Serving the Congress and the Nation: Strategic Plan 2002-2007
(19-JUN-02, GAO-02-430SP).
This report updates GAO's strategic plan for serving Congress
from fiscal year 2002-2007. Although the overall framework of the
old plan is still valid, greater emphasis is being placed in a
number of areas to reflect the altered agenda of policymakers.
Recognizing that Congress and the federal government will focus
considerable effort and resources on homeland security, GAO is
proposing to increasing its emphasis on overseeing the efficiency
and effectiveness of effort across the public and private sectors
to protect against and respond to various forms of terrorism. In
light of the changing public expectations and needs as well as
fiscal pressures, GAO has redefined one of its strategic goals to
focus on transforming the federal government's role to meet the
challenges of the 21st century--what it does and how it does
business. Because of the far reaching demographic and fiscal
trends that will affect the United States, GAO excepts to add
greater long-range focus to its work to support Congress in
addressing program priorities and budget decisions.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-02-430SP
ACCNO: A03720
TITLE: Serving the Congress and the Nation: Strategic Plan
2002-2007
DATE: 06/19/2002
SUBJECT: Strategic planning
Reporting requirements
Accountability
Agency missions
Internal controls
Performance measures
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GAO-02-430SP
GAO STRATEGIC PLAN 2002- 2007 i
ii GAO STRATEGIC PLAN 2002- 2007
CORE VALUES
Fiscal 2002- 2007
Health care needs and financing Education and protection of children Work
opportunities and worker protection
Retirement income security Effective system of justice
Viable communities Natural resources use and environmental protection
Physical infrastructure
Address Current and Emerging Challenges to the Well- Being and Address
Current and Emerging Challenges to the Well- Being and Financial Security of
the American People Financial Security of the American People related to . .
. related to . . .
Diffuse security threats Military capabilities and readiness
Advancement of U. S. interests Global market forces
Respond to Changing Security Threats and the Challenges of Respond to
Changing Security Threats and the Challenges of Global Interdependence
Global Interdependence involving . . . involving . . .
Roles in achieving federal objectives
Human capital and other capacity for serving the public
Progress toward results- oriented, accountable, and relevant government
Fiscal position and financing of the government
Help Transform the Federal Government Help Transform the Federal
Government?s Role and How It s Role and How It Does Business to Meet 21st
Century Challenges Does Business to Meet 21st Century Challenges by
assessing . . . by assessing . . .
Client and customer service Leadership and management focus Institutional
knowledge and experience
Process improvement Employer of choice
Maximize the Value of GAO by Being a Model Federal Agency and Maximize the
Value of GAO by Being a Model Federal Agency and a World- Class Professional
Services Organization a World- Class Professional Services Organization in
the areas of . . . in the areas of . . .
Provide Timely, Quality Service to the Congress and the Provide Timely,
Quality Service to the Congress and the Federal Federal Government to
Government to . . . . . . GOALS & OBJECTIVES THEMES
Demographics Security
and Preparedness
Globalization Changing Economy
Science and Technology
Quality of Life
Governance Accountability Integrity Reliability Accountability Integrity
Reliability SERVING THE CONGRESS
GAO?S STRATEGIC PLAN FRAMEWORK MISSION GAO exists to support the Congress in
meeting its constitutional responsibilities and to help improve the
performance and ensure the accountability
of the federal government for the benefit of the American people.
GAO STRATEGIC PLAN 2002- 2007 i
From the Comptroller General
June 2002 I am proud to present GAO?s strategic plan for serving the
Congress from fiscal 2002 through 2007, an update to the strategic plan we
issued 2 years ago.
Our first strategic plan, which was published in spring 2000, was an
important milestone, providing a solid foundation for how we will support
the Congress and serve the American people in the coming years. With the
plan as our blueprint, we realigned GAO?s structure and resources to better
address long- term goals and objectives for helping the Congress in its
legislative, oversight, and investigative roles. We also committed to
updating the plan every 2 years, coinciding with each new Congress,
to make sure our efforts remain a vital and accurate reflection of the major
issues facing the Congress and the nation.
In fact, the world has changed considerably since our last plan. Two years
ago, we were in a period of peace and prosperity, with large budget
surpluses projected into the future. Today, the country is at war against
terrorism, both within and outside our borders. The economic outlook,
already uncertain before September 11, continues to be difficult to predict.
And for the first time in several years, the federal government is facing
the return of budget deficits.
At the same time, a number of other changes are occurring that also have
significant ramifications for national policy, and consequently, for the
Congress and GAO. The United States faces not only a major preparedness
effort to address security threats, but it also has to come to grips with
the long- term fiscal challenge of caring for a growing elderly population.
It must also adapt its policies to a society and an economy that are
increasingly global in nature, connected by new technologies, and supported
by knowledge- based industries. Security and preparedness, the changing
economy, globalization, changing demographics, advances in science and
technology, concern for quality of life, and changing governance structures-
these are the major forces shaping the United States and its place in the
world, and are the themes for our strategic plan. They help frame the broad
areas where we aspire to make important contributions.
While the overall framework of our strategic plan is still valid, we are
placing greater emphasis in a number of areas to reflect the altered agenda
of policymakers:
Recognizing that the Congress and the federal government will focus
considerable effort and resources on homeland security, we are proposing to
increase our emphasis on overseeing the efficiency and effectiveness of
efforts across the public and private sectors to protect against and respond
to various forms of terrorism.
ii GAO STRATEGIC PLAN 2002- 2007
In light of changing public expectations and needs as well as fiscal
pressures, we have redefined one of our strategic goals to focus on helping
to transform the federal government?s role to meet the challenges of the 21
st century- what it does and how it does business.
Because of the far- reaching demographic and fiscal trends that will affect
the United States, we expect to add greater long- range focus to our work to
support the Congress in addressing program priorities and budget decisions
not only for the near future but for the long term as well.
In sharing a draft of this strategic plan with Members of Congress, their
staffs, and others in the accountability community, we sought to make sure
that it reflects the needs of the Congress. We also sought feedback from our
own staff, whose continued commitment and involvement are essential to
meeting our goals.
Since the attacks on America began, the focus of citizens on government has
grown dramatically. GAO has a vital role to play in our system of
government, by providing the oversight, insight, and foresight to support
the Congress in fulfilling its constitutional responsibilities and by
helping the government to work better on behalf of all Americans. This
updated strategic plan will help to ensure that we succeed in that role.
If you would like to know more about specific areas of GAO?s work, you will
find detailed strategic supplements on our Web site at www. gao. gov/ sp.
html that describe the performance goals, key efforts, and potential
outcomes for each of our strategic objectives. Links on that Web page will
also take you to our agency?s performance and accountability reports. If you
have questions, please contact me, at 202- 512- 5500 or walkerd@ gao. gov,
or Gene L. Dodaro, Chief Operating Officer, at 202- 512- 5600 or dodarog@
gao. gov.
Sincerely yours, David M. Walker Comptroller General of the United States
GAO STRATEGIC PLAN 2002- 2007 iii
Table of Contents
GAO?s Mission, Responsibilities, Strategies, and Means . . . . . . . . . . .
.1
Mission Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . 1 Statutory Responsibilities . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Strategies and
Means . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . 2
Themes for the Plan: Forces Shaping the United States and Its Place in the
World . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . .4
Security and Preparedness . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . 4 Globalization . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 The Changing
Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . 9 Demographics . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . 11 Science and Technology . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Quality of Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . 15 Governance . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Goal 1: Provide Timely, Quality Service to the Congress and the Federal
Government to Address Current and Emerging Challenges to the Well- Being and
Financial Security of the American People . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .18
The Health Needs of an Aging and Diverse Population . . . . . . . . . . . .
. . . . 19 The Education and Protection of the Nation?s Children . . . . . .
. . . . . . . . . . 21 The Promotion of Work Opportunities and the
Protection of Workers. . . . . . 23 A Secure Retirement for Older Americans
. . . . . . . . . . . . . . . . . . . . . . . . . . 25 An Effective System
of Justice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . 26 The Promotion of Viable Communities . . . . . . . . . . . . . . . . .
. . . . . . . . . . . 28 Responsible Stewardship of Natural Resources and
the Environment . . . . . . 29 A Secure and Effective National Physical
Infrastructure . . . . . . . . . . . . . . . . 31 External Factors that May
Affect Achievement of Goal 1. . . . . . . . . . . . . . . . 32
Goal 2: Provide Timely, Quality Service to the Congress and the Federal
Government to Respond to Changing Security Threats and the Challenges of
Global Interdependence. . . . . . . . . . . . . . . . . .34
Respond to Diffuse Threats to National and Global Security. . . . . . . . .
. . . . 35 Ensure Military Capabilities and Readiness. . . . . . . . . . . .
. . . . . . . . . . . . . . 35 Advance and Protect U. S. International
Interests . . . . . . . . . . . . . . . . . . . . . 37 Respond to the Impact
of Global Market Forces on U. S. Economic and Security
Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . 38 External Factors that May Affect
Achievement of Goal 2. . . . . . . . . . . . . . . . 40
iv GAO STRATEGIC PLAN 2002- 2007
Goal 3: Help Transform the Federal Government?s Role and How It Does
Business to Meet 21st Century Challenges . . . . . . . . . . .41
Analyze the Implications of the Increased Role of Public and Private Parties
in Achieving Federal Objectives . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . 42 Assess the Government?s Human Capital and Other
Capacity for Serving the
Public . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 42 Support Congressional Oversight of the
Federal Government?s Progress toward Being
More Results- Oriented, Accountable, and Relevant to Society?s Needs . . . .
. . . 44 Analyze the Government?s Fiscal Position and Approaches for
Financing the
Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 46 External Factors that May Affect Achievement of
Goal 3. . . . . . . . . . . . . . . . 48
Goal 4: Maximize the Value of GAO by Being a Model Federal Agency and a
World- Class Professional Services Organization . . . . .49
Sharpen GAO?s Focus on Clients? and Customers? Requirements. . . . . . . . .
. 50 Enhance Leadership and Promote Management Excellence . . . . . . . . .
. . . . 50 Leverage GAO?s Institutional Knowledge and Experience. . . . . .
. . . . . . . . . 51 Continuously Improve GAO?s Business and Management
Processes . . . . . . . 51 Become the Professional Services Employer of
Choice. . . . . . . . . . . . . . . . . 52 External Factors that May Affect
Achievement of Goal 4. . . . . . . . . . . . . . . . 52
Performance Measures and Evaluations . . . . . . . . . . . . . . . . . . . .
. . .53
Key Performance Measures. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . 53 Evaluations . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Consultations and Relationships with Other Agencies . . . . . . . . . . .
.55
GAO STRATEGIC PLAN 2002- 2007 v
List of Acronyms
AIDS acquired immunodeficiency syndrome CCDF Child Care and Development Fund
CFO Chief Financial Officer DOD Department of Defense FAR Federal
Acquisition Regulation FEMA Federal Emergency Management Agency FY fiscal
year GAO General Accounting Office GDP gross domestic product GNMA
Government National Mortgage Association (Ginnie Mae) GPRA Government
Performance and Results Act HHS Department of Health and Human Services HIV
human immunodeficiency virus HUD Department of Housing and Urban Development
IMF International Monetary Fund INS Immigration and Naturalization Service
IRA individual retirement account IRS Internal Revenue Service IT
information technology NATO North Atlantic Treaty Organization OASDI Old-
Age and Survivors Insurance and Disability Insurance OMB Office of
Management and Budget SBA Small Business Administration SES Senior Executive
Service TANF Temporary Assistance for Needy Families USAID U. S. Agency for
International Development VA Department of Veterans Affairs
GAO STRATEGIC PLAN 2002- 2007 1
GAO?s Mission, Responsibilities, Strategies, and Means GAO exists to support
the Congress in meeting its constitutional responsibilities and to help
improve the performance and ensure the accountability of the federal
government for the benefit of the American people.
Mission Statement
GAO examines the use of public funds; evaluates federal programs and
activities; and provides analyses, options, recommendations, and other
assistance to help the Congress make effective oversight, policy, and
funding decisions. In this context, GAO works to continuously improve the
economy, efficiency, and effectiveness of the federal government through the
conduct of financial audits, program reviews and evaluations, analyses,
legal opinions, investigations, and other services. GAO?s activities are
designed to ensure the executive branch?s accountability to the Congress
under the Constitution and the federal government?s accountability to the
American people.
Statutory Responsibilities
Through the Budget and Accounting Act of 1921, the Congress established GAO
in the legislative branch with the broad role of investigating ?all matters
relating to the receipt, disbursement, and application of public funds? and
to ?make recommendations looking to greater economy or efficiency in public
expenditures.? Since World War II, the Congress has clarified and expanded
that original charter:
The Government Corporation Control Act of 1945 provides GAO with the
authority to audit the financial transactions of government corporations.
The Budget and Accounting Procedures Act of 1950 assigns GAO the
responsibility for establishing accounting standards for the federal
government and carrying out audits of internal controls and financial
management.
The Legislative Reorganization Act of 1970 and the Congressional Budget and
Impoundment Control Act of 1974 authorize GAO to conduct program evaluations
and analyses of a broad range of federal activities.
The Chief Financial Officers (CFO) Act of 1990 and the Government Management
Reform Act of 1994 authorize GAO to audit agencies? financial statements and
annually audit the consolidated financial statements of the United States.
Numerous other laws complement GAO?s basic audit and evaluation authorities,
including the Inspector General Act of 1978, providing for GAO- established
standards for the audit of federal programs and activities, and the
Competition in Contracting Act of 1984, providing for GAO?s review of
protested federal contracting actions.
Today, GAO examines the full breadth and scope of federal activities and
programs, publishes thousands of reports and other documents annually, and
provides a number of related services. The agency also looks at national and
international trends and challenges to anticipate their implications for
public policy. By making recommendations to improve the practices and
operations of government agencies, GAO
2 GAO STRATEGIC PLAN 2002- 2007
contributes not only to the increased effectiveness of and accountability
for federal spending, but also to the enhancement of the taxpayers? trust
and confidence in their federal government. When considering GAO?s strategic
goals and objectives or weighing the potential outcomes of GAO?s work, it is
important to remember that GAO achieves its results mainly through the
actions taken by the Congress and federal agencies in response to the
information and recommendations GAO provides.
Strategies and Means
For GAO, achieving strategic goals and objectives rests, for the most part,
on providing professional, objective, fact- based, nonpartisan,
nonideological, fair, and balanced information. Most of the information is
gathered and reported in response to congressional requests for specific
work. As authorized by GAO?s enabling legislation, the agency also
independently undertakes research and development work. GAO develops and
presents the information it gathers in a number of ways to support the
Congress, including the following:
evaluations of federal programs, policies, operations, and performance;
oversight of government operations through financial and other management
audits to determine whether public funds are spent efficiently, effectively,
and in accordance with applicable laws;
investigations to assess whether illegal or improper activities are
occurring;
analyses of the financing for government activities;
constructive engagements in which GAO works proactively with agencies, when
appropriate, to help guide their efforts toward achieving positive results;
legal opinions to determine whether agencies are in compliance with
applicable laws and regulations;
policy analyses to assess needed actions and the implications of proposed
actions; and
additional assistance to the Congress in support of its oversight,
appropriations, legislative, and other responsibilities.
GAO combines those general strategies with strategies specific to individual
strategic objectives. These specific strategies take the form of performance
goals, each of which has a set of key efforts that connect with GAO?s day-
to- day work. The detailed performance goals and key efforts for each
strategic objective are online in the ?Strategic Supplements? section at
www. gao. gov/ sp. html.
In addition, GAO builds strategic working relationships with other national
and international government accountability and professional organizations
to broaden and leverage its institutional knowledge and experience, and in
turn, to improve its service to the Congress and the American public. These
relationships focus on (1) using advisory panels and other bodies to inform
GAO?s strategic and annual work planning and (2) initiating and supporting
collaborative national and international audit, technical assistance, and
other knowledge- sharing efforts.
Unlike large executive branch departments that manage federal lands or
maintain extensive facilities and systems across the country and, in some
instances, around the world, GAO is a relatively small agency that depends
almost totally on one type of resource to achieve its strategic goals and
objectives: its people. GAO?s staff, numbering about 3,200, are arrayed in
14 research, audit, and evaluation teams backed by staff offices and mission
support units (see fig. 1). Approximately three quarters of GAO?s staff are
based in the Washington, D. C., headquarters. The rest are deployed in field
offices across the country (see fig. 2).
GAO STRATEGIC PLAN 2002- 2007 3
Figure 1: GAO?s Organizational Structure
To achieve its strategic goals and objectives, GAO must maintain a workforce
of highly trained professionals with degrees in many academic disciplines,
including accounting, law, engineering, public and business administration,
economics, and the social and physical sciences. To maximize their
productivity, GAO must make steady investments in information technology. It
must also ensure the safety and security of its people, information, and
assets. The strategies GAO will use to ensure that it has the human capital
it needs to carry out its responsibilities and that its human capital,
business processes, information technology, and other resources are well
managed and secure are covered under the fourth strategic goal of this plan.
Figure 2: GAO?s Offices
Comptroller General Chief Operating Officer
Inspector General Opportunity and
Inclusiveness Chief Mission Support
Officer General
Counsel Quality and Risk
Management Field
Operations Product and
Process Improvement Congressional
Relations External
Liaison Public
Affairs Special Investigations Controller
Knowledge Services Human
Capital Information Technology
Acquisition and Sourcing Management
Defense Capabilities and
Management Financial
Management and Assurance
Health Care
International Affairs and Trade
Natural Resources and
Environment Strategic
Issues Teams
Applied Research and Methods
Education, Workforce, and Income Security
Financial Markets and Community
Investment Information
Technology National
Preparedness Physical
Infrastructure Tax
Administration and Justice
Seattle San Francisco
Los Angeles
Denver Dallas
Chicago Dayton Huntsville Atlanta
Norfolk Boston
Washington, D. C.
4 GAO STRATEGIC PLAN 2002- 2007
THEMES FOR THE PLAN
Themes for the Plan:
Forces Shaping the United States and Its Place in the World
In charting GAO?s work over the next several years, the agency?s strategic
plan takes into account the forces that are likely to shape American
society, the United States? place in the world, and the role of the federal
government. This section discusses these forces through the seven themes
that form the context for what GAO hopes to accomplish- its goals and
objectives- and that suggest the major trends ahead and their implications
for congressional decision making.
