
decade: 740. Over 70 percent of those estimates were published within
30 days of markup, and over 40 percent of those estimates were
published within 2 weeks. The overall average for completing a cost
estimate was 25 calendar days after markup.
In 2017, CBO enhanced its tracking system for cost estimates,
including focusing more on identifying why some cost estimates take
longer to complete. (Fewer than 10 percent of estimates took longer
than 60 days to complete in 2017.) The reasons vary. In many cases, the
legislation or the required analysis is particularly complex. In some
cases, legislative language is not in final form when received, or CBO
is waiting for data from agencies or relevant stakeholders. In any
case, CBO's goal is to improve the turnaround time when it can, and
identifying those roadblocks is one of the first steps toward that
goal. The agency aims to use the expanded tracking system to improve on
its performance in terms of timeliness, which already ensures that
almost all reported bills receive a cost estimate before final
consideration on the floor of either chamber.
With additional resources, CBO would be able to pursue three main
strategies to produce cost estimates more quickly. First, the agency
would hire more assistant analysts, who could move from one topic to
another and provide support to more senior analysts when demand surged
for analysis of a particular topic, such as healthcare, natural
resources, or banking. Second, CBO would hire analysts to develop
deeper expertise in certain topics, such as cybersecurity and higher
education policy, so that the agency was better positioned to analyze
new proposals in those areas. Third, the agency would hire analysts to
expand its use of team approaches, in which work on large and
complicated proposals is shared.
CBO's proposed expansion of its analytical capacity would also
bolster the agency's responsiveness in the long term by creating a
stronger base on which to build when starting new analyses.
Transparency
CBO is actively exploring ways to provide additional information
about its modeling that would be useful to the Congress. The agency has
released new publications this year describing its processes for
producing economic forecasts, budget baselines, and cost estimates.\1\
Key staff are making presentations to Congressional staff about those
processes.\2\ In the coming months, efforts to bolster transparency
will include the following:
--Exploring ways to make more supporting documentation of the methods
used in baseline projections and cost estimates publicly
available;
--Publishing detailed information about key aspects of CBO's updated
model for simulating health insurance coverage--including
computer code--and about how analysts use the model in
preparing estimates;
--Developing a version of CBO's model for projecting spending on
discretionary programs to allow for replicating roughly 40
percent of the agency's formal cost estimates;
--Releasing technical documentation and computer code explaining how
key parts of CBO's long-term budget model work and how they
contribute to the agency's analyses; \3\
--Providing information online that enables users to examine how a
large variety of changes in baseline economic projections can
affect projections of the Federal budget;
--Publishing revised estimates of how certain changes to laws
governing medical malpractice would affect medical spending,
explaining the reasons behind revisions to the methodology
used, documenting the model used to project how those changes
to laws would affect medical costs, and making computer code
for that model available;
--Posting on the agency's website a tool for examining the costs of
different military force structures; and
--Providing computer code that generates results discussed in a
working paper about CBO's model of the economy's maximum
sustainable output.\4\
In many cases, CBO produces cost estimates and baseline projections
through complex processes that integrate information from numerous
models and other analytical tools. Additional resources would allow CBO
to explain more about those processes in presentations, slide decks,
working papers, and reports.\5\ Such explanations would show how
computer programs used in CBO's modeling fit into the broader scope of
the agency's analysis, which consists mainly of identifying how
proposed legislation would affect the budget; assessing which types of
effects would be substantial enough to quantify; and integrating
different types of research, on the basis of historical data, to
project people's and institutions' responses to legislative changes.
The processes differ from estimate to estimate so that CBO can make the
best use of different types of research. The complexity of CBO's
analysis and the different analytical tools that are often brought to
bear make documentation time-consuming and resource-intensive.
Added resources would also allow CBO to produce other kinds of
information that would aid transparency. For instance, CBO could
provide more information about the basis for key parameters that
underlie the results of models.\6\ Additional funding would also help
the agency turn its internal comparisons of projections and actual
results--for the economy, revenues, spending, deficits, and debt--into
public documents.\7\
Input from outside experts and extensive external review will
remain an important component of transparency:
--CBO will continue to solicit external professional review of its
work so that the agency's analyses reflect both the consensus
and diversity of views of experts from around the country. For
example, in updating its simulation model of health insurance
coverage, CBO will get systematic feedback from the research
community by making presentations about different aspects of
the model as they are developed.
--The agency's cost estimates will often draw on consultation with
outside experts.
--CBO's Panel of Economic Advisers will meet twice a year to provide
input on the agency's latest economic forecast and other
issues, and CBO's Panel of Health Advisers will meet to discuss
key issues affecting the agency's baseline projections and
analyses of proposals and to examine new research in healthcare
and healthcare financing.
--CBO will also regularly consult with those distinguished experts on
its panels and other experts for guidance on the agency's work
on a broad range of topics.
Analytical Capacity
Interest in legislative proposals related to healthcare--on the
part of committees of jurisdiction, the Congressional leadership, and
the budget committees--remains very great. The enactment of the
Affordable Care Act in 2010 was followed by strong Congressional
interest in analysis of that legislation and possible modifications to
it, as well as in potential changes to Medicare or Medicaid. Recently,
the Congress has devoted substantial time to discussing proposals to
repeal and replace the Affordable Care Act. Those developments boosted
CBO's workload, and the agency anticipates that the Congress will
request much more analysis of such proposals, related executive
actions, and other potential changes. Adding healthcare analysts would
help the agency keep up with those interests and developments and
produce a greater range and volume of analysis.
In addition to responding to those immediate concerns, CBO is
engaged in longer-term projects, analyzing various aspects of the
healthcare system and enhancing the agency's future analytical capacity
to assess the effects of legislation on that system and on the Federal
budget. Additional staff would enable CBO to make more rapid progress
on the important effort of updating its simulation model of health
insurance coverage without constraining its work on current legislative
proposals.
In closing, I would like to thank the Committee for its long-
standing support of CBO. That support has allowed CBO to provide
budgetary and economic analysis that is timely, thoughtful, and
nonpartisan as the Congress addresses issues of critical importance.
--------
This testimony summarizes information in CBO's budget request for
fiscal year 2018, which was prepared by Mark Smith, with contributions
from Leigh Angres, Joseph E. Evans, Jr., Deborah Kilroe, Jeffrey Kling,
Cierra Liles, Terry Owens, Benjamin Plotinsky, and Stephanie Ruiz.
Mark Hadley and Robert Sunshine reviewed the testimony, John Skeen
edited it, and Jorge Salazar prepared it for publication. It is
available on CBO's website at www.cbo.gov/publication/53763.
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\1\ See Robert W. Arnold, How CBO Produces Its 10-Year Economic
Forecast, Working Paper 2018-02 (Congressional Budget Office, February
2018), www.cbo.gov/publication/53537; and Congressional Budget Office,
How CBO Prepares Baseline Budget Projections (February 2018),
www.cbo.gov/publication/53532, How CBO Prepares Cost Estimates
(February 2018), www.cbo.gov/publication/53519, and How CBO and JCT
Analyze Major Proposals That Would Affect Health Insurance Coverage
(February 2018), www.cbo.gov/publication/53571.
\2\ For example, see Jessica Banthin, Deputy Assistant Director,
Health, Retirement, and Long-Term Analysis Division, Congressional
Budget Office, ``An Overview of CBO's Estimates of Federal Subsidies
for Health Insurance for People Under Age 65: 2017 to 2027''
(presentation at a Congressional Research Service seminar, Washington,
D.C., January 10, 2018), www.cbo.gov/publication/53447; and Sarah Masi,
Analyst, Budget Analysis Division, Congressional Budget Office,
``Estimating the Costs of Proposals Affecting Health Insurance
Coverage'' (presentation at a Congressional Research Service seminar,
Washington, D.C., January 10, 2018), www.cbo.gov/publication/53448.
\3\ For the first of those explanations providing a general
description of that model, see Congressional Budget Office, An Overview
of CBOLT: The Congressional Budget Office Long-Term Model (April 2018),
www.cbo.gov/publication/53667.
\4\ See Robert Shackleton, Estimating and Projecting Potential
Output Using CBO's Forecasting Growth Model, Working Paper 2018-03
(Congressional Budget Office, February 2018), www.cbo.gov/publication/
53558.
\5\ For several recent examples, see Joshua Montes, CBO's
Projection of Labor Force Participation Rates, Working Paper 2018-04
(Congressional Budget Office, March 2018), www.cbo.gov/publication/
53616; Congressional Budget Office, ``Modeling the Subsidy Rate for
Federal Single-Family Mortgage Insurance Programs'' (January 2018),
www.cbo.gov/publication/53402; and Wendy Kiska, Jason Levine, and
Damien Moore, Modeling the Costs of the Pension Benefit Guaranty
Corporation's Multiemployer Program, Working Paper 2017-04
(Congressional Budget Office, June 2017), www.cbo.gov/publication/
52749.
\6\ For example, see Congressional Budget Office, ``Key Methods
That CBO Used to Estimate the Macroeconomic Effects of the 2017 Tax
Act'' (supplemental material for The Budget and Economic Outlook: 2018
to 2028, April 2018), https://go.usa.gov/xQcZD.
\7\ For examples of such comparisons, see Congressional Budget
Office, CBO's Record of Projecting Subsidies for Health Insurance Under
the Affordable Care Act: 2014 to 2016 (December 2017), www.cbo.gov/
publication/53094, An Evaluation of CBO's Past Outlay Projections
(November 2017), www.cbo.gov/publication/53328, CBO's Economic
Forecasting Record: 2017 Update (October 2017), www.cbo.gov/
publication/53090, and CBO's Revenue Forecasting Record (November
2015), www.cbo.gov/publication/50831.

Senator Daines. Thank you, Mr. Hall.
Mr. Dodaro.
----------

GOVERNMENT ACCOUNTABILITY OFFICE

STATEMENT OF HON. GENE DODARO
Mr. Dodaro. Good afternoon, Senator Daines, Ranking Member
Senator Murphy.
I appreciate the opportunity to be here.
First, I want to thank this subcommittee for the support
that was given for the fiscal year 2018 appropriation. This
will enable us to meet the critical needs of the Congress and
to make strategic investments, as you alluded to, Mr. Chairman,
in your comments, in information technology (IT) and
infrastructure within GAO.
This will modernize our communication, data management,
production capabilities, and save us operating costs that are
recurring in the future. It will also enable us to prepare the
GAO building to receive additional tenants, which will bring in
additional revenue.
Because of the ability to save on operating costs and
accelerate our IT investments, we will free up money that will
enable us, even with a flat budget from 2018 to 2019, to
increase the number of people at GAO in order to provide more
services to the Congress.
The additional staffing will get us to the 3,100 FTE level,
which is toward our goal of 3,250 FTE. But at 3,100 we will be
able to meet the most critical needs across the Congress that
we support.

