-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-06-418T
TITLE: Fiscal Year 2007 Budget Request: U.S. Government Accountability Office
DATE: 04/26/2006
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GAO-06-418T
* GAO's Fiscal Year 2007 Request to Support the Congress
* Performance, Results, and Plans
* Outcomes of Our Work and the Road Ahead
* GAO's High-Risk Program
* Concluding Remarks
* GAO's Mission
* Obtaining Copies of GAO Reports and Testimony
* Order by Mail or Phone
* To Report Fraud, Waste, and Abuse in Federal Programs
* Congressional Relations
* Public Affairs
Testimony
Before the Subcommittee on the Legislative Branch, Committee on
Appropriations, U.S. Senate
United States Government Accountability Office
GAO
For Release on Delivery Expected at 10:30 a.m. EST
April 26, 2006
FISCAL YEAR 2007 BUDGET REQUEST:
U.S. GOVERNMENT ACCOUNTABILITY OFFICE
Statement of David M. Walker Comptroller General of the United States
GAO-06-418T
2001 2002 2006 2007
2003 2004 2005
Performance measures Actual Actual Actual Actual Actual Target Target
Results
Financial benefits $26.4 $37.7 $35.4 $44.0 $39.6 $39.0 $40.0
(dollars in billions)
Other benefits 799 906 1,043 1,197 1,409 1,050 1,100
Past recommendations
implemented 79% 79% 82% 83% 85% 80% 80%
New products with
recommendations 44% 53% 55% 63% 63% 60% 60%
Client
Testimonies 151 216 189 217 179 210 185
Timeliness 95% 96% 97% 97% 97% 98% 98%
People
New hire rate N/A 96% 98% 98% 94% 97% 97%
Acceptance rate N/A 81% 72% 72% 71% 75% 75%
Retention rate with
retirements 91% 91% 92% 90% 90% 90% 91%
Retention rate without
retirements 95% 97% 96% 95% 94% 94% 95%
Staff development N/A 71% 67% 70% 72% 74% 75%
Staff utilization N/A 67% 71% 72% 75% 75% 78%
Leadership N/A 75% 78% 79% 80% 80% 80%
Organizational climate N/A 67% 71% 74% 76% 75% 76%
Source: GAO.
Note: N/A indicates the information is not available or the target is not
applicable.
Note: In fiscal year 2006, we will add two internal operations measures to
our list of performance measures on which we report. These measures will
help us determine how well our internal operations (1) help employees get
their jobs done and (2) improve employees' quality of life in the
workplace.
Mr. Chairman and Members of the Committee:
I am pleased to appear before the Committee today in support of the fiscal
year 2007 budget request for the U.S. Government Accountability Office
(GAO). This request will help us continue our support of the Congress in
meeting its constitutional responsibilities and will help improve the
performance and ensure the accountability of the federal government for
the benefit of the American people.
Budget constraints in the federal government grew tighter in fiscal years
2005 and 2006. In developing our fiscal year 2007 budget, we considered
those constraints consistent with GAO's and the Committee's desire to
"lead by example." In fiscal year 2007, we are requesting budget authority
of $509.4 million, a reasonable 5 percent increase over our fiscal year
2006 revised funding level. In the event Congress acts to hold federal pay
increases to 2.2 percent, our requested increase will drop to below 5
percent. This request will allow us to continue making improvements in
productivity, maintain our progress in technology and other transformation
areas, and support a full-time equivalent (FTE) staffing level of 3,267.
This represents an increase of 50 FTEs over our planned fiscal year 2006
staffing level and will allow us to rebuild our workforce to a level that
will position us to better respond to increasing supply and demand
imbalances in areas such as disaster assistance, the global war on
terrorism, homeland security, forensic auditing, and health care.
I am proud of the work we accomplished this past fiscal year in support of
the Congress and the American people. We provided our congressional
clients with timely, objective, and reliable information on how well
government programs and policies are working and, when needed,
recommendations for improvement. In the years ahead, our support to the
Congress will likely prove to be even more critical because of the
pressures created by our nation's current and projected budget deficit and
growing long-term fiscal imbalance. Indeed, as it considers those fiscal
pressures, the Congress will be grappling with tough choices about what
government does, how it does business, and who should do the government's
business. GAO is a valuable tool for helping the Congress review,
reprioritize, and revise existing mandatory and discretionary spending
programs and tax policies. Additionally, through its involvement
domestically with the federal, state, and local audit community and
internationally with its national audit office counterparts, GAO has
played-and will continue to play-an important role in helping to ensure
the financial integrity of U.S. funds expended at home and abroad. GAO-led
efforts to develop and implement the first-ever strategic plans for the
National Intergovernmental Audit Forum and the International Organization
of Supreme Audit Institutions have helped improve the effectiveness of
these audit organizations and GAO to work more efficiently and
cost-effectively.
