    GAO Performance and Accountability Report Fiscal Year 2005
    (15-NOV-05, GAO-06-1SP).

    Presented is GAO's performance and accountability report for
    fiscal year 2005. In the spirit of the Government Performance and
    Results Act, this annual report informs the Congress and the
    American people about what we have achieved on their behalf.
    Importantly, GAO received a clean opinion from independent
    auditors on our financial statements for the 19th consecutive
    year. The financial information and the data measuring GAO's
    performance contained in this report are complete and reliable.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-06-1SP
        ACCNO:   A41518
      TITLE:     GAO Performance and Accountability Report Fiscal Year
    2005
         DATE:   11/15/2005
      SUBJECT:   Accountability
    	     Agency missions
    	     Performance measures
    	     Strategic planning

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    GAO-06-1SP

         * Performance & Accountability Report
         * Contents
              * Abbreviations
              * How to Use This Report
         * Introduction
              * Financial Reporting Assurance Statements
              * About GAO
                   * Mission
                   * Strategic Planning and Management Process
                   * Organizational Structure
                   * How We Measure Our Performance
         * Management's Discussion and Analysis
              * Providing Information That Improves Federal Programs Now and in
                the Future
                   * Focusing on Results
                   * Focusing on Our Clients
                   * Focusing on Our People
                   * Focusing on Our Internal Operations
                   * 21st Century Challenges
                   * GAO's High-Risk Program
                   * Building Partnerships
                   * Managing Our Resources
                   * Strategies for Achieving Our Goals
                   * Addressing Management Challenges That Could Affect Our
                     Performance
                   * Mitigating External Factors That Could Affect Our
                     Performance
         * Performance Information
              * Performance Information by Strategic Goal
              * Goal 1 Overview
                   * Financial Benefits
                   * Other Benefits
                   * Testimonies
                   * Multiyear Performance Goals
              * Goal 2 Overview
                   * Financial Benefits
                   * Other Benefits
                   * Testimonies
                   * Multiyear Performance Goals
              * Goal 3 Overview
                   * Financial Benefits
                   * Other Benefits
                   * Testimonies
                   * Multiyear Performance Goals
              * Goal 4 Overview
                   * Multiyear Performance Goals
              * Data Quality and Program Evaluation
                   * Verifying and Validating Performance Data
                   * Program Evaluation
         * Financial Information
              * Overview of Financial Statements
                   * Financial Systems and Internal Controls
              * Audit Advisory Committee's Report
              * Independent Auditor's Report
              * Purpose of Each Financial Statement
              * Balance Sheets
              * Statements of Net Cost
              * Statements of Changes in Net Position
              * Statements of Budgetary Resources
              * Statements of Financing
              * Notes to Financial Statements
         * Appendixes
              * 1. Accomplishments and Other Contributions
              * 2. From the Inspector General
              * 3. GAO's Report on Personnel Flexibilities
              * 4. GAO's Federal Information Security Management Act Efforts
              * Image Sources
              * Providing Comments on This Report

                                     GAO'S 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.

                                     SCOPE OF WORK

    GAO performs a range of oversight-, insight-, and foresight-related
    engagements, a vast majority of which are conducted in response to
    congressional mandates or requests. GAO's engagements include evaluations
    of federal programs; performance, financial, and management audits; policy
    analyses; legal opinions; bid protest adjudications; and investigations.

                                      CORE VALUES

                                     ACCOUNTABILITY

    INTEGRITY

    RELIABILITY

    We help the Congress oversee federal programs and operations to ensure
    accountability to the American people. GAO's analysts, auditors, lawyers,
    economists, information technology specialists, investigators, and other
    multidisciplinary professionals seek to enhance the economy, efficiency,
    effectiveness, and credibility of the federal government both in fact and
    in the eyes of the American people.

    We set high standards for ourselves in the conduct of GAO's work. Our
    agency takes a professional, objective, fact-based, nonpartisan,
    nonideological, fair, and balanced approach to all activities. Integrity
    is the foundation of reputation, and the GAO approach to work ensures
    both.

    We at GAO want our work to be viewed by the Congress and the American
    public as reliable. We produce high-quality reports, testimonies,
    briefings, legal opinions, and other products and services that are
    timely, accurate, useful, clear, and candid.

    Source: GAO.

    Contents

    Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . . . . iii
    How to Use This Report . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . iv
    Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . . . . . . 1
    From the Comptroller General . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . 2
    Financial Reporting Assurance Statements . . . . . . . . . . . . . . . . .
    . . . . . . . 7
    About GAO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . . . . . 9
    Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . . . . . 9
    Strategic Planning and Management Process . . . . . . . . . . . . . . . .
    . . . . . . 10
    Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . 14
    How We Measure Our Performance . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . 17
    : Management's Discussion and Analysis . . . . . . . . . . . . . . . . . .
    . 21
    Providing Information That Improves Federal Programs Now and in the Future
    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . 22
    Focusing on Results . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . 25
    Focusing on Our Clients . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . 35
    Focusing on Our People . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . 37
    Focusing on Our Internal Operations . . . . . . . . . . . . . . . . . . .
    . . . . . . . . 41
    21st Century Challenges . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . 42
    GAO's High-Risk Program . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . 43
    Building Partnerships . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . 46
    Managing Our Resources . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . 47
    Strategies for Achieving Our Goals . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . 51
    Addressing Management Challenges That Could Affect Our Performance . . . .
    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . 55
    Mitigating External Factors That Could Affect Our Performance . . . . . .
    . . 58
    : Performance Information . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . 61
    Performance Information by Strategic Goal . . . . . . . . . . . . . . . .
    . . . . . . 62
    Goal 1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . . . 63
    Financial Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . 64
    Other Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . . 65
    Testimonies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . . . 65
    Multiyear Performance Goals . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . 65
    Goal 2 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . . . 68
    Financial Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . 69
    Other Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . . 70
    Testimonies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . . . 70
    Multiyear Performance Goals . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . 71
    Goal 3 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . . . 74
    Financial Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . 75
    Other Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . . 76
    Testimonies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . . . 76
    Multiyear Performance Goals . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . 77
    Goal 4 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . . . 79
    Multiyear Performance Goals . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . 80
    Data Quality and Program Evaluation . . . . . . . . . . . . . . . . . . .
    . . . . . . . . 82
    Verifying and Validating Performance Data . . . . . . . . . . . . . . . .
    . . . . . . . 82
    Program Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . 92
        : Financial Information . . . . . . . . . . . . . . . . . . . . . . . . .
                                                               . . . . . . . . 95
    From the Chief Financial Officer . . . . . . . . . . . . . . . . . . . . .
                                                           . . . . . . . . . . 96
    Overview of Financial Statements . . . . . . . . . . . . . . . . . . . . .
                                                             . . . . . . . . . 99
        Financial Systems and Internal Controls . . . . . . . . . . . . . . . . .
                                                               . . . . . . . . 99
        Audit Advisory Committee's Report . . . . . . . . . . . . . . . . . . . .
                                                                . . . . . . . 101
    Independent Auditor's Report . . . . . . . . . . . . . . . . . . . . . . .
                                                            . . . . . . . . . 102
        Purpose of Each Financial Statement . . . . . . . . . . . . . . . . . . .
                                                                . . . . . . . 106
    Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
                                                  . . . . . . . . . . . . . . 107
    Statements of Net Cost . . . . . . . . . . . . . . . . . . . . . . . . . .
                                                      . . . . . . . . . . . . 108
        Statements of Changes in Net Position . . . . . . . . . . . . . . . . . .
                                                                . . . . . . . 109
        Statements of Budgetary Resources . . . . . . . . . . . . . . . . . . . .
                                                              . . . . . . . . 110
        Statements of Financing . . . . . . . . . . . . . . . . . . . . . . . . .
                                                      . . . . . . . . . . . . 111
        Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . .
                                                          . . . . . . . . . . 112
    : Appendixes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . 123
    Accomplishments and Other Contributions . . . . . . . . . . . . . . . . .
    . 124
    From the Inspector General . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . 194
    GAO's Report on Personnel Flexibilities . . . . . . . . . . . . . . . . .
    . . . . 195
    GAO's Federal Information Security Management Act Efforts . . . . 197
    Image Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . . 200
    Providing Comments on This Report . . . . . . . . . . . . . . . . . . . .
    . . . . . . 201

    This is a work of the U.S. government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed in
    its entirety without further permission from GAO. However, because this
    work may contain copyrighted images or other material, permission from the
    copyright holder may be necessary if you wish to reproduce this material
    separately.

                                     Abbreviations

    BPA                     Bonneville Power Administration
    CAO                     Chief Administrative Office
    CMS                     Centers for Medicare & Medicaid
                               Services
    CSRS                    Civil Service Retirement System
    DHS                     Department of Homeland Security
    DISA                                    Defense Information Systems Agency
    DOD                     Department of Defense
    DOE                     Department of Energy
    DOL                     Department of Labor
    EPA                     Environmental Protection Agency
    FAA                     Federal Aviation Administration
    FECA                                   Federal Employees' Compensation Act
    FEGLIP                  Federal Employees' Group Life
                               Insurance Program
    FEHBP                   Federal Employees Health Benefits
                               Program
    FEMA                    Federal Emergency Management
                               Agency
    FERS                                   Federal Employees Retirement System
    FFMIA                   Federal Financial Management
                               Improvement Act
    FHA                     Federal Housing Administration
    FICA                    Federal Insurance Contributions Act
    FISMA                   Federal Information Security
                               Management Act
    FTE                     full-time equivalent
    GAO                     Government Accountability Office
    GSA                     General Services Administration
    HCTC                    Health Coverage Tax Credit
    HHS                     Department of Health and Human
                               Services
    HIPAA                   Health Insurance Portability and
                               Accountability Act

                        HUD           Department of Housing and Urban
                                      Development
                        IG            Office of Inspector General
                        INTOSAI       International Organization of Supreme
                                      Audit Institutions
                        IRS           Internal Revenue Service
                        IT            information technology
                        MFO           multinational force observer
                        NASA          National Aeronautics and Space
                                      Administration
                        NFC           National Finance Center
                        NHTSA         National Highway Transportation Safety
                                      Administration
                        NIH           National Institutes of Health
                        OMB           Office of Management and Budget
                        OOI           Office of Opportunity and Inclusiveness
                        OPM           Office of Personnel Management
                        PART          Program Assessment Rating Tool
                        QCI           Quality and Continuous Improvement
                        SBA           Small Business Administration
                        SEC           Securities and Exchange Commission
                        SSA           Social Security Administration
                        TSA           Transportation Security Administration
                        UNHCR         United Nations High Commissioner for
                                      Refugees
                        USACE         U.S. Army Corps of Engineers
                        USAID         U.S. Agency for International
                                      Development
                        USCIS         U.S. Citizenship and Immigration
                                      Services
                        USDA          U.S. Department of Agriculture
                        US-VISIT      United States Visitor and Immigrant
                                      Status Indicator Technology
                        VA            Department of Veterans Affairs

                                 How to Use This Report

    This report describes the U.S. Government Accountability Office's (GAO)
    performance measures, results, and accountability processes for fiscal
    year 2005. In assessing our performance, we compared actual results
    against targets and goals that were set in our annual performance plan and
    were developed to help carry out our strategic plan. Our complete set of
    strategic planning and performance and accountability reports is available
    on our Web site at http://www.gao.gov/sp.html .

    This report has an introduction, four major parts, and supplementary
    appendixes as follows:

    fS Introduction

    Look here for the letter from the Comptroller General and a statement
    attesting to the completeness and accuracy of the data in this report.
    Also, look here for a discussion of our mission, organizational structure,
    strategic planning process, and process for assessing our performance.

    fS Management's Discussion and Analysis

    Look here for our agencywide performance results and use of resources in
    fiscal year 2005. Look here also for information on the strategies we use
    to achieve our goals and the management challenges and external factors
    that affect our performance.

    fS Performance Information

    Look here for details on our performance results by strategic goal in
    fiscal year 2005 and the targets we are aiming for in fiscal year 2006.
    Look here also for an explanation of how we ensure the completeness and
    reliability of the performance data used in this report.

    fS Financial Information

    Look here for details on our finances in fiscal year 2005, including a
    letter from our Chief Financial Officer, audited financial statements and
    notes, and the reports from our external auditor and audit advisory
    committee. Look here also for information on our internal controls and for
    an explanation of the kind of information each of our financial statements
    conveys.

    fS Appendixes

    Look here for detailed write-ups about our most significant
    accomplishments and contributions recorded in fiscal year 2005, for our
    Inspector Gen-eral's assessment of our agency's management challenges, and
    for information on certain human capital management flexibilities and on
    information security reform efforts.

                                      Introduction

                                      Introduction

    Source:See Image Sources.

    November 15, 2005

    By nearly every measure, GAO has once again produced excellent results in
    serving the Congress and the American people and, through this performance
    and accountability report, I am proud to share with you our assessment of
    how well we performed during fiscal year 2005. Our business involves
    helping to improve performance and ensure accountability in connection
    with a broad range of federal programs, policies, and activities. Simply
    put, we try to help improve the way the federal government works for the
    benefit of all of our nation's citizens both now and in the future. To
    determine our success, we set performance targets and follow financial
    management and quality control practices that help ensure that we are
    making the best use of the federal funds invested in us. In addition, I am
    very pleased to report that we received clean opinions from external,
    independent auditors on our financial statements and on our performance
    audit and financial audit quality assurance systems. We also identified a
    broad range of issues that could seriously affect the stability and
    prosperity of the nation in the years to come. The following paragraphs
    highlight our performance in each of these areas.

    With respect to our performance measures, I am especially pleased to
    report that we met or exceeded targets for 10 of our 14 performance
    measures, while setting or matching all-time records for 3 measures. We
    documented $39.6 billion in financial benefits-a return of $83 for every
    dollar we spent-and over 1,400 nonfinancial ben-efits-a record for us. The
    work we did to produce these benefits helped to shape important
    legislation, such as the Intelligence Reform and Terrorism Prevention Act
    of 2004 (Pub. L. No. 108-458), and increase the efficiency of various
    federal programs, thus improving the lives of millions of Americans. In
    addition, the rate at which our recommendations were implemented by the
    Congress or federal agencies rose to 85 percent in fiscal year 2005, and
    the percentage of our fiscal year 2005 products con-taining
    recommendations increased to 63 percent-exceeding the targets we set for
    both of these measures this year. Our performance in these two areas also
    set an all-time record for recommendations implemented and matched the
    record we set in fiscal year 2004 for the percentage of new products with
    recommendations. We delivered 179 testimonies, slightly missing our target
    of 185. We also just missed our target of providing 98 percent of our
    products to the Congress when promised. In addition, in the first year
    that we are reporting our progress on our 8 new measures related to our
    people, we met or exceeded the targets for 6 of them related to retention
    and employee satisfaction. We came close to, but did not achieve, the
    targeted performance related to our new hire rate-the ratio of the number
    of people hired to the number of people we planned to hire-and the
    percentage of people that accepted our employment offers.

    As in past years, during fiscal year 2005, our work covered a number of
    major topics of concern to the nation and, in some cases, the world. For
    example, we reported on the nation's long-term fiscal challenges, the
    financial condition of the airline industry, spending and reconstruction
    activities related to Iraq and Afghanistan, and strengthening the visa
    process as an antiterrorism tool. As the war in Iraq continued, we
    examined how the Department of Defense supplied vehicles, body armor, and
    other materiel to the troops in the field. We also examined the Department
    of Defense's transformation challenges, base realignment and closure
    issues, increasing the strategic focus of federal acquisitions, protecting
    against identity theft, the oversight of electricity markets, zero down
    payment mortgages, and immigration enforcement. We testified many times
    before the Congress, contributing to the public debate on a variety of
    topics that included Social Security reform, wildland fire management,
    gasoline prices, the flu vaccine, veterans' health care, benefits for
    members of the Reserves and National Guard, digital broadcast television,
    long-term health care financing, passport fraud detection, reducing the
    tax gap, information security, and a range of financial management and
    accountability issues. These and other topics on which we testified are
    listed on page 36 of this report.

    The American people benefited this year as federal agencies took a wide
    range of actions based on our analyses and recommendations, while our
    efforts also heightened the visibility of issues needing attention. For
    example, adoption of our recommendations helped improve home health care
    performance standards, increase the collection of delinquent taxes, and
    improve the efficiency of federal acquisitions. It is important for our
    nation and citizens not only that these issues are made visible, but also
    that the nation's leaders address them. We feel fortunate and honored that
    in a significant majority of cases, our clients and federal agencies
    listen to what we have to say and act on our recommendations. Furthermore,
    virtually all of our reports are published and available on our Web site (
    http://www.gao.gov ), keeping us accountable to the American people.

    Once again we have received a clean audit opinion on our financial
    statements, and in part III of this report we have included the external
    auditor's report stating that we presented our financial statements fairly
    and maintained effective internal control processes. The auditors also
    reported no instances of noncompliance with applicable laws and
    regulations. Additionally, I am most pleased to report the results of the
    first ever review of our quality assurance system used to conduct our
    performance audits, which involves work performed in virtually all parts
    of GAO. This review-which was performed by an international team of
    auditors from seven countries led by the Office of the Auditor General of
    Canada-assessed whether our quality assurance policies and procedures were
    suitably designed and operating effectively; the review resulted in a
    clean opinion. Their April 2005 audit report also cited a number of
    exemplary practices at GAO, such as our strategic planning process,
    proactive working relationship with the Congress, quality assurance
    framework, and audit risk assessment process, and offered us some
    suggestions for improvement, including streamlining certain requirements
    for low-risk assignments, a suggestion that we are already working to
    implement. Similarly, we received a clean opinion resulting from a
    separate audit of our quality assurance system for our financial audits.
    This opinion was in line with previous such audits that have been
    conducted every 3 years. The auditors concluded that our system of quality
    control for the accounting and auditing practice was designed to meet
    applicable quality control standards and was complied with for the period
    reviewed, providing us reasonable assurance of conforming to applicable
    professional standards.

    In fiscal year 2005, we issued two products that will assist the Congress
    as it addresses a broad range of future challenges. Our report entitled
    21st Century Challenges: Reexamining the Base of the Federal Government
    provides a series of illustrative questions related to 12 areas of federal
    activity as well as our perspective on various strategies and approaches
    that should be considered as a possible means to address the issues and
    questions raised in the report. Drawing on our institutional knowledge and
    extensive program evaluation and performance assessment work for the
    Congress, we presented over 200 specific 21st century questions
    illustrating the types of hard choices our nation needs to face as it
    reexamines what the federal government should do, how it should do it, and
    how it should be financed. ( see p. 42 for more information about our 21st
    century challenges report.) We also issued our High-Risk Series: An
    Update, which identifies federal areas and programs at risk of fraud,
    waste, abuse, and mismanagement and those in need of broad-based
    transformations. The issues affecting many of these areas and programs may
    take years to address, and the report will serve as a useful guide for the
    Congress's future programmatic deliberations and oversight activities. The
    current administration has looked to our high-risk program in shaping
    governmentwide initiatives such as the President's Management Agenda,
    which has at its base many of the areas we had previously identified as
    high risk. The Office of Management and Budget, in consultation with us,
    is currently working to ensure that agencies develop detailed action plans
    to address high-risk areas, with the ultimate objective, over time, of
    seeing these items removed from our high-risk list.

    This year we also continued to take steps internally to be a model federal
    agency and a world-class professional services organization. These steps
    helped us to address our three major management challenges-human capital,
    physical security, and information security. Through the GAO Human Capital
    Reform Act of 2004, the Congress granted GAO several additional human
    capital flexibilities that will allow us, among other things, to move to
    an even more performance-oriented and market-based compensation system.
    Our most valuable asset continues to be our people, and the flexibilities
    granted in this act will help us to continue to modernize our
    people-related policies and strategies, which, in turn, will help to
    ensure that we are well equipped to serve the Congress and the American
    people in the years to come. As a result, we are continuing to take a
    range of actions designed to modernize our human capital policies and
    practices. In fiscal year 2005, we adopted a broad pay band approach and a
    more performance-oriented pay system for our administrative staff. We also
    made considerable progress in moving to a more market-based and skills-,
    knowledge-, and performance-oriented classification and pay system for all
    of our employees.

    In today's world, we should partner for progress with other key players.
    We believe strongly in doing so in order to maximize our value and
    mitigate risk within current and expected resource levels. Fiscal year
    2005 included several major milestones in GAO's outreach efforts. Most
    notably, we led the adoption of the first-ever strategic plans for the
    International Organizational of Supreme Audit Institutions (INTOSAI) and
    the National Intergovernmental Audit Forum.

    In short, fiscal year 2005 was a very successful year for us. This report
    describes our many contributions toward improving the government, and I am
    confident that the performance data and financial information in this
    report are complete and reliable, as noted in the statement of assurance
    that appears just after this letter. I believe that GAO remained true to
    its core values of accountability, integrity, and reliability throughout
    the year and that those who read this report will agree that the taxpayers
    received an excellent return on their investment in us.

    David M. Walker Comptroller General of the United States

                        Financial Reporting Assurance Statements

    November 15, 2005

    We, as GAO's executive committee, are responsible for preparing and
    presenting the financial statements and other information included in this
    performance and accountability report. The financial statements included
    herein are presented in conformity with U.S. generally accepted accounting
    principles; incorporate management's reasonable estimates and judgments,
    where applicable; and contain appropriate and adequate disclosures. Based
    on our knowledge, the financial statements are presented fairly in all
    material respects, and other financial information included in this report
    is consistent with the financial statements.

    On the basis of GAO's comprehensive management control program, we are
    pleased to certify, with reasonable assurance, that

         + Our financial reporting is reliable-transactions are properly
           recorded, processed, and summarized to permit the preparation of
           financial statements in accordance with U.S. generally accepted
           accounting principles, and assets are safeguarded against loss from
           unauthorized acquisition, use, or disposition.
         + GAO is in compliance with all applicable laws and
           regulations-transactions are executed in accordance with (1) laws
           governing the use of budget authority and other laws and regulations
           that could have a direct and material effect on the financial
           statements and (2) any other laws, regulations, and governmentwide
           policies applicable to GAO.
         + Our performance reporting is reliable-transactions and other data that
           support reported performance measures are properly recorded,
           processed, and summarized to permit the preparation of performance
           information in accordance with the criteria stated by GAO's
           management.

    We also believe these same systems of accounting Managers' Financial
    Integrity Act). This is an objecand internal controls provide reasonable
    assurance tive that we set for ourselves even though, as part of that GAO
    is in compliance with the spirit of 31 the legislative branch of the
    federal government, we

    U.S.C. 3512 (commonly referred to as the Federal are not technically
    required to do so.

    David M. Walker                                 Gene L. Dodaro
    Comptroller General                                Chief Operating Officer
    of the United States

    Sallyanne Harper Anthony H. Gamboa Chief Financial Officer General Counsel

    About GAO

    We exist 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

    Source:See Image Sources.

    GAO is an independent, nonpartisan, professional services agency in the
    legislative branch of the federal government. Commonly known as the "audit
    and investigative arm of the Congress" or the "congressional watchdog," we
    examine how taxpayer dollars are spent and advise lawmakers and agency
    heads on ways to make government work better. As a legislative branch
    agency, we are exempt from many laws that apply to the executive branch
    agencies. However, we generally hold ourselves to the spirit of many of
    the laws, including 31 U.S.C. 3512 (commonly referred to as the Federal
    Managers' Financial Integrity Act), the Government Performance and Results
    Act of 1993, and the Federal Financial Management Improvement Act of
    1996.1 Accordingly, this performance and accountability report for fiscal
    year 2005 supplies what we consider to be information that is at least
    equivalent to that supplied by executive branch agencies in their annual
    performance and accountability reports.

      Mission

    Our mission is 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. The strategies and means that we use to accomplish this mission
    are described in the following pages. In short, we accomplish our mission
    by providing reliable information and informed analysis to the Congress,
    to federal agencies, and to the public; and we recommend improvements,
    when appropriate, on a wide variety of issues. Three core
    values-accountability, integrity, and reliability-form the basis for all
    of our work, regardless of its origin. These are described on the inside
    front cover of this report.

                                     GAO's History

    The Budget and Accounting Act of 1921 required the

    President to issue an annual federal budget and estab

    lished GAO as an independent agency to investigate

    how federal dollars are spent. In the early years, we

    mainly audited vouchers, but after World War II we

    started to perform more comprehensive financial

    audits that examined the economy and efficiency of

    government operations. By the 1960s, GAO, which is

    in the legislative branch of the federal government,

    had begun to perform the type of work we are noted

    for today-program evaluation-which examines

    whether government programs are meeting their

    objectives. Our name-the U.S. Government Account

    ability Office-reflects our people, our work, and our

    reputation.

    1The Federal Managers' Financial Integrity Act requires ongoing
    evaluations and annual reports on the adequacy of the systems of internal
    accounting and administrative control of each agency. The Government
    Performance and Results Act seeks to improve public confidence in federal
    agency performance by requiring that federally funded agencies develop and
    implement an accountability system based on performance measurement,
    including setting goals and objectives and measuring progress toward
    achieving them. The Federal Financial Management Improvement Act
    emphasizes the need to improve federal financial management by requiring
    that federal agencies implement and maintain financial management systems
    that comply with federal financial management systems requirements,
    applicable federal accounting standards, and the U.S. Government Standard
    General Ledger at the transaction level.

      Strategic Planning and Management Process

    To accomplish our mission, we use a strategic planning and management
    process that is based on a hierarchy of four elements ( see fig. 1 ),
    beginning at the highest level with the following four strategic goals:

         + Strategic 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
         + Strategic 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
         + Strategic Goal 3: Help Transform the Federal Government's Role and How
           It Does Business to Meet 21st Century Challenges
         + Strategic Goal 4: Maximize the Value of GAO by Being a Model Federal
           Agency and a World-Class Professional Services Organization

                      Figure 1: GAO's Strategic Planning Hierarchy

    Source: GAO.

    Our work is primarily aligned under the first three strategic goals, which
    span issues that are both domestic and international, affect the lives of
    all Americans, and influence the extent to which the federal government
    serves the nation's current and future interests. The fourth goal is our
    only internal one and is aimed at maximizing our productivity through such
    efforts as investing steadily in information technology (IT) to support
    our work; ensuring the safety and security of our people, information, and
    assets; pursuing human capital transformation; and leveraging our
    knowledge and experience. Figure 2 lists by goal some examples of our work
    during fiscal year 2005; this work relates to a variety of specific
    strategic objectives. We revisit the focus and appropriateness of these
    four strategic goals each time that we update our strategic plan.

    Figure 2: Examples of How GAO Assisted the Nation

    GAO strategic goal Description In fiscal year 2005, GAO provided
    information that helped to...

    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.

         + Improve the transition from active duty to civilian status for
           veterans with serious war-related injuries
         + Address long-term health care financing pressures on state and local
           government budgets
         + Identify challenges with transferring the Medicare appeals process
           from the Social Security Administration (SSA) and the Department of
           Health and Human Services (HHS)
         + Improve patient safety at Department of Veterans Affairs hospitals
         + Improve the security of Social Security numbers
         + Address the challenges of pension reform
         + Strengthen the security screening process for passengers and checked
           baggage at the nation's airports
         + Improve the oversight of Federal Housing Administration single-family
           and multifamily lenders
         + Improve the oversight of electricity markets by the Federal Energy
           Regulatory Commission
         + Identify challenges associated with the Department of Energy's (DOE)
           nuclear facility designs
         + Monitor the growth in the digital television market
         + Analyze issues contributing to the declining financial condition of
           the airline industry

    Provide timely, quality service to the Congress and the federal government
    to respond to changing security threats and the challenges of global
    interdependence.

         + Improve the management of funds for the Global War on Terrorism
         + Increase the security of cargo containers to prevent terrorist
           activity
         + Alert the Congress to issues affecting the Department of Defense's
           (DOD) major weapon systems
         + Analyze funding options for a new federal foreign assistance
           program-the Millennium Challenge Account
         + Promote government efforts to address threats to the security of the
           nation's information systems
         + Strengthen the visa process as an antiterrorism tool
         + Improve management of the U.S. Coast Guard's Deepwater program
         + Shape the debate on improving military pay and benefits
         + Strengthen the U.S. strategic export control system
         + Identify improvements needed to secure the telecommunications and
           information systems used by U.S. financial markets

    Help transform the federal government's role and how it does business to
    meet 21st century challenges.

         + Increase the public's understanding of the federal government's
           long-term fiscal challenges
         + Implement governmentwide civil service reforms
         + Oversee federal tax policy
         + Increase debts collected from criminals
         + Decrease improper payments made by the U.S. Department of
           Agriculture's (USDA) Food Stamp Program and other federal agencies
         + Manage multibillion-dollar IT modernizations and investments at the
           Department of Homeland Security (DHS) and Office of Personnel
           Management
         + Improve agencies' strategic purchasing practices
         + Examine changes in key areas of federal activity that could affect the
           federal government's fiscal future
         + Enhance the knowledge base on comprehensive national indicators

    4 Maximize the value fS Foster among other federal agencies GAO's
    innovative human capital practices, such as of GAO by being a broad pay
    bands; performance-based compensation; and workforce planning and staffing
    model federal strategies, policies, and processes

    agency and a world-fS Share GAO's model business and management processes
    with counterpart organizations class professional

    in the United States and abroad services organization.

    Source: GAO.

    The four strategic goals are supported by strategic objectives that are in
    turn supported by and achieved through numerous performance goals and key
    efforts. Our strategic planning framework for serving the Congress, which
    lists the strategic objectives under each goal, is depicted on the next
    page . This framework not only shows the relationship between our
    strategic goals and strategic objectives, but also shows major themes that
    could potentially affect our work.

                     An Example of Our Strategic Planning Elements

                  Strategic 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

    Strategic Objective: A Secure Retirement for Older

    Americans

    Performance Goal: Identify Opportunities to

    Improve the Ability of Government Agencies to

    Administer and Protect Workers' Retirement Benefits

    Key Efforts:

         + Evaluate pension, pension insurance, and tax oversight programs to
           determine whether workers' private pension retirement benefits are
           effectively protected
         + Evaluate SSA's service-delivery systems and program operations to
           determine whether they are being implemented fairly, effectively,
           efficiently, and securely
         + Assess the adequacy and management of public service retirement
           systems, including the federal, state, and local government employee
           systems, in serving participants and in protecting and providing
           benefits

    Complete descriptions of the steps in our strategic planning and
    management process are included in our strategic plan for fiscal years
    2004 through 2009, which is available on our Web site at
    http://www.gao.gov . This site also provides access to our annual
    performance plans since fiscal year 1999 and our performance and
    accountability reports since fiscal year 2001.

    To ensure that we are well positioned to meet the Congress's current and
    future needs, we update our 6-year strategic plan every 3 years,
    consulting extensively during the update with our clients on Capitol Hill
    and with other experts (see our complete strategic plan on
    http://www.gao.gov/sp/d04534sp.pdf ). Using the plan as a blueprint, we
    lay out the areas in which we expect to conduct research, audits,
    analyses, and evaluations to meet our clients' needs, and we allocate the
    resources we receive from the Congress accordingly. Given the increasingly
    fast pace with which crucial issues emerge and evolve, we design a certain
    amount of flexibility into our plans and staffing structure so that we can
    respond readily to the Congress's changing priorities. When we revise our
    plans or our allocation of resources, we disclose those changes in annual
    performance plans, which are posted-like our strategic plan- on the Web
    for public inspection (http://www.gao.gov/sp.html ). For example, we
    issued our performance plan for fiscal year 2006 in June 2005.

    Each year, we hold ourselves accountable to the Congress and to the
    American people for our performance, primarily through the annual
    performance and accountability report. However, we have included some
    information about future plans in this report to provide as cohesive a
    view as possible of what we have done, what we are doing, and what we
    expect to do to support the Congress and to serve the nation. Last year,
    the Association of Government Accountants awarded us for the fourth
    consecutive year its Certificate of Excellence in Accountability Reporting
    for our fiscal year 2004 performance and accountability report. According
    to the association, this certificate means that we produced an interesting
    and informative report that achieved the goal of complete and fair
    reporting. (See p. 14 .)

    Source: See Image Sources.

      Organizational Structure

    As the Comptroller General of the United States, David M. Walker is the
    head of GAO and is serving a 15-year term that began in November 1998.
    Three other executives join Comptroller General Walker to form GAO's
    Executive Committee, which is the top policymaking body within GAO. These
    executives are Chief Operating Officer Gene L. Dodaro, Chief
    Administrative Officer/Chief Financial Officer Sally-anne Harper, and
    General Counsel Anthony H. Gamboa.

    To achieve our strategic goals, our staff is organized as shown in figure
    3 . For the most part, our 13 research, audit, and evaluation teams
    perform the work that supports strategic goals 1, 2, and 3-our three
    external strategic goals-with several of the teams working in support of
    more than one strategic goal.

    Figure 3: Organizational Structure

        Public Strategic Planning Congressional

    Opportunity and Inspector General

        Affairs and External Liaison Relations

    Inclusiveness

         o Provide audit and other legal support services for all goals and staff
           offices
         o Manage GAO's bid protest and appropriations law work

    Source: GAO.

    Provide timely, quality service to the Congress and the federal government
    to address current and emerging challenges to the wellbeing and financial
    security of the American people

         o Education,Workforce, and Income Security
         o Financial Markets and Community Investment
         o Health Care
         o Homeland Security and Justice
         o Natural Resources and Environment
         o Physical Infrastructure

    Provide timely, quality service to the Congress and the federal government
    to respond to changing security threats and the challenges of global
    interdependence

         o Acquisition and Sourcing Management
         o Defense Capabilities and Management
         o International Affairs and Trade

    Help transform the federal government's role and how it does business to
    meet 21st century challenges

         o Applied Research and Methods
         o Financial Management and Assurance

    - Forensic Audits and Special Investigations

         o Information Technology
         o Strategic Issues

    - Federal Budget and Intergovernmental Relations

    Maximize the value of GAO by being a model federal agency and a
    world-class professional services organization

         o Controller
         o Human Capital Office

    - Chief Human Capital Officer

    o  Information Systems and Technology Services

    - Chief Information Officer

         o Knowledge Services - Chief Knowledge Services Officer
         o Professional Development Program

    Note: General Counsel's structure largely mirrors the agency's goal
    structure, and attorneys who are assigned to goals work with the teams on
    specific engagements. Thus, the dotted lines in this figure indicate
    General Counsel's support of or advisory relationship with the goals and
    teams rather than a direct reporting relationship.

    Senior executives in charge of the teams manage a mix of engagements to
    ensure that the Congress's need for information on quickly emerging issues
    is met as we also continue longer term work efforts that flow from our
    strategic plan. To effectively serve the Congress with a finite set of
    resources, senior managers consult with our congressional clients and
    determine the timing and priority of engagements for which they are
    responsible. In fiscal year 2005, we formed a new unit-Forensic Audits and
    Special Investigations-within our Financial Management and Assurance team.
    This unit was designed to provide the Congress with high-quality forensic
    audits;2 investigations of fraud, waste, and abuse; and evaluations of
    security vulnerabilities and other appropriate investigative services as
    part of its own assignments or in support of other teams. This unit
    follows up on engagements and referrals from our other teams when its
    special services are required to help determine whether legislative or
    administrative actions are necessary. The unit is composed of
    investigators and staff from our former Office of Special Investigations;
    auditors from the Financial Management and Assurance team who have
    experience with forensic audits; and staff in General Counsel who worked
    with Fraud-Net-our online system designed to facilitate the reporting of
    allegations of fraud, waste, abuse, or mismanagement of federal funds.

    As described below, General Counsel supports the work of all of our teams.
    In addition, the Applied Research and Methods team assists the other teams
    on matters requiring expertise in areas such as economics, research
    design, and statistical analysis. And staff in many offices such as
    Strategic Planning and External Liaison, Congressional Relations,
    Opportunity and Inclusiveness (OOI), Quality and Continuous Improvement
    (QCI), Public Affairs, and the Chief Administrative Office (CAO) support
    the efforts of the teams. This collaborative process, which we refer to as
    matrixing, increases our effectiveness, flexibility, and efficiency in
    using our expertise and resources to meet congressional needs on complex
    issues.

    General Counsel is structured organizationally along subject matter lines
    to facilitate the delivery of legal services. This structure allows
    General Counsel to

    (1) provide legal support to GAO and its audit teams concerning all
    matters related to their work and (2) produce legal decisions and opinions
    for the Comptroller General. Specifically, the Goal 1, Goal 2, and Goal 3
    groups in General Counsel are organized to provide each of the audit teams
    with a corresponding team of attorneys dedicated to supporting each team's
    needs for legal services. In addition, these groups prepare advisory
    opinions to committees and members of the Congress on agency adherence to
    laws applicable to their programs and activities. General Counsel's Legal
    Services group provides in-house support to GAO's management on a wide
    array of human capital matters and initiatives and on information
    management and acquisition matters and defends the agency in
    administrative and judicial forums. Finally, attorneys in the Procurement
    Law and the Budget and Appropriations Law groups prepare administrative
    decisions and opinions adjudicating protests to the award of government
    contracts or opining on the availability and use of appropriated funds.

    For strategic goal 4-our fourth and only internal strategic goal-staff in
    CAO take the lead. They are assisted on specific key efforts by the
    Applied Research and Methods team and by staff offices such as Strategic
    Planning and External Liaison, Congressional Relations, OOI, QCI, and
    Public Affairs. In addition, attorneys in General Counsel, primarily in
    the Legal Services group, provide legal support for goal 4 efforts.

    2Forensic audits are reviews that are designed to highlight system
    vulnerabilities and identify potential instances of fraud, waste, and
    abuse. Such audits often involve data mining of agencies' information
    systems and developing examples or case studies to illustrate systemic
    problems. As with our performance and financial audits, we coordinate this
    work, when appropriate, with the agencies' Offices of Inspectors General
    (IG).

    Throughout GAO, we 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. About three-quarters of our approximately 3,200
    employees are based at our headquarters in Washington, D.C.; the rest are

    GAO Field Locations

    Atlanta Boston Chicago Dallas Dayton Denver Huntsville Los Angeles Norfolk
    San Francisco Seattle

    deployed in 11 field offices across the country. Staff in these field
    offices are aligned with our research, audit, and evaluation teams and
    perform work in tandem with our headquarters staff in support of our
    external strategic goals.

      How We Measure Our Performance

    We measure our performance using annual quantitative measures and
    multiyear qualitative performance goals. Together, these indicators help
    us to determine how well we are meeting the needs of the Congress and
    maximizing our value as a world-class organization.

        Annual Performance Measures

    For several years, we assessed our performance annually using quantitative
    performance measures that are related to our work results and the
    usefulness of those results to our primary client-the Congress. Recently,
    we expanded our focus to include a more balanced set of performance
    measures that focus on three key areas-results, clients, and peo-ple.3
    Fiscal year 2005 is the first year that we report how well we performed
    against the targets we set for our people measures. These categories of
    measures are briefly described below.

         + Results. Focusing on results and the effectiveness of the processes
           needed to achieve them is fundamental to accomplishing our mission. To
           assess our results, we measure financial benefits, other
           (nonfinancial) benefits, recommendations implemented, and percentage
           of new products with recommendations.
         + Clients. Our strategy in this area draws upon a variety of data
           sources (e.g., our client feedback survey and in-person discussions
           with congressional staff) to obtain information on the services we are
           providing to our congressional clients. To judge how well we are
           serving our clients, we measure the number of times we are asked to
           present expert testimony at congressional hearings as well as our
           timeliness in delivering products to the Congress.
         + People. As our most important asset, our people define our character
           and capacity to perform. A variety of data sources, including an
           internal survey, provide information to help us measure how well we
           are attracting and retaining high-quality staff and how well we are
           developing, supporting, using, and leading staff.

    Beginning with fiscal year 2006, we will add internal operations measures
    to the list of measures on which we report. Our mission and people are
    supported by our internal administrative services, including information
    management, building management, knowledge services, human capital, and
    financial management services. Through an internal customer satisfaction
    survey, we gather information on how well our internal operations help
    employees get their jobs done or improve employees' quality of work life.
    Examples of surveyed services include providing secure Internet access and
    voice

    3In addition, we are continuing to explore measures that could help us
    assess how well we develop mutually beneficial relationships with other
    accountability organizations. Such partnerships are important because they
    (1) create opportunities for collaboration and cooperation that help all
    organizations involved address common challenges and enhance their ability
    to improve government operations and serve the public better, (2) allow us
    and other organizations to make meaningful changes in our internal
    accountability processes and policies, and (3) allow us to better leverage
    available resources. The Building Partnerships and Strategies for
    Achieving Our Goals sections in this report provide additional information
    on the partnerships we have established.

    communication systems, performance management, and benefits information
    and assistance. (For more information about these measures, see p. 41 .)

    To establish targets for these measures, we examine what we have been able
    to achieve in the past (e.g., by looking at our 4-year rolling averages
    for our client measures and most of our results measures, see

    p. 24 ) and the external factors that influence our work ( see p. 58 ).
    The teams and offices that are directly engaged in the work discuss their
    views of what must be accomplished in the upcoming fiscal year with our
    top executives, who then establish targets for the performance measures.
    Once approved by the Comptroller General, the targets become final and are
    presented in our annual performance plan.4 We may adjust these targets
    after they are initially published when our expected future work or level
    of funding provided warrant doing so. If we make changes, we include the
    changed targets in later documents, such as this performance and
    accountability report, and annotate the changes. In part II, we include
    detailed information on data sources that we use to assess each of these
    measures, as well as the steps we take to verify and validate the data
    (see p. 82) .

        Measuring the Results of Our Work

    We use four of our annual measures-financial benefits, other benefits, the
    percentage of past recommendations implemented, and the percentage of new
    products with recommendations-to assess our efforts to provide the kind of
    information and recommendations that will lead to benefits for the
    American people. Financial benefits and other benefits provide
    quantitative and qualitative information, respectively, on the outcomes or
    results that have been achieved from our work. They often represent
    outcomes that occurred over a period of several years. The remaining
    measures are intermediate outcomes in that they often lead to achieving
    outcomes that are ultimately captured in our financial or other benefits.

    For financial benefits and other benefits we first set targets for the
    agency as a whole and then we set targets for each of the external
    goals-that is, goals 1, 2, and 3-so that the sum of the targets for the
    goals equals the agencywide targets. For past recommendations implemented
    and percentage of products with recommendations, we set targets and report
    performance for the agency as a whole because we want our performance on
    these measures to be consistent across goals. We track our performance by
    strategic goal in order to understand why we meet or do not meet the
    agencywide target. We also use this information to provide feedback to our
    teams on the extent to which they are contributing to the overall target
    and to help them identify areas in which they need to improve.

        Multiyear Performance Goals

    We use two elements in our strategic planning hier-archy-performance goals
    and key efforts-as qualitative indicators of our performance. We ask
    senior managers to determine whether the performance goals established in
    our strategic plan have been met over a multiyear period. To do this,
    these managers examine the amount of work conducted and recommendations
    made for each key effort supporting each performance goal. Senior managers
    also consider any other assistance provided to the client or customer that
    is related to these efforts. These managers then judge whether the work
    completed collectively for all key efforts actually achieved the
    performance goal, and we include the results of those assessments in our
    performance and accountability reports.

    For all four strategic goals, the multiyear, qualitative performance goals
    included in our current strategic plan describe specific areas of work
    that we had planned to complete by the end of fiscal year 2005. We assess
    our progress toward these multiyear, qualitative performance goals in part
    II of this report. However, during fiscal year 2004, we decided to revise
    our strategic plan every 3 years, rather than on a 2-year cycle, which
    means that we will not set new multiyear performance goals until 2007. To
    accommodate this change, for fiscal year 2006, we plan to continue to use
    the current performance goals as a basis for aligning our work with our
    strategic goals, and will describe the work we did in support of these
    multiyear performance goals at the end of fiscal year 2006. In preparing
    our fiscal year 2006 budget submission, we made minor revisions that apply
    to fiscal year 2006 for some of these performance goals, mainly in the
    homeland security

           4Our most recent performance plan is available on our Web site at
                    http://www.gao.gov/cgi-bin/getrpt?gao-05-776sp .

    and justice areas. These revisions were discussed in our fiscal year 2006
    performance plan. In our next strategic plan update, which will cover
    fiscal years 2007 through 2012, we will establish revised performance
    goals and key efforts that cover fiscal years 2007 through 2009.

        Measuring Client Service

    We use two performance measures-the number of testimonies and the
    timeliness of our products-as indicators of how well we are meeting our
    clients' needs.

    We consider requests to present testimony as an indicator that our clients
    believe our work can add value to the congressional decision-making
    process. We set a target at the agencywide level for the number of
    testimonies and then assign a portion of the testimonies as a target for
    each of the external goals-that is, goals 1, 2, and 3-based on their
    expected contribution to the agencywide total. As in measuring the results
    of our work, we track our progress on this measure at the goal level in
    order to understand why we met or did not meet the agencywide target.

    We also believe that our ability to provide products by the agreed-upon
    date means that we have met the clients' needs for providing information
    in time for it to be of value to them. We set agencywide targets for
    timeliness because we want our performance on these measures to be
    consistent across goals. However, we track our progress on this measure at
    the team level so that we can provide feedback to our teams on the extent
    to which they are contributing to the overall target and to help them
    identify areas in which they need to improve.

        Measuring the Management of Our People

    Our most important asset is our people, and they determine our capacity to
    perform. Therefore, we hold our managers accountable for attracting and
    retaining our human resources and determine how well we are performing in
    these areas through our new hire rate, acceptance rate, and retention
    rate. We also hold our managers accountable for investing in and leading
    our human resources. To assess our success in these areas, we track our
    performance using the following measures: staff development, staff
    utilization, leadership, and organizational development. We set targets
    for all of these measures at the agencywide level.

    On the pages that follow, we assess our performance for fiscal year 2005
    against our previously established performance targets. We also present
    our financial statements, the independent auditor's report, and a
    statement from GAO's Inspector General.

    Part I: Management's Discussion and Analysis

                                         Part I

    Management's Discussion and Analysis

    Providing Information That Improves Federal Programs Now and in the Future

    In fiscal year 2005, the Congress focused its attention on a broad array
    of challenging issues affecting the safety, health, and well-being of
    Americans here and abroad, and we were able to provide the objective,
    fact-based information these decision makers needed to stimulate debate,
    change laws, and improve federal programs for the betterment of the
    nation. For example, as the war in Iraq continued, we examined how DOD
    supplied vehicles, body armor, and other materiel to the troops in the
    field; contributed to the debate on military compensation; and highlighted
    the need to improve health, vocational rehabilitation, and employment
    services for seriously injured soldiers transitioning from the battlefield
    to civilian life. We also kept pace with the Congress's information needs
    about ways to better protect America from terrorism by issuing products
    and delivering testimonies that addressed issues such as security gaps in
    the nation's passport operations that threaten public safety and federal
    efforts needed to improve the security of checked baggage at airports and
    cargo containers coming through

    U.S. ports. We explored the financial crisis that weakened the airline
    industry and the impact of this situation on the traveling public and
    airline employees' pensions.

    In addition, we helped to focus the attention of the Congress and the
    public on issues affecting the fiscal security and economic stability of
    the nation in the long term. In the second quarter of fiscal year 2005, we
    issued two products that will assist the Congress as it addresses future
    challenges. Our report entitled 21st Century Challenges: Reexamining the
    Base of the Federal Government provides a series of illustrative questions
    related to 12 areas of federal activity as well as our perspective on
    various strategies and approaches that should be considered as a possible
    means to address the issues and questions raised in the report. Drawing on
    our institutional knowledge and extensive program evaluation and
    performance assessment work for the Congress, we presented over 200
    specific 21st century questions illustrating the types of hard choices our
    nation needs to face as it reexamines what the federal government does and
    how it does it. We also issued our High-Risk Series: An Update, which
    identifies federal areas and programs at risk of fraud, waste, abuse, and
    mismanagement and those in need of broad-based transformations. The issues
    affecting many areas and programs discussed in these two products may take
    years to address, and these products will serve as a useful guide for the
    Congress's future programmatic deliberations and oversight activities.
    (see pp. 42 and 43 for more information about our 21st century challenges
    and high-risk reports, respectively.) We performed all this work and more
    in accordance with our strategic plan, guided by our core values, and
    consistent with our professional standards.

    As we assisted the Congress in fiscal year 2005, we monitored our
    performance using 14 annual performance measures that capture the results
    of our work; the assistance we provided to our client-the Congress; and
    our ability to attract, retain, develop, and lead a highly professional
    workforce (see table 1) . These measures indicate that we had an
    impressive year-we met or exceeded our performance targets for 10 of our
    14 measures. Two of our results measures-financial benefits and other
    benefits-illustrate the outcomes of our work and our value to the nation
    because they track federal dollars saved or better used and programmatic
    improvements implemented as a result of our work. Two additional results
    measures track recommendations implemented and new products with
    recommendations that help us to achieve financial and other benefits. Our
    client measures-testimonies and timeliness-indicate how well we, as an
    information provider, serve the Congress, and our people measures reflect
    how well we manage our staff to achieve the results that we do.

               Table 1: Agencywide Summary of Annual Measures and Targets

    Source: GAO.

    Notes: N/A indicates the information is not available or the target is not
    applicable. Our fiscal year 2006 target for the percentage of products
    with recommendations differs from the target we reported for this measure
    in our fiscal year 2006 performance plan posted on our Web page in June
    2005. On the basis of our performance in fiscal year 2005, we increased
    this target by 5 percentage points.

    In fiscal year 2005, we accomplished real results for We did not achieve
    the targets we set for testimothe nation, surpassing our financial
    benefits target nies and timeliness. Several testimonies we had for the
    year and exceeding our annual target and scheduled were postponed or
    canceled so that the all-time record for other (nonfinancial) benefits.
    Our Congress could turn its attention to the Supreme financial benefits of
    $39.6 billion represents an $83 Court nominations, and during the last
    months of return on every dollar invested in us, and the more the fiscal
    year, to Hurricane Katrina and its after-than 1,400 other benefits
    resulting from our work math. However, we believe we served the Congress
    helped to improve the efficiency and effectiveness very well during fiscal
    year 2005. Based on feed-of government programs that serve the public. In
    back through an electronic survey completed by a addition, we exceeded our
    targets for past recom-sample of our congressional clients who requested
    mendations implemented and new products with our testimonies and
    significant products, 96 percent recommendations by 5 percentage points
    and 8 of the responses concerning their overall satisfacpercentage points,
    respectively. tion with our products were favorable. These respondents
    were pleased with various aspects of our written products and testimony
    statements, such as the professional manner in which we conducted our work
    and responded orally to questions at congressional hearings, respectively.
    We discuss the client feedback survey in detail on p. 37 of this report.

    Concerning our eight people measures, which we began to hold managers
    accountable for in fiscal year 2005, we are happy to report that we met or
    exceeded our annual targets for all but two of them-new hire rate and
    acceptance rate. Our performance in this area indicates that we did a very
    good job developing, productively using, and managing our staff, but need
    to improve our recruiting and hiring processes a little more, which we
    have taken steps to do. We discuss these actions in appendix 1 of this
    report (see p. 185) .

    To help us examine trends over time, we also look at 4-year averages for
    all of our results and client measures except the percentage of past
    recommendations implemented because it is a composite that is drawn from a
    number of years rather than an annual percentage. Calculating 4-year
    rolling averages for the other measures minimizes the effect of an
    atypical result in any given year. We consider this calculation, along
    with other factors, when we set our performance targets. Table 2 shows
    that from fiscal year 2001 through fiscal year 2005 financial and other
    benefits increased steadily along with the percentage of new products with
    recommendations. The average number of testimonies, on the other hand,
    declined from fiscal years 2003 through fiscal year 2004, but has
    increased in fiscal year 2005. Our ability to provide timely products
    leveled off after fiscal year 2002 and fiscal year 2004 at 96 percent, but
    increased slightly by 1 percentage point in fiscal year 2005.

             Table 2: Four-Year Rolling Averages for Selected GAO Measures

    Performance measure                        2001  2002   2003   2004   2005
    Results
    Financial benefits (dollars in billions)  $22.4 $26.9  $30.7  $35.9  $39.2
    Other benefits                              683  775    884    986   1,139
    New products with recommendations           37%  42%    48%    54%     58%
    Client
    Testimonies                                 225  215    205    193     200
    Timeliness                                  95%  96%    96%    96%     97%

    Source: GAO.

    Regarding our qualitative multiyear performance goals, at the close of
    fiscal year 2005 (the end of our multiyear performance cycle) we met 96 of
    our 99 performance goals. In part II of this report, we present detailed
    information about the multiyear performance goals developed to measure our
    progress toward achieving each of our four strategic goals.

    Focusing on Results

    Focusing on outcomes and the efficiency of the processes needed to achieve
    them is fundamental to accomplishing our mission. The following five
    annual measures indicate that we have fulfilled our mission and delivered
    results that benefit the nation.

    Financial and Other Benefits

    We describe many of the benefits produced by our work as either financial
    or other (nonfinancial) benefits. Both types of benefits result from our
    efforts to provide information to the Congress that helped to

    (1) change laws and regulations, (2) improve services to the public, and
    (3) promote sound agency and governmentwide management. In many cases, the
    benefits we claimed in fiscal year 2005 are based on work we did in past
    years because it often takes the Congress and agencies time to implement
    our recommendations or to act on our findings.

    To claim either type of benefit, our staff must document the connection
    between the benefits reported and the work that we performed.

    Financial Benefits

    Our findings and recommendations produce measurable financial benefits for
    the federal government when the Congress or agencies act on them and the
    funds are made available to reduce government expenditures or are
    reallocated to other areas. The monetary effect realized can be the result
    of changes in

         + business operations and activities;
         + the structure of federal programs; or
         + entitlements, taxes, or user fees.

    For example, financial benefits could result if the Congress were to
    reduce the annual cost of operating a federal program or lessen the cost
    of a multiyear program or entitlement. Financial benefits could also
    result from increases in federal reve-nues-due to changes in laws, user
    fees, or asset sales-that our work helped to produce.

    In fiscal year 2005, our work generated $39.6 billion in financial
    benefits ( see fig. 4 ). Of this amount, $19 billion (or approximately 48
    percent) resulted from changes in laws or regulations ( see fig. 5 ).

    Figure 4: Financial Benefits GAO Recorded in

    Fiscal Year 2005
    Dollars in billions
    50
                                         $44.0
        40                                  $37.7   $35.4           $37.5   $39.6
        30              $26.4
    20
    10
    0
                       2001          2002           2003    2004    2005     2005

    Actual Target Actual

    Source: GAO.

    Figure 5: Types of Financial Benefits Recorded in Fiscal Year 2005 from
    Our Work

                                   Financial Benefits

                                  Total $39.6 billion

    $7.7 billion

    (19.5%)

    $12.8 billion

    (32.4%)

    $19.0 billion

    (48.0%)

    Categories

    Agenciesacted on GAO information to improve servicesto the public

    Information GAO provided to the Congress resulted in statutory or
    regulatory changes

    Core business processes improved at agenciesand governmentwide management
    reformsadvanced by GAO's work

    Source: GAO.

    Note: Percentages and amounts do not add due to rounding.

    Financial benefits included in our performance measures are net
    benefits-that is, estimates of financial benefits that have been reduced
    by the costs associated with taking the action that we recommended. We
    convert all estimates involving past and future years to their net present
    value and use actual dollars to represent estimates involving only the
    current year. Financial benefit amounts vary depending on the nature of
    the benefit, and we can claim financial benefits over multiple years based
    on a single agency or congressional action. To ensure conservative
    estimates of net financial benefits, reductions in operating cost are
    typically limited to 2 years of accrued reductions. Multiyear reductions
    in long-term projects, changes in tax laws, program terminations, or sales
    of government assets are limited to 5 years. Estimates come from non-GAO
    sources and are reduced by any identifiable offsetting costs. These
    non-GAO sources are typically the agency that acted on our work, a
    congressional committee, or the Congressional Budget Office.

    To document financial benefits, our staff complete reports documenting
    accomplishments that are linked to specific products or actions. All
    accomplishment reports for financial benefits are documented and reviewed
    by (1) another GAO staff member not involved in the work and (2) a senior
    executive in charge of the work. Also, a separate unit, QCI, reviews all
    financial benefits and approves benefits of $100 million or more, which
    amounted to 94 percent of the total dollar value of benefits recorded in
    fiscal year 2005. Additionally, our IG performs an independent review of
    all accomplishment reports claiming benefits of $500 million or more,
    which represented about 78 percent in fiscal year 2005.

    Figure 6 lists several of our major financial benefits reported in fiscal
    year 2005 and briefly describes some of our work contributing to financial
    benefits.

     Figure 6: GAO's Selected Major Financial Benefits Reported in Fiscal Year 2005

                         Source:See Image Sources. Source: GAO.

    Other Benefits

    Many of the benefits that result from our work cannot be measured in
    dollar terms. During fiscal year 2005, we recorded a total of 1,409 other
    benefits (see fig. 7 ).

    Figure 7: Other Benefits GAO Recorded in Fiscal

    Year 2005
    Number
    1,500                                                              1,409
    900 1,200       799       906       1,043      1,197     1,000
    600
    300
                 0
                         2001    2002       2003      2004      2005      2005

    Actual Target Actual

    Source: GAO.

    We documented 75 instances where the information we provided to the
    Congress resulted in statutory or regulatory changes, 595 instances where
    federal agencies used our information to improve services to the public,
    and 739 instances where agencies improved core business processes or
    government-wide reforms as a result of our work. ( See fig. 8 .) These
    actions spanned the full spectrum of issues, from identifying that some
    soldiers had not been reimbursed for military-related travel costs they
    personally incurred to highlighting weaknesses in SSA's policies for
    verifying birth certificates when issuing replacement Social Security
    cards. In figure 9 we provide examples of some of the other benefits we
    claimed as accomplishments in fiscal year 2005. The laws that we cite in
    the first section of this figure were passed in fiscal year 2005.

    Figure8: Types of Other Benefits Recorded in Fiscal Year 2005 from Our
    Work

                                     Other Benefits

                                      Total 1,409

                                        739 595

                                    (52.4%) (42.2%)

    75

    (5.3%)

    Categories

    Agenciesacted on GAO information to improve servicesto the public

    Information GAO provided to the Congress resulted in statutory or
    regulatory changes

    Core business processes improved at agenciesand governmentwide management
    reformsadvanced by GAO's work

    Source: GAO.

    Note: Percentages do not add due to rounding.

     Figure 9: GAO's Selected Other (Nonfinancial) Benefits Reported in Fiscal Year
                                          2005

                               Source:See Image Sources.

    Source: GAO.

    In addition to the financial and other benefits claimed in fiscal year
    2005 from our work, we also achieved the following results.

    Past Recommendations Implemented

    One way we measure our effect on improving the government's
    accountability, operations, and services is by tracking the percentage of
    recommendations that we made 4 years ago that have since been implemented.
    At the end of fiscal year 2005, 85 percent of the recommendations we made
    in fiscal year 2001 had been implemented ( see fig. 10 ), primarily by
    executive branch agencies. Putting these recommendations into practice
    will generate tangible benefits for the nation in the years ahead.

    Four-year implementation rate

    80 90        79%         79%        82%        83%        80%          85%
          70
          60
          50
          40
          30
          20
          10
           0
                    2001       2002        2003       2004       2005        2005

    Actual Target Actual

    Source: GAO.

    The 85 percent implementation rate for fiscal year 2005 exceeded our
    target for the year by 5 percentage points as well as our actual
    performance for the last 4 years. As figure 11 indicates, agencies need
    time to act on recommendations. Therefore, we assess recommendations
    implemented after 4 years, the point at which experience has shown that if
    a recommendation has not been implemented, it is not likely to be.

    New Products Containing Recommendations

    This year, about 63 percent of the 637 written products we issued
    (excluding testimonies) contained recommendations. ( See fig. 12 .) We
    track the percentage of new products with recommendations because we want
    to encourage staff to develop recommendations that when implemented by the
    Congress and agencies, produce financial and other benefits for the
    nation. However, by setting our target at 55 percent, we recognize that
    our products do not always include recommendations and that the Congress
    and agencies often find such informational reports just as useful as those
    that contain recommendations. Our informational reports have the same
    analytical rigor and meet the same quality standards as those with
    recommendations and, similarly, can help to bring about significant
    financial and other benefits. Hence, this measure allows us ample leeway
    to respond to requests that result in reports without recommendations.

    Multiyear Performance Goals

    In addition to our annual measures, we track our progress on 99 multiyear
    performance goals. At the end of fiscal year 2005, we met all but 3 of our
    performance goals. Our performance goals measure the extent to which we
    did the work we had planned to do to support the Congress during fiscal
    years 2004 and 2005. Our senior managers developed these performance goals
    at the beginning of the assessment cycle (fiscal year 2004) based on their
    knowledge of specific subject areas and in consultation with our clients
    and customers. However, because congressional or GAO priorities can change
    over the period covered by these performance goals, we may not be able to
    meet some of them because resources had to be shifted away from planned
    work to address new or more urgent priorities. In such circumstances, we
    do not necessarily view an unmet performance goal as a problem. Rather, we
    believe it shows that we are responsive in carrying out our mission of
    serving the Congress and the nation and devoting our resources to efforts
    of critical importance. We consider these performance goals qualitative
    rather than quantitative because our senior managers determine whether
    enough work (i.e., key efforts) has been performed to achieve a
    performance goal. In Part II of this report, we list by strategic goal the
    multiyear qualitative performance goals supporting each strategic
    objective and indicate whether the performance goal was met.

    Focusing on Our Clients

    To fulfill the Congress's information needs, we strive to deliver the
    results of our work orally as well as in writing at a time agreed upon
    with our clients. Our performance this year indicates that we assisted our
    clients-the Congress-well, though we missed our target on both the number
    of hearings we participated in and our ability to deliver products on
    time.

    Testimonies

    Our clients often invite us to testify on our current and past work when
    it addresses issues that congressional committees are examining through
    the hearing process. During fiscal year 2005, experts from our staff
    testified at 179 congressional hearings covering a wide range of complex
    issues (see fig. 13 ). For example, our senior executives testified on
    improving the security of nuclear material, federal oversight of mutual
    funds, and the management and control of DOD's excess property. ( See p.
    36 for a summary of issues we testified on by strategic goal in fiscal
    year 2005.) Over 70 of our testimonies were related to high-risk areas and
    programs, which are discussed on page 43 .

    However, in spite of our willingness to testify for our clients, we did
    not meet our fiscal year 2005 target of 185 testimonies, primarily because
    congressional committees either canceled or postponed several hearings at
    which our senior executives were scheduled to testify to focus instead on
    the Supreme Court nominations and Hurricane Katrina.

         Figure 13: Testimonies
         Hearings at which GAO testified
         250
                                           216           217
         200                                       189             185     179
         150              151
         100
         50
         0
                       2001         2002          2003    2004    2005    2005

    Actual Target Actual

    Source: GAO.

    Timeliness

    We track the percentage of our products that are delivered on or before
    the day we agreed to with our clients because it is critical that our work
    be done on time for it to be used by policymakers. As shown in figure 14 ,
    in fiscal year 2005 we missed our target of providing 98 percent of them
    by the promised date.

    Figure 14: Timeliness

    Percentage of products on time 100 95% 96% 97% 97% 98% 97%

    80

    60

    40

    20

    0

    2001 2002 20032004 2005 2005

    Actual Target Actual

    Source: GAO.