PRIORITY STAFFING AREAS

With additional staff, there are four priorities for which
I would like to increase staffing.
First is the cyber security area. This involves both the
Federal Government's information systems, as well as critical
infrastructure protection in the private sector--the
electricity grid, financial markets, et cetera--in terms of the
Federal Government working with the private sector in order to
increase security preparedness in those areas.
Also critical are protecting personally identifiable
information and preparing to deal with a number of issues that
are evolving with the Internet of Things.
For example, autonomous vehicles and the movement in air
traffic control systems to a satellite-based control system
from a radar-based system. While this will improve air traffic,
it also introduces potential security concerns that have not
existed.
GAO would increase work in science and technology matters.
This would include bolstering our efforts to focus on
technology assessments on a wide range of issues. We are doing
one now, for example, looking at the technologies to protect
the grid. We are also working on freshwater technologies, given
the fact that 40 of the 50 States expect water shortages over
the next decade.
Also there are a lot of the science and technology aspects
addressed in our audit work. For example, we are looking at the
new Columbia-class nuclear submarine.
In the energy area and in defense, we are looking at
investments to modernize the nuclear arsenal, including
lifecycle extensions and interoperable warheads. We are also
looking at a number of science and technology issues associated
with healthcare.
We just completed a study, for example, on new technologies
that could more quickly diagnose infectious diseases, which
would enable the Government to respond better.
While we do technology assessments, we also do a wide range
of technology and science issues as part of our normal work
throughout GAO as well.
Our third staffing priority is the big investment that the
Congress is making in the Defense Department. I want to
increase our oversight to make sure that that investment pays
dividends and deals with the major challenges at the Defense
Department. The Department is undergoing their first DoD-wide
financial audit and I want to step up our oversight effort to
help that effort be successful over a long period of time. The
Department of Defense is the only major department in the
Federal Government that has not been able to pass the test of
an independent audit.
Lastly, I would like to apply more resources in the
healthcare area. This is the fastest growing part of the
Federal budget, except for interest on the debt. There is more
that we can do to help reduce unnecessary spending in the areas
of Medicare and Medicaid. We also have VA healthcare on our
high risk list and we need to do more work to put them in a
better position to serve our veterans with timely, high quality
care.

GAO IS A GOOD INVESTMENT

We believe we are a good investment. Last year, we returned
$128 for every $1 invested in GAO, with financial benefits of
over $73 billion. Our high risk program over the last decade
has had financial benefits of $240 billion.
Tomorrow I will be testifying on our latest update on the
overlap duplication and fragmentation work that Congress has
required us to do. (www.gao.gov/products/GAO-18-371SP)
So far Congress has implemented over 50 percent of our
recommendations. These had financial benefits of $136 billion.
I will be updating that tomorrow as these numbers have gone up
given recent events.
I thank you for the opportunity to discuss our proposal. I
know that you will give it careful consideration. I appreciate
that very much and I would be happy to answer any questions.
[The statement follows:]
Prepared Statement of Hon. Gene L. Dodaro

(See the full report GAO-18-426T, ``Testimony Before the Subcommittee
on the Legislative Branch, Committee on Appropriations, U.S. Senate''
in Appendix B at the end of the hearing.)

Chairman Daines, Ranking Member Murphy, and Members of the
subcommittee, thank you for the opportunity to discuss our fiscal year
2019 budget request. I very much appreciate the confidence this
subcommittee has shown in supporting our efforts to serve the Congress
and improve government performance, accountability, and transparency.
Since 2014, this Committee has provided funding that has resulted
in our work achieving over $265 billion in financial benefits and more
than 5,000 other improvements in Federal programs and government
operations. Last fiscal year alone, our work generated almost $74
billion in financial benefits and 1,280 program and operational
improvements across government. This resulted in a return of $128 for
every dollar invested in GAO. GAO's work was also incorporated into
appropriation and authorization legislation passed over the past year,
including requirements for Federal agencies to implement GAO's
recommendations.
I also thank the Committee for its support for our fiscal year 2018
appropriation. We have revised both our fiscal year 2018 operating plan
and our fiscal year 2019 request to reflect the new appropriation
level, including the disaster assistance supplemental funds we
received. In fiscal year 2018, we will begin hiring additional staff,
achieving a full-time equivalent (FTE) level of 3,020 and positioning
us to reach 3,100 FTE in fiscal year 2019. The funding level will also
allow us to invest in information technology and building facility
projects that will improve efficiency and reduce long-term operating
costs.
Our fiscal year 2019 request is at the same funding level as fiscal
year 2018. With these resources, we will achieve a staffing level of
3,100 FTE, allowing us to better serve Congress as it addresses many
critical domestic and international challenges and fulfills its
oversight responsibilities, as well as enable GAO to continue making
important contributions to improving government performance and
accountability.
fiscal year 2019 request
GAO is requesting budget authority of $614.8 million for fiscal
year 2019. This will fund the necessary activities to continue to meet
the highest priority needs of the Congress. The funding will allow us
to cover mandatory pay and inflationary cost increases, and achieve
increases in our on-board staff. The request includes an appropriation
of $578.9 million and $35.9 million in offsetting receipts and
reimbursements from program and financial audits, rental income,
training fees, bid protest fees, and funds provided to GAO for mandated
work.
The Congressional Budget Justification (CBJ) submitted in January
presented a fiscal year 2018 direct appropriation of $540.8 million
plus $33.0 million in offsets reflecting the continuing resolution
level. To avoid exceeding this level and out of uncertainty about the
final appropriation, we developed a prudent hiring plan that would have
resulted in 2,900 full time equivalents (FTE) in fiscal year 2018.
With the 2-year budget agreement and funding enacted for fiscal
year 2018, including $10 million in 2-year funding for information
technology and building infrastructure projects, we revised both our
fiscal year 2018 operating plan and our fiscal year 2019 budget
request. The information technology investments lower our operational
costs in the long run and the investments in infrastructure will allow
us to bring in a new tenant and increase our rental revenue. This will
allow GAO to put more funds into human capital in the future. We now
plan to accelerate hiring for the rest of this fiscal year. The revised
plan will put us in a position to achieve 3,100 FTE in fiscal year 2019
without an increase over the fiscal year 2018 appropriation level,
moving GAO closer to its optimal staffing level of 3,250 FTE. The chart
below provides a summary by program for the revised fiscal year 2019
request.

TABLE 1: FISCAL YEAR 2017-2019 SUMMARY OF RESOURCES BY PROGRAM
[Dollars in thousands]
----------------------------------------------------------------------------------------------------------------
Fiscal Year 2017 Fiscal Year 2018 Fiscal Year 2019 Net Change Fiscal
Actual Estimated Request Year 2018/2019
Program -----------------------------------------------------------------------------------
FTE Amount FTE Amount FTE Amount FTE Amount
----------------------------------------------------------------------------------------------------------------
Human capital............... 2,994 $470,926 3,020 $489,396 3,100 $516,097 80 $26,701
2.6% 5.5%
----------------------------------------------------------------------------------------------------------------
Engagement support.......... $10,452 $12,750 $12,750 $0
0.0%
----------------------------------------------------------------------------------------------------------------
Infrastructure operations... $90,091 $112,171 $85,470 ($26,701)
(24%)
----------------------------------------------------------------------------------------------------------------
Center for Audit Excellence. $545 $500 $500 $0
0.0%
----------------------------------------------------------------------------------------------------------------
Total budget authority...... 2,994 $572,014 3,020 $614,817 3,100 $614,817 80 $0
2.6% 0.0%
----------------------------------------------------------------------------------------------------------------
Offsets \a\................. ($28,163) ($35,900) ($35,900) $0
0.0%
----------------------------------------------------------------------------------------------------------------
Appropriation............... $543,851 $578,917 $578,917 $0
0.0%
----------------------------------------------------------------------------------------------------------------
Source: GAO. GAO-18-448T
\a\ Includes offsetting receipts and reimbursements from program and financial audits, rental income, training
fees, bid protest fees, and funds provided to GAO for mandated work and funds from the disaster supplemental.