Because the plan GAO published in 2000 presaged the diffuse nature of the
threats to national security in the post- cold war period, the themes have
not changed substantially. GAO has, however, updated them to factor in the
changes in national and world conditions that have occurred in the last 2
years. Significant changes, of course, flow from the terrorist attacks on
September 11: a war against terrorism and a national preparedness effort
that may last for years to come.
But changes flow from other sources as well. GAO has, for instance, added a
discussion of trends in the U. S. and world economies, such as the evolution
of knowledge- based industries, that appear likely to affect public policy.
It has also taken into account the results of the 2000 census in the
discussion of demographics, as well as evolving dimensions of quality of
life. The discussion of globalization was expanded to acknowledge the
growing concerns of civil society groups about its adverse consequences, and
the discussion of technology was broadened to include biotechnology and
medical sciences in addition to information technology. Finally, the
discussion of government performance and accountability was reoriented to
focus on governance issues, emphasizing particularly the importance of
examining the different tools and actors involved in carrying out federal
government policies.
The seven themes address
the national and global response to terrorism and other threats to personal
and national security;
the increasing interdependence of enterprises, economies, civil society, and
national governments, referred to as globalization;
the global shift to market- oriented, knowledgebased economies;
an aging and more diverse population;
advances in science and technology and the opportunities and challenges
created by these changes;
the quality of life for the nation, communities, families, and individuals;
and
the more diverse nature of governance structures and tools.
Any significant changes in these areas over the next 6 years, the period
covered by this plan, will affect GAO?s ability to meet its goals and
objectives. GAO will therefore continue to track developments in these areas
to make sure that its plan remains responsive to the needs of the Congress,
the federal government, and the American people.
Security and Preparedness
The terrorist attacks of September 11 launched a series of profound changes.
The resulting national imperative and resolve to prepare for and combat
terrorism and other threats to personal, financial, and national security
are now overarching forces likely to reshape American and international
priorities, and consequently the roles of all levels of government. Every
program team within GAO has
GAO STRATEGIC PLAN 2002- 2007 5
THEMES FOR THE PLAN
reevaluated its priorities and assessed the effects of these changes, and
they are reflected in each part of this strategic plan.
While many things have changed, others have remained stable, but nonetheless
still critical. Consequently, it is important to evaluate the collective
ramifications. The United States continues to maintain an asymmetric
relationship in many areas with many other countries and regions of the
world. Expenditures for military technology (see fig. 3), education, health
care, food production, research and development, biomedical studies,
manufacturing, infrastructure, information technology, energy, and for many
other areas significantly favor the United States.
Figure 3: Military Technology Investment, 1997
Note: Military expenditures per member of the armed forces serves as a rough
measure of the level of military technology in a country.
Source: State Department.
Similarly, life expectancy, per capita income, access to computers and the
Internet, and the like continue to grow in comparison to the rest of the
world on the whole. In many instances, a lack of shared values,
disagreements over foreign policy goals and objectives, and misperceptions
of U. S. intent are contributing further to perceived differences.
This continued asymmetry, when combined with the other broad forces
identified as themes in this strategic plan, are believed to have
contributed to the nature and growth of viable global terrorist threats
against U. S. interests, at home and abroad. Some commentators have noted
that the widening
gaps in income, technology, military strength, and consumption have provided
the philosophical underpinnings for the growth of terrorist groups. Some
small countries, hostile groups, or even individuals pose threats to
vulnerable civilian or military targets in unconventional ways to avoid
direct confrontations with superior U. S. resources and to ?right? perceived
inequities. While such threats have long existed, the ability of such
adversaries to consummate the threat has changed. Increasingly, movement
across geographical boundaries has become more fluid; chemical and
biological weapons of mass destruction have become more accessible; and new
technology, particularly Internet access, has made coordination and evasion
more available and less costly. While before isolated and widely dispersed
adversaries were not widely perceived as able to complete an attack
successfully within U. S. borders, September 11 shockingly ended this false
sense of invulnerability.
At the same time, more conventional threats persist, and American troops are
likely to be deployed not only in Afghanistan but in troubled regions like
the Balkans and the Middle East. The United States will continue to face the
challenge of maintaining a well- trained, equipped, and ready defense force
that can respond to more than one regional conflict at a time and that can
perform well not just in combat but also in peacekeeping. And even as the
environment changes, the United States must manage the modernization of its
weapons systems and the safety and reliability of its nuclear weapons
stockpile.
Prior to September 11, many commentators, including GAO, highlighted the
existence of numerous vulnerabilities susceptible to a variety of asymmetric
attacks. But September 11 and the subsequent anthrax mail attacks
underscored the extremely diverse ways in which instruments of normal daily
life could be used by terrorists to exploit these vulnerabilities. September
11 also emphasized that symbols of U. S. asymmetric advantages, such as the
World Trade Center and the Pentagon, are likely targets, as are more
traditionally perceived targets such as military bases, nuclear power
plants, and other critical elements of the transportation and utility
infrastructure. Finally, September 11, the anthrax attacks, and the
subsequent responses have emphasized the extensive
180.0 85.0 15.4
0 20
40 60
80 100
120 140
160 180
200 Developing Country Average Developed
Country Average U. S. Total
Dollars in Thousands per Member of the Armed Forces
6 GAO STRATEGIC PLAN 2002- 2007
THEMES FOR THE PLAN
and varied safety, economic, political, and social consequences of both a
terrorist attack and the efforts undertaken in response to such attacks.
Most of these conditions existed prior to September 11. What has changed
significantly since is the level of public recognition of the seriousness of
these threats and their varied consequences, the national resolve to fight
back, the dedication of resources, and the priority given to the war against
global terrorism. These changes constitute powerful new forces that have
altered the context within which governmental roles, initiatives, programs,
and priorities will be evaluated.
These forces present both risks and opportunities. Risks have been exposed
in many aspects of normal life, with perhaps many of the greatest dangers
posed in areas that Americans have simply taken for granted. Terrorist
weapons need not simply kill or injure large numbers to have the terrorists?
desired impact. Bioterrorism poses risks of unprecedented magnitudes,
potentially striking at air and water supplies and food production chains,
while using instruments of normal life such as the mail or air conditioning
systems. Hazardous materials storage sites, airports, train stations, water
chlorination plants, power stations, bridges, natural gas pipelines,
national monuments, and government office buildings, have now become
potential targets and crime scenes in addition to critical elements of the
American economy and lifestyle. The availability and safety of such
resources can no longer be taken for granted, and efforts must now be taken
to safeguard them without significantly diminishing the function they play
in everyday life, and in ways that are both affordable and sustainable. At
the same time, opportunities exist to harness the new resolve and dedication
of resources to adapt existing mechanisms and structures to the new job of
fighting terrorism, while simultaneously augmenting their ability to perform
their normal function, and meet other challenges such as epidemics, natural
disasters, or infrastructure rationalization or recapitalization.
This new context requires a changed analytical focus. Traditional threat,
risk, and criticality assessments will remain as valuable tools in the fight
against terrorism, but the use of such assessments must continue to be
viewed as fundamental policy decisions that must be made in a broader
national
preparedness context. These assessments are starting, not end, points.
National preparedness, both domestically and internationally, is a broad
context within which decision makers will balance the cost/ benefit of
security measures; decide upon respective roles of government, the private
sector, community groups and individuals; make sound investment decisions;
and factor in the direct and secondary financial and societal impacts of
both the responses to actual terrorist attacks and the preventative measures
employed to prevent future attacks.
To be successful in a long- term fight against terrorism, the nation must
embark upon strategies that are affordable, sustainable, and integrate the
capabilities of all levels of government, the private sector, community
groups, and individuals. The nation as a whole must foster and maintain
capabilities that are adequate to address the broad, varied, and
unpredictable nature of asymmetric threats. It is not affordable,
sustainable, or feasible to attempt to have everyone prepare for every
possible contingency. Regional approaches, public- private partnerships,
mutual assistance agreements, and other capability- sharing methods will be
increasingly employed. Composited or interlocking protective strategies that
call for different sectors to take different but complementary protective
measures may provide the most affordable and sustainable approaches. And the
focus on what capabilities are necessary, where they are best resident, and
what information and resources must be shared to integrate these
capabilities will significantly affect the policy, legislative, program, and
budget decisions as the Congress debates how best to wage the fight against
terrorism.
Thus, GAO has established a strategic framework to guide its efforts to
support the Congress and make constructive suggestions to a wide range of
public and private interests. It entails
1. examining the roles of government in fostering and maintaining integrated
capabilities among all levels of government, the private sector, community
groups, and individuals;
2. identifying threats and risks and critical nodes to prioritize for
protection;
3. analyzing both the direct costs and secondary financial impacts of both
response and preventative measures;
GAO STRATEGIC PLAN 2002- 2007 7
THEMES FOR THE PLAN
4. identifying options for investment of human, time, and fiscal resources
to achieve the greatest positive impact; and
5. examining the critical role of the public health system and emergency
responders for both consequences management and prevention and education.
Globalization
With rapid advances in technology, and with easier movement of goods and
people across borders, nations? economies, cultures, and governments have
become increasingly interdependent- that is, globalized. By many measures,
this interdependence has grown in recent decades.
One measure of growing worldwide interdependence is the total share of world
goods and services that is traded. As shown in figure 4, from 1970 through
2001, world exports increased from about 12 percent to about 24 percent of
world gross domestic product (GDP). Hence, all over the world, people are
depending more and more on those in other nations to consume the goods they
produce and to produce the goods they in turn consume.
Figure 4: World Exports of Goods and Services as a Percentage of World GDP,
1970 through 2001
Source: Calculated from International Monetary Fund data.
In the United States, where the economy was relatively self- contained
throughout much of the twentieth century, the importance of international
trade, investment, and financial flows has grown noticeably in recent
decades. U. S. exports as a share of U. S. GDP grew from about 6 percent to
over 11 percent between 1970 and 2000 (see fig. 5). The rise in U. S.
imports was even greater, increasing from about 6 to about 15 percent of
GDP. These increases came during a period when overall U. S. output,
adjusted for inflation, more than doubled.
Figure 5: U. S. Exports and Imports as a Percentage of U. S. GDP, 1970
through 2000
Source: Department of Commerce, Bureau of Economic Analysis.
A companion to growing international trade is a strong increase in
international financial flows. The internationalization and liberalization
of financial markets worldwide, along with growing wealth in many countries,
have fueled huge increases in cross- border investments. Gross capital flows
relative to GDP have grown almost 10- fold for industrial countries since
1970. For the United States, net financial inflows- comprising foreign
holdings of U. S. stocks and bonds as well as foreign direct investment in
the United States- rose from about 1 percent to about 11 percent of U. S.
GDP between 1970 and 2000, as shown in figure 6. Net financial outflows-
reflecting similar investments abroad from the United States- have
fluctuated over this period, with an overall upward trend.
0 5
10 15
20 25
30 1970 1975 1980 1985 1990 1995 2000
Percentage of GDP
0 2
4 6
8 10
12 14
16 1970 1975 1980 1985 1990 1995 2000
Percentage of GDP
Exports Imports
8 GAO STRATEGIC PLAN 2002- 2007
THEMES FOR THE PLAN Figure 6: U. S. Financial Flows as a Percentage of U. S.
GDP, 1970 through 2000
Source: Department of Commerce, Bureau of Economic Analysis. An important
part of the trend toward globalization is the growth of multinational
enterprises. These firms- based in the United States with foreign affiliates
or based in another nation with U. S. affiliates- find advantages either in
serving foreign markets more directly or in supplying their home markets
more cheaply. In 1999, more than a third of sales of goods and services by
U. S. firms in foreign markets, and by foreign firms in U. S. markets, were
through multinationals. Thus, while their heightened role is to some extent
reflected in increased international trade, it is also evident in measures
of increasing flows of foreign direct investment among industrialized
countries, which have grown more than 15- fold since the mid- 1970s.
These linkages mean that governments must increasingly be aware of
international dimensions when weighing policy options and taking action. For
example, a financial crisis that began in east
Asia in 1997 subsequently spread across major Asian and Latin American
economies. This created repeated pressure on the United States to take
action, not simply to assist other nations but also to protect an
international financial system that is vital to the United States? own well-
being. Recently, the spread to other nations of the economic slowdown in the
United States, a slowdown exacerbated by terrorist attacks and threats, has
highlighted the role of global trade and investment as a transmission
channel for economic trends.
Globalization affects individuals, business and other organizations in a
myriad of ways. Expanded markets for U. S. producers and the broader array
of goods available to U. S. consumers are among the opportunities that
economic globalization can provide. And increasing international economic
linkages have been associated with a rise in economic growth, both in the
United States and worldwide.
However, while many countries have benefited from greater economic linkages,
huge income disparities remain across countries and regions. As can be seen
in figure 7, differences in per capita income across countries have largely
continued over the past 25 years, although China and India stand out as poor
countries that have shown significant gains. Even when differences in cost
of living across countries are taken into account, average incomes in 1999
were about 13 times higher for countries in the high- income grouping than
in the low- income grouping, compared with about 14 times higher in 1975.
Many analysts believe that these gaps pose increasing challenges for U. S.
economic and security policies, as greater flows of people and information
across borders increase awareness of differences and foster resentments.
0 2
4 6
8 10
12 1970 1975 1980 1985 1990 1995 2000
Percentage of GDP
Net U. S. Financial Outflows Net Foreign Financial Inflows
GAO STRATEGIC PLAN 2002- 2007 9
THEMES FOR THE PLAN Figure 7: Trends in Per Capita Income across Country
Groupings, 1975, 1987, and 1999
Note: These country groupings contain 28 low- income, 45 middleincome, and
30 high- income countries as grouped by the World Bank based on 1975 per
capita income. China and India are shown as a distinct grouping due to their
size and strong income growth over the period. Countries? per capita incomes
are converted into dollars using purchasing power parity exchange rates,
which take into account differences in costs of living across countries.
Source: GAO analysis of data from the World Bank, World Development
Indicators 2001.
Concerns that globalization itself is adversely affecting individuals within
the United States and in other countries have become an increasing focus of
discussions about international trade and development policies. Civil
society groups around the world have demonstrated, sometimes violently, at
major gatherings of international organizations over the last 2 years. The
groups? concerns vary. Some, for instance, are concerned about how increased
globalization affects workers in traditional manufacturing industries within
the United States. Others focus on questions about the extent to which
developing countries are affected by increasing trade and international
investment flows. Still others believe that globalization poses a threat to
the common good, such as when corporations based in countries with tough
environmental safeguards opt to carry out environmentally destructive
activities in countries where safeguards are less stringent. These concerns
have been joined recently by a heightened awareness, even among strong
proponents of
increased international economic flows, of the security dimensions of
extensive international flows of financial assets, goods, and individuals.
These concerns confront U. S. policymakers in domestic and bilateral
discussions and, increasingly, in multilateral settings such as the World
Trade Organization, the International Monetary Fund, the World Bank, and the
United Nations. To address these concerns, policymakers need extensive
information and analysis across a range of complex questions.
The Changing Economy
Many of the issues facing the Congress and the nation stem from the complex
and changing nature of domestic and global economies. The last few years of
the 1990s saw a dramatic surge of productivity and economic growth, fueled
in part by the nation?s shift to a knowledge- based economy, the adoption of
new technology, and a greater emphasis on public policies that rely on
market forces and competition. In the coming years, the United States faces
the challenge of recovering from the current recession and returning to
strong economic growth while meeting increased demands for spending to
counter terrorism and improve security. Over the longer term, declining
personal saving, coupled with the overall aging of the population, presents
significant challenges to meeting the commitments to Social Security,
Medicare, and other national priorities.
After two decades of diminished expectations and reduced economic
performance, the GDP grew dramatically. As shown by figure 8, labor
productivity growth accelerated from 1.5 percent per year in the early 1990s
to 2.8 percent per year between 1996 and 2000. This growth can be
attributed, in part, to the move away from the nation?s traditional,
manufacturing- based economy to one characterized by the production of
information and services. In fact, for most of the past two decades, high-
technology manufacturing and knowledge- based services have grown at roughly
double the rate of other manufacturing industries. In light of forecasts for
a shift downward in labor productivity growth for the remainder of this
decade, the challenge for the future will be to sustain GDP growth.
1975 1987 1999 0 5,000
10,000 15,000
20,000 25,000
30,000
In Constant 1999 Dollars
China/ India Low- Income Countries Middle- Income Countries High- Income
Countries
10 GAO STRATEGIC PLAN 2002- 2007
THEMES FOR THE PLAN Figure 8: U. S. Productivity Growth, 1961 through 2010
Note: Changes to labor productivity growth for the periods 2001- 05 and
2006- 10 are estimates.
Source: Department of Commerce, Bureau of Labor Statistics, and DRI- WEFA
(an economic information company).
The growing use of technology and knowledgebased services raises a number of
policy issues. Because intellectual assets are the underpinning of a
knowledge- based economy, investment in human capital is fundamental to
continued growth. For policymakers, this shift requires greater attention to
education and training, both for children and adults. The methods of
preparing children for their futures as citizens and workers will have to be
adapted for new needs. New importance will also have to be given to
continuing education and training for adults, whose longer life expectancies
will allow them to stay in the workforce longer- a prospect that also holds
significance for retirement policies.
The shift to a knowledge economy also has implications for immigration
policy. The emergence of technology- oriented industries has tended to
create both high- paying jobs in computing and information technology and
low- skilled jobs ultimately delivering the services these industries
provide. To fill these jobs, the United States has come to rely
increasingly on workers from other countries. At the same time, in light of
heightened concern for homeland security, the relatively easy flow of
workers into the country may be reassessed. Moreover, the need for both
high- and low- skilled workers may also contribute to a long- term trend of
inequality in income in which those in the richest segments of society see
their incomes increase far more than those in the poorest segments do.
Consumer and investor protection policies are also affected by the growth in
knowledge- based industries. With human capital capacity and technological
capabilities as the principal assets of these companies, valuation of
corporate assets has become particularly difficult. Moreover, many of these
companies- in the financial services sector, for example- are in the
business of selling a range of new and complex services whose value is also
difficult to calculate. While accurately and rigorously evaluating
intangible assets and complex goods and services has always been difficult,
these new features raise additional disclosure and reporting challenges for
boards of directors and investors, as well as for auditors and government
regulators.
Finally, the shift in the U. S. economy to knowledge- based industries calls
into question whether GDP, the traditional indicator of economic
performance, should take into account investment in human capital and in
other intangible assets, such as research and development. As a result, the
public policy issues of the future are likely to demand new metrics that can
measure the long- term strategic impact of government choices.