    Selected Testimony Issues

      Fiscal Year 2005

        GOAL 1:

    Address Challenges to the Well-Being and Financial Security of the GOAL 2:
    American People

                                  Respond to Changing

    fS Head Start grants management

                                Security Threats and the

    fS Preparing for an influenzaChallenges of

    GOAL 3:

    pandemic

          Globalization

    fS Overseeing the U.S. food supply

          fS Retirement options for seniorsfS Army's modular forcesHelp Transform
          the Federal Government's Role

            * Long-term health care costsandfS U.S. passport fraud government
              budgetsand How It Does Business
            * fS Cargo security strategies
            * Energy demand in the
            * 21st century fS Acquisition challenges facing thefS Long-term
              fiscal issuesaffecting Navy's DD(X) destroyer program the federal
              government
            * Postal service reform legislation
            * fS Tactical aircraft modernization fS Gaps in military pay and
              benefits
            * Veterans' disability claims
            * fS DOD security clearancesfS 21st century challenges for the
            * Social Security reform federal government
            * fS Oil for Food program
            * Wildland fire management fS Air Force procurement protests
            * fS Unmanned aerial vehicles
            * Medicaid financing issues fS Human capital transformation
            * fS Condition of Coast Guard aircraft at DHS
            * Meeting the future demand for and shipsused in deep watersenergy in
              the United StatesfS Preparing for emergenciesat
            * fS Managing violations of restricted federal agencies
         + National air traffic system air space
              * Amtrak's Acela train fS Federal oversight of mutual fS Space
                shuttle workforce issues
              * fS Reducing the tax gap
         + Protecting nuclear material handled funds to ensure investor security
           at science and environmental sitesfS Portsecurity fS U.S. government
           financial
         + Providing services to seriouslyfS Protecting U.S.
           officialsstatementsinjured veterans overseas from terrorist attacksfS
           Management and control of DOD's
              * Rural housing service fS DOD'sbusiness transformation excess
                property
              * fS Pricing federal multiple award
         + Federal real property fS Transportation security issuescontracts
         + Endangered Species Act fS Implementing laws that protect fS
           Performance budgeting
         + Federal oversight of the E-rate the security of information

    fS High-risk federal programs

    program fS DOD's national security personnel system fS Army National Guard
    travel reimbursement issues

                          fS Acquisition challenges facing the

    Army's future combat systemsfS Space acquisitionsand investment planning

         + Improper Payments Information Act
         + Agencies' continuity of operations plans
         + DHS'sStudent and Exchange Visitor Information System

    As part of its periodic review of our performance measures, the IG
    independently examined our process for calculating product timeliness and
    found evidence that some staff may be inconsistently applying the policy
    for changing a committed issue date, which ultimately affects the
    reliability of this measure. The IG also noted that the internal reporting
    approach may not adequately represent the most complete assessment of the
    requesters' satisfaction with our ability to deliver products when our
    clients need them. The IG recommended that GAO management strengthen the
    guidance for determining timeliness and consider developing an
    alternative, more independent measure to gauge performance in this area.

    Therefore, beginning in fiscal year 2006, we will use the results of our
    client feedback survey as a barometer for how well we are getting our
    products to the Congress when it needs them. We will use this survey as
    the primary data source for our external timeliness measure because the
    responses come directly from our clients and are free from significant
    input by our staff. However, we will continue to use as a supplemental
    check to the survey our current process for determining timeliness and
    have already taken steps to clarify the guidance related to our process
    for changing committed issue dates. Both indicators will help to ensure
    that teams supporting strategic goals 1 through 3 continue to complete
    engagements on the date mutually agreed to with our clients.

    Since March 2002, we have been pilot testing an e-mail survey that we send
    to a portion of our clients for direct, independent feedback from them on
    their satisfaction with the quality and timeliness of our work and their
    interactions with our staff. We tally responses from the survey we send to
    key staff working for the requesters of our testimony statements and our
    more significant written products (e.g., engagements assigned a risk level
    of "high" by our senior management5 and those requiring an investment of
    500 staff days or more). Each survey asks the client whether the product
    was delivered on time. Because our products often have multiple
    requesters, we survey more than one congressional staff person per
    product. In fiscal year 2005, we sought feedback on 42 percent of the
    products we issued that year and had a 30 percent response rate from the
    congressional staff surveyed. Overall, 93 percent of those responding to
    the survey either strongly or generally agreed that our products were
    delivered on time.

    Focusing on Our People

    We could not have performed as well as we did in fiscal year 2005 without
    the support and commitment of our highly professional, multidisciplinary
    staff. Our ability to hire, develop, retain, and lead staff is critical to
    fulfilling our mission of serving the Congress and the American people.

    Since 2002, we have refined our processes for measuring how well we manage
    our human capital and have benchmarked our performance in this area.
    Fiscal year 2005 was the first year we held our managers accountable for
    our eight people measures, and we met six of them-slightly missing our
    targets for new hire rate and acceptance rate by only a few percentage
    points. These measures are directly linked to our goal 4 strategic
    objective of becoming a professional services employer of choice. For more
    information about our people measures, see Verifying and Validating
    Performance Data in part II of this report.

    New Hire Rate and Acceptance Rate

    Our new hire rate is the ratio of the number of people hired to the number
    we planned to hire. Annually, we develop a workforce plan that takes into
    account projected workload changes, as well as other changes, such as
    retirements, other attrition, promotions, and skill gaps. The workforce
    plan for the upcoming year specifies the number of planned hires and, for
    each new hire, specifies the skill type and the level. The plan is
    conveyed to each of our units to guide hiring throughout the year.
    Progress toward achieving the workforce plan is monitored monthly by the
    Chief Operating Officer and the Chief Administrative Officer. Adjustments
    to the workforce plan are made throughout the year, if

    5As part of our risk-based, engagement management process, we identify a
    new engagement as high risk if the work we need to perform will likely
    require a large investment of our resources, involve a complex
    methodology, or examine controversial or sensitive issues.

    necessary, to reflect changing needs and conditions. In fiscal year 2005,
    our adjusted plan was to hire 281 staff. However, we were only able to
    bring on board 263 staff by year-end. Our acceptance rate measure is a
    proxy for GAO's attractiveness as an employer and an indicator of our
    competitiveness in bringing in new talent. It is the ratio of the number
    of applicants accepting offers to the number of offers made. Table 3 shows
    that we missed the targets we set for new hire rate and acceptance rate by
    3 percentage points and 4 percentage points, respectively. Our
    calculations for each of these measures do not include offers extended to
    applicants for fiscal year 2005 vacancies that were accepted but for which
    applicants will not report for duty until the first quarter of fiscal year
    2006. In addition, we were unable to fill by year-end critical positions
    for accountants/auditors due to market competition.

    To more effectively anticipate and acquire the human resources we need now
    and in the future, we took steps to improve our recruitment strategy by
    expanding the focus of our student employment program. Rather than
    targeting our recruitment efforts solely at graduate students who are
    available to work with us during the summer, we expanded the program to
    include undergraduate students, and we will offer both groups employment
    opportunities in the fall and spring as well as during the summer. Our
    fiscal year 2006 recruitment strategy, developed in fiscal year 2005,
    includes (1) using targeted recruiting for special skill sets and
    hard-to-fill positions with an emphasis on diversity and

    (2) implementing year-round internships, cooperative education agreements
    with five local universities, and governmentwide flexibility for
    noncompetitive appointments into our Professional Development Program. We
    also launched a pilot program that offers employment to a limited number
    of undergraduate cooperative education program participants in September
    2005.

     Table 3: Actual Performance and Targets Related to Our New Hire and Acceptance
                                     Rate Measures

    Source: GAO.

    Note: N/A indicates the data are not available.

                                      Source: GAO.

    Staff Development, Staff Utilization, Leadership, and Organizational
    Climate

    One way that we measure how well we are supporting our staff and providing
    an environment for professional growth and improvement is through our
    annual employee feedback survey. This Web-based survey, which is conducted
    by an outside contractor to ensure the confidentiality of every
    respondent, is administered to all of our employees once a year. Through
    the survey, we encourage our staff to indicate what they think about GAO's
    overall operations, work environment, and organizational culture and how
    they rate our managers- from the immediate supervisor to the Executive
    Committee-on key aspects of their leadership styles. The survey consists
    of over 100 questions.

    In fiscal year 2005, 80 percent of our employees completed the survey, and
    we met or slightly exceeded our targets for all four measures ( see table
    5 ). We first conducted this survey in fiscal year 2002 and since then
    favorable responses to questions related to these measures have increased
    each year. Our scores this year averaged 8.5 percent higher than the
    latest Office of Personnel Management governmentwide survey and 5.25
    percent higher than the latest private industry survey. In fiscal year
    2005, we also added questions to assess employees' satisfaction with us.
    The results of the responses to these questions were used by the
    Partnership for Public Service (Partnership) to determine our standing in
    the annual Best Places to Work in the Federal Government rankings. In
    September 2005, we received an award from the Partnership for our fourth
    place ranking.

    Table 5: Actual Performance and Targets Related to Our Measures of
    Employee Satisfaction with Staff Development, Staff Utilization,
    Leadership, and Organizational Climate

    Source: GAO.

    Note: N/A indicates the data are not available.

    Focusing on Our Internal Operations

    Our mission and people are supported by our internal administrative
    services, including information management, building management, knowledge
    services, human capital, financial management, and other services.
    Beginning in fiscal year 2006, we will begin using two new performance
    measures to assess our performance related to how well our internal
    administrative services help employees get their jobs done or improve
    employees' quality of work life. These measures are directly related to
    our goal 4 strategic objectives of continuously enhancing GAO's business
    and management processes and becoming a professional services employer of
    choice. We will use information from our annual customer satisfaction
    survey to set targets and assess our performance for both of these
    measures, which are shown in table 6 along with baseline data that we
    recorded for them in fiscal year 2003 and fiscal year 2004. The first
    measure encompasses 21 services that help employees get their jobs done,
    such as Internet access, desktop computer equipment, and voice and video
    communication systems. The second measure encompasses another 10 services
    that affect quality of work life, such as assistance related to pay and
    benefits, building security, and workplace safety and health. Using survey
    responses, we calculate a composite score for each service category that
    reflects employee ratings for

    (1) satisfaction with the service and (2) importance of the service.

    Table 6: Actual Performance and Targets Related to Our Internal Operations
                                        Measures

    Performance measures     2000  2001    2002    2003    2004   2005    2006
                             actual  actual  actual  actual  actual actual target
    Internal operations
    Help get job done         N/A   N/A     N/A    3.98    4.01   N/A      4.0

    Quality of work life N/A N/A N/A 3.86 3.96 N/A

    Source: GAO.

    Notes: We will report actual data for fiscal year 2005 once the data from
    our November 2005 internal operations survey have been analyzed. N/A
    indicates that the data are not available yet or not applicable because we
    did not collect the data during this period.

    21st Century Challenges

    We have long had a statutory responsibility for monitoring the condition
    of the nation's finances. Recently, in our role as the auditor of the U.S.
    gov-ernment's consolidated financial statements, we included an emphasis
    paragraph in our audit report for the fiscal year ended September 30,
    2004, expressing our concern that the fiscal policies in place today
    will-absent unprecedented changes in tax policies, spending policies, or
    both-result in large, escalating, and persistent deficits that are
    economically unsustainable over the long term. This conclusion is based on
    the results of our long-term budget model, which the agency has used since
    1992.

    Over the long term, the nation's growing fiscal imbalance stems primarily
    from the aging of the population, rising health care costs, and lower
    federal revenues as a percentage of the economy. These trends are
    compounded by the presence of near-term deficits arising from new
    discretionary and mandatory spending as well as lower revenues as a share
    of the economy. Absent significant changes on the spending side, the
    revenue side, or both of the budget, these long-term deficits will
    encumber a growing share of federal resources and test the capacity of
    current and future generations to afford both today's and tomorrow's
    commitments. Continuing on this unsustainable path will gradually erode,
    if not suddenly damage, our economy, our standard of living, and
    ultimately our national security.

    Addressing the nation's long-term fiscal imbalances constitutes a major
    transformational challenge that may take a generation to resolve. Given
    the size of our projected deficit, we will not be able to grow our way out
    of this problem-tough choices will be required. In addition, traditional
    incremental approaches to budgeting will need to give way to more
    fundamental and periodic reexaminations of the base of government,
    ultimately covering discretionary and mandatory programs as well as the
    revenue side of the budget. The nature and magnitude of the fiscal,
    security, economic, and other adjustments that need to be considered are
    not amenable to "quick fixes"; rather they will likely require an
    iterative, thoughtful process of disciplined changes and reforms over many
    years.

    We produced the 21st century challenges report to help the Congress review
    and reconsider the base of federal spending and tax programs.6 It is
    intended as one input among many that the Congress will receive as it
    decides what its agenda will be for oversight and program review. We have
    framed the issues presented as illustrative questions for policymakers to
    consider as a supplement to their own efforts. The questions are drawn
    from our issued work, our strategic plan prepared in consultation with the
    Congress, input from several inspectors general, and the institutional
    knowledge of our staff. They cover discretionary spending; mandatory
    spending, including entitlements; as well as tax policies and programs.
    While answers to these questions may draw on our work and that of others,
    only elected officials can and should decide which questions to address as
    well as how and when to address them.

    Having identified the major fiscal challenge facing the nation, and given
    our role in supporting the Congress, we believe that we also have an
    obligation to provide policymakers with support in identifying issues and
    options that could help to address these fiscal pressures. In our 21st
    century challenges report, we built on our past and pending work-90
    percent of which was requested by the Congress or required by law-to
    provide policymakers with a comprehensive compendium of those areas
    throughout government that could be ripe for reexamination and review. The
    report is consistent with our other products, such as our high-risk
    reports (discussed below), in that it pulls together our insights and
    previous work for the Congress to help with its budget and programmatic
    deliberations and oversight activities.

    In developing the 21st century questions, we reflected on the inventory of
    future forces working to reshape American society, our place in the world,
    and the various roles and responsibilities of the federal government that
    were presented in our Strategic Plan for Serving the Congress and the
    Nation

    6GAO, 21st Century Challenges: Reexaminin  g the Base of the Federal
    Government, GAO-05-325SP (Washington, D.C.: February 2005).

    (2004-2009). The specific questions raised for each area were informed by
    a set of generic evaluation criteria that are useful in evaluating any
    government program, policy, function, or activity. The criteria are framed
    as questions and are designed to address the legislative basis for the
    program, its purpose and continued relevance, its effectiveness in
    achieving goals and outcomes, its efficiency and targeting, its
    affordability, its sustainability, and its management. We used these
    criteria to generate specific 21st century questions about those programs
    and priorities already identified. The 21st century questions illustrate
    the kinds of issues that a reexamination and review initiative needs to
    address.

    Copies of this report are available upon request. In addition, this
    document is available at no charge on our Web site at http://www.gao.gov .

    GAO's High-Risk Program

    Since 1990, our high-risk program has highlighted long-standing challenges
    facing the federal government. Increasingly, the program has focused on
    those major programs and operations that are in urgent need of broad
    transformation, and congressional as well as executive branch action, to
    ensure that our national government functions in the most economical,
    efficient, and effective manner possible. Our latest report, released in
    January 2005, highlights 25 troubled areas across government.7 Many of
    these areas involve critical public service providers, such as the U.S.
    Postal Service and IRS, and services provided to Medicare and Medicaid
    recipients through CMS. Table 7 lists each high-risk area, the year it was
    placed on the high-risk list, and the strategic goal under which our work
    related to each high-risk area is generally performed.

    7GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: January 2005).

    Table 7: GAO's 2005 High-Risk List

               Year GAO's designated strategic 2005 high-risk area high risk goal

                  Addressing challenges in broad-based transformations

                       Strategic Human Capital Managementa 2001 3

        U.S. Postal Service Transformation Efforts and Long-Term Outlooka 2001 1

                         Managing Federal Real Propertya 2003 1

    Protecting the Federal Government's Information Systems and the Nation's
    Critical Infrastructures 1997 3

        Implementing and Transforming the Department of Homeland Security 2003 2

    Establishing Appropriate and Effective Information-Sharing Mechanisms to
    Improve Homeland Security 2005 3

                    DOD Approach to Business Transformationa 2005 2

                       DOD Business Systems Modernization 1995 3

                    DOD Personnel Security Clearance Program 2005 2

                      DOD Support Infrastructure Management 1997 2

                            DOD Financial Management 1995 3

           DOD Supply Chain Management (formerly Inventory Management) 1990 2

                         DOD Weapon Systems Acquisition 1990 2

                     Managing federal contracting more effectively

                             DOD Contract Management 1992 2

                             DOE Contract Management 1990 1

                            NASA Contract Management 1990 2

                      Management of Interagency Contracting 2005 2

          Assessing the efficiency and effectiveness of tax law administration

                           Enforcement of Tax Lawsa, b 1990 3

                       IRS Business Systems Modernizationc 1995 3

              Modernizing and safeguarding insurance and benefit programs

                    Modernizing Federal Disability Programsa 2003 1

     Pension Benefit Guaranty Corporation Single-Employer Insurance Programa 2003 1

                                Medicare Programa 1990 1

                                Medicaid Programa 2003 1

    HUD Single-Family Mortgage Insurance and Rental Housing Assistance Programs 1994
                                           1

    Other

     Federal Aviation Administration (FAA) Air Traffic Control Modernization 1995 3

    Source: GAO.

    aLegislation is likely to be necessary, as a supplement to actions by the
    executive branch, in order to effectively address this high-risk area.

    bTwo high-risk areas-collection of unpaid taxes and earned income credit
    noncompliance-have been consolidated to make this area.

    cThe IRS financial management high-risk area has been incorporated into
    this high-risk area.

    Issued to coincide with the start of each new Congress, our high-risk
    update has helped sustain attention from members of the Congress who are
    responsible for oversight and from executive branch officials who are
    accountable for performance. Our focus on high-risk problems contributed
    to the Congress enacting a series of government-wide reforms to address
    critical human capital challenges, strengthen financial management,
    improve IT practices, and instill a more results-oriented government.
    Overall, our high-risk program has served to identify and help resolve
    serious weaknesses in areas that involve substantial resources and provide
    critical services to the public. Of the 43 areas that have appeared on our
    high-risk list since 1990, 16 have improved enough to be removed from the
    list and 2 have been consolidated with other areas. We also continue to
    identify other areas that require attention and should be added to the
    list. Further, the current administration has looked to our high-risk
    program in shaping governmentwide initiatives such as the President's
    Management Agenda, which has at its base many of the areas we had
    previously identified as high risk. OMB, in consultation with us, is
    currently working to ensure that agencies develop detailed action plans to
    address high-risk areas, with the ultimate objective, over time, of seeing
    these items removed from our high-risk list.

    Our high-risk program includes four high-risk areas added in 2005

         + establishing appropriate and effective information-sharing mechanisms
           to improve homeland security,
         + DOD approach to business transformation,
         + DOD personnel security clearance program, and
         + management of interagency contracting.

    One organization-related high-risk area that exemplifies the program's
    increasing focus on transformation is DOD's approach to business
    transformation. As an organization that spends billions of dollars
    supporting the warfighter here and abroad, DOD requires transformation to
    meet current and emerging mission and organizational challenges. DOD has
    initiated various efforts to transform business operations; however,
    current business processes continue to result in reduced effectiveness and
    efficiencies at a time when DOD is challenged to maintain a high level of
    operations while competing for resources in a fiscally constrained
    environment. The Secretary of Defense estimates that improving business
    operations could save 5 percent of DOD's annual budget, which would
    represent a savings of about $22 billion a year.8 Business transformation
    requires long-term cultural change and business process reengineering and
    a commitment from the executive and legislative branches of government.
    Sound strategic planning is the foundation on which to build, but DOD has
    not yet developed a clear strategic and integrated plan for business
    reform. For these reasons, we designated-for the first time-DOD's lack of
    a strategic and integrated planning approach to its business
    transformation as high risk.

    In addition, we consolidated four high-risk areas involving IRS into two.
    First, we combined the collection of unpaid taxes area and earned income
    credit noncompliance area into a single area called enforcement of tax
    laws. We determined that while IRS collection efforts and compliance with
    the provisions of the earned income credit remain important issues, other
    aspects of tax law compliance are also significant. We concluded that the
    challenge facing IRS in enforcing the nation's tax laws is better
    understood in this broader context. Second, we incorporated the IRS
    financial management high-risk area into the IRS business systems
    modernization area. We found that the main financial manage-ment-related
    challenge still facing IRS is the modernization of its outmoded financial
    management controls and processes and that IRS's efforts in this regard
    are closely intertwined with its business systems modernization project.

    In fiscal year 2005, we also removed the high-risk designation from three
    areas: Education's student financial aid programs, FAA's financial
    management, and USDA's Forest Service financial management.

    In fiscal year 2005, excluding our high-risk update report and its
    companion testimony, we issued 183 reports and delivered 75 testimonies
    related to our high-risk areas and documented financial benefits totaling
    about $26 billion. For example, we exam-

            8This figure is based on DOD's reported fiscal year 2004 budget.

    ined challenges in the implementation and transformation of DHS, such as
    strengthening internal controls and addressing weaknesses in financial
    systems, fully establishing and institutionalizing a departmentwide
    strategic framework for managing information, and addressing systematic
    problems in human capital and acquisition systems, resulting in 19 reports
    and 11 testimonies. We also evaluated the Medicare program and found
    weaknesses in program management and oversight of patient safety and care,
    inefficient payment policies, and areas vulnerable to fraud and abuse. Our
    work in this area resulted in approximately $3.9 billion in financial
    benefits for fiscal year 2005. Our efforts continue to bring attention to
    areas in urgent need of improvement and to help the Congress and federal
    government institute reforms to address these high-risk areas.

    To learn more about our work on the high-risk areas or to download the
    high-risk update in full, go to
    http://www.gao.gov/docsearch/featured/high- risk.html .

    Building Partnerships

    In fiscal year 2005, we continued to explore indicators that could help us
    measure how well we develop mutually beneficial relationships with other
    accountability organizations. Such partnerships are important because they
    create opportunities for collaboration that help all organizations
    involved address common challenges and enhance their ability to improve
    government operations and service to the public. Moreover, these
    partnerships allow us and other organizations to make meaningful changes
    in our internal accountability processes and policies as well as leverage
    available resources.

    We performed an extensive literature review to identify indicators that
    other agencies and organizations in the United States and overseas are
    using to measure the success of their partnership efforts. We collected
    information on partnership activities at several federal agencies, such as
    DOE and HUD and at a social services agency in Australia and a public
    works cooperative in England. Though we found no U.S. agencies that have
    developed indicators for measuring the health or effectiveness of
    partnerships, the foreign organizations articulated the following
    qualitative indicators for assessing the performance of these
    relationships:

         + commitment (e.g., time and resources devoted to the partnership effort
           and sustained participation by the same individuals),
         + clear definition of roles and responsibilities,
         + contribution to outcomes,
         + success of the activity or project being supported by the partnership,
           and
         + value for resources spent or effective use of resources.

    Teams and units supporting all four of our strategic goals have
    established key partnerships with a variety of organizations. For example,
    our partnership with the International Organization of Supreme Audit
    Institutions (INTOSAI) has been a long-standing relationship-cultivated
    primarily through goal 4's external liaison activities-that has resulted
    in tangible benefits for both organizations. In fiscal year 2005, we
    actively worked on several INTOSAI committees, gleaning valuable insights
    from the experiences of our counterpart audit institutions. We also helped
    INTOSAI produce various publications that help to promote auditing
    standards for use around the world. Through forums and roundtable
    discussions, we also partnered with the Concord Coalition-a nonpartisan
    organization dedicated to informing the public about the need for
    responsible fiscal policy-to support its work in educating the public
    about financial literacy and the government's long-term fiscal challenges.
    Our external liaison activities also helped to sustain partnerships with
    organizations such as the Intergovernmental Audit Forums, the Governmental
    Accounting Standards Advisory Committee, the Partnership for Public
    Service (which now includes the Private Sector Council), the Council for
    Excellence in Government, and the Woodrow Wilson International Center for
    Scholars; professional associations, such as the Association of Government
    Accountants; and various GAO advisory groups. (For more information about
    these partnerships, see Strategies for Achieving Our Goals later in this
    section of the report.) Finally, teams supporting goals 1 through 3
    established or maintained partnerships with organizations that helped them
    to exchange information about issues related to our performance goals and
    key efforts in these areas. For example, several Managing Our Resources
    teams continued their ongoing partnerships with the National Academies of
    Science, sharing, for Resources Used to Achieve Our Fiscal Year example,
    information on issues such as drinking 2005 Performance Goals

    water security, environmental indicators, and wind power development. One
    team also supported the National Academies of Science and the Organisation
    for Economic Cooperation and Development-a group of 30 member countries
    that helps to foster good governance in public service and corporate
    activity-in their efforts to advance the development of national
    performance indicators. In addition, another team worked collaboratively
    on a wide range of emerging transportation issues with the Eno
    Transportation Foundation, whose mission is to cultivate creative and
    visionary leadership for all modes of transportation.

    In the coming years, we will attempt to describe these and other
    partnerships that our teams and units participate in and describe the
    outcomes and benefits derived from them to help us assess our performance
    in this area.

    Our financial statements for fiscal year 2005 received an unqualified
    opinion from an independent auditor. The auditor found our internal
    controls to be effective-which means that no material weaknesses were
    identified-and the auditor reported substantial compliance with the
    requirements for financial systems in the Federal Financial Management
    Improvement Act of 1996. The auditor also found no instances of
    noncompliance with the laws or regulations in the areas tested. The
    statements and their accompanying notes, along with the auditor's report,
    appear later in this report. Table 8 summarizes key data. Compared with
    the statements of large and complex agencies in the executive branch, our
    statements present a relatively simple picture of a small yet important
    agency in the legislative branch. We focus most of our financial activity
    on the execution of our congressionally approved budget with most of our
    resources devoted to the human capital needed for our mission of
    supporting the Congress with professional, objective, fact-based,
    nonpartisan, nonideological, fair, and balanced information and analysis.

     Table8: GAO's Financial Highlights: Resource Information (Dollars in millions)

    Source: GAO

    aThe net cost of operations figures include nonbudgetary items, such as
    imputed pension and depreciation costs, which are not included in the
    figures for total budgetary resources (which include current and prior
    year carryover authority) or total outlays.

    Our budget consists of an annual appropriation covering salaries and
    expenses and revenue from reimbursable audit work and rental income. For
    fiscal year 2005, our total budgetary resources increased by $6.3 million
    from fiscal year 2004. This increase consists of funds needed to cover
    mandatory and uncontrollable costs and a one time transfer of budgetary
    authority from DHS for a review of TSA's calendar year 2000 costs for
    screening passengers and property.

    Our total assets were $114.4 million, consisting mostly of property and
    equipment (including the headquarters building, land and improvements, and
    computer equipment and software) and funds with the U.S. Treasury. The
    largest dollar change in our assets was in the net value of property and
    equipment, which decreased in fiscal year 2005 as a result of normal
    depreciation amounts being greater than asset purchases. Total liabilities
    of $94.9 million were composed largely of employees' accrued annual leave,
    amounts owed to other government agencies, accounts payable, and
    employees' salaries and benefits. The greatest changes in the liabilities
    were increases in intragovernmental accounts payable and capital lease
    liabilities. The increase in intragovernmental accounts payable relates to
    amounts due to GSA accrued at the end of the year. The increase in capital
    lease liability during fiscal year 2005 is primarily the result of
    entering into new leases for the replacement of substantially all the
    notebook computers and copiers at GAO headquarters.

    The net cost of operating GAO during fiscal year 2005 and fiscal year 2004
    was approximately $506 million and $490 million, respectively. Expenses
    for salaries and related benefits accounted for 78 and 79 percent of our
    net cost of operations in fiscal years 2005 and 2004, respectively. Figure
    15 shows how our fiscal year 2005 costs break down by category.

    We report net cost of operations according to our four strategic goals,
    consistent with our strategic plan. Goal 2 accounted for the greatest
    dollar increase in our net cost of operations from fiscal year 2004
    through fiscal year 2005. The increase is due to the continued efforts in
    homeland security. Costs in goal 4 decreased in fiscal year 2005 as a
    result of several goal 4 key efforts being completed during fiscal year
    2004, the first year of the 2-year strategic plan period. Examples include
    the implementation of the Travel Manager System completed in fiscal year
    2004 as well as the development phase efforts for both the
    performance-based compensation system and the competency-based appraisal
    system.

    Figure 15: Use of Fiscal Year 2005 Funds by Category

    Percentage of total net costs

    Salaries and benefits78.3%

    Building and hardware maintenance services10.8%

    Rent (space and hardware) 3.9%

    Depreciation 2.7%

    Other 4.3%

    Source: GAO.

    Figures 16 and 17 show our net costs by goal for fiscal year 2002 through
    fiscal year 2005. Figure 16 shows costs unadjusted for inflation, while
    figure 17 shows the same costs in 2005 dollars, that is, adjusted for
    inflation.

    Figure 16: Net Cost by Goal, Unadjusted for Inflation

    Dollars in millions

                                                                 200 150 100 50 0

    Goal 1 Goal 2 Goal 3Goal 4 2002 178.3 110.5 141.0 25.3

                              2003 186.4 122.0 144.9 20.0

                              2004 194.7 131.7 145.8 23.4

                              2005 197.7 144.2 147.3 22.0

    Source: GAO.

    Figure 17: Net Cost by Goal, Adjusted for Inflation Dollars in millions

                                                                 200 150 100 50 0

    Goal 1 Goal 2 Goal 3Goal 4 2002 191.3 118.6 151.3 27.2

                              2003 196.1 128.4 152.5 21.0

                              2004 200.1 135.3 149.8 24.0

                              2005 197.7 144.2 147.3 22.0

    Source: GAO.

    Audit Advisory Committee

    Assisting the Comptroller General in overseeing the effectiveness of GAO's
    financial operations is a three-member external Audit Advisory Committee.
    The committee's report for fiscal year 2005 appears after our financial
    statements and accompanying notes. Current members of the committee are

         + Sheldon S. Cohen (Chairman), CPA and practicing attorney in
           Washington, D.C., former Commissioner and Chief Counsel of the
           Internal Revenue Service, and Senior Fellow of the National Academy of
           Public Administration.
         + Edward J. Mazur, CPA, member of the Governmental Accounting Standards
           Board, former State Comptroller of Virginia, and former Controller of
           the Office of Federal Financial Management in OMB.
         + Charles O. Rossotti, Senior Advisor at The Carlyle Group; former
           Commissioner of Internal Revenue; and founder and former Chief
           Executive Officer and Chairman of American Management Systems, Inc.,
           an international business and IT consulting firm.

    Limitation on Financial Statements

    Responsibility for the integrity and objectivity of the financial
    information presented in the financial statements in this report rests
    with our managers. The statements were prepared to report our financial
    position and results of operations, consistent with the requirements of
    the Chief Financial Officers Act, as amended (31 U.S.C. 3515). The
    statements were prepared from our financial records in accordance with the
    formats prescribed in OMB Circular A-136, Financial Reporting
    Requirements. These financial statements differ from the financial reports
    used to monitor and control our budgetary resources. However, both were
    prepared from the same financial records.

    Our financial statements should be read with the understanding that as an
    agency of a sovereign entity, the U.S. government, we cannot liquidate our
    liabilities (i.e., pay our bills) without legislation that provides
    resources to do so. Although future appropriations to fund these
    liabilities are likely and anticipated, they are not certain.

    Planned Resources to Achieve Our Fiscal Year 2006 Performance Goals

    GAO's resources include budget authority of $490 million for fiscal year
    2006 to maintain current operations for serving the Congress as outlined
    in our strategic plan and allow us to continue to enhance our
    productivity, and maintain the progress we have made in technology and
    other transformation areas (see table 9) . This funding level supports
    3,217 full-time equivalent (FTE) per-sonnel. Our resources include $483
    million in direct canes Katrina and Rita, the Congress is considering
    appropriations and estimated revenue of $7 million governmentwide
    across-the-board funding reducfrom reimbursable audit work and rental
    income. tions that might reduce fiscal year 2006 spending Our fiscal year
    2006 resources represent a modest 3 levels, and this could affect our
    resources. The percent increase over fiscal year 2005 resources- nature
    and extent of any potential funding reducprimarily to fund mandatory pay
    and uncontrollable tion is unknown. costs. Following the catastrophic
    events of Hurri-

    Table 9: Fiscal Year 2006 Budgetary Resources by Strategic Goal

    Strategic goal                                            Amounta (dollars
                                                           FTEs  in millions)
    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.                    1,286             $194
    Goal 2
    Provide timely, quality service to the Congress and
    the federal government to respond to changing
    threats and the challenges of global
    interdependence.                                      941              141
    Goal 3 Help transform the federal government's role
    and how it does business to meet 21st century
    challenges.                                           850              129
    Goal 4
    Maximize the value of GAO by being a model federal
    agency and a world-class professional services
    organization.                                         140               26
    Total                                               3,217             $490

    Source: GAO.

    aThese amounts exclude prior year carryover authority.

    Our resources support three broad program areas: human capital, mission
    operations, and critical infrastructure. We will also continue to address
    our major management challenges, which are human capital, information
    security, and physical security. For example, on the human capital front,
    to ensure our ability to attract and retain a highly qualified,
    high-performing, and diverse workforce, our fiscal year 2006 recruitment
    strategy enhances or expands existing programs for internships and
    professional development, and provides targeted recruiting for special
    skill sets and hard-to-fill positions, and to enhance the agency's
    diversity recruiting.

    In fiscal year 2006, we plan to implement recommendations resulting from
    an assessment of our compensation system being conducted by a
    well-regarded consulting firm, to ensure that our compensation is fair and
    equitable and aligned with competitive labor markets.

    On the information security front, to address the increasing threats due
    to compromised information or information systems, we will complete an
    audit of network servers and refine monitoring techniques. To extend our
    ability to securely access and transmit classified data and information,
    we completed installation of security features in seven of our field
    offices and plan to continue installation at the remaining field offices
    in fiscal year 2006.

    On the physical security front, we are working to enhance our
    communication with external agencies, improve our internal communications
    and operations, and strengthen the technical and physical aspects of our
    emergency preparedness efforts.

    Strategies for Achieving Our Goals

    The Government Performance and Results Act directs agencies to articulate
    not just goals, but also strategies for achieving those goals. As detailed
    in the following sections, our strategies primarily emphasize providing
    information from our work to the Congress and the public in a variety of
    forms and continuing and strengthening our internal operations. For all
    four strategic goals, the multiyear, qualitative performance goals
    included in our current strategic plan describe specific areas of work
    that we planned to complete by the end of fiscal year 2005.

    Our strategies also emphasize the importance of two overarching
    approaches: (1) working with other organizations on crosscutting issues
    and

    (2) effectively addressing the challenges to achieving our agency's goals
    and recognizing the internal and external factors that could impair our
    performance. Through these strategies, which have proven successful for us
    for a number of years, we plan to achieve the level of performance that is
    needed to meet our annual performance measures and our multiyear
    performance goals and that in turn will allow us to achieve our strategic
    goals.

    Attaining our three external strategic goals (goals 1, 2, and 3) and their
    related objectives rests, for the most part, on providing professional,
    objective, fact-based, nonpartisan, nonideological, fair, and balanced
    information to support the Congress in carrying out its constitutional
    responsibilities. To implement the performance goals and key efforts
    related to these three goals, we develop and present information in a
    number of ways, including

            * evaluating federal policies, programs, and the performance of
              agencies;
            * fS overseeing government operations through financial and other
              management audits to determine whether public funds are spent
              efficiently, effectively, and in accordance with applicable laws;
         + investigating whether illegal or improper activities are occurring;
         + analyzing the financing for government activities;
         + conducting various constructive engagements in which we work
           proactively with agencies, when appropriate, to provide advice that
           may assist their efforts toward positive results;
         + providing legal opinions that determine whether agencies are in
           compliance with applicable laws and regulations;
         + conducting policy analyses to assess needed actions and the
           implications of proposed actions; and

    fS providing additional assistance to the Congress in support of its
    oversight and decision-making responsibilities.

    We conduct specific engagements as a result of requests from congressional
    committees and mandates written into legislation, resolutions, and
    committee reports. In fiscal year 2005, we devoted 87 percent of our
    engagement resources to work requested or mandated by the Congress. We
    initiated the remaining 13 percent of the engagement work under the
    Comptroller General's authority; much of this work was related to
    government programs and operations that we have identified as high risk
    for fraud, abuse, and mismanagement; reviews of agencies' budget requests;
    and various emerging challenges that are of broad-based interest to the
    Congress, such as the cost of the Global War on Terrorism and the status
    of the reconstruction efforts in Iraq.9 By making recommendations to
    improve the accountability, operations, and services of government
    agencies, we contribute to increasing the effectiveness of federal
    spending and enhancing the taxpayers' trust and confidence in their
    government.

    Our staff are responsible for gathering all the relevant data and
    following high standards for documenting and supporting the information we
    collect and analyze. This information is, more often than not, documented
    in a product that is made available to the public. In some cases, we
    develop products that contain classified or sensitive information that
    cannot be made available publicly. We generally issue around 1,200 to
    1,300 products each year, either electronically or in printed format. Our
    products include the following:

         + letter reports and chapter reports that when printed, are issued with
           our traditional blue cover;
         + correspondence, which is a written letter that does not have a blue
           cover;

    fS testimonies and statements for the record, where the former are
    delivered orally by one or more of our senior executives at a hearing and
    the latter are provided for inclusion in the congressional record; and

    fS oral briefings, which are usually given directly to congressional staff
    members.

    We also produce special publications on specific issues of general
    interest to all Americans, such as our primer on motor fuels that we
    prepared to help improve public understanding of the major factors that
    influence the U.S. price of gasoline and our guide on Social Security that
    answers concisely some basic questions about how the program works and why
    it needs to be reformed.10 Collectively, our products always contain
    information and often conclusions and recommendations that allow us to
    achieve our external strategic goals.

    Another means of ensuring that we are achieving our goals is to examine
    the impact of our past work and use that information to shape our future
    work. Consequently, we evaluate actions taken by federal agencies and the
    Congress in response to our past recommendations. The results of these
    evaluations are reported in terms of the financial benefits and other
    benefits that reflect the value of our work. We actively monitor the
    status of our open recommen-dations-those that remain valid but have not
    yet been implemented-and report our findings annually to the Congress and
    the public (http://www.gao.gov/openrecs.html ).

    Similarly, we will use our biennial high-risk report, most recently issued
    in January 2005, to provide a status report on major government operations
    that we consider high risk because they are vulnerable to waste, fraud,
    abuse, and mismanagement or are in need of broad-based transformation. And
    we will use our report on 21st century challenges, which was issued in
    February 2005, to alert the nation's leaders to current and emerging
    issues facing the nation, including the long-range budget challenge, the
    human capital crisis, postal reforms, and the federal government's
    financial management efforts.

    9In fiscal years 2003 and 2004, the work performed under the Comptroller
    General's authority represented 8 percent and 10 percent, respectively, of
    our engagement efforts.

    10GAO, Motor Fuels: Understanding the Factors That Influence the Retail
    Price of Gasoline, GAO-05-525SP (Washington, D.C.: May 2005), and Social
    Security Reform: Answers to Key Questions, GAO-05-193SP (Washington, D.C.:
    May 2005).

    These reports are valuable planning tools because they help us to identify
    those areas where our continued efforts are needed to maintain the focus
    on important policy and management issues that the nation faces.

    To attain our fourth strategic goal-an internal goal-and the five related
    objectives, we conduct surveys of our congressional clients and internal
    customers to obtain feedback on our products, processes, and services, and
    perform studies and evaluations to identify ways in which to improve them.

    Because achieving our strategic goals and objectives also requires
    strategies for coordinating with other organizations with similar or
    complementary missions, we

         + use advisory panels and other bodies to inform our strategic and
           annual work planning and
         + initiate and support collaborative national and international audit,
           technical assistance, and other knowledge-sharing efforts.

    These two types of strategic working relationships allow us to extend our
    institutional knowledge and experience; to leverage our resources; and in
    turn, improve our service to the Congress and the American people. Our
    Strategic Planning and External Liaison office takes the lead and provides
    strategic focus for the work with external partner organizations, while
    our research, audit, and evaluation teams lead the work with most of the
    issue-specific organizations.

    Strategic and Annual Work Planning

    Through a series of forums, advisory boards, and panels; periodic
    environmental scans; and our speakers' series, we gather information and
    perspectives for our strategic and annual planning efforts. In fiscal year
    2005, the Comptroller General convened various experts from the public,
    private, and nonprofit sectors in a series of forums and panels intended
    to enhance our understanding of emerging issues and to identify
    opportunities for action.

    fS In December 2004, we hosted a forum on long-term fiscal challenges and
    issued a report summarizing the discussion in February 2005.

         + In February 2005, we convened a forum on defined benefits pension
           plans, the results of which were reported in June 2005.
         + In March 2005, we convened a roundtable involving the accountability
           community on long-term fiscal challenges, the results of which were
           summarized and shared with the participants.
         + Throughout 2005, we held five sessions of our speakers' series
           Conversations on 21st Century Challenges, wherein prominent leaders
           discuss emerging themes and their implications for public policy. In
           2005, we also initiated the Auditors General Speakers' Series that
           provides unique international perspectives in support of our work;
           speakers included the auditors general of China, Ireland, South Korea,
           and Saudi Arabia.

    Advisory boards and panels also support our strategic and annual work
    planning for alerting us to issues, trends, and lessons learned across the
    national and international audit community that we should factor into our
    work. These groups include the Comptroller General's Advisory Board whose
    40 members from the public and private sectors have broad expertise in
    areas related to our strategic objectives. Through the National
    Intergovernmental Audit Forum, chaired by the Comptroller General, and 10
    regional intergovernmental audit forums, we consult regularly with federal
    inspectors general and state and local auditors. In addition, through the
    Domestic Working Group, the Comptroller General and the heads of 18
    federal, state, and local audit organizations exchange information and
    seek opportunities to collaborate.

    We also work with a number of issue-specific and technical panels to
    improve our strategic and annual work planning, including the following:

    fS The Advisory Council on Government Auditing Standards provides us
    guidance on promulgating auditing standards. These standards articulate
    auditors' responsibilities when examining government organizations;
    programs; activities; functions; and government assistance received by
    contractors, nonprofits, and other nongovernmental organizations. The
    council's work ensured that the revised standards would be generally
    accepted and feasible.

         + The Accountability Advisory Council, made up of experts in the
           financial management community, advises us on audits of the U.S.
           government's consolidated financial statements and emerging issues
           involving financial management and accountability reporting.
         + The Executive Council on Information Management and Technology, whose
           19 members are experts from the public and private sectors and
           representatives of related professional organizations, helps us to
           identify high-risk and emerging issues in the IT arena.
         + The Comptroller General's Educators' Advisory Panel, composed of
           deans, professors, and other academics from prominent universities
           across the United States, advises us on recruiting, retaining, and
           developing staff and on strategic planning matters.

    Internationally, we participate in INTOSAI-the professional organization
    of the national audit offices of 186 countries. During the fall of 2004,
    the INTOSAI Congress unanimously adopted a 5-year strategic plan-the first
    in INTOSAI's 50-year his-tory-that was developed by a 10-nation task force
    chaired by the Comptroller General. This plan has provided the foundation
    for the Governing Board to engage member institutions in advancing
    professional audit standards and promoting knowledge sharing.

    Collaborating with Others

    By collaborating with others, we have strengthened professional standards,
    provided technical assistance, leveraged resources, and developed best
    practices. In our work with INTOSAI, we chair the accounting and reporting
    committee and we are an active member of INTOSAI's auditing standards,
    internal control and accounting standards, and other technical committees.
    We publish INTOSAI's quarterly International Journal of Government
    Auditing in five languages to foster global understanding of standards,
    best practices, and technical issues. To help ensure that the public
    sector perspectives are reflected in the International Federation of
    Accountants Standards Development project, we are working as a member of
    INTOSAI's Professional Standards Committee as it collaborates closely with
    the International Auditing Assurance Standards Board and the World Bank to
    develop international auditing standards.

    To build capacity in the national audit offices around the world, we
    conduct an international audit fellows program for mid- to senior-level
    staff from other countries. In 2005, 20 audit fellows from Africa, Asia,
    Europe, Latin America, and the Middle East spent about 4 months at GAO
    learning how we are organized to do our work, how we plan our work, and
    what methodologies we use, particularly for performance audits. As part of
    our strategy to promote continuous learning and sustainability once the
    fellows return to their countries, we are working with major donors-such
    as the World Bank and the U.S. Agency for International Devel-opment-to
    identify or support relevant capacity-building projects in fellows'
    institutions. Six current and seven former auditors general as well as
    several deputy auditors general, including the current chair of INTOSAI,
    are graduates of this program.

    Other collaborative activities undertaken by our staff during 2005
    included the following:

         + Conferring with the Partnership for Public Service (Partnership), a
           nonprofit, nonpartisan public service organization committed to making
           the government an employer of choice for talented, dedicated Americans
           through educational outreach, research, legislative advocacy, and
           hands-on partnerships with agencies on workforce management issues. In
           late 2004, the Partnership merged with the Private Sector Council,
           another external partner organization dedicated to helping the federal
           government improve its efficiency, management, and productivity
           through the cooperative sharing of knowledge. During 2005, the
           Partnership has collaborated with us on a human capital symposium
           focused on performance management best practices and assisted us on a
           number of engagements.
         + Actively participating in four other Domestic Working Group
           collaborative efforts of federal, state, and local audit officials to
           address issues regarding access to records, grants management,
           long-term fiscal challenges, and governance. Collaborative efforts
           with the Domestic Working Group and the National Association of State
           Auditors, Comptrollers, and Treasurers facilitated our work involving
           the states by fostering a cooperative working relationship with the
           state auditors on over a dozen engagements.

    fS Implementing the National Intergovernmental Audit Forum (Forum)
    strategic plan that was adopted in December 2004. This plan was developed
    by a task force composed of federal, state, and local auditors and an
    independent public accountant. The newly established committees have begun
    organizing to implement the plan, which seeks to maximize the Forum's
    effectiveness in promoting good government and accountability at all
    levels of government. In addition, 21 regional Forum meetings were held,
    which brought together auditors at all government levels.

    Using Our Internal Experts

    We coordinated extensively within our own organization on our strategic
    and annual performance planning efforts, as well as on the preparation of
    our performance and accountability reports. Our efforts are completed
    under the overall direction of the Comptroller General and the Chief
    Operating Officer. We relied on our Chief Administrative Officer/Chief
    Financial Officer and her staff to provide key information, such as the
    financial information that is included in part III of this report. Her
    staff also coordinated with others throughout the agency to provide the
    information on goal 4's results, which appears in part II of this report,
    and provided input on other efforts dealing with issues that include
    financial management, budgetary resources, training, and security. We
    obtained input on all aspects of our strategic and annual performance
    planning and reporting efforts from each of our engagement teams and
    organizational units through their respective managing directors, as well
    as other staff responsible for planning or engagement activities in the
    teams. Staff from QCI prepared the report, ensuring, among other things,
    that the report addressed comments and suggestions received from the
    Association of Government Accountants and other reviewers. In short, we
    involved virtually every part of GAO and used our internal expertise in
    our planning and reporting efforts.

    Addressing Management Challenges That Could Affect Our Performance

    At GAO, management challenges are identified by the Comptroller General,
    the Executive Committee, and the agency's senior executives through the
    agency's strategic planning, management, and budgeting processes. Our
    progress in addressing the challenges is monitored through our annual
    performance and accountability process. Under strategic goal 4, we
    establish performance goals focused on each of our management challenges,
    track our progress in completing the key efforts for those performance
    goals quarterly, and report each year on our progress toward meeting the
    performance goals. Each year we ask our IG to examine manage-ment's
    assessment of the challenges and the agency's progress in addressing them.
    (See app. 2 for the IG's assessment.)

    For fiscal year 2005, we continued to address three management
    challenges-human capital, information security, and physical security. We
    anticipate that we may need to continue to address these management
    challenges in future years because they are evolving and will require us
    to continuously identify ways to adapt and improve. We revisit the
    challenges each year and refine them when appropriate, and when we believe
    we have sufficiently addressed these challenges we will remove them from
    our list. We will report any changes as we monitor and report on our
    progress in addressing the challenges through our annual performance and
    accountability process. The following sections describe our recent and
    planned efforts to address these challenges.

    The Human Capital Challenge

    Given our role as a key provider of professional and objective information
    and analyses to the Congress, maintaining the right mix of technical
    knowledge and expertise as well as general analytical skills is vital to
    achieving our mission. We spend about 80 percent of our resources on our
    people, but without excellent human capital policies and management
    practices, we could run the risk of being unable to lead by example and
    meet the expectations of the Congress and the American people. Our ability
    to meet the needs of the nation could also be impaired if we do not
    receive the funding that we need to adequately staff the agency, invest in
    our people, and reward our top performers-a mitigating external factor
    that we discuss along with others beginning on page 58 in this report.

    To recruit, reward, and retain a highly qualified, high-performing, and
    diverse workforce remains one of our most important challenges. We
    employed a number of strategies to improve our recruitment efforts and
    support our workforce plan, including increasing the use of short-term and
    time-limited appointments and direct-hire authorities and implementing a
    pilot program for undergraduate cooperative education program
    participants. We also developed our fiscal year 2006 recruitment strategy
    to more directly support the agency's workforce plan. The strategy
    includes enhancements or expansions of existing programs, such as the
    capability to offer internships in the fall and spring as well as the
    summer; fully implementing a cooperative education program; implementing
    government-wide flexibility for noncompetitive appointments into the
    Professional Development Program-our system for exposing new, entry-level
    staff to a variety of engagements, teams, and developmental opportunities
    during their first 2 years of employment; and using special teams to
    employ targeted recruiting for special skill sets, hard-to-fill positions,
    and diversity recruiting.

    We continued to enhance our performance management and compensation
    systems through new and enhanced policies and processes. To improve our
    Performance-Based Compensation System, with the help of a well-regarded
    consulting firm, we implemented a revised process for determining
    per-formance-based compensation that more directly links individuals'
    performance, as reflected by their appraisal, with his or her
    compensation. In June 2005, our administrative and professional support
    staff completed their first year under a broadband pay system and a
    competency-based performance system. To ensure that these staff understood
    the new process and to foster staff acceptance, we employed an aggressive
    communication strategy that included meetings with staff as well as
    Web-based guides and questions and answers. To design a competitive, fair,
    and equitable compensation program aligned with competitive labor markets
    in which we compete for talent, we worked with the same consulting firm to
    perform a market-based compensation study. Based on the results of the
    market-based compensation survey, we have invested significantly in
    restructuring our analyst and analyst-related specialist Band II pay band
    into two pay levels to better align individual staff with our
    institutional compensation policies. We expect all compensation system
    changes to be implemented in fiscal year 2006. To ensure that our
    managers' needs for support and guidance concerning their responsibilities
    in the performance management process are met, we established an
    organizational and performance consulting service designed to help
    managers interpret and address feedback they receive from our annual
    employee feedback survey, developed an e-learning course on designated
    performance managers' roles and responsibilities, and developed and began
    issuing a report for managers and our Employee Advisory Council evaluating
    the performance management assessment cycle with recommendations for
    improvements. We also improved the accuracy and user-friendliness of our
    performance management Web site.

    Finally, we continued providing our staff with courses and opportunities
    to develop their knowledge and expertise, build their competency, and
    strengthen their leadership skills. We designed and delivered 13 new
    competency-building courses and implemented an adjunct faculty program to
    increase the number of our subject matter experts available to develop
    content for new courses, expand the range of courses available, and
    provide training throughout the year. We also established a group of
    analysts-in-charge representing various teams supporting goals 1 through 3
    to discuss best practices related to managing engagements; challenges for
    new analysts-in-charge; and techniques for motivating, directing, and
    coaching staff. In addition, we upgraded our learning content management
    system to make it available on demand any time, anywhere, and provide
    improved tracking and reporting capabilities, and developed resource
    guides for our administrative professional and support staff that describe
    learning opportunities by competency and aid in creating individual
    development plans for professional growth. To deliver required core
    courses to Band I analyst staff in field offices, we redistributed and
    realigned course delivery among three learning hubs rather than
    centralizing course delivery in headquarters. We estimate that this
    decision will result in a cost avoidance of $500,000 in travel and per
    diem, as well as other benefits, such as networking among and across
    teams, a sustained focus on learning, larger classes that make more
    effective use of adjunct faculty time, and the opportunity to strengthen
    matrixed work relationships through shared learning experiences.

    We continued to strengthen our strategic human capital management by
    realigning our Human Capital Office during fiscal year 2005 to better meet
    the needs of our internal customers. By consolidating our services under
    four centers of excellence, we will improve our customer focus, clarify
    lines of delegated authorities, standardize guidance across the Human
    Capital Office, and dedicate more of our resources to direct customer
    support.

    While we have made progress in addressing the human capital challenge,
    more work remains to be done. Some of the largest efforts planned in this
    area for fiscal year 2006 include

         + implementing the market-based compensation ranges for our analyst and
           analyst-related staff,
         + determining the market-based compensation ranges for our
           administrative professional and support staff,
         + implementing changes necessary to restructure our analyst Band II
           staff,
              * continuing to strengthen our recruiting processes to better meet
                the needs of the agency and support our strategic goals,
              * fS obtaining a better understanding of the retention factors
                affecting GAO, and
         + identifying an appropriate methodology to successfully implement the
           Comptroller General's authority to determine the amount of annual pay
           adjustments.

    The Information Security Challenge

    Information system security is a critical activity in ensuring our
    information system assets are safe and free from compromise. To address
    the increasing threats due to compromised information or information
    systems, we implemented a wide range of initiatives to strengthen and
    protect the security of our information systems and data.

    We enhanced the security of our users' workstations by installing personal
    firewall software to prevent download of viruses, anti-spyware to identify
    and eliminate malicious programs, and automatic activation of the
    screensaver. We also locked the GAO intranet home page as the default home
    page to prevent spyware from hijacking the default home page and
    downloading more spyware.

    In support of the requirements in the Federal Information Security
    Management Act, we completed remediation of several key weaknesses and
    vulnerabilities during fiscal year 2005. These included, ensuring that
    risk assessments, system security plans, reviews performed under National
    Institute of Standards and Technology special publication 800-26, and
    letters for authorization to operate were in place and that system test
    and evaluation reviews and certifications and accreditations were
    developed and completed as necessary.

    To extend our ability to securely access and transmit classified data and
    information, we completed installation of the Secret Internet Protocol
    Router Network in seven of our field offices. This network allows our
    staff to obtain specific classified data directly from agency officials
    via secure e-mail, improves efficiency of our research through direct
    access to classified information, posts our classified reports for review
    and dissemination, electronically transmits our classified reports to
    agencies for comments, and reduces the necessity of using certified mail
    for classified data.

    Finally, we continued to implement initiatives and improvements to our
    Disaster Recovery Program. Our most significant accomplishment was the
    completion of our vision of the Disaster Recovery Pro-gram/Continuity of
    Operations, which was approved and signed by the Comptroller General and
    the Chief Administrative Officer on May 31, 2005. In support of the
    program we also developed Emergency Preparedness training video material
    for headquarters staff and installed an emergency voice and text
    notification system on the network.

    We anticipate that information security will continue to be one of our
    management challenges in the future. In fiscal year 2006, we will further
    address that challenge by completing implementation of centralized
    auditing of network servers and devices to better secure our computing
    assets within GAO, refining our network monitoring procedures to include
    the use of correlation products to automate the detection of potentially
    harmful threats to our network, implementing improvements to our disaster
    recovery operations, and improving our ability to respond and recover in
    the event of a disruption by implementing additional technologies to
    lessen our risks.

    The Physical Security Challenge

    The challenge to provide a safe and secure work environment for employees
    remains a constant in light of domestic and international events that can
    have a profound impact on the way we conduct business in the United States
    and around the world. Protecting our people and our assets is paramount to
    agency operations. In fiscal year 2005, we initiated actions to enhance
    our communication with external agencies, improve our internal
    communications and operations, and strengthen the technical and physical
    aspects of our emergency preparedness efforts.

    Externally, we established or enhanced contacts and procedures with local
    agencies to enable us to receive detailed intelligence that would not
    necessarily be provided through normal communication channels and to
    ensure coordination with the legislative branch in case of emergency. For
    example, we established emergency notification procedures with the Federal
    Bureau of Investigation Joint Terrorism Task Force; enhanced relocation
    procedures and improved relations with the U.S. Capitol Police, the House
    Sergeant of Arms, and the Emergency Preparedness Office; and made
    arrangements with the District of Columbia government to receive
    up-to-date emergency notifications. We are also an active member of the
    Legislative Branch Continuity of Operations Plan Working Group, and we
    coordinated and participated in a legislative branch tabletop exercise
    involving a simulation of a crisis requiring the House of Representatives
    to vacate and relocate elsewhere.

    Internally, we took several steps to support our goal of providing a safe
    and secure work environment. To ensure that our staff know what to do in
    case of an emergency, we conducted our first shelter in place drill for
    headquarters, and distributed shelter in place plans for the majority of
    our field offices and an emergency preparedness brochure for all staff. To
    reduce the agency's security risk, we installed an electronic fingerprint
    system that improves the speed with which we can obtain screening through
    the Federal Bureau of Investigation, including immediate reports if prints
    are not acceptable. In addition, we are now requiring National Crime
    Information Center checks for contractors, including fingerprints, which
    bring our security requirements and procedures for contractors more in
    line with those for our own employees.

    To help ensure continued operations, we have completed initiatives in the
    areas of technical and physical security. We increased our network access
    potential through installing and reactivating additional local area
    network ports. This will provide for efficient and effective use of space
    in the event that congressional staff need to relocate to our headquarters
    building in an emergency. Our physical security was improved this year
    with the completion of the perimeter security phase of our security plans.
    Projects completed include installation of high-speed rollup doors in the
    garage, placement of guard booths at our vehicle entrances, installation
    of undervehicle cameras and pop-up barriers, and construction of a
    perimeter plinth wall.

    We plan to continue to assess our security operations to ensure our
    ability to meet ever-changing challenges to our security posture. In
    fiscal year 2006 we will be completing work on the Integrated Electronic
    Security System, which includes installation of turnstiles at
    headquarters, implementation of smart card technology, and upgrading
    access control and intrusion detection systems for headquarters and the
    field offices. Other efforts to meet this continuing challenge include
    procurement of an emergency notification system, and designing and
    disseminating a more robust security education and awareness program for
    headquarters and the field offices.

    Mitigating External Factors That Could Affect Our Performance

    Several external factors could affect the achievement of our performance
    goals, including the amount of resources we receive, shifts in the content
    and volume of our work, and various national and international
    developments. Limitations imposed on our work by other organizations or
    limitations on the ability of other federal agencies to make the
    improvements we recommend are additional factors that could affect the
    achievement of our goals.

    The external factors that could have the most significant adverse affect
    on us are the constrained budget environment in which we currently work
    and the uncertain budget future we face. We are experiencing heavy demand
    from the Congress for work in a number of subject areas, especially in
    disaster recovery and preparedness in the aftermath of Hurricanes Katrina
    and Rita and in health care. Given the across-the-board funding reductions
    that the Congress is considering for fiscal year 2006, large current
    federal budget deficits, and the nation's long-range fiscal imbalance, the
    Congress is likely to place an increasing emphasis on fiscal constraint.
    While it is unclear how we will ultimately be affected, it is reasonable
    to assume that any attempt to exercise additional budgetary discipline in
    the legislative branch will include our agency. As a result, while we
    believe that we submit reasonable and responsible budget requests and we
    know that the return on investment that we generate is unparalleled, we
    must plan and prepare for the possibility of significant and recurring
    constraints on the resources made available to us. In addition, because
    almost 80 percent of our budget is composed of people-related costs, any
    serious budget situation will have an adverse impact on our human capital
    policies and practices. This, in turn, will have an adverse impact on our
    ability to serve the Congress and meet our performance targets. While, as
    we noted above, the nature and extent of any such budget constraints
    cannot be determined at the present time, our executive team is prudently
    engaged in a range of related planning activities that will help us to
    manage small reductions in our funding levels and still perform the
    high-quality work for the Congress that we are known for. We sincerely
    strive to lead by example, and are hopeful that our modest budget requests
    supported by our sound business case and proven performance results will
    encourage the Congress to provide additional resources to us and other
    high-performing entities like ours. If the Congress employs such an
    approach, we should be in a good position to continue to provide a high
    rate of return on the resources invested in the agency. However, employing
    an across-the-board cut or other nontargeted approaches would greatly
    impede our ability to do our work and may create perverse incentives for
    those agencies who are trying to model our priorities and practices.

    A growing area for us also involves our work on bid protests. As required
    by law, General Counsel prepares Comptroller General procurement law
    decisions that resolve protests filed by disappointed bidders. These
    bidders challenge the way individual federal procurements are being
    conducted or how the contracts were awarded. In recent years, we have
    experienced an increase in the number of bid protests that have been
    filed. There is a possibility of a further increase if the executive
    branch undertakes a significant number of public or private competitions
    under OMB Circular A-76, particularly if statutory changes allow
    representatives of employees to protest when the private sector wins these
    competitions. We will continue to monitor our workload in this area to
    ensure that we meet our statutory responsibilities with minimal negative
    impact on our other work.

    In addition to current and future budget constraints, another external
    factor is the extent to which we can obtain access to certain types of
    information. With concerns about operational security being unusually high
    at home and abroad, we may have more difficulty obtaining information in a
    timely manner and reporting on sensitive issues. Historically, our
    auditing and information gathering have been limited whenever the
    intelligence community is involved. In addition, we have not had the
    authority to access or inspect records or other materials held by other
    countries or, generally, by the multinational institutions that the United
    States works with to protect its interests. Consequently, our ability to
    fully assess the progress being made in addressing national and homeland
    security issues may be hampered. Also, we anticipate that more of our
    reports may be subject to classification reviews than in the past, which
    means that the public dissemination of these products may be limited. We
    plan to work with the Congress to identify both legislative and
    nonlegislative opportunities for strengthening our access authority as
    necessary and appropriate.

    As the Congress focuses on unpredictable events- such as natural
    disasters, possible public health pandemics, and the global threat posed
    by sophisti-cated terrorist networks-the mix of work we are asked to
    undertake may change, diverting our resources from some strategic
    objectives and performance goals. We can and do mitigate the impact of
    these events on the achievement of our goals in various ways. For example
    in fiscal year 2005, we

         + stayed abreast of current events (such as the airline industry's
           financial crisis and gasoline prices) and communicated frequently with
           our congressional clients in order to be alert to possibilities that
           could shift the Congress's priorities or trigger new priorities;
         + quickly redirected our resources when appropriate (i.e., on the cost
           and recovery efforts related to Hurricane Katrina) so that we could
           deal with major changes as they occur;
         + maintained broad-based staff expertise (i.e., in our social security,
           health care financing, and homeland security areas) so that we could
           readily address emerging needs; and
         + initiated research under the Comptroller General's authority on a
           limited number of selected topics, such as U.S. tsunami detection and
           preparedness efforts, the status of Iraq's reconstruction, and our
           21st century challenges and high-risk work.

    Our ability to effectively manage the demands on our resources could have
    an impact on our ability to meet our performance targets. However, we will
    continue to manage the congressional requests we receive and the work we
    do under the Comptroller General's authority in order to minimize any
    negative impact it may have on our ability to meet the needs of the
    Congress and the American people.

    Part II: Performance Information

    Part II

                                Performance Information

    Performance Information by Strategic Goal

    In the following sections, we discuss how each of contributed toward
    meeting the targets for the agenour four strategic goals contributed to
    our fiscal year cywide measures that were discussed in the previ2005
    performance results. Specifically, for goals 1, 2, ous part of this
    report. In addition, for all four and 3-our external goals-we present
    perfor-strategic goals, we assess our progress on our qualimance results
    for the three annual measures that we tative, multiyear performance goals.
    assess at the goal level. Most teams and units also

    Goal 1 Overview

    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

    Source:See Image Sources.

    Our first strategic goal upholds our mission to support the Congress in
    carrying out its constitutional responsibilities by focusing on work that
    helps address the current and emerging challenges affecting the well-being
    and financial security of the American people and American communities.
    Our multiyear (fiscal years 2004-2009) strategic objectives under this
    goal are to provide information that will help address

         + 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 safe, secure, and effective national physical infrastructure.

    These objectives, along with the performance goals and key efforts that
    support them, are discussed fully in our strategic plan, which is
    available on our Web site at http://www.gao.gov . The work supporting
    these objectives was performed primarily by headquarters and field staff
    in the following teams: Education, Workforce, and Income Security;
    Financial Markets and Community Investment; Health Care; Homeland Security
    and Justice; Natural Resources and Environment; and Physical
    Infrastructure.