meeting the priority needs of committees across congress
The resources we received for fiscal year 2018, and request for
fiscal year 2019, will allow GAO to continue to respond to Congress on
a wide variety of issues covering the full breadth of the Federal
Government's responsibilities. In addition, with increased staffing we
will: (1) expand our focus on critical cybersecurity issues and the
threats to the Nation's critical infrastructure; (2) continue our focus
on a range of rapidly evolving science and technology issues; (3)
bolster our reviews of the increased investment in Department of
Defense programs; and (4) assess the challenges associated with growing
Federal healthcare costs. In fiscal year 2018, we plan to utilize 3,020
FTE, an increase of 120 over the level included in the CBJ. In fiscal
year 2019, we plan to utilize 3,100 FTE, an increase of 80 over the
revised fiscal year 2018 operating plan.
The fiscal year 2018 operating plan and fiscal year 2019 budget
request reflect the utilization of the disaster supplemental. Currently
GAO has eight audits under way and another 15 planned to start over the
next 18 months. These audits involve multiple mission teams and range
from reviews of Puerto Rico and U.S. Virgin Islands economic and
disaster recovery plans; fraud risk management in Florida and Texas
disaster assistance programs; and the Federal response to the 2017
Western wildfires. Currently, we plan to use $8 million of the disaster
supplemental in fiscal year 2018 and fiscal year 2019 (approximately $2
million and $6 million, respectively).
Cyber-Based Threats to the Nation's Systems and Critical Infrastructure
The cyberattacks suffered by the Office of Personnel Management,
Equifax, and other large organizations in recent years highlight the
criticality of more effective cybersecurity. Threats from State and
non-State actors are growing in sophistication and scope and can have a
serious, or even potentially catastrophic, impact on Federal systems,
the Nation's critical infrastructure, and the privacy and safety of the
general public.
As Congress turns to GAO for insightful analysis and advice to
address these rapidly evolving threats, recruiting top-tier cyber
talent to augment our current audit workforce is critical. GAO plans to
recruit talent from leading cybersecurity-related undergraduate and
graduate institutions, including those participating in the CyberCorps
Scholarship for Service program. This would augment our existing cadre
of experts who can assess the nature and extent of cyber risks, both
present and future, as well as evaluate the government's complex and
multi-faceted attempts to address them.
In particular we plan to continue our focus on ensuring the
security of Federal information systems and cyber critical
infrastructure,\1\ two key components of our cyber High Risk area. Over
the next 2 years, our planned efforts include assessing government-wide
initiatives to implement continuous diagnostics and monitoring
capabilities, establish effective risk management processes at Federal
agencies, and work with the private sector responsible for critical
infrastructure.
---------------------------------------------------------------------------
\1\ Critical infrastructure includes systems and assets so vital to
the United States that incapacitating or destroying them would have a
debilitating effect on national security. These critical
infrastructures are grouped by the following 16 industries or
``sectors'': chemical; commercial facilities; communications; critical
manufacturing; dams; defense industrial base; emergency services;
energy; financial services; food and agriculture; government
facilities; healthcare and public health; information technology (IT);
nuclear reactors, materials, and waste; transportation systems; and
water and wastewater systems.
---------------------------------------------------------------------------
Other planned activities include evaluating key agency capabilities
for responding to security incidents and data breaches, as well as
assessing their security postures through detailed vulnerability
assessments and penetration testing of agency network defenses. For
example, the Explanatory Statement accompanying the 2018 Omnibus
Appropriations Act required GAO to evaluate information security at the
Office of Personnel Management and the Securities and Exchange
Commission, both of which have had recent major data breaches.
Regarding the protection of cyber critical infrastructure, we plan
to focus on the cybersecurity of specific sectors, such as the
electricity grid, and oil and gas pipeline subsectors, and evaluate the
effectiveness of the public-private partnership model as a framework
for protecting the Nation's critical assets from cyber threats.
Impact of Scientific and Technological Advances
Rapid advances in science and technology play an important role in
our society as they can impact economic growth as well as the social
and environmental well-being of the United States. Although such
advances will remain central to the prevailing issues of our day,
including economic competitiveness, improved medical care and the
prevention of disease, and information security, the ability of the
United States to lead these advances is increasingly challenged.
Given the persistent and growing demand for this technical work,
GAO strives to continue to build our staff capacity in this growing
area. We now have developed best practice guides related to capital
project cost estimating, project scheduling, and assessing technology
readiness, and will apply these guides in assessing multi-billion
dollar Federal projects at agencies including the Departments of
Defense, Homeland Security, Energy, and the National Aeronautics and
Space Administration.
We plan to expand and accelerate our work including potential
technology readiness assessment evaluations of complex technical
acquisitions such as the Columbia class Navy nuclear submarine, the
Joint Strike Fighter, the James Webb Space Telescope, DHS border
protection technologies, and Uranium Processing Facility. Strategic
technology reports on artificial intelligence systems, freshwater
technologies in agriculture, sustainable chemistry, and antibiotic-
resistant bacteria will be completed or initiated by fiscal year 2019.
Based on interest expressed by various Committees of jurisdiction,
potential future work would focus on block-chain technologies,
artificial intelligence in healthcare, autonomous vehicles, and
personalized medicine.
Assisting Congress in Overseeing and Transforming the Department of
Defense
The Department of Defense (DoD) faces significant challenges in
responding to a complex and rapidly evolving national security
environment. Considerable resources are entrusted to it to do so, about
48 percent (more than $671 billion) of discretionary appropriations for
fiscal year 2018. This represents a nearly 10 percent increase over the
fiscal year 2017 enacted level of almost $612 billion. The President's
budget for fiscal year 2019 further proposes to increase this to more
than $686 billion. Concurrently, DoD is working to sustain and advance
its military superiority while it undergoes one of the most significant
organizational realignments since the Goldwater-Nichols Act of 1986.\2\
---------------------------------------------------------------------------
\2\ Public Law 99-433.
---------------------------------------------------------------------------
Congress has directed GAO to review a broad range of DoD's
activities. Since 2006, GAO has made over 3,000 recommendations to DoD
designed to strengthen the department's programs and operations, and
this work has resulted in over $63 billion in financial benefits since
fiscal year 2015. To inform the new Congress and administration, GAO
highlighted much of this work last year in a special report identifying
five key challenges facing DoD--rebalancing and rebuilding forces,
mitigating cyber risks and expanding cyber capabilities, controlling
costs and managing finances, strategically managing human capital, and
achieving greater efficiencies in business operations--as well as the
factors that have impacted the department's progress in these areas.
GAO will continue to allocate significant resources to review a
broad range of DoD's activities. For example, the latest National
Defense Authorization Act contains provisions for GAO to continue to
support congressional oversight of DoD's efforts to balance current
operational deployments with training and equipping forces capable of
fulfilling the full spectrum of military operations, such as through
assessments of the department's efforts to rebuild readiness and
modernize for the future. We will further review the plans,
organization and capabilities of the department's cyber operations; the
safety and effectiveness of the U.S. strategic nuclear force; and DoD's
investments in science and technology, which provide innovations to
enhance the superiority of weapon systems now and in the future. We
will assess the extent to which the Defense Contract Audit Agency and
Defense Contract Management Agency are effectively and efficiently
overseeing contractors' primary business systems, such as accounting
and property management.
We will also continue to assess the department's strategies and
incentives for recruiting, retaining, and developing a workforce that
accounts for nearly 50 percent of the department's budget, as well as
contracting approaches DoD uses to buy the billions in goods and
services needed to carry out its missions. Further, as DoD implements
key organizational changes mandated by the Congress, we expect
Congressional interest in the department's progress and associated
impacts. These changes include the creation of a Chief Management
Officer position and implementation of cross-functional teams to drive
organizational change, as well as the creation of the offices of the
Under Secretary for Research and Engineering and Under Secretary for
Acquisition and Sustainment. We will also continue to assess DoD's
progress in following Congressional direction to recommend a new
organizational and management structure for its national security space
components.
GAO will continue to focus on DoD issues through its work to update
the biennial High Risk report for 2019. Seven DoD areas are included in
our High Risk report, including financial management, weapon systems
acquisitions, business systems modernization, and support
infrastructure management, as well as designations in 11 additional
areas, such as the government-wide personnel security clearance
process, added to the High Risk list earlier this year, in which DoD
shares responsibility with other Federal agencies. GAO's annual work to
review fragmentation, overlap and duplication in the Federal Government
will report on DoD's efforts to achieve efficiencies, such as across
its defense agencies and field activities, as well as efforts to
achieve efficiencies in the management of its over 500 installations
worldwide.
GAO's annual ``Quick Look'' reports, assessing the cost, schedule,
and performance of about 80 major defense acquisition programs, help
support the Congress in overseeing the department's $1.5 trillion in
planned spending on these systems. One particular focus in the coming
year is on the costs, schedule, and technical capabilities of the
Columbia class nuclear submarine program, one of DoD's largest
acquisitions.
Finally, DoD's financial management challenges remain a High Risk
area that continues to negatively affect DoD's ability to manage the
department and make sound decisions on mission and operations. For
example, DoD's financial management problems have contributed to (1)
inconsistent and sometimes unreliable reports to Congress on weapon
system operating and support costs and (2) an impaired ability to make
cost-effective choices, such as deciding whether to outsource specific
activities or how to improve efficiency through technology.
DoD's financial weaknesses are one of three major impediments
preventing a GAO opinion on the consolidated financial statements of
the Federal Government. With DoD's reported discretionary spending
making up nearly half of the Federal Government's reported
discretionary spending, and its reported assets representing more than
70 percent of the Federal Government's reported physical assets,
monitoring DoD's efforts to achieve auditability represents a major GAO
responsibility. To fulfill that responsibility, we will, in
coordination with the DoD Office of Inspector General, actively monitor
(1) the financial audits of the military services and other defense
organizations, and (2) DoD's progress in implementing corrective
actions for identified deficiencies, which currently number over 1,000.
With DoD's start of mandated full financial statement audits in fiscal
year 2018, this effort will require increased levels of GAO staffing
and resources.
Assisting Congress in Health Care Challenges
Growth in Federal spending for major healthcare programs, estimated
at $1 trillion in fiscal year 2017, has exceeded the growth of GDP
historically and is projected to grow faster than the economy.
These healthcare programs include Medicare, Medicaid, and the
Children's Health Insurance Program, along with Federal subsidies for
health insurance purchased through the marketplaces established by the
ACA and related spending. These Federal commitments to healthcare
programs are a key driver of the Nation's fiscal spending. Growth in
Federal spending on healthcare is driven both by increasing enrollment,
in part due to the aging of the population, and healthcare spending per
person.
The Federal Government faces challenges to effectively and
efficiently managing healthcare programs, including Medicare, Medicaid,
and programs that serve American Indians, veterans, and military
service members. Specifically, the demands to meet Americans' health
needs are growing in volume and complexity while oversight is becoming
more challenging. Understanding these complexities and offering fact-
based recommendations to address them requires advanced policy and
analytical expertise.
Our healthcare policy expertise is frequently sought out by
Congress on a range of healthcare issues. In 2017, we issued products
for 32 different Committees and Subcommittees that examined access to
and quality of care, drug availability and pricing, program
expenditures and integrity, the protection of public health, and
healthcare markets.
We have made recommendations in these audit products to improve the
efficiency and effectiveness of Federal healthcare spending, and
documented almost $2 billion in savings in 2017 alone by agencies
taking action on our recommendations.
GAO will continue to focus on healthcare issues through its work to
update the biennial High Risk report. With our 2017 High-Risk Update,
we designated the Indian Health Service (IHS) as high risk. This area
joins four other Federal healthcare programs on the High Risk list,
Medicare, Medicaid, the Food and Drug Administration, and VA Health
Care.
Finally, GAO will continue to devote resources for our healthcare
work on the most pressing public health-related issues of today. For
example, we have a growing body of work examining the Federal
Government's response to the ongoing opioid epidemic, which killed more
than 42,000 Americans in 2016. However, more work is needed on the
Federal Government's efforts to prevent opioid and other illicit drug
use. We will also continue to examine the pricing and utilization of
healthcare services-key drivers of public and private healthcare
spending and costs. Managing Federal healthcare spending, and holding
entities accountable for the outcomes of such spending, will be
critical to restoring the Nation to a fiscally sustainable long term
path.
gao information technology and building infrastructure
The resources we received for fiscal year 2018, and request for
fiscal year 2019, will allow GAO to make strategic investments in
information technology (IT), and GAO's facilities infrastructure. GAO
greatly appreciates the 2-year designation of $10 million in
Infrastructure Operations spending provided for in the fiscal year 2018
budget. This funding flexibility will enable GAO to make sound capital
investments in new technology and address important funding
requirements in support of our building facilities that will increase
efficiency, lower operating costs, and allow us to increase our rental
revenue.
Information Technology
At present, GAO operates in a computing environment that is rapidly
aging. We have made headway over the past few years to improve our
infrastructure by implementing a virtual desktop infrastructure and
consolidating 11 remote field office data centers into a single primary
data center at Headquarters. Additionally, we replaced older server
technology for data storage with newer, faster, more efficient
technology that strengthens the agency's security and reduces costs.
With the funding provided by Congress, we will be able to build on
these past improvements and make additional critical investments that
will further improve our effectiveness and efficiency and provide long
term cost savings.
Modernizing our current communications system is an important
project that is enabled by this funding. Our current technology is near
its end of life and a significant capital expense would have been
required to upgrade this old technology. Over the next 2 years, GAO
will now upgrade to communications technologies that will greatly
enhance GAO's capabilities and replace aging technology. GAO will be
able to take advantage of key features incorporated into new tools that
would not be possible with legacy systems.
For example, we will replace our obsolete video and
teleconferencing equipment that is no longer supported and is proving
to be extremely challenging to maintain and utilize effectively. We
will upgrade our software to take advantage of integrated collaborative
technologies, such as instant messaging, desktop sharing, and video
conferencing. These technologies, VoIP services, in an integrated
platform using digital voice services are less expensive to maintain
saving GAO significant annual maintenance costs and recurring capital
expenses. In summary, this improvement to our system will make it
easier for our staff to work together more effectively, and is less
expensive to operate.
Furthermore, this investment in GAO will enable us to begin the
migration from our current document management system that is over 30
years old, to modern technology that provides greater capabilities. Our
current document management system is used daily by all GAO staff and
houses all of GAO's audit documents, as well as information obtained
from agencies, and data analysis that forms the basis of GAO's
products. The current system is slow and difficult to use, yet critical
to our success. By upgrading the system, we will stabilize this
important software platform and improve the user experience resulting
in greater efficiencies.
This modernization effort will be built upon the success of
previous work we have done to improve our infrastructure and develop
tools that make our efforts to produce work more efficient. We will
continue to upgrade key systems that directly support the products and
services we provide to the Congress. We have successfully implemented a
new Engagement Management System (EMS) that helps us manage our work
more efficiently and we have a prototype of the New Blue system that
will both greatly improve how we create and share GAO content with our
clients.
New Blue is an enterprise-wide effort which will allow GAO to
easily publish web-based products in HTML format instead of the static
PDF format in a way that reduces manual activities for analysts and
publishing staff. It will enable analysts to perform different
functions concurrently and eliminate the need for separate copies for
drafting, referencing, and each review. It will also streamline
publishing and enable consistent and flexible distribution via multiple
channels with responsive design that will allow our reports to be read
on any device.
An enormous amount of effort has gone into upgrading and securing
our information technology systems and with this new flexibility and
funding in fiscal year 2018 and fiscal year 2019 we are going to make
substantial headway toward completing our modernization efforts.
Facilities and Security
While most of GAO's staff is located at its Headquarters in
Washington, DC, we maintain a presence in strategic locations
throughout the country and this remains a priority. GAO is
consolidating space within its Headquarters building to ensure
efficient utilization. With respect to our building investments, GAO is
currently undergoing moves, as commercial leases expire, to secure
Federal office spaces in Oakland, California, Chicago, Illinois, Los
Angeles, California, and Huntsville, Alabama. By moving into Federal
controlled space we are providing increased physical security for our
employees and locally stored data.
We appreciate the support of the committee for providing us with
the authority to transfer funding to the U.S. Army to build GAO a new
building on the grounds of the Redstone Arsenal Army Base to house
GAO's existing Huntsville staff. This new building will be a one-time
expense, with no rent and minimal maintenance costs going forward
saving GAO what it would have paid in rent. We expect completion of the
new building in the next year. Additionally, with the 2-year funding,
we will make investments in our Headquarters building by consolidating
and upgrading space enabling us to lease empty space to new tenants.
assisting the congress in shaping legislation
GAO continues to be recognized for its non-partisan, objective,
fact-based, and professional analyses across the full breadth and scope
of the Federal Government's responsibilities and the extensive
interests of Congress.
Since our last budget request, Congress has passed a number of laws
that reflect GAO findings and recommendations. For example:
--The National Defense Reauthorization Act of 2018 (NDAA) included
several directives based on GAO findings and recommendations
concerning defense-related and other issues. Specifically
--Improving defense-related efforts in key areas such as budget
guidelines; cost savings; leadership of business
operations; military readiness goals and implementation
strategies; potential vulnerabilities in military aircraft;
risks to military installations from climate change; and
sustainability for the F-35 combat aircraft.
--Requiring additional reporting requirements to help keep the
Columbia-class submarine program on track, raising the cost
cap for the Ford-class carrier program, and directing
changes to DoD's space leadership structure. In addition,
the reauthorization includes funding reductions warranted
by GAO findings.
--Requiring annual reports on the time required to conduct
investigations, adjudicate cases, and grant security
clearances. This reflects a matter GAO raised for
Congress's consideration in 2017, namely that such
reporting should be reinstated given the need to continue
efforts to reform the personnel security clearance process
government-wide, an area that GAO placed on the high-risk
list in January 2018.
--Changing the Small Business Administration's Historically
Underutilized Business Zone Program that provides Federal
contracting preferences for eligible small businesses. In
making these changes, Congress relied on our analysis of
the use of unemployment rates in making business zone
designations to better target counties with depressed
economic conditions.
--The No Veterans Crisis Line Call Should Go Unanswered Act directs
the Department of Veterans Affairs (VA) to develop a quality
assurance document for carrying out the toll-free Veterans
Crisis Line requires VA to develop a plan to ensure that each
telephone call, text message, and other communications received
is answered in a timely manner. These requirements reflect
GAO's recommendations related to ensuring that veterans who
called the crisis line had their calls answered in a timely
manner.
--The FITARA Enhancement Act of 2017 extended until 2020 the deadline
for Federal agencies to optimize their data centers, reflecting
the GAO recommendation that they be given more time to do so.
In line with previous GAO findings, that act also made
permanent the requirement that agencies evaluate, manage, and
publicly report on the risk of their major information
technology investments.
--GAO's reports and testimonies are also reflected in the 2018
Omnibus Appropriations Act, including:
--Using GAO work to direct agencies to implement GAO
recommendations. For example, the act directed
-- the Department of Homeland Security to develop robust
performance metrics for all deployed border security; begin
the collection of performance data to evaluate the
individual and collective contribution of specific
technologies; and assess progress in fully deploying
planned technologies and determine when mission benefits
from such deployments have been fully realized, citing a
GAO testimony; and
-- the Secretary of the Department of the Interior to take
several steps to improve Indian education, including
implementing GAO recommendations and restructuring Indian
Affairs to better support management control and
accountability for the Bureau of Indian Education system.
--Requiring agencies to report on how they plan to implement GAO
recommendations or what corrective action plans they plan
to take. For example:
-- having the entity responsible for managing cybersecurity
across the Federal Government and critical infrastructure,
the National Cybersecurity and Communications Integration
Center (NCCIC), report on plans to implement GAO
recommendations to determine if it is carrying out its
statutory functions, such as sharing information about
cyber threats, in the way it should: making the information
timely, relevant and actionable, and to establish
performance metrics for them;
-- having the Bureau of Indian Affairs report on progress to
implement recommendations on data to improve road
management and inform student attendance strategies, citing
a GAO 2017 report;
-- having the Indian Health Service report on how it will address
GAO recommendations on setting and monitoring agency wide
standards for patient wait time and IT issues related to
this monitoring, citing a GAO 2016 report;
-- having the Department of Defense (DoD) report on efforts to
align the structure, statutory parameters and regulatory
guidance across all Federal prescription drug buying
programs to increase buying power and reduce costs, citing
a GAO recommendation to the same effect; and
-- having the Bureau of Indian Affairs report on barriers to
developing strategies to properly manage oversight of
energy resources, citing a GAO 2017 report.
--Finally, providing funding to enable activities aligned with GAO
recommendations. For example, the act appropriated funds
to:
-- the Department of Homeland Security to conduct regular
assessments of advanced protective technologies related to
cybersecurity, citing a 2016 GAO report; the Department of
Health and Human Services for grants for clinical training
of sexual assault nurse examiners to administer medical
forensic examinations and treatments to victims of sexual
assault, citing a GAO 2016 report; and the Veterans Health
Administration for research into overmedication of veterans
that led to veterans' deaths, suicides, and mental health
disorders, among other things, citing multiple GAO reports.
financial and program benefits
Financial Benefits
In fiscal year 2017, we documented $73.9 billion in financial
benefits for the government--a return of about $128 for every dollar
invested in us. Examples of our work that contributed to these benefits
included (1) improving the Department of Defense's (DoD) processes for
acquiring weapon systems ($36.0 billion); (2) auctioning of the
broadcast television spectrum by the Federal Communications Commission
($7.3 billion); and (3) reducing the amount TRICARE pays for compounded
drugs ($1.9 billion).
Other Benefits
Many other benefits resulting from our work cannot be measured in
dollars but lead to program and operational improvements. In fiscal
year 2017, we recorded 1,280 of these other benefits. For example, our
work on public safety and security:
--led the Nuclear Regulatory Commission to tighten its controls on
licensing for possession of radioactive materials when, in one
of our tests, investigators secured agreements to buy devices
that, together, contained a dangerous quantity of material;
--led FEMA to better prepare for its future disaster response
activities by developing (1) a plan to finance equipment for
its urban search and rescue task forces, and (2) a process to
apply lessons learned from its incident management assistance
teams; and
--led the Food and Drug Administration to issue a final rule
requiring drug companies to report data on the sale and
distribution of antibiotics for use in food animals.