Other changes in the U. S. and world economies have occurred because of
government policies that liberalize trade and draw on greater market
competition. The U. S. government and, increasingly, foreign countries have
moved away from heavily regulated or state- owned enterprises to more
competitive markets. In the United States, the federal government has
deregulated industries such as trucking, electricity, and
telecommunications. In Europe and elsewhere, governments have privatized
formerly publicly owned industries, and many formerly planned economies have
reorganized to be more market oriented. Consequently, formerly regulated
industries have been forced to become more efficient as new competitors
enter previously protected markets. Nevertheless, as the blackouts in
California and the problems besetting the airline industry illustrate,
effective government oversight remains important.
2.3 2.4 2.6 1.5 1.3 1.7
1.2 2.3
2.0 3.7
0.0 0.5
1.0 1.5
2.0 2.5
3.0 3.5
4.0 1961-
65 1966- 70 1971-
75 1976- 80 1981-
85 1986- 90 1991-
95 1996- 2000 2001-
05 2006- 10
Annual Percentage Change
GAO STRATEGIC PLAN 2002- 2007 11
THEMES FOR THE PLAN
Although the economy was still growing at the end of the last decade, the
sustainability of this growth was already becoming more of a concern because
of a serious decline in the personal saving required to fuel investment.
Saving and investment drive the productivity growth that allows personal
incomes to rise without accelerating inflation. Since 1990, personal saving
declined from 6 percent of GDP to about 1 percent in 2001 (see fig. 9). In
recent years, low personal saving was offset by government budget surpluses
and sustained by foreign investment in the United States. To the extent that
these offsetting trends change, personal saving must rise if growth in
investment and productivity is to continue at recent levels.
Figure 9: Declines in U. S. Personal Saving, 1990 through 2001
Source: Department of Commence, Bureau of Economic Analysis.
By mid- 2001, the U. S. economy was experiencing a recession that was
exacerbated by declining consumer confidence in the wake of terrorist
attacks. Moreover, the likely increased spending on national defense and
homeland security will add to an already intense competition for resources
among many national priorities. In the longer term, the level of aggregate
saving may place even greater constraints on federal spending for national
priorities, particularly Social Security and Medicare. GAO?s long- term
budget model shows that simply paying for the higher retirement and health
care costs associated with the baby- boom generation will limit budgetary
flexibility (see fig. 10), while
leaving few resources for investment in new technology. This budget outlook
reinforces the importance of long- term growth- fueled by efficiency,
saving, and investment- that will allow the nation to support its
commitments to future generations.
Figure 10: Composition of Spending as a Share of GDP Assuming Discretionary
Spending Grows with GDP and the Tax Cuts Do Not Sunset
Note: In this simulation, discretionary spending grows with the economy
after 2002, and the expiring tax provisions under the Economic Growth and
Tax Relief Reconciliation Act of 2001 are extended through the end of the
simulation period.
Source: GAO analysis, March 2002.
Demographics
Profound changes in the characteristics of the U. S. population will occur
in the coming decades because the population is growing older and becoming
more diverse. According to the 2000 census, the median age of the population
is now the highest it has ever been, and the most rapidly increasing age
group is the 45- to 54- year- olds- the baby boomers. As the baby boomers
age, the share of the population aged 65 or older is projected to grow from
12 percent in 2000 to about 20 percent in 2030. At the same time, the growth
of the labor force is expected to slow considerably, becoming negligible by
2050 (see fig. 11).
Personal Saving Net National Saving 0
1 2
3 4
5 6
7
Percentage of GDP
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 0
10 20
30 40
2000 2015 2030 2050 Net Interest Social Security Medicare and Medicaid All
Other Spending
Revenue Percentage of GDP
12 GAO STRATEGIC PLAN 2002- 2007
THEMES FOR THE PLAN Figure 11: Labor Force Growth, 1975 through 2075
Note: Projections based on the intermediate assumptions of the Tr ustees?
report. Source: The 2002 Annual Report of the Board of Trustees of the
Federal Old- Age and Survivors Insurance and Disability Insurance Tr ust
Funds.
This decline in the number of working- age people compared with the rise in
the number of elderly has obvious implications for the financial status of
the Social Security and Medicare Trust Funds. Today, about 3.3 people pay
into Social Security for every person receiving benefits (see fig. 12). By
2030, this ratio is projected to decline to about 2 to 1.
Figure 12: Social Security Workers per Beneficiary, 1955 through 2075
Note: Projections based on intermediate assumptions of the Tr ustees?
report. Source: The 2002 Annual Report of the Board of Trustees of the
Federal Old- Age and Survivors Insurance and Disability Insurance (OASDI)
Trust Funds.
Unless productivity increases, low labor force growth will lead to slower
growth in the economy- and to slower growth in federal revenues at a time
when the expenditure demands on federal programs for the elderly are
increasing. This slowing labor force growth is likely to raise questions
about current retirement policies and whether people ought to be encouraged
to stay in the workforce longer and to be given opportunities to continue
their education and training. As with demand for scarce technical skills and
low- cost labor, the slowing growth in the labor force increases pressures
to import workers, thereby raising questions about immigration policies.
The implications of a growing elderly population are likely to extend far
beyond the financial status of Social Security, Medicare, Medicaid, and
retirement programs. The number of people served by housing, transportation,
and other government programs for the elderly will grow. Both publicly and
privately provided services, including communications and financial
services, are likely to change in response to the needs of this population.
This demographic shift will affect other industrialized nations as well. For
example, in some European countries, social program costs are projected to
consume a greater share of total GDP than in the
GAO STRATEGIC PLAN 2002- 2007 13
THEMES FOR THE PLAN
United States. As the health and retirement costs of these nations burgeon,
their budgets may become more constrained, which in turn could affect U. S.
interests. For example, while U. S. assets today represent a significant
share of foreign portfolios, European lending to the United States is likely
to be scaled back as the continent has to finance the consumption needs of
their elderly populations. The United States? international interests could
also be affected if Europe and other major donors are forced to curtail
their contributions to international lending institutions, peacekeeping
missions, and aid to developing countries.
While the U. S. population is growing older, it is also growing more
diverse, in large part because of record numbers of immigrants. Between 1990
and 2000, the number of foreign- born people in the United States grew by 43
percent to total more than 28 million- the largest number of foreign- born
residents in U. S. history. While these foreign- born residents make up
about 10 percent of the U. S. population overall, in some parts of the
United States, the numbers are especially high. For example, 26 percent of
California?s population comes from Mexico and Asia. Although over onefourth
of these immigrants are college educated, foreign- born residents are more
likely to be less educated and more likely to live in poverty than residents
who were born in the United States, placing special demands on education and
social service systems.
This more diverse population means that minorities, as well as women, will
continue to represent a continuously increasing share of the workforce.
Currently, women constitute 47 percent of the American workforce, up from
about 42 percent in 1978, a proportion expected to increase further (see
fig. 13). African Americans, Hispanics, Asians, and other minorities are
projected to account for about 18 percent of the total labor force by 2008,
but will account for almost 60 percent of all new workers between 1998 and
2008. These trends of slow labor force growth and increased diversity have
implications for federal policies and programs in education, training, child
care, and immigration, among others.
Figure 13: Women and Minorities in the Labor Force
Notes: ?Women? refers to all women, regardless of minority status.
?Minorities? includes women and men. Source: Bureau of Labor Statistics,
?Labor Force Projections to 2008: Steady Growth and Changing Composition,?
Monthly Labor Review, Nov. 1999.
Science and Technology
Technology influences every aspect of American life and touches the lives of
Americans in thousands of ways. While information technology is a major
technological force of this era- linking individuals, organizations, and
economies around the world- other kinds of scientific and technological
advances also are creating significant changes. For example, the rapidly
increasing understanding of the human genome is leading to new developments
in genetic engineering. For society and government, these developments in
science and technology present vast opportunities to improve the quality of
life, the performance of the economy and the government, and the
relationship of government to its citizens. At the same time, the increased
development and use of new technologies challenge the government?s and the
Congress?s ability to evaluate their potential and assess their effect on
security, safety, privacy, and equity. Within this context, the Senate
Legislative Branch Appropriations bill for fiscal year 2002 directed GAO to
conduct a pilot program in technology assessment and to evaluate the future
potential of such a program.
47.5 46.3 45.0 41.7
12.3 13.9 16.2 18.1
0 5
10 15
20 25
30 35
40 45
50 1978 1988 1998 2008 Women Minorities
Percentage
14 GAO STRATEGIC PLAN 2002- 2007
THEMES FOR THE PLAN
The positive outcomes from technological developments are well illustrated
by information technology, which contributed to the substantial gains in
productivity that fueled the U. S. economy in the 1990s, and which opened
the workforce to people who were previously barred by physical handicaps or
geographic distance. Electronic commerce in the United States far outpaces
the rest of the world and is expected to grow exponentially over the next
few years (see fig. 14). Information technology has begun to alter the way
citizens interact with government, making it easier for them to get
information and assistance, identify and obtain services, file applications
and taxes, and conduct other transactions with government. Information
technology has also begun to transform the way that government is organized
and operates by reducing levels of bureaucracy and ?middlemen? to better
serve citizens and to communicate with the businesses that government
regulates. Multiagency portals- Web sites providing a single point of access
to information and services from multiple government departments and
agencies- are based on the needs of citizens rather than on the structure of
the government providing the resources.
Figure 14: Worldwide E- Commerce Growth, 2000 through 2004
Notes: Worldwide total equals United States plus rest of world. Source:
Forrester Research, Inc.
Developments in biotechnology are also bringing forth many benefits. The
improved understanding of diseases and how the human body operates has led
to new therapies and treatments and may lead to the elimination or
significant control of some dis eases. In addition, genetically modified
crops have
the potential to dramatically improve the health and nutrition of many of
the world?s poorest people.
But these opportunities are also rife with challenges. The growth of
electronic commerce, for example, has made it more difficult to determine
the source and character of taxable income and sales, thereby complicating
division of the tax base across national, state, and local jurisdictions. As
organizations become more interconnected, the ability to share data among
systems can provide greater efficiencies, but can also lead to inappropriate
access to medical records, credit histories, and other personal and
confidential data. And fundamental access to technology will continue to
prompt debate over the digital divide- the disparity in the ability of
different socioeconomic groups to access and use technology.
The widespread interconnectivity of computer systems with the critical
operations and infrastructures they support has also created new
vulnerabilities. The nation?s telecommunications, power distribution, public
health, national defense (including the military?s warfighting capability),
law enforcement, financial, government, and emergency services all depend on
computer operations. Because financial markets and other critical
infrastructure are also reliant on information technology, the U. S. and
world markets can be attacked even without an actual physical assault. To
maintain information superiority, the United States must depend on an
interconnected global network of sensors, communications technology, command
and control assets, and highly lethal weapons possessing precisionstrike
capabilities. At the same time, the nation?s security increasingly depends
on intelligence gathering through electronic as well as more traditional
means, supported by knowledge- management systems enabling the analysis of
data.
Many of biotechnology?s advances raise concerns as well. Although they hold
great promise for improving health care, the affordability of new diagnostic
and treatment methods is becoming a growing issue for federal and state
government health care programs. Newer treatments may not reach poorer
countries, where even treatments currently available in the United States
are out of reach because of their costs. Many advances in biotechnology also
raise a number of difficult ethical and
0 1000
2000 3000
4000 5000
6000 7000
2000 2001 2002 2003 2004 United States
Total Dollar Value in Billions of Goods Traded Online
Rest of World
GAO STRATEGIC PLAN 2002- 2007 15
THEMES FOR THE PLAN
legal questions that society has not had to address before. For example, the
rapid progress of the Human Genome Project opens the possibility of
identifying a genetic predisposition for diseases in individuals and
thereby, the opportunity for preventive interventions. At the same time,
this information may make people more vulnerable to discrimination by
employers and insurance companies.
Quality of Life
In many respects, the quality of life for Americans has dramatically
improved. Large segments of the population enjoy greater economic prosperity
than ever before. In 2000, over 94 percent of the workforce was employed and
the median annual household income was over $42,000. Two- thirds of American
households own their own homes, and children are graduating from high school
and going on to college at record rates. The quality of the physical
environment has also improved, with air and water pollution declining over
the last couple of decades and larger numbers of hazardous waste sites
cleaned up.
Americans are also living longer, with the average life expectancy now up to
77 years, a trend likely to continue with advances in genetics and
biotechnology. In the last decade, the availability of new drug therapies
has increased dramatically. By the end of the decade, roughly 50 percent
more drugs were coming on the market each year than in the early part of the
1990s.
These improvements have not been without cost, however, and can be
jeopardized by a prolonged economic downturn. Spending on prescription
drugs, for instance, has grown much faster than health care spending and GDP
(see fig. 15). Beyond the costs of treating and preventing illness, the
costs of providing long- term care facilities for the growing elderly
population can be expected to burgeon. For the federal government, these
trends are of enormous consequence to the future scope and coverage of the
Medicare and Medicaid programs, as well as the defense and veterans? health
care programs.
Figure 15: Growth in National Expenditures for Prescription Drugs, 1993
through 2000
Source: Health Care Financing Administration, Office of the Actuary, and
Bureau of Economic Analysis.
Regardless of the costs of achieving and maintaining these improvements in
the quality of life, they have not been evenly distributed across the
population. In 2000, about 39 million Americans still lacked access to
health care because they did not have health insurance. Unemployment rates
for African Americans and Hispanics were nearly twice the rate for whites.
These groups also include proportionally fewer college graduates, their
average income levels are considerably lower, and their poverty rates are
more than double those of white Americans. Violent crime rates remain high
in certain geographic areas and for certain parts of the population,
although they have fallen considerably across the nation as a whole.
Affordable housing remains out of reach for many.
Moreover, prosperity itself has placed greater stresses on the quality of
life. Greater economic activity, for example, is producing more air and
highway traffic and heightening concerns about safety and environmental
quality. Families are struggling to balance the demands of work and home and
to find and pay for good day care. Parts of the country that have seen rapid
development- particularly the Southeast and Southwest- are facing increased
competition for water, land, and other natural resources. Population and
economic growth also create demand for new transportation and
0 2
4 6
8 10
12 14
16 18
20
Percentage of Annual Growth
Prescription Drug Expenditures Health Care Expenditures Gross Domestic
Product 1993 1994 1995 1996 1997 1998 1999 2000
16 GAO STRATEGIC PLAN 2002- 2007
THEMES FOR THE PLAN
other physical infrastructure, and place strains on existing capacity. In
the future, the need for new investments will increasingly come into
competition with other national priorities, including spending on Social
Security and Medicare as well as for national preparedness to confront
security threats- thus creating difficult budgetary choices for the federal
government.
Governance
As the pace of change accelerates in every aspect of American life,
government is faced with new and more complex challenges resulting from the
public?s growing expectations, demographic pressures, technological
opportunities, and the emerging fiscal challenges ahead. The attacks of
September 11 reminded the nation that the effectiveness of government
programs and agencies is critical to day- to- day security. These events
have placed new fiscal demands on federal, state and local governments,
underscoring the government?s obligation to enhance its fiscal flexibility
and capacity to address a rapidly evolving set of challenges facing the
nation both today and over the longer term.
As America takes on a new set of commitments necessary to protect the nation
from the threat of terrorism, it must also be mindful of the fiscal
challenges facing future generations in addressing the retirement and health
care costs of the baby boomers? retirement. To help safeguard the capacity
of future generations to finance an aging society and respond to their own
unforeseen challenges, government must begin to reexamine and update its
priorities, processes and portfolio of federal programs and policies.
Emerging needs and effective programs can be addressed, while outdated
programs can be either eliminated or improved. Coping effectively with these
challenges ultimately calls for a fundamental rethinking of the federal role
and commitments.
The foundation for much of this effort has already been laid through the
implementation of critical strategic planning, performance, and information
management reforms during the 1990s. Because of these reforms, information
on the performance of existing programs and operations is now generated
systematically. Likewise, the legislative foundation
for financial management reform is now in place and, when agencies are able
to systematically supply it, critical cost information will also be
available to manage and assess program performance. Using this information,
decision makers will be better able to sort out and measure the effects of
federal actions and policies on the broad outcomes and mission areas that
matter most.
Going forward, addressing emerging needs and chronic performance gaps in
existing programs will entail focusing on an evolving agenda of reforms in
the management of people and technologies, the metrics developed to track
results, and the frameworks articulated for governmentwide leadership
necessary to achieve important objectives cutting across agencies and
governmental boundaries. The people working for government are the most
important asset in addressing the emerging challenges facing the nation. The
aging of the federal workforce as well as the growing competition for bright
new entrants makes it imperative that the federal government equip itself
with new tools necessary to recruit, retain, and reward talented workers.
Moreover, the competencies that are sought and rewarded should be aligned
with broader strategic objectives and performance goals. The strategic
deployment of technology is also becoming more essential to realize the
kinds of major improvements in efficiency necessary to respond to the
nation?s expectations for service delivery. The Web and other major advances
in networking provide unprecedented opportunities to use technology as a
driver for change in the way that government agencies are structured to do
business internally and across boundaries with state and local governments,
private businesses, and with individual citizens.
Promoting a more strategic focus on the broad goals for government programs
is essential to bring about a more results- oriented debate about what
government should be doing. But reassessing the federal role and measuring
performance and accountability has also grown more complex. In most federal
mission areas- from low- income housing to food safety to higher education
assistance- national goals are achieved through the use of a variety of
policy tools and, increasingly, through the participation of many
organizations that are beyond the direct control of the federal government.
The policy tools- direct spending, tax preferences, loans and
GAO STRATEGIC PLAN 2002- 2007 17
THEMES FOR THE PLAN
guarantees, grants, and regulations- have often been considered individually
in a fragmented fashion, even though they are all associated with critical
national outcomes. Assessing the coherence of all related policy tools to
ascertain whether they are aligned and relevant for a changing society will
be a critical task in rethinking and updating the federal government?s role.
While programs and policy tools evolved piecemeal for many mission areas, an
integrated and multidisciplinary approach will be needed to address the
broader performance outcomes the nation expects from government.
Such an integrated perspective must address the fundamental role played by
third parties involved in achieving national goals- state and local
governments, nonprofit institutions, private corporations, and even
international institutions and governing bodies all play vital roles in
formulating and implementing federal initiatives. Figure 16 suggests one
indicator of the growing involvement of third parties. Since at least the
1960s, the number of federal employees has dropped even as federal outlays
have risen partly because the dollars that fund federal programs are
increasingly flowing to nonfederal entities. Promoting effective
partnerships with third parties in the formulation and design of complex
national initiatives will prove increasingly vital to achieving successful
policy outcomes in the years ahead. Protecting the nation from the threat of
terrorism, for instance, will require a concerted effort by all three levels
of government as well as key private sector leaders responsible for critical
infrastructure and resources.