                               Selected Work under Goal 1

    Improving the oversight and monitoring of Head Start grantees: We assisted
    the Congress and the Department of Health and Human Services (HHS) in
    identifying major risk areas in the Head Start program and crafting
    solutions to address those risks. For example, we noted the lack of
    reliable data on enrollment in Head Start centers nationwide and
    highlighted gaps in Head Start's oversight framework that put federal
    funds at risk and can reduce the quality or amount of services provided.
    HHS is now taking steps to address these and other gaps we identified.
    (See app. 1, item 1.36.C.)

    Addressing the challenges of pension reform: We urged the Congress to
    enact comprehensive pension reform that would reduce the financial risks
    to the Pension Benefit Guaranty Corporation and the taxpayer, as well as
    to put the defined benefit system on a more stable financial footing. The
    Congress subsequently included in draft legislation the key elements that
    we suggested. (See app. 1, item 1.47.C.)

    Redefining rural: In assessing how a change in the definition of rural
    would impact USDA's Rural Housing Service in meeting rural housing needs,
    we suggested that the Congress consider changing to a density-based system
    as a basis for making more equitable rural housing program eligibility
    determinations. (See app. 1, item 1.55.C.)

    Improving security at drinking water and wastewater plants: We identified
    key activities that can help the Environmental Protection Agency improve
    security for the water sector. Because of this work, the agency
    established common protocols for monitoring threats; provided simulation
    exercises to improve local, state, and regional collaboration; and
    significantly expanded training opportunities related to security by
    sponsoring several security workshops and seminars on topics such as
    wastewater system security, drinking water system preparedness, and
    emergency response. (See app. 1, item 1.67.C.)

    To accomplish our work under these strategic objectives, we conducted
    engagements, audits, analyses, and evaluations of programs at major
    federal agencies and developed reports and testimonies on the efficacy and
    soundness of those programs.

    As shown in table 10 , we did not meet our fiscal year 2005 performance
    target for financial benefits for goal 1, but we exceeded our targets for
    other benefits and testimonies.

    Table 10: Strategic Goal 1's Annual Performance Results and Targets

                           2001  2002   2003   2004   2005    2005    Met/   2006
    Performance       actual actual actual actual target actual not met target
    measure
    Financial
    benefits
    (dollars in        $8.9  $24.1  $23.6  $26.6  $19.6  $15.6  Not met $18.7a
    billions)
    Other benefits       210    226    217  252    240      277     Met   242a
    Testimonies           73    111     80     85     78     88     Met     89

    Source: GAO.

    aOur fiscal year 2006 targets for financial benefits and other benefits
    differ from the targets we reported for these measures in our fiscal year
    2006 performance plan. On the basis of our performance in fiscal year
    2005, we lowered these targets from $19.5 billion in financial benefits
    and 255 in other benefits, because we anticipate that these benefits
    during fiscal year 2006 are more likely to stem from work performed under
    goal 2. We did not change the agencywide targets for these measures, but
    we made corresponding changes to targets for goals 2 and 3.

    To help us examine trends for these measures over time, we look at their
    4-year averages, which minimize the effect of an unusual level of
    performance in any single year and are shown in table 11 . This table
    indicates that financial and other benefits have generally risen over
    time, while the number of testimonies has generally declined for goal 1
    since fiscal year 2001.

               Table 11: Four-Year Rolling Averages for Strategic Goal 1

    Performance measure                       2001   2002   2003   2004   2005
    Financial benefits (dollars in billions) $11.9  $15.2  $17.7  $20.8  $22.5
    Other benefits                            177    190    209    226     243
    Testimonies                               114    110     99     87      91

    Source: GAO.

    The following sections describe our performance in goal 1 for each of
    these three quantitative performance measures and describe the targets for
    fiscal year 2006. This analysis is followed by a discussion of our
    multiyear qualitative performance measures.

    Financial Benefits

    The financial benefits reported for this goal in fiscal year 2005 totaled
    $15.6 billion, falling short of the target of $19.6 billion. This
    shortfall resulted, in part, because our work focused on nonfinancial
    rather than financial benefits. The largest of the financial benefits for
    this goal arose from our recommendation that DOE take actions to avoid
    costs associated with a nuclear waste disposal process. Other financial
    benefits resulting from our work under goal 1 stemmed from HUD recapturing
    funds not being used by public housing authorities, HHS avoiding costs in
    the Medicare program, and the National

    Financial benefits valued at $4.5 billion arose from

    costs avoided after the implementation of our recom

    mendation that DOE seek legislation to allow more

    economical disposal of certain nuclear wastes. (See

    app. 1, item 1.60.A.)

    Park Service increasing revenues. We describe these and other
    accomplishments in the goal 1 section of appendix 1.

    Because financial benefits often result from work completed in prior
    years, we set our fiscal year 2006 target on the basis of our assessment
    of the progress agencies are making in implementing our past
    recommendations. Our analysis indicates that financial benefits in the
    future for goal 1 are likely to decline. We, therefore, have set the
    target for fiscal year 2006 at $18.7 billion, which is higher than what we
    achieved this year.

    Other Benefits

    Other tangible, nonfinancial benefits reported for goal 1 in fiscal year
    2005 included 254 actions taken by federal agencies to improve their
    services and operations in response to our work and another 23 in which
    information we provided to the Congress resulted in statutory or
    regulatory changes. This total of 277 other benefits exceeded our target
    of 240. We report some of our major accomplishments in detail in the goal
    1 section of appendix 1. For fiscal year 2006, we have set a target of
    242. While this target is lower than what we achieved this year, it is
    about the same as the 4-year average for the goal and is consistent with
    our recognition that we are more likely to achieve these benefits under
    goals 2 and 3 in the next few years.

    Testimonies

    Our witnesses testified at 88 congressional hearings related to this
    strategic goal, which exceeded the fiscal year 2005 target of 78
    testimonies. Among the testimonies given were those on student loan
    programs, Social Security reform, Medicare spending, defense health care,
    farm program payments, and transportation security ( see p. 36 for a list
    of testimony topics by goal). On the basis of our assessment of the
    potential need to testify on issues under this goal, we have set a target
    of presenting testimony at 89 hearings during fiscal year 2006.

    Multiyear Performance Goals

    As shown in table 12 , at the close of fiscal year 2005, we met 39 of the
    40 performance goals for this strategic goal. We did not meet the goal of
    assessing the administrative efficiency and effectiveness of the federal
    court and prison systems because we did not receive requests to perform
    work in this area and could not undertake self-initiated work because we
    needed resources for work requested by the Congress in other areas. For
    fiscal year 2006, we are replacing this performance goal with one for
    improving the administration of the nation's election system, a goal that
    better reflects the interests of our congressional clients.

                          Examples of Goal 1's Other Benefits

                     Paying properly for power wheelchairs for Medi

                  care beneficiaries: On the basis of our finding that

                 the information provided to Medicare contractors that

    process wheelchair claims-one of the program's most

    expensive items-provided insufficient detail, new

    requirements were established to make more informa

    tion available. (See app. 1, item 1.9.A.)

    Monitoring states' inventories of childhood vac

    cines: The Centers for Disease Control and Prevention

    implemented our recommendation to develop a strate

    gic plan that includes steps to monitor childhood vac

    cine supplies in state depots, which should help

    ensure that adequate inventories are available. (See

    app. 1, item 1.17.A.)

    Estimating tobacco retailer violation rates: Our

    work led HHS to increase oversight of states' monitor

    ing of tobacco retailers; for example, HHS now visits

    states to help assess the accuracy and completeness of

    tobacco outlet lists and works with states to improve

    standardization of inspection protocols. (See app. 1,

    item 1.19.A.)

     Table 12: Strategic Goal 1's Qualitative Performance Goals, Fiscal Years 2004
                                        and 2005

    " Met ... Not met Strategic objective/performance goal

                1.1. The health needs of an aging and diverse population

         o 1.1.1. Evaluate Medicare reform, financing, and operations
         o 1.1.2. Assess trends and issues in private health insurance coverage
         o 1.1.3. Assess actions and options for improving the Department of
           Veterans Affairs and the Department of Defense's health care services
         o 1.1.4. Evaluate the effectiveness of federal programs to promote and
           protect the public health
         o 1.1.5. Evaluate the effectiveness of federal programs to improve the
           nation's preparedness for the public health and medical consequences
           of bioterrorism
         o 1.1.6. Evaluate federal and state program strategies for financing and
           overseeing long-term health care
         o 1.1.7. Assess state experiences in providing health insurance coverage
           for low-income populations

               1.2. The education and protection of the nation's children

         o 1.2.1. Analyze the effectiveness and efficiency of early childhood
           education, care, and nutrition programs in serving their target
           populations
         o 1.2.2. Assess options for federal programs to effectively address the
           educational and nutritional needs of elementary and secondary students
         o 1.2.3. Determine the effectiveness and efficiency of child support
           enforcement and child welfare programs in serving their target
           populations
         o 1.2.4. Identify opportunities to better manage postsecondary,
           vocational, and adult education programs and deliver more effective
           services

         1.3. The promotion of work opportunities and the protection of workers

         o 1.3.1. Assess the effectiveness of federal efforts to help adults
           leave welfare for work and to assist other low-income individuals
         o 1.3.2. Analyze the impact of programs designed to maintain a skilled
           workforce and ensure employers have the workers they need
         o 1.3.3. Assess the success of various enforcement strategies to protect
           workers while minimizing employers' burden in the changing work
           environment
         o 1.3.4. Identify ways to improve federal support for people with
           disabilities

                      1.4. A secure retirement for older Americans

         o 1.4.1. Assess the policy challenges facing the future of the Social
           Security system and the need for reform
         o 1.4.2. Bolster retirement security by identifying opportunities to
           foster greater pension coverage, raise personal saving, and increase
           the employment earnings of seasoned workers
         o 1.4.3. Identify opportunities to improve the ability of government
           agencies to administer and protect workers' retirement benefits
         o 1.4.4. Assess the role of the Social Security number in improving
           government operations, minimizing fraud and abuse, and protecting
           citizens from identity theft and other illegal activity

    " Met ... Not met Strategic objective/performance goal

                          1.5. An effective system of justice

         o 1.5.1. Identify ways to improve federal agencies' ability to prevent
           and respond to terrorism and other major crimes
         o 1.5.2. Assess the effectiveness of federal programs to control illegal
           drug use
         o 1.5.3. Assess federal efforts to enforce immigration and customs laws
         o 1.5.4. Assess the administrative efficiency and effectiveness of the
           federal court and prison systems

                        1.6. The promotion of viable communities

         o 1.6.1. Assess federal community and economic development assistance
           and its impact on communities
         o 1.6.2. Assess the effectiveness of federal initiatives to assist small
           and minority-owned businesses
         o 1.6.3. Assess how the federal government can balance the promotion of
           home ownership with financial risk
         o 1.6.4. Assess federal efforts to enhance national preparedness and
           capacity to respond to and recover from natural and man-made disasters
         o 1.6.5. Assess how well federal programs that support affordable
           housing meet objectives, manage financial risk, and improve
           recipient's well-being

         1.7. Responsible stewardship of natural resources and the environment

         o 1.7.1. Assess the nation's ability to ensure reliable and
           environmentally sound energy for current and future generations
         o 1.7.2. Assess federal strategies for managing land and water resources
           in a sustainable fashion for multiple uses
         o 1.7.3. Assess environmental protection strategies and programs
         o 1.7.4. Assess efforts to reduce the threats posed by hazardous and
           nuclear wastes
         o 1.7.5. Assess federal programs' ability to ensure a plentiful and safe
           food supply, provide economic security for farmers, and minimize
           agricultural environmental damage

           1.8. Asafe, secure, and effective national physical infrastructure

         o 1.8.1. Assess strategies for identifying, evaluating, prioritizing,
           financing, and implementing integrated solutions to the nation's
           transportation infrastructure challenges
         o 1.8.2. Assess the impact of transportation and telecommunications
           policies and practices on competition and consumers
         o 1.8.3. Assess federal government's role in fostering and overseeing
           telecommunications in the public interest
         o 1.8.4. Assess efforts to improve safety in moving people and goods
           across the nation's transportation system
         o 1.8.5. Assess efforts to improve security in all transportation modes
         o 1.8.6. Assess the U.S. Postal Service's transformation efforts to
           ensure its viability and accomplish its mission
         o 1.8.7. Assess federal efforts to plan for, acquire, manage, maintain,
           secure, and dispose of the government's real property assets

    Source: GAO.

    Notes: In indicating whether we have met a performance goal, the
    responsible senior executive considers, for example, the amount of work
    conducted and recommendations made for each key effort under that
    performance goal, as well as other assistance provided to the client or
    customer that is related to these efforts. The senior executive then
    judges whether the work completed collectively for all key efforts has
    achieved the performance goal. To view the 153 key efforts for the 40
    performance goals above, go to http://www.gao.gov/sp.html.

    Goal 2 Overview

    Provide timely, quality service to the Congress and the federal government
    to respond to changing security threats and the challenges of global

    interdependence

    Source:See Image Sources.

    The federal government is working to promote foreign policy goals, sound
    trade polices, and other strategies to advance the interests of the United
    States and its allies while also seeking to anticipate and address
    emerging threats to the nation's security and economy. Given the
    importance of these efforts, our second strategic goal focuses on helping
    the Congress and the federal government respond to changing security
    threats and the challenges of global interdependence. Our multiyear
    (fiscal years 2004-2009) strategic objectives under this goal are to
    support the congressional and federal efforts to

         + respond to emerging threats to 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.

    These objectives, along with the performance goals and key efforts that
    support them, are discussed fully in our strategic plan, which is
    available on our Web site at http://www.gao.gov . The work supporting
    these objectives is performed primarily by headquarters and field staff in
    the following teams: Acquisition and Sourcing Management, Defense
    Capabilities and Management, and International Affairs and Trade. In
    addition, the work supporting some performance goals and key efforts is
    performed by headquarters and field staff from the Information Technology,
    Homeland Security and Justice, Financial Markets and Community Investment,
    and Natural Resources and Environment teams.

    To accomplish our work under these strategic objectives, we conducted
    engagements and audits that involved fieldwork related to federal programs

                               Selected Work under Goal 2

    Strengthening federal agency information security:

    In response to our identification of specific information security
    improvements needed at numerous agencies, some agencies strengthened their
    information security practices by, among other things, changing access
    controls to limit the ability to read, modify, or delete information to
    authorized individuals; implementing software change controls to allow
    only authorized software programs to operate; and using service continuity
    controls to protect computer-dependent operations from significant
    disruptions. (See app. 1, item 2.6.A.)

    Increasing security of cargo containers to prevent smuggling of weapons of
    mass destruction: In response to our recommendations, DHS agreed to
    improve its ability to assess security procedures of certain companies,
    identify high-risk containers, inspect containers with scanning equipment,
    and manage the programs overall to increase the security of cargo
    containers in order to prevent terrorists from using such containers to
    smuggle weapons of mass destruction into the United States. (See app. 1,
    item 2.11.C.)

    Identifying challenges to efforts to stabilize and rebuild Iraq: We
    identified the challenges to U.S. efforts to stabilize Iraq, reconstruct
    Iraq's essential infrastructure, and support its elections. Our work was
    widely reported in the national media, helped inform American taxpayers
    about U.S. efforts in Iraq, and provided the Congress with crucial
    oversight information as it considered legislative action. (See app. 1,
    item 2.49.C.)

    Bolstering efforts to prevent terrorists and criminals from obtaining U.S.
    passports: The Congress expressed grave concerns about the security gaps
    that we identified in U.S. passport operations and asked the Departments
    of State (State) and Justice to implement our recommendations correcting
    these and other systemic weaknesses in State's passport fraud detection
    efforts. The agencies have begun implementing actions to close these
    critical security gaps. (See app. 1, item 2.50.C.)

    that took us across multiple continents, including Australia, Europe,
    Africa, Asia, South America, and North America. As in the past, we
    developed reports, testimonies, and briefings on our work.

    As shown in table 13 , we exceeded our fiscal year 2005 performance
    targets for financial and other benefits, but did not meet the target for
    testimonies for this goal.

    Table 13: Strategic Goal 2's Annual Performance Results and Targets

    Performance         2001  2002   2003   2004   2005    2005  Met/     2006
    measure           actual actual actual actual target actual not met target
    Financial
    benefits
    (dollars in       $10.5   $8.4   $7.1   $9.7   $9.4  $13.0      Met $10.5a
    billions)
    Other benefits       188  218    273    369    300      365     Met   282a
    Testimonies           34     38     48     70     52     42 Not met     58

    Source: GAO.

    aOur fiscal year 2006 targets for financial benefits and other benefits
    differ from the targets we reported for these measures in our fiscal year
    2006 performance plan. On the basis of our performance in fiscal year
    2005, we raised these targets from $9.1 billion in financial benefits and
    275 in other benefits. We did not change the agencywide targets for these
    measures, but we made corresponding changes to targets for goals 1 and 3.

    To help us examine trends for these measures over time, we look at their
    4-year averages, which minimize the effect of an unusual level of
    performance in any single year and are shown in table 14 . This table
    indicates that financial and other benefits derived from our work have
    risen. At the same time, the number of testimonies for goal 2 has remained
    stable.

               Table 14: Four-Year Rolling Averages for Strategic Goal 2

    Performance measure          2001      2002      2003      2004       2005
    Financial benefits
    (dollars in billions)        $6.2      $6.9      $7.9      $8.9       $9.5
    Other benefits                118       154       202      262         306
    Testimonies                       43    41        44        48          50

    Source: GAO.

    The following sections describe our performance in goal 2 for each of our
    quantitative performance measures and describe the targets for fiscal year
    2006. This analysis is followed by a discussion of our multiyear
    qualitative performance measures.

    Financial Benefits

    The financial benefits reported for this goal in fiscal year 2005 totaled
    $13 billion, exceeding the target of $9.4 billion. These accomplishments
    stemmed from engagements that recommended scaling back a defense program
    until the required technology is mature, increasing efficiencies in the
    Army's force structure, reducing funding for the Millennium Challenge
    Account-an account established to support development in countries around
    the world-and for DOD's operations and maintenance, and avoiding costs
    associated with the return of excess Army

    A financial benefit of about $4.7 billion stemmed from

    our findings that the Missile Defense Agency could

    scale back its system development efforts until

    required technologies are more mature. (See app. 1,

    item 2.17.A) .

    materiel from Iraq. We describe these and other accomplishments in the
    goal 2 section of appendix

    1.

    Given the large portion of the U.S. budget that defense spending consumes,
    we expect our work under this goal to continue to produce economies and
    efficiencies that yield billions of dollars in financial benefits for the
    American people each year. We set goal 2's fiscal year 2006 target at
    $10.5 billion based on its fiscal year 2005 4-year rolling average of $9.5
    billion and our assessment of the progress agencies are making in
    implementing our past recommendations that might yield financial benefits.

    Other Benefits

    The other tangible benefits reported for goal 2 in fiscal year 2005
    included 341 actions taken by federal agencies to improve their services
    and operations in response to our work and another 24 in which information
    we provided to the Congress resulted in statutory or regulatory changes.
    This total of 365 other benefits exceeded our target of 300. Our success
    in this area arose from our increased emphasis on follow-up efforts and
    increased monitoring of our progress toward the targets throughout the
    year. Some of our major accomplishments are reported in detail in the goal
    2 section of appendix 1.

    Looking ahead, our assessments of the executive branch's current efforts
    to implement our recommendations made under this goal led us to set our
    fiscal year 2006 target at 282. This target is lower than our fiscal year
    2005 actual performance and 4year average for this measure because we want
    to encourage staff to identify significant and meaningful other benefits
    rather than numerous, narrowly focused ones that would easily ensure that
    we meet a higher target.

    Testimonies

    Our witnesses testified at 42 congressional hearings related to this
    strategic goal, missing our target of presenting testimony at 52 hearings.
    Among other things, we testified on U.S. passport fraud, DOD security
    clearances, the Oil for Food program, mutual funds, unmanned aerial
    vehicles, protecting

    U.S. officials oversees from terrorist attacks, and transportation
    security issues ( see p. 36 for a list of testimony topics by goal). We
    have set our target for presenting testimony at hearings to 58 for fiscal
    year 2006. This should be a challenge for us as it is above both our
    fiscal year 2005 performance and 4year average for this goal.

                          Examples of Goal 2's Other Benefits

                    Improving controls covering technology exports:

    We found that a gap in control regulations covering

    exports with both military and civilian applications

    could enable individuals in most countries to legally

    obtain these items without any U.S. government

    review and that these items could be used to help

    make a cruise missile or unmanned aerial vehicle. The

    Department of Commerce subsequently proposed

    modifications to its regulations to help close the regu

    latory gap. (See app. 1, item 2.1.A.)

    Strengthening the visa process as an antiterror

    ism tool: Using our work as a primary guide, State

    strengthened the visa process as an antiterrorism tool

    by, among other things, issuing guidance emphasizing

    national security as the department's first priority in the

    visa process; developing over 80 standard operating

    procedures to ensure that consular officers properly

    review visa applications and effectively fulfill their

    national security responsibilities; and developing and

    enhancing training on analytic interviewing tech

    niques, fraud prevention, counterterrorism, and use of

    a name check system for passports and visa applica

    tions. (See app. 1, item 2.32.A.)

    Ensuring decisions to transfer U.S. weapons and technologies to foreign
    governments are adequately informed: We found that the National Disclosure
    Policy Committee-which approves or denies requests for exceptions to the
    criteria used to determine if classified weapons or technologies can be
    released to the requesting country-was operating with outdated Central
    Intelligence Agency risk assessments. Acting on our recommendations, the
    commit-tee's Executive Secretariat requested that the Central Intelligence
    Agency provide updated risk assessments for 23 countries, and those
    assessments are under way.

    (See app. 1, item 2.55.A.)

    Multiyear Performance Goals

    As shown in table 15 , at the close of fiscal year 2004, we met 22 of our
    23 performance goals for this strategic goal. We did not meet the
    performance goal of identifying opportunities to embed homeland security
    concepts in ongoing national initiatives because our homeland security
    resources were needed for other work requested by the Congress and we did
    not have resources in the homeland security area to undertake
    self-initiated work related to this performance goal. For fiscal year
    2006, we plan to drop this performance goal and concentrate our resources
    on the remaining homeland security efforts.

     Table 15: Strategic Goal 2's Qualitative Performance Goals, Fiscal Years 2004
                                        and 2005

    " Met ... Not met Strategic objective/performance goal

                      2.1. Respond to emerging threats to security

         o 2.1.1. Assess federal homeland security management, responsibility,
           effectiveness, and achievement of mission goals
         o 2.1.2. Identify ways to strengthen strategies related to homeland
           security and their implementation
         o 2.1.3. Evaluate homeland security resource priorities, costs, and
           approaches to stimulate desired investments
         o 2.1.4. Identify opportunities to embed homeland security concepts in
           ongoing national initiatives
         o 2.1.5. Evaluate ways to strengthen government information security and
           protect computer and telecommunications systems that support the
           nation's critical infrastructures
         o 2.1.6. Assess the effectiveness of U.S. and international efforts to
           prevent the proliferation of nuclear, biological, chemical, and
           conventional weapons and sensitive technologies

                    2.2. Ensure military capabilities and readiness

         o 2.2.1. Assess DOD's ability to maintain adequate readiness levels
           while addressing the force structure changes needed in the 21st
           century
         o 2.2.2. Assess overall human capital management practices to ensure a
           high-quality total force
         o 2.2.3. Assess the ability of weapon system acquisition programs and
           processes to achieve desired outcomes
         o 2.2.4. Identify ways to improve the economy, efficiency, and
           effectiveness of DOD's support infrastructure and business systems and
           processes
         o 2.2.5. Assess the National Nuclear Security Administration's efforts
           to maintain a safe and reliable nuclear weapons stockpile
         o 2.2.6. Assess whether DOD and the services have developed integrated
           systems, procedures, and doctrines to support joint and coalition
           forces on the battlefield safely and effectively
         o 2.2.7. Analyze and support DOD's efforts to improve planning,
           programming, budgeting, execution, and program performance

                 2.3. Advance and protect U.S. international interests

         o 2.3.1. Analyze the plans, strategies, costs, and results of the United
           States and its allies in conflict interventions
         o 2.3.2. Analyze the effectiveness and management of U.S. foreign aid
           and developmental and humanitarian programs and the tools used to
           implement them
         o 2.3.3. Analyze the plans, costs, and outcomes of responding to
           challenges to U.S. strategic interests
         o 2.3.4. Evaluate the extent to which U.S. interests are effectively
           served by U.S. participation in multilateral organizations
         o 2.3.5. Assess the strategies and management practices for U.S. foreign
           affairs functions and activities

    2.4. Respond to the impact of global market forces on U.S. economic and security
                                       interests

         o 2.4.1. Analyze how U.S. interests are served through trade agreements
           and U.S. programs
         o 2.4.2. Improve understanding of the effects of a global industrial
           base on U.S. national security interests
         o 2.4.3. Assess how the United States can influence improvements in the
           world financial system
         o 2.4.4. Assess the ability of the financial services industry and its
           regulators to maintain a stable and efficient financial system in the
           face of market change and innovation
         o 2.4.5. Assess the effectiveness of regulatory programs and policies in
           ensuring access to financial services and deterring fraud and abuse in
           financial markets

    Source: GAO.

    Notes: In indicating whether we have met a performance goal, the
    responsible senior executive considers, for example, the amount of work
    conducted and recommendations made for each key effort under that
    performance goal, as well as other assistance provided to the client or
    customer that is related to these efforts. The senior executive then
    judges whether the work completed collectively for all key efforts has
    achieved the performance goal. To view the 88 key efforts for the 23
    performance goals above, go to http://www.gao.gov/sp.html.

    Source:See Image Sources.

    Our third strategic goal focuses on the collaborative and integrated
    elements needed for the federal government to achieve results. The work
    under this goal highlights the intergovernmental relationships that are
    necessary to achieve national goals. Our multiyear (fiscal years
    2004-2009) strategic objectives under this goal are to

         + reexamine the federal government's role in achieving evolving national
           objectives;
         + support the transformation to results-oriented, high-performing
           government;
         + support congressional oversight of key management challenges and
           program risks to improve federal operations and ensure accountability;
           and
         + analyze the government's fiscal position and strengthen approaches for
           addressing the current and projected fiscal gap.

    These objectives, along with the performance goals and key efforts that
    support them, are discussed fully in our strategic plan, which is
    available on our Web site at http://www.gao.gov . The work supporting
    these objectives is performed primarily by headquarters and field staff
    from the Applied Research and Methods, Financial Management and Assurance,
    Information Technology, and Strategic Issues teams. In addition, the work
    supporting some performance goals and key efforts is performed by
    headquarters and field staff from the Acquisition and Sourcing Management
    and Natural Resources and Environment teams. This goal also includes our
    bid protest and appropriations law work, which is performed by staff in
    General Counsel, and our fraud investigations, which are conducted by
    staff from the Forensic Audits and Special Investigations unit within the
    Financial Management and Assurance team.

                               Selected Work under Goal 3

    Cost effectively managing a multibillion dollar IT investment: DHS program
    managers who track cargo entering and leaving the United States
    implemented our recommendations related to developing and using enterprise
    architecture, following an incremental system acquisition approach,
    establishing system acquisition process controls, and ensuring the
    independence of DHS's function to oversee the program. (See app. 1, item
    3.19.C.)

    Improving criminal debt collection: Our efforts resulted in the Congress
    directing the Department of Justice to develop a strategic plan with the
    other involved federal agencies to improve the federal government's
    ability to collect billions of dollars of outstanding criminal debt. The
    department has begun to act on this directive. (See app. 1, item 3.20.C.)

    Improving governmentwide telecommunications acquisition: Because of
    concerns that we raised regarding a governmentwide telecommunications
    contract known as Networx, GSA drafted measures to address each of the
    pro-gram's goals and is working to revise the draft measures based on our
    feedback. In addition, the Congress directed the agency to delay the
    release of its final request for proposals until information was available
    on the level of service contractors would be required to provide at each
    location.

    (See app. 1, item 3.21.C.)

    Raising awareness of selected technology used to block pornography: We
    found that the filters offered by selected peer-to-peer file-sharing
    applications-which allow Internet users to find and exchange information,
    including images and videos-varied in their ability to block pornographic
    images. (See app. 1, item 3.29.C.)

    Conducting the first financial audit of the Securities and Exchange
    Commission (SEC): Our audit of SEC for the fiscal year ended 2004-the
    first conducted at SEC- resulted in a clean opinion on its financial
    statements. Nevertheless, we identified material internal control
    weaknesses over financial statements and disclosures, recording and
    reporting disgorgements and civil penalties, and information security,
    which SEC is taking steps to address. (See app. 1, item 3.60.C.)

    To accomplish our work under these four objectives, we conducted audits,
    evaluations, and analyses in response to congressional requests and
    carried out work initiatives under the Comptroller General's authority. As
    in the past, we developed reports, testimonies, and briefings on our work.

    As shown in table 16 , we exceeded our fiscal year 2005 performance
    targets for financial and other benefits for this goal, but did not meet
    the target for testimonies at the goal level.

          Table 16: Strategic Goal 3's Annual Performance Results and Targets

    Performance         2001  2002   2003   2004   2005    2005  Met/     2006
    measure           actual actual actual actual target actual not met target
    Financial
    benefits
    (billions of        $7.0  $5.2   $4.7   $7.6   $8.5  $11.0      Met  $9.8a
    dollars)
    Other benefits       401  462    553    576    460      767     Met   526a
    Testimonies           42     65     56     60     55     47 Not met     63

    Source: GAO.

    aOur fiscal year 2006 targets for financial benefits and other benefits
    differ from the targets we reported for these measures in our fiscal year
    2006 performance plan. On the basis of our performance in fiscal year
    2005, we lowered the financial benefit target from $10.4 billion. We also
    raised the target for other benefits from 520. We did not change the
    agencywide targets for these measures, but we made corresponding changes
    to targets for goals 1 and 2.

    To help us examine trends for these measures over time, we look at their
    4-year averages, which minimize the effect of an unusual level of
    performance in any single year and are shown in table 17 . This table
    indicates that documentation of financial and other benefits derived from
    our work under this goal have risen, while the number of testimonies for
    goal 3 has declined overall.

               Table 17: Four-Year Rolling Averages for Strategic Goal 3

    Performance measure          2001      2002      2003      2004       2005
    Financial benefits
    (dollars in billions)        $5.3      $5.5      $5.5      $6.1       $7.1
    Other benefits                407       445       480      498         590
    Testimonies                       86    78        67        56          57

    Source: GAO.

    The following sections describe our performance in goal 3 for each of our
    quantitative performance measures and describe the targets for fiscal year
    2006. This analysis is followed by a discussion of our qualitative
    performance measures.

    Financial Benefits

    The financial benefits reported for this goal in fiscal year 2005 totaled
    $11 billion, exceeding our target of $8.5 billion. These efforts included
    increasing revenues from IRS collections, avoiding costs by using
    streamlined federal acquisition strategies, reduced funding due to
    improved cash management processes in the Air Force's working capital fund
    and to postponement of NASA's Prometheus 1 project, and reducing costs
    associated with the 2010 Census. We describe these and other
    accomplishments in the goal 3 section of appendix 1.

                 A financial benefit of about $1.8 billion stemmed from

    our findings that led IRS to increase revenue collec

    tions. (See app. 1, item 3.51.A) .

    Under goal 3, we typically work on core government business processes and
    governmentwide management reforms. Our assessments of the executive
    branch's current efforts to implement the recommendations we made in our
    work under this goal indicate that financial benefits related to this goal
    are likely to be in line with our 4-year average; consequently, we set the
    target for financial benefits at $9.8 billion for fiscal year 2006.

    Other Benefits

    The other tangible benefits reported for goal 3 in fiscal year 2005
    included 739 instances in which agencies' core business processes were
    improved or governmentwide management reforms were advanced because of our
    work. In addition, there were 28 instances in which information we
    provided to the Congress resulted in statutory or regulatory changes. This
    total of 767 other benefits exceeded our target of 460. The larger number
    of other benefits occurred mainly in our financial management and
    information technology areas where we tend to make multiple, specific
    recommendations for change to more than one entity. We describe some of
    our major accomplishments in the goal 3 section of appendix 1.

    Looking ahead, our assessments of the executive branch's current efforts
    to implement our recommendations made under this goal led us to set a
    fiscal year 2006 target of 526 other benefits for goal 3. We recognize
    that this target is lower than our fiscal year 2005 actual performance,
    but we set it at this level because we want to encourage staff to identify
    significant and meaningful other benefits rather than numerous, narrowly
    focused ones that would easily ensure that we meet a higher target.

    Testimonies

    Our witnesses testified at 47 congressional hearings related to this
    strategic goal, falling short of the target of 55. Among the testimonies
    presented were those on Army Reserve and Army National Guard pay, tax
    system abuse by DOD contractors, diploma mills, federal purchase and
    travel cards, NASA's shuttle program, and DOD contract management (see p.
    36 for a list of testimony topics by goal). For fiscal year 2006, we have
    set a target of presenting testimony at 63 hearings because we expect the
    level of hearings to be higher than it was in fiscal year 2005; the
    anticipated increase stems from our work on bid protests and on
    contracting activities resulting from federal Hurricane Katrina cleanup
    and recovery efforts.

                          Examples of Goal 3's Other Benefits

                     Adding rigor to the Coast Guard's oversight of

    Deepwater program contractors: We found that

    (1) the Coast Guard's evaluation of a contractor responsible for
    developing and delivering assets for the Deepwater Program-established to
    modernize the Coast Guards' aging fleet of ships and aircraft- lacked the
    necessary rigor to be effective and (2) two subcontractors were solely
    responsible for deciding whether to compete assets or make the assets
    themselves. Based on our recommendations, the Coast Guard improved the
    criteria for assessing the system integrator's performance and required
    the subcontractors to provide notification of decisions to make assets
    valued at $10 million or more. (See app. 1, item 3.6.A.)

    Preventing improper sales of sensitive clothing

    and textile items: On the basis of our findings that it

    improperly sold over the Internet excess clothing with

    reflectant properties that prevent detection with infra

    red technologies, DOD issued a more stringent policy,

    which determined that these items are of a sufficiently

    critical and sensitive nature to require total destruc-

    tion-an action that should help prevent this sensitive

    technology from falling into the wrong hands. (See

    app. 1, item 3.31.A.)

    Improving accountability at the Department of Labor (DOL): We recommended
    that OMB revise its audit guidance to require sufficient testing for
    auditors to be able to positively state whether agency financial
    management systems comply with requirements (positive assurance). DOL's IG
    advised us that it had followed our advice and became the first federal
    agency to provide positive assurance. (See app. 1, item 3.34.A.)

    Improving NASA's cost-estimating processes: Act

    ing on our recommendations, NASA has removed bar

    riers to cost estimation-such as the lack of reliable

    financial and performance data and the lack of incen

    tives to measure and monitor cost trends-and

    improved its cost-estimating practices. (See app. 1,

    item 3.37.A.)

    Multiyear Performance Goals

    As shown in table 18 , at the close of fiscal year 2005, we met all of the
    19 performance goals for this strategic goal.

     Table 18: Strategic Goal 3's Qualitative Performance Goals, Fiscal Years 2004
                                        and 2005

    " Met ... Not met Strategic objective/performance goal

      3.1. Reexamine the federal government's role in achieving evolving national
                                       objectives

         o 3.1.1. Examine emerging challenges and opportunities to position the
           federal government for the 21st century
         o 3.1.2. Develop new resources and approaches that can be used to assess
           the nation's position and progress
         o 3.1.3. Explore ways to evaluate the effectiveness of the entire set of
           policy tools that the federal government uses to achieve national
           objectives
         o 3.1.4. Assess how involvement of state and local governments and
           nongovernmental organizations affects federal program implementation
           and achievement of national goals

    3.2. Support the transformation to results-oriented, high-performing government

         o 3.2.1. Analyze and support efforts to improve the human capital
           infrastructure key to the successful transformation of the government
         o 3.2.2. Assess and support efforts to improve results-oriented
           management across the government
         o 3.2.3. Analyze efforts to build high-performing organizations
         o 3.2.4. Identify ways to improve the collection, dissemination, and
           quality of federal information
         o 3.2.5. Identify ways to improve financial management infrastructure
           capacity to provide useful information for managing results and costs
           day to day
         o 3.2.6. Assess the government's planning, implementation, and use of
           information technology to improve performance and modernize federal
           programs and operations
         o 3.2.7. Identify ways to improve how federal agencies acquire goods and
           services

    3.3. Support congressional oversight of key management challenges and
    program risks to improve federal operations and ensure accountability

         o 3.3.1. Highlight the federal programs and operations at highest risk
           and the major performance and management challenges confronting
           agencies
         o 3.3.2. Assess the management and results of the federal investment in
           science and technology and the effectiveness of efforts to protect
           intellectual property
         o 3.3.3. Identify ways to strengthen accountability for the federal
           government's assets and operations

    3.4. Analyze the government's fiscal position and strengthen approaches
    for addressing the current and projected fiscal gap

         o 3.4.1. Analyze the long-term fiscal position of the federal government
         o 3.4.2. Analyze the structure and information for budgetary choices and
           explore alternatives for improvement
         o 3.4.3. Contribute to congressional deliberations on tax policy
         o 3.4.4. Support congressional oversight of federal tax administration
         o 3.4.5. Assess the reliability of financial information on the
           government's fiscal position and financing sources

    Source: GAO.

    Notes: In indicating whether we have met a performance goal, the
    responsible senior executive considers, for example, the amount of work
    conducted and recommendations made for each key effort under that
    performance goal, as well as other assistance provided to the client or
    customer that is related to these efforts. The senior executive then
    judges whether the work completed collectively for all key efforts has
    achieved the performance goal. To view the 90 key efforts for the 19
    performance goals above, go to http://www.gao.gov/sp.html.

    Source:See Image Sources.

    The focus of our fourth strategic goal is to make GAO a model
    organization. For us, this means that our work is driven by our external
    clients and internal customers, our managers exhibit the characteristics
    of leadership and management excellence, our employees are devoted to
    ensuring quality in our work process and products through continuous
    improvement, and our agency is regarded by current and potential employees
    as an excellent place to work. Our multiyear (fiscal years 2004-2009)
    strategic objectives under this goal are to

         + continuously improve client and customer satisfaction and stakeholder
           relationships;
         + lead strategically to achieve enhanced results;
         + leverage GAO's institutional knowledge and experience;
         + continuously enhance GAO's business and management processes; and
         + become a professional services employer of choice.

    These objectives, along with the performance goals and key efforts that
    support them, are discussed fully in our strategic plan, which is
    available on our Web site at http://www.gao.gov . The work supporting
    these objectives is performed under the direction of CAO with assistance
    on specific key efforts being provided by staff from the Applied Research
    and Methods team and from offices such as Strategic Planning and External
    Liaison, Congressional Relations, OOI, QCI, and Public Affairs.

    To accomplish our work under these five objectives, we plan to perform
    internal studies and complete projects that further the strategic goal.

                               Selected Work under Goal 4

    Improving dissemination of GAO products: We continued our pilot to produce
    and disseminate GAO reports in an electronic format, and, based on the
    positive client feedback we received on the products we provided in
    electronic format, we plan to make the use of electronic products routine.
    We also improved the process for creating and posting to our Web site the
    electronic supplements to our reports, enabling our staff to view all
    features of a supplement before it is posted on the Internet, easing
    navigation within the electronic supplement, and more readily identifying
    the product as a GAO product. (See app. 1, item 4.3.C.)

    Enhancing our classification and compensation systems: We more directly
    linked the process for determining compensation to an individual's
    performance, as reflected on the appraisal, and used a market-based
    compensation study to design a competitive, fair, and equitable
    compensation program that is aligned with competitive labor markets in
    which we compete for talent. In addition, our administrative and
    professional support staff completed their first year under a broadband
    pay system and a competency-based performance system. (See app. 1, item
    4.13.C.)

    Improving customer service through use of Web-based technology: We
    upgraded our Web-based time and attendance system and our automated
    competency-based performance system, developed and implemented a Web-based
    request system for scheduling GAO vans that transport our staff to
    official meetings, redesigned the Web-based phone book, and deployed a
    major enhancement to our Web-based employee locator system. (See app. 1,
    item 4.27.C)

    Ensuring our IT security: To ensure our IT security we installed personal
    firewall software, implemented changes to ensure desktop security and foil
    spyware, and implemented an integrated security approach for our Web-based
    systems.

    (See app. 1, item 4.32.C.)

    Ensuring our physical security: We enhanced our physical security by
    completing the perimeter security efforts, including installation of high
    speed rollup doors, guard booths, undervehicle cameras, pop-up barriers,
    and a perimeter plinth wall. (See app. 1, item 4.33.C.)

    Multiyear Performance Goals

    The annual measures used to assess our performance under our external
    strategic goals are not applicable to this internal strategic goal, but
    the multiyear qualitative performance goals do apply. As shown in table 19
    , at the close of fiscal year 2005, we met 16 of the 17 performance goals
    for this strategic goal. We did not meet our performance goal of
    maximizing the collection, use, and retention of essential organizational
    knowledge. While we completed substantial work for this performance goal,
    we will not complete this work until after fiscal year 2005. Specifically,
    our work has been slower than we anticipated because funding was rescinded
    in fiscal year 2004 and some essential steps-such as developing prototypes
    and conducting pilot tests-have taken longer than we initially
    anticipated. We now plan to complete efforts under this performance goal
    during fiscal year 2006.

     Table 19: Strategic Goal 4's Qualitative Performance Goals, Fiscal Years 2004
                                        and 2005

    " Met ... Not met Strategic objective/performance goal

    4.1. Continuously improve client and customer satisfaction and stakeholder
                                     relationships

         o 4.1.1. Strengthen communication with congressional clients and more
           broadly measure their satisfaction with GAO's work
         o 4.1.2. Assess internal customer satisfaction with GAO's services and
           processes and implement and measure improvement efforts
         o 4.1.3. Strengthen relationships with GAO's stakeholders and increase
           the accessibility of GAO's products

                  4.2. Lead strategically to achieve enhanced results

         o 4.2.1. Integrate planning, budgeting, and performance measurement to
           achieve enhanced results
         o 4.2.2. Strengthen GAO's strategic human capital management to achieve
           enhanced results
         o 4.2.3. Ensure exemplary practices and systems in GAO's fiscal
           operations
         o 4.2.4. Strengthen IT governance practices and processes to achieve
           strategic results

               4.3. Leverage GAO's institutional knowledge and experience

         o 4.3.1. Maximize the collection, use, and retention of essential
           organizational knowledge
         o 4.3.2. Increase GAO's knowledge-sharing capability
         o 4.3.3. Enhance knowledge sharing with other national and international
           accountability and professional organizations

           4.4. Continuously enhance GAO's business and management processes

         o 4.4.1. Improve engagement support services
         o 4.4.2. Use enabling technology to improve GAO's crosscutting business
           processes

                 4.5. Become a professional services employer of choice

    o  4.5.1. Promote an environment that is fair and unbiased and that values
          opportunity and inclusiveness
    o  4.5.2. Provide GAO staff with tools, technology, and a world-class
          working environment
    o  4.5.3. Provide a safe and secure workplace
    o  4.5.4. Enhance employee views about GAO
    o  4.5.5. Improve the development and experiences of newly hired staff

    Source: GAO.

    Notes: In indicating whether we have met a performance goal, the
    responsible senior executive considers, for example, the amount of work
    conducted for each key effort under that performance goal, as well as
    other assistance provided to the client or customer that is related to
    these efforts. The senior executive then judges whether the work completed
    collectively for all key efforts has achieved the performance goal. To
    view the 80 key efforts for the 17 performance goals above, go to

    http://www.gao.gov/sp.html.

    Data Quality and Program Evaluation

    Verifying and Validating Performance Data

    Each year, we measure our performance by

    (1) evaluating our annual performance on measures that cover the outcomes
    and outputs related to our work results, client service, and management of
    our people and (2) assessing our progress in performing work related to
    the multiyear qualitative performance goals. To assess our performance in
    fiscal year 2005, we used performance data that were complete and actual
    (rather than projected) for all of our performance measures. We believe
    the data to be reliable because we followed the criteria and verification
    and validation procedures described here to ensure the data's quality.

    The specific sources of the data for our annual performance measures and
    multiyear qualitative performance goals, procedures for independently
    verifying and validating these data, and the limitations of these data are
    described in table 20 .

    Table 20: How We Ensure Data Quality for Our Annual Performance Measures
    and Multiyear Performance Goals

                                    Results measures

                                   Financial benefits

    Definition and Our work-including our findings and recommendations-may
    produce benefits to the federal

    background government that can be estimated in dollar terms. These
    benefits can result in better services to the public, changes to statutes
    or regulations, or improved government business operations. A financial
    benefit is an estimate of the federal monetary effect of agency or
    congressional actions. These financial benefits generally result from work
    that we completed over the past several years but can also result from
    information about questionable activities referred to us by agencies' IGs.
    The funds made available as a result of the actions taken in response to
    our work may be used to reduce government expenditures, increase revenues,
    or reallocate funds to other areas. Financial benefits included in our
    performance measures are net benefits-that is, estimates of financial
    benefits that have been reduced by the costs associated with taking the
    action that we recommended. We convert all estimates involving past and
    future years to their net present value and use actual dollars to
    represent estimates involving only the current year. Financial benefit
    amounts vary depending on the nature of the benefit, and we can claim
    financial benefits over multiple years based on a single agency or
    congressional action.

    Financial benefits are linked to specific recommendations or other work.
    To claim that financial benefits have been achieved, our staff must file
    an accomplishment report documenting that

    (1)
               the actions taken as a result of our work have been completed or
               substantially completed,

    (2)
               the actions generally were taken within 2 fiscal years prior to
               the filing of the accomplishment report, (3) a cause-and-effect
               relationship exists between the benefits reported and our
               recommendation or work performed, and (4) estimates of financial
               benefits were based on information obtained from third parties.
               Prior to fiscal year 2002, we limited the period over which the
               benefits from an accomplishment could be accrued to no more than 2
               years. Beginning in fiscal year 2002, we extended the period to 5
               years for certain types of accomplishments known to have multiyear
               effects, such as those associated with multiyear reductions in
               longer term projects, changes embodied in law, program
               terminations, or sales of government assets yielding multiyear
               financial benefits. For financial benefits involving events that
               occur on a regular but infrequent basis-such as the decennial
               census-we may extend the measurement period until the event occurs
               in order to compute the associated financial benefits using GAO's
               present value calculator.

    Managing directors decide when their staff can claim financial benefits. A
    managing director may choose to claim a financial benefit all in 1 year or
    decide to claim it over several years, especially if the benefit spans
    future years and the managing director wants greater precision as to the
    amount of the benefit.

    Data sources Our Accomplishment Reporting System provides the data for
    this measure. Teams use this Web-based data system to prepare, review, and
    approve accomplishments and forward them to QCI for its review. Once
    accomplishment reports are approved, they are compiled by QCI, which
    annually tabulates total financial benefits agencywide and by goal.

    Verification and validation Our policies and procedures require us to use
    the Accomplishment Reporting System to record the financial benefits that
    result from our work. They also provide guidance on estimating those
    financial benefits. The teams identify when a financial benefit has
    occurred as a result of our work. Teams develop estimates based on
    third-party sources, such as the agency that acted on our work, a
    congressional committee, or the Congressional Budget Office, and file
    accomplishment reports based on those estimates. The estimates are reduced
    by any identifiable offsetting costs. Teams develop workpapers to support
    accomplishments with evidence that meets our evidence standard,
    supervisors review the workpapers, and an independent person within GAO
    reviews the accomplishment report. The team's managing director or
    director is authorized to approve financial accomplishment reports with
    benefits of less than $100 million.

    The team forwards the report to QCI, which reviews all accomplishment
    reports and approves accomplishment reports claiming benefits of $100
    million or more. QCI provides summary data on approved financial benefits
    to unit managers, who check the data on a regular basis to make sure that
    approved accomplishments submitted by their staff have been accurately
    recorded. Our Engagement Reporting System also contains fiscal year 2005
    accomplishment data. In fiscal year 2005, QCI approved accomplishment
    reports covering 94 percent of the dollar value of financial benefits we
    reported.

    Every year, our IG reviews accomplishment reports that claim benefits of
    $500 million or more. In addition, on a periodic basis, the IG
    independently tests compliance with our process for claiming financial
    benefits of less than $500 million. The IG is currently completing a
    review of fiscal year 2005 financial benefits of less than $500 million.

    Data limitations Not every financial benefit from our work can be readily
    estimated or documented as attributable to our work. As a result, the
    amount of financial benefits is a conservative estimate. Estimates are
    based on information from third parties and are based on both objective
    and subjective data, and as a result, professional judgment is required in
    reviewing accomplishment reports. The IG is currently completing a review
    of financial benefits, including ensuring that our existing verification
    and validation steps are reasonable and adequately minimize any adverse
    impact from this limitation.

                             Other benefits (nonfinancial)

    Definition and background Our work-including our findings and
    recommendations-may produce other benefits to the federal government that
    cannot be estimated in dollar terms. These benefits can result in better
    services to the public, changes to statutes or regulations, or improved
    government business operations. Other (nonfinancial) benefits generally
    result from work that we completed over the past several years.

    Other benefits are linked to specific recommendations or other work that
    we completed over several years. To claim that other benefits have been
    achieved, staff must file an accomplishment report that documents that (1)
    the actions taken as a result of our work have been completed or
    substantially completed, (2) the actions generally were taken within the
    past 2 fiscal years of filing the accomplishment report, and (3) a
    cause-and-effect relationship exists between the benefits reported and our
    recommendation or work performed.

    Data sources Our Accomplishment Reporting System provides the data for
    this measure. Teams use this automated system to prepare, review, and
    approve accomplishments and forward them to QCI for its review. Once
    accomplishment reports are approved, they are compiled by QCI, which
    annually tabulates total other (nonfinancial) benefits agencywide and by
    goal.

    Verification and validation Our policies and procedures require us to use
    the Accomplishment Reporting System to record the other benefits that
    result from our findings and recommendations. Staff in the teams file
    accomplishment reports to claim that benefits have resulted from their
    work. Teams develop workpapers to support accomplishments with evidence
    that meets our evidence standard. Supervisors review the workpapers; an
    independent person within GAO reviews the accomplishment report; and the
    team's managing director or director approves the accomplishment report to
    ensure the appropriateness of the claimed accomplishment, including
    attribution to our work.

    The team forwards the report to QCI, where it is reviewed for
    appropriateness. QCI provides summary data on other benefits to unit
    managers, who check the data on a regular basis to make sure that approved
    accomplishments from their staff have been accurately recorded.
    Additionally, on a periodic basis, the IG independently tests compliance
    with our process for claiming other benefits. For example, the IG tested
    this process in fiscal year 2005 and found it to be reasonable. The IG
    also suggested actions to strengthen documentation of our other benefits
    and to encourage the timely processing of the supporting accomplishment
    reports. We are currently examining this performance measure and
    considering possible alternative methods for determining our impact in
    this area.

    Data limitations The data may be underreported because we cannot always
    document a direct cause-and-effect relationship between our work and
    benefits it produced. However, we feel that this is not a significant
    limitation on the data because the data represent a conservative measure
    of our overall contribution toward improving government.

                      Percentage of products with recommendations

    Definition and background We measure the percentage of our written
    products (chapter and letter reports and numbered correspondence) issued
    in the fiscal year that included at least one recommendation. We make
    recommendations that specify actions that can be taken to improve federal
    operations or programs. We strive for recommendations that are directed at
    resolving the cause of identified problems; that are addressed to parties
    who have the authority to act; and that are specific, feasible, and
    cost-effective. Some products we issue contain no recommendations and are
    strictly informational in nature.

    We track the percentage of our written products that are issued during the
    fiscal year and contain recommendations. This indicator recognizes that
    our products do not always include recommendations and that the Congress
    and agencies often find such informational reports just as useful as those
    that contain recommendations. For example, informational reports, which do
    not contain recommendations, can help to bring about significant financial
    and other benefits.

    Data sources Our Documents Database records recommendations as they are
    issued. The database is updated daily. As our staff monitor implementation
    of recommendations, they submit updated information to the database.

                              Verification and validation

    Through a formal process, each team identifies the number of
    recommendations included in each product and an external contractor enters
    them into a database. We provide our managers with reports on the
    recommendations being tracked to help ensure that all recommendations have
    been captured and that each recommendation has been completely and
    accurately stated. Additionally, on a periodic basis, the IG independently
    tests the teams' compliance with our policies and procedures related to
    this performance measure. For example, during fiscal year 2003, the IG
    tested and determined that our process for determining the percentage of
    written products with recommendations was reasonable. In fiscal year 2005,
    we used the same procedures to compute and report this measure.

    Data limitations This measure is a conservative estimate of the extent to
    which we assist the Congress and federal agencies because not all products
    and services we provide lead to recommendations. For example, the Congress
    may request information on federal programs that is purely descriptive or
    analytical and does not lend itself to recommendations.

    Past recommendations implemented

    Definition and background We make recommendations designed to improve the
    operations of the federal government. For our work to produce financial or
    other benefits, the Congress or other federal agencies must implement
    these recommendations. As part of our audit responsibilities under
    generally accepted government auditing standards, we follow up on
    recommendations we have made and report to the Congress on their status.
    Experience has shown that it takes time for some recommendations to be
    implemented. For this reason, this measure is the percentage rate of
    implementation of recommendations made 4 years prior to a given fiscal
    year (e.g., the fiscal year 2005 implementation rate is the percentage of
    recommendations made in fiscal year 2001 products that were implemented by
    the end of fiscal year 2005). Experience has shown that if a
    recommendation has not been implemented within 4 years, it is not likely
    to be implemented.

    This measure assesses action on recommendations made 4 years previously,
    rather than the results of our activities during the fiscal year in which
    the data are reported. For example, the cumulative percentage of
    recommendations made in fiscal year 2001 that were implemented in the
    ensuing years is as follows: 20 percent by the end of the first year
    (fiscal year 2002), 31 percent by the end of the second year (fiscal year
    2003), 48 percent by the end of the third year (fiscal year 2004), and 85
    percent by the end of the fourth year (fiscal year 2005).

    Data sources Our Documents Database records recommendations as they are
    issued. The database is updated daily. As our staff monitor implementation
    of recommendations, they submit updated information to the database.

                              Verification and validation

    Through a formal process, each team identifies the number of
    recommendations included in each product, and an external contractor
    enters them into a database.

    Policies and procedures specify that our staff must verify, with
    sufficient supporting documentation, that an agency's reported actions are
    adequately being implemented. Staff update the status of the
    recommendations on a periodic basis. To accomplish this, our staff may
    interview agency officials, obtain agency documents, access agency
    databases, or obtain information from an agency's IG. Recommendations that
    are reported as implemented are reviewed by a senior executive in the unit
    and by QCI.

    Summary data are provided to the units that issued the recommendations.
    The units check the data regularly to make sure the recommendations they
    have reported as implemented have been accurately recorded. We also
    provide to the Congress a database with the status of recommendations that
    have not been implemented, and we maintain a publicly available database
    of open recommendations that is updated daily.

    Additionally, on a periodic basis, the IG independently tests our process
    for calculating the percentage of recommendations implemented for a given
    fiscal year. For example, the IG determined that our process was
    reasonable for calculating the percentage of recommendations that had been
    made in our fiscal year 1999 products and implemented by the end of fiscal
    year 2003. In fiscal year 2005, we followed the same process for
    calculating the percentage of recommendations that had been made in fiscal
    year 2001 products and implemented by the end of fiscal year 2005.

    Data limitations The data may be underreported because sometimes a
    recommendation may require more than 4 years to implement. We also may not
    count cases in which a recommendation is partially implemented. However,
    we feel that this is not a significant limitation to the data because the
    data represent a conservative measure of our overall contribution toward
    improving government.

                                    Client measures

    Testimonies

    Definition and background The Congress may ask us to testify at hearings
    on various issues. Participation in hearings is one of our most important
    forms of communication with the Congress, and the number of hearings at
    which we testify reflects the importance and value of our institutional
    knowledge in assisting congressional decision making. When multiple GAO
    witnesses with separate testimonies appear at a single hearing, we count
    this as a single testimony. We do not count statements submitted for the
    record when a GAO witness does not appear.

    Data sources The data on hearings at which we testify are compiled in our
    congressional hearing system managed by staff in our Congressional
    Relations office.

    Verification and validation The units responding to requests for testimony
    are responsible for entering data in the congressional hearing system.
    After a GAO witness has testified at a hearing, our Congressional
    Relations office verifies that the data in the system are correct and
    records the hearing as one at which we testified. Congressional Relations
    provides weekly status reports to unit managers, who check to make sure
    the data are complete and accurate. Additionally, on a periodic basis, the
    IG independently examines the process for recording the number of hearings
    at which we testified. For example, the IG determined that our process for
    recording hearings during fiscal year 2003 was reasonable. In fiscal year
    2005, we followed the same process for recording hearings.

    Data limitations This measure does not include statements for the record
    that we prepare for congressional hearings. Also, this measure may be
    influenced by factors other than the quality of our performance in any
    specific year. The number of hearings held each year depends on the
    Congress's agenda, and the number of times we are asked to testify may
    reflect congressional interest in work in progress, as well as work
    completed that year or the previous year. To mitigate this limitation, we
    try to adjust our workload to reflect cyclical changes in the
    congressional schedule. We also outreach to our clients on a continuing
    basis to increase their awareness of our readiness to participate in
    hearings.

    Timeliness

    Definition and background The likelihood that our products will be used is
    enhanced if they are delivered when needed to support congressional and
    agency decision making. To determine whether our products are timely, we
    compute the proportion of our products that are issued by the dates agreed
    to with our clients or, for our work performed under the Comptroller
    General's authority, by the dates agreed to internally. The "committed"
    issue date for a product can be changed for requester-related reasons and
    for other significant reasons beyond GAO's control. Managing directors
    approve extensions to committed issue dates for their teams' engagements,
    and the teams document in their workpapers the reasons for extensions and
    the managing directors' approval. In fiscal year 2005, we extended the
    issue date on about one-third of our products.

         Data sources The data supporting this measure are from our Mission and
        Assignment Tracking System, which is used to monitor our progress on our
                                      engagements.

                              Verification and validation

    Our staff enter the data supporting this measure into our Mission and
    Assignment Tracking System. The data are then uploaded into our Engagement
    Reporting System, allowing the teams to monitor their performance on this
    measure on a daily basis, if necessary, and resolve any issues. When an
    assignment is completed, data on its target and completion dates are
    reported to the project manager, who reviews and signs the report to
    confirm its accuracy. Additionally, on a periodic basis, the IG
    independently examines our process for calculating product timeliness.

    Data limitations We do not measure the timeliness of all of our external
    products. Products such as staff studies, certain correspondence, and
    guidance are not part of our main product line and are excluded. To ensure
    that the data for this measure are sound, staff must follow the policy
    guidance as described above. However, based on the IG's 2005 review, there
    is evidence that some staff may be inconsistently applying the policy for
    changing a committed issue date, which ultimately affects the reliability
    of our measure. Also, our staff perform the process of changing a
    committed issue date, and thus the resulting data may not adequately
    represent an independent assessment of the requesters' satisfaction with
    our ability to deliver products when our clients need them. To mitigate
    these limitations, in fiscal year 2006 we will use our more direct client
    feedback survey as the primary indicator for our ability to deliver
    products on time to our clients.

    Multiyear qualitative performance goals

    Definition and background In addition to our other measures, we consult
    with our congressional clients and other outside experts in setting our
    multiyear qualitative performance goals. Thus, assessing the extent to
    which we achieve our performance goals helps focus our efforts on issues
    of critical importance and provides a tool for holding ourselves
    accountable for the resources the Congress provides. These goals measure
    the extent to which we did the work we had planned to do to support the
    Congress over a period of time. In this case, they cover fiscal years 2004
    and 2005.

    For each performance goal, we identify the key efforts needed to achieve
    it. To determine whether a performance goal has been met, we assess the
    work completed under the goal's key efforts. In making this assessment,
    the responsible senior executives for strategic goals 1 through 3-our
    external goals-consider, for example, the number of products issued (such
    as reports and testimonies) and the recommendations made for each key
    effort as well as any other assistance provided to the Congress related to
    these efforts. Senior executives then judge whether the work completed
    collectively for all key efforts actually achieved the performance goal.
    For strategic goal 4-our internal goal-senior executives also judge
    whether the performance goals have been met based on the work done on the
    goals' key efforts.

    Data sources      The data supporting senior executives' assessments come
                         from our Engagement Reporting System for strategic goals
                         1 through 3 and from reports produced by the managers
                         responsible for each key effort for strategic goal 4.
                         Teams and units maintain the supporting data used.
    Verification and  The assessment of each performance goal under strategic
    validation        goals 1 through 3 is supported by documentation showing,
                         for example, by key effort the number of reports issued
                         and recommendations made during the assessment period.
                         The assessment of the performance goals under strategic
                         goal 4 is also supported by documentation showing the
                         work completed under each key effort. Managing directors
                         in all four goals sign this documentation.
                         At the end of a multiyear assessment cycle, QCI reviews
                         the assessments from each of the goals and checks
                         supporting documentation for a sample of performance
                         goals to ensure that criteria are consistently applied
                         and that requirements are met. On a periodic basis, our
                         IG independently tests our process for determining
                         whether performance goals are met. The IG is currently
                         completing its test of our multiyear performance goal
                         process for fiscal year 2005. The assessment data
                         represent opinions in the form of qualitative,
    Data limitations  professional judgments that
                        senior managers make about their own work performed under
                        each performance goal.
                            However, we feel that the verification and validation
                                          steps that we take minimize any adverse
                        impact from this limitation.
                                             People measures
    New hire rate

    Definition and      This performance measure is the ratio of the number of
                                            people hired to the number we planned
    background     to hire. Annually, we develop a workforce plan that takes
                      into account projected workload
                      changes, as well as other changes, such as retirements,
                      other attrition, promotions, and skill gaps. The workforce
                      plan for the upcoming year specifies the number of planned
                      hires and, for
                       each new hire, specifies the skill type and the level. The
                                         plan is conveyed to each of our units to
                      guide hiring throughout the year. Progress toward achieving
                      the workforce plan is monitored monthly by the Chief
                      Operating Officer and Chief Administrative Officer.
                      Adjustments to the
                      workforce plan are made throughout the year, if necessary,
                      to reflect changing needs and
                      conditions.

    Data sources The Executive Committee approves the workforce plan. The
    workforce plan is coordinated and maintained by CAO. Data on
    accessions-that is, new hires coming on board-is taken from a database
    that contains employee data from USDA's National Finance Center (NFC)
    database, which handles payroll and personnel data for GAO and other
    agencies.

    Verification and validation CAO maintains a database that monitors and
    tracks all our hiring offers, declinations, and accessions. In
    coordination with our Human Capital Office, our CAO staff input workforce
    information supporting this measure into the CAO database. While the
    database is updated on a daily basis, monthly reports are provided to the
    Chief Operating Officer and the Chief Administrative Officer to monitor
    progress by GAO units in achieving workforce plan hiring targets. CAO
    continuously monitors and reviews accessions maintained in the NFC data
    against its database to ensure consistency and to resolve discrepancies.
    The office follows up on any discrepancies. In addition, on a periodic
    basis, the IG examines our process for calculating the new hire rate.
    During fiscal year 2004, the IG independently reviewed this process and
    found it to be reasonable. The IG also suggested actions to improve the
    documentation of the process used to calculate this measure. We have
    implemented the IG's suggestions.

    Data limitations There is a lag of one to two pay periods (up to 4 weeks)
    before the NFC database reflects actual data. We generally allow
    sufficient time before requesting data for this measure to ensure that we
    get accurate results.

                                    Acceptance rate

    Definition and This measure is the ratio of the number of applicants
    accepting offers to the number of offers background made. Acceptance rate
    is a proxy for GAO's attractiveness as an employer and an indicator of our
    competitiveness in bringing in new talent.

    Data sources The information required is the number of job offers made
    (excluding interns, experts/consultants, and reemployed annuitants), the
    number of offers declined, and the number of individuals who come on
    board. Our CAO staff maintain a database that contains the job offers made
    and accepted or declined. Data on accessions-that is, new hires coming on
    board-are taken from a database that contains employee data from USDA's
    NFC database, which handles payroll and personnel data for GAO and other
    agencies.