Similarly, our work related to vulnerable populations:

--led the Department of Health and Human Services (HHS) to issue a
strategy addressing the use of opioids such as heroin and
prescription pain medications during pregnancy, which can lead
to newborns having a condition called Neonatal Abstinence
Syndrome;
--led the Veterans Administration to improve its oversight and
process for providing veterans newly enrolled in its healthcare
system with timely access to primary care appointments; and
--led several agencies, including the Departments of Homeland
Security, the Interior, and State, to better protect contractor
employees against reprisal, when they identify fraud, waste,
abuse, or mismanagement.

Furthermore, our work in the area of agency operations:

--led DoD to establish categories for prioritizing its more than
83,000 missing persons cases from military conflicts since
World War II, based on the feasibility of recovery;
--prompted the Social Security Administration to not provide
increases in monthly disability insurance benefit payments
until it had determined if individuals' earnings required
changes in benefits--preventing overpayments to about 4,300
beneficiaries in 2016;
--prompted DoD to strengthen its oversight of equipment provided to
Iraq's security forces by developing new procedures for
recording equipment transfer dates and making other planned
changes to improve accountability; and
--led OMB and the Department of the Treasury to improve
implementation of the Digital Accountability and Transparency
Act of 2014 (Public Law 113-101) by clarifying requirements,
using implementation plans, and documenting procedures.
building bodies of knowledge
Through the products we issued in fiscal year 2017, we continued to
build on bodies of work to address our three broad strategic goals for
serving the Congress and the Nation to (1) address current and emerging
challenges to the well-being and financial security of the American
people, (2) help respond to changing security threats and global
interdependence, and (3) help transform the Federal Government to
address national challenges. Examples include:
Protection of Children
We reported on the (1) Federal support for pediatric trauma care
centers--used to treat children with potentially life-threatening or
disabling injuries; (2) Federal support for states to oversee the use
of psychotropic medications for children in foster care; and (3)
Federal coordination on early learning and childcare.
Veterans
We reported on the need to improve (1) management of veterans'
healthcare, (2) protections for veterans against financial
exploitation; and (3) the Department of Veterans Affairs' use of vacant
and underutilized property to house homeless veterans.
Healthcare
We reported on the (1) actions needed to prevent illegal drug use,
such as opioids; (2) Federal efforts to position the physician
workforce to meet current and future demands; and (3) need to harmonize
Federal and State rules to better protect Medicaid beneficiaries
receiving personal care services.
Science and Technology
We reported on (1) the Internet of Things, smart technologies and
devices that sense information and communicate it to the Internet or
other networks--offering new benefits and potential risks to IT,
privacy, and safety; and (2) medical device technologies designed to
rapidly diagnose infectious diseases.
Military Readiness
We reported in fiscal year 2017 and prior years on the: (1)
considerable readiness challenges facing the Military Departments; (2)
need for better strategies, goals and metrics for guiding the
departments' readiness rebuilding efforts, and more oversight of these
efforts by the Office of the Secretary of Defense; and (3) Navy's
training, manning and infrastructure challenges that have contributed
its readiness crisis.
High Risk Areas
We issued the biennial update of our high-risk report to focus
attention on government operations that are highly vulnerable to fraud,
waste, abuse and mismanagement or need transformation. It offers
solutions to 35 high-risk problems, including four new areas, Federal
Indian education, health, and energy programs; Federal environmental
liabilities; government-wide personnel security clearance processes;
and the 2020 Census (see Enclosure I). For example, we reported on the
enormous challenge that a complete count of the Nation's population is
for the Bureau of Census as it seeks to control the cost of the census
while it implements several new innovations and manages the processes
of acquiring and developing new and modified information technology
(IT) systems supporting them. Over the past 4 years, we have made 33
recommendations specific to the Bureau regarding the 2020 Census. As of
October 2017, the Bureau had fully implemented 10 of the
recommendations, and was at varying stages of implementing the
remaining recommendations.
In 2017, our High Risk work contributed to 154 reports, 43
testimonies, $42.2 billion in financial benefits, and 519 other
benefits. In the last decade this work has led to about $240 billion in
financial benefits.
Fragmentation, Overlap, and Duplication
Our seventh annual report identified 79 new actions across 29 new
areas that could reduce fragmentation, overlap, and duplication, or
provide other cost savings and revenue enhancement opportunities across
the Federal Government. Actions taken by the Congress and executive
branch agencies to address the 645 actions government-wide we
identified from 2011 to 2016, have led to about $136 billion in
financial benefits--$75 billion to date, with $61 billion more
expected.
Testimonies
In fiscal year 2017, senior GAO Officials testified 99 times before
45 separate committees or subcommittees on issues that touched all
major Federal agencies. The following, listed by our three strategic
goals, are examples of topics GAO addressed in testimony:

TABLE 2: SELECTED GAO FISCAL YEAR 2017 TESTIMONIES

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

Controlling Medicaid's Improper Payments
Restoring US Postal Service's Fiscal Sustainability
Addressing Serious Weaknesses in Federal Programs Serving Indian Tribes
Improving the Small Business Administration's Disaster Loan Assistance
Providing Health Insurance Under the Patient Protection and Affordable
Care Act
Ensuring the Privacy and Accuracy of Face Recognition Technology
Strengthening Oversight of the Low Income Housing Tax Credit
Using Lessons Learned from SafeTrack to Improve Future Rehabilitation
Projects
Early Observations on Implementation of the Every Student Succeeds Act
Improving Federal Management of Indian Energy Resources
Addressing Department of Energy's Management Challenges

_______________________________________________________________________
Goal 2: Respond to Changing Security Threats and the Challenges of
Global Interdependence
_______________________________________________________________________

Observations on the Use of Force Management Levels in Afghanistan,
Iraq, Syria
Observations on Implementation of Federal Immigration Laws--Northern
Mariana Islands
Addressing Challenges to DoD's Delivery of Critical Space Capabilities
Enhancing Controls Over DoD's Excess Property
Observations on Challenges Facing Navy Readiness
Improving DHS's Border Security: Addressing Threats Posed by High-Risk
Travelers and Strengthening Visa Security
Increasing DoD's Accountability Over Equipment Provided to Iraq's
Security Forces
Improving the Response to Zika Virus Outbreaks
Strengthening US Cybersecurity Capabilities
Addressing Critical Acquisition Decisions for the Littoral Combat Ship
and Frigate