Figure 16: Federal Civilian Employment and Outlays, Fiscal Years 1950
through 2001
Note: Figures for executive branch civilian employees exclude the U. S.
Postal Service. Legislative and judicial branch personnel constitute less
than 2 percent of total federal personnel.
Source: Office of Management and Budget.
This growing interdependence has important ramifications for governance and
accountability. The public rightly expects to hold the federal government
accountable for achieving important national outcomes. Certainly, involving
state and local governments and other types of organizations in the federal
mission can add new capacities and efficiencies and can promote
responsiveness to a wider range of local interests. However, unique
accountability challenges arise as well, both from the involvement of
independent interests operating under their own sovereignty and from the
reliance on ever more complex networks to deliver federal services. The
challenge for the federal government will be to design, select, and manage
the various tools of governance- regulations, grants, tax preferences, or
loans- to prompt these independent interests to work together in pursuit of
common national goals. Metrics defining and tracking progress against
broader national objectives will be an important leadership tool to focus
the attention of these different interests on common goals and challenges.
The existing reforms developed to improve the management of federal agencies
will have to be applied to also improve the way that federal agencies manage
across governmental and institutional boundaries.
Federal Civilian Employment Total Federal Outlays
GOAL 1
18 GAO STRATEGIC PLAN 2002- 2007
Goal 1
Provide Timely, Quality Service to the Congress and the Federal Government
to Address Current and Emerging Challenges to the Well- Being and Financial
Security of the American People
In keeping with GAO?s mission to support the Congress in carrying out its
constitutional responsibilities, GAO?s first strategic goal focuses on
several aspirations of the American people that were defined by the Founding
Fathers: to ?establish justice, insure domestic tranquility, ? promote the
general welfare, and secure the blessings of liberty to ourselves and our
posterity?.? The nation?s aging and more diverse population, rapid
technological change, and Americans? desire to improve the quality of life
have major policy and budgetary implications for the federal government. In
particular, growing commitments to the elderly will crowd out the capacity
of a smaller generation of workers to finance the competing needs and wants
brought to the federal doorstep.
The first goal in this updated plan, therefore, continues to be to help the
Congress and the federal government address the challenges that affect the
well- being and financial security of the American people. As the tragic
events of September 11 revealed, domestic policies and programs have become
integral to national security. Accordingly, each major objective in this
plan has been shaped to accommodate the implications of the terrorism threat
to GAO?s work in those areas.
GAO also recast its objectives under this goal in response to changes in the
federal policy agenda to emphasize the need to better educate the population
and prepare people for work. GAO?s new objectives- one on the education and
protection of children and one on the promotion of work opportunities and
worker safety- expand on an objective in GAO?s previous strategic plan that
combined education and workforce issues and replace an objective on the
social safety net. The objective on promoting investment in viable
communities focuses greater attention on the federal role in helping various
communities promote their own economic and housing goals.
GAO?s objectives for this goal are to support congressional and federal
efforts on
the health needs of an aging and diverse population,
the education and protection of the nation?s children,
the promotion of work opportunities and the protection of workers,
a secure retirement for older Americans,
an effective system of justice,
the promotion of viable communities,
responsible stewardship of natural resources and the environment, and
a secure and effective national physical infrastructure.
GAO STRATEGIC PLAN 2002- 2007 19
GOAL 1
I ssue: Health care has been one of the most rapidly rising elements of
federal spending,
growing at an average annual rate twice that of the rest of the federal
budget over the last 10 years (see fig. 1.1). Expenditures on health-
related programs are now one of the largest components of federal spending,
totaling an estimated $433 billion in fiscal year 2001, or about 23 percent
of all federal spending that year. Health care also accounts for significant
federal tax expenditures, with $92 billion in forgone revenues projected for
2002 because of employer contributions to medical care and medical
insurance. The cost pressures of serving a growing population are compounded
by scientific advances in medical treatments, which can blur the lines
between needs and wants and make it difficult to reasonably assess what
society can afford.
Figure 1.1: Growth of Federal Health Expenditures, 1980 through 2001
Note: The 2001 number is an estimate. Source: Office of Management and
Budget.
Of particular concern is the growth in Medicare expenditures, which are
estimated to total about $264 billion in 2002. Without changes, Medicare is
expected to nearly double its share of the economy by 2030, crowding out
other spending and economic activity of value. Indeed, one part of Medicare,
the Medicare Hospital Insurance Trust Fund, is projected to begin running a
deficit in 2016 and to be depleted by 2029. Also of concern are issues of
(1) modernizing Medicare?s management structure, payment policies and
methodologies, and benefits package, and (2) reducing Medicare?s
administrative burden on providers. Moreover, because of its size and
complexity, Medicare is inherently difficult to manage. About 50 insurance
companies process and pay approximately 900 million claims annually to
nearly 1 million health care providers. Consequently, the program is a
target for fraud, waste, and abuse, and effective oversight is critical to
protecting program dollars and promoting efficient program operations.
A strong private insurance market that provides access to affordable
employer- based or individually purchased health coverage can reduce the
demand for government- funded insurance programs. However, despite a strong
economy for much of the last decade, the number of Americans without health
insurance remains high. Although the introduction of competitive principles
to health care helped to contain medical care cost increases for many years,
costs are increasing significantly once again. These cost increases, in
concert with a recent downturn in the economy, have important implications
for the availability of employer- sponsored health insurance and for federal
health care programs and outlays. Moreover, the public is concerned about
the quality of care, consumer protection mechanisms, and the availability of
information to allow purchasers to make informed insurance choices.
The government also must address pressing issues in its own system of
hospitals and clinics. The Department of Veterans Affairs (VA)- one of the
nation?s
Strategic Objective: The Health Needs of an Aging and Diverse Population
0 100
200 300
400 500
600
Percentage Increases since 1980
Health Outlays All Other Federal Outlays 1980 1985 1990 1995 2000
20 GAO STRATEGIC PLAN 2002- 2007
GOAL 1
largest health care systems- spends about $21 billion a year to provide
health care to approximately 4.3 million veteran patients. The Department of
Defense?s (DOD) health care system spends about $25 billion annually to
support health care to about 8.2 million eligible beneficiaries. Yet, much
of VA?s physical infrastructure is obsolete and burdened with excess
capacity, and the size and other requirements for DOD facilities are
currently at issue. Pressure is also mounting to integrate aspects of the
two systems to increase their efficiency and effectiveness.
The efficiency and effectiveness of the government?s public health programs
are other areas of concern, including those administered by the National
Institutes of Health, the Food and Drug Administration, the Centers for
Disease Control and Prevention, and the Health Resources and Services
Administration. These programs support and conduct research; provide grants
to states for public health programs, such as maternal and child health
services and AIDS prevention and treatment; and conduct regulatory oversight
of the United States? new drug and medical device research. Questions have
been raised about the government?s ability to ensure the necessary
protection of patients in research as well as to safeguard the public in the
review of new pharmaceuticals, medical devices, and new food products.
Additionally, the changing nature of public health threats domestically and
internationally, such as antimicrobial resistance, HIV infection, and other
emerging infectious diseases, poses significant challenges for the
government. As diseases such as HIV and tuberculosis have become pandemics,
the effectiveness of international health programs to prevent and adequately
treat populations in developing countries is a growing concern. Government?s
ability to help surmount shortages of certain prescription drugs and
vaccines is a worldwide concern as well.
Since September 11 and the first reports of anthrax in Florida, New York,
and Washington, D. C., the public health infrastructure has experienced
additional strain in responding to community demand for public health
services. This has heightened concern about the adequacy of trained
personnel, laboratory capacity, disease surveillance systems, and
coordinated communication systems among state and local emergency
responders. Greater attention has since been given to state and local
communities? capacity to develop coordinated plans for dealing with a
potential biological attack and to develop emergency response
systems linking hospitals, emergency rooms, health personnel, and fire and
police efforts to respond to any form of terrorism.
Finally, the baby- boom generation will undoubtedly place increasing
pressure on the federal/ state Medicaid program to help pay for nursing home
and other community- based forms of long- term care services. Meeting an
increasing demand for such services within the available funding will pose
significant challenges for federal and state decision makers, with important
implications for the services offered by each state. At the other end of the
population spectrum are millions of uninsured children whose families have
no health insurance. Medicaid and the State Children?s Health Insurance
Program help cover the health insurance costs of these low- income Americans
and are often viewed as established programs that may be expanded to help
reduce the number of the uninsured. However, the recent flux in the managed
care market, which states increasing rely on to deliver services, may hamper
states in their ability to attract and retain managed care plans and
providers and to ensure beneficiary access to needed, cost- effective
services. Moreover, accounting for and overseeing these two programs
represents a formidable challenge for the federal government because of the
variation in state policies, procedures, and delivery systems.
P erformance Goals: To support efforts by the Congress and the federal
government to address
these issues, GAO will
evaluate Medicare reform, financing, and operations;
assess trends and issues in private health insurance coverage;
assess actions and options for improving VA?s and DOD?s health care
services;
evaluate the effectiveness of federal programs to promote and protect the
public health;
evaluate the effectiveness of federal programs to improve the nation?s
preparedness for the public health and medical consequences of bioterrorism;
evaluate federal and state program strategies for financing and overseeing
chronic and long- term health care; and
assess states? experiences in providing health insurance coverage for low-
income populations.
GAO STRATEGIC PLAN 2002- 2007 21
GOAL 1
I ssue: Educating and protecting children are important to the continued
vitality of this democratic
society and to its long- term ability to compete in a global marketplace. To
this end, the federal government invests more than $90 billion per year in
programs that foster the development, education, and protection of children
from childbirth through elementary and secondary school and postsecondary
education. Although federal spending is only about 7 percent of total
spending on education, the federal government?s efforts are especially
important in ensuring that all children have the opportunity to meet high
academic standards from kindergarten through high school. The government?s
postsecondary efforts provide access to higher education for all through the
use of loans, grants, and other financial tools, while protecting the
financial interests of taxpayers.
According to the most recently available data, the federal government spent
more than $9 billion in fiscal year 1999 on 29 programs that have early
childhood education or care as an objective. These programs, including Head
Start, are geared principally toward disadvantaged children from infancy to
age 5- a developmental period during which early investment may lead to
better performance in school years. Beyond inherent concerns about
fragmentation and overlap among these programs, there is also concern about
their effectiveness. Although the Department of Health and Human Services
(HHS) and the Department of Education are sponsoring research on some of
these programs, little is known about their ultimate effect, especially on
school- readiness and early literacy skills- two areas at the center of the
federal education focus. Federal investment in child care has been growing,
in part to support low- income mothers who have entered the workforce due to
welfare reform (see fig. 1.2). Policymakers at the federal and state levels
are concerned about the cost, quality, and availability of child care.
Figure 1.2: Growth of Federal Investment in Child Care, Fiscal Years 1997
through 2000
Note: Child Care and Development Fund (CCDF) amounts include dollars states
transferred from their Temporary Assistance for Needy Families (TANF)
programs to CCDF as allowed under the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996. The amounts shown for TANF include
only those TANF funds
expended for child care. Source: Administration for Children and Families,
HHS.
Federal elementary and secondary school programs are especially designed to
ensure that children in poor families and children who are disadvantaged are
given the opportunity to meet challenging academic standards, which will
give them the skills to succeed. The United States places a high priority on
educating its children at the elementary and secondary levels and has
increased the federal investment from over $20 billion in fiscal year 2000
to nearly $30 billion in fiscal year 2002. However, this increased
investment is accompanied by an increased emphasis on accountability for
schools to raise all students to proficient levels in math and reading. With
the reauthorization of the Elementary and Secondary Education Act, the
Congress has placed additional requirements on states, beyond those in the
1994 act. For example, the Congress
Strategic Objective: The Education and Protection of the Nation?s Children
0 1000
2000 3000
4000 5000
6000 7000
1997 1998 1999 2000 TANF CCDF
Dollars in Millions
22 GAO STRATEGIC PLAN 2002- 2007
GOAL 1
required testing in three additional grades and mandated actions for schools
that fail to improve the performance of their students. All students-
including those from poor families, with limited English proficiency, and
with disabilities- are expected to meet challenging academic standards.
However, an achievement gap exists between different groups of students, for
example between white and African American students and between white and
Hispanic students (see figs. 1.3 and 1.4). Dissatisfied with this continued
achievement gap, policymakers are exploring a variety of school reform
initiatives and strategies to improve school performance, improve teaching,
reduce student dropout rates, and enhance educational options for the
nation?s children.
Figure 1.3: Achievement Gaps in Reading at Age 17
Source: National Center for Education Statistics, National Assessment of
Educational Progress, 1999 Long- Term Trend Assessment.
Figure 1.4: Achievement Gaps in Math at Age 17
Source: National Center for Education Statistics, National Assessment of
Educational Progress, 1999 Long- Term Trend Assessment.
The nation also needs to be concerned about protecting its children and
ensuring that families have the financial means to provide for their
children?s needs. Each year, over 800,000 children are found to be the
victims of abuse and neglect by their parents, relatives, or other
caregivers. Tragically, over 1,000 children die each year from abuse and
neglect. While responsibility for investigating reports of abuse and neglect
and providing services to families falls primarily to state child protective
service agencies, the federal government invests approximately $6 billion
annually to provide care for children who need placement outside their
homes, services to help keep families together or to reunite them, and
training and research activities to improve child welfare services
nationwide. Moreover, nearly 23 million children live with only one of their
parents. To help obtain the financial support noncustodial parents owe their
children and to help single- parent families achieve or maintain economic
self- sufficiency, the Congress established a joint federal/ state child
support enforcement program in 1975 to help locate noncustodial parents,
establish paternity and child support obligations, and enforce child
support.
31 29 30
24 30
33
0 5
10 15
20 25
30 35
40 1994 1996 1999 Score Difference between White and Black Students? Average
Scores Score Difference between White and Hispanic Students? Average Scores
Score Differences Calendar Year
1994 1996 1999 Score Difference between White and Black Students? Average
Scores Score Difference between White and Hispanic Students? Average Scores
Score Differences Calendar Year
31 27 27
22 21 22
0 5
10 15
20 25
30 35
40
GAO STRATEGIC PLAN 2002- 2007 23
GOAL 1
Beyond providing for basic educational needs, a competitive national economy
depends, in part, on effectively preparing workers to compete in the labor
force. To this end, the federal government currently supports over $50
billion annually to enhance students? access to postsecondary, vocational,
and adult education. In particular, the government?s investment in
supporting college students with direct loans and loan guarantees results in
over $30 billion of new loans annually. This is in addition to over $8
billion yearly for Pell grants to college students from low- income
families. The federal government also provides higher education subsidies
for students or their families through such benefits as the Hope and
lifetime learning tax credits and the deferral of tax on the earnings of
contributions to qualified state tuition programs. These tax expenditures
are just over $12 billion annually. A major concern with the nation?s
investment in postsecondary education is its exposure to significant losses.
While student loan default rates have decreased in recent years, student
loan defaults still cost the federal government billions of dollars each
year. For example, in fiscal year 2000, default costs for the Federal Family
Education Loan Program were about $1.4 billion, while defaults under the
Federal Direct Loan Program exceeded $600 million. The cumulative principal
amount outstanding from defaulted student loans stood at about $22 billion
in fiscal year 2001 (see fig. 1.5).
Figure 1.5: A Growing Balance of Defaulted Loans Is Subject to Collection,
1993 through 2001
Note: Balances include defaulted loans under both the Federal Family
Education Loan and Federal Direct Loan Programs. Fiscal year 2000 and 2001
data are from draft financial statements.
Source: Department of Education, Budget Service.
P erformance Goals: To support efforts by the Congress and the federal
government to
address these issues, GAO will
analyze the effectiveness and efficiency of early childhood education and
care programs in serving their target populations;
assess options for federal programs to effectively address the educational
needs of elementary and secondary students and their schools;
determine the effectiveness and efficiency of child support enforcement and
child welfare programs in serving their target populations; and
identify opportunities to better manage postsecondary, vocational, and adult
education programs and deliver more effective services.
I ssue: A strong national economy depends, in part, on effectively preparing
workers to compete
in the labor force, efficiently helping employers locate qualified job
candidates, providing
a work environment that promotes productivity, and finding ways to help
workers when they become unemployed. To this end, the federal government
currently invests more than $50 billion
0 5
10 15
20 25
30 1993 1994 1995 1996 1997 1998 1999 2000 2001
Billions of Dollars Fiscal Year $17.1
$21.8
Strategic Objective: The Promotion of Work Opportunities and the Protection
of Workers
24 GAO STRATEGIC PLAN 2002- 2007
GOAL 1
annually to help new entrants to the workforce, support those who have
become dislocated from their jobs and assist them in becoming reemployed,
rehabilitate disabled and injured workers, help employers obtain adequate
supplies of high- quality skilled labor, and protect employees? rights to
fair and safe workplaces without unduly burdening employers. In addition,
federal policies for providing income support for the low- income population
have increasingly focused on promoting work in exchange for government
assistance.
The last half of the 1990s saw welfare use decline and work efforts increase
among single mothers (see fig. 1.6), a population targeted under the 1996
welfare reform legislation. But the dramatic declines in welfare rolls
nationwide slowed beginning in 2000; as the economy slowed in 2001, many
states have begun to see their caseloads increase. As the nation emerges
from an economic recession, the strength of these programs will be critical
in maintaining a ready workforce and preserving economic stability.
Furthermore, two key support programs- the Temporary Assistance for Needy
Families block grant and the Food Stamp Program- are slated to be
reauthorized in 2002. As the Congress faces reauthorization in a less
favorable economy, it will need to consider the appropriate funding levels
and structures, as well as experiences from implementation of the 1996
reforms.
Figure 1.6: Single Mothers? Work and Welfare Status, 1987 through 1999
Source: U. S. Census Current Population Survey data.
Technology is redefining the labor market for workers and employers, and
federal employment support and worker protection programs must deal with
these new challenges, in addition to encouraging a commitment to lifelong
learning. New technologies, increased marketplace competition, and very
tight labor markets have prompted employers to downsize, change employment
patterns, move abroad, or seek qualified foreign workers to meet their
needs. More than ever, today?s economy rewards skilled workers more than
their unskilled counterparts. College graduates have experienced growth in
real earnings from 1979 to 2000, while real earnings for those without a
high school diploma have declined. In addition, medical and technological
advances, as well as changes in the nature of work, have combined to offer
workingage people with disabilities more opportunities to work than were
available a generation ago. All of these new developments in technology and
the labor market are challenging the Congress and the administration as they
redefine the role of public policies in enhancing productivity, protecting
workers? rights, and facilitating labor- management cooperation, even as
unemployment edges upward.