                              Verification and validation

    Human capital managers in the Human Capital Office work with the CAO to
    ensure that each job offer made and its outcome (declination or
    acceptance) is noted in the database that is maintained by CAO's staff;
    periodic checking is performed to review the accuracy of the database. In
    addition, on a periodic basis, the IG examines our process for calculating
    the acceptance rate. During fiscal year 2004, the IG independently
    reviewed this process and found it to be reasonable. The IG also suggested
    actions to improve the documentation of the process used to calculate this
    measure and the reporting of this measure. We have implemented the IG's
    suggestions.

                 Data limitations See New hire rate, Data limitations.

    Retention rate

    Definition and     We continuously strive to make GAO a place where people
                                                  want to work. Once we have made
    background     an investment in hiring and training people, we would like
                      to retain them. This measure is one indicator that we are
                      attaining that objective and is the inverse of attrition.
                      We calculate this
                      measure by taking 100 percent of the onboard strength minus
                                              the attrition rate, where attrition
                      rate is defined as the number of separations divided by the
                      average on-board strength. We calculate this measure with
                      and without retirements.

    Data sources Data on retention-that is, people who are on board at the
    beginning of the fiscal year and are still here at the end of the fiscal
    year as well as the average number of people on board during the year-are
    taken from a CAO database that contains some data from the NFC database,
    which handles payroll and personnel data for GAO and other agencies.

                              Verification and validation

    CAO staff continuously monitor and review accessions and attritions
    against the contents of their database that has NFC data and they follow
    up on any discrepancies. In addition, on a periodic basis, the IG examines
    our process for calculating the retention rate. During fiscal year 2004,
    the IG reviewed this process and found it to be reasonable. The IG also
    suggested actions to improve the documentation of the process used to
    calculate this measure. We have implemented the IG's suggestions.

                 Data limitations See New hire rate, Data limitations.

    Staff development

    Definition and background One way that we measure how well we are doing
    and identify areas for improvement is through our annual employee feedback
    survey. This Web-based survey, which is conducted by an outside contractor
    to ensure the confidentiality of every respondent, is administered to all
    of our employees once a year. Through the survey, we encourage our staff
    to indicate what they think about GAO's overall operations, work
    environment, and organizational culture and how they rate our
    managers-from the immediate supervisor to the Executive Committee-on key
    aspects of their leadership styles. The survey consists of over 100
    questions.

    This measure is based on staff's favorable responses to four of the six
    questions related to staff development on our annual employee survey. This
    subset of questions was selected on the basis of senior management's
    judgment about the questions' relevance to the measure and specialists'
    knowledge about the development of indexes. Staff were asked to respond to
    these four questions on a five-point scale or choose "no basis to
    judge/not applicable" or "no answer".

    Data sources These data come from our staff's responses to an annual
    Web-based survey. The survey questions we used for this measure ask staff
    how much positive or negative impact (1) internal training, (2)
    computer-based training, (3) external training and conferences, and (4)
    on-the job-training have on their ability to do your job during the last
    12 months. From the staff who expressed an opinion, we calculated the
    percentage of staff selecting the two categories that indicate
    satisfaction with or a favorable response to the question. For this
    measure, the favorable responses were either "very positive impact" or
    "generally positive impact."

                              Verification and validation

    The employee feedback survey gathers staff opinions on a variety of
    topics. The survey is password protected, and only the outside contractor
    has access to passwords. In addition, when the survey instrument was
    developed, extensive focus groups and pretests were undertaken to refine
    the questions and provide definitions as needed. We have historically
    achieved a high response rate (over 80 percent) to the survey, which
    indicates that its results are largely representative of the GAO
    population. In addition, many teams and work units conduct follow-on work
    to gain a better understanding of the information from the survey.

    In addition, on a periodic basis, the IG independently examines our
    process for calculating the percentage of favorable responses for staff
    development. The IG examined this process during fiscal year 2004 and
    found it to be reasonable. The IG also suggested actions to improve the
    documentation of the process used to calculate this measure. We have
    implemented the IG's suggestions.

    Data limitations The information contained in the survey is the
    self-reported opinions of staff expressed under conditions of
    confidentiality. Accordingly, there is no way to further validate those
    expressions of opinion.

    The practical difficulties of conducting any survey may introduce errors,
    commonly referred to as nonsampling errors. These errors could result
    from, for example, respondents misinterpreting a question or data entry
    staff incorrectly entering data into a database used to analyze the survey
    responses. Such errors can introduce unwanted variability into the survey
    results. We took steps in the development of the survey to minimize
    nonsampling errors. Specifically, when we developed the survey instrument
    we held extensive focus groups and pretests to refine the questions and
    define terms used to decrease the chances that respondents would
    misunderstand the questions. We also limited the chances of introducing
    nonsampling errors by creating a Web-based survey for which respondents
    entered their answers directly into an electronic questionnaire. This
    approach eliminated the need to have the data keyed into a database by
    someone other than the respondent, thus removing an additional source of
    error.

    Staff utilization

    Definition and background This measure is based on staff's favorable
    responses to three of the six questions related to staff utilization on
    our annual employee survey. This subset of questions was selected on the
    basis of senior management's judgment about the questions' relevance to
    the measure and specialists' knowledge about the development of indexes.
    Staff were asked to respond to these three questions on a five-point scale
    or choose no basis to judge/not applicable" or "no answer." (For
    background information about our entire employee feedback survey, see
    Staff development.)

    Data sources          These data come from our staff's responses to an
                             annual Web-based survey. The survey questions we
                             used for this measure ask staff how often the
                             following occurred in the last 12 months: (1) my job
                             made good use of my skills; (2) GAO provided me with
                             opportunities to do challenging work; and (3) in
                             general, I was utilized effectively. From the staff
                             who expressed an opinion, we calculated the
                             percentage of staff selecting the two categories
                             that indicate satisfaction with or a favorable
                             response to the question. For this measure, the
                             favorable responses were either "very positive
                             impact or "generally positive impact."
    Verification and      See Staff development, Verification and validation.
    validation
    Data limitations      See Staff development, Data limitations. This
    Leadership Definition measure is based on staff's favorable responses to
    and background        10 of 20 questions related to six areas of
                             leadership on our annual employee survey. This
                             subset of questions was selected on the basis of
                             senior management's judgment about the questions'
                             relevance to the measure and specialists' knowledge
                             about the development of indexes. Specifically, our
                             calculation included responses to 1 of 4 questions
                             related to empowerment, 2 of 4 questions related to
                             trust, all 3 questions related to recognition, 1 of
                             3 questions related to decisiveness, 2 of 3
                             questions related to leading by example, and 1 of 3
                             questions related to work life. Staff were asked to
                             respond to these 10 questions on a five-point scale
                             or choose "no basis to judge/not applicable" or "no
                             answer." (For background information about our
                             entire employee feedback survey, see Staff
                             development, Definition and background.)

    Data sources These data come from our staff's responses to an annual
    Web-based survey. The survey questions we used for this measure ask staff
    about empowerment, trust, recognition, decisiveness, leading by example,
    and work life as they pertain to the respondent's immediate supervisor.
    For example, we looked at the responses related to specific qualities of
    our managers, such as "My immediate supervisor gave me the opportunity to
    do what I do best" and "My immediate supervisor provided meaningful
    incentives for high performance." From the staff who expressed an opinion,
    we calculated the percentage of staff selecting the two categories that
    indicate satisfaction with or a favorable response to the question. For
    this measure, the favorable responses were either "always or almost
    always" or "most of the time."

    Verification and validation See Staff development, Verification and validation.

               Data limitations See Staff development, Data limitations.

                                 Organizational climate

    Definition and This measure is based on staff's favorable responses to 5
    of the 13 questions related to

    background organizational climate on our annual employee survey. This
    subset of questions was selected on the basis of senior management's
    judgment about the questions' relevance to the measure and specialists'
    knowledge about the development of indexes. Staff were asked to respond to
    these 5 questions on a five-point scale or choose "no basis to judge" or
    "no answer." (For background information about our entire employee
    feedback survey, see Staff development.)

    Data sources These data come from our staff's responses to an annual
    Web-based survey. The survey questions we used for this measure ask staff
    to think back over the last 12 months and indicate how strongly they agree
    or disagree with each of the following statements: (1) a spirit of
    cooperation and teamwork exists in my work unit; (2) I am treated fairly
    and with respect in my work unit; (3) my morale is good; (4) sufficient
    effort is made in my work unit to get the opinions and thinking of people
    who work here; and (5) overall, I am satisfied with my job at GAO. From
    the staff who expressed an opinion, we calculated the percentage of staff
    selecting the two categories that indicate satisfaction with or a
    favorable response to the question. For this measure, the favorable
    responses were either "strongly agree" or "generally agree."

    Verification and validation See Staff development, Verification and validation.

               Data limitations See Staff development, Data limitations.

                              Internal operations measures

    Help get job done and Quality of work life

    Definition and background To measure satisfaction with GAO internal
    operations and solicit ideas on ways to improve them, we administer an
    annual web-based survey, known as our customer satisfaction survey, that
    asks employees to rate 31 administrative services, on a scale of 1 (low)
    to 5 (high), for those services that are important to them and that they
    have had experience with or used recently. For each selected service,
    employees are asked to indicate their level of satisfaction from 1 to 5,
    and provide a written reason for their rating and recommendations for
    improvement if desired. Based on the survey results, we calculate
    composite scores for two measures: one measure reflects the satisfaction
    with the 21 services that help employees get their job done and the second
    measure reflects satisfaction with another 10 services that affect quality
    of work life.

    Since 2003, we have collected baseline data from our internal customer
    satisfaction survey, but we will set targets and hold managers accountable
    for these two performance measures for the first time in 2006.

    Data sources To determine how satisfied GAO employees are with internal
    operations, we calculate composite scores for two measures. One measure
    reflects the satisfaction with the 21 services that help employees get
    their job done. These services include Internet and intranet services, IT
    customer support, mail services, and voice communication services. The
    second measure reflects satisfaction with another 10 services that affect
    quality of work life. These services include assistance related to pay and
    benefits, building maintenance and security, and workplace safety and
    health. The composite score represents how employees rated their
    satisfaction with services in each of these areas relative to how they
    rated the importance of those services to them. The importance scores and
    satisfaction levels are both rated on a scale of 1 (low) to 5 (high).

                              Verification and validation

    To ensure the security of the survey data, the survey is housed on a Web
    site maintained by an outside contractor and only the contractor has
    access to the password-protected results. We analyze the results by
    demographic representation (unit, tenure, location, band level, and job
    type) to ensure that its results are largely representative of the GAO
    population. In addition, each GAO unit responsible for internal operations
    conducts follow-on work, including analyzing the written comments to gain
    a better understanding of the information from the survey.

    Data limitations The information contained in the survey is
    self-contained. Therefore, there is no information to validate the views
    expressed by staff. We do not plan any actions to remedy this limitation
    because we feel it would violate the pledge of confidentiality that we
    make to our staff regarding the survey responses.

    Source: GAO.

    Program Evaluation

    To assess our progress toward our first three strategic goals and their
    objectives and to update them for our strategic plan, we evaluate actions
    taken by federal agencies and the Congress in response to our
    recommendations. The results of these evaluations are conveyed in this
    performance and accountability report as financial benefits and other
    benefits that reflect the value of our work.

    In addition, we actively monitor the status of our open
    recommendations-those that remain valid but have not yet been
    implemented-and report our findings annually to the Congress and the
    public ( http://www.gao.gov/openrecs.html ). We use the results of that
    analysis to determine the need for further work in particular areas. For
    example, if an agency has not implemented a recommended action that we
    consider to be worthwhile, we may decide to pursue further action with
    agency officials or congressional committees, or we may decide to
    undertake additional work on the matter.

    We also use our biennial high-risk series to provide a status report on
    those major government operations considered high risk because of their
    vulnerabilities to waste, fraud, abuse, and mismanagement or the need for
    broad-based transformation. The series is a valuable evaluation and
    planning tool because it helps us to identify those areas where our
    continued efforts are needed to maintain the focus on important policy and
    management issues that the nation faces.

    To help ensure the quality of our work supporting strategic goals 1, 2,
    and 3, an external peer review was completed of the processes and
    practices we use to perform many of our engagements, specifically,
    performance audits. The review-conducted by an international team of
    auditors that was led by the Office of the Auditor General of Canada-
    assessed whether our quality assurance policies and procedures were
    suitably designed and operating effectively. The peer review team examined
    the design of our engagement quality control system and the audit
    documentation for a sample of our products. The reviewers found that we
    have designed and implemented an effective system of quality controls for
    our performance audits to ensure reasonable compliance with generally
    accepted government auditing standards. The review team issued its final
    report in April 2005. In addition, a team of external auditors reviewed
    our process and procedures for performing our financial audits of other
    agencies. In the comment letter accompanying the clean opinion report that
    resulted from the financial audit peer review, the auditor included a
    suggestion for clarifying our quality control policies and procedures. We
    have begun to implement this suggestion.

    In addition, a team of independent auditors completed a review of our
    financial management and assurance procedures, which we contract for every
    3 years. The auditors concluded that our system of quality control for the
    accounting and auditing practice was designed to meet applicable quality
    control standards and that we complied with this system for the period
    reviewed. Thus, the auditors were reasonably assured that our financial
    audits conformed with professional standards and gave us a clean opinion.

    To help ensure the quality of our internal processes and systems
    supporting strategic goal 4, we conducted an evaluation that supported our
    strategic objectives under goal 4, in response to a mandate in the House
    report on the fiscal year 2005 legislative branch appropriation (H.R. Rep.
    No. 108-577). This mandate asked that we identify opportunities to reduce
    costs, outsource, and streamline our internal operations. As a result of
    our review this year, we streamlined the travel document audit process of
    our travel function and have selected a service provider to provide
    accounts payable transaction processing services. Both of these actions
    will result in measurable cost savings in the future.

    In addition, an organizational and performance consulting firm examined
    our three-tier pay band system for our analysts and other professional
    staff and compared the compensation we provide these two groups with the
    compensation received by employees performing comparable work in the U.S.
    marketplace. Based on the results of this study, we reassessed the roles
    and responsibilities of our midlevel (Band II) analysts and adjusted
    compensation levels for other professional staff. As a result of this
    study, we are restructuring our analyst and ana-lyst-related specialist
    pay bands to better align compensation and responsibilities and adjust
    compensation levels for other professional staff.

    We also completed a number of other studies and evaluations related to
    goal 4's strategic objectives. These studies resulted in internal products
    or briefings in fiscal year 2005 that are not available publicly.

         + Financial management. We conducted internal reviews of our compliance
           with requirements set forth in 31 U.S.C. 3512 (commonly referred to as
           the Federal Managers' Financial Integrity Act) and OMB Circular A-127,
           Financial Management Systems. The A-127 review covered consistency
           with the Standard General Ledger, adequacy of integration, reporting
           requirements, general ledger maintenance, and travel manager. The
           Financial Integrity Act review covered payroll testing; Financial
           Management System functions, including reporting; capitalized assets;
           budget administration controls; GAO mission and assignment tracking
           system; and internal controls for purchases, payments, and employee
           reimbursements. These reviews uncovered no problems and showed that we
           have the proper controls in place and that they are being followed.
         + Observations on the performance assessment cycle. The Executive
           Committee reviewed our 2004 annual performance management assessment
           data and requested that

    OOI make recommendations for improvements in the areas of staff feedback,
    communication, and training. OOI provided draft recommendations to the
    managing directors, the Employee Advisory Council, Blacks in Government,
    the Hispanic Liaison Group, the Gay and Lesbian Employee Association, the
    Asian-American Liaison Group, and an agency representative for veterans,
    and forwarded their comments to the Executive Committee.

         + Training for field office staff. We studied how best to deliver core
           training courses to our Band I staff in our field offices and
           determined that the most cost-effective way was to use a "hub"
           approach. Specifically, we identified San Francisco, Denver, and
           Atlanta as our three learning hubs where staff from these and nearby
           offices will complete groups of courses in five sets of 1-week
           sessions. The study concluded that among other things, this approach
           would be significantly less costly than bringing all Band I staff to
           GAO headquarters and result in a cost avoidance of $500,000 in travel
           and per diem expenditures.
         + Electronic records management. In fiscal year 2005 we began pilot
           testing an electronic records management system that will store all of
           our workpapers, reports, and testimonies and make them available to
           all of our staff. We plan to conclude this pilot in fiscal year 2006.
         + Customer satisfaction with internal operations and services. We
           conducted our second customer satisfaction survey to measure customer
           satisfaction with internal operational services, determine the impact
           of our improvement efforts launched as a result of our first survey,
           refine our targets, and make necessary adjustments to improve services
           and reduce the gaps between what our customers expect and the services
           available to them. We also used the information from this survey to
           refine our internal operations measures.
         + IT Security Program assessment. We contracted for an audit of our
           security practices and controls based upon the Federal Information
           Security Management Act and National Institute of Standards and
           Technology guidance. This assessment was designed to analyze the
           effectiveness of our IT Security Program and assist management in
           determining how to best utilize resources to protect our information
           and information systems. It is a critical on-site examination and
           analysis of the program to ascertain the present program status, to
           identify deficiencies or excesses, to determine the protection needed,
           and to make recommendations for improvement.

    Part III: Financial Information

    Part III

                                 Financial Information

                                        From the

                                Chief Financial Officer

                               Source:See Image Sources.

    November 15, 2005

    I am pleased to report that in fiscal year 2005 the U.S. Government
    Accountability Office continued to set the standard for excellence in
    government financial management. For the 19th consecutive year,
    independent auditors gave our financial statements an unqualified opinion
    with no material weaknesses and no major compliance problems. The
    financial statements that follow were prepared, audited, and made publicly
    available as an integral part of this performance and accountability
    report 45 days after the end of the fiscal year. In addition, for the
    fourth year in a row, the Association of Government Accountants awarded us
    a certificate of excellence in accountability reporting for our fiscal
    year 2004 annual performance and accountability report.

    During fiscal year 2005 we continued to make strides toward our strategic
    goal of becoming a model federal agency and a world-class professional
    services organization. We are leading the way in performance management
    through new and enhanced policies and processes. With the help of a
    consultant, we analyzed and designed a competitive, fair, and equitable
    compensation program aligned with the labor markets in which GAO competes
    for talent. Further, we invested significantly in restructuring our
    analysts' and specialists' pay bands to better align compensation with
    responsibilities. In June, our administrative staff completed their first
    cycle under a similar competency-based system designed to establish a
    clear link between employee performance and GAO's mission, core values,
    and strategic goals and objectives. This system will enable fair, honest,
    and properly applied measures of performance based on standards that are
    reasonable, appropriate, and clear to employees. Having a consistent
    competency-based performance management system throughout the agency will
    help to ensure that the work of all our staff is aligned with our core
    values and strategic direction.

    This year, we performed an extensive review of agency operations for
    potential cost savings, outsourcing, streamlining, and other opportunities
    to increase operational efficiency and effectiveness, as the result of a
    mandate in House Report 108-577. We had previously decided to cease
    operations of our internal print plant as a result of a reduced demand for
    printed products. The closing of the print plant was completed in October
    2004, and all our printing needs are now met through contracts. Another
    area affected by our streamlining efforts this fiscal year was our
    accounting branch within the Office of Financial Management. Aiming to
    focus our financial management staff on greater value-added input to GAO
    activities, we have begun to shift the efforts of our staff away from
    routine transaction processing and toward a greater role in strategic
    business decision analysis and support. This shift will occur through a
    combination of automation, reallocation of resources within GAO, and
    outsourcing some data entry functions. Last year's implementation of the
    Travel Manager system has enabled us to streamline the auditing of our
    travel vouchers and transfer the remaining efforts from financial
    management to field office staff, more efficiently using administrative
    resources available throughout the agency. We cross-serviced the accounts
    payable function to the Department of the Interior's National Business
    Center. This center performs invoice receipt, processing, and payment
    activities for a number of other agencies; by utilizing the center's
    services, we will realize savings through eliminating data entry positions
    and focusing the efforts of the remaining staff on higher end financial
    analysis and decision support.

    To improve our operations through the use of new technology, we have
    embarked on an extensive effort to replace our current financial
    management system. Although our current system has served us well over the
    years, upgrades are no longer offered and technical support has become
    increasingly difficult to find. We have adopted, and are following, best
    practice processes to select and implement our next generation financial
    management system. This is part of a larger enterprise architecture effort
    that will improve integration of all our systems that interact with our
    financial data. We also improved our internal communications by
    implementing a new system for electronic dissemination and storage of
    agencywide communications, a new administrative services Web site, and a
    searchable administrative services directory.

    Looking forward to fiscal year 2006, we realize that there are many
    challenges ahead. In addition to our work on the new financial system, we
    continue to voluntarily implement the additional requirements of OMB's
    revised Circular A-123, which requires management to specifically
    document, assess, and attest to the effectiveness of internal controls
    over financial reporting beginning in fiscal year 2006. In addition to
    these efforts, we will continue to investigate and implement new
    approaches to improve the efficiency and effectiveness of our preparation
    of quality products for our clients in the Congress and the American
    people.

    Sallyanne Harper Chief Financial Officer

                            Overview of Financial Statements

    Our financial statements and accompanying notes begin on page 107 .4 Our
    financial statements for the fiscal years ended September 30, 2005 and
    2004, were audited by an independent auditor, Cotton & Co., LLP.

    Cotton & Co., LLP, rendered an unqualified opinion on our financial
    statements and an unqualified opinion on the effectiveness of our internal
    controls over financial reporting and compliance with laws and
    regulations. The auditor also reported that we have substantially complied
    with the applicable requirements of the Federal Financial Management
    Improvement Act (Improvement Act) of 1996 and found no reportable
    instances of noncompliance with selected provisions of laws and
    regulations. (For further information about this law, see footnote 1 on
    page 9 .) In the opinion of the independent auditor, the financial
    statements are presented fairly in all material respects and are in
    conformity with generally accepted accounting principles.

    Financial Systems and Internal Controls

    We recognize the importance of strong financial systems and internal
    controls to ensure our accountability, integrity, and reliability. To
    achieve a high level of quality, management maintains a quality control
    program and seeks advice and evaluation from both internal and external
    sources.

    We are committed to fulfilling the internal control objectives of 31
    U.S.C. 3512, commonly referred to as the Federal Managers' Financial
    Integrity Act (Integrity Act). (For further information about this law,
    see footnote 1 on page 9. ) Although we are not subject to the act, we
    comply voluntarily with its requirements. Our internal controls are
    designed to provide reasonable assurance that obligations and costs are in
    compliance with applicable laws and regulations; funds, property, and
    other assets are safeguarded against loss from unauthorized acquisition,
    use, or disposition; and revenues and expenditures applicable to our
    operations are properly recorded and accounted for to enable our agency to
    prepare reliable financial reports and maintain accountability over our
    assets.

    Our management assesses compliance with these controls through a series of
    comprehensive internal reviews, applying the evaluation criteria in OMB's
    guidance for implementing the Integrity Act. The results of these reviews
    are discussed with our Audit Advisory Committee, and action is taken to
    correct deficiencies as they are identified.

    We assessed our internal controls as of September 30, 2005, based on the
    criteria mentioned above for effective internal controls in the federal
    government. On the basis of this assessment, we believe that as of
    September 30, 2005, we have effective internal controls in place.
    Additionally, our independent auditor found that we maintained effective
    internal controls over financial reporting and compliance with laws and
    regulations. Consistent with our evaluation, the auditor found no material
    internal control weaknesses.

    In addition, we are committed to fulfilling the objectives of the
    Improvement Act, which is also covered within 31 U.S.C. 3512. Although we
    are not subject to the act, we voluntarily comply with its requirements.
    We believe that we have implemented and maintained financial systems that
    comply substantially with federal financial management systems
    requirements, applicable federal accounting standards, and the United
    States Government Standard General Ledger at the transaction level as of
    September 30, 2005. We made this assessment based on criteria established
    under the Improvement Act and guidance issued by OMB. Also, our auditor
    reported

    4 Note 14 to the financial statements describes our Davis Bacon Act trust
    function. For more detailed Davis Bacon Act financial information, contact
    our General Counsel.

    that we had substantially complied with the applicable requirements of the
    Improvement Act as of September 30, 2005.

    GAO's IG also conducts audits and investigations that are internally
    focused, functions as an independent fact-gathering adviser to the
    Comptroller General, and reviews all accomplishment reports totaling $500
    million or more. During fiscal year 2005, the IG examined compliance with
    our policy and procedures for conflict-of-interest determinations,
    recruiting and hiring, performance evaluations, career advancement,
    professional development, continuing professional education, GAO's
    information security program and practices, performance-based compensation
    process for analysts and attorneys, and benefits for transit and parking.
    In addition, the IG independently tests our compliance with procedures
    related to our performance data on a rotating basis over a 3-year period;
    these actions are specifically identified in the table that begins on page
    83 . No material weaknesses were reported by the IG. During fiscal year
    2005, we completed actions related to 12 IG recommendations, none of which
    affected the financial statements. There are no unresolved issues.

    Our Audit Advisory Committee assists the Comptroller General in overseeing
    the effectiveness of our financial reporting and audit processes, internal
    controls over financial operations, and processes to ensure compliance
    with laws and regulations relevant to our financial operations.

    As of September 30, 2005, the committee consisted of Sheldon S. Cohen
    (Chairman), Edward J. Mazur, and Charles O. Rossotti, whose relevant
    experience was described on page 49 of this report. The com-mittee's
    report and the report from our independent auditors are included on the
    following pages.

                           Audit Advisory Committee's Report

    The Audit Advisory Committee (the Committee) assists the Comptroller
    General in overseeing the U.S. Government Accountability Office's (GAO)
    financial operations. As part of that responsibility, the Committee meets
    with agency management and its internal and external auditors to review
    and discuss GAO's external financial audit coverage, the effectiveness of
    GAO's internal controls over its financial operations, and its compliance
    with certain laws and regulations that could materially impact GAO's
    financial statements. GAO's external auditors are responsible for
    expressing an opinion on the conformity of GAO's audited financial
    statements with the U.S. generally accepted accounting principles. The
    Committee reviews the findings of the internal and external auditors, and
    GAO's responses to those findings, to ensure that GAO's plan for
    corrective action includes appropriate and timely follow-up measures. In
    addition, the Committee reviews the draft Performance and Accountability
    Report, including its financial statements, and provides comments to
    management who has primary responsibility for the Performance and
    Accountability report. The Committee met two times with respect to its
    responsibilities as described above. During these sessions, the Committee
    met with the internal and external auditors without GAO management being
    present and discussed with the external auditors the matters that are
    required to be discussed by generally accepted auditing standards. Based
    on procedures performed as outlined above, we recommend that GAO's audited
    statements and footnotes be included in the 2005 Performance and
    Accountability Report.

    Sheldon S. Cohen Chairman Audit Advisory Committee

                              Independent Auditor's Report

                          Purpose of Each Financial Statement

         + A balance sheet presents the combined amounts we had available to use
           (assets) versus the amounts we owed (liabilities) and the residual
           amounts after liabilities were subtracted from assets (net position).
         + A statement of net cost presents the annual cost of our operations.
           The gross cost less any offsetting revenue earned from our activities
           is used to arrive at the net cost of work performed under our four
           strategic goals.
         + A statement of changes to net position presents the accounting items
           that caused the net position section of the balance sheet to change
           from the beginning to the end of the fiscal year.
         + A statement of budgetary resources presents how budgetary resources
           were made available to us during the fiscal year and the status of
           those resources at the end of the fiscal year.
         + A statement of financing reconciles the resources available to us with
           the net cost of operating the agency.

    Financial Statements

    U.S. Government Accountability Office Balance Sheets As of September 30,
    2005 and 2004

    (Dollars in thousands)

    2004 Assets

    Intragovernmental Funds with the U.S. Treasury and cash (Note 2 and 3 )

    $67,169 Accounts receivable (Note 2 ) 1,501

    Total Intragovernmental

    68,670

    Property and equipment, net ( Note 4 )

    49,180 Other 382

    $118,232

    Total Assets

    Liabilities

    Intragovernmental ( Note 2 ) Accounts payable

    $7,359 Employee benefits (Note 6 )

    1,928 Workers' compensation ( Note 7 )

    1,961

    Total Intragovernmental

    11,248

    Accounts payable

    12,749 Salaries and benefits ( Note 6 )

    15,035 Accrued annual leave and other ( Note 5 )

    29,958 Workers' compensation ( Note 7 )

    9,819 Capital leases ( Note 9 )

    5,934

    84,743

    Total Liabilities

    Net Position

    Unexpended appropriations

    34,621 Cumulative results of operations

    (1,132)

    33,489

    Total Net Position ( Note 13 )

    $118,232

    Total Liabilities and Net Position

    The accompanying notes are an integral part of these statements.

    Financial Statements

    U.S. Government Accountability Office

    Statements of Net Cost For Fiscal Years Ended September 30, 2005 and 2004

    (Dollars in thousands)

    Net Costs by Goal

    Goal 1: Well-Being/Financial Security of American People

    $194,733 Less: reimbursable services

    (2)

    Net goal costs

    194,731

    Goal 2: Changing Security Threats/Challenges of Global Interdependence

    131,745 Less: reimbursable services

    (85)

    Net goal costs

    131,660

    Goal 3: Transforming the Federal Government's Role

    148,196 Less: reimbursable services (2,435)

    Net goal costs

    145,761

    Goal 4: Maximize the Value of GAO

    23,410 Less: reimbursable services

    -

    Net goal costs

    23,410

    (5,493)

    Less: reimbursable services not attributable to goals

    $490,069

    Net Cost of Operations ( Note 10 )

    The accompanying notes are an integral part of these statements.

    Financial Statements

    U.S. Government Accountability Office

    Statements of Changes in Net Position For Fiscal Years Ended September 30,
    2005 and 2004

    (Dollars in thousands)

    2004

    Cumulative Results of Unexpended OperationsAppropriations

    $2,338 $40,327

    Balances, Beginning of Fiscal Year

    Budgetary Financing Sources

    Current year appropriations

    -457,606 Appropriations transferred in Lapsed budget authority

    -(1,809) Appropriations used 461,503 (461,503)

    Other Financing Sources

    Intragovernmental transfer of property and equipment

    (788) Federal employee retirement benefit costs paid by OPM and imputed to
    GAO ( Note 6 )

    25,884

    Total Financing Sources

    486,599 (5,706)

    (490,069)

    Net Cost of Operations

    Net Change

    (3,470) (5,706)

    ($1,132) $34,621

    Balances, End of Fiscal Year

    The accompanying notes are an integral part of these statements.

    Financial Statements

    U.S. Government Accountability Office

    Statements of Budgetary Resources For Fiscal Years Ended September 30,
    2005 and 2004

    (Dollars in thousands)

    Budgetary Resources ( Note 11 )

    Current year appropriations

    $457,606 Transfers of budget authority

    Unobligated appropriations, beginning of fiscal year

    18,895 Reimbursable services ( Note 10 )

    8,015 Cost-sharing and pass-through CPA contract reimbursements 3,006

    $487,522

    Total Budgetary Resources

    Status of Budgetary Resources

    Obligations incurred

    $471,647 Unobligated appropriations, end of fiscal year

    14,066 Lapsed budget authority 1,809

    $487,522

    Total Status of Budgetary Resources

    Relationship of Obligations to Outlays

    Obligations incurred

    $471,647 Obligated balance, net -beginning of fiscal year

    50,487 Less: Obligated balance, net - end of fiscal year

    (53,103)

    Total Outlays

    469,031 Less: Reimbursable services

    (8,015) Cost-sharing and pass-through CPA contract reimbursements

    (3,006)

    $458,010

    Net Outlays

    Outlays

    Disbursements

    $469,031 Collections

    (11,021)

    $458,010

    Net Outlays

    The accompanying notes are an integral part of these statements.

    Financial Statements

    U.S. Government Accountability Office

    Statements of Financing For Fiscal Years Ended September 30, 2005 and 2004

    (Dollars in thousands)

    Resources Used to Finance Activities

    Budgetary Resources Obligated

    Obligations incurred

    $471,647 Less: Reimbursable services ( Note 10 )

    (8,015) Cost-sharing and pass-through CPA contract reimbursements

    (3,006) Net obligations 460,626

    Other Resources

    Intragovernmental transfer of property and equipment

    (788) Federal employee retirement benefit costs paid by OPM and imputed to
    GAO ( Note 6 )

    25,884

    25,096

    Net other resources used to finance activities

    485,722

    Total resources used to finance activities

    Resources Used to Finance Items Not Part of the Net Cost of Operations

    Net decrease in unliquidated obligations

    Costs capitalized on the balance sheet

    (11,703)

    Total resources used to finance items not part of the net cost of
    operations

    (10,827)

    474,895

    Total resources used to finance the net cost of operations

    Components That Require/Generate Resources in Future Periods

    Increase/(decrease) in Workers' Compensation, Accrued Annual Leave, and
    Other Liabilities ( Note 12 )

    (1,630)

    Costs That Do Not Require Resources

    Depreciation 16,804

    $490,069

    Net Cost of Operations

    The accompanying notes are an integral part of these statements.

                             Notes to Financial Statements

    Note 1. Summary of Significant Accounting Policies

    Reporting Entity

    The accompanying financial statements present the financial position, net
    cost of operations, changes in net position, budgetary resources, and
    financing of the U.S. Government Accountability Office (GAO). GAO, an
    agency in the legislative branch of the federal government, supports the
    Congress in carrying out its constitutional responsibilities. GAO carries
    out its mission primarily by conducting audits, evaluations, analyses,
    research, and investigations and providing the information from that work
    to the Congress and the public in a variety of forms. The financial
    activity presented relates primarily to the execution of GAO's
    congressionally approved budget. GAO's budget consists of an annual
    appropriation covering salaries and expenses and revenue from reimbursable
    audit work and rental income. The revenue from audit services and rental
    income is included on the Statement of Budgetary Resources as
    "reimbursable services." The financial statements, except for federal
    employee benefit costs paid by the Office of Personnel Management (OPM)
    and imputed to GAO, do not include the effects of centrally administered
    assets and liabilities related to the federal government as a whole, such
    as interest on the federal debt, which may in part be attributable to GAO;
    they also do not include activity related to GAO's trust function
    described in Note

    14 .

    Basis of Accounting

    GAO's financial statements have been prepared on the accrual basis of
    accounting in conformity with Generally Accepted Accounting Principles for
    the federal government. Accordingly, revenues are recognized when earned
    and expenses are recognized when incurred, without regard to the receipt
    or payment of cash. These principles differ from budgetary reporting
    principles. The differences relate primarily to the capitalization and
    depreciation of property and equipment, as well as the recognition of
    other long-term assets and liabilities. The statements were also prepared
    in conformity with Office of Management and Budget (OMB) Circular A-136,

    Financial Reporting Requirements.

    Assets

    Intragovernmental assets are those assets that arise from transactions
    with other federal entities. Funds with the U.S. Treasury composed the
    majority of intragovernmental assets on GAO's balance sheet.

    Funds with the U.S. Treasury

    The U.S. Treasury processes GAO's receipts and disbursements. Funds with
    the U.S. Treasury represent appropriated funds Treasury will provide to
    pay liabilities and to finance authorized purchase commitments.

    Accounts Receivable

    GAO's accounts receivable are due principally from federal agencies for
    reimbursable services; therefore, GAO has not established an allowance for
    doubtful accounts.

    Property and Equipment

    The GAO building qualifies as a multi-use heritage asset, is GAO's only
    heritage asset, and is reported with property and equipment on the balance
    sheet. The designation of multi-use heritage asset is a result of both
    being listed in the National Register of Historic Places and being used in
    general government operations. Statement of Federal Financial Accounting
    Standards No. 16 requires accounting for multiuse heritage assets as
    general property, plant, and equipment to be included in the balance sheet
    and depreciated. Maintenance of the building has been kept on a current
    basis. The building is depreciated on a straight-line basis over 25 years.

    Generally, property and equipment individually costing more than $15,000
    are capitalized at cost. Building improvements and leasehold improvements
    are capitalized when the cost is $25,000 or greater. Bulk purchases of
    lesser value items that aggregate more than $150,000 are also capitalized
    at cost. Assets are depreciated on a straight-line basis over the
    estimated useful life of the property as fol-lows: building improvements,
    10 years; computer equipment, software, and capital lease assets, ranging
    from 3 to 6 years; leasehold improvements, 5 years; and other equipment,
    ranging from 5 to 20 years. GAO's property and equipment have no
    restrictions as to use or convertibility except for the restrictions
    related to the GAO building's classification as a multi-use heritage
    asset.

    Liabilities

    Liabilities represent amounts that are likely to be paid by GAO as a
    result of transactions that have already occurred.

    Accounts Payable

    Accounts payable consists of amounts owed to federal agencies and
    commercial vendors for goods, services, and other expenses received but
    not yet paid.

    Federal Employee Benefits

    GAO recognizes its share of the cost of providing future pension benefits
    to eligible employees over the period of time that they render services to
    GAO. The pension expense recognized in the financial statements equals the
    current service cost for GAO's employees for the accounting period less
    the amount contributed by the employees. OPM, the administrator of the
    plan, supplies GAO with factors to apply in the calculation of the service
    cost. These factors are derived through actuarial cost methods and
    assumptions. The excess of the recognized pension expense over the amount
    contributed by GAO and employees represents the amount being financed
    directly through the Civil Service Retirement and Disability Fund
    administered by OPM. This amount is considered imputed financing to GAO
    (see Note 6 ).

    GAO recognizes a current-period expense for the future cost of
    postretirement health benefits and life insurance for its employees while
    they are still working. GAO accounts for and reports this expense in its
    financial statements in a manner similar to that used for pensions, with
    the exception that employees and GAO do not make current contributions to
    fund these future benefits.

    Federal employee benefit costs paid by OPM and imputed to GAO are reported
    as resources on the Statements of Changes in Net Position and Financing
    and are also included as a component of net cost by goal on the Statements
    of Net Cost.

    Annual, Sick, and Other Leave

    Annual leave is recognized as an expense and a liability as it is earned;
    the liability is reduced as leave is taken. The accrued leave liability is
    principally long-term in nature. Sick leave and other types of leave are
    expensed as leave is taken.

    Contingencies

    GAO has certain claims and lawsuits pending against it. Provision is
    included in GAO's financial statements for losses considered probable and
    estimable. Management believes that losses from certain other claims and
    lawsuits are reasonably possible but are not material to the fair
    presentation of GAO's financial statements and provision for these losses
    is not included in the financial statements.

    Note 2. Intragovernmental Assets, Liabilities, and Revenues

    Intragovernmental assets, liabilities, and revenues arise from
    transactions with other federal entities. Details of GAO's
    intragovernmental assets, liabilities, and revenues, by agency, as of
    September 30, 2005 and 2004, are as follows:

    Intragovernmental assets as of September 30, 2005 and 2004:
    Dollars in thousands
                                   Fund balance with
    Fiscal Year 2005 intragovernmental    Treasury Accounts receivable   Total
    assets
    Department of the Treasury             $65,875                   - $65,875
    Cash                                         3                   -       3
    Federal Deposit Insurance Corporation        -                $613     613
    Securities and Exchange Commission           -                 233     233
    Other                                        -                  31      31
    Total intragovernmental assets         $65,878                $877 $66,755

    Dollars in thousands

                                   Fund balance with
    Fiscal Year 2004 intragovernmental    Treasury Accounts receivable   Total
    assets
    Department of the Treasury             $67,163                   - $67,163
    Cash                                         6                   -       6
    Federal Deposit Insurance Corporation        -                $546     546
    Securities and Exchange Commission           -                 850     850
    Other                                        -                 105     105
    Total intragovernmental assets         $67,169              $1,501 $68,670

    Intragovernmental liabilities as of September 30, 2005 and 2004:

    Dollars in thousands Dollars in thousands

    Fiscal Year 2005 intragovernmental  Accounts Employee   Workers'
    liabilities                         payable  benefits compensation   Total
    General Services Administration      $10,363        -            - $10,363
    Department of Labor                      284        -    $2,121      2,405
    Office of Personnel Management           549   $1,701            -   2,250
    Department of the Treasury                 -      561            -     561
    Government Printing Office               227        -            -     227
    Department of Veterans Affairs           139        -            -     139
    Other                                    243        -            -     243
    Total intragovernmental liabilities  $11,805   $2,262    $2,121    $16,188

    Fiscal Year 2004 intragovernmental  Accounts  Employee   Workers'
    liabilities                          payable  benefits compensation  Total
    General Services Administration        $5,559        -            - $5,559
    Office of Personnel Management              -   $1,884            -  1,884
    Department of the Treasury                661       44            -    705
    Government Printing Office                361        -            -    361
    Department of Agriculture                 271        -            -    271
    Department of Labor                       215        -    $1,961     2,176
    Other                                     292        -                 292

            Total intragovernmental liabilities $7,359 $1,928 $1,961 $11,248

    Intragovernmental revenues for fiscal years 2005 and 2004:

    Dollars in thousands

            Intragovernmental revenue                2005               2004
            U.S. Army Corps of Engineers            $4,856            $4,799
            Federal Deposit Insurance
            Corporation                              1,774             1,540
            Securities and Exchange
            Commission                               1,057               849
            State Department                          248                361
            Other                                     420                390
            Total intragovernmental revenue         $8,355            $7,939
            Intergovernmental revenue               $8,355            $7,939
            Nongovernmental revenue                          67           76
            Total revenue                           $8,422            $8,015

    GAO's pricing policy for reimbursable services is to seek reimbursement
    for actual costs incurred, including overhead costs where allowed by law.
    Therefore, revenues, as listed above, and costs that generated those
    revenues are equivalent.

    Note 3. Funds with the U.S. Treasury and Cash

    GAO's funds with the U.S. Treasury consist of only appropriated funds. GAO
    also maintains cash imprest funds for use in daily operations. The status
    of these funds as of September 30, 2005 and 2004 is as follows:

    Dollars in thousands

                                                                2005         2004
    Unobligated balance
    Available                                         $1,296            $3,609
    Unavailable                                       9,781             10,451
    Obligated balances not yet
    disbursed                                         54,798            53,103
    Total funds with U.S. Treasury                    65,875            67,163
    Cash                                                        3            6
    Total funds with U.S. Treasury and cash          $65,878           $67,169

    Note 4. Property and Equipment, Net

    The composition of property and equipment as of September 30, 2005, is as
    follows:

    Dollars in thousands

                                                          Accumulated
    Classes of property and          Acquisition value depreciation Book value
    equipment
    Building                                   $15,664   $10,652        $5,012
    Land                                         1,191            -      1,191
    Building improvements                      112,855    93,638        19,217
    Computer and other equipment and            33,663    22,290        11,373
    software
    Leasehold improvements                       5,956        5,152        804
    Assets under capital lease                  20,223    10,529         9,694
    Total property and equipment              $189,552   $142,261      $47,291

    The composition of property and equipment as of September 30, 2004, is as
    follows:

    Dollars in thousands

                                                          Accumulated
    Classes of property and          Acquisition value depreciation Book value
    equipment
    Building                                   $15,664   $10,025        $5,639
    Land                                         1,191            -      1,191
    Building improvements                      109,389    87,413        21,976
    Computer and other equipment and            34,525    20,533        13,992
    software
    Leasehold improvements                       5,091        4,895        196
    Assets under capital lease                  30,321    24,135         6,186
    Total property and equipment              $196,181   $147,001      $49,180

    The decrease in the acquisition value of assets under capital lease in
    fiscal year 2005 relates to the retirement of fully depreciated assets
    during fiscal year 2005 in conjunction with implementing a new asset
    management system.

    Note 5. Liabilities Not Covered by Budgetary Resources

    The liabilities on GAO's Balance Sheets as of September 30, 2005 and 2004,
    include liabilities not covered by budgetary resources, which are
    liabilities for which congressional action is needed before budgetary
    resources can be provided. Although future appropriations to fund these
    liabilities are likely and anticipated, it is not certain that
    appropriations will be enacted to fund these liabilities. The composition
    of liabilities not covered by budgetary resources as of September 30, 2005
    and 2004, is as follows:

    Dollars in thousands 2005 2004

    Intragovernmental liabilities- Workers' compensation $2,121 $1,961

    Salaries and benefits- Comptrollers General retirement plan 2,836 2,937

    Accrued annual leave and other 30,093 29,958

    Workers' compensation 10,357 9,819

    Capital leases 9,657 5,934

    Total liabilities not covered by budgetary resources $55,064 $50,609

    Note 6. Federal Employee Benefits

    All permanent employees participate in the contributory Civil Service
    Retirement System (CSRS) or the Federal Employees Retirement System
    (FERS). Temporary employees and employees participating in FERS are
    covered under the Federal Insurance Contributions Act (FICA). To the
    extent that employees are covered by FICA, the taxes they pay to the
    program and the benefits they will eventually receive are not recognized
    in GAO's financial statements. GAO makes contributions to CSRS, FERS, and
    FICA and matches certain employee contributions to the thrift savings
    component of FERS. All of these payments are recognized as operating
    expenses.

    In addition, all permanent employees are eligible to participate in the
    contributory Federal Employees Health Benefits Program (FEHBP) and Federal
    Employees' Group Life Insurance Program (FEGLIP) and may continue to
    participate after retirement. GAO makes contributions through OPM to FEHBP
    and FEGLIP for active employees to pay for their current benefits. GAO's
    contributions for active employees are recognized as operating expenses.
    Using the cost factors supplied by OPM, GAO has also recognized an expense
    in its financial statements for the estimated future cost of
    postretirement health benefits and life insurance for its employees. These
    costs are financed by OPM and imputed to GAO.

    Amounts owed to OPM and Treasury as of September 30, 2005 and 2004, are
    $2,262,000 and $1,928,000, respectively, for FEHBP, FEGLIP, FICA, FERS,
    and CSRS contributions and are shown on the Balance Sheet as an employee
    benefits liability.

    Details of the major components of GAO's federal employee benefit costs
    for the years ended September 30, 2005 and 2004, are as follows:

    Dollars in thousands

    Federal Employee Benefits Costs 2005 2004

    Federal employee retirement benefit costs paid by OPM and imputed to GAO:

    Estimated future pension costs (CSRS/FERS) $11,476 $13,341

    Estimated future postretirement health and life insurance (FEHBP/FEGLIP)
    13,833 12,543

    Total $25,309 $25,884

           Pension expenses
           (CSRS/FERS)                            $28,583            $26,896
           Health and life insurance
           expenses (FEHBP/FEGLIP)                $15,130            $14,257
           FICA payment made by GAO               $15,261            $14,545
           Thrift Saving Plan - matching
           contribution by GAO                     $8,439             $7,889

    Comptrollers General and their surviving beneficiaries who qualify and so
    elect to participate are paid retirement benefits by GAO under a separate
    retirement plan. These benefits are paid from current year appropriations.
    Because GAO is responsible for future payments under this plan, the
    estimated present value of accumulated plan benefits of $2,836,000 as of
    September 30, 2005, and $2,937,000 as of September 30, 2004, is included
    as a component of salary and benefit liabilities on GAO's Balance Sheet.

    Note 7. Workers' Compensation

    The Federal Employees' Compensation Act (FECA) provides income and medical
    cost protection to covered federal civilian employees injured on the job,
    employees who have incurred a work-related occupational disease, and
    beneficiaries of employees whose death is attributable to a job-related
    injury or occupational disease. Claims incurred for benefits for GAO
    employees under FECA are administered by the Department of Labor (DOL) and
    are paid, ultimately, by GAO.

    For fiscal year 2004, and again in fiscal year 2005, GAO used estimates
    provided by DOL to report the FECA liability. This practice is consistent
    with the practices of other federal agencies.

    GAO recorded an estimated liability for claims incurred but not reported
    as of September 30, 2005 and 2004, which is expected to be paid in future
    periods. This estimated liability of $10,357,000 and $9,819,000 as of
    September 30, 2005 and 2004, respectively, is reported on GAO's Balance
    Sheets. GAO also recorded a liability for amounts paid to claimants by DOL
    as of September 30, 2005 and 2004, of $2,121,000 and $1,961,000,
    respectively, but not yet reimbursed to DOL by GAO. The amount owed to DOL
    is reported on GAO's Balance Sheets as an intragovernmental liability.

    Note 8. Building Lease Revenue

    The U.S. Army Corps of Engineers (USACE) entered into an agreement with
    GAO to lease the entire third floor of the GAO building. USACE provided
    all funding for the third floor renovation. Occupancy began August 3,
    2000, for an initial period of 3 years, with options to renew on an annual
    basis for 7 additional years. Total rental revenue to GAO includes a base
    rent, which remains constant for the entire 10-year period, plus operating
    expense reimbursements at a fixed amount for the first 3 years, with
    escalation clauses from year 4 through year 10 if the option years are
    exercised. Beginning in fiscal year 2002, USACE leased additional space on
    the sixth floor with occupancy lasting through the original lease term.

    Rent received by GAO for fiscal year 2005 and 2004 was $4,856,000 and
    $4,799,000, respectively. These amounts are included in reimbursable
    services on the Statements of Budgetary Resources and Financing ( see Note
    2 ). Total rental revenue for the remaining period of the 10-year lease is
    as follows:

    Dollars in thousands

                                                          Total rental
                 Fiscal year ending September 30              revenue*
                 2006                                           $4,916
                 2007                                            4,978
                 2008                                            5,045
                 2009                                            5,111
                 2010                                            5,179
                 Total                                         $25,229

    *If option years are exercised.

    Note 9. Leases

    Capital Leases

    GAO has entered into capital leases for office equipment and computer
    equipment under which the ownership of the equipment covered under the
    leases transfers to GAO when the leases expire. When GAO enters into these
    leases, the present value of the future lease payments is capitalized, net
    of imputed interest, and recorded as a liability. The acquisition value
    and accumulated depreciation of GAO's capital leases are shown in Note 4,
    Property and Equipment, Net. As of September 30, 2005 and 2004, the
    capital lease liability was $9,657,000 and $5,934,000, respectively. This
    increase in capital lease liability is a result of replacing substantially
    all the copiers and notebook computers at GAO during 2005 and recording
    new capital lease liabilities.

    These lease agreements are written as contracts with a base year and
    option years. The option years are subject to the availability of funds.
    Early termination of the leases for reasons other than default is subject
    to a negotiation between the parties. These leases are lease-to-ownership
    agreements. GAO's leases are short term in nature and no liability exists
    beyond the years shown in the following table. GAO's estimated future
    minimum lease payments under the terms of the leases are as follows:

                Dollars in thousands
                Fiscal year ending September 30                    Total
                2006                                              $5,019
                2007                                               4,015
                2008                                               1,343
                2009                                                 241
                2010                                                  54
                Total estimated future lease payments             10,672
                Less: imputed interest                           (1,015)
                Net capital lease liability                       $9,657

    Operating Leases

    GAO leases office space, predominately for field offices, from GSA and has
    entered into various other operating leases for office communication and
    computer equipment. Lease costs for office space and equipment for fiscal
    year 2005 and fiscal year 2004 amounted to approximately $10,752,000 and
    $7,991,000, respectively. Leases for equipment under operating leases are
    generally less than 1 year, therefore there are no associated future
    minimum lease payments. Estimated future minimum lease payments for field
    office space under the terms of the leases are as follows:

    Dollars in thousands

                Fiscal year ending September 30                    Total
                2006                                              $7,559
                2007                                               4,293
                2008                                               3,435
                2009                                               2,859
                2010                                               2,376
                2011 and thereafter                                3,845
                Total estimated future lease payments            $24,367

    Leased property and equipment must be capitalized if certain criteria are
    met (see Capital Leases description). Because property and equipment
    covered under GAO's operating leases do not satisfy these criteria, GAO's
    operating leases are not reflected on the Balance Sheets. However, annual
    lease costs under the operating leases are included as components of net
    cost by goal in the Statements of Net Cost.

    Note 10. Net Cost of Operations

    Expenses for salaries and related benefits for fiscal year 2005 and fiscal
    year 2004 amounted to $395,783,000 and $389,104,000, respectively, which
    were about 78 percent of GAO's annual net cost of operations in fiscal
    year 2005 and 79 percent in fiscal year 2004. Included in the net cost of
    operations are federal employee benefit costs paid by OPM and imputed to
    GAO of $25,309,000 in fiscal year 2005 and $25,884,000 in fiscal year
    2004.

    Revenues from reimbursable services are shown as an offset against the
    full cost of the goal to arrive at its net cost. Earned revenues that are
    insignificant or cannot be associated with a major goal are shown in
    total, the largest component of which is rental revenue from the lease of
    space in the GAO building. Revenues from reimbursable services for fiscal
    year 2005 and fiscal year 2004 amounted to $8,422,000 and $8,015,000,
    respectively. Further details of the intragovernmental components are
    provided in Note 2 .

    The net cost of operations represents GAO's operating costs that must be
    funded by financing sources other than revenues earned from reimbursable
    services. These financing sources are presented in the Statements of
    Changes in Net Position.

    Note 11. Budgetary Resources

    Budgetary resources made available to GAO include current appropriations,
    spending authority from budget transfers, unobligated appropriations, and
    reimbursements arising from both revenues earned by GAO from providing
    goods and services to other federal entities for a price (reimbursable
    services) and cost-sharing and pass-through contract arrangements with
    other federal entities.

    For fiscal year 2004 differences exist between the total budgetary
    resources on the Statements of Budgetary Resources and the budget
    authority amount in the fiscal year 2006 President's Budget. These
    differences are due to (1) unobligated funds available in expired accounts
    not included in the President's Budget submission and (2) reimbursements
    from cost-sharing and pass-through contract arrangements that could not
    have been anticipated at the time the President's Budget was developed. In
    addi-tion, as the fiscal year 2007 President's Budget is not yet
    available, comparison between the Statements of Budget Resources and the
    actual fiscal year 2005 data in the President's Budget cannot be
    performed.

    For fiscal year 2005, budget transfers consisted of budget authority
    transferred from the Department of Homeland Security for a review of the
    Transportation Security Administration's calendar year 2000 cost for
    screening passengers and property. Reimbursements from cost-sharing and
    pass-through contract arrangements consisted primarily of collections from
    other federal entities (1) for the support of the Federal Accounting
    Standards Advisory Board and (2) to utilize GAO contracts to obtain
    services. The costs and reimbursements for these activities are not
    included in the Statements of Net Cost.

    Note 12. Components That Require/Generate Resources in Future Periods

    Increases/decreases in workers' compensation, accrued annual leave, and
    other liabilities are reported in the Statements of Financing. These
    changes represent the increases/decreases in liabilities not covered by
    budgetary resources, as reported in Note 5 .

    Dollars in thousands

           Fiscal year ending September 30                    2005       2004
           Liabilities not covered by budgetary
           resources                                    $55,064    $50,609
           Liabilities that are not components
           of net cost:
           Capital leases                               (9,657)       (5,934)
           Current year liabilities not covered
           by budgetary resources that are
           components of net cost                           45,407     44,675
           Prior year liabilities that are not
           components of current year net
           costs                                        (44,675)   (46,305)
           Increase/(decrease) in workers'
           compensation, accrued annual
           leave, and other liabilities, as
           reported on the Statements of Financing            $732 $(1,630)

    Note 13. Net Position

    Net position on the balance sheets consist of unexpended appropriations
    and cumulative results of operations. Unexpended appropriations are the
    sum of the total unobligated appropriations and undelivered goods and
    services. Cumulative results of operations represent the excess of
    financing sources over expenses since inception. Details of the components
    of GAO's cumulative results of operations for the fiscal years ended
    September 30, 2005 and 2004, are as follows:

    Dollars in thousands

                                                           2005       2004
              Investment in property and
              equipment, net                            $47,291    $49,180
              Other - supplies inventory                    217        297
              Liabilities not covered by
              budgetary resources                   (55,064)      (50,609)
              Cumulative results of operations      $(7,556)      $(1,132)

    Liabilities not covered by budgetary resources are liabilities for which
    congressional action is needed before budgetary resources can be provided.
    See Note 5 for breakdown.

    Note 14. Davis-Bacon Act Trust Function

    GAO is responsible for administering for the federal government the trust
    function of the Davis-Bacon Act receipts and payments and publishes
    separate, audited financial statements for this fund. GAO maintains this
    fund to pay claims relating to violations of the Davis-Bacon Act and
    Contract Work Hours and Safety Standards Act. Under these acts, DOL
    investigates violation allegations to determine if federal contractors owe
    additional wages to covered employees. If DOL concludes that a violation
    has occurred, GAO collects the amount owed from the contracting federal
    agency, deposits the funds into an account with the U.S. Treasury, and
    remits payment to the employee. GAO is accountable to the Congress and to
    the public for the proper administration of the assets held in the trust.
    Trust assets under GAO's administration totaled approximately $4,666,000
    as of September 30, 2005. These assets are not the assets of GAO nor the
    federal government and are held for distribution to appropriate claimants.
    During fiscal year 2005, receipts and disbursements in the trust amounted
    to $526,000 and $612,000, respectively. Because the trust assets and
    related liabilities are not assets and liabilities of GAO, they are not
    included in the accompanying financial statements.

    Part IV

    Appendixes Part IV: Appendixes

                       1. Accomplishments and Other Contributions

    In pursuing our strategic goals during fiscal year 2005, we recorded
    hundreds of accomplishments and made numerous other contributions. This
    appendix provides details on the most significant of these. In reporting
    accomplishments (designated by an A in the item number below) and other
    contributions (designated by a C in the item number below), we are holding
    ourselves accountable for the resources we received to implement our
    strategic plan. The accomplishments document financial benefits or other
    benefits achieved through action on our findings or recommendations.

    Typically, the accomplishments describe work that we completed in prior
    fiscal years because it takes time to implement recommendations, realize
    benefits, and record them. The other contributions, which often refer to
    work completed in fiscal year 2005, describe instances in which we
    provided information or recommendations that aided congressional decision
    making or informed the public debate to a significant degree. At the end
    of each accomplishment and contribution summary, we list the reference
    number for products associated with the work discussed. In the online
    version of this document, readers can link directly to these products if
    they want additional information.

    Strategic 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

    Source:See Image Sources.