_______________________________________________________________________
Goal 3: Help Transform the Federal Government to Address National
Challenges
_______________________________________________________________________

Address DATA Act Implementation Challenges
Improving Anti-Fraud Efforts for Social Security Administration
Disability Benefits
Improving IG Oversight of the Architect of the Capital Operations
Protecting Older Adults from abuse by Guardians
Addressing Improper Payment Estimates and Ongoing Efforts to Reduce
Them
Reducing Fragmentation, Overlap and Duplication in Federal Programs
Improving Implementation of IT Reform Law Critical to Effective
Management
Addressing Cybersecurity Workforce Challenges
Reducing Collection, Use and Display of Social Security Numbers
Using Leading Human Capital Practices to Improve Agency Performance
Assessing Progress on Preparations for the 2020 Census
Addressing Implementation Challenges with IRS' New Wage Verification
Process
Improving Government Efficiency and Effectiveness to Reduce Federal
Costs
Improving VA's Management of IT
----------
Source: GAO. GAO-18-448T
focusing on congressional priorities
Serving Our Clients
In fiscal year 2017, we received 739 requests for work from 92
percent of the standing committees of the Congress--supporting a broad
range of congressional interests. We issued 658 reports and made 1,414
new recommendations. Our senior executives were asked to testify before
45 separate committees or subcommittees on topics including the
Nation's fiscal health; Navy readiness; preventing high-risk travelers
from boarding U.S. bound flights; and improving the response to Zika
virus outbreaks. Our testimonies continued to underscore the importance
of implementing GAO's recommendations to strengthen the government's
performance and yield financial benefits.
Outreach Efforts
I continued my regular meetings with the Chairs and Ranking Members
of congressional committees to obtain their views on GAO's work,
including their priorities, and to discuss opportunities and challenges
facing our Nation.
I also sent letters to the heads of most Federal departments to
acknowledge the actions taken to date to implement our prior
recommendations and to draw their attention to priority recommendations
still requiring their attention. These letters were also sent to the
congressional committees of jurisdiction to inform their oversight.
We continue to collaborate with the Congress to revise or repeal
mandated reporting requirements to align our work with current
congressional priorities and maximize our staff resources. For example,
S. 2400, the GAO Audit Mandates Revision Act of 2018, would shift many
low-risk financial audits to public accounting firms so GAO can audit
Treasury's General Fund. The fund, which has never been audited before,
covers every Federal entity that receives appropriated funds.
internal improvements
Supporting Our People
The hard work and dedication of our diverse and professional
multidisciplinary staff positioned GAO to achieve a 96 percent on-time
delivery of our products in fiscal year 2017. Our performance this year
also indicates that staff received the support needed to produce high-
quality work. GAO also continued its distinction as a best place to
work in the Federal Government, ranking second among mid-size Federal
agencies and first for supporting diversity by the Partnership for
Public Service.
Managing Our Internal Operations
In fiscal year 2017, we continued efforts to maximize our value by
enabling quality, timely service to the Congress and being a leading
practices Federal agency. We made progress addressing our three
internal management challenges--human capital management, engagement
efficiency, and information security. To enhance engagement efficiency,
we fully transitioned to an updated engagement management process and
new management system.
We also undergo an annual independent financial statement audit.
For fiscal year 2017, our financial statements received an unmodified
``clean'' opinion once again. This unmodified opinion along with our
effective internal controls, demonstrate our sound stewardship of the
taxpayers' dollars entrusted to us. Our independent auditors found that
GAO maintained, in all material aspects, effective internal control
over financial reporting, and our financial management systems
substantially complied with the applicable requirements of the Federal
Financial Management Improvement Act of 1996.
In addition, independent organizations perform a peer review of
GAO's system of quality control for work done under generally accepted
government auditing standards to determine whether it is suitably
designed and operating effectively. The peer review includes a review
of audit documentation, tests of functional areas, and staff
interviews. Our most recent external peer review, conducted by a team
of international auditors, resulted in a clean opinion on the
effectiveness and appropriateness of our quality assurance framework.
We also demonstrated that our detailed performance and financial
information is complete and reliable and meets our high standards for
accuracy and transparency.
legal work
In fiscal year 2017, our Office of General Counsel created an
electronic bid protest filing system, handled about 2,600 bid protests,
issued over 500 bid protest and other decisions, including
appropriations law decisions, and issued the third chapter of the
fourth edition of ``Principles of Federal Appropriations Law''. This is
the primary resource for appropriations law guidance in the Federal
community.
strategic planning
I am pleased to announce that GAO has issued our 2018-2023
Strategic Plan for Serving the Congress and the Nation (See Enclosure
II). As the United States confronts a series of new and long-standing
challenges, GAO will rely on this latest strategic plan to guide our
efforts to help make government more accountable, efficient, and
effective and, ultimately, help improve the safety, security, and well-
being of the American people.
Our plan outlines a number of important drivers and trends that
will shape GAO's work in the coming years, in areas such as national
security and defense, healthcare, and new developments in science and
technology. GAO's new plan consists of three components:
--Goals and Objectives (GAO-18-1SP),
--Key Efforts (GAO-18-395SP), and
--Trends Affecting Government and Society (GAO-18-396SP).

This 3-part format enables the trends and key efforts to be updated
periodically to reflect rapidly changing external forces and shifts in
priorities. By periodically reviewing our plan, GAO will remain agile
and responsive to the areas of greatest national concern and usefulness
to the Congress and the public. Prior to issuance a draft was shared
for comment by Congress, employees and external stakeholders.
center for audit excellence
The Congress authorized GAO to establish a Center for Audit
Excellence (the Center) in 2014 to provide training and technical
assistance to enhance the capacity of domestic and international
accountability organizations. Although GAO contributes to a number of
efforts that promote good governance and enhance accountability
community capacity, the Center is unique in its ability to tackle
complex training and capacity building projects because it can offer a
wide range of services at locations throughout the world. The Center is
authorized to charge fees for its services to facilitate recovery of
its costs.
Since the Center's opening in October 2015, the Center has provided
training or technical assistance services to nearly two dozen Federal,
State, local, and international organizations. The Center expanded its
volume of work significantly between fiscal year 2016 and fiscal year
2017, collecting $41 thousand in fees in fiscal year 2016, its first
year of operation, and $345 thousand in fiscal year 2017. The Center
also signed a Memorandum of Understanding with the U.S. Agency for
International Development, a key partner to the Center in promoting
accountability among developing nations.
During fiscal year 2017, the Center enhanced the capacity of 15
domestic and international accountability organizations. Domestically,
the Center provided high quality training to promote greater
understanding of Government Auditing Standards (the Yellow Book),
internal control, performance auditing, report writing and other topics
to five State and local audit offices, three Federal audit
organizations, and four other domestic audit organizations. Based on
formal and informal feedback, the organizations and the vast majority
of training participants found the training to be greatly useful.
Moreover, several audit organizations have returned to the Center
repeatedly for training and technical assistance to help their staff
build capacity in applying auditing concepts and tools introduced in
Center training classes.
The Center also expanded its work and achieved positive impact in
working with international accountability organizations in fiscal year
2017. The Center provided training and technical assistance to a
Supreme Audit Institution in Eastern Europe that enhanced its capacity
to conduct information technology audits. The Center also worked with
the Millennium Challenge Corporation to develop and start a project
that is helping to enhance the capacity of a Supreme Audit Institution
in Central America. Most recently, the Center worked with the U.S.
Agency for International Development to finalize an agreement for the
Center to assess and identify ways to build the capacity of a Supreme
Audit Institution and internal audit organization in an African
country.
The Center continues to implement its Business Plan and look for
additional ways to build on the successes achieved and find additional
ways to further strengthen the capacity of accountability partners to
help enhance the oversight of U.S. Federal funds used domestically and
across the globe. For example, during fiscal year 2018, the Center
plans to expand its international work further by leveraging its
Memorandum of Understanding with USAID and building on outreach and
partnerships with other organizations such as the World Bank.
concluding remarks
We value the opportunity to provide Congress and the Nation with
timely, insightful analysis on the challenges facing the country. I
would like to thank the Committee again for its support of GAO and the
fiscal year 2018 budget. Our fiscal year 2019 budget requests the
resources to ensure that we can continue to address the highest
priorities of the Congress.
Our request will allow us to continue building our staffing level
and provide our employees with the appropriate resources and support
needed to serve the Congress effectively. This funding level will also
allow us to continue efforts to promote operational efficiency and
address long-deferred information technology investments and
maintenance. We will also continue to explore opportunities to generate
revenue to help offset our costs.
I appreciate, as always, your careful consideration of GAO's budget
and your continued support.

ENCLOSURE I: GAO'S 2018 HIGH RISK LIST

------------------------------------------------------------------------
High Risk Area Year Designated
------------------------------------------------------------------------
Strengthening the Foundation for Efficiency and Effectiveness
------------------------------------------------------------------------
Improving Federal Programs that Serve Tribes and 2017
their Members (new)............................
2020 Decennial Census (new)..................... 2017
U.S. Government Environmental Liabilities (new). 2017
Improving the Management of IT Acquisitions and 2015
Operations.....................................
Limiting the Federal Government's Fiscal 2013
Exposure by Better Managing Climate Change Risk
Management of Federal Oil and Gas Resources..... 2011
Modernizing the US Financial Regulatory System 2009
and the Federal Role in Housing Finance........
Restructuring the US Postal Service to Achieve 2006
Sustainable Financial Viability................
Funding the Nations Surface Transportation 2007
System.........................................
Managing Federal Real Property.................. 2003
Strategic Human Capital Management.............. 2001
------------------------------------------------------------------------
Transforming Defense Department Program Management
------------------------------------------------------------------------
DoD Approach to Business Transformation......... 2005
DoD Support Infrastructure Management........... 1997
DoD Business Systems Modernization.............. 1995
DoD Financial Management........................ 1995
DoD Supply Chain Management..................... 1990
DoD Weapon Systems Acquisitions................. 1990
------------------------------------------------------------------------
Ensuring Public Safety and Security
------------------------------------------------------------------------
Government-wide Personnel Security Clearance 2018
Processes (new)................................
Mitigating Gaps in Weather Satellite Data....... 2013
Protecting Public Health through Enhanced 2009
Oversight of Medical Products..................
Transforming EPA's Processes for Assessing and 2009
Controlling Toxic Chemicals....................
Ensuring the Effective Protection of 2007
Technologies Critical to US Nations Security
Interests......................................
Improving Federal Oversight of Food Safety...... 2007
Strengthening Department of Homeland Security 2003
Management Functions...........................
Ensuring the Security of Federal Information 1997
Systems and Cyber Critical Infrastructure and
Protecting the Privacy of Personally
Identifiable Information.......................
------------------------------------------------------------------------
Managing Federal Contracting More Effectively
------------------------------------------------------------------------
DoD Contract Management......................... 1992
DOE's Contract Management for the National 1990
Nuclear Security Administration and the Office
of Environmental Management....................
NASA Acquisition Management..................... 1990
------------------------------------------------------------------------
Assessing the Efficiency and Effectiveness of Tax Law Administration
------------------------------------------------------------------------
Enforcement of Tax Laws......................... 1990
------------------------------------------------------------------------
Modernizing and Safeguarding Insurance and Benefit Programs
------------------------------------------------------------------------
Managing Risks and Improving VA Health Care..... 2015
National Flood Insurance Program................ 2006
Improving and Modernizing Federal Disability 2003
Programs.......................................
Pension Benefit Guaranty Corporation Insurance 2003
Programs.......................................
Medicaid Program................................ 2003
Medicare Program................................ 1990
------------------------------------------------------------------------
Source: GAO. GAO-18-448T

ENCLOSURE II: GAO'S STRATEGIC PLAN FRAMEWORK

Senator Daines. Thank you, Mr. Dodaro.
I think what we are going to do is Senator Murphy and I
will start with CBO. We will have a few questions back and
forth here, and then we will come over to GAO here next after
that.