P erformance Goals: To support efforts by the Congress and the federal
government to
address these issues, GAO will
0 10
20 30
40 50
60 70
80 90
1987 1989 1991 1993 1995 1997 1999
Percentage
Percentage Who Worked at Any Time during the Year Percentage Who Received
Aid to Families with Dependent Children or Temporary Assistance for Needy
Families during the Year
GAO STRATEGIC PLAN 2002- 2007 25
GOAL 1
assess the effectiveness of federal efforts to help adults enter the
workforce and to assist lowincome workers,
analyze the impact of programs designed to maintain a skilled workforce and
ensure employers have the workers they need,
assess the success of various enforcement strategies to protect workers
while minimizing employers? burden in the changing environment of work, and
identify ways to improve federal support for people with disabilities.
I ssue: Social Security has long served as the foundation of the nation?s
retirement income
system. About 39 million people receive Social Security retirement and
survivor benefits and, for one- fifth of the elderly, Social Security is the
sole source of income. Yet because of demographic changes under way in the
nation, the ratio of workers to retirees is declining. This change will have
fundamental implications for Social Security and the economy. Although
Social Security payroll tax revenues exceed benefit expenditures today,
projections suggest that beginning in 2017, spending will exceed revenues by
growing proportions and that in 2041, the Social Security Trust Funds will
be depleted (see fig. 1.7). However, depending on the strength of the
economy, the trust fund may be depleted more quickly. Action must be taken
in the near term to restore solvency and sustainability to the Social
Security system, particularly as other, even more urgent priorities present
claims on public funding and legislative agendas. A variety of proposals for
such actions have been made, including some that would create individual
retirement accounts for workers. The Congress has considered a number of
these proposals, and is continuing these policy deliberations. Most of the
proposals would have major consequences for retirees? benefits, the federal
budget, and the longterm economic growth of the country.
Figure 1.7: Social Security Trust Fund Faces Insolvency in 2041
Source: GAO analysis of data from the Social Security Administration?s
Office of the Actuary (2002 intermediate assumptions of the 2002 Annual
Report of the Board of Trustees of the Federal Old- Age and Survivors
Insurance and Disability Insurance Trust Funds). Pensions are also an
important element in the
nation?s approach to ensuring adequate retirement income, comprising 19
percent of retirement income in the United States (see fig. 1.8).
Nonetheless, tens of millions of U. S. workers have no individual pension
coverage, placing them at risk
Strategic Objective: A Secure Retirement for Older Americans
1000 -500
0 500
1000 1500
2000 2500
3000 3500
4000 2000 2005 2010 2015 2020 2025 2030 2035 2040
FY 2002 Dollars in Billions
Cash Surplus Cash Deficit Trust Fund Balance
Social Security cash deficit
2017
26 GAO STRATEGIC PLAN 2002- 2007
GOAL 1
during their retirement years. Only about half of the nation?s workers are
covered by employer pensions, and 48 percent of retirees do not receive any
pension income. Determining the best way to increase pension coverage
represents a continuing policy concern.
Figure 1.8: Sources of Income in the United States, Age 65 and Over, 2000
Note: ?Pensions? includes private pensions and annuities; government
employee pensions; Railroad Retirement; and individual retirement account
(IRA), Keogh, and 401( k) payments. Source: Social Security Administration,
Annual Statistical Supplement, 2001, p. 19.
Some workers with pensions are experiencing a new kind of coverage as a
growing number of employers move away from traditional defined benefit plans
to defined contribution plans. Further more, some employers are shifting to
?hybrid?
systems that retain the defined benefit structure while adopting certain
features of defined contribution plans. These plans place greater
responsibility on workers themselves to make prudent investment decisions
about their retirement savings, but do not always provide workers access to
the accurate and reliable information necessary for such decisions. Such
changes will pose new challenges to workers, government regulators, and
policymakers.
Long- term weaknesses in the solvency of the Social Security program and the
sustained lack of pension coverage to half of the labor force necessitate
that workers place a greater reliance on their own retirement savings to
cover these gaps. Yet despite these potential shortfalls, personal savings
rates continue to hover at historically low levels. Current economic
uncertainties may exacerbate this trend, threatening the prospects for
individuals? future retirement income as well as the nation?s future
economic growth.
P erformance Goals: To support efforts by the Congress and the federal
government to
address these issues, GAO will
assess the implications of various Social Security reform proposals;
identify opportunities to foster greater pension coverage, increase personal
saving, and ensure adequate and secure retirement income; and
identify opportunities to improve the ability of federal agencies to
administer and protect workers? retirement benefits.
I ssue: Spending on law enforcement continues to grow at the federal, state,
and local levels. In
constant 2001 dollars, federal spending will be about $34 billion in fiscal
year 2002, up from about $15 billion in 1991 (see fig. 1.9). Most of the
increase has been to accommodate a shift in focus at the federal level from
helping local governments control crime to emphasizing more distinct federal
responsibilities, such as controlling illegal immigration and, more
recently, preventing terrorist attacks.
Other 3%
Pensions 18%
Asset Income 18%
Earnings 23%
Social Security 38%
Strategic Objective: An Effective System of Justice
GAO STRATEGIC PLAN 2002- 2007 27
GOAL 1 Figure 1.9: Federal Outlays for the Administration of Justice, 1991
through 2003
Note: The 2002 and 2003 numbers are estimates. Source: Budget of the U. S.
Government, Fiscal Year 2003.
During the past several years, overall crime levels have been reduced.
Nevertheless, the Congress and the public remain concerned and look to the
federal government for leadership on how to control domestic and
transnational crime, including terrorism, to prevent illegal drug use, to
provide effective treatment for drug users, to deter illegal immigration,
and to control prison costs. The USA Patriot Act, passed in October 2001,
significantly expands federal law enforcement authority and, with billions
of dollars in emergency supplemental funding, will greatly increase the
federal counterterrorism role. In addition, the newly created Office of
Homeland Security in the Executive Office of the President is expected to
coordinate the executive branch?s efforts to detect, prepare for, prevent,
respond to, and recover from terrorist attacks within the United States.
Many of these functions are the primary roles of law enforcement at the
federal, state, and local levels- which heightens the importance of
effective coordination and cooperation. Also, the Justice Department has
begun to restructure the FBI and expects to redefine its mission and
priorities in light of the increased focus on antiterrorism.
In the wake of the September 11 terrorist attacks in New York, Virginia, and
Pennsylvania, the Congress authorized a Victim Compensation Fund through
which the federal government will compensate any
individual (or their representative) who was physically injured or killed as
a result of the terroristrelated aircraft crashes on that day. In November
2001, the Attorney General appointed a Special Master to administer the
fund. The Justice Department, in conjunction with the Special Master, issued
interim regulations in December, explaining the operation of the fund. In
addition, the master has issued a paper explaining how economic and
noneconomic losses will be calculated.
The Immigration and Naturalization Service (INS), the largest federal law
enforcement agency, has undergone dramatic growth in recent years. In
constant 2001 dollars, its fiscal year 2002 budget of $5.4 billion
represents an increase of over 200 percent from its fiscal year 1993 budget
and was subsequently increased further by the emergency supplemental funding
to deal with the events of September 11. Ensuring that aliens entering the
United States and staying here are authorized to do so has been a challenge
for INS, one that took on a new sense of urgency as part of the nation?s new
counterterrorism strategy. The 2000 census results indicated that there were
about 8 million illegal aliens residing in the United States, and that
during the 1990s their numbers had been increasing dramatically. Recently,
the Congress has addressed such issues as whether INS is properly structured
to effectively carry out its enforcement and service missions. On the
enforcement side, INS grapples with how illegal entry into the United States
can be deterred and how the removal of illegal aliens can be expedited. On
the service side, INS must determine how processes can be reformed for
naturalization, immigrants? entitlements to welfare benefits, and admitting
temporary agricultural and high- tech workers.
After several years of mandatory minimum sentencing, ?three strikes and
you?re out? laws, and truth- in- sentencing grants, federal and state
prisons are overcrowded. The size of the prison population will be the
subject of increasing public debate as these policies? cost to the public
escalates. Moreover, in constant 2001 dollars, the federal judiciary?s
fiscal year 2002 spending, estimated at about $4.8 billion, was up nearly
100 percent from its fiscal year 1991 spending of about $2.4 billion. In
addition, the judiciary has faced an imbalance in its workload in recent
years, particularly its criminal caseload, with some courts facing much
higher
0 5
10 15
20 25
30 35
40 1991 1993 1995 1997 1999 2001 2003
Fiscal Year 2001 Dollars in Billions
28 GAO STRATEGIC PLAN 2002- 2007
GOAL 1
workloads than others. Thus, the judiciary faces a major challenge in
determining how to use its resources efficiently and effectively to address
such workload imbalances and to coordinate its strategy with other affected
agencies, particularly along the southwest border.
P erformance Goals: To support efforts by the Congress and the federal
government to
address these issues, GAO will
identify ways to improve federal agencies? ability to prevent and respond to
major crimes, including terrorism;
assess the effectiveness of federal programs to control illegal drug use;
identify ways to administer the nation?s immigration laws to better secure
the nation?s borders and promote appropriate treatment of legal residents;
and
assess the administrative efficiency and effectiveness of the federal court
and prison systems.
I ssue: The economic and social well- being of the nation?s communities has
a great bearing on
the nation?s overall growth and prosperity. Vibrant communities are integral
to the quality of life of America?s citizens. Community and economic growth
is a multifaceted challenge involving state and local governments,
nonprofits, and private entities covering a range of issues, including
regional growth planning and management, local business development, home
ownership, and disaster preparedness. As underscored by the events of
September 11, where the critical role played by local governments in
preparing and responding to terrorism attacks was highlighted for the entire
nation, successful implementation of the many federal programs addressing
these objectives depends on effective local governance and management.
The federal government operates more than 100 programs through multiple
federal agencies and spends billions of dollars annually on grants, loans,
loan guarantees, and other types of assistance for community and economic
development. The sheer number of programs raises questions about the federal
role in economic development- whether it should be focused on communities
with special needs or more broadly directed toward all communities. In
addition, a large share of the federal commitment is administered through
state and local
governments and nonprofit organizations. This reliance on multiple layers of
government and nonprofits presents coordination issues for the local
communities and oversight challenges for the federal government.
Small businesses play an important role in the nation?s economy, employing
more than half of the nation?s workforce. The Small Business Administration
(SBA), with a portfolio of loans worth more than $50 billion, is the
nation?s single largest financial backer of small businesses and provides
management and technical assistance to about 1 million small business owners
annually. SBA also has oversight responsibility for federal contracting
goals for small businesses. SBA has undertaken numerous initiatives to
address management issues. As a result, the Congress needs up- to- date
assessments of SBA?s performance.
To promote affordable home ownership, a key element of a vibrant community,
the federal government provides mortgage assistance through mortgage
guarantees provided by the Federal Housing Administration and the VA and
guarantees of mortgage securities by the Government National Mortgage
Association (GNMA). It also provides a federal charter and other direct and
indirect benefits to government sponsored enterprises- Fannie Mae,
Strategic Objective: The Promotion of Viable Communities
GAO STRATEGIC PLAN 2002- 2007 29
GOAL 1
Freddie Mac, and the Federal Home Loan Banks- that invest in mortgages that
are not federally insured. The federal government must balance the benefit
derived from achieving additional home ownership, especially among the
underserved, against the financial risk it takes on directly or indirectly.
The Department of Housing and Urban Development (HUD) provides housing
assistance programs to help families with lower incomes reside in safe,
decent, and affordable housing. HUD?s rental assistance programs remain at
high risk of waste and abuse, and HUD faces numerous management challenges
in human capital, contract management and information technology. Also, HUD
and the U. S. Department of Agriculture?s Rural Housing Service, which
oversees rural housing programs, face challenges in ensuring that federally
assisted properties are physically and financially sound and administered in
a way that best serves the needs of lowincome households. All of these
challenges point to the need to better understand the relationship between
federally supported housing programs and community stability.
Since the late 1970s, the federal government provided over $100 billion to
help prepare for disaster and to assist disaster victims and their
communities. In response to the recent terrorist attacks, billions of
dollars have already been appropriated for recovery
and relief efforts. Establishing an efficient and costeffective approach to
disaster assistance is difficult in the face of pressures to provide relief
for disaster victims. However, approaches that provide incentives for
preventive activities and foster private insurance coverage are two avenues
that both the Federal Emergency Management Agency (FEMA) and the Congress
are interested in exploring.
P erformance Goals: To support efforts by the Congress and the federal
government to
address these issues, GAO will
assess federal economic development assistance and its impact on
communities,
assess how the federal government can balance the promotion of home
ownership with financial risk,
assess the effectiveness of federal initiatives to assist small and
minority- owned businesses,
determine how federal disaster assistance can enhance national preparedness
and capacity to respond to and recover from natural and manmade disasters,
and
assess how well federally supported housing programs meet their objectives
and affect the well- being of recipient households and communities.
I ssue: The nation?s natural resources and the systems associated with their
use are under unprecedented
stress, generating intense debate and posing daunting challenges to
policymakers at all levels of government. In part, this is the consequence
of the country?s growing population and economy, but other stress factors
exist as well, such as the globalization of the world?s economy and
political tensions. Most glaringly, the tragic events of September 11
revealed the nation?s vulnerability to hostile acts, mandating heightened
protection of its critical natural resources, including the air we breathe,
the
water we drink, the food we consume, and the energy supplies that keep the
economy going.
Even before the tragic events of September 11, however, part of the country
faced an energy crisis. The chaos in California?s electricity market
underscored the difficulties of crafting energy policies and regulatory
approaches that adequately protect against price volatility and supply
disruptions. Without the application of prudence and foresight in crafting
the nation?s strategic energy plan, similar crises could affect other areas
of the country in the
Strategic Objective: Responsible Stewardship of Natural Resources and the
Environment
30 GAO STRATEGIC PLAN 2002- 2007
GOAL 1
electricity, natural gas, heating oil, and gasoline markets. The challenge
is further complicated by the global nature of many energy markets, and
growing doubts about the long- term sustainability of policies that demand
increased production from the existing energy mix. Furthermore, strategies
must now incorporate greater attention to the means of protecting a massive
energy infrastructure that encompasses 5,000 power plants, 204,000 miles of
high voltage transmission lines, and nearly 3 million miles of oil and gas
pipelines. Finally, energy strategies must consider the environmental
consequences of energy choices, as illustrated by issues surrounding the
potential reemergence of the nuclear power industry. While increased nuclear
power capacity would provide needed electricity, vexing questions would
remain about where and how to store the byproduct radioactive waste in an
environmentally sound manner as well as how to secure the plants and waste
sites against possible future attacks.
The country?s lands and waters are more than ever under increasing stress.
This is evidenced by rapidly dwindling open spaces, declining biodiversity,
depleted aquifers, and collapsing fisheries- the unintended consequences of
economic growth and the need to sustain the lifestyle of a growing
population. Reconciling and balancing the demands of often competing
objectives- economic growth for today versus natural resource protection for
the future- is a major challenge facing the American public and their
elected leaders. The difficulties experienced in trying to reach agreement
on whether, and how, the Arctic National Wildlife Refuge in Alaska should be
used for oil and gas drilling is a prime example of this challenge. In this
case, the issue pertains to the use of federal lands, which constitute about
30 percent of the country?s total land surface, but similar controversies
exist over privately held lands affected by federal law and regulations. The
use of the nation?s waters present equally sobering challenges, as
pollutants and over fishing rapidly deplete coral reefs and offshore
fisheries, while competition over rights to fresh water supplies grows among
various interests, such as ranchers, communities, utilities, and
recreational users. Conflicts over water are especially pronounced in arid
areas of the West that have experienced a high population growth in recent
years.
Food safety lies at the forefront of concerns about the country?s
agricultural resources, an urgent matter given the potential for
agricultural bioterrorism. Besides this troubling matter, a whole range of
other food safety issues, while less ominous, nevertheless pose serious
questions. These include questions about the adequacy of the government?s
recent devolution of food inspection authority, and its new ?farm- to-
table? food safety approach. Foreign concerns are increasing, meanwhile,
about the safety of U. S. genetically modified crops and foods, an important
development given the significant role that food exports play in the health
of the U. S. agricultural economy. The Congress also faces other important
issues as it debates the future direction of U. S. farm policy. Questions
over the role of agriculture in land conservation, wildlife habitat
protection, and energy production efforts are likely to figure prominently
in the deliberations.
The increasing globalization of natural resource issues also affects
pollution control matters, as seen in the federal government?s discussions
with other governments about global warming and what should be done about
it. Such discussions add a new layer of complexity to the already difficult
question of how to sustain economic growth when the engines of that growth-
factories, cars and trucks, fertilizers, electricity generating plants- can
adversely affect air and water quality. Another factor in attaining federal
air and water quality goals is that land use practices, often resulting in
?urban sprawl,? are controlled mainly by local governments and private
owners. Moreover, the federal government relies upon state and local
governments for inspection and enforcement actions.
Finally, significant challenges remain in cleaning up the country?s
hazardous and radioactive waste sites. Today, an estimated 60 million
Americans live within 4 miles of a hazardous site, and radioactive waste
from weapons production still needs to be cleaned up at Department of Energy
sites in 13 states. These sites? continued existence poses not only
potential health and safety problems, but fiscal and economic problems as
well. Delayed cleanup results in higher price tags for eventual cleanup, and
in stunted economic development in the affected communities. Also, the
terrorist attacks of September 11 underlined the need for steps to
GAO STRATEGIC PLAN 2002- 2007 31
GOAL 1
ensure the security of hazardous and radioactive materials during storage,
transportation, and disposal. P erformance Goals: To support efforts by the
Congress and the federal government to address these issues, GAO will
assess the nation?s ability to ensure reliable and environmentally sound
energy for current and future generations;
assess federal strategies for managing land and water resources in
sustainable fashion for multiple uses;
assess federal programs? ability to ensure a plentiful and safe food supply,
provide economic security for farmers, and minimize agricultural
environmental damage;
assess federal pollution prevention and control strategies; and
assess efforts to reduce the threats posed by hazardous and nuclear wastes.