    The health needs of an aging and diverse population

    1.1.A. Improving the Call Transfer Process Used by 1-800-MEDICARE: In
    2004, we found that the 24-hour 1-800-MEDICARE help line, operated by the
    Department of Health and Human Ser-vices's (HHS) Centers for Medicare &
    Medicaid Services (CMS), did not answer 10 percent of the calls we placed
    to test its accuracy, often because it automatically transferred some
    calls to claims administration contractors that were not open for business
    at the time of the calls. This call transfer process prohibited callers
    from accessing information during nonbusiness hours, even though
    1-800-MEDICARE operates 24-hours a day. As a result, we recommended that
    CMS revise the routing procedures of 1-800-MEDICARE to ensure that calls
    are not transferred or referred to claims administration contractors' help
    lines during nonbusiness hours. In response, CMS finished converting its
    call routing procedures. As a result, calls placed after normal business
    hours will be routed to the main 1-800-MEDICARE line, which operates
    24-hours a day. (GAO-05-130 )

    1.2.A. Reforming Medicare Payments for Inhalation Therapy Drugs: We
    provided information on the costs to suppliers of dispensing inhalation
    therapy drugs to Medicare beneficiaries. The Medicare Prescription Drug,
    Improvement, and Modernization Act of 2003 revised the payment formula for
    most outpatient drugs, including inhalation therapy drugs, covered under
    Medicare part B. Under the revised formula, effective 2005, Medi-care's
    payment was intended to be closer to acquisition costs. We found that
    under the previous system, the higher dispensing costs incurred by some
    suppliers were covered by the excess payments for these drugs, but that
    under the revised payment system, the necessary costs of dispensing
    inhalation therapy drugs may not be covered. As we recommended, CMS-the
    agency that administers Medicare-evaluated the costs of dispensing
    inhalation therapy drugs and used our analysis to help set an appropriate
    dispensing fee. (GAO-05-72 )

    1.3.A. Requiring Out-of-Cycle Inspections for Medicare Suppliers: Although
    durable medical equipment suppliers are inspected when applying for
    Medicare billing privileges and reinspected every 3 years, this
    predictable timing has allowed suppliers intent on committing fraud to
    create the illusion of legitimacy long enough to enter the program. The
    Medicare contractor responsible for screening suppliers conducts
    out-of-cycle inspections but is not required to do so by its contract and
    can curtail this activity at any time. Because conducting out-of-cycle
    inspections has been valuable, we recommended routinely conducting them to
    better identify potentially fraudulent suppliers. During the course of our
    review of the supplier screening process, we held discussions on this
    topic with CMS staff who were writing the statement of work for a new
    contract that is scheduled to be awarded in December 2005. As a result,
    CMS included language in the new contract that will require the contractor
    to conduct random, out-of-cycle site visits as resources permit. (
    GAO-05-656 )

    1.4.A. Identifying Chain Suppliers for Medicare Site Inspections: Site
    inspections of durable medical equipment suppliers help verify their
    compliance with Medicare's standards and help safeguard the program
    against fraud. CMS allows its enrollment contractor to exempt suppliers in
    chains with 25 or more locations from the inspections. However, the
    contract did not clearly state that all 25 locations in the chain have to
    have active billing numbers. As a result, we found that the contractor had
    been exempting some suppliers in chains that currently had fewer than 25
    locations with active billing numbers, including some with locations that
    had billing privileges revoked due to noncompliance with Medicare's
    standards. After we informed CMS, the agency revised its contract to
    clarify that a chain consisted of 25 or more active supplier locations. (
    GAO-05-656 )

    1.5.A. Classifying Inpatient Rehabilitation Facilities: In an April 2005
    report, we recommended that CMS refine the rule used by Medicare to
    classify inpatient rehabilitation facilities. Medicare classifies these
    facilities using the "75 percent rule." If a facility can show that during
    1 year, at least 75 percent of its patients required intensive
    rehabilitation for 1 of 13 specified conditions, it may be classified as
    an inpatient rehabilitation facility and paid at a higher rate than is
    paid for less intensive rehabilitation in other settings, such as an acute
    care hospital or a skilled nursing facility. Enforcement of the rule was
    suspended in 2002, resumed in July 2004, and suspended again in January
    2005 pending issuance of our report on the rule. We found that there are
    patients in these facilities who may not need the intense level of
    services provided in them and that CMS has not been routinely reviewing
    admissions to these facilities to determine if they were medically
    justified. We recommended that CMS conduct reviews for medical necessity
    and produce more information about the effectiveness of inpatient
    rehabilitation to support future efforts to refine the rule over time to
    increase its clarity about which types of patients are most appropriate
    for inpatient rehabilitation facilities. CMS generally agreed with our
    recommendations and issued a regulation on June 24, 2005, to resume
    enforcement of the procedures for classifying these facilities, stating
    that facilities that do not comply with the requirements of the rule would
    have their classification terminated. ( GAO-05-366 and GAO-05-825T )

    1.6.A. Improving Medicare Communications with Providers: To improve
    communications with physicians, we recommended that the administrator of
    CMS adopt a standard approach that would promote the quality, consistency,
    and timeliness of communications by publishing a national bulletin for
    physicians. We found that bulletins issued by Medicare contractors were
    poorly organized and contained dense legal language. We also noted that
    some failed to include information or provided little advance notice about
    upcoming program changes. CMS implemented our recommendation by developing
    a series of educational articles, "Medlearn Matters," which are available
    at CMS's Web site and replace the individual articles previously developed
    by each Medicare contractor. (GAO-02-249 )

    1.7.A. Improving Medicare Call Center Responses to Policy-Oriented
    Inquiries from Providers: To improve the accuracy and completeness of
    responses to policy-oriented inquiries from providers, we recommended that
    the Administrator of CMS create a process to routinely screen and triage
    calls by routing complex policy-oriented questions to staff with the
    expertise to adequately address them. We found that the responses of call
    center customer service representatives to our policy-oriented questions
    were largely incorrect. Among other things, we noted that these call
    centers did not have the capability of identifying the subject of
    providers' questions so their calls could be routed to the most
    appropriate customer service representatives. We recommended that the
    Administrator of CMS take steps to ensure that all customer service
    representatives have the necessary tools to respond to such calls by
    developing clear and easily accessible policy-oriented materials that are
    electronically searchable. CMS instructed most of its contractors to
    develop an inquiry triage process for telephone inquiries by January 2005.
    Call centers must have at least two levels of customer service
    representatives dedicated to responding to provider inquiries. Questions
    requiring in-depth research must be referred to a new group of staff,
    known as Provider Relations Research Specialists, who are trained to do
    the necessary research to provide complete and accurate responses to the
    inquiries. (GAO-04-669 )

    1.8.A. Improving Home Health Performance Standards and Oversight: In 2002,
    we reported that CMS's oversight of state home health agency survey
    activities was limited and needed to be improved. CMS responded by
    developing annual performance standards as a way to routinely monitor
    important state home health survey activities. For example, states are now
    evaluated to ensure that all home health agencies are surveyed at least
    once every 3 years, as required by statute. States are now evaluated on
    whether deficiencies found dur-ing home health surveys are appropriately
    and sufficiently supported and documented. Finally, states are now
    evaluated on whether home health complaints and incidents are
    appropriately prioritized based on the seriousness of the allegations
    received and whether those alleging immediate jeopardy to a patient are
    investigated within 2 working days of receipt by the state agency. These
    new standards allow CMS to monitor state performance over time and to work
    with state agencies to improve the quality of home health survey
    activities and ultimately the care provided to Medicare home health
    beneficiaries. In the same report, we stated that CMS had not applied the
    oversight tools that it uses to monitor state nursing home surveys to the
    survey activities of home health agencies. As a result, CMS officials
    generally were unaware of the variability in the extent to which states
    cited home health deficiencies and were unable to offer insights as to the
    underlying causes. Since our report, CMS has created a Web-based data
    reporting system that accumulates and stores data related to a variety of
    home health agency survey activities, including overdue surveys and home
    health agencies with identified serious deficiencies. Thus, CMS and states
    are now able to readily access important data related to home health
    survey activities to ensure that problems are addressed in a timely manner
    and Medicare beneficiaries receive the best quality care available. (
    GAO-02-382 )

    1.9.A. Paying Properly for Power Wheelchairs for Medicare Beneficiaries:
    In 2004, we examined the steps taken by CMS to respond to improper
    payments by the Medicare program for power wheelchairs. Medicare spending
    for power wheelchairs-one of the Medicare program's most expensive items
    of equipment-had increased more than fourfold from 1999 through 2003. We
    reported that the information provided to Medicare contractors that
    process wheelchair claims did not provide sufficient detail for
    determining if power wheelchair claims should be paid, and we recommended
    that documentation supplied to these contractors be revised. In August
    2005, CMS established a new requirement that the relevant clinical
    documentation from a patient's medical record be maintained by the
    supplier along with a written prescription for the power wheelchair and be
    submitted to the contractor upon request. ( GAO-04-716T and GAO-05-43 )

    1.10.A. Leveraging Experts' Knowledge in Implementing Medicare Competitive
    Bidding:

    Each year, Medicare pays billions of dollars for beneficiaries' medical
    equipment and supplies. We have repeatedly reported that Medicare payments
    for some of these items are out of line with actual market prices. In
    2007, CMS is slated to begin a large-scale effort to conduct Medicare
    competitive bidding for medical equipment and supplies. In September 2004,
    we recommended that as it implements the competitive bidding program, the
    agency seek input from individuals with technical knowledge about the
    items and services suppliers provide to beneficiaries. Subsequently, CMS
    appointed an advisory and oversight committee to advise the agency about
    the implementation of competitive bidding and about standards for
    suppliers that want to participate in the Medicare program. ( GAO-04-765 )

    1.11.A. Revising the Health Insurance Portability and Accountability Act's
    (HIPAA) Model Certificate of Creditable Group Health Plan Coverage: HIPAA
    sets minimum federal standards for certain aspects of private health
    insurance to improve access to health insurance for people obtaining
    coverage through employment as well as for those purchasing it as
    individuals. For example, HIPAA limits the time that preexisting
    conditions may be excluded from coverage for many people changing jobs and
    guarantees access to coverage for certain individuals losing group
    coverage. HIPAA also requires that each person losing health coverage
    receive a certificate that documents the length of prior coverage. We
    determined, however, that the model certificate the federal agencies had
    developed as part of the 1997 interim rules had limitations as an
    educational tool. For example, it neither explicitly informed consumers
    that they had a group-to-individual portability right nor highlighted any
    of the restrictions on this right. To more explicitly inform consumers of
    their HIPAA rights, we recommended that HHS's Health Care Financing
    Administration-now known as CMS-and the Department of Labor (DOL) revise
    the model certificate to highlight key provisions and restrictions of the
    law and to inform consumers about appropriate contacts for additional
    information. As a result of our work, in 2004 HHS, DOL, and the Department
    of the Treasury (Treasury) issued final regulations for health coverage
    portability for group health plans and group health insurance issuers. The
    final regulations cite our recommendation and include a modified
    certificate of creditable coverage, which includes an explicit description
    of HIPAA's portability rights and lists telephone numbers that can be
    called for additional information. (GAO/HEHS-99-100 )

    1.12.A. Making Medicare's Coverage Process More Understandable: Each year,
    CMS makes important decisions on whether new technology will be covered
    for Medicare's beneficiaries. However, the rationale for CMS's decisions
    has sometimes been uncertain because of the lack of clear coverage
    criteria. In 2003, we recommended that CMS develop written criteria for
    assessing whether a medical service or item is reasonable and necessary
    and could be covered by Medicare. In 2004, CMS published information on
    how it intends to develop public guidance discussing factors to be
    considered in making coverage decisions. In addition, CMS issued draft
    guidance in 2005 on how it would make coverage decisions for certain items
    or services for which sufficient data are not available. CMS also stated
    that it will seek public input on possible topics for new guidance
    documents. (GAO-03-175 )

    1.13.A. Determining Higher Payments' Effects on Nurse Staffing: The
    Congress enacted a temporary increase in the nursing component of the
    Medicare payment rate for skilled nursing facilities, effective April 1,
    2001, and directed us to assess the impact of the increased payments on
    nursing staff in skilled nursing facilities. We found that after the
    nursing-related payment rate increase took effect, nurse staffing per
    patient day changed little. The payment increase expired September 30,
    2002, and the Congress did not reinstate it during fiscal year 2005,
    resulting in a cost avoidance of about $2 billion. ( GAO-03-176 )

    1.14.A. Assessing Medicare's Skilled Nursing Facility Payment Rate: A 1999
    law authorized CMS to raise all Medicare payment rates for skilled nursing
    facilities by 4 percent for 2 years. Prior to the September 30, 2002,
    expiration of this 4 percent add-on, provider representatives argued that
    the add-on should be restored, citing payment shortfalls from other
    payers. In a 2002 report, however, we found that under the prospective
    payment system, most freestanding skilled nursing facilities' Medicare
    payments substantially exceeded the costs of caring for Medicare patients,
    contributing to facilities' overall positive financial condition.
    Specifically, the median Medicare margin was about 8 percent in 1999 and
    almost 19 percent in 2000. Consequently, the Congress declined to restore
    the 4 percent add-on from 2002 through 2005. The Medicare Payment Advisory
    Commission also contributed to this congressional decision by reporting
    similar results about the facilities' Medicare payments. (GAO-03-183 )

    1.15.A. Strengthening Guidelines for Nursing Home Fire Investigations: In
    2004, we reported on two recent nursing home fires in which 31 residents
    died. Our review revealed weaknesses in federal fire safety standards for
    nursing homes and in federal and state oversight. To improve federal
    oversight of state fire safety activities and better ensure the adequacy
    of federal fire safety standards, we recommended that the Administrator of
    CMS ensure thorough investigations are conducted following multiple-death
    nursing home fires so that fire safety standards can be reevaluated and
    modified where appropriate. In response to our study, CMS developed and
    issued a standardized procedure to ensure that both state survey agencies
    and its own staff take appropriate action to investigate health facility
    fires that result in serious injury or death. ( GAO-04-660 )

    1.16.A. Developing a Strategy to Ensure an Appropriate Workforce: In June
    2004, we recommended that the Substance Abuse and Mental Health Services
    Administration develop a detailed succession strategy to ensure that it
    has the appropriate workforce to carry out its mission. We reported that
    it had not developed a detailed succession strategy to prepare for the
    loss of essential expertise and to ensure that the agency continues to
    have the ability to fill key positions. In February 2005, the Substance
    Abuse and Mental Health Services Administration developed a succession
    planning document that includes strategies related to recruitment, the
    selection process, training, and leadership development. The document also
    includes strategies for anticipating the loss of or additional coverage
    needed for critical positions and job functions. (GAO-04-683 ) 1.17.A.
    Monitoring States' Inventories of Childhood Vaccines: The Centers for
    Disease Control and Prevention has implemented our recommendation to
    develop a strategic plan that includes steps to monitor childhood vaccine
    supplies in state depots. The agency's strategic plan for the expansion of
    the pediatric vaccine stockpiles indicates that the agency will "Monitor
    state inventory levels on a routine basis." Specifically, its National
    Immunization Program requires states and other grantees to report, via
    automated software or monthly reports, the total number of doses of 18
    childhood vaccines that are in stock at the state's central and secondary
    depots. ( GAO-02-987 )

    1.18.A. Counting Clinical Research Expenditures at the National Institutes
    of Health (NIH): In a 2002 report describing NIH's implementation of the
    Clinical Research Enhancement Act of 2000, we stated that NIH's reports of
    clinical research expenditures did not include precise figures because the
    process of counting clinical research dollars varied widely across NIH's
    institutes and centers. We recommended that NIH strengthen its tracking
    and reporting of intramural and extramural expenditures for clinical
    research by developing and implementing a consistent, accurate, and
    practical way for all institutes and centers to count intramural and
    extramural clinical research expenditures. NIH implemented this
    methodology in order to respond to our recommendation, to make the
    reporting of clinical research transparent and rational, and to provide
    accurate and consistent data. (GAO-02-965 )

    1.19.A. Estimating Tobacco Retailer Violation Rates: To help ensure the
    quality of states' estimates of tobacco retailer violation rates, we
    recommended that the Secretary of HHS direct the Administrator of the
    Substance Abuse and Mental Health Services Administration to help states
    improve the validity of their samples by working more closely with them;
    revising the inspection protocol guidance to better reflect research
    results, particularly regarding the ages of minor inspectors, and working
    with states to develop a more standardized inspection protocol; and
    ensuring that all states' retailer violation rates exclude invalid
    inspections, particularly those in which the ages of minors and outcomes
    of inspections are unknown. The agency reported that in addition to other
    activities, it (1) is requiring states that selected their samples from a
    list of outlets to annually report and justify the accuracy and
    completeness of their tobacco outlet lists, making site visits to help
    states assess the accuracy and completeness of tobacco outlet lists,
    offering technical assistance to states on improving the quality and
    validity of samples drawn from outlet lists, and conducting reviews of
    states' sampling frames;

    (2) will work with states to discontinue the use of 14-year-olds as
    inspectors by 2007 and will continue to work with states to improve
    standardization of inspection protocols and carefully monitor changes in
    inspector characteristics over time; and (3) has instituted review
    protocols that require states to exclude inspections that do not include
    the age or sex of minor inspectors and the outcome of inspections. The
    agency also developed a computer system to assist states in estimating
    violation rates by using software that only operates if complete data sets
    that include the age and gender of each inspector and the outcome of the
    inspection are entered in the system, and it reported that in fiscal year
    2005, the majority of states used the system to report their survey data
    and inspection results. (GAO-02-74 )

    1.20.A. Improving Processing of Premium Changes from Health Plans: The
    Trade Adjustment Assistance Reform Act of 2002 established the health
    coverage tax credit (HCTC), which pays 65 percent of the premium cost for
    qualified individuals. For the advance credit, the HCTC program remits its
    share of the premium payment directly to the health plan. We found that
    enrollees sometimes face delays in having the correct amount of their
    advance HCTC payment adjusted and paid promptly to their health plans if
    they fail to notify the HCTC program office when their health plans change
    their premiums. This problem was attributed largely to the time it takes
    for HCTC enrollees to notify the HCTC program of their new premiums and
    for the HCTC program to adjust the allowable premium amount. In September
    2004, we recommended that the Commissioner of Internal Revenue encourage
    participating health plans to provide notification of changes in premiums
    directly to the HCTC program office in order to simplify payment
    processing and avoid disruptions resulting from premium changes. In its
    comments to our draft report, the Internal Revenue Service (IRS) stated
    that it agreed that accepting notification of premium changes from
    participating health plans would be an administrative improvement, and it
    would develop an action plan to address the recommenda-tion. In December
    2004, IRS's proposal to standardize the HCTC program's ability to process
    bulk premium changes made upon a health plan's request was approved by the
    HCTC executive change control board. The change was imple mented in the
    spring of 2005. (GAO-04-1029 )

    1.21.A. Improving Monitoring and Tracking of Physical Exam Programs:
    Servicemembers who leave the military and file disability claims with the
    Department of Veterans Affairs (VA) may be subject to potentially
    duplicative physical exams in order to meet requirements of both the
    Department of Defense (DOD) and VA. To streamline the process for these
    servicemembers, DOD and VA have attempted to coordinate their physical
    exam requirements by developing a single separation exam program. We
    recommended that DOD and VA develop systems to monitor and track the
    progress of implementing the single separation exam program. VA hired an
    official in November 2004 to monitor the single separation exam program at
    certain sites where VA and DOD have memorandums of understanding in place.
    This official monitors and tracks the progress of the single separation
    exam program in several ways. First, each VA regional office must provide
    a monthly report on the sites' activities. Included in these reports is
    information on the number of single separation exams that have been
    conducted. In addition, this official has conducted on-site evaluations at
    five locations and is planning to make seven additional site visits in the
    near future. The official will use information obtained during these site
    visits to develop best practices for other single separation exam programs
    and plans to continue to conduct site visits in the future. DOD uses VA's
    tools and its database to monitor the progress of single separation
    examination sites. Each month, DOD reviews VA's database to determine
    where a program is in place. (GAO-05-64 )

    1.22.A. Supporting DOD's Implementation of a Uniform Pharmacy and Tiered
    Co-payment System: In a 2001 report, we recommended that the Secretary of
    Defense complete the development and implementation of a formulary of
    brand-name drugs applicable to defense pharmacy programs, including the
    use of tiered retail and mail order pharmacy co-payments. A formulary is a
    list of drugs that health care organizations encourage or require their
    providers to use when they write prescriptions for patients, thus allowing
    the organizations to secure better prices for those drugs. DOD concurred
    with the recommendation and published a notice in the Federal Register
    that it was amending regulations to implement a uniform formulary drug
    list for DOD's Military Health Care System. The amendment states that the
    pharmacy benefits program, which includes the uniform formulary and an
    associated tiered co-payment structure, is applicable to all of the
    uniformed services. Under a tiered system, the co-payment borne by
    beneficiaries is generally lower for drugs on the uniform list of
    formulary drugs and higher for drugs not on the list. (GAO-01-588 )

    1.23A. Improving VA and DOD Capabilities to Electronically Order
    Medications and Perform Drug Interaction Checks: In 2002, we recommended
    that VA and DOD require providers to use computerized order entry of
    medications for shared patients where it is available. DOD agreed with
    this recommendation, and a pilot project is ongoing between DOD and VA in
    Hawaii in which electronic medication orders will be placed in the DOD
    system and electronically pushed to the VA system. The first phase is
    operational and allows DOD's Composite Health Care System providers to
    order prescriptions for dispensing at the VA Medical Center Honolulu
    pharmacy. Development of the second phase began in September 2004 and will
    allow VA Medical Center Honolulu providers to order prescriptions for
    dispensing at DOD's Tripler Army Medical Center. The interface system was
    developed on the legacy Composite Health Care System. The pilot system
    will be modified to work on Composite Health Care System II, which began
    worldwide deployment in January 2004. In the same report, we recommended
    that the agencies develop the capability to perform a comprehensive drug
    interaction check that uses medication information from all VA and DOD
    facilities and mail order operations and DOD's network pharmacies.
    According to DOD, the departments are exploring alternatives to best meet
    the legislative requirements for achieving a "real-time interface, data
    exchange, and checking of prescription drug data of outpatients and using
    national standards for the exchange of outpatient medication information."
    In June 2005, DOD reported that DOD and VA have developed a pharmacy
    interface as part of a multiphase project to support the agencies' goal of
    complete health care data systems interoperability. The agencies'
    bidirectional pharmacy, which enables the electronic exchange of
    prescription information between two pharmacies-Tripler Army Medical
    Center and the Veteran Affairs Pacific Island Health Care
    System-represents a significant achievement in advancing interoperability
    between VA and DOD health care information systems. A phased-in deployment
    of the new system is scheduled from October through December 2005. (
    GAO-02-1017 )

    1.24.A. Purchasing Surgical Supplies More Economically: In June 2002
    testimony, we reported that joint contracting for surgical and medical
    supplies could yield meaningful savings for VA and DOD. Specifically, we
    pointed out that our analysis of about 100 identical medical and surgical
    items that VA and DOD contract for separately indicated that joint
    purchasing would yield savings. We also noted that the future of joint
    procurement initiatives depends on each department's commitment to joint
    procurement. In July 2005, VA and DOD demonstrated a commitment to joint
    procurement by announcing their decision to standardize the purchase of
    nearly 200 general surgical instruments throughout the military and VA
    health care sys-tems-an action that should save about $180,000 annually. (
    GAO-02-872T )

    1.25.A. Improving VA's Oversight Policy for Community Nursing Homes: In
    July 2001, we reported on weaknesses in VA's oversight of community
    nursing homes under contract to VA. Among other issues, we reported that
    VA lacked a comprehensive policy for overseeing community nursing homes.
    We recommended that VA establish a policy for overseeing all community
    nursing homes that may rely on annual state inspections and comparative
    reviews to assess the sufficiency of state survey data. In response to our
    recommendation, VA has established such a policy, as outlined in its
    community nursing home oversight procedures handbook, dated June 4, 2004.
    This handbook provides a protocol for conducting community nursing home
    oversight, relying on initial and annual state reviews, monthly site
    visits, and a comparative review by VA to assess the sufficiency of state
    surveys. ( GAO-01-768 )

    1.26.A. Providing Guidance for VA and DOD Health Resource Sharing: In
    2000, we suggested that the Congress provide guidance and direction to VA
    and DOD to further encourage the sharing of health care resources. Through
    the National Defense Authorization Act of Fiscal Year 2003, the Congress
    directed VA and DOD to

    (1)
               develop and publish a joint strategic vision statement and a joint
               strategic plan to shape, focus, and prioritize the coordination
               and sharing efforts among appropriate elements of the two
               departments; (2) establish a DOD-VA Health Executive Committee to
               recommend to the secretaries the strategic direction for the joint
               coordination and sharing efforts between and within the two
               departments;

    (3)
               establish a joint incentives fund program to provide incentives to
               implement, fund, and evaluate creative coordination and sharing
               initiatives; and

    (4)
               establish a health care resources sharing project to serve as a
               test for evaluating the feasibility, the advantages, and the
               disadvantages of measures and programs designed to improve the
               sharing and coordination of health care resource sharing.
               (GAO/HEHS-00-52 )

    1.27.C. Highlighting Increasing Financial Burden of Long-term Care
    Spending: In an April 2005 testimony, we reported that projected spending
    for long-term care services for the elderly could nearly quadruple from
    2000 through 2050. Public payers primarily finance the cost of long-term
    care services, especially the Medicaid program, which is one of the
    largest funding sources. Projected increases in long-term care spending
    have significant implications for federal and state budgets, as future
    spending is expected to also rely heavily on public payers. We highlighted
    these growing concerns, which will be fueled in part by the aging baby
    boom generation, and identified several areas that the Congress needs to
    consider as it shapes any reform proposals. Our information helped focus
    congressional and public attention to the increasing federal and state
    budgetary issues due to long-term care and will continue to inform future
    congressional debate as the Congress, states, and the American public
    search for solutions to this growing problem. ( GAO-05-564T )

    1.28.C. Ensuring Seamless Transition from DOD to VA Health Care: In our
    work to ensure that servicemembers who leave active duty (veterans) are
    able to make a smooth transition from DOD health care services to VA
    health care services, we found that DOD does not have specific procedures
    for routinely transmitting to VA health information on servicemembers who
    are likely to be discharged from the military because of their medical
    conditions and may seek VA health care services in the future.
    Additionally, DOD does not share information on the responses to the
    postdeployment health assessment questionnaire for Reserve and National
    Guard members who have left active duty. This questionnaire is completed
    following deployment to a location outside of the United States, including
    locations involved in Operation Enduring Freedom and Operation Iraqi
    Freedom. VA officials state that aggregate information from the
    postdeployment health assessment questionnaires would help VA plan for the
    future health care needs of these new veterans. The Congress used our
    findings to hold hearings and to stress the need to improve the exchange
    of medical information from DOD to VA. In response to our findings, VA and
    DOD continue to work together to identify the medical information that is
    needed to ensure a smooth transition from DOD to VA health care ser vices.
    (GAO-05-722T and GAO-05-1052T )

    1.29.C. Improving VA's Patient Safety Program: The Institute of Medicine's
    estimate that 98,000 patients die each year from accidents at U.S.
    hospitals makes patient safety a critical issue. We measured clinicians'
    familiarity with, participation in, and cultural support of VA's Patient
    Safety Program at four VA facilities. We found that three-fourths of the
    clinicians were familiar with the concepts of teams investigating causes
    of unintentional adverse events. In addition, at one facility, the culture
    blocked participation for many clinicians. Clinicians articulated that a
    culture change could be stimulated by VA leadership actions and open
    communication. VA will implement an action plan to improve patient safety
    at its facilities by setting goals to increase staff familiarity with the
    major concepts of the program, participating in teams that investigate
    causes of unintentional adverse events, and promoting cultural support of
    the program-to the extent that each facility has established mutual trust
    and fostered comfort in reporting close calls and adverse events. In
    addition, VA plans to develop tools for measuring these goals by specific
    facility and to develop interventions when goals have not been met.
    (GAO-05-83 )

    1.30.C. Identifying Needed Changes in Managing Medicare Appeals: We
    identified weaknesses in a plan prepared by the Social Security
    Administration (SSA) and HHS regarding the transfer of the Medicare
    appeals workload from SSA to HHS. Our work found that important details
    concerning the transfer-mandated by the Congress to be completed by
    October 1, 2005-were omitted from the plan. We recommended that the
    Secretary of HHS and the Commissioner of SSA take steps to complete a
    substantive and detailed transfer plan that includes contingency
    provisions. At the request of the Senate Committee on Finance, we
    continued to monitor both agencies' efforts and subsequently identified
    three areas of concern-maintaining appellant access, meeting critical
    human resource needs, and resolving operational issues. The Senate
    Committee on Finance relied on our work in urging the agencies to take
    action to ensure that Medicare beneficiaries have access to a fair and
    accessible appeals process. ( GAO-05-45 and GAO-05-703R )

    The education and protection of the nation's children

    1.31.A. Using Student Data for Commercial Activities: As required under
    the No Child Left Behind Act, the Department of Education (Education)
    addressed pupil privacy by notifying states and school districts of the
    requirements to develop policies that cover the collection, disclosure,
    and use of personal data about students for commercial purposes and that
    include requirements for parental notification and permission. In 2004, we
    reported that many school districts had not developed effective policies
    that corresponded to state and federal law and others did not understand
    or were unaware of the guidance. After we recommended that Education take
    additional action to help districts implement effective policies, the
    agency worked with state education associations to provide training on the
    new requirements and discussed them at a National School Boards
    Association conference. Education also plans to disseminate the policy
    requirements to all states affiliated with the National School Boards
    Association and through the associa-tion's free e-mail service that
    provides participants with weekly updates on legal issues. ( GAO-04-810 )

    1.32.A. Improving Compliance with the Individuals with Disabilities in
    Education Act: The Individuals with Disabilities Act requires states to
    provide educational and related services that facilitate learning to
    students with disabilities based on their individual needs. We reported
    that Education's system for resolving noncompliance with the act often
    takes several years and that some of the data used to monitor state
    compliance are weak. We recommended that Education improve its system of
    resolving noncompliance by shortening the amount of time it takes to issue
    a report of noncompliance, by tracking changes in response times under the
    new monitoring process, and by developing and providing states with more
    guidance for collecting data. As a result, Education instituted an
    improved monitoring process and created a database to facilitate tracking.
    The agency also provided guidance to states and developed a state survey
    for better data collection, offering states assistance with analyzing and
    reporting the data. Education also created the Center on Secondary,
    Transition, and Postsecondary School Outcomes for Students with
    Disabilities to help states implement and improve data systems to measure
    outcomes for students with disabilities and met with states to help them
    develop outcome measurement systems to improve special education data
    reporting. ( GAO-04-879 )

    1.33.A. Strengthening Mediation to Resolve Disputes over Special Education
    Services:

    School districts and families may disagree about what kinds of special
    services, if any, are needed for children and how they should be provided.
    Some disagreements that cannot be resolved quickly become formal disputes
    that can be costly, both financially and in terms of the harm done to
    relationships. We found that officials in several states emphasized the
    importance of using mediation, a voluntary process, to resolve these
    disputes. Mediation was successful in achieving agreements, strengthening
    relationships and fostering communication between families and educators,
    resolving disputes more quickly, and reducing costs. However, the degree
    to which mediation was offered and used varied among the states we
    visited, and mediation agreements were not always implemented or enforced.
    The Congress noted that our report showed that the incidence of formal
    dispute resolution mechanisms, including mediation, has been generally low
    relative to the number of children with disabilities and included an
    amendment to the Individuals with Disabilities Education Improvement Act
    requiring mediation agreements to be executed through a legally binding
    agreement, enforceable in any state court of competent jurisdiction or in
    a district court of the United States. The act was reauthorized in
    December 2004. (GAO-03-897 )

    1.34.A. Clarifying Guidance on Using the Wage Withholding Process to
    Collect Child Support Payments: Changes to the wage withholding process
    can reduce the number of noncustodial parents who have their wages
    improperly withheld. In a 2002 report, we reviewed the wage withholding
    form used by private firms and state child support enforcement agencies.
    HHS's Office of Child Support Enforcement, which establishes enforcement
    policies and guidance, issued a wage withholding form, along with
    guidance, for employers to use for automatically deducting amounts from an
    employee's wages or income to pay a debt or child support obligation. The
    office considers wage withholding the most effective tool for collecting
    child support, reporting that it is responsible for over 60 percent of
    successful collections. However, we found that the form and guidance made
    it difficult for employers to determine whether a private firm sent the
    form or if an appropriate authority had approved wage withholding. As a
    result, wages were inappropriately withheld from noncustodial parents.
    Consequently, we recommended specific changes to the form and guidance.
    The Office of Child Support Enforcement established a task group of
    stakeholders in the child support enforcement community to address these
    recommendations, and the group made several changes and clarifications to
    the form and guidance that resolved our concerns. The office subsequently
    informed state and tribal agencies administering child support enforcement
    plans of the revised form and guidance and stated that all public and
    private firms should use the revised form immediately. ( GAO-02-349 )

    1.35.C. Influencing Temporary Changes in Subsidy Payments for 9.5 Percent
    Loans: To encourage lenders to make student loans under the Federal Family
    Education Loan Program, the federal government guarantees lenders a
    statutorily specified rate of return-called lender yield. Some lenders may
    issue tax-exempt bonds to raise capital to make or purchase loans; loans
    financed with such bonds issued prior to October 1, 1993, are guaranteed a
    minimum lender yield of 9.5% (hereafter called 9.5% loans). When the
    interest rate paid by borrowers is less than the lender yield, the
    government pays lenders the difference-a subsidy called special allowance
    payments. In September 2004, we reported that subsidy payments for 9.5%
    loans had increased significantly in recent years, rising from $209
    million in fiscal year 2001 to over $600 million in fiscal year 2004. We
    identified loopholes in legislation and regulatory guidance that enabled
    lenders to maintain or increase the amount of 9.5% loans they held in
    three ways-recycling, refunding bonds, and transferring. We suggested that
    the Congress change the yield for loans made or purchased in the future
    with the proceeds of tax-exempt bonds issued prior to October 1, 1993, and
    any associated refunding bonds, to better reflect market interest rates.
    As a result of our work, the Congress enacted the Taxpayer-Teacher
    Protection Act in October 2004, which temporarily changed the lender yield
    on certain loans to one that reflects market interest rates. This
    legislative change will save the government $285 million in fiscal years
    2005 and 2006. In addition, as part of the Higher Education Act
    reauthorization, the Congress passed legislation in July 2005 that would
    permanently end the minimum 9.5 percent yield and could avert millions in
    future subsidy payments. ( GAO-04-1070 )

    1.36.C. Improving the Oversight and Monitoring of Head Start Grantees:
    Through a series of testimonies and reports, we assisted the Congress and
    HHS's Administration for Children and Families in identifying major risk
    areas in the Head Start program and crafting solutions to address those
    risks. For example, we reported on the lack of reliable data on enrollment
    in Head Start centers throughout the country. We also highlighted gaps in
    Head Start's oversight framework that put federal funds at risk and can
    reduce the quality or amount of services that the program can provide to
    poor children and their families. The agency does not have a comprehensive
    risk assessment strategy that would allow it to identify weaknesses in
    grantees that could limit the program's ability to achieve its objectives.
    Further, the agency does not have a process in place to ensure that
    oversight reviews are conducted in accordance with the framework it
    designed to assess grantee compliance with program and financial
    management requirements. Also, the agency does not effectively use
    grantees' financial reports and audits in its day-to-day monitoring
    activities to identify high-risk grantees and resolve their problems. HHS
    is now taking steps to address these and other gaps we identified. Once
    these gaps have been addressed, we recommended that the Administration for
    Children and Families make greater use of its authority to seek
    competition in communities that are currently served by poorly performing
    Head Start grantees. The agency plans to work with the Congress to seek
    changes in the law that would give the Secretary more flexibility in
    replacing poorly performing grantees. Head Start reauthorization bills
    incorporated measures to define underenrollment and prescribed methods to
    ensure that underenrollment is promptly addressed. The bills also provide
    the Secretary with more flexibility to seek competition in those cases
    where a community has been served by a high-risk grantee. (GAO-04-17 ,
    GAO-05-176 , GAO-05-465T, and GAO-05-473T )

    The promotion of work opportunities and the protection of workers

    1.37.A. Improving SSA's Disability Claims Process: In response to several
    of our recommendations, SSA took action to improve its disability claims
    decision-making process. SSA developed and implemented the Case Processing
    and Management System, a nationwide system to support case processing
    operations, which is intended to speed up hearings and appeal decisions.
    To further increase efficiency, SSA has established electronic folders for
    use at all levels. SSA also designated a lead component agency to compile
    racial bias and misconduct complaint information filed against
    administrative law judges, who make disability determination decisions at
    the hearings level. SSA created a form to capture key information on
    racial bias and misconduct, and now stores the data in an electronic
    database, as we recommended. As a result, SSA can more readily identify
    patterns of racial bias and misconduct in complaints against
    administrative law judges and improve its assessment of the judges'
    decision-making accuracy. In addition, we reported that applicants had
    difficulty understanding the five-step disability determination process
    and the importance of providing SSA with information about how their
    disability prevented them from substantial gainful activity. In compliance
    with our recommendations, the agency's Web site now includes clarifying
    information on all steps in the process and makes its interactive adult
    disability report more readily available to all claimants. These efforts
    can expedite the claims process and help SSA make the right decisions on
    the disability process as early as possible. ( GAO-02-322 , GAO-02-831 ,
    and GAO-05-495 )

    1.38.A. Helping to Expand Apprenticeship Programs: In a 2001 report, we
    found that DOL lacked a systematic process to expand apprenticeship-an
    employee training program administered by DOL-and did not systematically
    locate resources for apprenticeships needing funds. Employers' negative
    perceptions of the program also impeded its use. We recommended that DOL
    work with state apprenticeship councils and others to identify occupations
    that need skilled labor and could support apprenticeships and to develop
    plans to encourage apprenticeship in these occupations; share information
    about apprenticeships, especially among employers in occupations that
    traditionally have not used apprenticeship; and help identify funding to
    develop apprenticeships. In addressing these concerns, DOL implemented the
    Advancing Apprenticeship Initiative, which trained staff to work in
    high-growth industries new to apprenticeship, and developed marketing
    materials tailored to specific industries. DOL approved several
    apprenticeships in these industries. The agency also established the
    federal Advisory Committee on Apprenticeship to foster communication among
    business, labor, and the public sector and to advise DOL. Additionally,
    DOL used the Internet to share information about occupations that were new
    to apprenticeships. Finally, DOL leveraged $18.5 million in federal funds
    for marketing and pilot projects in growing industries and secured almost
    $5.5 million in private funds to stimulate apprenticeship development. (
    GAO-01-940 )

    1.39.A. Improving Oversight at the Mine Safety and Health Administration:
    DOL's Mine Safety and Health Administration improved oversight of its
    programs through changes to its operations, guidance, and data collection
    efforts, addressing many of the concerns raised in our 2003 report. We
    found weaknesses (1) in the agency's oversight of 6month district
    inspections, timely correction of hazards identified during inspections,
    guidance to inspectors, and data collection to evaluate performance and
    prevent future accidents and (2) in the agency's preparation for a likely
    shortage of inspectors in the future. Subsequently, the agency implemented
    a process for quarterly review of key inspection data to monitor the
    status of timely abatement of violations; increased the focus of its
    accountability program on core inspection activities, including the
    correction of hazards; adopted measures and standard operating procedures
    to improve the monitoring of 6-month reviews; stepped up its reviews and
    evaluation of inspection data and, when deficiencies were identified, took
    corrective action; and developed national procedures to ensure accident
    investigation data are entered into its Accident Investigation database.
    The agency also expedited the hiring process for inspectors and expanded
    recruitment possibilities by using a new competency-based recruitment
    approach that provides more flexibility and fills vacancies much faster.
    In addition, in 2005, the agency identified ways to improve data
    collection from contractors to better track fatalities, injury rates, and
    trends and revised its General Inspections Procedures Handbook, which is
    now available on each inspector's computer for ready access to all the
    guidance needed to conduct an inspection. Such efforts can strengthen
    oversight to better protect the safety and health of coal miners. (
    GAO-03-945 )

    1.40.A. Improving Coordination to Enhance Charitable Contributions in
    Disasters: Many large charities reported raising billions of dollars to
    aid survivors of the September 11, 2001, terrorist attacks. We found that
    questions about how best to use the funds as well as service delivery
    difficulties complicated charities' responses to this disaster. We
    recommended that the Federal Emergency Management Agency (FEMA) convene a
    working group to implement strategies for future disasters. With FEMA's
    encouragement, national voluntary agencies developed the Collaborative
    Assistance Network (Network) to promote a coordinated approach to
    providing disaster relief services. The Network seeks to identify ways to
    coordinate more effectively and efficiently with voluntary and government
    agencies in catastrophic and major disaster events. Work groups consisting
    of representatives from national voluntary agencies are seeking to (1)
    ensure access to available services by sharing service delivery
    information and client data and (2) streamline the intake process and
    minimize the administrative burden by identifying common application form
    requirements and accepted standards for document verification. (
    GAO-03-259 ) 1.41.C. Improving Enforcement of Fugitive Felon Provisions:
    To better implement the fugitive felon provisions of the Personal
    Responsibility and Work Opportunity Reconciliation Act, we recommended
    that the Secretary of HUD test the feasibility and effectiveness of
    routinely matching its nationwide tenant file with the National Crime
    Information Center arrest warrant database to help identify tenants in
    housing assistance programs nationwide who are fugitive felons and subject
    to eviction. According to a HUD Office of Inspector General (IG)
    semiannual report to the Congress, the IG established the Fugitive Felon
    Initiative to assist HUD in responding to this recommendation. Under this
    initiative, the IG began computer matching its nationwide tenant file with
    the U.S. Marshals Ser-vice's arrest warrant database, the Federal Bureau
    of Investigation's National Crime Information Center arrest warrant
    database, and the wanted person data maintained by state and local law
    enforcement agencies. In August 2005, HUD's IG reported that the
    initiative had resulted in the apprehension of over 5,900 wanted felons. (
    GAO-02-716 )

    1.42.C. Addressing the Health Problems of Nuclear Weapons Workers: We
    assisted the Congress in crafting major improvements to a program intended
    to compensate individuals who worked in nuclear weapons facilities and
    developed illnesses due to exposure to hazardous materials. We identified
    program features that would likely lead to inconsistent benefit outcomes
    for claimants, in part because the program depended on varying state
    workers compensation systems to provide benefits. We also presented
    several options for improving the consistency of benefit outcomes and a
    framework for assessing these options. As a result, the Congress
    overhauled the program as part of the Ronald W. Reagan National Defense
    Authorization Act for Fiscal Year 2005. This legislation replaced the
    program with a new one that federalizes the payment of benefits and
    provides a schedule of uniform benefit payments for eligible individuals.
    (GAO-04-249T, GAO-04-298T, GAO-04-515 , GAO-04-516 , and GAO-04-571T )

    1.43.C. Improving Transitional Assistance to Seriously Injured
    Servicemembers: In our work on transitional assistance to seriously
    injured servicemembers and Reserve and National Guard members, including
    vocational rehabilitation and employment services, we found that more
    collaboration between VA and DOD is needed to expedite services for
    seriously injured servicemembers. We also found that enhanced services
    could improve transition assistance for Reserve and National Guard
    members. The Congress used our findings to hold hearings and highlight the
    need to improve these services. In response to our recommendation, VA and
    DOD have taken initial steps, including signing a memorandum of
    understanding, to lay the groundwork for sharing data and improving their
    assistance to seriously injured servicemembers and Reserve and National
    Guard members as they transition to civilian life. ( GAO-05-167 and
    GAO-05-544 )

    A secure retirement for older Americans

    1.44.A. Improving Management at the Employee Benefits Security
    Administration:

    Our report on the DOL's Employee Benefits Security Administration's
    management resulted in improvements to strengthen safeguards for
    participants in employee benefit plans protected by the Employee
    Retirement Income Security Act. In studying concerns about the agency's
    enforcement program, we identified weaknesses in the agency's enforcement
    strategy, investigative process, and human capital management. We made
    recommendations to address the lack of information needed to assess
    benefit plans' noncompliance with the act, lack of coordination to share
    best practices information on investigations, lack of a centrally
    coordinated quality review process to ensure the proper conduct of
    investigations, and failure of the agency to consider succession planning
    and workforce retention as part of its human capital strategy. The agency
    subsequently issued a report on a noncompliance study and initiated
    additional studies that provided the information needed to identify
    compliance improvements. The agency established a Best Practices Sharing
    Team that developed a Web site on which investigators can share
    investigative plans and practices, and the agency developed a process to
    review case quality that ensures the independence of the case reviewer. In
    addition, the agency assessed its workforce retention and training needs
    and included this analysis in its Human Capital Strategic Management Plan,
    which addresses areas such as skill shortages, future staffing needs, and
    competency requirements. ( GAO-02-232 ) 1.45.A. Avoiding
    Disproportionately Adverse Effects on Pension Plan Participants from
    Securities and Exchange Commission (SEC) Regulations: Market timing by
    mutual fund investors has negatively affected pension plan participants
    and other long-term investors. In an effort to stop this abusive practice,
    SEC issued proposed regulations that would impose mandatory redemption
    fees on certain mutual fund transactions. We analyzed the potential
    effects of these proposed regulations on pension plan participants and, in
    a 2004 report, concluded that it could result in plan participants paying
    fees intended to deter market timing, even where there is clearly no
    intent to engage in abusive trading. Many such transactions are automated
    and, therefore, the plan participant would have no control over whether he
    or she is assessed a redemption fee. Thus, the proposed rule could affect
    plan participants more adversely than other investors. We recommended that
    SEC's Commissioners change the proposed regulations to prevent pension
    plan participants from being more adversely affected than other investors.
    SEC addressed this concern in a final rule issued in March 2005 that made
    the fees no longer mandatory. In this way, mutual fund companies may
    exempt any pension plan transaction where there is clearly no intent to
    engage in market timing. (GAO-04-799 )

    1.46.A. Strengthening the Integrity of the Social Security Card and Other
    Identification Documents: We recently reported on weaknesses in SSA's
    enumeration processes and found that SSA's policies for verifying birth
    certificates for children under age 1 and issuing replacement Social
    Security cards were weak and could expose SSA to fraud. Because Social
    Security numbers are central to many aspects of American life, they are
    vulnerable to fraud and financial crimes and, thus, sought by identity
    thieves. We also reported on the verification of identity documents for
    drivers' licenses, noting that visual inspection of key documents lent
    itself to possible identity fraud. To demonstrate this, our investigators
    were able to obtain licenses in two states using counterfeit documents and
    the Social Security numbers of deceased persons. Subsequently, the
    Congress included provisions in the Intelligence Reform and Terrorism
    Prevention Act mandating that SSA implement regulations for independently
    verifying birth documents for all field office Social Security number
    applicants, limit the number of replacement cards issued to individuals,
    and add death and fraud indicators to Social Security number verification
    systems for state agencies issuing drivers' licenses and identity cards.
    In addition, the Congress passed the Real ID Act of 2005, which
    established federal identification standards for state drivers' licenses
    and other such documents, and mandated third-party verification of
    identity documents. ( GAO-04-11 , GAO-04-768T, GAO-04-1099T, and GAO-05-59
    )

    1.47.C. Addressing the Challenges of Pension Reform: Numerous reports and
    testimonies in 2005 urged the Congress to take timely action to enact
    comprehensive pension reform. The goal of such reform is to reduce the
    financial risks to the Pension Benefit Guaranty Corporation and the
    taxpayer, as well as to put the defined benefit system on a more stable
    financial footing. We urged that the Congress consider, for example,
    revisions to the existing rules governing the funding of defined benefit
    plans so that plans would be better funded and thus more able to meet
    benefit promises to plan participants. We also urged that there be changes
    to the Pension Benefit Guaranty Corporation insurance premium structure in
    how shutdown benefits are funded by plan sponsors, and that the Congress
    address the legal uncertainty concerning hybrid pension plans like cash
    balance plans. All of these key elements have been included in legislation
    in both the House and the Senate. In addition, we organized a Comptroller
    General forum involving experts and policymakers to discuss the many
    aspects of pension reform. The discussion and ensuing report have
    contributed to the Congress's and the public's understanding of the issues
    in this high-risk area and helped shape the proposed legislation. (
    GAO-05-360T, GAO-05-578SP, and GAO-05-794T )

    An effective system of justice

    1.48.A. Limiting Terrorists' Access to Guns: In a January 2005 report, we
    identified a number of potential problems in the procedures that the
    Federal Bureau of Investigation and applicable state agencies follow when
    a potential gun purchaser is identified as a valid match with a terrorist
    watch list record. While being on the watch list does not, in itself,
    disqualify an applicant from purchasing a gun, it is extremely important
    that steps are taken to ensure that the applicant does not have other
    disqualifying factors. These other factors could include a felony
    conviction or illegal alien status. The Federal Bureau of Investigation
    and states are allowed to share information with other law enforcement
    officials in order to validate the match and to ensure that other factors
    that would prohibit the sale are fully investigated. We made a number of
    recommendations intended to ensure that all allowable information is
    shared in cases of potential matches with the terrorist watch list and
    that states handle these cases consistently. Our recommendations have been
    adopted. ( GAO-05-127 )

    1.49.C. Improving Immigration Enforcement:

    In several reports, we stressed that the Department of Homeland Security
    (DHS) should use performance information and employee feedback to manage
    its programs and operations. We reported that the federal response to
    alien smuggling could be improved if DHS tracked the results of alien
    smuggling referrals by U.S. Customs and Border Protection to U.S.
    Immigration and Customs Enforcement, that decisions about how to allocate
    scarce DHS resources could be improved if DHS developed additional
    measures on the performance of its Border Patrol-operated interior traffic
    checkpoints, and that future DHS transformations and communications
    strategies could be improved if DHS sought feedback from employees about
    their ideas and concerns. DHS concurred with our recommendations in these
    areas, and we believe that their implementation will contribute to DHS's
    effectiveness in enforcing the nation's immigration laws and addressing
    long-standing management challenges. We also contributed to congressional
    debate by describing immigration-related management challenges confronting
    DHS, quantifying the costs of incarcerating criminal aliens, questioning
    the usefulness of an annual address reporting requirement for aliens, and
    describing how DHS has addressed immigration enforcement objectives. (
    GAO-05-66 , GAO-05-81 , GAO-05-204 , GAO-05-305 , GAO-05-337R , and
    GAO-05-435 )

    1.50.C. Improving Evaluation of Contractor Performance: In a June 2005
    report, we recommended that DHS's U.S. Citizenship and Immigration
    Services (USCIS) take steps to ensure that specific performance
    measurement requirements are finalized before awarding new
    performance-based contracts for operating USCIS call centers and that
    performance evaluation records are properly maintained. While discussing
    these issues during the course of our work, USCIS officials told us they
    planned to take the corrective actions. Further, in its formal comments on
    our draft report, DHS generally agreed with our recommendations, noting
    that a draft solicitation for new contracts specifically identified
    nonnegotiable performance requirements and that written records of
    performance assessments and performance evaluation meetings will be
    maintained and readily available for review by interested parties. These
    actions will improve USCIS's efforts in evaluating the performance of
    contractor-operated call centers and encourage quality services at the
    call centers. (GAO-05-526 )

    1.51.C. Providing Evidence regarding Effectiveness of Adult Drug Courts:
    With 1,200 operating drug courts in 2004, and an additional 500 being
    planned, it is extremely important that their effectiveness be assessed.
    Drug court programs generally allow some defendants with substance abuse
    problems to enter these programs as an alternative to prison or probation.
    The combination of court supervision and substance abuse treatment is
    intended to reduce recidivism and drug abuse relapse compared to more
    traditional sentencing. Our review of 27 methodologically strong
    evaluations of drug courts provided evidence supporting drug courts as a
    means to reduce recidivism. Data concerning relapse was less clear for
    several reasons. While our review did not allow us to pinpoint specific
    aspects of drug courts that lead to their success, it was clear that
    program actions that help participants stay in and complete the program
    were linked to recidivism reductions. This is an important piece of
    information, given that the 2005 National Drug Control Strategy calls for
    an increase in federal drug court spending from about $40 million to about
    $70 million in 2006. ( GAO-05-219 )

    The promotion of viable communities

    1.52.A. Improving Oversight of Federal Housing Administration (FHA)
    Lenders: In a November 2004 report, we recommended ways that the
    Department of Housing and Urban Development (HUD) could improve its
    oversight of lenders participating in FHA's single-family mortgage
    insur-ance programs. Due in part to poor lender oversight, we have
    designated HUD's single-family mortgage insurance programs as high risk.
    In response to our report, HUD (1) issued updated standards for granting
    FHA lenders the authority to underwrite loans and determine their
    eligibility for FHA mortgage insurance without HUD's prior review, (2)
    revised the system used to evaluate the underwriting quality of loans
    insured by FHA so that it better reflects the risks different errors pose
    to the insurance fund, and (3) issued guidance specifying when action must
    be taken against lenders that fail to comply with FHA's program
    requirements. These changes will help HUD identify the lenders that pose
    the greatest insurance risk to the department and hold lenders accountable
    for poor performance. ( GAO-05-13 )

    1.53.A. Reducing the Cost of Federal Subsidized Housing Projects: We
    determined that HUD had not developed the systems it needed to track the
    status of unexpended balances in its project-based Section 8 housing
    program and therefore could not use this information to help manage the
    program and formulate budget requests for it. Because of our work, the
    Congress required HUD to better enforce the legislative provisions
    requiring the recapture of capital funds not being utilized by public
    housing authorities. HUD recaptured about $2.531 billion in fiscal year
    2003, or about $2.7 billion in current dollars. ( GAO-01-663T )

    1.54.C. Improving First Responder Interoperable Communications: We noted
    that interoperable communications equipment was being bought without the
    fundamental first step of developing a clear, comprehensive plan for what
    needed to be communicated, to whom, and when. Without such a plan it was
    not possible to know whether the equipment purchased would meet defined
    needs. We recommended that DHS, through its grant guidance, encourage each
    state to establish a single statewide body to develop a single
    comprehensive statewide interoperability plan and that grant funding
    depend on conformance with such a plan. In its report accompanying the
    fiscal year 2006 appropriations bill, the Senate Committee on
    Appropriations directed that before grant dollars could be obligated for
    interoperable equipment, jurisdictions must certify that they have
    implementation plans that include governance structures, policies,
    procedures, training, and planned exercises. ( GAO-04-231T, GAO-04-740 ,
    and GAO-04-1057T )

    1.55.C. Redefining Rural: We assessed how a change in the definition of
    rural would affect the

    U.S. Department of Agriculture's (USDA) Rural Housing Service in meeting
    rural housing needs. By

    (1)
               presenting a time line of how the Congress had increased
               population limits over the past 50 years,

    (2)
               building on our prior work on Rural Housing Service management
               issues and how changes in technology and demographics have linked
               rural to urban areas, and (3) using geographically coded national
               data to show that such questionable eligibility determinations
               also exist nationwide, we were able to suggest that the Congress
               consider changing to a density-based system as a basis for making
               more equitable rural housing program eligibility determinations.
               The Rural Housing Service's Administrator agreed (1) that it does
               not make sense to use outdated boundaries, (2) to take our
               suggestion to work with USDA's Economic Research Service to
               develop a density-based system, (3) to propose legislative
               changes, and (4) to fix the data reliability problems we
               identified. The changes that the Administrator has agreed to make
               will help the Rural Housing Service use its scarce resources more
               efficiently and allocate its funding more fairly and equitably in
               accord with the intent and purposes of rural housing programs. The
               new rural definition could also have major implications for other
               federal agencies that allocate resources by population or
               location. ( GAO-05-110 )

    Responsible stewardship of natural resources and the environment

    1.56.A. Preparing for Asian Soybean Rust:

    Beginning in February 2005, we raised concerns regarding USDA's
    preparations for Asian soybean rust, which is a harmful, quick-spreading
    fungal disease that first appeared in the United States in 2004 and
    threatens America's $16 billion annual soybean production. As a result of
    our recommendations, USDA (1) developed a coordinated federal-state plan
    to manage the disease; (2) provided soybean producers with additional
    guidance on farming practices and documentation required to file an Asian
    soybean rust insurance claim; (3) authorized the use of about $1.2 million
    in contingency funding to help monitor, report, and manage the disease
    during the 2005 growing season; and (4) agreed to revise its insurance
    data system so that it can collect information on the number and dollar
    amounts of claims submitted and paid as a result of Asian soybean rust. (
    GAO-05-668R )

    1.57.A. Improving Transparency of Water Bank Operations: In March 2005, we
    reported that the Bureau of Reclamation's Klamath Project water bank
    management and accounting practices lacked transparency, creating
    confusion and doubt among stakeholders such as farmers, environmentalists,
    and tribes. A credible water bank is essential to easing conflicts over
    water use among these groups by increasing river flows for salmon while
    ensuring irrigation water for farmers under ongoing drought conditions.
    Acting on our recommendation, the bureau improved the information provided
    to stakeholders by creating a water bank Web page, updated biweekly, with
    information on how much water has been delivered by the water bank, the
    current water delivery schedule, links to real-time water flow gauges and
    other information, and documents relevant to water bank management.
    (GAO-05-283 )

    1.58.A. Improving the Bonneville Power Administration's (BPA) Financial
    Condition:

    BPA, which markets 45 percent of the electric power consumed in the
    Pacific Northwest, experienced significant financial problems in 2001 and
    2002 while substantially increasing its electric power rates. BPA's
    open-ended obligation to provide power to the region was the primary cause
    of these rate increases. In response to our recommendations, BPA agreed to
    limit the power it sells at its lowest rate to the amount generated by the
    Federal Power System and to sell any additional power at rates that
    reflect the cost of generating or acquiring that power. These rate
    policies will help ensure that BPA remains competitive in the changing
    electricity industry and reduce the risk of BPA defaulting on its Treasury
    debt. ( GAO-04-694 )

    1.59.A. Realizing Financial Benefits in the Environmental Protection
    Agency's (EPA) Superfund Program: During the past few years, we have noted
    that opportunities exist for EPA to recover unspent funds from inactive
    contracts under its Superfund program-established in 1980 to locate,
    investigate, and clean up the worst hazardous waste sites nationwide. In
    2001, we developed a method for targeting potential deobligations and
    shared this approach with EPA. During our fiscal year 2005 budget
    justification review process, EPA acknowledged that our method for
    identifying deobligations was very useful in identifying unspent funds and
    that this method is still in use today. The deobligated funds have enabled
    the agency to address its backlog of hazardous waste sites that need
    remediation without receiving additional appropriations to conduct these
    cleanups. The financial benefits resulting from these deobligations in
    fiscal year 2005 total about $370 million. (Based on briefings)

    1.60.A. Reducing Nuclear Waste Cleanup Costs: Our work over the last 2
    years helped to avoid a substantial increase in the cost of treating and
    disposing of high-level nuclear waste at the Department of Energy's (DOE)
    Savannah River Site. DOE's long-standing plan for treating the waste was
    in jeopardy because of a legal challenge that could have resulted in the
    agency pursuing a substantially more costly treatment and disposal
    alternative that had little added environmental benefit. We recommended
    that DOE seek legislative clarification from the Congress to minimize
    delays and cost increases. In October 2004, the Congress clarified DOE's
    authority to follow its planned treatment and disposal strategy, thus
    avoiding a cost increase at the Savannah River Site of $55 billion to $60
    billion. The cost avoidance for fiscal years 2005 through 2009 will be
    about $4.5 billion. ( GAO-03-593 , GAO-03-930T, and GAO-04-611 )

    1.61.A. Improving the Security of the Plum Island Animal Disease Center:
    In September 2003, we found that security at the federal Plum Island
    Animal Disease Center, which contains highly contagious foreign animal
    disease pathogens, was insufficient and needed substantial improvement. We
    found that the center's physical security was incomplete, that the
    security force's response capability was limited, and that the security
    plan did not consider the possibility of a terrorist attack. In addition,
    center officials were not adequately controlling access to areas where
    pathogens are located, in part by allowing access by foreign scientists
    without security clearances. DHS, which assumed overall responsibility for
    Plum Island from USDA in June 2003, agreed with our assessment and
    recommendations. Subsequently, these departments have taken many actions
    to improve physical security and security planning for Plum Island, such
    as the addition of guards, security lighting, surveillance cameras, locks,
    alarms, and visitor inspections. Access to the pathogens has been
    restricted. Also, a Federal Protective Service officer has been assigned
    to Plum Island, and this step is expected to facilitate a further
    strengthening of the security response force. ( GAO-03-847 )

    1.62.A. Protecting Our Food Supply from Deliberate Contamination: In 2003,
    we reported that USDA and the Food and Drug Administration- the principal
    federal agencies responsible for ensuring food safety-issued security
    guidelines to help food processors identify measures to prevent or
    mitigate the risk of deliberate contamination during food production.
    However, we reported that the majority of federal food safety inspectors
    were not receiving training on food security issues addressed by the
    guidelines. To increase the inspectors' knowledge and understanding of
    food security issues and facilitate their discussions about the guidelines
    with food processors, we recommended that such training be provided. This
    year, USDA directed its food inspectors to implement food security
    verification procedures during their routine food safety inspections. As
    part of implementing these new security procedures, the agency has
    provided training on the security guidelines for industry and on practical
    antiterrorist strategies. ( GAO-03-342 )

    1.63.A. Reducing Overlaps and Duplication in Federal Food Safety
    Activities: During 2005, we continued to report and testify on the
    organization of federal food safety functions-a highly complex and
    fragmented system that stems from 30 principal laws and is administered by
    15 federal agencies. This system results in inefficient use of resources,
    inconsistent oversight and enforcement, and ineffective coordination. In
    the past, we have recommended that the federal statutes be streamlined and
    that food safety functions be consolidated into a single agency. This
    year, our work identified overlapping and duplicative inspection
    activities conducted by USDA and the Food and Drug Administration at
    food-processing facilities that fall under the regulatory jurisdiction of
    both agencies. Although the agencies have entered into an agreement to
    make more efficient use of their resources and to reduce overlap and
    duplication, we found that they are not routinely communicating findings
    of mutual concern, such as sanitation problems affecting foods produced at
    these facilities- whether the foods fall under USDA or Food and Drug
    Administration jurisdiction. We recommended that the agencies ensure
    implementation of the agreement. USDA took prompt action and in June 2005
    issued a directive, entitled Responsibilities in Dual Jurisdiction
    Establishments. The directive states that each agency's resources and
    experience will be used efficiently and that duplication of inspection
    effort is to be avoided. It also states that USDA and the Food and Drug
    Administration agree to communicate at the district office level about

    (1) findings of hazardous, contaminated, or mislabeled foods; (2)
    processes that may result in contamination or recalls; or (3) food
    tampering. (GAO-05-213 )

    1.64.A. Improving Recreation Fee Programs on Federal Lands: Our work over
    the past several years has helped the Congress to establish and assess the
    impacts of the recreational fee demonstration program. Under this trial
    program, the Congress authorized the Department of the Interior's National
    Park Service, Bureau of Land Management, and Fish and Wildlife Service and
    USDA's Forest Service to charge fees to visitors to, among other things,
    reduce the maintenance backlog at federal parks and historic places and
    protect these lands from the wear and tear caused by visitors. Since the
    program's inception in 1996, we have identified issues that needed to be
    addressed to improve the program's effectiveness. These issues included
    providing (1) a more permanent source of funds to enhance stability, since
    the current program had to be reauthorized every 2 years; (2) the
    participating agencies with greater flexibility in how and where they
    apply fee revenues; and (3) improvements in interagency coordination in
    the collection and use of revenue fees to better serve visitors by making
    the payment of fees more convenient and equitable and reducing visitor
    confusion about similar or multiple fees being charged at nearby or
    adjacent federal recreational sites. As a result of this body of work, the
    Congress designed and enacted the Federal Lands Recreation Enhancement
    Act, which addresses all of our reported issues, including providing a
    more permanent source of funding for the agencies. ( GAO/RCED-99-7 ,
    GAO/T-RCED-99-77 , GAO/T-RCED-99-101 , GAO/RCED-00-37R , GAO-02-10 ,
    GAO-03-470 , and GAO-04-745T )

    1.65.A. Providing Federal Assistance to Alaska Native Villages Affected by
    Flooding and Erosion: We reported that while 184 out of 213 Alaska Native
    villages are affected to some extent by flooding and erosion, these
    villages often have difficulty qualifying for federal assistance to combat
    these problems. We recommended that the Denali Commission (established by
    the Congress to provide economic development services and to meet
    infrastructure needs in rural Alaska) adopt a policy to guide investment
    decisions and project designs in villages affected by flooding and
    erosion. We also identified four alternatives that could increase federal
    service delivery to the affected villages. In response to our findings,
    the Denali Commission adopted an investment policy, which will ensure that
    federal funds are expended in the most effective and efficient manner
    possible, and the Congress provided the Secretary of the Army authority to
    carry out "structural and nonstructural projects for storm damage
    prevention and reduction, coastal erosion, and ice and glacial damage in
    Alaska, including relocation of affected communities and construction of
    replacement facilities." ( GAO-04-142 and GAO-04-895T )

    1.66.C. Clarifying Policies on Wetlands: The

    U.S. Army Corps of Engineers (USACE) is responsible for implementing
    Section 404 of the Clean Water Act, our nation's primary wetlands
    protection program. Under this program, a property owner must obtain a
    permit from USACE before undertaking any activities that may degrade or
    destroy waters or wetlands that fall under federal jurisdiction. In 2004,
    we reported that USACE's district offices and staff were interpreting and
    applying federal regulations differently when determining whether a water
    or wetland falls under federal jurisdiction and that these differences
    might result in different jurisdictional decisions in similar situations.
    As we recommended, USACE is evaluating its districts' differing practices
    and determining what revisions to its guidance will be needed to ensure
    more consistency in decisions about which waters and wetlands fall under
    federal jurisdiction. ( GAO-04-297 ) 1.67.C. Improving Security at
    Drinking Water and Wastewater Plants: We identified key activities that
    can help EPA improve security for the water sector. As a result of this
    work, EPA has begun to implement a number of these actions. First, the
    agency established common protocols for monitoring threats. In particular,
    it developed a list of Standardized Analytical Methods, providing a common
    standard for environmental laboratories' use in measuring contamination
    events and their associated threats. In addition, EPA provided simulation
    exercises to improve local, state, and regional collaboration.
    Specifically, it provided drinking water and wastewater systems with a
    series of tabletop exercises to help them prepare and carry out emergency
    response plans and strengthen relationships between utilities and local,
    state, and federal officials in the event of a terrorist attack. Finally,
    EPA significantly expanded training opportunities related to security by
    sponsoring several security workshops and seminars on topics such as
    wastewater system security, drinking water system preparedness, and
    emergency response. As a result, water sector personnel have additional
    tools and training opportunities to support them in their efforts to
    protect against terrorist attacks. (GAO-04-29 , GAO-04-1098T, and
    GAO-05-165 )

    1.68.C. Improving Oversight of EPA Grant Programs: EPA has long faced
    problems in managing its grants, which constitute over one-half of the
    agency's annual budget, or $4 billion annually. Our work over the past 3
    years has identified the major challenges facing EPA in managing its
    grants, including awarding, overseeing, and obtaining results from grants.
    EPA issued a 5-year grants management plan and policies, which for the
    first time offers a comprehensive road map with goals and milestones for
    addressing the challenges we identified. However, we found that the
    policies and plan will require strengthening, enhanced accountability, and
    sustained commitment to succeed. For example, EPA's new oversight policy
    mandates more in-depth monitoring of grantees, but it does not build in a
    process for analyzing the results of in-depth monitoring to address
    systemic grantee problems. In addition, its 5-year plan does not
    completely address how EPA will hold all managers and staff accountable
    for successfully fulfilling their responsibilities. Our recommendations,
    which EPA has begun to implement, will help to ensure that EPA is
    providing effective oversight of grants and holding managers and staff
    accountable for their grants management responsibilities. ( GAO-03-846 ,
    GAO-04-383R , GAO-04-459 , and GAO-05-149R )

    1.69.C. Improving EPA's Knowledge of Environmental Conditions: In a
    November 2004 report, we recommended that EPA establish clear lines of
    responsibility and accountability among its various organizational
    components and identify specific requirements for developing and using
    environmental indicators. Environmental indicator sets assemble
    quantitative measures of conditions and trends to assess the state of the
    environment and natural resources and to gauge progress toward specific
    goals. We reported that EPA needs to develop a more systematic approach to
    developing these indicators to ensure that information on environmental
    conditions and trends is incorporated into EPA's efforts to plan
    strategically, allocate resources, and assess progress toward meeting
    environmental goals and objectives. EPA is currently working to link its
    indicators to the agency's strategic planning activities and investigating
    opportunities to link environmental information to management reporting
    and accountability systems. (GAO-05-52 )

    1.70.C. Identifying Challenges to Ensuring Competition in Natural Gas
    Markets: Recent reports on the impact of soaring natural gas prices have
    outlined the volatile nature of natural gas prices that are driven by
    supply and demand imbalances. However, these reports also have highlighted
    the important role the federal government plays in ensuring that prices
    are determined in a competitive and informed marketplace. We found that
    federal agencies face major challenges in ensuring that natural gas prices
    are determined in a competitive and informed marketplace. For example, we
    found that the Federal Energy Regulatory Commission lacks an adequate
    regulatory and oversight approach and is reviewing its statutory authority
    and market monitoring tools. The Commodity Futures Trading Commission does
    not have regulatory authority for over-the-counter derivatives markets. It
    does have anti-manipulation authority and is currently investigating what
    role, if any, these markets played in the natural gas price spike of 2000
    through 2001. Finally, the Energy Information Administration has an
    outdated natural gas data collection program, but has made efforts to
    reassess its data needs to provide more useful information. ( GAO-03-46 )
    1.71.C. Enhancing Oversight of Electricity Markets: Our recent reports on
    electricity market restructuring have encouraged the Federal Energy
    Regulatory Commission to, among other things, enhance its oversight of
    these markets to reduce the potential that firms could inappropriately
    exercise the use of market power, reduce the uncertainty private companies
    face when upgrading transmission lines to their power plants, and support
    consumer pricing and other programs that encourage consumers to adjust
    their electricity usage in response to changes in market conditions.
    Action in this last area alone-encouraging consumers to respond to
    changing electricity market conditions-could save billions of dollars as
    well as enhance reliability in the U.S. electricity sector more generally.
    (GAO-04-204 and GAO-04-844 )