EFFORTS TO ENHANCE CBO'S TRANSPARENCY

Dr. Hall, the Congressional Budget Office has been
criticized for not providing enough detail to explain its
findings in budget estimates and scoring of legislation.
You have already begun efforts to provide greater
transparency, and I thank you for that. A large part of your
requested increase would fund additional staff to tackle or
address that issue.
Could you describe in further detail what you are doing to
enhance transparency and how the additional staff requested
would add to that work?
Dr. Hall. Part of what we have done is we have shifted some
staff into transparency roles. We have shifted some positions,
so we need to do a little backfilling, but it has given us a
chance to start in on the transparency improvement.
Trying to increase our documentation of things has been
really important. We have done a couple of things where we have
documented processes, how we go about a cost estimate, how we
go about doing a budget project, that sort of thing.
We have also been trying to increase the detail in our cost
estimates and other things. We have done that. I think we have
made, actually, pretty good progress through that.
Then we have a large number of things, which I almost
consider pilots because there are so many ways to be
transparent. We are going to try increasing transparency in a
number of things.
For example, there has been a lot of interest in our
healthcare estimates. And so, we are producing a new healthcare
model, the major model and in doing that, we are going to be as
transparent as we can.
While we are actually developing the model, we are going to
have a couple of seminars to discuss aspects of the modeling
and get feedback. We are going to document it fully.
When we write the code, we are going to write the code in
mind, and we are going to then make some of the code publicly
available, and put it up on our website. So this is sort of the
maximum of transparency, I think, that we can produce on the
healthcare modeling.
We just have a number of things, our long-term budget model
where we are going to revamp some of that. So when we do that,
we are going to make documentation available and put some of
that code up.
There are just so many things that actually we are trying.
We are trying to put a model that shows all the discretionary
spending and let you have some interaction on how discretionary
spending can go up or down. That is actually about 40 percent
of our cost estimate, so it will give you a chance for staff to
get a feel of the responsiveness of things.

PROVIDING RANGES BASED ON CERTAIN ASSUMPTIONS

Senator Daines. Dr. Hall, I appreciate the time we got to
spend last week and it is a flashback to the days I used to
have to forecast in my business as a line manager.
I had to provide forecasts and estimates. I think we talked
about one of the truisms of forecasts is the forecast is always
wrong. And the further out the forecast, the more wrong it is.
It is the nature of forecasts. It is dynamic. There are a lot
of variables that go into it.
We discussed the idea of providing additional details in
the forecast and estimates that would show how different
variables might affect outcomes.
I think that is one of the challenges we face when we do a
forecast with the CBO, we lock down these variables and say,
``It is a number,'' or arguably a range looking at sensitivity
to perhaps help guide better decision making. I think of
variables like interest rates, productivity, and GDP growth.
Do you have some sense of what additional resources you
would need in order to implement that change of providing
ranges based on certain assumptions versus just a number?
Dr. Hall. Well, actually on that one, we had plans on doing
that with our current resources.
We, in fact, are working on an interactive tool, online
tool where you will be able to do things like change interest
rates and see what the budgetary impact would be if we have
higher interest rates or lower interest rates, productivity, et
cetera. That is actually one I am excited about because it
really will give you an idea when we do a budget forecast just
how sensitive the forecast is to some of these variables.
I do not want to say we are overdue for this, but we are
looking very much forward to getting this done and then seeing
if we can provide more detail in the future.
Senator Daines. That is good news.
What is your sense, Dr. Hall, on the time where you might
have that more interactive kind of model in playing with
variables here to see the sensitivity as such?
Dr. Hall. Yes, I think right now we are looking at it being
sometime in June.
Senator Daines. Okay.
Dr. Hall. I wish it was faster, but the real trick for us
is that the tax code changed so much that we have a lot of work
to do to work out how the tax code interacts with some of the
economic budget numbers. So our plan is for June on that and I
think we will be able to meet that.
Senator Daines. Great. Thanks, Dr. Hall.
Senator Murphy.

RELOCATION EXPENSES (STAFF RECRUITMENT OBSTACLES)

Senator Murphy. Thank you very much.
Dr. Hall one of your requests here is reimbursement
authority to allow for relocation expenses. I thought that just
might be an interesting jumping off point to ask a question
about staff recruitment and what kind of barriers you are
finding today, especially given the fact that the salary cap
has not changed in, now, a decade.
What kind of obstacles, if any, are you finding in trying
to attract the people that you need?
Dr. Hall. Sure. Well, we always have issues in competing
with nongovernment entities especially for the type of people
that we hire. Eighty percent of our people have advanced
degrees of one type or another. So that is a pretty competitive
area.
The relocation fee is actually helping us compete even with
just the executive branch because they are able to pay
relocation fees, that sort of thing.
We still do okay. I think we do all right. We struggle in
some areas like financial analysis where the private sector
salaries are just unthinkable for us.
We have the authority to hire some senior positions in 2017
and I think that is going to be very helpful. We did not create
any in 2017, but this year, we have created a few. So now, we
will be able to actually, with our senior positions, compete
with the executive branch. So that will help.
But for the most part, we rely on people who are excited
about public service and public policy analysis. The CBO, in
that respect, is sort of right on the frontlines. So that is a
real advantage to us.

TAX CUT BILL ESTIMATE

Senator Murphy. I wanted to just drilldown into two
specific policy areas while I have you.
The first is regarding the estimates that you provided to
Congress around the tax cut bill that was passed within this
Congress. Obviously, there is a dispute here. CBO has said it
is going to add about $1.9 trillion to the deficit over the
first 10 years. Secretary Mnuchin has said that he thinks it
will all actually reduce the deficit because of increase
economic growth.
When will we start getting data from CBO to help us
understand which side of the argument is right? At what point
are we going to start to understand which way deficits are
heading and whether what you have given us is on-point or needs
to be revised?
Dr. Hall. Well, sure, that is a good question because a lot
of the effect, we think, of the tax bill is going to be a
short-term stimulus. So we should see pretty strong economic
growth, we think, over the next year or two.
The challenge there is that we think there is no longer any
slack in the economy, so that is going to put growth above
slack. At some point, then, it is going to require higher
inflation and higher interest rates from the Federal Reserve.
So we think it is going to put us into a mini-cycle.
And so, that is certainly a different view, I think, of
things. We see the potential GDP over the next 10 years being
at about 1.8, 1.9 percent. And we think we are going to start a
full employment economy. We are going to wind up there in about
10 years.
I think that will be one of the big telling things, I think
is, in fact, if we see this sort of heating up and whether
interest rates rise significantly going forward. Then, I think,
that is the effect of the stimulus that we have been talking
about.
Senator Murphy. And then in terms of revenue projections
into the Government, when do we start to understand the
accuracy of your projections on revenue?
Dr. Hall. I suppose it is the same thing.
Senator Murphy. Yes.
Dr. Hall. If we are going to have stronger growth, we are
going to have stronger revenue. That is not really going to
reveal much about what we have done to the potential of the
economy, if you know what I mean. Because I think that is the
main difference in our view of this is whether this boost is
temporary or whether it has actually permanently raised the
growth in the economy.

IMPACT OF MOVING DEFENSE SUPPLY CHAIN OVERSEAS

Senator Murphy. And then lastly, I just wanted to shift to
another topic. A lot of your energy is involved in doing cost
estimates for the biggest portion of discretionary spending in
the Government, that being the Department of Defense.
One of the things that I have actually talked to Mr. Dodaro
about a lot is the impact of buy America laws and the impact of
moving more of our defense supply chain overseas.
The short-term impact of more of our defense supply chain
moving overseas is that you can purchase cheaper goods for the
Department of Defense, but the impact then finds its way into
other parts of the budget, as you start to lose jobs, lose
factories here. We find that having costs in other parts of the
budget whether it be increased outlays for social insurance
programs or lower taxes into the Government.
This is a discussion we have a lot in a State like
Connecticut that does a decent amount of events purchasing. We
think we are cutting off our nose to spite our face as the
supply chain moves overseas.
But as you calculate some of the costs of the supply chain
moving overseas, is there any way to inform Congress or the
executive branch about the other spill off costs in other parts
of the budget, if you continue to have that domestic supply
chain atrophy?
Dr. Hall. Yes, I can certainly talk with our Department of
Defense analysts to see if they think there is enough
information there for us to look at that. That is the sort of
thing that we will do analytical reports on, the budgetary
impact of that sort of thing.
I would be happy to follow up, and talk to our folks, and
follow up with you to let you know what we see as possible.
Senator Murphy. Great. Thank you, Dr. Hall.
Senator Daines. Thank you, Senator Murphy.
Before we get to Senator Van Hollen, it is good to have you
here, by the way.
Senator Van Hollen. Thank you.

GDP OF 1.9 PERCENT AND INFLATION

Senator Daines. Just a follow up question, and this really
gets back to where the transparency and showing assumptions
would be helpful for all of us.
Just looking at the GDP forecast of, let us say, 1.9
percent in the out years, were you assuming that inflation
would be up and therefore interest rates had to be rising with
a GDP of 1.9 percent or did I misunderstand that?
Dr. Hall. Yes, well, what we see is GDP is getting above
the potential, which is above 1.9 for a couple years.
Senator Daines. Yes.
Dr. Hall. And then this rise in interest rates and possible
inflation will actually slow growth to below 1.8 percent, we
think, for a couple years. And then finally settle back in at
its potential by the end of the 10 year period at about 1.8,
1.9.
So we actually have it above and then we have it below.
That is part of why it is hard to tell quickly whether we are
going to settle at something higher or lower.
Senator Daines. Yes, thank you. And that is where I think
this, as we get to June, being able to place some sensitivity
analysis with different assumptions, because it can yield very
different outcomes and it is all going to be based on which
assumption is going to be the most accurate one.
Dr. Hall. Sure.
Senator Daines. Okay, thank you.
Senator Van Hollen.
Senator Van Hollen. Thank you. First of all, Mr. Chairman,
I look forward to working with you and the Ranking Member.
Welcome to both of you. Dr. Hall, thank you for the good
work you and your team do at the Congressional Budget Office. I
serve on the Senate Budget Committee and I appreciate your
presentations and working with our staff to clarify some of the
issues in recent testimony.
I look forward to supporting your budget requests because I
think that the work the CBO does is very important. Sometimes
we disagree with an analysis, sometimes we agree. But the
reality is we need an independent scorekeeper and referee. So
thank you.
Mr. Dodaro, thank you for your work at GAO and I have a
couple of questions related to some areas you have been
involved in, in the past, with respect to oversight; you, the
GAO.
And one has to do with the FBI headquarters building
because the GAO, as you know, has done at least one very
extensive report on the FBI building proposals. In fact, back
during the 2009 Omnibus Appropriations Act, the Congress
directed the GAO to examine the FBI's headquarter facilities.
In response, you examined the extent to which the facility
supported the FBI's security, space, and building requirements.
And you looked at the different security requirements that were
required at a building like the FBI headquarters.
You recommended, and I quote, ``That the FBI should
document decisions about and track its implementations of all
security recommendations for the Hoover Building and the FBI's
headquarter annexes. GSA should reassess its decision to limit
recapitalization investments in the Hoover Building since the
FBI is likely to stay in it for several more years while its
long term facility needs are being planned.'' And the FBI
agreed with those recommendations.
After many years where the FBI and the GSA were looking at
new sites for the FBI headquarters in both Maryland and
Virginia, they very abruptly and without much explanation, said
they are going to actually stay at the current location and
modernize there.
My question to you, since the GAO has looked into this, and
without divulging sensitive information, do you think a new
headquarters building at the current site can be built in a way
that meets the ISC Level 5 security specifications?
Mr. Dodaro. It would depend on the specific proposals that
the FBI and GSA would make in order to address the issues that
they identified previously.
We have not done any work in this area since the report
that you mentioned. We do have an outstanding request from
Senator Grassley and Congressman Connolly to look at it, but we
are waiting until the FBI and GSA make a decision.
They have changed their approach, as you point out in your
statement, and in the interim, Congressman Connolly has asked
the GSA IG to look at what the basis was for the change in
their decision to move from the swap proposal into staying at
the current location.
We have not done any work on their proposal yet. I do not
have any insights into how they are planning to address those
issues.
Senator Van Hollen. Well, I look forward to working with
the Chairman here as well as others on the Appropriations
Committee to ask GAO to look into the new proposals because
most of the Federal agencies that are able to meet that level
of security requirement, have major set-backs like the CIA,
like the NSA, and others. You just cannot have that kind of
setback at that site.
When the new proposals came down, all we got to back it up
was a 22 page PowerPoint presentation. That was part of a $2.1
billion project.
In your experience is that sufficient back up for a Federal
agency request of that magnitude?
Mr. Dodaro. We have not looked at what would be the
underpinning for the PowerPoint presentation. So I do not have
any insight into what work they did that led to that
discussion.
We would typically get involved once there is a detailed
prospectus put in place.
Senator Van Hollen. Yes.
Mr. Dodaro. Part of our recommendations previously were for
GSA and the FBI to follow best practices in terms of capital
planning and investment. So that will be what we would look for
when we assess their proposal.
Right now, we are trying to work with the requesters to
decide when we should engage in looking at the new proposal,
given the fact that the GSA IG is already looking at it.