I ssue: The nation?s economic vitality and the quality of life of its
citizens depend to an important
degree on the soundness and availability of its physical infrastructure.
Transportation and telecommunications systems, for instance, provide the
superstructure for the nation?s economic engine, facilitating the movement
of people, goods, and ideas. Adequate drinking water and waste treatment
facilities are also essential to the well- being of all Americans. The
nation relies heavily on its postal system for efficient mail delivery
service. And thousands of federal facilities house and support human capital
and the other assets needed to provide services to the American people.
In both the short and the long term, the nation faces important
infrastructure challenges as federal, state, and local governments confront
new demands brought on by changes in demographics, technology, and
lifestyles. The challenges are complex, cutting across many interrelated
issues, and require coordinated intergovernmental responses. For example,
the vulnerability of infrastructure systems to terrorism requires effective
efforts to identify, prevent, and respond to threats. In addition, longterm
trends indicate that increasing numbers of motorists and air travelers are
encountering increas ingly congested highways and airport runways.
Suburban growth has raised demands for new roads, water and sewer systems,
and access to telecommunications. At the same time, existing communities are
demanding that the environment and their citizens? quality of life not be
harmed by this growth. The cost of maintaining and modernizing its
infrastructure is only one concern of a U. S. Postal Service that faces
growing financial, operational, and human capital challenges. In addition,
the deregulated transportation and telecommunications industries require
continuous oversight to help ensure that firms have a level playing field on
which to compete and that consumers receive the intended benefits of
deregulation.
The responses of the federal government and other levels of government to
these infrastructure challenges will have important consequences for the
nation?s future because of their effects on the quality of life and their
significant costs. Furthermore, infrastructure needs must compete with
noninfrastructure demands such as health care and the war on terrorism. As
shown in figure 1.10, federal spending for nondefense infrastructure has
increased only slightly since 1981.
Strategic Objective: A Secure and Effective National Physical Infrastructure
32 GAO STRATEGIC PLAN 2002- 2007
GOAL 1 Figure 1.10: Federal Spending on Infrastructure, 1981 through 1998
Source: GAO?s analysis of Office of Management and Budget data.
Given limited resources, decision makers must choose the investments that
promise to be most cost- effective and targeted to address national
infrastructure needs. These choices must be supported by credible data on
needs and costs, performance information and measures highlighting outcomes
from existing programs, and a budget process prompting a more explicit focus
on investment spending across agencies.
It is therefore essential for government at all levels to have the
information needed to make wellinformed decisions about how to allocate
funds among competing priorities, evaluate the challenges to determine which
solutions are most cost- effective, and implement these solutions as
efficiently and effectively as possible.
P erformance Goals: To support efforts by the Congress and the federal
government to
address these efforts, GAO will
assess strategies for identifying, evaluating, prioritizing, financing, and
implementing integrated solutions to the nation?s infrastructure needs;
assess the impact of transportation and telecommunications policies and
practices on competition and consumers;
assess efforts to improve safety and security in all transportation modes;
assess the U. S. Postal Service?s transformation efforts to ensure its
viability and accomplish its mission; and
assess federal efforts to plan for, acquire, manage, maintain, secure, and
dispose of the government?s real property assets.
Any significant changes in the major forces shaping the United States
discussed earlier in this plan will affect GAO?s ability to meet its goals
and objectives. Already, the tragic events since September 11 have wrought
major changes in the agenda of public policy issues facing the nation.
Domestic policy and programs have become more intertwined with the nation?s
security challenges, as the threats penetrate the nation?s borders. Each
major objective in this plan has been changed to reflect the implications of
the terrorism threat for GAO?s work in those areas.
However, much uncertainty remains. The scope of the threat itself could
shift in unforeseen ways. As the specific nature of the threats continues to
be defined, the consequences for domestic programs
and priorities are still unfolding. In some respects, federal, state, and
local governments are just beginning the process of defining the most
vulnerable facilities, areas, and services and designing effective
strategies to both mitigate known threats and prepare the nation to respond.
The consequences of these initiatives will extend beyond the confines of
counterterrorism programs themselves- the Congress and the agencies will be
challenged to redefine their budgetary and program priorities across the
entire range of programs and activities to better focus limited resources on
the major threats now facing the nation. As this process unfolds, GAO will
be called upon to help define effective counterterrorism strategies as well
as to identify other pro
0 20
40 60
80 100
120 140
160 180
200 1981 1985 1990 1995 1998
Fiscal Year 2000 Dollars in Billions Fiscal Year
Total Spending Defense Nondefense
External Factors that May Affect Achievement of Goal 1
GAO STRATEGIC PLAN 2002- 2007 33
GOAL 1
grams and activities that are candidates for deemphasis or reductions based
on long- standing problems with their performance.
The fiscal underpinnings for domestic policies and programs are also
shifting in ways that are still unclear. The recent recession and the
response to the terrorism attacks both have contributed to the shift in the
nation?s fiscal position from surplus to deficit, at least in the near term.
Health care costs have accelerated recently as well. The short- term
deterioration of the fiscal outlook will serve to further weaken the long-
term fiscal outlook, which is already unsustainable because of the aging of
the population. Should deficits continue beyond the immediate downturn,
renewed fiscal discipline will be necessary to restore the budget to balance
and then a surplus, to better promote the level of savings necessary to
prepare the nation for the longerterm challenges of an aging society. Unlike
the
1990s when the budget was balanced in large part with cuts to defense, this
time fiscal balance will have to be achieved by addressing other parts of
the budget, possibly including many of the areas covered in goal 1. The
economic downturn has implications for other areas covered by this plan. For
instance, changes in the rates of return of major stock markets could
dramatically affect retirement patterns and issues. Declining returns could
place some private pension plans in jeopardy, cause some workers to postpone
retirement, and force retirees to rely more on Social Security for their
retirement income.
Any of these developments would reshape congressional needs for information
and analyses. GAO will be prepared to respond to such a change by
maintaining its expertise and the models needed for such analyses.
GOAL 2
34 GAO STRATEGIC PLAN 2002- 2007
Goal 2
Provide Timely, Quality Service to the Congress and the Federal Government
to Respond to Changing Security Threats and the Challenges of Global
Interdependence
As the world grows increasingly interconnected through more open markets and
rapidly developing technology, the globalization of markets has created new
opportunities for the nation as a whole and for American producers and
consumers. At the same time, the United States is facing threats to its
security and economy from sources that range from terrorism to regional
conflicts to instability sparked by adverse economic conditions, corruption,
ethnic hatreds, nationalism, and disease. Consequently, while seeking to
anticipate and address diffuse threats to the nation?s security and economy,
the federal government also tries to promote foreign policy goals, sound
trade policies, and other strategies to advance the interests of the United
States and those of U. S. trading partners and allies in every corner of the
world. In light of the globalization, technology, and security trends, the
second goal of GAO?s strategic plan is to help the Congress and the federal
government respond to changing security threats and the challenges of global
interdependence. GAO?s specific objectives are to support congressional
and federal efforts to
respond to diffuse threats to national and global security,
ensure military capabilities and readiness,
advance and protect U. S. international interests, and
respond to the impact of global market forces on U. S. economic and security
interests.
GAO STRATEGIC PLAN 2002- 2007 35
GOAL 2
I ssue: The United States and other nations face increasingly diffuse
threats in the post- cold war
era. Adversaries have demonstrated they are more likely to strike vulnerable
civilian or military targets in nontraditional ways to avoid direct
confrontation with U. S. military forces on the battlefield. Porous borders
and rapid technological change make such threats more viable. At risk are
the nation?s values, way of life, and the personal security of its citizens.
In response to the most recent attacks, the President, on October 8, 2001,
established the Office of Homeland Security to develop and coordinate a
national strategy. The office will coordinate the nation?s efforts to
prevent, respond, and recover from the aftermath of terrorist attacks and to
plan and budget for its homeland security mission. To support this new
strategy, there also will have to be
a concerted effort to improve the threat information the United States
receives from foreign and domestic sources; to understand the nature of the
threats to vulnerable assets and processes; and to protect the nation?s
military forces, critical infrastructures and computer and
telecommunications systems, and population. As discussed earlier,
preparing and responding to these threats will entail a governmentwide
effort involving both defense and domestic agencies and programs.
Internationally, the United States and its allies will have to bolster their
efforts to prevent the proliferation of dangerous weapons that can be used
to carry out threats to the nation?s security.
P erformance Goals: To support congressional and federal decision making on
governmentwide
preparation for and response to diffuse threats to national and global
security, GAO will
analyze the effectiveness of the federal government?s approach to providing
for homeland security;
assess U. S. efforts to protect computer and telecommunications systems
supporting critical infrastructures in business and government; and
assess the effectiveness of U. S. and international efforts to prevent the
proliferation of nuclear, biological, chemical, and conventional weapons and
sensitive technologies.
I ssue: After a decade of decline in defense spending, DOD has seen a
gradual increase in
recent years. The fiscal year 2002 budget of about $331 billion represented
the largest increase in defense spending in recent years and came amidst
growing concerns over the readiness of U. S. forces. The budget included
additional resources for operational maintenance, quality- of- life
programs, pay raises, and improvements to crumbling facilities. The most
recent Quadrennial Defense Review
charts a new defense strategy emphasizing homeland security, military
transformation, joint operations, and advanced capabilities related to
information technology, intelligence, and space operations. Follow- on
studies will more precisely define how existing defense programs and
priorities will change. The new defense strategy also highlights the
criticality of reforming the department?s business practices, streamlining
organizational struc
Strategic Objective: Respond to Diffuse Threats to National and Global
Security
Strategic Objective: Ensure Military Capabilities and Readiness
36 GAO STRATEGIC PLAN 2002- 2007
GOAL 2
tures, and eliminating excess infrastructure that unnecessarily diverts
resources from other defense priorities.
Obviously, the nature and intensity of the expected defense debate changed
on September 11. The terrorist attacks heightened the debate over types of
military capabilities and tactics required to address this threat and ensure
adequate homeland protection. The Congress appropriated $40 billion in
supplemental funds to deal with the immediate consequences of the attacks,
with a large portion subsequently designated for increased defense spending.
Requests for significant additional increases in defense spending are
planned for fiscal year 2003 and beyond. The debate about what capabilities
DOD must maintain and develop, where they should exist, and to what extent
additional defense spending is required will be significantly shaped by the
debate over the military?s role in homeland security and the augmentation of
the civilian agencies? roles in the fight against terrorism. Nonetheless,
the Quadrennial Defense Review is the linchpin tying many of these issues
together (see fig. 2.1).
Figure 2.1: Key Topical Issues Framing the Defense Debate
P erformance Goals: To support efforts by the Congress and the federal
government to address
these issues, GAO will
assess the ability of DOD to maintain adequate readiness levels while
addressing the force structure changes needed in the 21 st century;
assess overall human capital management practices to ensure a high- quality
total force;
identify ways to improve the economy, efficiency, and effectiveness of DOD?s
support infrastructure and business systems and processes;
assess the National Nuclear Security Administration?s efforts to maintain a
safe and reliable nuclear weapons stockpile;
analyze and support DOD?s efforts to improve budget analyses and performance
management;
assess whether DOD and the services have developed integrated procedures and
systems to operate effectively together on the battlefield; and
assess the ability of weapon system acquisition programs and processes to
achieve desired outcomes.
Weapon Systems Modernization
Quality of Life and Facilities Infrastructure Homeland
Security
Defense Challenges
Human Capital Challenges Guard
and Reserve Roles
Force Transformation Nuclear Stockpile
Capabilities Based Strategy
vs. 2 Theater Wars Improved
Business MajorPractices Jointness
and Interoperability
GAO STRATEGIC PLAN 2002- 2007 37
GOAL 2
I ssue: Although U. S. leaders agree on the ulti- mate goal of promoting
global peace, prosperity,
and stability, intense debate is occurring over how to achieve that goal.
Military and humanitarian interventions to make or keep the peace, stabilize
and rebuild failed states, and deal with humanitarian emergencies have
become major activities for the United States. These interventions are
controversial, both domestically and internationally. They also are costly:
the United States has spent more than $23 billion in the Balkans since the
early 1990s. Many billions more are likely to be spent fighting terrorism.
Such interventions are likely to continue to play a prominent role in
addressing the forces giving rise to terrorism.
Countries in transition to democracies and private market structures are
critical to U. S. economic and security interests. The countries and regions
in transition are large, having combined populations in excess of two
billion, and some are of strategic importance to the United States. The
United States supports and encourages these transitions to democracies
through several means. These include rule- oflaw assistance, measures to
combat corruption, military support and training, and development assistance
and humanitarian aid. The extent to which countries can successfully make
the transition to and maintain democratic governments and market economies
will significantly influence U. S. economic and security objectives and,
ultimately, the U. S. budget. Countries failing to make the transition are
more likely to embrace destructive nationalistic policies. The application
and effectiveness of the tools available to the United States may affect the
outcomes.
Strategic alliances established decades ago are undergoing changes to better
reflect current and future needs and priorities. For example, the terrorist
attacks in New York and Washington
have prompted calls to develop new coalitions to pursue military, political,
and economic efforts to erode terrorists? networks and their sources of
support. As the North Atlantic Treaty Organization (NATO) expands its
membership eastward, its focus is changing from defending the territory of
Western Europe to promoting peace and stability outside member countries.
NATO enlargement has important implications for U. S. relations with Russia,
too. In addition, NATO?s expansion in the Balkans has highlighted the
significant gaps that exist between the military capabilities of the United
States and those of other NATO members. These gaps are likely to grow,
further complicating the ability of the alliance to conduct joint operations
and exacerbating concerns over how roles and costs will be shared by NATO
members.
Conducting foreign affairs is becoming more complicated as the lines between
domestic and international issues blur and the threat of terrorist attacks
on U. S. facilities and personnel overseas changes how America does
business. About 35 federal agencies have around 19,000 U. S. staff assigned
to overseas embassies (see fig. 2.2), and most federal policies have
international aspects. The State Department plays a key role in coordinating
U. S. policy and programs for a region or country. To carry out its
responsibilities, the State Department operates more than 250 embassies and
consulates located in over 160 countries. It either owns or leases about
12,000 properties at these locations. The reasonableness of the size and
composition of the State Department?s overseas infrastructure is being
questioned, particularly in light of security concerns. Also being
questioned are the practices for granting entry into the United States and
the need to block the entry of terrorists and criminals while at the same
time facilitating entry for legitimate travel key to the nation?s
prosperity. Moreover, recent attacks on the United States prompted a
rethinking of U. S. public diplomacy
Strategic Objective: Advance and Protect U. S. International Interests
38 GAO STRATEGIC PLAN 2002- 2007
GOAL 2
and public affairs activities and ways to better understand, inform, and
influence foreign publics and policymakers.
Figure 2.2: Federal Agencies? 19,000 U. S. Employees Assigned to Embassies
Note: USAID stands for the U. S. Agency for International Development.
Source: State Department.
P erformance Goals: To support efforts by the Congress and the federal
government to
address these issues, GAO will
analyze the plans, strategies, costs, and results of the U. S. role in
conflict interventions;
analyze the effectiveness and management of foreign aid programs and the
tools used to carry them out;
analyze the costs and implications of changing U. S. strategic interests;
evaluate the efficiency and accountability of multilateral organizations and
the extent to which they are serving U. S. interests; and
assess the strategies and management practices for U. S. foreign affairs
functions and activities.
I ssue: Globalization is increasing the interdepen- dence of the world?s
economies and affecting
national security and the economic well- being of the American people. U. S.
exports have grown much faster than the economy (see fig. 2.3). Moreover,
the United States has been the principal architect of an open world trading
system and, as the world?s largest exporter of goods and services, has
benefited immensely from global trade. But segments of the U. S. and world
populations have not shared equally in these benefits and may not do so in
the future. Moreover, global market forces have made the United States more
vulnerable to overseas
economic crises. In addition, it has become more difficult for the United
States to maintain control over critical technologies and the industrial
base that U. S. economic and military security depends on. With the global
reach of the Internet, electronic government and commerce applications move
more easily across national boundaries. These applications thereby raise
legitimate questions about legal responsibility, consumer protection,
jurisdiction over offenses committed online, and many others. For
policymakers, several aspects of these trends require particular attention:
State Department
40%
Defense Department
38%
Justice Department
6%
USAID
5%
Other Federal Agencies
11%
Strategic Objective: Respond to the Impact of Global Market Forces on U. S.
Economic and Security Interests
GAO STRATEGIC PLAN 2002- 2007 39
GOAL 2 Figure 2.3: Growth in U. S. Exports Compared to GDP since 1970
Source: Calculated from International Monetary Fund data.
Trade agreements are increasing in number and importance to the U. S.
economy. More than 300 international trade agreements affect hundreds of
billions of dollars in trade and millions of U. S. jobs. The mutual
dependence of international markets and the U. S. economy is expected to
increase even further with China?s recent admission to the World Trade
Organization and the launching of new multilateral trade negotiations. Over
10 U. S. agencies have programs to promote U. S. exports. These programs
include providing financial assistance through loans, loan guarantees, and
grants as well as providing U. S. businesses with information on the export
process.
The globalization of the defense industry, driven by the drop in
governments? military investments worldwide, is following patterns similar
to those found in other commercial sectors. Defense companies are engaged in
a wide variety of business arrangements across national borders. For
example, U. S. companies enter into offset agreements, in many cases
developing long- term supplier relationships, which will change the nature
of the market and the composition of the DOD supplier base. Although
globalization has the potential to speed innovation and reduce costs, it
also carries potential threats to the technological superiority of the U. S.
military and may require even greater investments in weapons modernization.
Global financial health and the maintenance of the global financial and
trade systems are critical to long- term U. S. objectives and are
cornerstones of U. S. foreign policy. Financial crises in Argentina, Mexico,
Asia, Russia, and elsewhere have raised questions about what can be done to
prevent, solve, or contain the spread of regional financial crises and what
can be done to reduce the debt burden on poor countries. International
financial institutions, such as the International Monetary Fund (IMF) and
the World Bank, are at the center of efforts to address financial crises.
The United States is the major contributor to the IMF and relies heavily on
it and the World Bank to promote world economic health. The operations and
transparency of these institutions have come under increased scrutiny.