    1.72.C. Identifying the Effects of Oil Mergers on Consumers: Our work on
    the effects of mergers and market concentration in the U.S. petroleum
    industry, which found that the wave of mergers and market concentration
    that occurred in the 1990s led to higher gasoline prices, prompted a
    reevaluation by the Federal Trade Commission of how it reviews petroleum
    industry mergers in an effort to protect

    U.S. consumers from potential anticompetitive effects of such mergers in
    the future. ( GAO-04-96 )

    1.73.C. Improving the Nuclear Regulatory Commission's Oversight of Nuclear
    Power Plants: In a series of reports and testimonies, we have identified a
    number of challenges to the Nuclear Regulatory Commission's ability to
    effectively regulate the safety and security of the nation's commercial
    nuclear power plants. We have made a number of recommendations to improve
    force-on-force exercises (mock terrorist attacks) that test nuclear power
    plants' defenses, and we are currently assessing the process the
    commission used to revise the design basis threat, which describes the
    terrorist threat plants are required to defend against. As part of this
    review, we have observed force-on-force exercises at two nuclear power
    plants and confirmed that the commission is implementing improvements we
    recommended that will better enable the commission to evaluate plants'
    ability to defend against terrorist attacks. In 2005, we reported that
    plants' control and accounting of radioactive spent nuclear fuel have been
    uneven and that the commission should establish specific requirements and
    inspection procedures for control and accounting of loose fuel rods and
    segments. In response to our recommendation, the commission is clarifying
    its guidance to plants on control and accounting of spent fuel and
    revising its inspection procedures-actions that if properly implemented,
    will reduce the risk that plants will report additional cases of missing
    spent nuclear fuel. ( GAO-03-752 , GAO-04-1064T, GAO-05-339 , and
    GAO-05-754T )

    A safe, secure, and effective national physical infrastructure

    1.74.A. Improving Oversight of State Highway Safety Programs: In 2003 we
    reported that National Highway Traffic Safety Administration (NHTSA)
    regional offices were inconsistent in their oversight of state highway
    safety programs. Consequently, states with relatively poor safety
    performance sometimes received less oversight than states with better
    safety performance. We recommended that NHTSA provide clear guidance to
    its regional offices on the appropriate use of program management reviews
    and program improvement plans. In response to our recommendations, NHTSA
    developed new policies for its regional offices on when it is appropriate
    to use management reviews and improvement plans to assist state highway
    safety programs. Among other things, the new procedures direct NHTSA
    regional offices to conduct management reviews in each state at least
    every 3 years. In addition, the new procedures direct NHTSA regional
    offices to work with a state in collaboratively developing a performance
    enhancement plan (formerly known as an improvement plan) when a state
    fails to meet performance goals, shows substandard performance, or fails
    to show improvement toward priority safety program goals over a 3year
    period. The Congress is considering specifying these improvements and
    mandating that we perform a follow-up review. ( GAO-03-474 )

    1.75.A. Updating Assessments of Highway Traffic Safety Data Systems: In a
    November 2004 report, we recommended that the Congress consider requiring
    states to have assessments of their traffic records safety data systems
    that are no more than 5 years old in order to participate in NHTSA's
    traffic safety data improvement program. According to NHTSA officials,
    these assessments were valuable starting points in helping states take
    stock of the strengths and weaknesses of their entire systems. During our
    review, we found some assessments submitted by states that were nearly 10
    years old. We also found assessments based on recent information reflected
    the dynamic and often changing reality of state safety data systems. In
    August 2005, the Congress passed the Safe, Accountable, Flexible, and
    Efficient Transportation Equity Act of 2005. The act included our
    recommendation that states have up-to-date assessments or audits of their
    highway safety data and traffic records systems in order to participate in
    NHTSA's state traffic safety information system improvements grant
    program. By implementing this eligibility requirement, NHTSA will have
    improved monitoring of state progress and have made a more detailed
    accounting of traffic data system improvements made as a result of the
    grant program. (GAO-05-24 )

    1.76.A. Improving NHTSA's Oversight Efforts:

    We found that NHTSA was inconsistent in its use of management reviews and
    improvement plans in providing oversight of state highway safety programs.
    We recommended that NHTSA develop guidance on the use of management and
    improvement plans. In response, NHTSA, in April 2004, reported to the
    Congress that it was establishing new procedures to address problems we
    identified. These new procedures included conducting triennial management
    reviews and establishing performance enhancement plans for states that
    fail to meet program goals over 3-year period. In February 2005, we
    discussed incorporating our recommendations and alternative language for
    the surface transportation reauthorization bill with congressional staff.
    In July 2005, the Congress passed the Safe, Accountable, Flexible and
    Efficient Transportation Equity Act: a Legacy for Users, which enacted the
    NHTSA policies established directly in response to our recommendations.
    The law directs NHTSA to conduct triennial management reviews of state
    highway safety programs and program reviews of states that fail to make
    substantial progress in meeting priority program goals over a 3-year
    period. (GAO-03-474 )

    1.77.A. Authorizing the Retention of Proceeds from Real Property: In 2003,
    we reported that most agencies could not retain the proceeds from the sale
    of unneeded property and this acted as a disincentive to disposing of
    unneeded property. We concluded that agencies should be permitted to
    retain proceeds for reinvestment from real property where a need exists.
    Subsequently, in the 2005 Consolidated Appropriations Act, for fiscal year
    2005 the Congress authorized the Administrator of the General Services
    Administration (GSA) to retain the net proceeds from the conveyance of
    real and related personal property. These proceeds are to be deposited
    into the Federal Buildings Fund and are to be used for GSA's real property
    capital needs. (GAO-03-122 )

    1.78.A. Identifying Improvements Needed to Strengthen Security and Achieve
    Efficiencies in Airport Passenger and Checked Baggage Screening: We
    conducted a body of work assessing the physical screening of airport
    passengers and their checked baggage, as well as the prescreening of
    passenger names against terrorist watch lists, designed to identify and
    prevent terrorist threats. We found that insufficient screener staffing
    and a lack of high-speed Internet and intranet connectivity at the
    nation's airports resulted in the majority of screeners not meeting
    legislatively mandated screener training requirements, and that weakness
    and vulnerabilities continued to exist in passenger and checked baggage
    screening systems. We also found that DHS's Transportation Security
    Adminis-tration's (TSA) internal solutions for deploying explosive
    detection systems to screen checked baggage resulted in operational
    inefficiencies and diminished security, and that its efforts to install
    in-line baggage screening systems have been limited. Related to passenger
    prescreening against terrorist watch lists, we found the effectiveness of
    TSA's Secure Flight program in identifying passengers who should undergo
    additional security scrutiny had not been determined, and that TSA had not
    resolved how passenger data would be transmitted from air carriers to TSA
    to support Secure Flight operations. We also reported that TSA did not
    comply with Privacy Act requirements by not fully disclosing to the public
    its use of personal information from commercial data sources during
    testing as required. Specifically, a TSA contractor collected more than
    100 million commercial data records containing personal information, such
    as name, date of birth, and telephone number, without informing the
    public. Based on this work, we made numerous recommendations to strengthen
    screener training, systematically evaluate baggage screening needs at
    airports, and manage the risks associated with Secure Flight's development
    and implementation. TSA agreed to take corrective actions in these areas.
    Several pieces of legislation were passed requiring a plan and guidelines
    for installing in-line baggage screening systems and measures to
    strengthen Secure Flight's development and implementation, based in part
    on our work. ( GAO-05-324 , GAO-05-356 , GAO-05-365 , GAO-05-457 , and
    GAO-05-864R )

    1.79.C. Implementing Postal Reforms to Address Structural and Systemic
    Deficiencies: Our testimony identified the need for comprehensive postal
    reform legislation to address challenges that threaten the U.S. Postal
    Ser-vice's long-term outlook and identified some of the key principles for
    postal reform, including the need for additional managerial flexibility to
    improve the efficiency of postal operations and increased transparency and
    accountability for results, which have been incorporated into pending
    postal reform legislation. We also reported that the Postal Service faces
    challenges in eliminating excess capacity in its mail processing
    infrastructure, but its infrastructure realignment strategy was not
    sufficiently clear or accountable. The Congress referred to our work
    related to postal infrastructure realignment and said that it would work
    to ensure that the Postal Service implemented our recommendations.
    Language in postal reform legislation would require the Postal Service to
    report to the Congress on how it plans to modernize its infrastructure and
    provide greater transparency through annual reports on its progress in
    this area. We also testified that one of the key elements of postal reform
    is to clarify the Postal Ser-vice's mission and role so that it remains
    focused on universal postal service. Two of our reports on the Postal
    Service's electronic commerce activities contributed to language in
    pending postal reform legislation to limit the Postal Service's mission to
    delivering physical mail pieces to avoid the financial costs the Postal
    Service has incurred when it ventured away from its core business.
    (GAO/GGD-00-188 , GAO-02-79 , GAO-05-261 , and GAO-05-453T )

    1.80.C. Improving Congressional Oversight of the Airline Industry's
    Financial Condition: We reported on the deteriorating financial condition
    of the U.S. commercial airline industry, providing the Congress with some
    key insights into the underly-ing structural problems hampering the
    industry's recovery. Since 2001, the major U.S. airlines have lost more
    than $30 billion, with four major U.S. legacy airlines-Delta, Northwest,
    United, and US Air-ways-operating under bankruptcy protection. United and
    US Airways terminated their pension programs, transferring their plans to
    the Pension Benefit Guaranty Corporation at a net cost to the corporation
    of $9.7 billion; plan participants lost $5.3 billion in benefits (in
    constant 2005 dollars). We also reported that the airlines faced a
    considerable liquidity crisis over and above pension funding requirements.
    Legislative pension reform allowing airlines to amortize pension
    contributions over more years would relieve some of the liquidity
    pressures, but does not ensure that they will avoid bankruptcy because it
    does not fully address other fundamental structural problems, such as
    other high fixed costs. ( GAO-05-83 , GAO-05-945 , and GAO-05-835T )

    1.81.C. Identifying Federal Action Needed to Secure Cargo Transported by
    Air: We found that TSA took initial steps in applying a risk-based managed
    approach to address air cargo security. However, TSA had not yet
    established a methodology or schedule for completing assessments of
    vulnerabilities and critical assets. We also found that TSA had not
    developed measures to assess the adequacy of air carrier compliance and
    systematically analyze audit results to target future inspections, or
    assessed the effectiveness of its enforcement actions to ensure compliance
    with security requirements. We also found that TSA's future plans for
    enhancing air cargo security pose financial, operational, and
    technological challenges to the agency and air cargo industry
    stakeholders, and that TSA may have underestimated the cost of proposed
    security measures. We recommended that among other actions, TSA complete
    assessments of air cargo vulnerabilities and critical assets; develop
    measures to gauge air carrier compliance; and ensure that data used in
    identifying elevated risk cargo are complete, accurate, and current. TSA
    generally concurred with the findings and recommendations in the
    restricted version of the report. (Based on a report that contains
    sensitive material and is not available to the public)

    1.82.C. Improving Federal and Private Sector Efforts to Secure General
    Aviation: We found that a systematic assessment of threats to general
    aviation-all aviation other than commercial and military-had not been
    conducted, and that TSA and the Federal Aviation Administration (FAA) had
    taken limited steps to secure related airports, aircraft, and
    infrastructure. We also found that TSA has not established policies and
    procedures for reviewing and revalidating the need for flight restrictions
    that limit access to airspace for indefinite periods that could negatively
    affect the general aviation industry. We further found limitations in
    TSA's process for requiring background checks of foreign candidates for
    U.S. flight training schools. We recommended, among other things, that TSA
    develop a plan for implementing a risk-managed approach to strengthen
    general aviation security, and that FAA establish a documented process for
    reviewing and revalidating flight restrictions. TSA and FAA agreed to take
    corrective actions, and legislation, based on input from our work, was
    passed requiring DHS to improve pilot licenses to prevent tampering and
    alterations. TSA issued an interim final rule in July 2005 to restore
    limited general aviation aircraft operations at Reagan National airport.
    (GAO-05-144 )

    1.83.C. Identifying Federal Action Needed to Strengthen Airport Perimeter
    Security and Access Controls: We conducted a comprehensive review of
    airport perimeter security and access controls that addressed and made
    associated recommendations related to employee access to secure airport
    areas, including airport employee screening requirements. We briefed
    numerous congressional committees on this work and conferred with
    congressional staff as language was drafted for the Intelligence Reform
    and Terrorism Prevention Act of 2004. We also briefed the 9/11
    Commission-whose recommendations formed the basis for this act-on our
    results in this area. ( GAO-04-728 )

    1.84.C. Enhancing Federal Leadership Needed to Address Rail Security: We
    found that TSA had not completed risk assessments of the passenger rail
    industry, or completed a methodology for determining how to analyze and
    characterize risks that have been identified through other risk assessment
    initiatives. The lack of a risk management framework will make it
    difficult for TSA to compare risks across sectors, prioritize them, and
    allocate resources accordingly. We also found that federal and rail
    industry officials raised questions about the feasibility of implementing
    and complying with TSA rail security directives. We also observed security
    practices among certain foreign passenger rail systems or their
    governments that are currently not used by the domestic rail operators or
    the U.S. government, which could be considered for use in the United
    States. We recommended, among other things, that TSA develop a plan for
    completing its methodology for conducting risk assessments and develop
    rail security standards that can be measured and enforced. We also
    recommended that TSA consider the feasibility of implementing certain
    security practices in the United States that are currently used by foreign
    rail operators. DHS, the Department of Transportation, and Amtrak reviewed
    a draft of this report and generally agreed with the report's
    recommendations. Further, DHS stated that it appreciated the thorough
    analysis and discussion of rail security initiatives within our report and
    that it will continue to be cognizant of the areas of passenger rail
    security where further improvements can be made. ( GAO-05-851 )

    1.85.C. Coordinating Agencies' Facility Protection Efforts and Promoting
    Key Practices: The Interagency Security Committee is chaired by DHS and is
    composed of representatives from most agencies. In November 2004, we
    recommended that DHS direct the committee to develop an action plan that
    identifies resource needs, goals, and time frames for meeting its
    responsibilities, and propose strategies for addressing the challenges it
    faces. Such an action plan would provide a road map for DHS to use in
    developing resource priorities and for the committee to use in
    communicating its planned actions to agencies and other stakeholders,
    including the Congress. DHS agreed to implement this recommendation. In
    addition, the committee has begun to implement our recommendation to
    establish a set of key practices that could guide agencies' efforts in the
    facility protection area. This initiative could be used to evaluate agency
    actions, identify lessons learned, and develop strategies for overcoming
    challenges. ( GAO-05-49 )

    1.86.C. Providing Critical Information for the Congress Regarding Issues
    Related to the Digital Television Transition: Since 2002, we have reported
    why the transition from analog to digital television will not be likely to
    end by 2006- the target date originally set by the Congress. We have
    provided critical recommendations and information for policymakers to
    consider in their attempts to further the transition. Completing this
    transition is critical because the return of radio frequency spectrum used
    for analog broadcast television at the end of the digital television
    transition will provide many benefits to society, such as easing the
    spectrum scarcity facing public safety first responders; engendering
    economic growth and consumer value from spectrum redeployed to wireless
    services; and affording the federal government auction revenues, which
    could range from about $10 billion to $30 billion according to some
    studies. We reported on the digital television transition in Germany, and
    the Congress is now considering providing subsidies to low-income
    households, which was a feature of the German transition plan. This year,
    we also provided information on the likely costs of a subsidy to certain
    households for the purchase of digital television equipment and we also
    testified about the administrative issues that may arise in implementing a
    subsidy program. Legislation has been introduced in both the Senate and
    House aimed at speeding the transition using a subsidy program. (
    GAO-05-258T )

    1.87.C. Enhancing the New Car Assessment Program: In 2005, we reported
    that NHTSA's New Car Assessment Program, which subjects new vehicles to
    crash and rollover tests, is at a crossroads and needs to be changed to
    remain relevant. For example, we found that the usefulness of current
    testing has been eroded by changes in the vehicle fleet that have occurred
    since the program began in 1978. The growing number of large pickups,
    minivans, and sport utility vehicles in the nation's vehicle fleet is
    creating different safety risks, particularly with regard to the
    incompatibility of large and small vehicles and vehicle rollover, which we
    found that the New Car Assessment Program does not fully address. In
    addition, the very success of the program has brought it to a point where
    it is not clear that the program's goals can continue to be met. Because
    almost all vehicles today receive top ratings in frontal and side crash
    tests, the program provides little incentive for manufacturers to further
    improve vehicle safety and does not provide consumers with information
    that differentiates the safety of one vehicle compared to another-two key
    goals of the program. Our recommendations will have continuing value in
    improving the safety of new vehicles. The agency generally agreed with the
    report, and it plans to address the key issues we raised to improve the
    program-namely, examining the growing size of vehicles in the nation's
    fleet, the risks associated with vehicle rollover, new technologies that
    can help prevent crashes from occurring, and ways to provide the public
    with improved safety information in a more timely manner. (GAO-05-370 )

    1.88.C. Reevaluating the Funding of Highway and Transit Grant Programs: In
    light of the nation's long-term fiscal outlook and the need to
    fundamentally reexamine the base of federal spending, we have highlighted
    the need to reevaluate highway and transit grant programs financed through
    the Highway Trust Fund. The trust fund was created to construct the
    interstate highway sys-tem-although the system is now complete, the
    program's basic financing and delivery mechanisms have not changed. Most
    highway grant funds are apportioned by formula, without regard to the
    needs or capacity of recipients. Evidence also suggests that increased
    federal highway grants do not result in commensurate increases in overall
    investment because states and localities in part substitute federal funds
    for funds they otherwise would have spent on highways. The Department of
    Transportation has established performance measures and outcomes to
    enhance mobility and security, but the program has no mechanism to link
    funding with the accomplishment of these measures and outcomes.

    In addition, while a wide range of factors must be considered when
    selecting highway or transit projects, decision makers often do not use
    formal analytical tools when evaluating projects, and even when they do,
    these analyses generally do not drive investment decisions. The Federal
    Highway Administration oversees the expenditure of tens of billions of
    federal dollars a year but lacks goals and measures that guide its
    activities, workforce plans that support these goals and measures, and
    data collection and analysis efforts to identify problems and transfer
    lessons learned. To improve federally funded highway and transit programs,
    we suggested that the Congress consider expanding the mandate of a
    proposed national commission to assess possible changes to the federal-aid
    highway program, including changes to the program's design, structure, and
    funding formulas; the roles of the various levels of government; and the
    inclusion of greater performance and outcome-oriented features. In
    addition, we recommended that the Federal Highway Administration link its
    activities and staff expectations to oversight goals and measures; develop
    workforce plans that support its goals and measures; and develop the
    capability to track costs, identify problems, and transfer lessons
    learned. (GAO-04-802 , GAO-05-172 , GAO-05-173 , and GAO-05-325SP )

    Strategic 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

    Source:See Image Sources.

    Respond to emerging threats to security

    2.1.A. Improving Controls Covering Technology Exports: In response to our
    recommendation, the Department of Commerce (Commerce) reviewed whether the
    existing catchall provision to address missile proliferation by certain
    entities-such as terrorist organizations or individu-als-sufficiently
    protects U.S. national security interests, reported the results of the
    review, and proposed modifications to the rule to help close the
    regulatory gap. We reported that a gap in control regulations covering
    exports with both military and civilian applications (dual-use exports)
    could enable individuals in most countries to legally obtain, without any
    U.S. government review, U.S. dual-use items not on the Commerce Control
    List that could be used in making a cruise missile or unmanned aerial
    vehicle. ( GAO-04-175 )

    2.2.A. Improving Controls over Computer Exports: In response to our
    recommendation to address the shortcomings of computer export controls, a
    Commerce council convened a panel of government and industry
    representatives to develop a replacement for the current method of
    measuring the composite theoretical performance of high-performance
    computers. The council advises Commerce on the technical parameters for
    export controls applicable to dual-use commodities and the administration
    of these controls. Composite theoretical performance is currently measured
    in millions of theoretical operations per second. The council's experts
    met and reached a consensus on using a new, simpler method for measuring
    performance. (GAO-01-10 ) 2.3.A. Improving Processes to Share Information
    on Maritime Threats: In April 2005, we identified U.S. Coast Guard
    procedures for providing security clearances that needed to be improved to
    get classified threat information to key state, local, and private sector
    stakeholders involved in port security. These stakeholders needed access
    to classified information, but did not have federal security clearances
    allowing them to receive the threat information. Lack of adequate guidance
    from Coast Guard Headquarters had stalled the process to provide
    clearances to more than 350 state, local, and private sector officials.
    Based on our findings, the Coast Guard provided the guidance and took
    other steps to expedite the process. This improvement will make it easier
    for key stakeholders in maritime activities to get sensitive threat
    information and thus take appropriate protective actions to ensure port
    security. ( GAO-05-394 )

    2.4.A. Improving Management of U.S. Coast Guard Deepwater Program: Based
    on a body of work assessing the U.S. Coast Guard's Deepwater program, we
    identified areas for improved program oversight and management. We found
    that while the Coast Guard generated some limited information on the
    condition of its legacy assets, the majority of the Coast Guard's measures
    were not sufficiently robust to link an asset's declining condition to
    degradation in mission capabilities or performance. We noted that without
    such measures, the extent and severity of the decline in the existing
    deepwater legacy assets and their true condition could not be fully
    determined. Based on our findings, the Coast Guard has begun developing
    improved measures to more accurately capture data on the extent to which
    its deepwater legacy assets are degraded in their mission capabilities.
    This improvement will provide more accurate and mean-ingful information to
    the Coast Guard as well as to DHS as it decides where to spend limited
    budget dollars to obtain the greatest capabilities in the Deepwater
    program. In addition, we recommended the Coast Guard update the original
    2002 Deepwater acquisition schedule in time to support the fiscal year
    2006 Deepwater budget submission to DHS and the Congress and at least once
    a year thereafter to support each budget submission. We also recommended
    that the updated schedule include the current status of asset acquisition
    phases, interim phase milestones, and the critical paths linking assets.
    Based on our recommendations, the Coast Guard has taken steps to update
    the outdated schedule and has indicated that it plans to continue to
    update the schedule each month for internal efforts. The Coast Guard
    Deepwater Deputy Program Executive Officer agrees that these efforts to
    update the Deepwater acquisition schedule and integrate the individual
    schedules of the assets have improved the Coast Guard's overall management
    of the program. (GAO-05-307T, GAO-05-651T, and GAO-05-757 )

    2.5.A. Ensuring Proper Implementation of Biometrics for Aviation Security:
    In our May 2004 testimony on the use of biometrics (a wide range of
    technologies that can be used to verify identity by measuring and
    analyzing human characteristics) for aviation security, we reported on the
    need to identify how biometrics will be used to improve aviation security
    prior to making a decision to design, develop, and implement biometrics.
    Using information from our statement, the House introduced a bill on July
    22, 2004, directing TSA to establish system requirements and performance
    standards for using biometrics, and to establish processes (1) to prevent
    individuals from using assumed identities to enroll in a biometric system
    and (2) to resolve exceptions. These provisions were later included in an
    overall aviation security bill and were eventually included in the
    Intelligence Reform and Terrorism Prevention Act of 2004. (GAO-04-785T )

    2.6.A. Strengthening Federal Agency Information Security: In 2005, we
    identified specific information security improvements needed at the
    following agencies: DHS, IRS, SEC, FAA, the Defense Logistics Agency, and
    the Federal Deposit Insurance Corporation. Also, on the basis of our prior
    recommendations, agencies-including VA, IRS, the Bureau of the Public
    Debt, the Federal Deposit Insurance Corporation, the Federal Reserve, and
    Commerce-took numerous actions to strengthen their information security
    practices. Actions included improvements to agencies' information security
    programs to aid in understanding risks and selecting and properly
    implementing effective controls; access controls to limit the ability to
    read, modify, or delete information to authorized individuals; software
    change controls to allow only authorized software programs to operate; and
    service continuity controls to protect computer-depen-dent operations from
    significant disruptions. (GAO-05-262 , GAO-05-482 , GAO-05-486 ,
    GAO-05-567T, GAO-05-700 , and GAO-05-712 )

    2.7.C. Improving the Government's Ability to Respond to Terrorist Attacks
    and Other Emergencies: We helped the Congress move toward ensuring that
    the federal government is prepared for emergencies, including terrorist
    attacks. For example, we reported, based on detailed assessments of
    continuity of operations plans at major federal agencies, that agencies
    had not yet identified their essential functions that must be accomplished
    in an emergency and that none of the plans met the requirements of federal
    guidance. This work has focused congressional, agency, and public interest
    on these issues. Further, consistent with our recommendations, the
    Homeland Security Council initiated a major effort to identify essential
    functions governmentwide, including the identification of eight national
    essential functions and a process for identifying related agency-level
    functions. In addition, FEMA, which is the executive agent for continuity
    of operations planning, issued improved guidance addressing the
    prioritization of essential functions and the identification of associated
    resources. Finally, two agencies that did not have continuity plans in
    place have now developed them. As a result of these actions, the federal
    government is better positioned to respond to emergencies and continue
    essential services during and after emergencies of all types. ( GAO-05-577
    and GAO-05-619T )

    2.8.C. Assessing and Improving Chemical Facility Security: In March 2005,
    we reported that DHS has estimated that there are about 4,000 chemical
    manufacturing facilities in the United States, but the exact number is
    uncertain. About 1,100 of these facilities belong to two major chemical
    associations that require their member compa-nies and facilities to take
    actions to assess and improve their security. Only those facilities that
    are subject to the Maritime Transportation Security Act are required by
    federal law or regulation to take any actions to assess and improve their
    security, and the Coast Guard has not yet assessed the effectiveness of
    those actions. The Congress directed DHS to begin vulnerability
    assessments of those chemical facilities at highest risk and develop a
    protection strategy for the chemical sector that includes clear,
    measurable benchmarks for improving security and sharing lessons learned
    throughout the sector. (GAO-05-327 )

    2.9.C. Promoting Government Efforts to Address Emerging Security Threats:
    In fiscal year 2005, we reported on three emerging information security
    issues facing the federal government: security of wireless networks in the
    federal government; information security of third-party services; and
    emerging cybersecurity threats, such as spam, phishing, spyware, and
    malware. We found that agencies generally were not effectively applying
    the requirements in the Federal Information Security Management Act of
    2002 (FISMA) to protect and maintain the confidentiality, integrity, and
    availability of their information and information systems. Also, we noted
    that by relying on a contractor's assessment of an agency's information
    systems, an agency official may not obtain a clear understanding of the
    effectiveness of security controls or be assured of the validity of the
    responses without independent testing. The Office of Management and Budget
    (OMB) recognized the significance of our findings and took immediate
    action, implementing several recommendations. Specifically, OMB made key
    changes to improve its fiscal year 2005 FISMA reporting instructions to
    the federal agencies, including (1) specifying that self-reporting by
    contractors does not meet agencies' FISMA requirements to ensure the
    security of their information systems and (2) requiring agencies to report
    on their policies and special procedures pertaining to new technologies
    and emerging threats, including wireless, spyware, and malware. OMB's
    actions could help to focus federal agencies' efforts to address and
    mitigate these emerging information security issues. ( GAO-05-231 ,
    GAO-05-362 , and GAO-05-383 ) 2.10.C. Improving Policies and Oversight
    Needed for TSA's Designation of Sensitive Security Information: In June
    2005, we reported that TSA lacked guidance and procedures, aside from the
    regulations themselves, for determining what constitutes sensitive
    security information. TSA also lacked a system of internal controls to
    ensure that the sensitive security information designation is being
    appropriately applied. It is clearly very important that some information
    related to threats to or protection of our transportation systems be held
    out of the public domain. However, it is also the case that the public has
    a legitimate interest and need for information related to threats and
    vulnerabilities. While TSA has indicated that it was already in the
    process of taking some steps to develop guidance and to institute internal
    control procedures, our work reinforced the need to take steps to ensure
    proper application of the sensitive security informa tion designation.
    (GAO-05-677 )

    2.11.C. Increasing Security of Cargo Containers to Prevent Smuggling of
    Weapons of Mass Destruction: We identified a number of limitations in two
    DHS programs designed to increase the security of cargo containers and
    prevent terrorists from using such containers to smuggle weapons of mass
    destruction into the United States. The department was reducing its
    scrutiny of shipments from certain companies before it had assurances that
    the companies had adequate security procedures in place. We also found
    that not enough staff had been assigned to identify high-risk containers
    at several key ports. In addition, the department did not have technical
    requirements in place to assess the ability of foreign countries to
    inspect the containers with scanning equipment. Finally, the department
    had not developed performance measures to evaluate the performance of
    these cargo container programs. In response to our recommendations, the
    department agreed to improve its ability to assess company security
    procedures, identify high-risk containers, inspect containers with
    scanning equipment, and manage the programs overall. ( GAO-05-404 ,
    GAO-05-466T, and GAO-05-557 )

    2.12.C. Enhancing Government and Private Sector Critical Infrastructure
    Protection Efforts: Critical infrastructure protection activities are
    intended to enhance the security of the public and private infrastructures
    that are essential to our national security, economic security, and public
    health and safety. Critical infrastructures include energy, information
    technology (IT) and telecommunications, water supply, and the defense
    industrial base. Over the last several years, we helped promote the
    progress made by federal agencies and nonfederal infrastructure sectors in
    implementing the activities required and suggested by federal critical
    infrastructure protection policy. For example, we highlighted where the
    government needed to improve public health IT infrastructure, which
    affects the nation's ability to respond to public health emergencies,
    including bioterrorism. In May 2005, we reported on DHS's progress in
    fulfilling 13 key cybersecurity-related critical infrastructure protection
    responsibilities identified in law and federal policies. We noted that
    while DHS has initiated multiple efforts, it has not fully addressed any
    of the 13 key cybersecurity-related responsibilities, and it has much work
    ahead in order to be able to fully address them. We also reported that DHS
    faces a number of challenges that have impeded its ability to fulfill its
    cyber critical infrastructure protection responsibilities. Key challenges
    include achieving organizational stability, gaining organizational
    authority, overcoming hiring and contracting issues, increasing awareness
    about cybersecurity roles and capabilities, establishing effective
    partnerships with stakeholders (other federal agencies, state and local
    governments, and the private sector), achieving two-way information
    sharing with these stakeholders, and demonstrating the value DHS can
    provide. This work resulted in recommendations that DHS strengthen its
    ability to implement key cybersecurity responsibilities by prioritizing
    and completing critical activities and resolving underlying challenges.
    (GAO-05-308 and GAO-05-434 )

    Ensure military capabilities and readiness

    2.13.A. Rebalancing Army Force Structure to Create Needed Units and Avoid
    $3.4 Billion of Costs: In May 2001, we recommended that the Department of
    the Army establish mission criteria to provide a firmer basis for its
    strategic reserve, domestic support, and homeland defense requirements. At
    the time of our review, the Army reported it was experiencing a
    45,000-position shortfall in its warfighting force, and we were concerned
    that the Army might not be making the best allocation of its available end
    strength among all of its mission requirements. In response, the Army
    programmed force structure changes affecting 34,018 spaces over the period
    covering fiscal years 2004 through 2009, increasing available units for
    military police, military intelligence, special forces, chemical, civil
    affairs, and psychological operations. Army officials agreed that these
    actions have created a substantial cost avoidance of at least $3.4 billion
    because the Army was able to rebalance the force to create needed units,
    with minimal increases in authorized end strength. ( GAO-01-485 )

    2.14.A. Improving DOD's Weapon Acquisition Process: Since 1990, we have
    designated DOD's weapon acquisitions as a high-risk area due largely to
    persistent cost increases, schedule delays, and performance shortfalls. In
    our March 2005 report on 54 weapon acquisition programs, which represent a
    total investment of over $800 billion, we noted significant cost growth
    and schedule delays-largely the result of programs not complying with
    DOD's policy on demonstrating high levels of technology, design, and
    production knowledge before key program commitments were made. Just 4
    years ago, the largest 5 programs cost about $281 billion; today, in the
    same base year dollars, the largest 5 programs cost about $521 billion. In
    light of these facts, the Congress called for more oversight and better
    outcomes from weapon system programs. In response, DOD established the
    Defense Acquisition Performance Assessment Project to assess every aspect
    of the current acquisition system and provide a road map for restructuring
    DOD's weapon acquisition system. Additionally, the Air Force has been
    directed to take actions to improve its software development practices, as
    our work demonstrated that additional controls would help increase
    successful outcomes of complex software-intensive weapon systems. (
    GAO-04-393 and GAO-05-301 )

    2.15.A. Contributing to Properly Funding the Military's Needs: We reviewed
    the reasonableness of DOD's fiscal year 2005 budget request, its use of
    budgeted funds in prior years, and its future resource needs. By the end
    of September 2004, we identified billions of dollars in potential costs
    avoided and opportunities for DOD to improve its internal oversight of the
    use and tracking of funds. Overall, our work contributed to multiple
    actions that resulted in total financial benefits of about $2.4 billion.
    Specifically, our work analyzing various aspects of DOD's operation and
    maintenance budget request for fiscal year 2005 resulted in the Congress
    reducing DOD's budget by almost $2 billion because of high unobligated
    balance levels and an overstatement of need in the civilian pay budget
    request. For example, our papers assisted the Congress in identifying
    funds not used by providing analyses of average unobligated balances for
    fiscal years 1999 through 2003 and the unexpended balances canceled and
    reverted to the U.S. Treasury for fiscal years 1994 through 1998. The
    congressional conferees subsequently reduced DOD's fiscal year 2005
    operation and maintenance budget by $833.1 million for the active and
    reserve military components and defense agencies. We also reported that
    the Defense Emergency Response Fund for the war on terrorism continued to
    maintain a high level of unobligated funds for several years. Based on our
    continued monitoring of these funds, the Congress directed DOD to transfer
    about $130 million in unobligated funds to the Iraqi Freedom Fund. Our
    past work also prompted DOD to become more engaged in managing its
    contracts looking for opportunities for greater economy and efficiency.
    The Army estimated that by adopting our recommendations for increased
    monitoring, it was able to save over $300 million in its Balkan support
    contracts. ( GAO-05-328 )

    2.16.A. Improving the Outcomes of DOD's Aircraft System Acquisitions:
    DOD's F/A-22 Raptor, Joint Strike Fighter, Global Hawk Unmanned Aerial
    Vehicle, and E-10A Command and Control Aircraft programs-which together
    represent about a $322 billion investment-have not captured key knowledge
    early enough to efficiently and effectively manage program risks. Since
    the F/A-22's inception in 1986, the Air Force has planned for large
    investments in new capabilities without developing a new business case to
    justify these investments or aircraft quantities. The Joint Strike Fighter
    program has encountered serious design problems that required major
    changes to reduce the weight of the aircraft, and further design changes
    are likely. Delayed delivery, as well as reduced quantities, of both the
    F/A-22 and the Joint Strike Fighter could require existing aging aircraft
    to remain in the inventory longer. The Global Hawk program has been
    restructured twice to develop and produce a new and larger aerial vehicle
    in half the time originally planned. The accelerated schedule depends on a
    risky acquisition strategy that has already resulted in cost increases,
    schedule slippages, and performance trade-offs. Consistent with our
    recommendations, the Congress is considering

    (1) funding reductions that would slow Joint Strike Fighter development to
    allow the program to mature and (2) decreased procurement of the Global
    Hawk until a new acquisition strategy that reduces risk and justifies
    further investments is completed. Our review of the E-10A program raised
    questions about the overall business case for the program as well as DOD's
    strategy to make important decisions before critical knowledge about the
    aircraft's design, manufacturing, and reliability was known. DOD
    subsequently reduced the program's budget by a total of $600 million and
    delayed the program by 5 years until it could demonstrate more knowledge
    about the aircraft. ( GAO-05-6 , GAO-05-271 , GAO-05-273 , GAO-05-304 ,
    GAO-05-390T, and GAO-05-519T )

    2.17.A. Improving DOD's Missile Defense System Acquisitions: DOD plans to
    spend nearly $67 billion over the next 6 years to develop and field
    ballistic missile defenses. The diverse set of technologies that must be
    developed, integrated, and deployed across an array of land-, air-, sea-,
    and space-based platforms makes this system a challenging and risky
    endeavor, as evidenced by recent test failures and the delayed activation
    of an initial capability. Although DOD aims to place capabilities in the
    hands of the warfighter more quickly and with the flexibility to respond
    to an evolving threat, DOD has been unable to deliver the quantities
    promised within the original cost estimates- due in part to a lack of
    knowledge about the emerging technologies. Additionally, the year-to-year
    variability of the program's goals has made congressional oversight of the
    execution of this program difficult. Based on our reporting of these
    issues since 2003, DOD has taken a more knowl-edge-based approach to
    developing an element of the system. Over a 5-year period-from fiscal year
    2005 through fiscal year 2009-program funding will be reduced by about
    $5.2 billion, which has a present value of about $4.7 billion. DOD has
    also taken specific actions to ensure that the fielded system is
    adequately tested and that the Congress has adequate information to
    conduct oversight of this large and complex program. ( GAO-03-441 ,
    GAO-04-409 , and GAO-05-243 ) 2.18.A. Improving DOD's Acquisition Business
    Processes: For fiscal year 2003, the Congress appropriated $47 billion to
    the military departments and the Missile Defense Agency for defense
    research and development-$3.8 billion dollars of which DOD subsequently
    shifted, or reprogrammed, from one research and development account to
    another or temporarily withheld. Although the Congress permits such
    reprogramming, we found that programs had reprogrammed funds multiple
    times and some had inflated their budget requests in anticipation of
    funding adjustments. At the same time, reporting on reprogrammed funds has
    been of limited use in terms of content and timing. As a result of our
    work, the Congress has taken action to end inappropriate reprogramming
    practices and to provide detailed and timely data on reprogramming and
    withholding activity. The Congress is considering restricting DOD's
    ability to rebaseline programs-a practice we found reduced cost increases
    below the threshold that would trigger required reporting to the
    Congress-as well as directing DOD to analyze alternatives to weapon system
    programs that exceeded their original cost baselines by more than 15
    percent. ( GAO-04-944 and GAO-05-182 )

    2.19.C. Improving the Outcomes of Land System Acquisitions: The Army's
    Future Combat Systems-a networked suite of light and agile weapons and
    other systems-is, in the Army's words, the "greatest technology and
    integration challenge the Army has ever undertaken." An investment of well
    over $100 billion, we found that this program is at significant risk for
    not delivering required capability within cost and schedule estimates.
    Nearly 2 years after program launch and with $4.6 billion invested,
    requirements are still changing and only 1 of the system's more than 50
    technologies has sufficiently matured. Based on our findings, the Congress
    has begun to take action to restrict funding for key program elements
    until certain requirements have been met and demonstrated, and to require
    independent analyses of the rationale and cost of additional requirements
    for the systems. Significantly enhanced communications and networking
    capabilities are also critical to the Future Combat Systems' success.
    However, we have reported that each of the key communications programs is
    struggling to meet ambitious sets of user requirements and steep technical
    challenges within highly compressed schedules. In particular, the Joint
    Tactical Radio System program has been unable to mature and integrate
    technologies and come up with an effective design to meet key
    require-ments-delaying the delivery of capabilities to the warfighter. As
    a result, the program is significantly over cost and behind schedule, and
    DOD is considering options for restructuring it. In light of our findings,
    the Congress has proposed reducing the funding for the program in fiscal
    year 2006 and introduced legislation requiring DOD to strengthen the
    management and oversight of the Joint Tactical Radio System development
    efforts and to report on its plans for restructuring the program.
    (GAO-05-442T and GAO-05-669 )

    2.20.C. Improving the Outcomes of DOD's Sea System Acquisitions: The
    Navy's DD(X) Destroyer is designed to be an advanced, multimission ship
    that will support forces ashore. The first ship is expected to cost over
    $3 billion. However, as the program approached two key milestones, it was
    clear that the destroyer's demanding requirements and time frames
    presented substantial challenges that greatly increased the risk of cost
    overruns, schedule delays, and degraded performance. As a result of our
    work, the Congress is considering rescinding fiscal year 2005 funds for
    the program and delaying approval of advance procurement funds for fiscal
    year 2006. The Navy is also developing a new class of surface warship-the
    Littoral Combat Ship-that is being designed to use helicopters, unmanned
    vehicles, and other systems that operate at a distance from the ship and
    that can be rapidly reconfigured to accomplish specific mine,
    antisubmarine, and surface warfare missions. However, like the destroyer,
    this program's requirements, operations, and technology created a number
    of challenges so that within the program's tight schedule between the
    delivery of the initial version of the ship and subsequent-and more
    sophisticated- versions, there would be little time to draw on lessons
    learned. As a result of our work, the Congress has begun to take action to
    limit the Navy's ability to procure subsequent versions until the results
    of an operational evaluation of the initial version is completed and the
    Navy has reported on its acquisition strategy for the subsequent versions.
    (GAO-04-973 , GAO-05-255 , GAO-05-752R , and GAO-05-924T ) 2.21.C.
    Highlighting Issues Confronting DOD in Managing Its Facilities
    Infrastructure: For several years, our reports on DOD infrastructure have
    frequently cited the underfunding of maintenance and repairs, resulting in
    the deterioration of facilities, and the negative effects on the quality
    of life for those living and working at military installations and on
    their ability to accomplish their mission activities. Our July 2005 report
    on DOD's selection process and recommendations for its 2005 round of base
    realignments and closures indicated the process followed was generally
    logical, was reasoned and well documented, and has the potential for
    financial benefits and some reductions in excess infrastructure capacity;
    however, mechanisms will be needed to monitor implementation of finalized
    recommendations to validate and periodically update projected financial
    benefit estimates. In June 2005, we recommended that DOD resolve
    long-standing inconsistencies among the services' definitions of base
    operations and support functions and expedite development and consistent
    application of a model for determining requirements. Also in June 2005, we
    reported that military training ranges are in varying degrees of
    degradation or lacked the necessary upgrades to meet training needs. DOD
    concurred with our recommendations that focused on the need for a more
    comprehensive approach for addressing deficiencies to ensure that its
    military ranges are sustainable and modernized, provide for more realistic
    training, and achieve DOD's transformation goals. Finally, our May 2005
    report on DOD's efforts to privatize its utility systems found that the
    department's economic analyses supporting individual utility privatization
    decisions gave an unrealistic sense of financial benefit to a program that
    generally increases government costs in order to pay contractors for
    enhanced services and capital improvements. We made several
    recommendations to help ensure the reliability of future analyses and to
    improve the implementation and oversight the program. ( GAO-05-433 ,
    GAO-05-534 , GAO-05-556 , and GAO-05-785 )

    2.22.C. Contributing to Congressional Oversight of Transformation of the
    Armed Forces: Transformation is one of three top priorities of the
    National Military Strategy. DOD's transformation includes a number of
    efforts to adopt new operational concepts, restructure forces, and
    rebalance its active and reserve components in order to prepare the force
    to meet future global challenges. We contributed to congressional
    oversight of DOD's transformation plans by reporting on three key areas:
    DOD's New Triad, which defines the strategic capabilities that play a
    critical role in defending the United States; the Army's modular force
    initiative; and DOD's initiatives to rebalance active and reserve forces.
    First, we reported on the need for greater visibility of projected
    spending and future investments for DOD's New Triad. The New Triad is an
    effort by DOD to significantly change its definition and conceptual
    framework for its strategic capabilities to include not only the nuclear
    capabilities, but also offensive conventional strike forces, active and
    passive defenses, and a revitalized defense infrastructure. Second, we
    testified on the Army's efforts to convert its division-based force to a
    modular brigade-based force-considered to be the most significant
    restructuring of the Army since World War II. We noted that the Army will
    be challenged to provide its new modular units with some required skilled
    personnel and equipment needed to achieve planned capabilities. We also
    reported on the services' plans to move servicemembers to high-demand
    specialties and noted that the plans are not fully developed and funding
    has not been identified to implement the planned changes. Finally, we
    reported that the Army's current policy of maintaining its reserve forces
    at low levels of readiness has resulted in unplanned and ad hoc transfers
    of personnel and equipment to deploying units, which have degraded the
    ability of nondeployed units to prepare for future overseas or homeland
    missions. ( GAO-05-21 , GAO-05-200 , GAO-05-443T, GAO-05-540 , GAO-05-660
    , and GAO-05-962R )

    2.23.C. Contributing to Improved Warfighter Support and Readiness: We
    identified five systemic deficiencies in the way DOD's supply chain
    provided support to U.S. troops in Iraq that led to shortages of tires,
    batteries, body armor, up-armored high-mobility multipurpose wheeled
    vehicles and armor kits, and other items. DOD's ability to achieve its
    goal of providing sufficient numbers of the right items at the right time
    to meet the warfighter's needs was impeded by inaccurate Army war reserve
    spare parts requirements, inaccurate supply forecasts, insufficient and
    delayed funding, delayed acquisition, and ineffective distribution. We
    recommended that DOD take numerous actions to enhance logistics support to
    deployed forces, such as update war reserve models and run them annu-ally
    to determine war reserve requirements, develop models for computing supply
    requirements for operations and provide the item managers with timely
    information for making supply decisions, assess the industrial-base
    capacity to meet updated demands for critical items, clearly state who has
    responsibility and authority for synchronizing supply distribution from
    the United States to deployed units during operations, and establish
    common supply information systems that can requisition and match incoming
    supplies to facilitate expeditious and accurate distribution. ( GAO-05-275
    )

    2.24C. Contributing to Congressional Oversight of the Development and
    Design of DOD's National Security Personnel System:

    DOD's new personnel management system-the National Security Personnel
    System-will have far-reaching implications for civil service reform across
    the federal government. If designed and implemented properly, this system
    could serve as a model for governmentwide transformation in human capital
    management. The 2004 National Defense Authorization Act gave DOD
    significant flexibilities for managing more than 700,000 defense civilian
    employees. In February 2004, DOD and the Office of Personnel Management
    (OPM) released for public comment the proposed regulations for the new
    system. We contributed to the debate by providing the Congress with timely
    information and testimony on the far-reaching implications that DOD's new
    personnel management system will have, not just for the management of the
    department, but for civil service reform across the federal government.
    For example, the Comptroller General testified on our preliminary
    observations on DOD's proposed National Security Personnel System
    regulations in such areas as pay and performance management, adverse
    actions and appeals, and labor-management relations; the multiple
    challenges DOD faces in implementing the new system; and a governmentwide
    framework to advance human capital reform. In addition, our written
    products on DOD's efforts to design its new personnel management system
    helped the Congress monitor and assess the progress of DOD's
    implementation effort. (GAO-05-432T, GAO-05-517T, GAO-05-559T, GAO-05-641R
    , GAO-05-770R , GAO-05-771R , and GAO-05-730 ) 2.25.C. Helping Shape the
    Debate on Improving Military Compensation: The cost to provide military
    compensation-which includes a myriad of pays, benefits, and deferred
    compensa-tion-has grown steeply in recent years. This upward cost trend is
    especially dramatic for certain military-related entitlements, like
    providing lifetime health care for retired members and their families. The
    growth has been somewhat obscured, however, because the total cost of
    military compensation is scattered around the federal budget, leaving the
    Congress with an incomplete picture of the true costs. We reported in July
    2005 that the cost to the government for providing active duty
    compensation had grown by fiscal year 2004 to about $158 billion, or
    approximately $112,000 for each active duty member. More than half these
    costs were for benefits and deferred compensation, such as retirement and
    health care. DOD's approach is inefficient and may not be appropriate for
    meeting the human capital demands facing the military in the 21st century.
    Moreover, it has left many military members unsatisfied with their pay and
    benefits, despite their large and growing costs. Our work has served to
    stimulate and shape the debate within the executive branch. For example,
    the Comptroller General in July 2005 briefed the Defense Advisory
    Committee on Military Compensation. Our findings also alerted the
    President, the Congress, and the American people that DOD's approach may
    not be affordable in the longer term, especially when considered against
    the inevitable fiscal constraint facing the military and the nation.
    People are an organization's most important asset, but DOD must balance
    its investments across a wide range of programs, including infrastructure
    and hardware. Like many other federal programs described in our report
    entitled 21st Century Challenges: Reexamining the Base of the Federal
    Government, we believe military compensation is an area for reexamination.
    ( GAO-05-325SP and GAO-05-798 )

    2.26.C. Influencing DOD's Plan to Improve Supply Chain Management: In
    April 2005, the Director of OMB testified his agency agreed that fixing
    the management deficiencies highlighted by our high-risk report has the
    potential to save billions of dollars, dramatically improve service, and
    strengthen public confidence and trust in the performance and
    accountability of government. He then announced a DOD, OMB, and GAO
    collaborative effort to reduce DOD's supply chain manage-ment risk level.
    To more efficiently and effectively supply support to the warfighter, DOD
    would prepare a plan for improving the visibility over supplies, the
    accuracy of supply forecasting, and the seamless distribution of supplies
    in support of deployed forces. Since then, DOD has been developing its
    plan for improving management practices and soliciting comments from OMB
    and GAO on its format and content. The draft plan cites goals, specific
    focus areas for improvement, the responsible organizations, baseline
    metrics and data for measuring progress, performance targets for fiscal
    years 2005 through 2007, and details on 10 specific initiatives it expects
    will contribute to achieving these targets. We are waiting for DOD to
    finalize and fully implement the plan. (GAO-05-207 )

    2.27.C. Improving the Use of Private Security Providers in Iraq: The
    United States is spending billions of dollars to reconstruct Iraq while
    combating an insurgency that has targeted military and contractor
    personnel and the Iraqi people. This environment, coupled with the fact
    that providing security for agencies and contractors is not part of the
    U.S. military's stated mission, created a need for

    U.S. government agencies and reconstruction contractors to obtain
    substantially more security services than are typically needed when
    operating in other countries. Our work found that neither the agencies nor
    the reconstruction contractors were fully prepared to address this need.
    As a result, contractors had difficulty obtaining suitable security
    providers, and coordination between the military and private security
    providers continued to be problematic. In addition, agencies had limited
    data on the role, cost, and implications of using private security
    providers in Iraq. Our work provided the Congress information to increase
    its understanding of the issues associated with using private security
    providers to support reconstruction efforts and prompted DOD and other
    reconstruction agencies to initiate efforts to address the issues we
    identified. (GAO-05-737 )

    2.28.C. Improving the Outcomes of DOD's Space System Acquisitions: In
    fiscal year 2006 alone, DOD expects to spend almost $20 billion to develop
    and procure satellites and other space systems. These systems collect
    information on the capabilities and intentions of potential adversaries
    and enable U.S. military forces to be warned of missile attacks and to
    communicate and navigate while avoiding hostile actions, making them
    increasingly critical to every facet of military operations as well as the
    U.S. economy and homeland security. DOD's introduction of these important
    capabilities over time has not come without difficulties. Space system
    acquisitions have experienced problems over the past decade that have
    driven up costs by billions of dollars and delayed the delivery of needed
    capabilities to the warfighter. Since 2003, we have pointed out that DOD's
    acquisition policies and processes have not fostered a disciplined,
    knowledge-based approach to acquisitions. In response to our reports, DOD
    revised its policies and processes to increase the knowledge about space
    programs before investment decisions are made, and the Congress has held
    hearings on how to get better outcomes from space system acquisitions.
    (GAO-05-570R and GAO-05-891T )

    2.29.C. Improving Management of Funding for the Global War on Terrorism:
    We recently reviewed the reasonableness of DOD's fiscal year 2005
    supplemental budget request to support the Global War on Terrorism, its
    use of budgeted funds in prior years, its future resource needs, and the
    status of its war expenditures. We identified significant problems with
    DOD's processes for recording and reporting costs related to the war,
    raising concerns about the reliability of cost data used by DOD and the
    Congress in determining future funding needs. We also reported separately
    on the adequacy of supplemental appropriations for the war, identifying
    gaps between funding and war-related expenses, and the various actions DOD
    took to cover the difference, including deferring programs, to free up
    funds to help cover the gaps. We found that DOD had not considered using
    all available funds that were intended to support the war. If DOD had done
    so, it could have reduced or eliminated the gaps. We made several
    recommendations to help improve the reliability of DOD's cost reporting.
    In response, DOD has taken a range of corrective actions, including
    revising pertinent guidance, correcting recording errors, and establishing
    new methods for determining and reporting costs. (GAO-05-767 and
    GAO-05-882 )

    2.30.C. Improving Management of DOD's Business Transformation Efforts: DOD
    spends billions of dollars to sustain key business operations intended to
    support the warfighter, including systems and processes related to the
    man-agement of contracts, finances, the supply chain, support
    infrastructure, and weapons systems acquisition. DOD has embarked on a
    series of efforts to reform its business operations, including modernizing
    underlying IT business systems. However, serious inefficiencies remain.
    The areas of DOD's overall management approach that remain high risk
    include business transformation; business systems modernization; contract,
    financial, supply chain, and support infrastructure management; and weapon
    systems acquisition. Furthermore, limitations in DOD's approach to
    strategic planning and budgeting hinder its efforts to transform military
    capabilities and supporting business operations. During this fiscal year,
    we reported and testified on inefficiencies in DOD's business operations,
    such as the lack of sustained leadership, the lack of a strategic and
    integrated business transformation plan, and inadequate incentives. In
    particular, we pointed out the need for DOD to establish a chief
    management official to lead the department's overall business
    transformation efforts. In response to our work, DOD has acknowledged the
    need for better leadership accountability and has designated a senior
    official to be the focal point for business transformation. It has also
    stated that it is developing a plan to guide key business reform efforts.
    We will continue to monitor DOD's efforts in these areas. ( GAO-05-140T,
    GAO-05-207 , GAO-05-520T, and GAO-05-629T )

    Advance and protect U.S. international interests

    2.31.A. Designating American Samoa as a High-Risk Grantee: After the
    Congress cited our December 2004 report and its recommendations, the
    Deputy Assistant Secretary of the Interior announced in June 2005 that the
    department was designating the American Samoa government as a high-risk
    grantee as a tool to encourage other federal agencies to support the
    fiscal reform process in American Samoa. We had assisted the Congress in
    drafting language for a congressional report that would implement our
    recommendation. According to the report, the committee had reviewed our
    recent report concerning accountability for federal grants to American
    Samoa and urged the Secretary to use his authority to encourage other
    agencies to consider designating American Samoa a high-risk grantee. In
    order to be removed from high-risk category, the American Samoa government
    will have to satisfy three conditions: (1) complete single audits by the
    statutory deadline, resulting in materially clean opinions, for 2
    consecutive years; (2) have a balanced budget for 2 consecutive years,
    without regard for nonrecurring windfalls such as insurance settlements;
    and (3) remain in compliance with the memorandum of agreement executed
    with the Department of the Interior in 2002, as well as the related fiscal
    reform plan. (GAO-05-41 )

    2.32.A. Strengthening the Visa Process as an Antiterrorism Tool: Using our
    work as a primary guide, the Department of State (State) has strengthened
    the visa process as an antiterrorism tool. State issued guidance
    emphasizing national security as the department's first priority in the
    visa process; developed more than 80 standard operating procedures to
    ensure that consular officers properly review visa applications,
    effectively fulfill their national security responsibilities, and have a
    step-by-step, unambiguous guide for all procedures; established special
    teams to visit posts and reinforce standard operating procedures and
    management practices; and developed and enhanced training on analytic
    interviewing techniques, fraud prevention, counterterrorism, and the use
    of the Consular Lookout and Support System to check names on visa and
    passport applications. ( GAO-03-132NI )

    2.33.A. Improving Programs to Protect Internally Displaced Persons: In
    response to our work, the United Nations established a specific division
    to coordinate overall efforts to assist internally displaced persons-those
    forced to flee their homes because of armed conflict and persecution but
    who remain within their own country. The United Nations High Commissioner
    for Refugees (UNHCR) conducted a detailed review of its efforts to assist
    and protect displaced persons and, according to State officials, has
    implemented a more robust response for internally displaced persons.
    Ending a bureaucratic stalemate that lasted several years, the United
    States Agency for International Development (USAID) was designated the
    lead U.S. agency for internally displaced persons and instituted triweekly
    coordination meetings with State. In response to our recommendation that
    the Secretary of State strengthen international organizations' protection
    efforts by implementing training programs and forming country-level
    protection working groups, United Nations' organizations, U.S. government
    agencies, and nongovernmental organizations implemented internally
    displaced persons training programs for their staff. Also, according to
    State and USAID officials, country-level protection working groups are
    standard practice in countries with refugees and internally displaced
    persons. For example, in Sudan there are three protection working groups
    in Darfur. Finally, in response to our recommendations that the Secretary
    of State include a focus on internally displaced persons in annual
    reporting, State increased the breadth and scope of internally displaced
    persons reporting in its annual human rights report. State also improved
    the reporting format on internally displaced persons' issues by
    concentrating the bulk of its findings into one section of the individual
    country reports and harmonizing report language. ( GAO-01-803 )

    2.34.A. Improving Efforts to Employ U.S. Citizens at United Nations'
    Organizations: In response to our recommendations for increasing efforts
    to achieve equitable representation of Americans employed in United
    Nations' organizations, State has undertaken several actions. Beginning in
    2002, State incorporated U.S. employment targets for the United Nations
    and a strategy for implementing those targets in its performance and
    accountability report. State's recruitment strategy includes establishing
    and coordinating governmentwide efforts, promoting the detail and transfer
    of federal employees, and working with United Nations' agencies to
    encourage their hiring of more Americans. Also, State directed its
    missions to United Nations' organizations to redouble their efforts to
    promote increased U.S. representation on the staffs of United Nations'
    agencies by meeting with each of the heads of the major United Nations'
    agencies for which they were responsible. Each mission received specific
    guidance on what either the prescribed geographic distribution targets or
    negotiated targets were for each organization. As part of this effort,
    State provided each mission the department's annual reports to the
    Congress on efforts by the United Nations to employ Americans with
    specific instructions to share the report with United Nations' officials
    and encourage better recruitment of U.S. citizens. Consequently, some
    United Nations' agencies are more aware of U.S. employment issues and have
    taken strides to ensure that the United States does not fall below its
    geographical target. For example, because many of their U.S. employees
    will be eligible for retirement soon, the Secretariat has invited the
    United States to offer the National Competitive Recruitment exam. (
    GAO-01-839 )

    2.35.A. Improving Information on International Development Results: As a
    result of our work, USAID reported that it aggregated performance data for
    agencywide reporting in sectors where data are sufficiently comparable to
    use as common indicators. We recommended that USAID's Administrator
    provide clearer evidence of progress toward achieving agency outcomes,
    including, where possible, aggregate performance results across agency
    objectives and the activities under them. Although USAID reported that it
    made progress toward achieving the selected outcomes, the extent of the
    progress was unclear because the agency based its support on disaggregated
    and, in some cases, out-of-date and selective data. (GAO-01-721 )

    2.36.A. Improving Reporting of Microenterprise Results: USAID uses
    information from its Microenterprise Results Reporting system to prepare
    annual reports. This system was created to track USAID's funding and
    program data related to small, informally organized businesses, called
    microenterprises. In response to our recommendations to improve the
    accuracy and completeness of its annual reports, USAID has undertaken
    several corrective actions that included adding language citing the
    limitations of its data on outreach to the poor and improving the
    collection, analysis, and reporting of data on meeting its spending
    targets. For example, it issued new guidance on what information should be
    collected, added requirements to perform spot checks on the data to
    improve accuracy, provided better instructions to clearly stipulate what
    portion of USAID assistance to institutions can be reported as
    microenterprise funding, and added clarifications in its annual report to
    better inform the reader of USAID's contribution to the institutions.
    Additionally, USAID took several actions to improve the completeness and
    accuracy of its reporting on microfinance institution sustainability.
    These actions include a requirement that each institution explain its
    sustainability calculations, that USAID review and follow up on
    problematic calculations, and that annual reports highlight the variance
    in sustainability reporting.