ENFORCEMENT OF IMPOUNDMENT CONTROL ACT

Senator Van Hollen. Got it. The final question, Mr.
Chairman, relates to something else the GAO has been involved
with over the years, and that is enforcement of the Anti-
Impoundment Act, the Impoundment Control Act.
Mr. Dodaro. Yes.
Senator Van Hollen. As you know, if the executive branch,
regardless of party, refuses to release funds, it begins a
clock ticking. I believe it is a 45-day period.
Is that right?
Mr. Dodaro. It is 45 days from the time the President would
make a proposal; that is, send the rescission package to the
Congress.
Senator Van Hollen. Right, yes.
Mr. Dodaro. What happens in terms of what GAO does from
there, is that your question?
Senator Van Hollen. My question is you are saying that
would only be triggered in the event that they sent a proposal
to the Congress.
But I believe back in the day, the GAO actually brought a
case during the Nixon administration when they claimed the
authority to simply withhold funds.
Is that not the case?
Mr. Dodaro. Yes, these are two different things.
One, under the Impoundment Control Act, we have a
responsibility. If we notice, or something is brought to our
attention, that money that is appropriated by the Congress has
not been released by the administration, we investigate, and
then report to the Congress.
We did that recently at the Department of Energy. There is
a loan program for $91 million that was supposed to be spent,
but was not being released. We reported that this met the
definition of a rescission. It should have been reported. The
funds were then released.
The second part of our responsibility is if the President
does send the rescission package to the Congress, there is a
45-day clock that starts if the President officially reports
it. If the President withholds it and does not report it, we
have to report it to the Congress if we discover and validate
it.
Senator Van Hollen. Okay.
Mr. Dodaro. If they do report it, then the 45-day clock
starts. Our responsibilities there are to advise the committees
on what the probable effect would be of the rescission.
Senator Van Hollen. Yes.
Mr. Dodaro. We do that within 10 days based on already
existing GAO work. If after the 46th day Congress has not
approved the rescission package, then our responsibilities are
to determine if the funds are then released by the President.
Senator Van Hollen. Okay.
Mr. Dodaro. If the money is still not released, based upon
the work we would do at OMB and the agencies, then the
Impoundment Control Act authorizes me to sue to release the
funds through the U.S. District Court.
Senator Van Hollen. So there are two areas I want to follow
up that I would ask you to look into.
One has to do with funds at the NLRB that are not being
spent.
Mr. Dodaro. Right.
Senator Van Hollen. And the other, I was just in a
subcommittee hearing with the Attorney General, Attorney
General Sessions. There are Justice Department Byrne Grants
that the Justice Department withheld and applied their own
unilateral conditions. Just within the last week, the Seventh
Circuit found that that was an inappropriate set of conditions.
So those Byrne Grants are very important and I am going to
want to follow up with you to find out when GAO can act to make
sure that those funds are released.
Mr. Dodaro. Yes, we will start to look at that right away.
The NLRB situation we are aware of and already looking at.
We will be prepared within the next few weeks to give you a
decision on that.
I was not aware of the Byrne Grants, but we can take a look
at it right away.
Our policy is as soon as something comes to our attention,
we look at it.
Senator Van Hollen. That is why I wanted to put it on your
radar screen, the Byrne Grants.
Mr. Dodaro. The radar is always on.
Senator Van Hollen. Thank you.
Mr. Dodaro. Message received.
Senator Van Hollen. Thank you.
All right, Mr. Chair.
Senator Daines. Thank you, Senator Van Hollen.

INCREASED STAFFING

Mr. Dodaro, your request for fiscal year 2019 is very
unusual in that it was level with the funding provided in
fiscal year 2018. That does not happen very often in
Washington, DC, which I appreciate, by the way.
Because of your investment in one-time IT and
infrastructure costs this year, you could shift resources into
fiscal year 2019 to address your personnel needs. It looks like
you plan to hire an additional 80 FTE in fiscal year 2019 to
get to a level of 3,020 in total FTE.
The question is this, if you were given additional
resources--and I ask this question of somebody who just
testified and said, ``For every buck invested, you get $128
buck back,''--would you be able to onboard additional staff
above the planned 80 FTE for fiscal year 2019?
Mr. Dodaro. Absolutely.
Senator Daines. That is a pretty clear answer.
Mr. Dodaro. I can elaborate.
Senator Daines. Yes.
Mr. Dodaro. I have been in this job for 10 years now and I
have consistently said we need 3,250 FTEs. That is the optimum
level for GAO within the current budgetary situation at the
national level.
I believe the Federal Government is on an unsustainable
long-term fiscal path. I am trying to act consistent with that
and have reasonable expectations for what can be funded.
We can easily onboard additional people. We would use them
in the same areas that I am planning to increase, that is,
cyber security issues writ large. I think we are facing another
evolution of security issues.
We designated cyber security on the Federal Government's
information systems as a government-wide high-risk area in
1997. Nobody could say we did not warn people this was going to
be a problem.
In 2003, we designated critical infrastructure protection,
and in 2015, protecting personally identifiable information.
I would use the extra staff in cyber security, and expand
our science and technology work. I see technology as the next
big evolution of GAO's growth to adjust to meet the needs of
the Congress. I would also increase our defense and healthcare
work.
Senator Daines. So this 3,250 number that you just
mentioned, if we got to that point, how would that additional
staff affect your output? What I am looking for here is looking
at a return on investment.
Mr. Dodaro. Right.
Senator Daines. At some point, are there diminishing
returns? Are you looking for a sweet spot? We are, I guess, in
terms of getting maximum ROI based on our investment.
Mr. Dodaro. Right. I think the way to do it is to start at
the 3,250 FTE level.
Our ROI is based on two factors. One is what do we identify
that we recommend to the Congress and the executive branch?
Number two is how did the Congress and the executive branch
act on our recommendations? Our recommendations have no force
of law. It is really up to the Congress.
Senator Daines. Yes, do not check the ROI on Congress. I
think that could be something embarrassing.
Mr. Dodaro. It would be higher if Congress would act on all
our recommendations.
Senator Daines. I was going to ask you about that here.
Save that answer. I want to probe that for a minute here.
Mr. Dodaro. Right. To be honest with you, I do not know
where we would hit the diminishing returns.
Senator Daines. Yes.
Mr. Dodaro. I think if we start at 3,250 FTE and we are
still operating at the same level, then I could assess whether
going further----
Senator Daines. There is an old saying feed your strengths
and starve your weaknesses. Right?
Mr. Dodaro. Yes.

POTENTIAL HIRING CHALLENGES

Senator Daines. You can see return on investment. So if you
want to hit the 3,250 and we said, ``Let us go do that,'' what
would be your barriers to hiring? Is it competitive salaries
out there to get the best people to do these important jobs?
Mr. Dodaro. We have some of the same kind of challenges
that Keith mentioned.
Senator Daines. Yes.
Mr. Dodaro. We compete particularly for economists and
science and technology people, but we really do not have a real
serious problem in finding people. Our only limitation is the
amount of funding that the Congress has given us.
We can bring the people in. We can train them. People love
our mission. We do work on almost every national issue. We make
a difference in that our recommendations are acted upon.
Our attrition rate is only at 6 percent. So people come.
They stay. They like the work. They are energized by it. It is
a continual learning environment.
We really do not have any recruitment or retention problems
at GAO. It is just a matter of having the money to bring in the
necessary people.
Senator Daines. You mentioned that your ROI is dependent on
Congress acting on what you recommend. Billions of dollars of
savings have been achieved as a result of your work. You
mentioned that especially in the areas of your high risk report
on ``Fragmentation, Overlap, and Duplication,'' of Federal
programs.
The question that gets back to what you alluded to,
dependence on this institution, Congress, to implement what you
tell us. Has Congress been aggressive enough to address these
areas, and how can we do more to the follow up in getting it
done?

CONGRESS HELPS IMPLEMENT RECOMMENDATIONS

Mr. Dodaro. Yes. First, the Congress has been very helpful
and active in the high-risk program. In the last 2 years, they
have passed 12 pieces of legislation to try to address the
high-risk issues that we have identified.
Overall, over three-quarters of our recommendations are
implemented over a period of time.
The $136 billion that I mentioned, savings for overlap,
duplication, and fragmentation, has largely come through
congressional actions to let the ethanol tax credit lapse, for
example, and to eliminate the direct farm payment program that
replicated other programs. It was only supposed to be a
temporary program. Also Congress allowed for the sale from the
strategic petroleum reserve to get additional revenue.

OVERLAP, DUPLICATION AND FRAGMENTATION

Tomorrow, I will be testifying on our eighth annual report
on overlap, duplication, and fragmentation. In that report will
be an appendix that will list 58 open matters for congressional
consideration that have not yet been acted upon.
Senator Daines. So how much money are we leaving on the
table?
Mr. Dodaro. There are tens of billions of dollars. There
are recommendations to the executive branch. I do not want to
let them off the hook. It is both to the Congress and to the
executive branch.
I talked to the Deputy Director for Management at OMB, and
they are going to be taking a look at our recommendations that
are still open, as well as new ones.
Senator Daines. So last question for the sake of this
committee as well. I would like to see that list of
recommendations that have not yet been implemented by Congress
as well as the executive branch.
Mr. Dodaro. Sure.
Senator Daines. And frankly, any other recommendations you
have because that is money we are leaving on the table here
based on the hard work that you are doing.
Mr. Dodaro. There are some big dollar savings.
Senator Daines. Right.
Mr. Dodaro. Particularly in Medicare and Medicaid.
Senator Daines. Okay. Thank you.
Senator Murphy.
Senator Murphy. Thank you very much, Mr. Chairman.

GAO EXTERNAL OUTREACH

I guess I could ask this question to either one of you, but
we are on you, Mr. Dodaro, so I will ask it to you.
There is a lot of discussion about a general assault on the
idea of objective truth these days and in this place, as close
as we came to objective truth was reports from the CBO and, in
particular, from the GAO who would deliver to us some pretty
tough recommendations that generally, republicans and
democrats, would stick to.
Yet today, we have members of the administration saying
nobody should ever listen to the CBO. We have a lot of other
people who just seem intent on pushing their own spin.
I would just be interested to hear from you as to whether
you have seen any diminution, any influence of GAO reports or
whether you have any worry about this constant questioning of
whether there is any truth, any set of facts underlying the
political spin from the left and the right?
Mr. Dodaro. Yes, well, to the first part of your question,
I have seen no diminution in the reaction to GAO reports.
In addition to meeting with all the Chairs and Ranking
Members of all the committees in the Congress that we do work
for, I have also met with the heads of departments and agencies
in most of the departments and agencies across the Federal
Government. I send them a letter every year with open GAO
recommendations that are prioritized for them, such as which
ones I think have the biggest return on investment, or most
affect public safety, or improve public safety.
We have established a working relationship with the
executive branch that is fairly good, with the major
departments and agencies. I would say there are no big problems
there.