Oversight of financial institutions and markets has become increasingly
challenging. Each day, millions of households collectively have trillions of
dollars flowing through the nation?s financial institutions and markets. The
globalization of financial firms and markets along with constantly advancing
technology have created opportunities for increased efficiencies but also
have increased the speed and potential scope of undesirable results that may
occur, such as the flow of illegal finances or the spread of financial
crises. The global scope of firms, along with difficulties in valuing
knowledge- based assets, also raise questions about the accounting and
disclosure models that underpin U. S. financial markets. Finally, the
globalization of electronic commerce increases access but makes it harder to
protect consumers and businesses from fraudulent and abusive marketing as
well as adding to audit, security, backup, and disaster recovery concerns.
P erformance Goals: To support efforts by the Congress and the federal
government to
address these issues, GAO will
analyze how trade agreements and programs serve U. S. interests,
improve understanding of the effects of defense industry globalization,
assess how the United States can influence improvements in the world
financial system,
0 100
200 300
400 500
600 1970 1975 1980 1985 1990 1995 2000
Index, 1970= 100 Exports Grew More than Twice as Fast as GDP
Exports GDP
40 GAO STRATEGIC PLAN 2002- 2007
GOAL 2
assess the ability of the financial services industry and its regulators to
maintain a stable and efficient global financial system,
evaluate how prepared financial regulators are to respond to change and
innovation, and
assess the effectiveness of regulatory programs and policies in ensuring
access to financial services and deterring fraud and abuse in financial
markets.
Other factors, in addition to those discussed earlier, could affect GAO?s
ability to achieve this goal. First, as the United States plans and executes
its short- and long- term responses to recent terrorist attacks on the
homeland, concerns about operational security are likely to be emphasized
both at home and abroad. Consequently, it may be more difficult to obtain
and report on operational and readinessrelated information. GAO reports
dealing with these areas may be subjected to greater classification reviews
than in the past, which could limit their public dissemination. Moreover,
historically GAO?s access to the intelligence community for audit and
information purposes has been limited. Continuation of this practice could
hamper GAO?s ability to fully assess progress in addressing the full range
of homeland security issues.
Second, GAO has not had authority historically to access or inspect records,
documents, or other materials held by other countries and at multilateral
institutions that the United States works with to protect its interests.
Accordingly, GAO?s ability to conduct thorough analyses of some issues has
been affected by the level of openness and voluntary cooperation. However,
the recent terrorist attacks in the United States are producing unparalleled
opportunities for international cooperation in some areas. Likewise, other
changes in the international environment and unanticipated geopolitical
crises could affect GAO?s strategy and objectives. GAO will monitor
international events, work closely with its congressional clients, and
maintain broad- based staff expertise so that it can quickly adjust its work
focus to meet emerging needs.
External Factors that May Affect Achievement of Goal 2
GOAL 3
GAO STRATEGIC PLAN 2002- 2007 41
Goal 3
Help Transform the Federal Government?s Role and How It Does Business to
Meet 21 st Century Challenges
The federal government faces an array of challenges, including the national
response to terrorism, transition to a knowledge- based economy, rapid
technological advances, and changing demographics. These challenges require
a fundamental reexamination of the government?s priorities, processes,
policies, and programs to effectively address shifting public expectations,
needs, and fiscal pressures. What has become obvious since September 11 is
that the federal government will need to work better with other governments,
nongovernmental organizations, and the private sector- both domestically and
internationally- to achieve results. A mixture of critical resources is
needed for the federal government to better deliver public services. Because
the public expects demonstrable results from the federal government,
government leaders need to increase strategic planning, address management
challenges and high- risk issues, use integrated approaches, enhance their
agencies? results orientation, and ensure accountability. Examining existing
programs and operations for potential cost savings can create much needed
fiscal flexibility to address emerging needs. Moreover, addressing today?s
priorities must be balanced against the longterm fiscal pressures of
financing existing programs and operations.
GAO has refined its third strategic goal and the accompanying strategic
objectives in light of the comprehensive reassessment called for in the
current environment. Specifically, GAO now focuses on the collaborative and
integrated elements needed to achieve results, and it highlights the
intergovernmental relationships that are necessary to achieve national
goals.
To ensure that GAO helps transform the role of government and how it does
business to meet 21 st century challenges, it has established strategic
objectives to
analyze the implications of the increased role of public and private parties
in achieving federal objectives;
assess the government?s human capital and other capacity for serving the
public;
support congressional oversight of the federal government?s progress toward
being more results- oriented, accountable, and relevant to society?s needs;
and
analyze the government?s fiscal position and approaches for financing the
government.
42 GAO STRATEGIC PLAN 2002- 2007
GOAL 3
I ssue: Over time, as the federal government has sought to address more
complex and pervasive
societal needs, the traditional ?bright lines? between the public sector and
the private sector and between the federal government and other public
sector institutions have become increasingly blurred. In fact, since the
1930s there has been a largely overlooked revolution in which the
traditional hierarchical federal agency model- that is, a federal agency
implementing a program through annually appropriated funding- has been
essentially replaced by an incredibly diverse and blended service- delivery
model involving many different parties and tools of intervention (for
example, grants, tax expenditures, regulations, loans, guarantees, and
insurance). Nowhere does this revolution become more evident and more
confounding than in federal agencies? efforts to become more
resultsoriented. In the 21 st century, federal agencies? performance and
accountability will, to an ever greater extent, be seen as a function of
nonfederal entities
and involve tools that are typically not subject to the same level of annual
or even periodic oversight and reexamination as more traditional federal
programs and activities.
P erformance Goals: To inform the Congress of the implications of the
increased role of public
and private parties in achieving federal objectives, GAO will
analyze the modern service- delivery system environment and the complexity
and interaction of service- delivery mechanisms,
assess how involvement of state and local governments and nongovernmental
organizations affect federal program implementation and achievement of
national goals, and
assess the effectiveness of regulatory administration and reforms in
achieving government objectives.
I ssue: The federal government requires a mixture of critical resources-
such as human capital,
information technology, and financial systems- to fulfill its roles and
achieve intended results. Unfortunately, over the last decade, the federal
government has missed opportunities to make needed investments in these
resources effectively. For
example, agencies have only recently started the analysis necessary to link
their human capital policies and practices to their missions and goals. This
situation puts the government at risk because an increasing number of
federal employees will become eligible to retire over the next several years
(see fig. 3.1).
Strategic Objective: Analyze the Implications of the Increased Role of
Public and Private Parties in Achieving Federal Objectives
Strategic Objective: Assess the Government?s Human Capital and Other
Capacity for Serving the Public
GAO STRATEGIC PLAN 2002- 2007 43
GOAL 3 Figure 3.1: Employees Eligible to Retire at 24 Major Agencies, Fiscal
Years 1999 through 2012
Notes: Estimates do not reflect likely attrition before becoming eligible to
retire. ?Employees? are career federal employees at agencies that fall under
the Chief Financial Officers (CFO) Act, which account for about 98 percent
of the executive branch?s employees. The CFO Act agencies include the
cabinet agencies and major independent agencies, such as the Environmental
Protection Agency and the Social Security Administration, but exclude the U.
S. Postal Service, the Federal Reserve, the Tennessee Valley Authority, and
the intelligence agencies. Source: GAO?s analysis of data from the Office of
Personnel
Management?s Central Personnel Data File as of Sept. 30, 1998.
Accordingly, GAO and the President have identified human capital as a
critically needed management reform. In January 2001, GAO designated
strategic human capital management as a governmentwide high- risk area.
GAO?s high- risk report outlined four pervasive human capital challenges
facing the federal government:
strategic human capital planning and organizational alignment;
leadership continuity and succession planning;
acquiring and developing staffs whose size, skills, and deployment meet
agency needs; and
creating results- oriented performance cultures. Moreover, the President?s
Management Agenda for Fiscal Year 2002 also identifies human capital as the
first of five governmentwide areas for management reform (see fig. 3.2). It
calls for workforce planning and restructuring in terms of each agency?s
mission, goals, and objectives. Both the administration and the Congress
have proposed legislation intended to address human capital issues at the
federal level.
Figure 3.2: The President?s Management Agenda for Fiscal Year 2002:
Governmentwide Initiatives
In addition, numerous poorly managed information technology systems have
produced multimilliondollar cost overruns, schedule slippages, and poor
results, and now the government?s information technology and management
infrastructure faces security threats. Similarly, the federal government?s
financial management has suffered from neglect and financial systems with
serious shortcomings. One result of this condition is that many agencies
prepare statutorily required annual financial statements, and receive
unqualified audit opinions, only by using inefficient, time- consuming, and
costly processes to remedy inaccurate and untimely information produced by
their financial systems. This approach does not result in significantly
improved financial management and requires resources that could otherwise be
used to address underlying financial management systems and control
problems. Moreover, financial management success goes beyond an unqualified
financial statement audit opinion- the federal government also must
recognize the importance of success measures such as having financial
information that is timely, reliable, and useful for managing operations day
to day; financial systems that meet requirements; no material internal
control weaknesses; and cost reporting that captures the full cost of
programs and projects.
Agencies also are considering other approaches for achieving greater
efficiency and effectiveness in their operations, including appropriate use
of contracts with the private sector. In response to a congressional
mandate, GAO convened the Commercial Activities Panel, chaired by the
Comptroller General, to review the process and procedures agencies use to
decide whether to have needed services performed by government employees or
through contracts with the private sector. The panel issued its report to
the Congress
0 10,000
20,000 30,000
40,000 50,000
60,000 70,000
80,000 2000 2002 2004 2006 2008 2010 2012
Fiscal Year Number of Employees 1. Strategic Management of Human Capital
2. Competitive Sourcing 3. Improved Financial Performance 4. Expanded
Electronic Government 5. Budget and Performance Integration
44 GAO STRATEGIC PLAN 2002- 2007
GOAL 3
on April 30, 2002. The panel developed a set of principles to be used in
addressing sourcing decisions and recommended that competitions between the
public and private sectors to perform commercial functions be conducted
using the established framework of the Federal Acquisition Regulation (FAR).
GAO will be following developments in this area closely in the coming years.
While it is important to enhance the government?s use of new technologies to
improve the collection and dissemination of government information, it is
also important that this information- especially that collected for
statistical purposes- meets the current needs of federal programs and
policymakers. In areas where the U. S. economic and social structure is
undergoing major change, statistical agencies need to respond to these
changes with relevant data on a timely basis.
Finally, despite recent reforms to transform the federal acquisition
process, the government still does not have a world- class purchasing
system. All too often, many of the products and services the government buys
cost more than expected, are delivered late, or fail to perform as expected.
No commercial business would remain viable for very long with results like
these. Significant improvements- including the skills of the acquisition
work force- are needed to produce better outcomes that
mirror the practices of the nation?s best commercial companies.
P erformance Goals: To assess the government?s capacity to better deliver
public services,
GAO will
identify and facilitate the implementation of human capital practices that
will improve federal economy, efficiency, and effectiveness;
identify ways to improve the financial management infrastructure capacity to
provide useful information to manage for results and costs day to day;
assess the government?s capacity to manage information technology to improve
performance;
assess efforts to manage the collection, use, and dissemination of
government information in an era of rapidly changing technology;
assess the effectiveness of the Federal Statistical System in providing
relevant, reliable, and timely information that meets federal program needs;
and
identify more businesslike approaches that can be used by federal agencies
in acquiring goods and services.
I ssue: During the past decade, the Congress has sought to instill a greater
focus on results and
accountability by enacting a statutory framework with the Government
Performance and Results Act (GPRA) as its centerpiece. However, GAO has
reported that performance improvements do not take place merely because a
set of management requirements has been established and that building
organizational cultures that help create and sustain a focus on results
remains a work in progress. Linking the GPRA strategic planning process to
institutional and individual performance management and reward systems can
serve to significantly accelerate movement toward a more results- oriented
and accountable federal government. In GAO?s governmentwide surveys, for
example, federal managers have reported that their top leaders still do not
show a consistently strong commitment to achieving results (see fig. 3.3).
Strategic Objective: Support Congressional Oversight of the Federal
Government?s Progress toward Being More ResultsOriented, Accountable, and
Relevant to Society?s Needs
GAO STRATEGIC PLAN 2002- 2007 45
GOAL 3 Figure 3.3: Extent to Which Top Leadership Is Perceived as
Demonstrating a Strong Commitment to Achieving Results, 1997 and 2000
Note: Survey respondents were both Senior Executive Service (SES) members
and non- SES members. ?Top leadership? refers to the leadership of the
agencies in which the respondents serve.
Source: GAO survey data.
Also, in crafting GPRA, the Congress recognized that if federal managers
were to be held accountable for program results, they would need the
authority and flexibility to achieve those results. However, managers also
reported that while they often are held accountable for results, they
sometimes do not have the decision- making authority they need to accomplish
agency goals (see fig. 3.4).
Figure 3.4: Extent to Which Managers Believe They Have Needed Decision-
Making Authority and Are Held Accountable for Results, 1997 and 2000
Notes: ?Needed? decision- making authority refers to the authority managers
responding to the survey believe managers at their level need to help their
agencies accomplish their strategic goals.
Source: GAO survey data.
Part of a results- oriented framework is relevance; that is, the extent to
which programs meet society?s priorities. Performance indicators can help
decision makers gauge the relevance of programs in meeting societal needs.
The President?s Management Agenda for Fiscal Year 2002 also seeks to instill
a greater focus on governmental results, presenting a number of
governmentwide initiatives, including the aforesaid human capital goals, and
program- specific initiatives intended to improve federal management and to
deliver results. For example, consistent with GAO?s position, the agenda
identified improving financial performance as an important initiative to
stop erroneous benefit and assistance payments and to ensure that agencies
supply reliable, accurate, and timely information to enhance accountability
to the American people. Furthermore, among the specific initiatives is the
development of better criteria for federal investment in science and
technology. Although science and technology are major factors in economic
growth, there must be accountability for the investment of the federal money
supporting these activities in terms of effectiveness in achieving specific
goals.
52 56 72 76
0 10
20 30
40 50
60 70
80 90
100 1997 2000
Percentage
Non- SES SES Had Decision- Making Authority
Held Accountable for Results
56 34 51
29 66 62 62
54
0 10
20 30
40 50
60 70
80 90
100 Non- SES SES Non- SES SES
Percentage 1997 2000
46 GAO STRATEGIC PLAN 2002- 2007
GOAL 3
Also, today, there are widespread concerns about the accountability
profession?s role in serving the public?s interest. GAO assists the Congress
in this important area, such as by overseeing the governance of the auditing
profession, setting the standards auditors use to perform audits of federal
funds and activities, and working collaboratively with the inspectors
general to issue a methodology for conducting federal financial statement
audits.
P erformance Goals: To support congressional oversight of the federal
government?s progress
toward being more results- oriented, accountable, and relevant to society?s
needs, GAO will
analyze and support efforts to instill resultoriented management across the
government,
highlight the federal programs and operations at highest risk and the major
performance and management challenges confronting agencies,
identify ways to strengthen accountability for the federal government?s
assets and operations,
promote accountability in the federal acquisition process,
assess the management and results of the federal investment in science and
technology and the effectiveness of efforts to protect intellectual
property, and
identify ways to improve the quality of evaluative information and explore
the use of governmentwide performance indicators to gauge progress in
meeting societal needs.
I ssue: The federal budget is the principal annual vehicle through which the
Congress and the
President balance competing views about the allocation of federal resources,
accountability for those resources, and the allocation of responsibility
between the public and private sectors and among levels of government. After
many years of attempting to balance the federal budget in the face of
chronic deficits and mounting federal debt, federal fiscal policy in recent
years focused on saving surpluses and reducing debt. In the past year,
however, the near- term budget outlook has worsened with deficits projected
for the next few years. GAO?s long- term budget model has consistently
suggested that without changes for the major retirement and health care
programs, large deficits and mounting debt will emerge over the long term.
It will be difficult to address today?s urgent need to deal with terrorism
and to increase national pre paredness without unduly exacerbating the
nation?s
long- term fiscal challenges. The budget controls instituted to achieve
balance have recently expired, but no agreement has been reached on the
appropriate structure or process for focusing on the fiscal challenges that
now move to center stage.
To understand the context for near- term budget decisions more fully, it is
important to look at trends in revenue sources and the distribution of
expenditures. These trends show (among other things) growth in the relative
share of revenues derived from employment taxes, such as those for Social
Security (Old- Age Survivors and Disability Insurance), and a dramatic
change over time in composition of spending, with a growing share devoted to
health and interest on the debt, as figures 3.5 and 3.6 show.
Strategic Objective: Analyze the Government?s Fiscal Position and Approaches
for Financing the Government
GAO STRATEGIC PLAN 2002- 2007 47
GOAL 3 Figure 3.5: Composition of Federal Receipts by Source, Fiscal Years
1962, 1982, and 2002
Note: Fiscal year 2002 data are the current services estimates of the Office
of Management and Budget.
Source: Budget of the U. S. Government, fiscal year 2003. Figure 3.6:
Composition of Federal Spending by Budget Function, Fiscal Years 1962, 1982,
and 2002
Note: Fiscal year 2002 data are the current services estimates of the Office
of Management and Budget.
Source: Budget of the U. S. Government, fiscal year 2003. In rethinking
federal fiscal policy and preparing for the long- term budgetary challenges,
policymakers have the opportunity to consider what the federal government
does and how to finance those activi ties. American taxpayers annually pay
about $2 trillion
in taxes to fund the federal government. The federal tax system includes
numerous tax provisions intended to influence taxpayers? behavior throughout
the economy, but little is known about the effects of many of these
provisions. Given the size and complexity of the federal tax code, the
Congress remains interested in tax reform, particularly simplification. As
the nation?s chief tax collector, the Internal Revenue Service (IRS)
interacts with more Americans than any other government agency, and
compliance with tax laws is a significant burden imposed on businesses and
individuals. IRS is in the midst of implementing major legislatively
mandated reforms in how the nation?s tax system is administered, and
congressional interest remains focused on what progress IRS is making.
Congressional attention will also continue to focus on controlling spending.
A key to making resource decisions is having reliable, useful, and timely
financial information routinely available. Such information is also
necessary to ensure financial accountability and to improve the economy,
efficiency, and effectiveness of government actions that have a direct
effect on achieving a more results- oriented government.
P erformance Goals: To analyze the government?s fiscal position and identify
ways to
strengthen approaches for financing the government, GAO will
analyze the long- term fiscal position of the federal government,
analyze the structure and information for budgetary choices and explore
alternatives for improvement,
contribute to congressional deliberations on tax policy,
support congressional oversight of IRS?s modernization and reform efforts,
and
assess the reliability of financial information on the government?s fiscal
position and financing sources.