    Finally, USAID's report will now indicate that USAID funding alone is not
    responsible for the accomplishments highlighted. ( GAO-04-171 )

    2.37.A. Improving Workforce Planning at USAID: In response to our
    recommendation that the USAID Administrator develop and institutionalize a
    strategic workforce planning and management system to help the agency plan
    for changes in its workforce and continue operations in an uncertain
    environment, USAID initiated a comprehensive workforce analysis and
    planning effort to predict workload and staffing demands for the future,
    identify current workforce gaps, and develop necessary solutions to close
    those gaps. The workforce plan institutes a process that will allow the
    agency to project its staffing requirements and to develop targeted
    initiatives to meet those requirements. Plans have been made to integrate
    the workforce planning model and its results into other agency planning
    processes. We reported that USAID's ability to deliver foreign assistance
    in an uncertain environment was becoming increasingly difficult as a
    result of several human capital vulnerabilities, such as its ad hoc
    approach to workforce planning. (GAO-03-946 )

    2.38.A. Significantly Reducing the Wait for Student Visas: As a result of
    our work, science students and scholars should be able to obtain visas
    significantly faster now than in 2004. In response to our recommendation,
    the Secretary of State, in coordination with the Director of the Federal
    Bureau of Investigation, the Secretary of Homeland Security, and others,
    reduced the length of time it takes for science students and scholars to
    obtain visas by taking several actions to improve the program and shorten
    the time allotted for security checks from 56 days to 15 days. For
    example, State and an intelligence agency agreed that the agency would
    reduce its response time from 15 to 10 days. (GAO-04-371 and GAO-05-198 )

    2.39.A. Expanding Refugee Protection: State worked with UNHCR to respond
    to our recommendations to reform elements of UNHCR's human capital
    management, including its staffing system, in order to better protect
    refugee women and girls from sexual abuse and violence. Specifically,
    UNHCR implemented a new personnel rotation policy to fill positions at
    hardship posts, began a pilot program to provide training on protection
    for nongovernmental organizations working with UNCHR in the field,
    institutionalized a project to fill staffing gaps, and included
    discussions on the prevention of sexual exploitation of refugee women and
    girls at meetings and in an annual report. State urged UNHCR to undertake
    these changes and contributed funding for projects to provide training on
    protection and provide UNHCR with personnel to fill staffing gaps.
    (GAO-03-663 )

    2.40.A. Developing More Comprehensive Interagency Strategic Plans for
    Democracy Assistance: In response to our work, USAID and State included in
    their first jointly prepared strategic plan a strategic goal of advancing
    the growth of democracy and good governance. The plan refers to working
    with key partners and crosscutting programs and highlights key areas of
    focus, including promoting the rule of law and developing governance and
    human rights infrastructures. The two agencies also (1) established a
    joint policy council to ensure that interagency coordination is
    implemented at the working level and (2) are developing a common tool at
    the country level to reflect strategic planning. USAID also held training
    sessions for democracy officers aimed at enhancing the quality of
    democracy programs by providing exposure to the latest academic thinking,
    programming from other regions, and comparison among similar approaches
    now being undertaken in Latin America. ( GAO-03-358 )

    2.41.A. Improving the Accountability and Effectiveness of Microenterprise
    Programs:

    In response to our recommendations intended to improve program
    accountability and effectiveness, the House International Relations
    Committee crafted legislation to improve the accountability and impact of
    microeconomic development funds. Specifically, the Congress noted that
    USAID is not currently organized to adequately coordinate, implement, and
    monitor such programs. The Congress passed the Microenterprise Results and
    Accountability Act of 2004 in December 2004. The law required USAID to
    establish an Office of Microenterprise Development and implement a program
    of central funding in order to improve program effectiveness,
    accountability, and efficiency. ( GAO-04-171 ) 2.42.A. Reducing the Amount
    Requested for the Millennium Challenge Account: Our work contributed to
    the Congress's decision to appropriate $1.5 billion for the Millennium
    Challenge Account in fiscal year 2005-a reduction of $1 billion from the
    President's request. In March and June 2004, we provided budget papers and
    follow-up briefings to the Congress to help it assess the Presi-dent's
    $2.5 billion fiscal year 2005 budget request for the account, which is a
    new foreign assistance program intended to provide economic assistance to
    countries that demonstrate a commitment to ruling justly, investing in
    people, and encouraging economic freedom. Our work made a unique
    contribution by providing a framework for identifying the relationships
    and trade-offs between funding levels, compact length, and numbers of
    compacts under several illustrative scenarios. We showed the impact of
    reducing the President's budget request by about $1 billion; suggested
    that the Millennium Challenge Account could compensate for lower levels of
    funding by reducing compact length, assistance target levels, or both; and
    estimated the effect of funding compacts partly from future
    appropriations. The fiscal year 2005 appropriations conference report
    recommended that the account negotiate shorter duration compacts because
    of budget constraints and directed it to fund compacts from existing
    appropriations, rather than partially using future appropriations. (Based
    on briefings)

    2.43.A. Improving Consultation on United Nations' Peacekeeping: In
    September 2001, we recommended that the Secretary of State provide the
    Congress with timely, detailed, and complete information about shortfalls
    for new or substantially revised peacekeeping operations and plans to
    mitigate the shortfalls. In response, State has provided detailed
    briefings to the Congress each month about new or substantially revised
    operations and the issues that confront the department. Also, in its
    notifications to the Congress, State now includes discussions about the
    shortfalls in operations and the steps to mitigate them. ( GAO-01-917 )

    2.44.A. Improving Oversight of the Multinational Force and Observers
    (MFO):

    We recommended that State ensure that staff with accounting expertise
    carry out financial oversight responsibilities for MFO-the body that
    monitors the peace treaty between Egypt and Israel-and that State's MFO
    Advisory Board should monitor and document State compliance with its
    oversight guidelines. In response, the board included representatives from
    State's IG to review MFO audits and adopted a mission statement to ensure
    adequate and documented review and analysis of MFO's activities and budget
    in accordance with established guidelines. State's IG reviewed MFO's
    latest annual external audit and financial statements in August 2004 and
    found no problems. A State official said that the IG will routinely
    participate on the board and will check on the quality of MFO's audits
    through an annual review of MFO-audited financial statements and relate
    them to prior years' statements. Moreover, any irregularities will be
    brought to the attention of State bureaus. We noted that State had not
    provided employees who possess the expertise to carry out many of its
    financial oversight responsibilities for MFO. ( GAO-04-883 )

    2.45.A. Improving USAID's Caribbean Housing Reconstruction Program: Based
    on our observations, USAID and its primary contractor for housing refined
    their selection criteria and implemented mechanisms to make sure only
    those most in need obtained assistance. We are concurrently monitoring the
    progress of USAID's efforts to repair damage in Grenada, Jamaica, and
    Haiti caused by several hurricanes. We had previously identified
    weaknesses in the selection process, observing that the contractor did not
    have mechanisms for staff conducting site inspections to verify that
    people applying for housing assistance were only those in most need.
    (Based on a briefing)

    2.46.A. Improving Counternarcotics Assistance to Colombia: In response to
    our recommendations, State and DOD provided a report to the Congress
    detailing support for U.S. counternarcotics assistance to Colombia,
    including funding, training, maintenance, and logistics for the
    U.S.-provided helicopters. A subsequent DOD white paper also outlined
    timeliness, planning, and coordination to eventually turn operations and
    maintenance responsibilities over to the Colombians. We recommended that
    the Secretaries of State and Defense (1) determine training and logistical
    support requirements and identify future funding sources to support the
    U.S.-provided helicopters and other major equipment items already
    delivered to Colombia and (2) complete U.S. implementation plans and
    coordinate with Plan Colombia-Colom-bia's integrated strategy to meet its
    most pressing challenges, including combating the narcotics industry-so
    that any future U.S. assistance is adequately supported and plans for its
    use are clearly identified and agreed to. (GAO-01-26 )

    2.47.C. Strengthening Accountability at the Global Fund: Based partly on
    our work, legislation was introduced that would make 25 percent of the
    U.S. contribution to The Global Fund to Fight AIDS, Tuberculosis, and
    Malaria conditional on the Secretary of State's certification that the
    fund has undertaken certain actions, including actions to

    (1) establish clear progress indicators upon which to determine the
    release of incremental disbursements, (2) release such disbursements only
    if positive results have been attained based on these indicators, and (3)
    provide support and oversight to country-level entities to enable them to
    fulfill their mandates. ( GAO-05-639 )

    2.48.C. Overseeing the United Nations' Reform and the Oil for Food
    Program: Earlier this year, we testified before the Congress that the
    United Nations had not assessed the status and impact of its reforms or
    developed a system to monitor and evaluate program results. We also
    identified 702 findings and 667 recommendations in the 58 internal audit
    reports of the Oil for Food program in Iraq but noted several limitations
    on scope and authority. Partly on the basis of our work, the Congress
    introduced a bill requiring reforms in the United Nations' accountability
    and directing us to review the implementation of United Nations reforms.
    The Congress also cited our report on United Nations reform efforts in a
    draft United Nations reform bill. (GAO-05-346T and GAO-05-392T )

    2.49.C. Identifying Challenges to Efforts to Stabilize and Rebuild Iraq:
    We identified the challenges to U.S. efforts to stabilize Iraq,
    reconstruct Iraq's essential infrastructure, and support its elections. We
    reported that the United States has provided about $24 billion for these
    purposes from fiscal years 2003 through 2005. Our analysis of Iraq's
    security showed that the insurgency in Iraq has grown in intensity and
    sophistication. Moreover, the difficulty in training and equipping Iraqi
    forces and developing capable and loyal Iraqi leadership challenge efforts
    to stabilize Iraq and withdraw U.S. troops. We found that U.S.
    reconstruction efforts have made some progress in increasing Iraq's
    electrical generation capacity, refurbishing oil facilities, restoring
    some water treatment plants, and rehabilitating some health facilities.
    However, as of May 2005, Iraq's crude oil production and power generation
    were lower than before the 2003 conflict, and some completed water
    projects were not functioning as intended. Moreover, reconstruction faces
    significant challenges, such as rebuilding in an insecure environment,
    ensuring that rehabilitated infrastructure is maintained after projects
    are turned over to the Iraqis, and measuring program results. In the water
    and sanitation sector, we recommended actions to improve U.S. efforts to
    measure progress and impact and to help the Iraqis operate and maintain
    new and repaired facilities. We also reported that the United States
    provided about $130 million to support Iraq's elections. All these
    findings were widely reported in the national media, helped inform
    American taxpayers about U.S. efforts in Iraq, and provided the Congress
    with crucial oversight information as it considers legislative action.
    (GAO-05-431T, GAO-05-872 , GAO-05-876 , and GAO-05-932R )

    2.50.C. BolsteringEfforts to Prevent Terrorists and Criminals from
    Obtaining U.S. Passports: Our work uncovered alarming security gaps in
    U.S. passport operations that made it more difficult to protect U.S.
    citizens from terrorists, criminals, and others who would do harm to the
    United States. We found that State was not receiving information from the
    Terrorist Screening Center-estab-lished to, among other things, provide
    continual operational support for thousands of federal screeners
    worldwide-on certain persons listed in the federal government's
    consolidated terrorist watch list and, therefore, could not integrate that
    information into its name-check system. We also found that State was not
    routinely obtaining the names of other individuals wanted by both federal
    and state law enforcement authorities for various crimes-some very
    serious. We made a number of recommendations for correcting these and
    other systemic weaknesses that we identified in State's passport fraud
    detection efforts. The Congress expressed grave concerns about the
    security vulnerabilities we identified and, citing maintaining the
    integrity of the U.S. passport as a critical component of our global
    effort to fight terrorism, called upon State and the Department of Justice
    (Justice) to implement our recommendations. The agencies have begun
    implementing actions to close these critical security gaps. ( GAO-05-477
    and GAO-05-853T )

    Respond to the impact of global market forces on U.S. economic and
    security interests

    2.51.A. Using Better Measures for Trade Adjustment Assistance Outcomes: In
    response to our recommendations to establish more effective measures of
    desired outcomes of Trade Adjustment Assistance Centers, which were
    established to assist firms that have been adversely affected by import
    competition, Commerce established new measures to determine the percentage
    of clients taking action as a result of the assistance facilitated by the
    centers and the percentage of those actions taken by centers' clients that
    achieved the expected results. Commerce subsequently reported that the
    performance measures were established to determine the value added to the
    centers, to further define the relevance of the assistance by the centers,
    and to determine if the assistance facilitated by the centers is market
    based. This responds to our second recommendation that Commerce apply
    these measures as criteria to evaluate the effectiveness of the centers in
    helping injured firms adjust to import competition. (GAO-01-12 )

    2.52.A. Strengthening DOD's Anti-Tamper Program: U.S. weapons and
    technologies that are exported, stolen, or lost or damaged during combat
    and routine missions are vulnerable to reverse engineering and other
    exploitations, which can weaken

    U.S.
               military advantage, shorten the expected life of a system, and
               erode the U.S. industrial base's technological competitiveness. In
               an effort to protect

    U.S.
               weapons and technologies from exploitation, in 1999 DOD
               established a policy directing each military service to implement
               anti-tamper tech-niques-a policy that has proven difficult to
               implement on individual weapon systems. Consistent with
               recommendations we made in March 2004, DOD issued a report that
               provides guidance to program managers about the relative cost and
               effectiveness of generic anti-tamper techniques. According to DOD,
               the guidance will help program managers consider anti-tamper
               technologies in the design, development, and fielding of their
               systems. (GAO-04-302 )

    2.53.A. Improving Oversight of Trade Adjustment Assistance: We identified
    expenditures of almost $1.7 million for training, trade readjustment
    allowances, relocation, and job search allowances that were reported for
    trade adjustment petitions that according to DOL's database, were not
    certified and had been denied. Based on our analysis and recommendation,
    DOL identified reports from 31 states that included petitions that had
    been denied and asked the states to review their reports to determine
    whether these were data entry errors or if benefits were wrongly paid. As
    of March 2003, none of the states had identified any wrongly paid
    benefits, according to DOL. Further, DOL stated that it has corrected all
    errors that it has identified. ( GAO-01-59 and GAO-01-988T )

    2.54.A. Improving Monitoring of Community Adjustment and Investment
    Program: In response to our recommendation, Treasury set up a system to
    monitor the number of jobs created or preserved by the borrowers of its
    loans and loan guarantees, as well as by grant recipients, in distressed
    communities under the Community Adjustment and Investment Program. The
    program conducted its first survey of job creation and preservation
    outcomes in September 2002 and plans to do its first survey of another
    program soon. Grant recipients report quarterly and in a final report on
    progress in meeting the annual goals. The Congress created the program in
    December 1993 to assist communities suffering job losses due to changing
    trade patterns with Mexico and Canada. (GAO/NSIAD-00-229 )

    2.55.A. Ensuring Decisions to Transfer U.S. Weapons and Technologies to
    Foreign Governments Are Adequately Informed: In 2001, transfers of U.S.
    weapons and technologies to foreign governments totaled over $12 billion,
    representing 46 percent of the world market share-a 15 percent increase
    from 1997. Before transfers are approved, the U.S. government must first
    determine if classified weapons or technologies can be released to the
    requesting country according to criteria set out in the National
    Disclosure Policy. To make this determination, a number of federal
    agencies and committees assess a number of factors including the risks
    that would be involved if a classified weapon or technology were to be
    compromised or end up in unfriendly hands. These assessments are based, in
    part, on intelligence infor-mation. However, in July 2003, we found that
    the National Disclosure Policy Committee-which reviews and approves or
    denies requests for exceptions to the National Disclosure Policy-was
    operating with outdated Central Intelligence Agency risk assessments.
    Acting on our recommendations, the committee's Executive Secretariat
    requested that the Central Intelligence Agency provide updated risk
    assessments for 23 countries. ( GAO-03-694 )

    2.56.A. Improving Training under Trade Adjustment Assistance: The Congress
    acted on our matters for congressional consideration when it passed the
    Trade Act of 2002, inserting language to amend the Trade Act of 1974.
    Specifically, the language (1) permits workers to receive payments during
    breaks in training lasting up to 30 days, which allows workers to continue
    to receive income benefits during unavoidable, extended interruptions in
    training; (2) standardizes the training enrollment deadline for
    trade-affected workers; (3) refines training waiver policies for certified
    workers; and

    (4) expedites review of petitions by the Secretary of Labor, reducing the
    time from 60 to 40 days, thereby permitting displaced workers to more
    quickly access retraining and financial support ser vices. (GAO-01-59 and
    GAO-01-988T )

    2.57.A. Improving Information Security Practices: In response to the
    September 11, 2001, terrorist attacks, we have examined and reported on
    the adequacy of the steps that financial market participants have taken to
    reduce their vulnerability to attacks, including those by hackers
    attempting to gain unauthorized access to a specific organization's
    networks or systems or those arising from malicious computer viruses or
    worms that seek to damage data or deny access to legitimate users. From
    October 2003 through April 2005, we reviewed the measures taken by
    selected critical financial market organizations, including exchanges,
    clearing organizations, and payment system processors, to protect
    themselves from electronic attacks. As part of these reviews, we found
    that the selected financial market organizations were taking steps to
    prevent their operations from being disrupted by electronic attacks. Each
    of the organizations had implemented the major elements of a sound
    information security program. However, at each of these organizations, we
    identified 11 to 38 suggested improvements that could be taken to further
    improve their protections against attacks. Many of the improvements we
    identified related to how these organizations could implement additional
    controls to prevent unauthorized access to networks and information
    systems and to better detect intrusion attempts when they occur. We
    briefed staff from SEC and the Federal Reserve Board of Governors on the
    detailed results of our reviews, and they both indicated that they will
    use our work to monitor the progress of the organizations they oversee in
    implementing the information security improvements. ( GAO-05-679R )

    2.58.A. Strengthening the Government's Ability to Monitor Foreign
    Investors' Compliance with National Security Agreements: In 1988, the
    Congress passed the Exon-Florio amendment to the Defense Production Act,
    authorizing the President to suspend or prohibit a foreign acquisition of

    U.S. companies if the acquisition poses a threat to national security. In
    some cases, the Committee on Foreign Investment in the United States-an
    interagency committee that is chaired by the Secretary of the Treasury and
    is responsible for reviewing foreign acquisitions-may negotiate an
    agreement with the foreign investor on measures to mitigate national
    security concerns. However, in 2002, we reported that weaknesses in some
    agreements made it difficult to ensure compliance. Specifically, we found
    that agreements did not indicate the agency responsible for monitoring
    compliance and lacked monitoring provisions, such as time frames for
    implementing mitigation measures and consequences for noncompliance.
    Consistent with our suggestions, the committee has begun including
    specific time frames for compliance and the specific member agency office
    responsible for reviewing compliance with recently negotiated agreements.
    (GAO-02-736 )

    2.59.C. Contributing to Federal Financial Literacy Efforts: Research has
    shown that many Americans lack the knowledge of basic personal economics
    they need to make informed financial judgments and manage their money
    effectively. Yet financial literacy is increasingly important in a world
    where consumers must choose from an array of complicated financial
    products and services and employees must take on more responsibility for
    their retirement savings. Our financial literacy forum contributed to
    federal and nationwide discussion on possible topics, target populations,
    and methods of delivery for federal financial education efforts and the
    role of program evaluation. Our study on con-sumer knowledge and behavior
    regarding credit reporting outlined ways to improve consumers'
    understanding of the information contained in credit reports and how their
    actions can influence the contents of their reports. The study will help
    the Financial Literacy and Education Commission- which was established to
    improve financial literacy and education of people in the United
    States-and other groups following its lead to identify and penetrate
    particular demographic groups that would benefit the most from financial
    education efforts. (GAO-05-95 and GAO-05-223 )

    2.60.C. Developing an Approach to Analyze Offshoring of Services:
    Offshoring of services generally refers to an organization's purchase from
    other countries of services that it previously produced or purchased
    domestically, such as software programming or services provided by
    telephone call centers. Our offshoring work has provided the Congress with
    an analytical approach for understanding a controversial and politically
    sensitive topic. The work took advantage of our ability to assemble a
    crosscutting team to analyze complex data to craft a unique report, which
    has served as the basis for numerous public presentations in the United
    States and Europe. Our analysis led the international Organisation for
    Economic Cooperation and Development to adopt our approach. The government
    of Sweden sought out the team for further coordination of the Organisation
    for Economic Cooperation and Development's efforts to understand the
    impact of offshoring in Europe. We are now routinely included in
    offshoring panel discussions, due to our objective and clear analysis of
    the practice and concept of offshoring and the multiple

    U.S. databases that relate to offshoring. (GAO-04-932 )

    2.61.C. Improving Transparency of U.S. Reporting on Currency Manipulation
    Issues:

    In a 2005 review of currency manipulation issues, we provided
    comprehensive analysis on a key international policy issue and increased
    the transparency of Treasury reporting on its manipulation assessments.
    Our report provided objective information on the legal determinants of
    currency manipulation, differences between currency undervaluation and
    manipulation, and the basis for recent Treasury findings. Partly in
    response to our ongoing work, Treasury added information to its semiannual
    currency report about its criteria for manipulation assessments. In
    addition, Treasury introduced a link to Web-based information about U.S.
    consultations with the International Monetary Fund to meet a legislative
    requirement. ( GAO-05-351 )

    2.62.C. Prompting Action to Reform the U.S. Export Control System: Over
    the years, we have reported on the need to address weaknesses and
    inefficiencies in export controls to ensure that U.S. interests-economic
    as well as military-are safeguarded and that defense-related items do not
    fall into the wrong hands. We have made numerous recommendations aimed at
    correcting these weaknesses and inefficiencies, such as clarifying
    jurisdiction over the export of missile technologies and establishing
    formal guidelines for reviewing and monitoring the flow of export license
    applications. Despite our findings and recommendations, we reported early
    this year that the export control system remained fundamentally unchanged.
    As a result of our work, the Congress has begun to take action to
    reexamine and reform the U.S. export control system. ( GAO-02-63 ,
    GAO-02-120 , GAO-05-234 , and GAO-05-468R )

    Source:See Image Sources.

    Reexamine the federal government's role in achieving evolving national
    objectives

    3.1.A. Enhancing the Knowledge Base on Indicators: We have been working as
    a catalyst regarding approaches and options for measuring national
    performance using comprehensive key indicator systems. The U.S. government
    has invested billions of dollars in a rich variety of topical information
    (on the economy, the environment, and society and culture) that could
    underpin a national system. However, although several states, counties,
    and cities have developed key indicator systems, the United States lacks
    such a system at the national level. A comprehensive key indicator system
    for the United States could serve as a trusted source for reliable,
    fact-based information that could inform a much-needed reexamination of
    the base of existing programs, policies, functions, and activities. In
    fiscal year 2005, we issued the results of a wide-ranging study of
    comprehensive key indicator systems in the United States and elsewhere. We
    also contributed to the planning and implementation of the Organisation
    for Economic Development's first World Forum on Key Indicators. The
    participation of over 500 officials representing 43 nations provided a key
    opportunity to share experiences and an impetus for further action and
    improvement. One such action was publication of the 2005 Fact-book and an
    interactive Web site that present a range of statistics on member
    countries. At the Forum, representatives of the Key National Indicators
    Initiative discussed efforts to develop a comprehensive key national
    indicator system for the United States. We helped build the foundation for
    the Key National Indicators Initiative effort, which is housed under the
    National Academies. ( GAO-03-672SP and GAO-05-1 ) 3.2.C. Reexamining the
    Base of the Federal Government: In February 2005, we issued a report
    calling for, defining, and illustrating how to carry out a fundamental
    reexamination of what the federal government does, how it does it, who
    does it, and how it gets paid for. Prompted by unsustainable fiscal
    commitments and the need to ready the federal government for the emerging
    challenges of the 21st century, the federal government and the Congress
    need to reexamine entitlements, tax policy, and discretionary spending
    governmentwide. The Congress held two hearings to learn more about such
    reexamination, and it has been a focal point of sustained outreach efforts
    agencywide. The report has been instrumental in beginning to shape both
    the interest of some in the Congress in how to deal with the 21st century
    challenges, as well as the lens through which we structure and prioritize
    our own work. ( GAO-05-325SP, GAO-05-317T, and GAO-05-352T )

    Support the transformation to results-oriented, high-performing government

    3.3.A. Improving the Defense Information Systems Agency's (DISA) IT
    Investment Planning and Management Controls: In March 2002, we identified
    numerous opportunities for DISA to improve planning and management
    controls over its $3.5 billion annual IT spending. Implementation of our
    recommendations helped DISA realize improvements in its strategic planning
    (including development of a strategic plan and implementation of a plan),
    organizational structure management, enterprise architecture management
    (including soon using the architecture to support IT investment
    decisions), IT investment management (including soon implementing
    portfolio management), customer relations management, and knowledge
    management. While responding to these recommendations required major
    change in its management systems and required years to complete, the
    changes realized to date helped DISA focus on improving warfighter support
    and better focus its IT spending. ( GAO-02-50 )

    3.4.A. Achieving Significant Financial Benefits by Leveraging DOD's Buying
    Power: In fiscal year 2004, DOD spent over $127 billion on service
    contracts-more than two-thirds of the $189 billion spent by the entire
    federal government in that year. Despite this significant share of
    spending, DOD's management of service procurement is inefficient and
    ineffective and the dollars are not always well spent. Many private
    companies have managed their procurements by using spend analysis, which
    involves analyzing spending patterns and coordinating procurement in order
    to achieve substantial financial benefits. In response to our report, DOD
    and contractor project managers pilot-tested Web-based technology that
    links and pulls data from disparate sources; maps and organizes the data
    into a common taxonomy of products, services, and suppliers; and produces
    spend analysis reports. The proposed virtual spend data warehouse will
    enable DOD to identify high-volume, high-dollar services and product
    spending-opportunities for strategic sourcing that will result in
    financial benefits and quality improvements. In March 2005, DOD approved a
    business case analysis to seek follow-on funding for developing a
    departmentwide spend analysis system. DOD projects $4 billion to $10
    billion in annual financial benefits once the system is in place and used
    to support strategic sourcing across DOD. ( GAO-03-661 )

    3.5.A. Encouraging Efficiency in DHS Acquisitions: In March 2003, 22
    federal agencies and organizations essentially merged to form DHS-a
    transformation GAO has designated high risk since 2003. With a budget of
    almost $40 billion, DHS was challenged to leverage its substantial buying
    power and boost administrative efficiency. Based on our work, DHS has
    developed acquisition strategies for purchasing goods and services that
    include basic office supplies, ammunition, weapons, and IT. As a result of
    these strategies, DHS reported approximately $14 million in cost
    reductions and cost avoidances for fiscal year 2004, with cost reductions
    expected to continue to grow, according to agency officials. At the same
    time, DHS was challenged to maintain an effective acquisition workforce.
    The contracting workforce of one of DHS's largest entities-with annual
    obligations for goods and services totaling $1.7 billion-had not grown
    sufficiently to manage an increased workload. In addition, Immigration and
    Naturalization Service field offices relied heavily on contracting
    officers who performed contracting duties along with their mission-related
    responsibilities and who are not career contracting officers. Consistent
    with our recommendations, DHS developed a plan, based on best practices,
    that defines the acquisition workforce, focuses on the need for continual
    training, and implements a certification program. DHS also phased out all
    collateral duty contracting officers, allowing only those individuals with
    specific contracting officer authority to execute contracts and related
    agreements on DHS's behalf. (GAO-02-230 , GAO-03-799 , GAO-04-870 , and
    GAO-05-179 )

    3.6.A. Providing Needed Rigor to the Coast Guard's Oversight of Deepwater
    Program Contractors: The Coast Guard established the Deepwater program to
    modernize and replace its fleet of ships and aircraft used for search and
    rescue, drug interdiction, offshore inspection, and other missions that
    generally occur beyond 50 miles from shore. Deepwater is the largest and
    most complex procurement project in the Coast Guard's history. In June
    2002, the Coast Guard awarded a contract to a system integrator to develop
    and deliver the Deepwater assets, and from fiscal years 2002 through 2004,
    the Congress appropriated almost $1.5 billion for the program. However, in
    March 2004 we reported that the Coast Guard's evaluation of the system
    integrator's performance lacked the rigor to effectively assess the
    contractor's performance. We also found that the two
    subcon-tractors-Lockheed Martin and Northrop Grum-man-were solely
    responsible for deciding whether to compete Deepwater assets or make the
    assets themselves, and the Coast Guard had no insight into these
    decisions. Based on our recommendations, the Coast Guard has improved the
    criteria for assessing the system integrator's performance and has asked
    the system integrator to provide notification of a subcontractor decision
    to make instead of compete assets valued at $10 million or more.
    (GAO-04-380 ) 3.7.A. Ensuring Continued Investment in GSA's Online
    Purchasing System: In 1995, GSA launched Advantage, an Internet-based
    system for ordering products and services online. As of 2002, GSA had
    spent $84 million to develop, implement, and maintain the system. However,
    5 years after the system was launched, only 35 percent of all
    government-contracted vendors participated in the program, and agencies
    were largely using the system to compare pricing. To ensure GSA's level of
    investment matched customer needs, we recommended that the agency develop
    a business case for an online ordering and market research system such as
    Advantage. In January 2005, GSA selected a new business strategy that
    would significantly enhance the system's capabilities to serve as a broker
    between buyers and suppliers and provide agencies with an automated tool
    for formulating acquisition requirements and developing requests for
    quotes. Although GSA expects to invest $124 million to implement the
    enhanced system, the agency projects over $1.5 billion in financial
    benefits from electronic transactions, spend analyses (reviews of
    expenditures that shows how money is spent on goods and services), a
    searchable procurement data repository, and competitive pricing. This
    financial benefit has a present value of just over $1.3 billion.
    Consistent with our recommendation, GSA's new business strategy also calls
    for reviewing and adding as appropriate new performance measures to track
    results and outcomes of the enhanced system. (GAO-03-328 )

    3.8.A. Delivering Results through Performance-Based Service Contracting:
    In fiscal year 2004, federal agencies spent roughly $189 billion acquiring
    services from contractors-an area we have designated high risk for over a
    decade for DOE, DOD, and the National Aeronautics and Space Administration
    (NASA), which together account for most of the federal spending on
    services. To achieve greater financial benefits and better outcomes, the
    Congress and OMB have encouraged agencies to use performance-based service
    contracting, where the contracting agency specifies the desired outcome
    and the contractor decides how best to achieve this outcome. Although
    performance-based contracts can encourage contractors to find innovative
    ways to deliver services and offer other significant benefits, agencies
    historically have not widely used this strategy. Consistent with our
    recommendations-particularly when acquiring unique and complex services
    that require strong government oversight, OMB's Office of Federal
    Procurement Policy improved its guidance for using performance-based
    contracting and established a fiscal year 2005 target for using
    perfor-mance-based service acquisition methods. The office also partnered
    with the Defense Acquisition University, the Federal Acquisition
    Institute, federal government agencies, and industry associations to
    establish an online acquisition center of excellence. The Services
    Acquisition Reform Act of 2003 provides an additional incentive for the
    use of perfor-mance-based contracting by giving executive agencies
    authority to treat qualifying contracts or task orders as contracts for
    commercial items. The act also requires agencies to collect data on these
    contracts and OMB to report to the Congress on the use of this incentive.
    Finally, OMB has taken steps to better track civilian agencies' use of
    performance-based service contracting. ( GAO-02-1049 and GAO-03-716T )

    3.9.A. Promoting a Well-Trained Federal Acquisition Workforce: Procurement
    reforms, technological changes, and downsizing have placed unprecedented
    demands on the federal acquisition workforce. Acquisition workers are now
    expected to have greater knowledge of market conditions, industry trends,
    and the technical details of the commodities and services they procure.
    Despite congressional reforms enacted in the 1990s to ensure the federal
    acquisition workforce has the right skills to meet such challenges, we
    reported in July 2002 that agencies needed to better define and track
    their acquisition workforce training to inform the agencies' human capital
    strategic planning and ensure an adequately trained acquisition workforce.
    A number of actions have been taken in response to recommendations we
    made. As required by the Services Acquisition Reform Act of 2003, GSA
    established an acquisition workforce training fund, and certain civilian
    executive agencies have designated noncareer chief acquisition officers to
    establish clear lines of authority, accountability, and responsibility for
    acquisition decisions. OMB's Office of Federal Procurement Policy required
    each chief acquisition officer to implement a budget strategy that
    reflects his or her agency's workforce development needs and
    organizational structure and to appoint an individual with acquisition
    experience to lead the agency's acquisition career management program. The
    interagency Chief Acquisition Officer Council has established a Human
    Capital Working Group that is assessing skills required in the federal
    acquisition workforce, identifying skill gaps, and target ing training
    funds to those gaps. (GAO-02-737 and GAO-03-281 )

    3.10.A. Improving OMB's Competitive Sourcing Processes: Under competitive
    sourcing, federal agencies open their commercial activities to competition
    among public and private sector sources, and this process begins each year
    with agencies developing inventories of their commercial positions. A
    large body of our work from 2000 through 2004 recommended sustained
    improvement in the use of annual inventories and greater consistency in
    classifying commercial positions to support competitive sourcing as well
    as revisions to processes for the performance of commercial activities
    that are described in OMB Circular A-76, Performance of Commercial
    Activities. In addition, we recommended various improvements to OMB's
    proposed revisions to Circular A-76 processes to bring them more in line
    with the Commercial Activities Panel's principles for improving the
    competitive sourcing decisions of the government. The congressionally
    mandated panel, chaired by the Comptroller General and composed of federal
    and private sector experts, stressed the importance of linking sourcing
    policy with agency missions, promoting sourcing decisions that provide
    value to the taxpayer regardless of the service provider selected, and
    ensuring greater accountability for performance. In response to our work
    and the inclusion of competitive sourcing as one of the President's
    management initiatives, OMB has undertaken a sustained effort since 2003
    to improve and maintain a governmentwide commitment to developing useful
    annual inventories, improving guidance for classifying commercial
    positions, and incorporating most of the A-76 sourcing principles adopted
    by the panel. In fiscal years 2003 and 2004, OMB reported that agencies'
    competitive sourcing efforts will yield billions of dollars in finan cial
    benefits. (GAO/GGD/NSIAD-00-244 , GAO-02-498T, GAO-02-1022R , GAO-03-391R
    , GAO-03-1022T, and GAO-04-367 )

    3.11.A. Improving Collection of Delinquent Nontax Debt: In a series of
    reports and testimonies over the past several years, we promoted federal
    agencies' use of key provisions of the Debt Collection Improvement Act of
    1996 to collect non-tax delinquent debt, which exceeds $70 billion
    annually. Acting on our recommendations, Treasury and other federal
    agencies have continued to take steps to implement the act's key
    provisions to improve collections. For example, Treasury included
    additional federal salary payments in its payment offset program and
    continued to offset Social Security payments to recover delinquent debts.
    Also, certain agencies-including Education and HHS-have published final
    rules allowing the implementation of administrative wage garnishment under
    the Debt Collection Improvement Act. These actions, along with additional
    steps taken by Treasury and other agencies to improve debt collection
    processes in response to our recommendations, have added about $374
    million to a steady stream of recoveries. ( GAO/T-AIMD-98-195 ,
    GAO/AFMD-90-12 , GAO-02-308 , GAO-02-313 , and GAO-02-463 )

    3.12.A. Assessing Programs Related to a Common Outcome: To review the
    relative contributions of similar programs to common or crosscutting goals
    and outcomes and to facilitate comparisons and trade-offs between such
    programs, we recommended that OMB conduct Program Assessment Rating Tool
    (PART) assessments of similar programs and activities in the same year.
    Consistent with these recommendations, for the fiscal year 2006 budget,
    OMB used PART in conducting two crosscutting analyses to inform the
    President's Budget request-Community and Economic Development programs and
    Rural Water programs. The Community and Economic Development analysis
    formed the basis for the administration's proposal to consolidate various
    of these programs into a $3.7 billion program at Commerce. The budget also
    indicated the administra-tion's intention to develop recommendations to
    consolidate and reform Rural Water programs. (GAO-04-174 )

    3.13.A. Monitoring the Effectiveness of OMB's PART : To improve OMB's
    ability to judge the efficacy of PART, we recommended that the Director of
    OMB centrally monitor agency implementation and progress on PART
    recommendations and report such progress in OMB's budget submission to the
    Congress. Consistent with this recommendation, in the PART Summary
    Worksheets submitted with the fiscal year 2006 President's Budget Request,
    OMB reported on the status of each program's recommendations. In April
    2005, OMB also implemented PARTWeb, a Web-based data collection tool to,
    among other things, centrally track the implementation and status of PART
    recommendations. (GAO-04-174 )

    3.14.A. Assisting Agencies in Implementing Leading Diversity Management
    Practices: In January 2005, we identified nine leading practices that
    experts agreed should be considered when an organization is developing and
    implementing diversity management. We also provided examples of how 10
    selected federal agencies implemented these practices. As the federal
    government strives to better manage its diverse workforce, our report is
    being used by agencies to begin the dialogue necessary to create an
    environment that is inclusive of individual differences, responsive to the
    diverse needs of employees, and ultimately provides for accountability and
    fairness for all employees. For example, in July 2005, the Census Bureau
    held a diversity fair that focused on five of the diversity management
    practices discussed in our report (top leadership commitment, diversity as
    part of an orga-nization's strategic plan, diversity linked to
    performance, employee involvement, and diversity training). A panel of
    officials from the selected agencies featured in our report discussed
    their agencies' implementation of the practices with Census Bureau
    employees in the morning, and executives from those agencies engaged in a
    frank discussion with Census Bureau executives in the afternoon about
    implementation strategies and barriers. ( GAO-05-90 )

    3.15.A. Controlling the Cost of the 2010 Census: A body of congressionally
    requested products we issued in 2004 on plans for the 2010 Census
    contributed to congressional decision making that will reduce the life
    cycle cost of the next decennial headcount by around $807 million, and
    could produce better quality data. Specifically, members of the Congress
    cited findings contained in our report on census cost and design issues to
    secure legislative support for operational reforms that could help control
    the cost of the 2010 Census, the price tag of which is currently estimated
    at more than $11 billion. These same reforms, which include a
    short-form-only census and various technological improvements, could
    produce more accurate and timely information for data users as well.
    Additional taxpayer savings stemmed from our review of the feasibility of
    counting U.S. citizens living abroad.

    We concluded that enumerating this population group would not be
    cost-effective because of the difficulties in obtaining an adequate
    response rate and other challenges. Partly as a result of our findings and
    recommendation to the Congress, legislators eliminated funding for any
    future planning and testing activities. ( GAO-04-37 and GAO-04-898 )

    3.16.A. Strengthening Senior Executive Performance Management:
    High-performing organizations understand that their top leadership needs
    to lead the way to transform their agencies' cultures to be more
    results-oriented, customer focused, and collaborative in nature.
    Recognizing this important leadership role, the Congress authorized a new
    performance-based pay system for members of the federal government's
    Senior Executive Service in 2003. Yet we found that Education, HHS, and
    NASA had opportunities to use their performance management systems more
    strategically. Based on a report we issued in May 2004, these agencies are
    now implementing a series of recommendations that can help them provide a
    clear and direct linkage between their senior executives' performance and
    organizational results. ( GAO-05-69SP and GAO-05-832SP )

    3.17.C. Helping Enhance Legislative Branch Agencies' Efforts to Improve
    Performance and Accountability: Our work has assisted legislative branch
    agencies in guiding their respective management improvement and
    transformation efforts. The Government Printing Office used our work to
    guide the realignment of its human capital office, which will assist its
    leadership in managing its workforce and will support its overall
    transformation. To help ensure that the Office of Compliance maintains
    institutional continuity into the future, the Congress acted on our
    recommendations to amend the Congressional Accountability Act to permit
    the reappointment of its Board of Directors to an additional term. We
    encouraged the Architect of the Capitol and the U.S. Capital Police to
    make needed improvements to basic management functions, such as IT,
    financial management, strategic planning, and human capital management. We
    also provided recommendations to the Architect of the Capitol on ways to
    improve cost and schedule management of the Capitol Visitors Center
    project. As a result of our work, the Architect strengthened project
    management resources and obtained new cost and schedule estimates; and the
    Congress pro-vided additional funds for the project. Additionally, we
    surveyed all of the legislative branch agencies to identify their efforts
    to cross-service and outsource administrative services, implement
    management and operational improvements, and streamline organizational
    structures and operations. Our survey also provided the legislative branch
    agencies the opportunity to document their efforts to incorporate best
    practices and to make management improvements in the areas of IT,
    financial management, strategic planning, human capital management, and
    acquisition. ( GAO-04-85 , GAO-04-299 , GAO-04-400 , GAO-04-830 ,
    GAO-04-966 , GAO-05-714T, GAO-05-811T, GAO-05-910T, and GAO-05-1037T )

    3.18.C. Strengthening the Nation's Border Security: DHS's United States
    Visitor and Immigrant Status Indicator Technology (US-VISIT) program is a
    legislatively required, multibillion-dollar effort to track the entry and
    exit of foreign visitors traveling to the United States. In reviewing the
    fiscal year 2005 expenditure plan for the US-VISIT program, we identified
    a number of areas where USVISIT could improve its program management
    activities, including developing reliable cost estimates and managing
    system capacity to support mission needs, and provided the Congress with
    information upon which to make funding decisions. We noted that the
    program office was not employing the kind of rigorous and disciplined
    management controls typically associated with successful programs and that
    as the program grows in scope and complexity, these controls would become
    even more critical. The US-VISIT program management office concurred with
    our recommendations and has begun implementing some of our
    recommendations, including establishing an effective program office
    structure, developing effective risk management processes and plans, and
    developing a human capital strategy. ( GAO-05-202 )

    3.19.C. Helping the Government Cost Effectively Manage Multibillion-Dollar
    IT Modernizations and Investments: DHS's Automated Commercial Environment
    is a multibillion-dollar program that tracks cargo entering and leaving
    the United States. Managers of the program have implemented our past
    recommendations related to developing and using enterprise architecture,
    following an incremental system acquisition approach, establishing system
    acquisition process controls, and ensuring the independence of its
    function to oversee the program. Further, DHS has improved management of
    the program by reducing the degree of concurrent system development
    activities and reconciling program cost estimates with independent
    estimates. Our recent recommendations have focused on the need for DHS to
    strengthen accountability for the Automated Commercial Environment program
    and better ensure the delivery of promised system capabilities and
    benefits within budget and on time. ( GAO-03-406, G AO-04-719, and
    GAO-05-267 )

    3.20.C. Improving Criminal Debt Collection:

    To improve the federal government's ability to collect billions of dollars
    of outstanding criminal debt, we recommended that Justice work with other
    agencies involved in criminal debt collection, including the
    Administrative Office of the U.S. Courts, Treasury, and OMB, to develop a
    strategic plan that would improve interagency processes and coordination
    with regard to criminal debt collection activities. In subsequent reports,
    we continued to identify criminal debt collection problems and followed up
    with Justice on the status of this and other related recommendations. We
    kept interested congressional parties informed of the status of
    outstanding criminal debt and Justice's lack of progress in implementing
    this recommendation, which resulted in the Congress directing the Attorney
    General to develop a strategic plan with the other involved federal
    agencies to improve criminal debt collection. Specifically, the conference
    report that accompanied the Consolidated Appropriations Act of 2005
    included language to further the implementation of our 2001 recommendation
    on establishing an interagency task force for more effectively managing,
    accounting for, reporting, and collecting criminal debt. As a result,
    Justice has begun to meet with the Administrative Office of the U.S.
    Courts, Treasury, and OMB as a joint task force to develop the strategic
    plan as recommended. (GAO-01-664 , GAO-04-338 , and GAO-05-80 )

    3.21.C. Improving Agency Preparation for Governmentwide Telecommunications
    Acquisition: During fiscal year 2005, we reviewed GSA's planning for a
    governmentwide telecommunications acquisition program, known as Networx.
    In March 2005, we testified on GSA's progress in addressing management
    challenges identified during our earlier reviews, including a lack of
    performance measures and inadequate transition planning for the Networx
    contracts. During our review, we identified several areas of concern to
    GSA officials, which they subsequently addressed. For example, we
    determined that GSA had not established performance measures to aid in
    program management. GSA subsequently drafted measures to address each of
    the program's goals and is working to revise the draft measures based on
    our feedback. Also, we pointed out that GSA had not provided potential
    offerors with enough information on the level of service they would be
    required to provide at each location. Without this information, offerors
    would have had difficulty preparing realistic proposals. In response, GSA
    delayed the release of its final request for proposals until information
    on the required levels of service was available. (GAO-04-1085T and
    GAO-05-361T )

    3.22.C. Improving OMB Oversight of At-Risk IT Investments: In April 2005,
    we recommended that OMB strengthen its oversight of major IT investments
    by better utilizing the business cases it collects and analyzes as part of
    the annual formulation of the President's Budget. In the President's
    Budget for Fiscal Year 2005, OMB reported that based on its evaluation of
    the projects' business cases, about half of the 1,200 major IT investments
    submitted by agencies for funding were at risk. The total value of these
    investments was about $22 billion out of a total IT budget of about $60
    billion. We reported that OMB never aggregated these at-risk projects into
    a single list and that its oversight of these projects was inconsistent,
    which limited the potential value of the management watch list. We
    recommended that OMB create a centralized capability for creating and
    monitoring these at-risk projects and that it use the additional insights
    provided in its statutorily mandated reporting to the Congress. The
    governmentwide analysis and consolidated tracking of projects' risk level
    made possible by an aggregated management watch list will enhance OMB's
    and the Congress's ability to ensure that funds are being wisely spent and
    to take effective and timely action on the billions in IT investments
    judged to be at risk. ( GAO-05-276 )

    3.23.C. Improving OPM's Ability to Manage Retirement System Modernization:
    We reported that OPM did not have key system acquisition, change
    management, and investment management processes in place to help manage
    its Retirement Systems Modernization program and recommended that OPM
    establish the management processes needed for effective oversight of that
    program. Subsequently, OPM initiated efforts to develop a comprehensive
    acquisition strategy, identify interdependencies between project
    components, develop project tracking processes, establish risk management
    processes, and implement investment management processes. The agency also
    identified milestones for completing these activities over the next few
    months. As a result of our review, OPM is working to improve its ability
    to manage its modernization program. In addition, the Congress is better
    informed about the status of OPM's acquisition and is now in a better
    position to oversee OPM's project management of its retirement systems
    modernization program. ( GAO-05-237 )

    3.24.C. Getting the Best Value for Goods and Services through Interagency
    Contracts: Federal agencies are increasingly relying on interagency
    contracts, leveraging the government's aggregate buying power to procure
    commonly used goods and services more efficiently. From 1994 through 2004,
    GSA's interagency contract sales alone jumped almost 750 percent to $32.5
    billion. Given the rapid growth of taxpayer dollars involved- along with
    the limited expertise of users and administrators and unclear
    accountability for ensuring proper use-we designated interagency contract
    management as a high-risk area in January 2005. Our work since then has
    continued to draw attention to the risks associated with interagency
    contracting arrangements, such as noncompetitive prices for goods and
    services, orders placed outside the scope of contracts, and inadequate
    management controls. To ensure the government is getting the best value
    from these types of contracting arrangements, we recommended that agencies
    clarify roles and responsibilities and establish clear, consistent, and
    enforceable policies and processes. DOD and other agencies are beginning
    to take action to respond to our recommendations. ( GAO-05-201 ,
    GAO-05-207 , GAO-05-229 , and GAO-05-456 )

    3.25.C. Leveraging the Government's Significant Buying Power: In fiscal
    year 2004, federal agencies procured more than $327 billion in goods and
    services. Despite this significant cost, it is not clear that the federal
    government is fully leveraging its enormous buying power because agency
    procurement processes are decentralized. Recognizing the potential to use
    federal purchasing dollars more wisely, several of our reports examined
    best commercial procurement practices to reduce costs, stay competitive,
    and improve service levels. From 2002 through 2004, we reported how
    leading companies were implementing strategic sourcing approaches to
    leverage their buying power and foster new ways of doing business, and
    recommended several actions that agencies could take to adopt similar best
    practices to achieve the type of financial benefits and procurement
    performance improvements experienced by these companies. In May 2005, OMB
    adopted a new policy directing federal agencies to implement the types of
    strategic sourcing approaches we recommended, and beginning next year,
    agencies must report annually on their strategic sourcing outcomes,
    including price reductions for goods and services and total procurement
    cost reductions. According to OMB's federal procurement policy officials,
    OMB aligned much of its May 2005 strategic sourcing policy with the
    commercial best practices identified in our reports. (GAO-02-230 ,
    GAO-03-661 , and GAO-04-870 )

    3.26.C. Helping Customs Improve its Modernization Program: Our work has
    resulted in DHS's Customs and Border Protection improving its ability to
    manage its multibillion-dollar IT modernization program and provided the
    Congress with information on which to base funding decisions. Our
    recommendations have focused on the need for Customs and Border Protection
    to strengthen accountability for its modernization program and better
    ensure the delivery of promised system capabilities and benefits within
    budget and on time. The agency's progress toward addressing our earlier
    recommendations that it reduce the degree of concurrent system development
    activities, reconcile program cost estimates with independent estimates,
    and address human capital weaknesses has improved management of its
    modernization program. Adoption of our earlier recommendations related to
    developing and using an enterprise architecture, following an incremental
    system acquisition approach, establishing system acquisition process
    controls, and ensuring the independence of its function to oversee the
    modernization program has resulted in reduced exposure to risk. (
    GAO-03-406 , GAO-04-719 , and GAO-05-267 ) 3.27.C. Improving the Federal
    Government's Collection, Use, and Dissemination of Federal Information: We
    have provided assistance to the Congress in ensuring that federal
    information is effectively managed and leveraged to improve agency
    performance and protect citizens' rights. For example, since key
    amendments to the Freedom of Information Act were passed in 1996, we have
    produced a body of work reporting on agency actions to implement the act,
    and congressional decision makers as well as the press have come to rely
    on our reports to gauge agencies' progress. In early 2005, bills were
    introduced to make further amendments to the act, we were asked to provide
    key status information at a May 2005 hearing on such measures as the
    numbers of Freedom of Information Act requests agencies have been
    processing annually and the size of the backlog of open requests that is
    carried over from one year to the next. Our analysis has provided a basis
    of discussion and debate for the Congress, the news media, and the public.
    We also made contributions to the Congress's upcoming reauthorization of
    the Paperwork Reduction Act, which provides the framework for managing
    federal information. In February, we sponsored a forum to explore
    reauthorization issues, which was attended by experts and key stakeholders
    in the executive and legislative branches. In addition, we reported on
    agencies' efforts to review proposed information collec-tions-a critical
    process added to the act in the last reauthorization-and made suggestions
    to the Congress to strengthen the act's paperwork reduction requirements.
    On the issue of privacy, we commented on emerging issues in reporting on
    five case studies involving federal efforts to mine data, including
    personal information, and identified ways to improve privacy and security
    protections. In addition, we reported on shortcomings in TSA's initial
    public privacy notices on Secure Flight, its new passenger screening
    system, and as a result, the agency took prompt action to more fully
    disclose its use of personal information. Regarding records management, we
    made contributions toward ensuring that valuable electronic records
    created today will be accessible in the future by reporting on the
    progress that the National Archives and Records Administration has made in
    developing an advanced electronic records archive. ( GAO-05-12 ,
    GAO-05-405 , GAO-05-420 , GAO-05-424 , GAO-05-648T, GAO-05-864R ,
    GAO-05-866 , and GAO-04-927 )

    3.28.C. Using IT to Transform Health Care:

    Our work has helped to highlight the importance of IT in health care
    delivery and public health by identifying benefits of selected IT
    applications, which, among other things, have reduced costs, improved
    quality of care, and improved communications within health care delivery
    organizations and insurers. We have also highlighted the limited progress
    being made by federal agencies to improve the public health IT
    infrastructure, which affects the nation's ability to respond to public
    health emergencies, including bioterrorism. In addition, several
    significant bipartisan bills focused on health IT have been introduced in
    the House and the Senate that address interoperability standards,
    improvements to patient safety, and grants for health IT projects that
    demonstrate costs and benefits-areas of importance emphasized by our work.
    Our reports and resulting recommendations are also helping to drive HHS
    improvements such as the appointment of a National Coordinator for Health
    IT whose objective is to help transform the health care industry's use of
    IT. In July 2004, the National Coordinator issued the framework for
    strategic action, which outlined an approach to the nationwide
    implementation of electronic health records and interoperable health IT.
    This framework addresses the adoption of data standards and actively
    involves the private sector (such as the American Health Information
    Community task force) as integral components needed to transform the use
    of IT for health care delivery. In addition, HHS has issued requests for
    proposals for developing a prototype of a National Health Information
    Network architecture. Later this year, the National Coordinator is
    expected to release a comprehensive strategic plan, which we anticipate
    will implement our recommendations. ( GAO-03-139 , GAO-04-224 ,
    GAO-04-947T, GAO-04-991R , GAO-05-308 , GAO-05-309R , and GAO-05-628 )

    3.29.C. Improving the Understanding of Selected File-Sharing Programs:
    Peer-to-peer file-sharing programs represent a major change in the way
    Internet users find and exchange information by allowing direct
    communication between computer users who can access and share digital
    music, images, and video files. These programs also can be a conduit for
    sharing pornographic images and videos. During fiscal year 2005, we
    reviewed selected electronic file sharing applications to

    (1) determine the extent to which they provide easy access to pornographic
    images and (2) assess the ability of the applications' filters to block
    pornographic images. We found that pornographic images are easily shared
    and accessed by the selected file-sharing applications, and that the
    pornography filters offered by the selected programs varied in their
    ability to block pornographic images. Our review contributed substantially
    to the Congress's and the public's understanding of the uses of
    peer-to-peer file-sharing applications to access and share pornography. (
    GAO-05-634 )

    3.30.C. Ensuring Executive Branch Agency Compliance with Continuity of
    Operations Guidance: We identified weaknesses in the processes agencies
    had used to identify the essential functions that should be quickly
    restored after being disrupted by an emergency and the plans to support
    restoring them (known as continuity of operations plans). These weaknesses
    included inconsistencies in the number of functions identified by agencies
    and the inclusion of functions that appeared to be of secondary
    importance. In response to these concerns, the President's Homeland
    Security Advisor began an interagency effort in January 2005 to define
    governmentwide essential functions and to review and validate
    agency-identified essential functions. Also, DHS published revised
    guidance for agency continuity planning. Our most recent evaluation found
    that agencies had already begun addressing weaknesses identified in our
    original assessment. For example, two major agencies that did not have
    continuity plans in place in October 2002 have since implemented plans. In
    addition, the recent steps taken by DHS and the White House could result
    in an increased emphasis on the most critical government functions and
    better planning to ensure that those functions are quickly restored
    regardless of the type of event that caused the disruption. ( GAO-04-160 ,
    GAO-04-638T, GAO-05-577 , and GAO-05-619T )

    Support congressional oversight of key management challenges and program
    risks to improving federal operations and ensuring accountability

    3.31.A. Preventing Improper Sales of Sensitive Clothing and Textile Items:
    Our audit of controls over excess DOD property found that DOD improperly
    sold excess clothing with infrared reflectant properties over the Internet
    to the public. Infrared reflectant technology prevents detection and State
    has established criteria for designating certain of these items as defense
    articles. In response to our work, DOD issued a more stringent policy than
    State's guidelines. DOD determined these items to be of a sufficiently
    critical and sensitive nature to require the same demilitarization control
    as significant military equipment-total destruction-an action that should
    help prevent this sensitive technology from falling into the wrong hands.
    (GAO-04-15NI and GAO-04-81TNI )

    3.32.A. Bolstering Governmentwide Actions to Identify and Report Improper
    Payments:

    Since fiscal year 2000, our recommendations aimed at raising the level of
    attention given to improper payments by the agencies that are subject to
    the Chief Financial Officers Act of 1990 contributed to the Congress
    passing the Improper Payments Information Act of 2002. This act required
    all agencies to identify programs and activities susceptible to
    significant improper payments, estimate the annual amount of improper
    payments, and report on the amount of and their actions to reduce their
    improper payments. Fiscal year 2004 marked the first year that federal
    agencies governmentwide were required by the act to report improper
    payment information. From our review of fiscal year 2004 performance and
    accountability reports, the 11 programs or activities that provided this
    information for the first time reported improper payments totaling over
    $700 million. For example, HHS disclosed an improper payment amount of
    $255 million for its Head Start program. Similarly, USDA disclosed an
    improper payment amount of $125 million for its Federal Crop Insurance
    Corporation program. USDA, which has a long history of analyzing payment
    error rates for the Food Stamp Program, also reported that the improper
    payment rate for the Food Stamp Program had been reduced significantly,
    primarily due to the rate reduction in improper overpayments.
    Specifically, Food Stamp Program improper overpayments declined from

    6.16 percent in base year 2002 to 5.05 percent in fiscal year 2003,
    resulting in a $249.7 million reduction in improper overpayments for
    fiscal year 2003. On the basis of our analysis of USDA statistically
    projected error rates and OMB's reduction estimates of the Food Stamp
    Program, we expect to continue to see financial benefits stemming from
    these changes over the next 4 fiscal years. (GAO-02-749 , GAO-03-750T,
    GAO-03-991T, GAO-04-99 , and GAO-04-631T )

    3.33.A. Ensuring That USCIS Becomes Self-supporting: We determined that
    fees USCIS collected were not sufficient to fully fund the cost of
    processing applications for U.S. citizenship and naturalization as
    contemplated by existing law. USCIS charged fees to process applications
    for U.S. citizenship and naturalization, but was also receiving
    appropriated funds to pay for administrative and overhead costs. Our work
    highlighted the need for USCIS, among other things, to increase its fees
    in order to alleviate the need for appropriated funds. In April 2004,
    USCIS increased its fees, thereby enabling it to discontinue its partial
    reliance on taxpayer financing. The additional federal revenues for fiscal
    years 2004 and 2005 were $551 million. (GAO-04-309R )

    3.34.A. Improving Accountability at DOL:

    OMB's audit guidance for reporting compliance with the Federal Financial
    Management Improvement Act of 1996 (FFMIA) calls for either reporting
    identified problems or stating that none came to auditors' attention
    during testing. In our annual report on FFMIA, we recommended that OMB
    revise its audit guidance to require auditors to perform sufficient
    testing to be able to positively state whether an agency's systems
    substantially complied with the act's requirements (positive assurance).
    Although OMB has not done so, in fiscal year 2004, DOL's IG contracted
    with an independent public accounting firm to perform sufficient testing
    to allow positive assurance of FFMIA compliance, if warranted. DOL's IG
    advised us that DOL had decided to be the first federal agency to provide
    positive assurance because of our continual emphasis on this topic.
    Positive assurance provides users with substantially greater confidence
    that agency systems provide the reliable, useful, and timely management
    information envisioned by the act. (GAO-02-29 , GAO-03-1062 , and
    GAO-05-881 )

    3.35.A. Helping NASA Recognize Significant Challenges with the Prometheus
    1 Project: In 2003, NASA initiated the Prometheus 1 project to explore the
    outer reaches of the solar system. However, in February 2005, we reported
    that the Prometheus 1 project, which the Congressional Budget Office
    estimated would cost about $10 billion, faced challenges in setting
    realistic requirements, preparing reliable cost estimates, and advancing
    complex critical technologies-chal-lenges NASA has had difficulty
    overcoming in a number of other costly space initiatives. Additionally,
    the approved funding for Prometheus 1 was inadequate to support a planned
    2015 launch to Jupiter's icy moons. Based on concerns about cost and
    technical complexity and consistent with our recommendations, NASA has
    deferred the Jupiter Icy Moons Orbiter mission indefinitely and is
    shifting the focus of its Prometheus 1 project. Eliminating the Jupiter
    Icy Moons Orbiter mission from its fiscal year 2006 budget request reduces
    NASA's funding needs by more than $1.1 billion through fiscal year 2009. (
    GAO-05-242 )

    3.36.A. Strengthening NASA's Integrated Financial Management Program: For
    more than a decade, we have identified NASA's contract management as a
    high-risk area-in part, because the agency lacked an integrated financial
    management system, hampering its ability to oversee contracts, control
    program costs, and ensure an effective human capital management strategy.
    In April 2000, NASA initiated the Integrated Financial Program-its third
    effort at modernizing its financial management system. More than 3 years
    later, we reported that insufficient processes for ensuring adequate
    funding reserves for contingencies-along with uncertain reliability of
    cost estimates and optimistic schedules-put the program at risk of
    schedule delays and cost growth. In our fiscal year 2005 review, we found
    that NASA has implemented a methodology that enables programs to identify
    high-severity risks and determine their direct relationship to reserves,
    which is in line with our recommendation. This methodology should help the
    agency ensure that the program's reserve funding is sufficient to cover
    the potential cost impact of risks and unknowns. (GAO-04-118 ) 3.37.A.
    Improving NASA's Cost-Estimating Processes: NASA's inability to collect,
    maintain, and report the full cost of its programs-along with persistent
    cost growth-has put NASA's contract management on our high-risk list for
    more than a decade. Through a review of selected programs, we found that
    NASA lacks the basic cost-estimating processes needed to establish
    priorities, quantify risks, and make informed investment decisions. As a
    result, programs may be restructured to fit available resources,
    increasing the risk of cost and schedule overruns and failure to meet
    program objectives. We also identified a number of barriers to
    implementing effective cost-estimating practices, including the lack of
    reliable financial and performance data and the lack of incentives to
    measure and monitor cost trends. Acting on recommendations we made in May
    2004, NASA has taken actions to remove these barriers and improve its
    cost-estimat-ing practices, including establishing requirements to
    facilitate the efficient and effective use of NASA's cost-estimating
    staff, requirements for independent assessments at program and project
    milestones, and enforcement mechanisms for ensuring that project
    cost-estimating requirements are met before the project proceeds to the
    next milestone. (GAO-04-642 )

    3.38.A. Avoiding Additional Losses from Loan Sales: We found that the
    Small Business Administration (SBA) improperly calculated the results of
    billions of dollars of loan sales and could not determine the value of its
    remaining disaster loan portfolio. We recommended that SBA correct the
    calculation of the results of its loan sales and determine the value of
    its remaining disaster loan portfolio before conducting additional sales.
    In response, SBA conducted a detailed review of its financial records
    relating to the disaster loan program, including the completed loan sales,
    and shortly thereafter discontinued the loan sale program. SBA's analysis
    identified a fundamental flaw in the method used to determine whether a
    sale was beneficial to the government and allowed SBA to develop a more
    reliable process to calculate the results of a sale and to value the
    remaining loan portfolio. SBA's analysis showed that its prior sales of
    disaster loans resulted in losses of over $900 million as opposed to gains
    as previously reported. Prior to our review, SBA had intended to sell its
    remaining disaster portfolio of about $3 billion as well as loans
    disbursed in the future. Had SBA pro-ceeded with these sales using the
    same flawed pricing model, it would have continued to incur significant
    losses, estimated to be approximately $441.4 million over 5 years. (
    GAO-03-87 )

    3.39.A. Increasing the Collection of Delinquent Federal Taxes: We have
    long advocated increased use of Treasury's offset program to intercept
    federal payments to those who have delinquent nontax and tax debt. Under
    this program, federal payments can be levied to pay taxpayers' outstanding
    tax debt. We identified missed collection opportunities because few
    payment streams were subject to the offset program, including those of
    disbursing offices outside of Treasury. We noted that millions of dollars
    of tax debt could be collected if Treasury levied such federal payments
    using its existing capacity. Fiscal year 2004 marked the first significant
    success due to (1) increasing numbers of programs subject to the levy
    program and (2) IRS releasing substantially more tax debt to be included
    in the levy program. We determined that tax levy collections using
    Treasury's levy authority for fiscal years 2004 and 2005 totaled $308
    million dollars. ( GAO/T-AIMD-98-195 , GAO/GGD-00-65 , and GAO-01-711 )

    3.40.A. Revising DOD Working Capital Fund Appropriations: Over the years,
    we have reviewed various aspects of defense working capital funds,
    including cash management requirements. Our work on cash management this
    year showed that (1) the Air Force working capital fund would exceed the
    cash requirement at the end of fiscal year 2005 and (2) the Navy's working
    capital fund budget did not project excess cash at the end of fiscal year
    2005, but these projections have not been reliable in recent years. Based
    on our review, the Congress reduced the Air Force and Navy fiscal year
    2005 appropriations for operation and maintenance by a total of just under
    $1.3 billion due to excessive cash amounts. ( GAO-04-498 )

    3.41.A. Improving Accountability at DHS: At the time that it was created
    in 2003, DHS was not subject to two key financial management improvement
    laws-the Chief Financial Officers Act of 1990 and FFMIA-whose key goals
    are, among other things, providing the Congress and agency management with
    reliable financial information for daily management and decision making
    and improving financial management systems and controls to properly
    safeguard the government's assets. Because of the size of DHS, the
    internal control weaknesses it inherited, and the importance of these laws
    in improving financial management, we urged the Congress to require DHS to
    be subject to these laws. We also supported the concept of DHS obtaining
    internal control opinions over financial reporting, similar to what
    Sarbanes-Oxley requires for publicly traded companies. On October 16,
    2004, the Department of Homeland Security Financial Accountability Act was
    signed in to law by the President, requiring DHS to comply with the
    provisions of these laws. The act also requires DHS to obtain an opinion
    on its internal controls over financial reporting, making it the first
    agency covered by the Chief Financial Officers Act that is required to do
    so. (GAO-03-1134T, GAO-04-774 , and GAO-04-945T )

    3.42.C. Increasing Reuse of Excess DOD Property: Our assessment of DOD's
    excess property program showed that DOD does not have management controls
    in place to maximize reuse of excess items. Of $33 billion in excess
    commodity disposals in fiscal years 2002 through 2004, $4 billion were
    reported to be in new, unused, and excellent condition. DOD found in-house
    use for $495 million (12 percent) of these items. However, the remaining
    $3.5 billion (88 percent) represented significant waste and inefficiency
    because new, unused, and excellent condition items were transferred and
    donated outside of DOD, sold for pennies on the dollar, or destroyed even
    though other DOD units concurrently bought many of these same items. We
    identified at least $400 million of fiscal year 2002 and 2003 commodity
    purchases for which new, unused, and excellent condition items were
    available for reutilization. In response, the Defense Logistics Agency
    pledged to have systems improvements in place by January 2006 to prevent
    purchases of new items when identical items are available for
    reutilization. ( GAO-05-277 and GAO-05-729T )

    3.43.C. Focusing Attention on Financial Hardships Experienced by Army
    Guard and Reserve Soldiers: We reported that injured and ill Army Reserve
    soldiers-who are entitled to extend their active duty status to receive
    treatment-had been inappropriately removed from active duty status in the
    automated systems that control pay and access to medical care. Many of our
    case study sol-diers incurred severe, permanent injuries fighting for
    their country, including loss of a limb, hearing loss, and back injuries.
    Nonetheless, these soldiers had to navigate the Army's convoluted and
    poorly defined process for extending active duty service. In responding to
    our report, DOD described its completed, ongoing, and planned actions to
    address each of our 22 recommendations. If effectively implemented, these
    actions should be important steps in developing comprehensive, effective
    solutions for dealing with Reserve component soldiers with
    service-connected injuries or illnesses. (GAO-05-125 and GAO-05-322T )

    3.44.C. Improving Travel Reimbursement Process for Mobilized Army Guard
    Soldiers:

    We reported and testified that mobilized Army Guard soldiers have
    experienced significant problems getting accurate, timely, and consistent
    reimbursements for out-of-pocket travel expenses. Army Guard soldiers in
    our case study units reported a number of problems that they and their
    families endured due to delayed or unpaid travel reimbursements, including
    debts on their personal credit cards, difficulty paying their monthly
    bills, and inability to make child support payments. As a result of our
    recommendations, DOD is taking action to correct the deficiencies noted in
    the areas of processes, human capital, and automated systems. However,
    with regard to DOD's longer term automated systems initiatives, we
    identified problems that raise concerns about whether and when complete
    and lasting solutions to these issues will be implemented. ( GAO-05-79 and
    GAO-05-400T )