ACCESS TO NEEDED INFORMATION

In terms of the second part of your question about whether
I am worried. I am an auditor. You pay me to worry about
things, and you pay me to identify emerging issues so there is
always that concern.
I feel we have a good reputation. It is sound and people
are being responsive to us. Now, we have continual problems,
which we have had with all administrations, such as getting
answers out of the White House, if our work touches on the
White House.
The intelligence community has been more cooperative than
they have historically, but we still have some problems over
there. We need support from the intelligence committees to do
effective work.
Sometimes in the law enforcement area, although we have not
had anything recently, we had problems. And we have had some
problems with every administration getting access to
information and being responsive. I met with the heads of those
departments and agencies and we worked it out with support from
the Congress.
And so, if I run into problems, I will come to the
Congress, and ask for help and support in working them out. As
for right now, I do not see any big change.
Senator Murphy. You mentioned the inability of the
Department of Defense to get an audit done.

DOD FINANCIAL AUDITS

How does DoD's receptivity to your requests for information
rank amongst agencies that you deal with?
Mr. Dodaro. Yes, they have been very good. I met with
Deputy Director Shanahan. I have met with all the service
secretaries from Army, Air Force, and Navy. I am meeting this
Friday with the new Chief Management Officer over there. I have
met with the new Comptroller.
I think they have the best approach that I have seen in 20
years of trying to tackle this issue at DoD.

DOD RECOMMENDATION IMPLEMENTATION CHALLENGES

Now, that being said, DoD has a lower implementation rate
on our recommendations than many other agencies, and I will be
discussing that with them. They have over 1,000 open GAO
recommendations. I have prioritized the top 76 and a lot of
them get implemented through the Defense Authorization Bills
over time.
So Congress has been very supportive when we need
congressional help there to implement some of those
recommendations. I am hopeful they will have a better uptake.

HHS OPEN RECOMMENDATIONS

The two areas are there at DoD and at CMS over at the
Department of Health and Human Services. I met with Seema
Verma. I met with Tom Price when he was secretary. I am trying
to meet with the new secretary. We are meeting quarterly with
them to discuss open recommendations at CMS.
I am hopeful we will see a better response to our
recommendations both at DoD and CMS.

DOD AND BUY AMERICA LAWS

Senator Murphy. And I know, because we have talked about
this issue of the effect of Buy America laws and compliance at
DoD that it is an issue that you are interested as well.
The Inspector Generals at the Department of Defense have
issued some of their most damning reports with respect to Buy
America compliance where they have, at least on multiple
occasions, found noncompliance rates of 40 percent with respect
to the existing Buy America laws, never mind any conversation
we may have about tightening them up.
I know this is something that you are pursuing as well.
Correct?
Mr. Dodaro. Yes, that is correct. We have work underway to
look at the types of goods that are purchased that are subject
to the Buy America Act, and what kind of training is provided
so that people will know what their responsibilities are under
the law. We expect that report to be issued later this year.

GAO AUDIT PLAN FOR DISASTER SUPPLEMENTAL

Senator Murphy. And then finally, the fiscal year 2018
supplemental provided GAO with $14 million to conduct oversight
of the $90 billion in disaster relief that we provided to
Puerto Rico, and the Virgin Islands, and other areas affected
by the 2018 hurricanes and wildfires.
Can you just talk about your audit plan and when Congress
can expect to see something?
Mr. Dodaro. We issued our first report in February on the
amount of contracts that had been let by 19 different Federal
agencies at that point in time. Most of the money was let by
FEMA and DoD, but other agencies will be engaged more as we get
into recovery.
We have 11 audits underway right now looking at things like
the disaster recovery plans in Puerto Rico and the Virgin
Islands. We have work underway looking at restoring the power
grid in Puerto Rico. We have work underway looking at the
response to the wildfires.
We will have a comprehensive report on the Federal
Government's initial response to these disasters coming out
this summer, and then we will have detailed reports that will
drill-in into individual areas.
We have 12 other audits that are planned to be started over
the next 18 months. We have a plan with 23 different audits.
As the recovery proceeds, SBA will be in there. We are
going to look at HUD. A lot of money went through the CDBG, the
Community Development Block Grant program. DOT gets involved in
those areas, the Red Cross, and DoD as well. So we will have a
comprehensive look.
We have done this work over the years with Hurricanes
Katrina and Rita dating back to Hurricane Andrew in the early
1990s in Florida. So we have expertise.
We appreciate the additional money. That will help us. We
have already planned to bring back some people that have had
some expertise in that area and bolster our capabilities by
hiring more people.
Senator Murphy. One last follow up question.
One unique aspect, though, of the Puerto Rico recovery is
the existence of the oversight board, which was initially
established to oversee the debt restructuring process for the
island.
Mr. Dodaro. Right.
Senator Murphy. But now is rightly involved in the
expenditure of these dollars.
I just want to make sure that in your report, you are going
to be looking at, and perhaps critiquing, whether or not there
is efficiency added to the process, whether it be logistical or
financial efficiency, by the oversight board's involvement. In
some ways very detailed involvement, I would argue, over
prescriptive involvement in the dispensing of these dollars.
Mr. Dodaro. Yes, we will definitely look at that. We have
looked at other oversight boards in the past, for example, when
there was one set up for the DC government many years ago. So
we will take a look at that.
I also have the comptroller from Puerto Rico on an advisory
committee that I have of State and local officials. We have a
good relationship with her. We have a lot of contacts in Puerto
Rico. We have already had teams onsite, so we will take a look
at that issue.
Of course, you have the confluence here of two very
significant events. You had their economic travails early on
and then the Hurricane. They are trying to solve multiple
issues at the same time, we will be sensitive to that, but we
will look at how they are doing and whether we think it makes
sense.
Senator Murphy. Well, thank you.
Thank you, Mr. Chairman.
Senator Daines. Thank you, Senator Murphy.
This concludes the Legislative Branch Appropriations
Subcommittee hearing regarding fiscal year 2019 funding for the
Government Accountability Office and the Congressional Budget
Office.

ADDITIONAL COMMITTEE QUESTIONS

Thank you, Mr. Dodaro and Dr. Hall for your testimony.
The hearing record will remain open for 7 days, allowing
Members to submit statements and/or questions for the record,
which should be sent by close of business Wednesday, May 2,
2018.
[The following questions were not asked at the hearing, but
were submitted to the Agencies for response subsequent to the
hearing:]
Question Submitted to Dr. Keith Hall
Question Submitted by Senator Christopher Murphy
Question. In regards to the Buy America Law, Senator Murphy would
like to know if CBO would be able to inform the Congress of the impacts
to the economy if we were to move the majority of our defense supply
chain overseas. He's specifically concerned with the Department of
Defense moving a number of their functions overseas.
Answer. A change by the Department of Defense and its contractors
to permit greater purchases of goods and services abroad would have
various economic effects, depending on the period examined and the
economic conditions. Such a change could also affect national security.
In the short run, such a change could create significant
disruptions. A drop in Federal defense spending on domestic goods and
services, if it was abrupt or unexpected, would decrease domestic
production, increase imports, and thus lower gross domestic product
(GDP) in the short term. CBO estimates that for each one-dollar
increase in net imports, the total decrease in GDP and income over 2
years would be 50 cents.\1\
---------------------------------------------------------------------------
\1\ In CBO's estimation, that would be the case in economic
conditions in which the Federal Reserve was likely to try to offset the
effects of changes in fiscal policies by altering interest rates. See
Valerie A. Ramey and Sarah Zubairy, ``Government Spending Multipliers
in Good Times and in Bad: Evidence from US Historical Data,'' Journal
of Political Economy, vol. 126, no. 2 (March 2018), pp. 850-901, http:/
/dx.doi.org/10.1086/696277; Charles J. Whalen and Felix Reichling, The
Fiscal Multiplier and Economic Policy Analysis in the United States,
Working Paper 2015-02 (Congressional Budget Office, February 2015),
www.cbo.gov/publication/49925; and Congressional Budget Office, How CBO
Analyzes the Effects of Changes in Federal Fiscal Policies on the
Economy (November 2014), www.cbo.gov/publication/49494.
---------------------------------------------------------------------------
However, the effects of changes in defense spending on local
economies vary with local economic conditions and other factors.\2\ The
effects are greatest when unemployment in local economies is higher and
when workers have narrowly targeted skill sets. Broadly speaking, not
only can replacing domestic production with imports be costly for
domestic workers who become unemployed when their occupations,
businesses, or industries shrink; such workers tend to earn markedly
less once they are reemployed.
---------------------------------------------------------------------------
\2\ For example, see Edward G. Keating and others, The Economic
Consequences of Investing in Shipbuilding: Case Studies in the United
States and Sweden (RAND Corporation, 2015), www.rand.org/pubs/
research_reports/RR1036.html.
---------------------------------------------------------------------------
Over time, if the Department of Defense was able to import goods
and services at a lower cost than it could purchase them domestically
and if spending on defense was correspondingly lower, Federal deficits
would be smaller, and domestic resources could be reallocated to more
efficient uses. Indeed, in the long term, international trade generally
encourages a more efficient allocation of resources in the economy and
raises the average productivity of businesses and industries in the
United States.\3\ However, a small portion of defense spending--the
part dedicated to basic and applied research--contributes to the U.S.
economy's overall productivity, in CBO's view, so moving that spending
abroad could partially offset those positive effects.\4\
---------------------------------------------------------------------------
\3\ For a discussion of the ways in which trade affects the
economy, see Congressional Budget Office, How Preferential Trade
Agreements Affect the U.S. Economy (September 2016), www.cbo.gov/
publication/51924.
\4\ For a discussion of the sources of Federal investment, see
Congressional Budget Office, Federal Investment (December 2013),
www.cbo.gov/publication/44974.
---------------------------------------------------------------------------
A separate concern is that reliance on international supply chains
can jeopardize national security. If such supply chains were disrupted,
developing domestic sources of defense goods and services might take
time.
______

Questions Submitted to Hon. Gene Dodaro
Questions Submitted by Senator Chris Van Hollen
Question. According to press reports, the executive branch may be
withholding some of the funding that Congress has appropriated to the
National Labor Relations Board (NLRB), which is the agency responsible
for protecting the rights of workers in the private sector. At a
hearing of the Senate Appropriations Subcommittee on the Legislative
Branch on April 25, you indicated to me that the Government
Accountability Office was looking into this potential impoundment of
funding at NLRB, which could be in violation of the Impoundment Control
Act. Is GAO still examining whether there is an impoundment taking
place at NLRB, and if so, when do you expect to report to Congress on
this question?
Answer. Our work on the potential impoundment of funds at NLRB is
ongoing. We expect to provide your staff with an update by the end of
June 2018.
Question. When can GAO make sure the Department of Justice Edward
Byrne Memorial Justice Assistance Grants (Byrne JAG) are released?
Answer. Our work on the potential impoundment of funds for Byrne
Grants is ongoing. We expect to provide your staff with an update by
the end of June 2018.

Senator Daines. The next hearing of this subcommittee will
be held on Tuesday, May 8 at 2:30 p.m., in Dirksen 124, when we
will hear testimony from the Librarian of Congress and the
Architect of the Capitol regarding their fiscal year 2019
budget requests.

SUBCOMMITTEE RECESS

Until then, the subcommittee stands adjourned.
[Whereupon, at 4:24 p.m., Wednesday, April 25, 2018. The
subcommittee was recessed, to reconvene at 2:30 p.m., Tuesday,
May 8.]
APPENDIX A

Congressional Budget Office

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APPENDIX B

Government Accountability Office

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