Individual Income Taxes Corporation Income Taxes Social Insurance Excise Tax
and Other
17% 17%
45% 21%
33% 11%
48% 8% FY 1962 FY 1982 FY 2002
35% 7%
48% 10%
FY 1962 31% 6%
13% 50%
FY 1982 34% 11%
9% 21% 25%
FY 2002 33%
18% 9% 17%
23%
Defense Social Security Medicare and Medicaid Net Interest All Other
Spending
48 GAO STRATEGIC PLAN 2002- 2007
GOAL 3
Efforts to improve the government?s performance and accountability could be
affected by (1) the heightened priorities now assigned by the administration
and agency management to homeland defense in response to the terrorist
attacks that began on September 11, (2) the capacity within agencies to
develop and use performance and cost information effectively to make
improvements, (3) the level and management of resources provided for needed
investments in agencies? manage ment systems, and (4) the evolving fiscal
position of
the government, as it is affected by both the economy and policy decisions.
While recent events are likely to lead to significant competition for, and
increases in, federal spending on homeland defense issues, GAO will
emphasize the importance of improved business practices and useful
performance and cost information to better ensure the cost- effective use of
federal resources.
External Factors that May Affect Achievement of Goal 3
GOAL 4
GAO STRATEGIC PLAN 2002- 2007 49
Goal 4
Maximize the Value of GAO by Being a Model Federal Agency and a World- Class
Professional Services Organization
To successfully carry out its responsibilities to the Congress for the
benefit of the American people, GAO?s work must be professional, objective,
factbased, nonpartisan, nonideological, fair, and balanced. GAO should also
lead by example. The focus of goal 4 is to make GAO a model organization-
one that is client and customer driven; exhibits the characteristics of
leadership and management excellence; leverages its institutional knowledge
and experience; is devoted to ensuring quality in its work processes and
products through continuous improvement; and is regarded as an employer of
choice.
In this respect, the focus of goal 4 for the period 2002 through 2007 is
largely unchanged from the previous plan. GAO has, however, made some
refinements. For example, rather than have a separate strategic objective
for information technology (IT), GAO has integrated technology efforts
throughout this strategic plan because technology significantly contributes
to GAO?s performance and affects many agencywide efforts. Furthermore, GAO
has added a strategic objective on knowledge sharing to ensure that as a
knowledge- based organization, it collects, shares, and leverages its
institutional knowledge on emerging issues that shape America today and in
the future.
To accomplish GAO?s goal of being a model federal agency and a world- class
professional service organization, the strategic objectives are to
sharpen GAO?s focus on clients? and customers? requirements,
enhance leadership and promote management excellence,
leverage GAO?s institutional knowledge and experience,
continuously improve GAO?s business and management processes, and
become the professional services employer of choice.
50 GAO STRATEGIC PLAN 2002- 2007
GOAL 4
I ssue: GAO interacts and works with a diverse set of external clients and
internal customers.
GAO?s principal client is the Congress, but its work is also important to
other stakeholders, including federal, nonfederal, and international
agencies, organizations, and institutions. GAO?s internal customers are its
own staff. They are the principals responsible for delivering quality
products and services to GAO?s clients. Therefore, being a model agency
depends on both determining and meeting the requirements of clients and
internal customers.
For external clients, GAO plans to continuously update its understanding of
their needs and expectations through expanded outreach efforts and strategic
planning. GAO also plans to develop and use quality measurement systems and
feedback mechanisms to obtain external clients? views on GAO?s products and
services. In addition, to complement congressional protocols implemented
during the previous planning cycle, GAO will develop
protocols for each major stakeholder group- agencies and international
organizations- to help govern interactions and manage expectations.
For internal customers, GAO plans to identify their needs and expectations
through expanded outreach and planning efforts. GAO will identify and
develop high- quality measurements to assess customer satisfaction, business
processes, and accomplishment of the agency?s strategic direction. In
addition, GAO will develop policies and procedures to guide how its work
responds to customer needs.
P erformance Goals: To support the objective to sharpen GAO?s focus on
clients? and customers?
requirements, GAO will
continuously update client requirements,
develop and implement stakeholder protocols and refine client protocols, and
identify and assess customer requirements and measures.
I ssue: GAO intends to establish results- oriented agency management
practices that will establish
the agency as a leader among high- performing professional services
organizations. To accomplish this objective, GAO will build on its
established base of strategic planning, performance management, sound
financial management, IT best practices, and leadership initiatives. GAO
will also need to institute new ways of doing business to create management
and leadership systems that are practical,
flexible, and that enable managers to efficiently use resources to solve
problems. GAO will lead by example.
P erformance Goals: To support the objective to enhance leadership and
promote
management excellence, GAO will
foster an attitude of stewardship to ensure a commitment to GAO?s mission
and core values,
implement an integrated approach to strategic management,
Strategic Objective: Sharpen GAO?s Focus on Clients? and Customers?
Requirements
Strategic Objective: Enhance Leadership and Promote Management Excellence
GAO STRATEGIC PLAN 2002- 2007 51
GOAL 4
continue to provide leadership in strategic human capital management
planning and execution,
maintain integrity in financial management,
use enabling technology to improve GAO?s crosscutting business processes,
and
provide a safe and secure workplace. I ssue: GAO is a knowledge- based
professional
services organization. It needs to use a wide and expanding variety of media
to communicate the results of its work to its clients and the public. It
also needs to preserve information from its work for the long- term and to
share knowledge among its staff and with others so that it can improve
service to its clients, the executive branch, taxpayers, and other
governments, both domestic (state and local) and international.
P erformance Goals: To support the objective to leverage its institutional
knowledge and
experience, GAO will
improve GAO?s Web- based knowledge tools;
develop a framework to manage the collection, use, distribution, and
retention of organizational knowledge; and
strengthen relationships with other national and international
accountability and professional organizations.
I ssue: GAO, as the federal government?s account- ability organization,
evaluates the economy, efficiency,
and effectiveness of a wide range of federal policies and programs to assist
the Congress for the benefit of the American people. By continuously
assessing and improving its products, as well as its business and managerial
processes, GAO can determine whether the organization?s operations are
aligned with its strategic direction and comply with applicable professional
standards in the conduct of its work.
P erformance Goals: To support the objective to continuously improve its
business and management
processes, GAO will
improve internal business and administrative processes,
improve GAO?s product and service lines to better meet client needs, and
improve GAO?s job management processes.
Strategic Objective: Leverage GAO?s Institutional Knowledge and Experience
Strategic Objective: Continuously Improve GAO?s Business and Management
Processes
52 GAO STRATEGIC PLAN 2002- 2007
GOAL 4
I ssue: To be a model organization, GAO hopes to build and maintain a
diverse work environment
that is conducive to performance excellence; encourages full participation
by the workforce; and supports personal, professional, and organizational
growth. GAO wants to be regarded as an employer of choice- one that recruits
and retains excellent employees, and is considered one of the best places to
work. The agency is committed to treating all employees fairly, respecting
their diversity, and valuing their contributions. GAO?s human capital
initiatives should enable employees to develop and use their full potential,
as aligned with agency objectives.
P erformance Goals: To become the professional services employer of choice,
GAO will
maintain an environment that is fair, unbiased, family- friendly, and
promotes and values opportunity and inclusiveness;
improve compensation and performance management systems;
develop and implement a training and professional development strategy
targeted toward competencies; and
provide GAO?s people with tools, technology, and a working environment that
is world- class.
A significant constraint to achieving GAO?s objectives under this goal
relates to the security situation facing the nation and the Congress since
the events of September 11. The attacks of September 11 have caused GAO to
completely rethink many of the principles of physical and information
security that apply to its day- to- day operations. Moreover, the Congress?s
use of the GAO?s headquarters building for contingency operations in the
wake of the anthrax attacks on the U. S. Capitol caused GAO to quickly shift
substantial mission support resources to respond to its congressional
client?s immediate needs. The potential for the House and the Senate to rely
on GAO for similar direct support in the future could significantly affect
areas of the plan related to continuity of operations, physical and
information infrastructure, and security. It could also result in changed
priorities and delays in achieving some of GAO?s other stated objectives.
The availability of resources could also affect GAO?s timely achievement of
objectives under this goal. Specifically, the agency envisions relying, to a
great extent, on in- house expertise as it develops the nec essary
strategies, policies, and process changes
identified with each of the five strategic objectives. This approach will
require GAO to apply the knowledge, skills, and abilities of its current
staff to the diversity of strategic needs identified in the plan. However,
in- house expertise alone will not be enough to fully accomplish GAO?s
objectives. This is especially true with regard to GAO?s human capital,
business process, and enabling technology initiatives. To bring a fresh
perspective, subject expertise, and knowledge of best practices to these
issues, GAO will need to rely on assistance from external consultants and
contractors. In the event that its planned resources need to be diverted to
respond to changing national priorities or cannot be made available because
of changing budget priorities, GAO?s ability to achieve its stated
objectives could, at minimum, be delayed.
GAO will work closely with its oversight and appropriations committees to
help ensure that it remains responsive to its clients? needs and changing
national priorities and that needed resources are available to address
emerging contingencies.
Strategic Objective: Become the Professional Services Employer of Choice
External Factors that May Affect Achievement of Goal 4
GAO STRATEGIC PLAN 2002- 2007 53
In updating this plan, GAO relied on a variety of information sources about
past performance to determine priorities for the future. GAO will continue
to rely on these sources and other evaluations to judge progress toward its
strategic goals and objectives over the period of this plan. GAO intends to
continue refining its performance indicators as part of a balanced scorecard
approach to performance measurement that focuses on the agency?s clients,
the results achieved, and its employees.
Key Performance Measures
GAO uses both quantitative and qualitative performance measures to assess
progress in achieving its strategic goals and objectives. Collectively,
these measures help demonstrate the degree to which GAO
provides timely, quality service to the Congress and the federal government
so that they can respond to current and emerging challenges and
helps the government meet 21 st century challenges by transforming its role
and its ways of doing business.
To assess GAO?s progress toward its external strategic goals (that is, goals
1, 2, and 3) and their objectives, the agency uses two types of quantitative
measures. First, GAO assesses its efforts to provide support to the Congress
and the federal government in terms of the number of recommendations GAO has
made, the percentage of its products that contain recommendations, the
percentage of recommendations implemented, the number of testimonies GAO has
given before the Congress, and the timeliness of its products. Second, GAO
goes beyond these measures of services provided to assess the results or
outcomes related to the services it has provided. GAO does this by
tabulating both the financial benefits to the taxpayers and the improvements
to government programs and services that result when action is taken in
response to information and recommendations it provided. GAO sets
performance targets for all of these quantitative measures annually and
compares its actual performance with the targets.
Quantitative Measures for GAO?s External Strategic Goals (Goals 1, 2, and 3)
To complement GAO?s annual quantitative measures, the agency sets multiyear
qualitative performance goals for each of its strategic objectives that help
it assess whether it has done the work it planned to do for its
congressional clients. These performance goals reflect the breadth and depth
of GAO?s work, and each includes a set of key efforts to be undertaken
during the first 2 years of this plan: fiscal years 2002 and 2003. Potential
outcomes are also listed for each performance goal to highlight the
improvements that may result if the Congress and the federal government use
the information and recommendations GAO provides. (To review these key
efforts and potential outcomes, please see the ?Strategic Supplements?
section at www. gao. gov/ sp. html. Annual reports on GAO?s progress toward
its goals and objectives and updates to its plan are also posted on the Web
page.)
Performance Measures and Evaluations
Financial benefits that are documented as either directly attributable to,
or significantly influenced by, GAO?s work; these include reductions in
annual operating costs, reductions in the costs of multiyear projects,
reductions in costs of entitlements, and increased revenues from asset sales
and changes in tax laws or user fees
Other benefits that take the form of improvements in government programs to
which GAO?s work contributed, such as improving programs? economy,
efficiency, and effectiveness and better financial or
information management systems
Testimonies delivered, an indicator GAO uses as a measure of direct support
to the Congress
Recommendations made and those subsequently implemented to correct the
underlying causes of problems that impede government efficiency and
effectiveness- measured in terms of (1) the number of recommendations made,
(2) the percentage of products containing recommendations, and (3) the
percentage of recommendations implemented 4 years after they were made
Timeliness of GAO?s products, as measured by the extent to which they are
delivered to clients by agreed- upon dates
54 GAO STRATEGIC PLAN 2002- 2007
GAO will measure its success in meeting its qualitative performance goals by
having senior managers assess the extent to which GAO does the work the key
efforts describe for each goal. GAO expects that information should be
provided or recommendations made on at least 75 percent of the key efforts
for a performance goal to be met.
For its fourth strategic goal- which calls for GAO to become a model federal
agency and a world- class professional services organization- the agency
relies on qualitative measures to assess its progress in making the internal
improvements necessary to achieve that goal and its objectives. As with
GAO?s external strategic objectives, each objective under the internal
strategic goal has a set of multiyear qualitative performance goals with key
efforts that will be assessed after 2 years. The assessments of whether
these performance goals have been met are made by senior managers based on
the work done on the goals? key efforts. GAO expects that for one of these
performance goals to have been met, 75 percent of the key efforts should
have been completed.
GAO is continuing to refine its measures, working toward a ?balanced
scorecard? that evaluates performance from three key perspectives: GAO?s
clients, GAO?s results, and GAO?s people. The agency plans, for instance, to
establish a client feedback measure and indicators that assess its
efficiency and effectiveness in supporting its staff in their efforts to
serve GAO?s clients and the American people.
Evaluations
For the purposes of this plan, GAO used several periodic evaluations to help
review and revise its strategic objectives. One of the essential steps in
the planning process for goals 1, 2, and 3 was an evaluation of actions
taken by federal agencies and the Congress in response to GAO?s
recommendations. GAO actively monitors the status of open recommendations
and uses the results of its analysis to determine the need for further work
in an area. If, for example, an agency has not undertaken a recommended
action that GAO considers still valid and worthwhile, GAO may decide to
pursue further action with agency officials, with congressional committees,
or to undertake additional work.
Another major evaluation GAO used to inform the update of the strategic
objectives under goals 1, 2, and 3 was the January 2001 edition of GAO?s
biennial
Performance and Accountability Series: Major Management Challenges and
Program Risks. This series addresses a range of challenges and opportunities
to enhance performance and accountability governmentwide and at 21 agencies.
A companion volume provides a status report on those major government
operations considered ?high risk? because of their greater vulnerabilities
to waste, fraud, abuse, and mismanagement. The series is, among other
things, a valuable planning tool for GAO, helping it identify those areas
where its continued efforts are needed to maintain the focus on important
policy and management issues facing the nation.
GAO also used a number of studies and evaluations to help review and update
the strategic objectives on improving its internal operations under
strategic goal 4. These studies and evaluations- many of which were
identified in GAO?s initial strategic plan (covering fiscal years 2000
through 2005)- include
a comprehensive assessment of GAO?s human capital policies and practices;
a first- ever knowledge and skills inventory that will identify skill gaps
and provide the basis for sound succession planning within the agency;
a comprehensive review of GAO?s IT infrastructure to identify opportunities
to increase the agency?s efficiency, effectiveness, and productivity;
a security evaluation of GAO?s IT systems; and
a case study of GAO?s initial strategic planning process.
Finally, GAO?s Office of the Inspector General evaluates the administration
of the agency, including an assessment of key performance measurements. The
Inspector General?s evaluations are useful for ensuring that GAO?s
operations are efficient and economical and serve as another input for
updating the objectives under strategic goal 4.
A number of planned evaluations should benefit GAO?s future strategic
planning efforts. GAO will continue to monitor the status of open
recommendations to determine the need for additional work.
GAO STRATEGIC PLAN 2002- 2007 55
In fiscal year 2003 and every 2 years thereafter, GAO will again report on
major management challenges and high- risk areas in federal agencies,
publishing analyses that, among other things, serve to identify areas for
continued GAO efforts. Meanwhile, in fiscal year 2002, GAO will have an
independent review of the financial audits it conducted in fiscal year 2001
to assess its quality controls. As outlined in the discussion of strategic
goal 4, GAO
also plans to evaluate in fiscal years 2002 and 2003 (1) the effectiveness
of GAO?s risk management approach to designing engagements and developing
quality products that meet GAO?s core values and professional standards and
(2) a number of GAO?s core and support business processes to determine how
to make them more efficient and effective.
Because GAO?s mission, goals, and objectives are to support the Congress in
its decision making, GAO consulted with Members and their staff in drafting
this updated strategic plan and continued to seek their views as the plan
evolved. The feedback from those consultations allowed GAO to make
adjustments to its planned work so that it better serves the Congress?s
institutional interests. While GAO will continue to respond to congressional
requests for work much as it always has, it expects that its plan will help
it to be more efficient and effective in meeting those requests because it
will be better able to anticipate congressional needs and deploy its
resources accordingly.
Although GAO is unique in the scope of its activities to support the
Congress and to improve the performance and accountability of government, it
works closely with other members of the accountability community. Each
member of this community has different roles, responsibilities, and
expertise,
but collectively, they advance the principles of good government through a
variety of activities. To take advantage of opportunities to work
collaboratively,
GAO continues to ensure that its work complements the efforts of others and
that crosscutting goals are mutually reinforcing and efficiently
implemented. As part of GAO?s periodic meetings and other interactions, it
consulted with key members of the accountability community, including the
inspectors general, the chief financial officers, the heads of state audit
agencies, and the executives of other nations? audit agencies. GAO also
shared a draft of this plan with them. In addition, GAO consulted and shared
the draft with officials from the Office of Management and Budget, the
Congressional Budget Office, the Congressional Research Service, and other
federal agencies. GAO also consulted with experts outside of government-
including those on the Comptroller General?s Advisory Board and Educators?
Advisory Panel- and sought their views on a draft of this plan.
Consultations and Relationships with Other Agencies
56 GAO STRATEGIC PLAN 2002- 2007
CONSULTATIONS AND RELATIONSHIPS
GAO STRATEGIC PLAN 2002- 2007 i
CORE VALUES
Accountability Integrity Reliability
This strategic plan and our performance and accountability reports are
available through our Web site at www. gao. gov/ sp. html.
Linked to that same page is our full family of strategic planning and
performance and accountability publications.
Other Web pages of possible interest:
GAO's audit and evaluation reports and testimonies www. gao. gov/ audit. htm
GAO's legal products www. gao. gov/ legal. htm FraudNet www. gao. gov/
fraudnet. htm For the press www. gao. gov/ pressmain. html Employment
opportunities www. gao. gov/ jobopp. htm
www. gao. gov
ii GAO STRATEGIC PLAN 2002- 2007
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