    3.45.C. Identifying Airline Passenger and Property Screening Costs:
    Funding for aviation security programs remains a central issue because
    passenger and air carrier security fees are not sufficient to fully cover
    TSA's costs. In the post-Septem-ber 11 environment, passenger screening
    and who pays for it are highly visible and extremely sensitive topics to
    the traveling public, air carriers, airports, security companies, trade
    organizations, and the federal government. One of the fees that TSA is
    authorized to collect is currently based on airlines' self-reported costs
    of providing passenger and property screening during calendar year 2000.
    These self-reported amounts totaled $319 million. Because this amount was
    much lower than anticipated, the Congress asked us to provide an
    independent assessment of the airlines' passenger and property screening
    costs in 2000, the last full year prior to September 11, 2001. We
    estimated that passenger and property screening costs in 2000 for the
    major cost components were about $448 million or $129 million more than
    the air carriers reported. Accordingly, we recommended-and TSA agreed to
    consider-using the analysis and estimates in our study in determining the
    future basis for this fee. (GAO-05-558 )

    3.46.C. Supporting the Congress in Its Efforts to Focus on the Importance
    of Internal Control: The 1982 Federal Managers' Financial Integrity Act
    required the Comptroller General to issue internal control standards and
    OMB to issue guidelines for agencies to follow in assessing their internal
    controls. In 2004, OMB revised its internal control guidance contained in
    Circular A-123, in an effort to strengthen the requirements for conducting
    management's assessment of internal control over financial reporting and
    bring a principles-based approach to establishing and reporting on
    internal control. In February of 2005, we provided our views on OMB's
    revised circular, highlighting issues critical to successful
    implementation of the revised circular. We also outlined the importance of
    internal control, summarized the Congress's long-standing interest in
    internal control and the related statutory framework, and discussed our
    experiences and lessons learned from agency internal control assessments
    since the early 1980s. ( GAO-05-321T )

    3.47.C. Helping NASA to Address Its Human Capital Challenges: At the end
    of this decade, NASA plans to retire its Space Shuttle. Retiring the space
    shuttle-and in the larger context, implementing the President's new vision
    for space explo-ration-will require NASA to rely on its most important
    asset: its workforce. The space shuttle workforce currently consists of
    about 2,000 civil service and 15,600 contractor personnel, including a
    large number of scientists and engineers. After we began our work on
    NASA's human capital challenges related to retiring the Space Shuttle,
    NASA directed panel teams to examine human capital as an element of the
    shuttle program's mission execution and transition needs. Consistent with
    our findings, the teams made various recommendations on steps that should
    be taken to address human capital concerns, including developing and
    implementing a critical skills retention plan, developing a communication
    plan to ensure the workforce is informed, establishing an agencywide team
    to integrate human capital planning efforts, and developing a detailed
    budget that includes funding for human capital retention and reduction
    strategies. (GAO-05-230 and GAO-05-718T )

    3.48.C. Modernizing the Accountability Profession for the 21st Century: We
    were actively engaged with other accountability organizations in building
    a solid foundation for an effective and ethical accountability profession
    prepared for the challenges of the 21st century. We provided leadership on
    key issues involving fair presentation of financial reporting overall and
    key aspects of auditing standards. We also provided the essential public
    interest perspective in the development of

    U.S. and international auditing standards that will fundamentally
    strengthen audit performance and improve the effectiveness of audits in
    the private and public sectors. We also continued to provide leadership in
    accountability for all levels of government auditors and financial
    management professionals in the United States-state, local, and
    federal-through training, technical advice, and leadership in auditing and
    internal control standards. Our experts responded to thousands of
    auditors' inquiries on the Government Auditing Standards, and provided
    training sessions at more than 50 professional conferences and workshops
    across the country for state, local, and federal government auditors and
    financial management professionals. In addition, we contributed insight
    and recommendations to ongoing Sarbanes-Oxley Act reforms, which posed
    significant challenges for corporations and auditors. In venues such as an
    SEC roundtable and the Public Company Accounting Oversight Board's
    Standing Advisory Group, we contributed to efforts to improve and
    streamline the audit process. On the international front, we provided
    leadership in developing strong, globally accepted auditing standards for
    the International Organization of Supreme Audit Institutions (INTOSAI),
    which is an association of national government audit organizations, and
    the International Auditing and Assurance Standards Board, which is working
    to establish auditing standards to be used around the world. (Based on
    briefings)

    Analyze the government's fiscal position and strengthen approaches for
    addressing the current and projected fiscal gap

    3.49.A. Improving GSA's Capital Financing Decisions: In our December 2004
    report, we recommended that GSA's Administrator, among others, perform
    business case analyses and ensure that the full range of funding
    alternatives, including the technical feasibility of useful segments, are
    analyzed when making capital financing decisions. In a May 12, 2005,
    letter to the Comptroller General, GSA's Administrator wrote that in
    response to our recommendation, GSA will develop a pro forma business case
    analysis that is similar to the analysis used for projects using
    appropriated funds and can be used for Energy Savings Performance
    Contracts, which provide capital improvements, such as lighting retrofits
    and ventilation systems, for federal facilities without the government
    recording the full cost up-front. In addition, GSA has promulgated
    supplemental internal procedures to be followed when entering into these
    contracts. The procedures require the performance of a life cycle cost
    analysis as part of the contract evaluation process. (GAO-05-55 )

    3.50.A. Permanently Reauthorizing Selected Franchise Fund Pilots: In
    August 2003, the Congress was considering the reauthorization of the six
    franchise fund pilots operating at the Department of the Interior,
    Commerce, Treasury, VA, HHS, and EPA. These franchise funds, authorized by
    the Government Management Reform Act of 1994, are part of a group of 34
    intragovernmental revolving funds that were created to provide common
    administrative support services required by many federal agencies. For
    example, the Commerce Franchise Fund's business line provides IT
    infrastructure support services to the agency. The Congress established
    these self-supporting, businesslike entities to provide such services on a
    fully reimbursable basis. We concluded in our report that increasing the
    period of authorization would help to ease the concerns of current and
    potential clients about franchise fund stability and might allow franchise
    funds to add new business lines. The Congress provided permanent authority
    to the Commerce and Treasury franchise funds in the Consolidated
    Appropriations Acts of 2004 and 2005, respectively. ( GAO-03-1069 )

    3.51.A. Improving IRS's Methodology for Pursuing Delinquent Taxes: Our
    report on IRS's fiscal year 1999 financial statements stated that IRS did
    not have systems or procedures in place to allow it to identify and
    actively pursue cases that may have some collection potential. We
    recommended that IRS improve its capacity to assess the collectibility of
    delinquent taxes as a way of deciding on which debts to focus collection
    efforts. In 2004, IRS began implementing sophisticated modeling technology
    to differentiate between more and less productive cases in order to make
    better resource allocation decisions. IRS's analysis showed that its
    collections of delinquent taxes with approximately the same resources
    increased by about $1.8 billion, or 8.4 percent from the previous year.
    (GAO-01-42 )

    3.52.A. Improving Agency Capital Planning: In 2004, we evaluated VA,
    National Park Service, and Bureau of Prisons capital planning practices
    against the practices used by leading private companies and state and
    local governments that we identified in a 1998 report. We found that
    capital plans were not being done or needed to be centralized or expanded
    to reflect all the capital investment decisions made by the agencies. We
    also noted that the Congress and OMB should receive the plans to make
    agencies' longer term priorities transparent and to promote a longer term
    perspective in capital decision making. Since our 2004 report, all three
    agencies developed and improved capital plans, making them available to
    key decision makers. Also, as agencies developed such plans, capital asset
    management systems and asset inventories were improved as part of their
    efforts to better determine actual capital asset needs. ( GAO-04-138 )

    3.53.A. Revising Tax Rules on Expatriation of Individuals: Certain high
    income or high net worth individuals are subject to an alternative method
    of income taxation for the 10 years after they relinquish their U.S.
    citizenship or noncitizens terminate their residency. In our May 2000
    report to the Joint Committee on Taxation, we provided information on IRS,
    Immigration and Naturalization Service, and State Department procedures
    for preventing individuals who do not comply with these tax rules from
    reentering the United States, analyses of their tax returns, and
    information related to their country of citizenship and residence after
    leaving the United States. In February 2003, the committee issued a report
    on the tax law and immigration treatment of relinquishment of citizenship
    and termination of long-term residency. The report extensively cited our
    assistance to the committee and provided the basis for the American Jobs
    Creation Act of 2004 to revise the tax rules related to citizenship
    relinquishment or residency termination. To accompany the conference
    agreement, the committee estimated that budget effect of the revised tax
    rules for the 2005 to 2014 period will be to increase revenues about $377
    million. We are recognizing $121 million of this increased revenue over
    the 2005 to 2009 period as an accomplishment. (GAO/GGD-00-110R )

    3.54.C. Contributing to the Tax Reform Debate: We issued several products
    in fiscal year 2005 that looked at the cost, complexity, and fairness of
    our tax system. For example, two products focused on a major contributor
    to these costs, tax expenditures. One looked at tax expenditures as a
    whole, noting their growth and lack of oversight compared to federal
    spending. The other found that the rules governing the tax expenditures
    for higher education are complex and taxpayers often make decisions
    counter to their own financial interest. We also reviewed the literature
    on the costs of the current tax system-economic efficiency and compliance
    costs beyond the taxes actually paid-and reported that estimates of
    compliance burden range from 1.0 to 1.5 percent of Gross Domestic Product,
    while estimates of the economic efficiency losses are on the order of 2 to
    5 percentage points of Gross Domestic Product. Complexity also breeds
    noncompliance. As we reported, IRS estimates that the tax gap is over a
    quarter of a trillion dollars. Lack of confidence in the current tax
    system is driving proposals for reform. We also issued a special
    publication providing background on revenue needs, the criteria for a good
    tax system, and key questions to help policymakers and the public make up
    their own minds on tax reform proposals. (GAO-05-527T, GAO-05-684 ,
    GAO-05-690 , GAO-05-753 , GAO-05-878 , and GAO-05-1009SP ) 3.55.C.
    Analyzing the Federal Government's Long-term Fiscal Imbalance: We continue
    to provide updated analyses of our nation's large and growing long-term
    fiscal challenge and the risks it poses to our future. Simply put, our
    nation's fiscal policy is on an unsustainable course. Absent substantive
    policy change, a growing imbalance between expected federal spending and
    tax revenue will lead to escalating and ultimately unsustainable federal
    deficits and debt. We hosted a forum in December 2004 to identify ways to
    broaden public understanding and dialogue so that action could be more
    likely, more informed, and more immediate. Taken together, our efforts
    have helped foster collaborations between groups and individuals across
    the political and policy spectrum aiming at increased public understanding
    of the nature, magnitude, and potential consequences of the long-term
    fiscal challenge. ( GAO-05-282SP )

    3.56.C. Conducting the First GAO Appropriations Law Forum: We held our
    first Appropriations Law Forum on March 10, 2005, to highlight the more
    relevant federal appropriations law topics from the year as well as
    provide members of the community an opportunity to discuss appropriations
    law issues and to meet other appropriations counsel. Over 100 attorneys
    from government agencies participated in the forum, which focused on the
    Congress's power of the purse, with sessions that included an overview of
    significant decisions issued in 2004, a discussion of interagency
    transactions, and an overview of the availability of appropriated funds to
    purchase food. Material from the forum was subsequently posted on our Web
    site and is routinely used by federal appropriations law practitioners.
    (Based on a forum)

    3.57.C. Achieving the First Annual Update of the Red Book: In March 2005,
    we published the first annual update of the third edition of volume I of
    Principles of Federal Appropriations Law (known as the Red Book) to
    improve its value as a timely, exemplary resource for understanding
    federal appropriations law matters. The update presented a cumulative
    supplement to the published third edition text that includes all relevant
    decisions from January 1 to December 31, 2004. It was posted
    electronically on our Web site and contains links to all cited our
    decisions. The update has served as an invaluable new reference tool for
    the entire federal government and has been welcomed by the federal
    procurement community, composed of hundreds of attorneys and even more
    practitioners, as an extremely helpful publication. (GAO-05-354SP )

    3.58.C. Amending the Antideficiency Act to Include GAO: We drafted
    legislative language amending the Antideficiency Act to require the heads
    of executive agencies and the Mayor of the District of Columbia to
    transmit to the Comptroller General copies of reports of violations at the
    same time violations are reported to the Congress and the President. Our
    provision was inserted into the Consolidated Appropriations Act 2005. We
    also drafted report language for the Senate report, which instructs us to
    establish a central repository of Antideficiency Act reports and states
    that the Comptroller General will track all Antideficiency Act reports,
    including responses to Comptroller General legal decisions and opinions
    and findings in audit reports and financial statement reviews. (Based on
    legal assistance)

    3.59.C. Increasing the Oversight of the Vehicle Donations Program: The
    American Jobs Creation Act of 2004 included a provision limiting the
    amount that a taxpayer can claim for a donated motor vehicle, boat, or
    plane to the gross proceeds received from the sale when the value exceeds
    $500 and the item is sold by the charitable organization. Prior to this
    law, IRS's guidance instructed taxpayers donating vehicles to charities to
    establish the value of a donation based on its fair market value. Our
    November 2003 report on charitable vehicle donations stated that the
    proceeds received by charities from vehicle donations were 5 percent or
    less of the value donors claimed as a deduction on their tax returns. We
    consulted with congressional staff on a legislative proposal to address
    the problem by allowing taxpayers to only take a tax deduction for the
    selling price of the donated vehicle instead of the fair market value. As
    a direct result of our report, a bill was introduced in the Congress that
    included a revenue raiser to address the vehicle donations problem, and
    this revenue raiser was ultimately included in the American Jobs Creation
    Act. (GAO-04-73 )

    3.60.C. Advancing Accountability with the First Financial Audit of SEC: We
    conducted the first-ever audit of SEC for the fiscal year ended 2004. SEC
    plays a prominent and critically important role in overseeing the U.S.
    securities markets and in enforcing accountability for corporations whose
    securities are traded in those markets. Completion of the first financial
    statement audit of SEC represented a significant advance in the
    commission's accountability to the public. SEC earned an unqualified, or
    clean, opinion on its financial statements, meaning that we found that its
    financial statements and accompanying notes are presented fairly in all
    material respects and in conformity with generally accepted accounting
    principles. We also found that in preparing its first complete set of
    financial statements, SEC had made significant progress in building a
    financial reporting structure. Nevertheless, we found that SEC had
    material weaknesses in internal control over financial statements and
    disclosures, recording and reporting disgorgements and civil penalties,
    and information security, and therefore we issued an adverse opinion on
    internal control. In congressional testimony, the Comptroller General said
    that SEC must lead by example in internal control. He said that a higher
    standard of accountability is important to SEC as a government regulator
    and to the success of its programs, activities, and leadership in the
    business community. SEC agreed with the majority of our recommendations
    and has taken steps to address the weaknesses we found. (GAO-05-244 ,
    GAO-05-693R , and GAO-05-880T )

    Source:See Image Sources.

    Continuously improve client and customer satisfaction and stakeholder
    relationships

    4.1.C. Strengthening Communication with our Congressional Clients: To
    provide new members of the Congress and their staff with information about
    GAO and our working relationship with the Congress and to obtain
    information on client needs, the Comptroller General and the Congressional
    Relations staff met with new members and their staffs and have continued
    to meet and seek feedback from other committee members and staff who have
    been long-standing clients of GAO. We also sought to further improve our
    products, processes, and services by routinely providing feedback from our
    Web-based client survey to our managing directors who direct engagements
    supporting goals 1, 2, and 3. (Based on internal activities)

    4.2.C. Measuring Congressional Satisfaction with Our Work: We collect
    feedback on our products (all testimonies and high interest and higher
    cost written products) from every congressional committee, expanding our
    coverage from our two oversight committees. We received 96 percent
    favorable responses to our client feedback survey for fiscal year 2005.
    Feedback on the nature of the comments has been provided to our managing
    directors, and our training now incorporates some of the most frequently
    received feedback. (Based on internal activities)

    4.3.C. Developing Options for Electronic Dissemination: As part of our
    ongoing pilot project to test the feasibility of producing and
    disseminating GAO reports in an electronic format, we provided over 70
    products to various congressional requesters in an electronic format
    rather than generating hard copy reports. Electronic reports allow our
    clients to search and excerpt text more easily and to follow Web links for
    further information. Client feedback on our electronic dissemination
    process has been positive, and we plan to make the use of electronic
    products routine. As part of another effort, we modified processes for our
    electronic supplements, which are electronic copies of the complete
    results of Web-based surveys that were conducted in conjunction with our
    work and are posted on our Web site. Specifically, we modified the
    software program that generates these supplements and simplified the
    process for creating and posting them. As a result, paperwork requirements
    involved in requesting a product number are reduced for our staff, staff
    can view all features of the supplement before it is posted on the
    Internet, clients and other readers can more easily navigate within the
    electronic supplement, and the product is more readily identified as a GAO
    product. (Based on internal activities)

    4.4.C. Assessing Internal Customer Satisfaction with Our Services and
    Processes: In fiscal year 2004, we launched the Chief Administrative
    Office (CAO) customer satisfaction survey and established baselines for
    key performance indicators. Based on an analysis of the gap between
    customer expectations and satisfaction with services provided, we
    established targets for improvement for the most important CAO areas, and
    CAO units developed and implemented a number of improvement efforts. We
    conducted the second customer satisfaction survey in November 2004 to
    measure the impact of our improvement efforts, refine our targets, and
    make necessary adjustments to reduce the gap between customer expectations
    and the satisfaction with services provided. The fol-lowing are examples
    of the improvements we made. To improve communications, we implemented a
    new system for disseminating and storing agencywide communications and
    notices; a new administrative services Web site (the GAO Administrative
    Gateway) to provide information about our administrative services in a
    more customer-focused and user-friendly format, including direct links to
    CAO unit Web sites; and a searchable administrative services directory. We
    also addressed two major IT pain points identified in the survey: (1) we
    replaced the software that allowed secure network access in conference
    rooms but resulted in considerable network slowness and response times for
    users with one that enhances security while providing simple, direct, and
    stable access to the network, reducing customer frustration and the number
    of help desk calls, and (2) we procured new network printers with greater
    paper capacity, finishing capabilities, and print speed to replace an
    aging fleet of printers that were prone to breakdowns and were
    inconveniently located for staff. (Based on internal activities)

    4.5.C. Assessing GAO Staff Views on Overall Operations and the Work
    Environment: We launched our fifth employee feedback survey in May 2005, a
    confidential survey conducted online that provides an opportunity for our
    employees to provide their views on GAO's work environment. The results
    are used to assess employees' satisfaction with GAO and are analyzed to
    compile the people measures that are discussed in parts I and II of this
    report. Eighty percent of our employees completed the survey, and the
    overall results were very positive with improvement recorded in every
    people measure. Our scores averaged 8.5 percent higher than the latest OPM
    governmentwide survey and 5.25 percent higher than the latest private
    industry survey. This year we also added questions to assess employees'
    satisfaction with GAO. The results of the responses to these questions
    were used by the Partnership for Public Service to determine our standing
    in the annual Best Places to Work in the Federal Government rankings. In
    September, we received an award from the Partnership for Public Service
    for our fourth place ranking. (Based on internal activities) 4.6.C.
    Strengthening Relationships with Our Stakeholders and Increasing the
    Accessibility of Our Products: We developed and issued international
    protocols to strengthen our relationships with our stakeholders in the
    international community. We released the draft protocols for a 1-year
    pilot in October 2005 and plan to issue the final version in early fiscal
    year 2006. We also continued work on our agency protocols, which provide
    clearly defined and transparent policies and practices on how we interact
    with the executive branch agencies in performing our work. Since we began
    pilot-testing the protocols in December 2002, we have been monitoring
    their application. During that time we have received comments indicating
    that the protocols (1) help to ensure a consistent and unified GAO
    approach throughout the federal government and (2) could benefit, in some
    areas, from additional clarification. In response to these comments, we
    revised the protocols in October 2004 to clarify our relationship with the
    agencies where we perform work and our methods of communicating and
    exchanging information with them. Where applicable, we also revised the
    protocols to reflect the updated congressional protocols that were issued
    July 16, 2004. The international peer review team that independently
    assessed the effectiveness of our quality assurance system for conducting
    performance audits cited GAO's agency protocols in its April 2005 report
    as a good practice that will be of interest to other national audit
    offices. (Based on internal activities)

    4.7.C. Achieving External Recognition: We won an American Graphic Design
    Award for excellence in communication and design for our publication About
    GAO, a brochure that provides an overview of GAO and its history, mission,
    and key performance statistics. Fewer than 10 percent of the approximately
    10,000 entries from advertising agencies, graphic design firms, corporate
    creative departments, and publishers were selected for an award by a panel
    of judges from the design and publishing fields. In addition, one of our
    systems-the Electronic Assistance Guide for Leading Engagements, which
    brings together in one place on the intranet everything our staff members
    need to carry out an engagement-was selected by the E-Gov Institute from
    among 120 entries as one of 14 government IT applications to receive its
    Pioneer Award. This award recognizes government organizations that have
    illustrated results-oriented government during the past year. Finally, our
    Chief Information Officer was recognized as one of the 10 recipients of
    Government Computer News' government IT leadership awards for
    "demonstrating the essential qualities of leadership." (Based on internal
    activities)

    Lead strategically to achieve enhanced results

    4.8.C. Integrating Planning, Budgeting, and Performance Measurement: We
    continued our efforts to integrate our planning, budgeting, and
    measurement process to ensure a logical, timely, and accurate progression
    of information from one activity to the next during the fiscal year
    process while avoiding duplication of effort in information gathering and
    report preparation. For example, we aligned the contents of and time
    frames for the performance plan, performance and accountability report,
    and budget with our new 3-year strategic planning process. We also
    established a matrixed team to document the entities and activities
    associated with the workforce plan, budget, and human capital to help
    ensure integration of the time frames and content of planning and
    performance measurement. To improve performance measurement, we continued
    to refine our measures by dropping the measure that counted the number of
    recommendations we made in our reports annually and introducing two new
    measures related to our internal operations. Beginning in fiscal year
    2006, these internal operations measures will help us track our ability to
    provide useful administrative services that help staff perform their jobs
    and contribute to the quality of their work lives. We also continued to
    explore ways to assess our performance in creating and sustaining
    partnerships with external organizations and entities. (Based on internal
    activities)

    4.9.C. Improving Our Strategic and Budget Planning Processes: As part of
    our planning activities for the fiscal year 2005 performance and
    accountability report, we incorporated lessons learned from the successful
    issuance of our fiscal year 2004 performance and accountability report on
    November 15. We accelerated issuance of this report from January 31 to
    November 15 to comply with OMB guidelines and the spirit of the Government
    Performance and Results Act. We also modified the format and revised some
    text in the fiscal year 2004 and 2005 performance and accountability
    reports to address suggestions and recommendations from external
    reviewers, such as the Association for Government Accountants, and the
    Mercatus Center. For the fourth year in a row, the Association of
    Government Accountants awarded our performance and accountability report
    the Certificate of Excellence in Accountability Reporting. We also
    implemented changes to our budget and resource planning process designed
    to improve the efficiency of the process and ensure increased integration
    among IT investments, budget, procurement, and workforce planning. The
    revised process will help ease customers' administrative burden, provide
    greater consistency among the resource planning components, and provide a
    more comprehensive assessment of our resource needs. (Based on internal
    activities)

    4.10.C. Strengthening Our Strategic Human Capital Management: Based on
    feedback from our customer satisfaction survey, our Human Capital Office
    was realigned in June 2005 to consolidate services under four centers of
    excellence: the Talent Acquisition and Human Capital Consulting Center,
    the Learning Center, the Performance and Pay Management Center, and the
    Human Capital Strategic and Operations Center. This consolidation enables
    us to improve our customer focus and our understanding of our customer
    needs. In addition, the realignment has helped to clarify lines of
    delegated authorities, standardized guidance across the Human Capital
    Office, and allowed us to dedicate more of our resources to direct
    customer support. (Based on internal activities)

    4.11.C. Retaining and Attracting Staff: To more effectively anticipate and
    secure an adequate supply of talent for current and future needs, we have
    improved our recruitment strategy by redefining the student employment
    program to include both graduate and undergraduate career experiences
    during the fall and spring as well as the summer and increasing the use of
    short-term and time-limited appointments and direct-hire authorities. Our
    fiscal year 2006 recruitment strategy, developed this year and recently
    approved by our Executive Committee, includes year-round internships;
    implementing cooperative education agreements with five local
    universities; implementing governmentwide flexibility for noncompetitive
    appointments into the Professional Development Program; and using targeted
    recruiting for special skill sets, hard-to-fill positions, and diversity
    recruiting. We also launched a pilot program that offers employment to a
    limited number of undergraduate cooperative education program participants
    in September 2005. (Based on internal activities)

    4.12.C. Refining Performance Management:

    We enhanced and improved our communications with managers and staff in
    fiscal year 2005 through implementation of a number of initiatives such as
    providing an organizational and performance consulting service to address
    organizational needs of our managers; issuing a report to our managing
    directors and the Employee Advisory Council that evaluates the performance
    management assessment cycle with recommendations for improvement;
    redesigning the performance management Web site to improve its
    user-friendliness; providing direct links to performance Web site
    information in GAO notices, e-mails, policy documents, and other forms of
    communication to staff; and developing an e-learning course-Roles and
    Responsibilities of the Designated Performance Manager-that provides our
    managers and supervisors with timely access to the information on our
    performance management process and their responsibilities. We also made
    specific improvements to the analysts, specialists, and investigators
    performance management system, including shortening the processing time
    for appraisals, pay, and promotion decisions; distinguishing feedback on
    performance from feedback on pay and promotion potential; and reducing the
    amount of paperwork required. (Based on internal activities)

    4.13.C. Enhancing Our Classification and Compensation Systems: We
    continued to enhance our performance management and compensation systems
    through new and enhanced policies and processes. We revised the process
    for determining performance-based compensation so that the compensation is
    more directly linked to an individual's performance, as reflected on the
    appraisal. In addition, our administrative and professional support staff
    completed their first year under a broadband pay system and a
    competency-based performance system in June 2005. To ensure that these
    staff understood the new process, as well as to foster staff acceptance,
    we employed an aggressive communication strategy that included meetings
    with staff, as well as Web-based guides and questions and answers. We also
    sought to strengthen our compensation system. To design a competitive,
    fair, and equitable compensation program aligned with competitive labor
    markets in which we compete for talent, we worked with a consulting firm
    to perform a market-based compensation study. Based on the results of the
    study, we have invested significantly in restructuring our analyst and
    analyst-related specialist Band II pay band into two pay levels to better
    align compensation and responsibilities. Other improvements we have
    implemented to ensure our managers' needs for support and guidance
    concerning their responsibilities in the performance management process
    are met include establishing an organizational and performance consulting
    service, developing an e-learning course on designated performance
    managers' roles and responsibilities, developing and issuing a report for
    managers and our Employee Advisory Council evaluating the performance
    management assessment cycle with recommendations for improvements, and
    improving the accuracy and user-friendliness of our performance management
    Web site. (Based on internal activities)

    4.14.C. Enhancing Opportunities for Training: We designed 13 new
    competency-building courses that focused on expanding the professional
    skills of auditors, assisting supervisors in providing oversight to the
    engagement process, and equipping designated performance managers to
    develop assigned staff. As a result, our staff have an opportunity to
    improve the quality of our writing, our methodological analysis, and our
    ability to identify appropriate developmental activities for continued
    professional growth. To further strengthen our definition of effective
    leadership and provide new leaders with an opportunity for peer-to-peer
    mentoring and problem solving, we have established a community of practice
    consisting of analysts-in-charge who graduated from a course on
    supervision. This community of practice meets regularly to discuss best
    practices; challenges facing new analysts in charge; techniques for
    motivating, directing, and coaching staff; how to effectively use and
    contribute to our performance management system; and tools to improve
    performance. We also implemented an adjunct faculty program, certifying
    line auditors as adjunct faculty. This program enlarges the number of
    subject matter experts available to develop content for new courses,
    expands the range of courses available for more experienced staff, and
    meets the needs of both headquarters and field staff. To deliver required
    core curricula to Band I analyst staff in the field offices in the most
    cost-effective manner, we developed and implemented a hub approach whereby
    we deliver courses that have been grouped into five sets of week-long
    sessions at three learning hubs (San Francisco, Denver, and Atlanta). This
    decision was based on our analysis that showed it would cost twice as much
    to centralize Band I program delivery in headquarters as it would to
    distribute and realign programs among the three learning hubs. This
    represents a cost avoidance of $500,000 in travel and per diem and offers
    a number of intangible benefits, such as networking among and across
    teams, a sustained focus on learning, larger classes that make more
    effective use of adjunct faculty time, and the opportunity to strengthen
    matrixed work relationships through shared learning experiences. (Based on
    internal activities)

    4.15.C. Providing Online Job Aids and Support Tools: To increase our
    ability to provide courses, job aids, or performance support tools to our
    staff online, in December 2004 we implemented an upgraded learning content
    management system. The upgraded system makes this learning content
    available on demand, anytime, anywhere, for our staff. It also provides
    the ability to identify core, required curricula for designated staff;
    track completion of the courses; capture information on completion of
    commercially licensed professional development courseware and simulations
    into our training information system; generate management, utilization,
    and course completion reports; and effectively launch e-learning developed
    in GAO directly to the learner's desktop. To bring equity to learning
    opportunities for both analyst and mission support staff, we organized
    information about the over 1,900 professional development courses deployed
    to our desktops last fiscal year as well as other centrally taught,
    instructor-led classes into online learning resource guides for
    administrative professional and support staff. The resource guides, which
    parallel the design for analyst staff, organize learning opportunities by
    competency, suggest job developmental activities, and lay out practical
    learning tracks for staff and their supervisors to use in creating
    individual development plans for professional growth. (Based on internal
    activities) 4.16.C. Ensuring Exemplary Practices and Systems in Our Fiscal
    Operations: Our fiscal year 2005 financial statements were prepared, and
    the audit was completed with a clean opinion within 45 days after the end
    of the fiscal year. This quick turnaround allowed the statements and
    audi-tor's report to be included in the performance and accountability
    report in the time frame mandated by OMB. Based on a fiscal year 2004
    financial statement audit recommendation by our independent external
    auditors, we have developed an Anti-Fraud Program within GAO. Key elements
    of the program will include creation of an Anti-Fraud Web site and
    employee awareness training. Employees will be able to report significant
    instances of fraud, waste, and abuse in our operations anonymously and
    without fear of retaliation to the Anti-Fraud Web site, which will be
    overseen by our IG. Fraud awareness training modules will be included in
    our internal ethics training and the Web-based computer security awareness
    training that staff must take annually. Finally, in anticipation of a
    focused effort in fiscal year 2006 to replace our current financial
    management system, we established a steering committee, a management team,
    and a project team to analyze agency requirements and select the
    replacement system. (Based on internal activities)

    4.17.C. Strengthening IT Governance Practices and Processes: In fiscal
    year 2005, we took actions related to two surveys of our IT organization.
    The first survey reviewed how we compared with peer organizations of
    similar technical complexity, size, and workload in terms of costs. While
    the overall results were positive and showed that we are very competitive
    with our peers, there were two areas identified for potential cost
    reductions- desktop hardware and voice communications. In replacing our
    installed base of notebook computers by the close of fiscal year 2005, we
    have achieved some of these cost reductions. And we have an effort under
    way to contract for a voice communications system, which will yield
    additional financial benefits and reduce the number of support staff
    required for voice communications, bringing us within the competitive
    range for like organizations. The second survey assessed the skills of our
    IT staff in business and IT technical areas and evaluated how well we are
    positioned in workforce planning compared to peer organizations. Based on
    the survey results, we identified our skill strengths and weaknesses,
    training needs, and current and future workforce gaps and initiated an
    action plan to address the identified skill gaps and ensure workforce
    continuity and talent management. (Based on internal activities)

    Leverage GAO's institutional knowledge and experience

    4.18.C. Maximizing the Collection, Use, and Retention of Essential
    Organizational Knowledge: As a knowledge-based professional services
    organization, it is important that we identify and implement strategies to
    increase organizational knowledge retention and transfer. We began a pilot
    of an electronic records management system, which we plan to implement in
    fiscal year 2006, that will capture our records-such as our workpapers,
    reports, and testimonies-and make them accessible electronically to all
    GAO staff. We plan to implement the final version of this system in fiscal
    year 2006. We have also made more types of organizational information
    accessible by beginning to digitize certain document collections-such as
    the legislative histories and the General Counsel's files that document
    legal research-and identifying GAO data sets, databases, and data models
    to make them available as well. We are currently assessing the policy and
    cultural implications of making all GAO records available to all GAO
    staff. In addition, we established a working group of employees from
    different parts of the agency to explore ways we could improve our
    reporting. These efforts may include creating new product types, revising
    our existing reporting format, or using other communication modes. Key
    members of this group also began to develop short- and long-term
    communications standards for various media to guide the presentation of
    all of our publications. (Based on internal activities)

    4.19.C. Increasing Our Knowledge-Sharing Capability: The Human Capital
    Reform Act of 2004 granted authority for an executive exchange program
    with private sector organizations. This year, we finalized our policy for
    an executive exchange program and received Executive Committee approval
    for the forms, templates, and brochures we developed to be used in the
    program. This program will further the institutional interests of GAO and
    the Congress by providing training and skill development opportunities for
    our employees as well as obtaining the expertise of selected private
    sector employees. In fiscal year 2005, we also implemented several changes
    to improve customer satisfaction with our external Web site, including
    integration of our products database with a search engine that provides
    more relevant and targeted results for customers using our search utility
    and links to both primary and related GAO products, an enhanced
    presentation of search results, enhanced capabilities for narrowing a
    full-text search, updated content on several pages, and making more site
    visitors eligible for the satisfaction survey through expansion of the
    survey throughout the site and using a version of the survey that works
    with popup blockers and additional browser types. Overall, customer
    satisfaction with the site, as measured by the American Customer
    Satisfaction Index, increased six points from June 2004 to September 2005.
    We also initiated development of Web-based just-in-time training for many
    of our Web-based library databases. These databases will have instantly
    available step-by-step instructions that are only a click away on all GAO
    desktops. Finally, as part of continuing efforts to support operations, we
    have developed standards to aid analysts in conducting their research.
    These standards are available on the Knowledge Services and Information
    Services Web sites as well as in the Electronic Assistance Guide for
    Leading Engagements. To accompany the standards, we included a formatted
    checklist that analysts can use as a tool in performing literature
    searches. (Based on internal activities)

    4.20.C. Enhancing Knowledge Sharing with Other National Accountability and
    Professional Organizations: We convened a number of forums, symposia, and
    other meetings to provide opportunities for an exchange of knowledge
    between accountability and professional organizations, experts, and
    stakeholders within the United States. For example, we held Comptroller
    General forums that covered topics such as long-term fiscal challenges and
    defined benefit pension plans. In addition, our speakers' series, called
    Conversations on 21st Century Challenges, brought five distinguished
    leaders to speak to our staff on issues affecting the United States and
    its place in the world. Nationally, our continued participation in the
    Domestic Working Group-a group of federal, state, and local auditors that
    meets to discuss mutual challenges-on efforts such as access to records,
    governance, long-term fiscal challenges, and grants management facilitated
    collaboration between GAO teams and state auditors on 14 issues. The
    Partnership for Public Service and the National Association of State
    Auditors, Controllers, and Treasurers assisted us on a number of
    engagements and helped to facilitate our access to state and local
    auditors on engagements relating to improper payments. Through the
    National Intergovernmental Audit Forum, we convened 21 regional forum
    meetings to update federal, state, and local auditors on changes to
    professional audit standards, the implications of Sarbanes-Oxley for the
    audit profession, and other key issues affecting the audit community. In
    addition, we helped organize and develop briefings on program evaluation
    for OMB examiners in response to concerns about how they were assessing
    agency program evaluations with PART. As a result, these examiners should
    be able to more realistically judge the quality of the evaluation evidence
    presented to them and communicate more clearly to agency staff what
    evaluation information they need. (Based on internal activities)

    4.21.C. Enhancing Knowledge Sharing with International Accountability and
    Professional Organizations: Internationally, we continued to provide
    leadership in the implementation of INTOSAI's first strategic plan by
    having the Comptroller General serve as the Vice-Chair of the Governing
    Board's newly created Finance and Administration Committee and as board
    liaison for the strategic plan's capacity building goal. He also chairs
    INTOSAI's Accounting and Reporting Committee and several GAO employees are
    active members of the Auditing Standards, Internal Control Standards,
    Information Technology, Public Debt, and other technical committees. This
    year, we played a major role in developing international internal control
    standards that were adopted at the INTOSAI Congress. To help ensure that
    U.S. public sector perspectives are reflected in the International
    Federation of Accountants' standards development project, we are
    collaborating closely with the International Auditing and Assurance
    Standards Board and the World Bank. We also expanded our global network
    and reputation by promoting education and knowledge sharing through the
    International Auditor Fellowship Program and the Visitor Program in which
    20 fellows from Africa, Asia, Latin America, the Caribbean, and Eastern
    Europe participated. We received about 600 visitors from 63 countries,
    including officials from our counterpart organizations, parliaments, and
    central government ministries. We also initiated the Auditors General
    Speaker Series that provides unique international perspectives and
    insights in support of our work. Speakers in this series included the
    auditors general of South Korea, China, Saudi Arabia, and Ireland. (Based
    on internal activities)

    Continuously enhance GAO's business and management processes

    4.22.C. Improving Engagement Support Services: In fiscal year 2005, we
    improved engagement support services through various efforts. For example,
    we streamlined and simplified the Audit Documentation Set as part of the
    final phase of the document's pilot test, which was launched in January
    2004. The Audit Documentation Set helps to ensure that our engagements are
    consistent with the generally accepted government auditing standards and
    our Quality Assurance Framework and that our work and engagement-related
    decisions have been systematically documented. After revising the January
    2004 document based on extensive comments from analyst staff, we solicited
    comments from staff again in May 2005 and issued the final version of the
    Audit Documentation Set in July 2005. The new version should require less
    time to complete because it eliminated duplicate requirements and no
    longer requires documentation of steps where not applicable responses are
    self-evident. In a separate effort, we implemented two changes to improve
    the efficiency of the report production process and enhance customer
    service in response to comments we received through internal surveys.
    Specifically, we reduced the number of Product Assistance Groups-which
    provide services such as graphics design, editing and writing assistance,
    and report production- from four to three and realigned the teams and
    offices that they serve. In addition, we placed a full-time manager in
    charge of outside printing and graphics procurement, which has become more
    important since the elimination of our in-house printing capacity in
    fiscal year 2004. These changes will allow us to continue to support
    product development more efficiently and economically. (Based on internal
    activities) 4.23.C. Obtaining a Clean Opinion on Our Performance Audit
    Practice: We obtained a clean opinion on our performance audit practice
    from an international team of experienced audi-tors-the first time that we
    have sought such an opinion. The independent reviewers concluded that we
    have designed and implemented an effective system of quality controls to
    provide reasonable assurance of complying with generally accepted
    government auditing standards, which are designed to ensure that audits of
    government activities are objective, independent, and reliable. This
    opinion validated that the Congress and the American people can rely on
    our work and products. (Based on internal activities)

    4.24.C. Improving Staff Assignments: Throughout the fiscal year, we rolled
    out first a prototype and then a pilot of our staffing information system,
    which is intended to integrate staffing data from related but disparate
    systems, reduce staff time spent researching staffing and engagement data,
    and enable better staffing decisions by identifying staff skills and
    availability early in the job process. The system should provide more
    visibility to current and future engagement staffing needs and a uniform
    means for staff to express future assignment preferences and short-term
    availability. Having a common system will also support the engagement
    staffing process across all GAO teams and maximize the use of staff by
    facilitating their assignment to multiple activities (multitasking) and
    sharing of staff expertise across teams (matrixes). (Based on internal
    activities)

    4.25.C. Initiating Process Improvement: We identified two areas-travel and
    accounts payable- for alternative sourcing in order to aid our financial
    management office in achieving its vision of shifting the efforts of our
    staff away from routine transaction processing and toward a greater role
    in policy, guidance development, reporting, and oversight. We selected a
    service provider to perform routine data entry functions, and we have
    transferred post-travel audits of travel documents to field office staff,
    resulting in increased efficiency and productivity of our workforce. To
    improve our IT operations, we used a competency diagnostic tool provided
    through the Chief Information Officer Executive Board-an organization that
    provides strategic, case-study-based research to senior IT executives- to
    examine the organization of our IT operations from the perspective of our
    Information Systems and Technology Services staff. The tool focuses on
    eight core areas of IT management-governance, performance measurement,
    security, infrastructure, applications, vendor management, talent
    management, and business enablement. Analysis of the results by the
    Executive Board included benchmarking our organization against other
    public and private IT organizations and making recommendations for
    improvement, which included expanding the use of the diagnostic tool to
    examine the organization of our IT operations from the perspective of all
    GAO customers. In addition, following the closing of our in-house print
    plant, the increase of electronic-only report issuances has resulted in
    both financial benefits and efficiency gains. Reports no longer need to be
    printed on a 24-hour schedule to meet issue dates, resulting in
    significant financial benefits and allowing the teams and the Product
    Assistance Groups additional time to produce higher quality reports. We
    set a ceiling of 200 for printed copies of products, resulting in printing
    cost reductions that will total an estimated $189,000 over 2 years. (Based
    on internal activities)

    4.26.C. Using Enabling Technology to Improve Our Crosscutting Business
    Processes: We completed several efforts in fiscal year 2005 to provide
    better efficiency in our business processes. We automated two
    processes-the awards nomination process and the posting of individualized
    pay-sav-ing staff time. The automated awards nomination process also
    provides award nomination tracking and approval and payment status and
    automatically sends out status reports on the nomination via e-mail. We
    installed ceiling-mounted projectors in five meeting rooms in headquarters
    to allow staff to use the equipment without needing to reserve equipment
    or schedule support staff ahead of time. We also acquired and deployed a
    Web-based, user-friendly, cost-effective project management software
    package that allows our staff to view files received from other agencies
    that use that software. (Based on internal activities)

    4.27.C. Using Web-Based Technology to Improve or Replace Existing Systems:
    We improved our customer service in several areas using Web-based
    technology. In response to customer requests for a more user-friendly
    interface, we upgraded our Web-based time and attendance system, which
    streamlined data entry so that time charges can be entered all on one
    screen, provided staff the ability to charge compensatory time while on
    travel, and enhanced the administrative functions to support the needs of
    our human capital staff. We also upgraded our automated competency-based
    performance system to include our administrative professional and support
    services staff during their first year under the new competency-based
    system and incorporate revised attorney competencies, new security
    requirements, new report features, enlarged font for improved readability,
    and online help and system feedback links. We improved our customer
    service for employees requesting GAO transportation to business meetings
    by providing a Web-based request system to take the place of the manual
    system used to collect information to schedule GAO vans and drivers. This
    new system allows users a more dependable way to submit requests and
    allows property management staff to make better-informed decisions when
    scheduling vans and drivers. In addition, we redesigned the Web-based
    phone book, making it more user-friendly, including additional information
    and mail and location links, and improving its search capabilities.
    Finally, we deployed a major enhancement to our Web-based employee locator
    system to enable easy location of our employees when they are on official
    business travel overseas. (Based on internal activities)

    Become a professional services employer of choice

    4.28.C. Promoting an Environment That Is Fair and Unbiased and Values
    Opportunity and Inclusiveness: The Office of Opportunity and Inclusiveness
    (OOI) made recommendations concerning proposed agency policy on reasonable
    accommodations and corresponding guidance. As a result, we developed a
    defined program for reasonable accommodation to (1) ensure a systematic
    approach to providing a safe and efficient workplace for staff members who
    have disabilities as defined by the Americans with Disabilities Act and

    (2) enhance the role of the reasonable accommodations coordinator as a
    central contact person who follows the accommodation process from the
    point of request through implementation. At the request of the Comptroller
    General, OOI drafted several recommendations addressing recent trends
    noted in our 2004 annual assessment data and concerns in the areas of
    staff feedback, communication, and training. These recommendations were
    discussed with a cross section of employee groups and forwarded with
    comments to the Executive Committee, which approved the recommendations.
    As a result, OOI set up a task force to determine how best to implement
    the recommendations. OOI also addressed the issue of sexual harassment in
    the workplace, conducting a number of workshops at the request of team
    managers. These workshops served to emphasize the agency's zero tolerance
    posture concerning sexual harassment. (Based on internal activities)

    4.29.C. Promoting Diversity: To help ensure that we attract a diverse pool
    of applicants for our vacant positions, we expanded our equal employment
    opportunity hiring statement in our vacancy announcements to specify the
    basis for our hiring selections, and we began providing a contact person
    and number for applicants who need a reasonable accommodation for the
    application process. To help retain talent we acquired through the summer
    internship program, the OOI Managing Director met with our 2005 summer
    interns to discuss his office's role and to provide guidance on important
    steps that interns can take to enhance their chances for successful
    conversion to permanent GAO employment. To increase retention of our
    Professional Development Program employees, the OOI Managing Director met
    with the their advisors to discuss the importance of ensuring that all
    program participants are provided appropriate training opportunities as
    well as the opportunity to demonstrate their abilities in all performance
    competencies. In addition, OOI provided several presentations during the
    fiscal year aimed at providing staff with information and reinforcing the
    agency's position on diversity and promoting a fair and unbiased work
    environment, including a panel discussion on diversity in the workforce; a
    presentation to new Band II analysts on the importance of promoting an
    environment that is fair and unbiased and that values opportunity and
    inclusiveness for all staff; and a presentation to Senior Executive
    Service employees on leading practices for maintaining diversity, focusing
    on top leadership commitment and ways in which officials can communicate
    that commitment. Our Asian American Liaison Group also continued to
    actively promote diversity and provide opportunities for GAO staff
    professional development. This group actively coordinates with the Human
    Capital Office to define and meet transparent recruiting goals and is
    spearheading creation of a committee to aid the Human Capital Office in
    increasing and targeting diversity recruitment in the most fair and
    efficient manner and improving overall diversity yield. To provide
    professional development opportunities, the group hosted external speakers
    such as the U.S. Postal Service's Vice President of Diversity Development,
    an expert from the American Association of Retired Persons, and a panel
    featuring four Asian American congressional staff. In addition, the group
    and the Human Capital Office cosponsored a self-assessment workshop to
    provide practical tools for GAO employees to use to highlight their
    accomplishments, addressing cultural and other sensitivities that may
    affect one's ability to do so effectively. (Based on internal activities)

    4.30.C. Upgrading Tools and Technology: We completed a number of major
    upgrades to our tools and technology in fiscal year 2005, such as
    replacing outdated phone systems and equipment in the Chicago, Denver, Los
    Angeles, Seattle, and Dallas Field Offices to increase reliability and
    stability of the systems; replacement of older servers with up-to-date,
    bigger, and faster equipment; upgrading our server software, making it
    easier to patch and update and providing easier server administration and
    improved security; replacing existing copiers and multifunction machines
    with modern, more reliable units to reduce downtime for customers and
    standardize our printing hardware platform; installing updated desktop and
    office productivity software on our notebook computers, resulting in a
    single notebook platform that reduces maintenance costs; providing remote
    access software that is more reliable, is more secure, and provides
    worldwide access for dial-in users, supplementing available digital
    subscriber line and cable access; and installing a major software upgrade
    on the new notebooks that provides better access to the most up-to-date
    hardware drivers, tools, security updates, patches, and customer-requested
    product changes, as well as better organization of e-mail. (Based on
    internal activities)

    4.31.C. Providing a World-Class Working Environment: We completed all
    physical relocations of staff related to our organizational realignment,
    enabling more efficient function of organizations through proximity of
    staff requiring close interaction. We also awarded a new 5-year contract
    for cafeteria services, providing reasonably priced, quality meals for our
    employees. In the area of IT, we significantly enhanced the reliability
    and availability of access to the Internet by obtaining a redundant
    Internet connection that provides two paths to the Internet and ensures
    that users will have access to a fast Internet connection in the event
    that one connection fails or experiences slowness. In response to user
    comments on the customer feedback survey, we provided enhanced audio for
    videoconferences by making technical improvements. We upgraded our
    broadcast communications system that delivers live and prerecorded
    programs to our staff's desktops by replacing equipment, which increased
    capacity to meet growing demand by increasing storage capacity and
    improving the video file distribution process. We are now able to deliver
    live programs to all GAO desktops nationwide, replacing the use of video
    teleconferencing in the field offices. Finally, we upgraded our cable
    television service by moving to satellite television, which, among other
    things, will improve reception for televisions in managing directors'
    offices and the cafeteria and provide closed-circuit television
    programming capabilities. (Based on internal activities)

    4.32.C. Ensuring the Security of Our IT Systems: We strengthened security
    through personal firewall software that prevents the download of viruses
    while staff are on travel or working from home and other software that
    helps identify and eliminate malicious programs. In addition, we improved
    network security by automatically activating the screensaver after a
    period of inactivity, removing several games that were preinstalled on our
    new notebook computers, and locking the GAO intranet page as the default
    home page to prevent spyware from hijacking the default home page and
    downloading more spyware. Based on the results of a third-party
    independent annual assessment conducted to ensure that our systems and
    network meet industry security standards, we created a plan of action and
    milestones to remediate vulnerabilities, bringing us into compliance with
    FISMA requirements. This ensures that risk assessments, the system
    security plan, information security program assessments, and operator
    authorizations are in place for all major systems and other systems as
    required and that we have developed and completed system test and
    evaluation reviews and certi-fications and accreditations as necessary. In
    conjunction with the upgrade to our time and attendance system, we
    implemented an integrated security approach that protects and validates
    transactions in our Web-based systems, ensuring that no changes have been
    made once a transaction is approved. While the function is transparent to
    the user, internal controls capability is significantly enhanced and it
    also addresses the need for digital signatures in a Web-based environment.
    We also continued installation of the Secret Internet Protocol Router
    Network in our field offices and completed the process in Seattle,
    Norfolk, Los Angeles, Huntsville, Denver, Dallas, and Atlanta. This
    network access allows our staff to obtain specific classified data
    directly from agency officials via secure e-mail, improves the efficiency
    of our research through direct access to classified information, posts our
    classified reports for review and dissemination, electronically transmits
    our classified reports to agencies for comments, and reduces the need to
    use certified mail for classified data. (Based on internal activities)

    4.33.C. Providing a Safe and Secure Workplace: To meet our goal of
    providing a safe and secure workplace for our employees, we implemented
    internal procedures and policies to enhance our security posture. For
    example, we conducted our first shelter in place drill for our
    headquarters staff, and developed and distributed shelter in place plans
    for the majority of our field offices; we further enhanced our
    communications with staff by developing and distributing an Emergency
    Preparedness Plan brochure; and we began requiring that contractors
    undergo a check conducted by our Security and Safety unit (through the
    Federal Bureau of Investigation's National Crime Information Center) and
    be fingerprinted, reducing the agency's security risk. We also improved
    the speed with which we can obtain the results of the Federal Bureau of
    Investigation's screening of fingerprints taken for security checks by
    procuring and installing an electronic fingerprint system. The system
    allows for instant transfer of information to the bureau and reports
    immediately if prints are not acceptable. Our employees are also happier
    with this system as it is an inkless, paperless process. In the event that
    emergency relocation of staff in the headquarters building is required, we
    have provided additional network access for displaced teams by installing
    and activating additional local area network ports in some conference and
    training rooms, and have reactivated existing disconnected local area
    network ports in all remaining conference rooms in headquarters. We
    completed the perimeter security build out phase of our security plans,
    including installation of high-speed rollup doors, guard booths,
    undervehicle cameras, pop-up barriers, and a perimeter plinth wall.
    Finally, we completed a number of significant items in support of our
    Disaster Recovery Program. We completed the vision of the Disaster
    Recovery Program/Continuity of Operations, which was approved and signed
    by the Comptroller General and Chief Administrative Officer on May 31,
    2005; developed video materials for Emergency Preparedness training for
    headquarters staff; and installed an emergency voice and text notification
    system on the network. (Based on internal activities)

    4.34.C. Enhancing Emergency Coordination:

    Externally, to increase our ability to obtain detailed intelligence and
    ensure coordination with the legislative branch in case of an emergency,
    we established contacts and procedures with local agencies, including
    establishment of emergency notification procedures with the Federal Bureau
    of Investiga-tion's Joint Terrorism Task Force; enhancement of relocation
    procedures and relations with the U.S. Capitol Police, House Sergeant of
    Arms, and emergency preparedness offices; participation as a member of the
    Legislative Branch CAO Council on Continuity of Operations Plans;
    coordination of and participation in the Legislative Branch CAO Table Top
    Exercise; and completion of arrangements with the District of Columbia
    government to receive up-to-date emergency notifications. (Based on
    internal activities)

                             2. From the Inspector General

                       3. GAO's Report on Personnel Flexibilities

    The GAO Personnel Flexibilities Act of 2000 (Pub. L. No. 106-303) and the
    GAO Human Capital Reform Act of 2004 (Pub. L. No. 108-271) require us to
    provide a review of the actions we have taken in fiscal year 2005 under
    specific sections of these acts. This appendix details the activities we
    have undertaken separately for each act.

    GAO Personnel Flexibilities Act of 2000

    Several sections of this act were made permanent by the 2004 act; the
    actions taken related to these provisions are reported under the new act.
    Section 3 of the 2000 act amended our prior reduction-in-force procedures,
    added a new provision, and required us to report the effect of using this
    authority on preference eligibles such as disabled veterans. During fiscal
    year 2005, one GAO employee was separated using reduction-in-force
    procedures and that individual was not a preference eligible.

    GAO Human Capital Reform Act of 2004

    The first two sections of this act made permanent our authority to offer
    voluntary early retirement and voluntary separation incentive payments. We
    revised our regulations for offering voluntary early retirement on
    November 15, 2004. These regulations allow us to announce agencywide
    voluntary retirement opportunities with specific time frames and, under an
    exception provision, allow us to authorize early retirement for up to 5
    employees in any organizational unit in any fiscal year without an
    agencywide announcement. During fiscal year 2005, a voluntary early
    retirement opportunity was offered from November 2 through December 16,
    2004. Applicants were required to retire between December 31, 2004, and
    January 3, 2005. Of the 9 applications that were received, 7 were approved
    (all 7 applicants separated in the required time period) and 2 were
    denied. Under the exception provision, there have been 12 applications for
    early retirement, of which 8 were approved (6 of these applicants
    separated in fiscal year 2005 and 2 will separate in fiscal year 2006), 2
    were denied, and 2 are pending decision. This authority has been very
    helpful in reshaping our workforce by reducing the number of high-graded
    managers and replacing many of them with entry-level and midlevel hires
    who possess the skills and knowledge that will allow us to accomplish our
    mission and serve the needs of the Congress and the American people for
    many years to come.

    The voluntary separation incentive provision requires us to make the
    payment out of current appropriations and to pay an additional amount into
    the retirement fund. In certain circumstance, these costs can be
    considerable and, given the many demands on our resources, present a
    strong financial incentive to use the provision sparingly, if at all.
    Thus, we anticipate little or no use of this authority. For this reason,
    as well as to avoid creating unrealistic employee expectations, we have
    not developed and issued regulations to implement this authority.

    Section 3 of the act established a requirement that an employee must be
    performing at a satisfactory level in order to receive an annual pay
    adjustment and amended 31 U.S.C. 732(c), which required our employees' pay
    to be adjusted at the same time and to the same extent as the General
    Schedule, to authorize the Comptroller General to determine the amount of
    annual pay adjustments and described the factors to be considered in
    making those determinations. The Comptroller General's authority under
    section 3 is effective for increases on or after October 1, 2005. On
    January 4, 2005, we issued regulations addressing the satisfactory
    performance requirement for GAO's analysts and attorneys (employees
    covered by validated competency-based appraisal systems for at least one
    full appraisal cycle). The regulations provided for withholding annual
    increases from any employee whose performance on any competency was rated
    below expectations. These regulations will be revised to make this
    requirement applicable to all remaining employees prior to the January
    2006 annual adjustment, at which time those employees will have completed
    one full appraisal cycle under the new competency-based appraisal system.
    We plan to issue regulations covering the determination of pay adjustments
    prior to January 2006-the first opportunity for the Comptroller General to
    exercise this authority.

    Section 4 authorizes the Comptroller General to establish pay retention
    regulations applicable to employees who are placed in lower grades or
    bands as a result of workforce restructuring, reclassification, or other
    appropriate circumstances. Draft regulations are currently under review.
    We intend to complete the review and consultation process and implement
    the regulation prior to January 2006.

    Section 6 authorizes GAO to provide increased annual leave to key
    employees. We posted draft regulations for employee comment on December
    29, 2004. These regulations would permit designated key employees with
    less than 3 years of federal service to earn 6 hours of annual leave per
    pay period. GAO's Executive Committee is considering employee comments
    before finalizing the regulations and, due to the complicated nature of
    the many issues raised, we anticipate finalization of the regulations and
    implementation of this provision in early fiscal year 2006.

    Section 7 authorized GAO to establish an Executive Exchange Program. After
    soliciting and analyzing employees' comments on draft regulations, we
    issued the final regulations on May 20, 2005. We also developed draft
    forms, templates, and brochures to be used in implementing this program in
    fiscal year 2006.

    Section 9 incorporated additional requirements for GAO's performance
    management system, all of which are addressed by our competency-based
    appraisal systems. Additionally, we conduct an annual review and
    assessment of our performance management policies and processes as part of
    ongoing continuous improvement.

    Finally, section 10 requires us to consult with any interested groups or
    associations representing officers and employees of GAO when implementing
    changes brought about by this act. As evidenced in the narrative above,
    this is a practice that we have implemented for several years. Typically,
    in implementing changes such as those in this act, we consult with
    interested groups and associations within GAO, provide them with draft
    policies and regulations, and obtain input from them on suggested
    clarifications or changes to the policies and regulations. We carefully
    consider this input and incorporate it, when appropriate, before
    distributing policies and regulations for comment to all employees. We
    will continue this practice in implementing the changes relating to the
    act and have already taken steps to ensure that all GAO groups,
    associations, and employees are aware of the impending changes in the
    performance management system related to this act.

    4. GAO's Federal Information Security Management Act Efforts

    Federal IT security management, policy, and procedures continue to evolve,
    and we have focused efforts on integrating these evolving policies and
    practices into our IT processes. During the past year, we stepped up
    efforts to improve our information security program, processes, and
    procedures, implementing key requirements set forth in FISMA provisions
    enacted under the E-Government Act of 2002, in National Institute of
    Standards and Technology 800 series guidance, and in Federal Information
    Processing Standards Publication 199. While we are not obligated by law to
    comply with FISMA, we have adopted FISMA requirements to help ensure that
    we establish an effective information security program and to fulfill our
    goal of being a model federal agency.

    We have instituted a wide range of programs and processes to assess, on a
    recurring basis, the status of our information security program, including
    the results of internal reviews by program offices and security staff.
    Consistent with FISMA requirements, our IG independently evaluated our
    information security program during fiscal year 2005. The IG commented on
    our progress in correcting identified weaknesses and implementing FISMA
    requirements and offered additional recommendations to further strengthen
    our IT security program. We also follow the standard practice of using a
    public accounting firm, as well as other external sources, to provide
    independent external evaluations and testings of IT controls on our major
    applications. Results of these reviews and evaluations, to date, have
    identified no material weaknesses in our major applications. In addition,
    we have substantially elevated information systems security consciousness
    at GAO by putting into practice requirements consistent with FISMA through
    our efforts to

    fS implement an enterprisewide risk-based security program;

         + develop essential policies, procedures, and reporting mechanisms to
           ensure that our security program is integrated into every aspect of IT
           system life cycle planning and maintenance;
         + provide recurring security training and awareness to all of our staff;
         + integrate security into our capital investment control process; and
         + implement an enterprise disaster recovery solution.

    We have defined security initiatives that have pointed to the need for
    changes in our existing technology infrastructure, as well as new security
    tools and appliances. During fiscal year 2005, we undertook a number of
    projects that have significantly improved our information security
    program. Among these projects are the following:

    fS Certification and accreditation methodology.

    We have revised the IT policy and procedures on certification and
    accreditation of our information systems. This policy establishes the
    foundation for our requirement to certify and accredit information systems
    that we supported. In addition, the methodology identifies activities,
    documentation, and the timeliness necessary to provide a complete risk
    assessment.

    fS Certification and accreditation of the General Support System and major
    applications. We have completed revision of documentation for the
    certification and accreditation of our information systems, which includes
    the General Support System (our network) and four major applications. An
    update to existing risk assessments, system security plans, National
    Institute of Standards and Technology Special Publication 800-26 reviews,
    system tests and evaluations were accomplished to ensure the appropriate
    security controls had been implemented, risk to GAO was validated, and
    system documentation included current approval by the designated approval
    authority.

         + Vulnerability assessment. We have instituted a process consistent with
           the requirements cited in FISMA to scan the General Support System for
           vulnerabilities and potential areas that could be exploited. We
           integrated this process with our network operations to maintain
           up-to-date patched systems to ensure a stable network. Using a
           scanning software tool, each network device is scanned on a routine
           schedule to identify vulnerabilities that are remediable via patches
           and configuration changes in order to ensure secure services and
           system standardization and meet our network hardening guidelines.
         + Wireless network protocol implementation.

    We have implemented the use of the Institute of Electrical and Electronics
    Engineers 802.1x protocol-which covers network access control and is used
    to provide authenticated network access-in our team and conference rooms,
    nationwide. This validation process ensures computer equipment that
    connects to our network is in fact GAO equipment, removing the potential
    risk for non-GAO equipment to have uncontrolled access to our network. The
    initial deployment of this technology was implemented in fiscal year 2005.
    This technology is also being examined for use beyond conference rooms in
    fiscal year 2006.

    fS Centralized plan of actions and milestones.

    Tracking the results of various audits of our information systems was
    previously accomplished separately, using the methodologies specific to
    each audit. By integrating these tracking methods into a single program,
    we were able to gain synergy in monitoring the risks and remediation
    efforts and improve security within our information systems.

    fS Enterprise FISMA tool. The procurement of an automated tool to enhance
    the security tracking and documentation of our information systems was
    completed in late 2005. This program will become our source for managing
    audit findings and remediation efforts, documenting annual assessments,
    and tracking certification and accreditation.

         + Enterprise event correlation application. We procured an event
           correlation engine, in late fiscal year 2005, to assist with the
           monitoring of diverse network traffic that identifies potential
           threats to our network environment. The use of this tool will allow
           the effective use of limited resources to minimize risk to GAO while
           vigilantly monitoring network activities.
         + Classified processing upgrade. In the past, our investigative mission
           work requiring electronic access to classified defense information had
           been limited to select sites with limited access. During fiscal year
           2005, we expanded our Secret Internet Protocol Router Network
           connections to seven GAO field office sites, providing each site with
           a secure computing facility and new equipment. Rooms were outfitted
           with dedicated switches, routers, firewalls, intrusion detection
           devices, servers, and workstations. Installation at the remaining
           field locations is scheduled to occur in fiscal year 2006.
         + Enterprise anti-spyware. We deployed an enterprise anti-spyware
           application as part of the standard desktop image. This application
           automatically monitors and remediates various types of intrusion and
           monitoring programs, such as adware and Trojan viruses, to prevent
           desktops from becoming infected with spyware. The implementation of
           this program has significantly reduced the amount of work required to
           reimage desktops due to spyware.
         + Enterprise Internet screening. We piloted the implementation of an
           Internet screening tool that provides antivirus and anti-spyware
           protection to our Web-based activities. This package will provide
           added security for the Web and improve the overall security posture
           for GAO's information systems.
         + Security Program Plan. We implemented a formalized Security Program
           Plan that provides the road map of activities for our Information
           Systems Security Group over the next few years to improve both the
           program and technical components of our network security. We also
           established a number of working groups to effectively support our
           security program. The IT Security Users Group meets monthly to share
           information about security-related activities, including policy,
           procedures, and guidance, on the network, while the Remediation Group
           meets

    monthly to provide input on activities related to the remediation of
    findings documented from audits and maintained in the centralized plan of
    actions and milestones.

    fS FISMA Month. We instituted a novel program that takes place each August
    and is called FISMA Month. Because FISMA reporting is key to our annual
    security assessment, implementing FISMA Month focuses staff on the time
    frames and review requirements and helps to ensure that the documentation
    of our program activities is complete and up-to-date. This activity
    provides a snapshot of our program that has been in effect the entire
    year.

    fS Security awareness training. We implemented a robust security awareness
    training program, which included awareness training for all of our staff
    and contractors and specialized security training for staff with enhanced
    access to the GAO network (primarily our IT operations staff). All
    training used Web-based courses.

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