In an effort to identify areas for potential improvement, GAO underwent
two peer reviews in fiscal year 2005. We obtained a clean opinion on our
performance audit practice from an international team of experienced
auditors-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. Also during fiscal
year 2005, GAO received an unqualified report, or clean opinion, on the
results of the external peer review of its financial audit practice.
External peer reviews are conducted on a 3-year cycle, and this is the
fourth such clean opinion that GAO has received from an external peer
reviewer since the program began in fiscal year 1996. The external peer
reviewer, KPMG LLP, found that the system of quality control for GAO's
financial auditing practice met professional standards and that GAO in
fact complied with the standards.
In fiscal year 2005, 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 benefits-a
record for us. Our targets for fiscal years 2006 and 2007 will continue to
challenge the agency in our efforts to support the Congress and serve the
American people. Beginning with fiscal year 2006, we will add 2 internal
operations measures to the list. These 2 new performance measures will
assess how well our mission and people are supported by our infrastructure
operations staff.
In fiscal year 2005, we issued two products that will assist the Congress
as it addresses future challenges. Recognizing the importance and scope of
these reports, we provided a copy to every member of Congress and each
Committee, as well as the White House. 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. 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 (OMB), in consultation with
GAO, 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.
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. We also examined the Department of
Defense's (DOD'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, pension reform, postal
reform, GSE oversight, 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.
In addition, we conducted a range of work on a variety of legislative
branch agencies and projects, including the Capitol Visitor Center, the
Architect of the Capitol, and the U.S. Capitol Police.
This past year we also continued to take steps internally to help us
achieve our goal of being 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. As you have
heard me say many times, our most valuable asset is 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
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. In
fiscal year 2006, we implemented a more market-based and skills-,
knowledge-, and performance-oriented classification and pay system for all
of our employees.
My testimony today will focus on our budget request for fiscal year 2007
to support the Congress and serve the American people and on our
performance and results with the funding you provided us in fiscal year
2005.
GAO's Fiscal Year 2007 Request to Support the Congress
Our fiscal year 2007 budget request will provide us the resources
necessary to achieve our performance goals in support of the Congress and
the American people. This request will allow GAO to improve productivity
and maintain progress in technology and other transformation areas. We
continue to streamline GAO, modernize our policies and practices, and
leverage technology so that we can achieve our mission more effectively
and efficiently. These continuing efforts allow us to enhance our
performance without significant increases in funding. Our fiscal year 2007
budget request represents a modest increase of about $25 million (or 5
percent) over our fiscal year 2006 revised funding level-primarily to
cover uncontrollable mandatory pay and price level increases. This request
reflects a reduction of nearly $5.4 million in nonrecurring fiscal year
2006 costs used to offset the fiscal year 2007 increase. This request also
includes about $7 million in one-time fiscal year 2007 costs, which will
not recur in fiscal year 2008, to upgrade our business systems and
processes.
As the Congress addresses the devastation in the Gulf Coast region from
Hurricane Katrina and several other major 2005 hurricanes, GAO is
supporting the Congress by assessing whether federal programs assisting
the people of the Gulf region are efficient and effective and result in a
strong return on investment. In order to address the demands of this work;
better respond to the increasing number of demands being placed on GAO,
including a dramatic increase in health care mandates; and address supply
and demand imbalances in our ability to respond to congressional interest
in areas such as disaster assistance, homeland security, the global war on
terrorism, health care, and forensic auditing, we are seeking your support
to provide the funding to rebuild our staffing level to the levels
requested in previous years. We believe that 3,267 FTEs is an optimal
staffing level for GAO that would allow us to more successfully meet the
needs of the Congress.
In preparing this request and taking into account the effects of the
fiscal year 2006 rescission, we revised our workforce plan to reduce
fiscal year 2005 hiring and initiated a voluntary early retirement
opportunity for staff in January 2006. These actions better support GAO's
strategic plan for serving the Congress, better align GAO's workforce to
meet mission needs, correct selected skill imbalances, and allow us to
increase the number of new hires later in fiscal year 2006. Our revised
hiring plan represents an aggressive hiring level that is significantly
higher than in recent fiscal years, and it is the maximum number of staff
we could absorb during fiscal year 2006. These actions will also position
us to more fully utilize our planned FTE levels of 3,217 and 3,267 in
fiscal years 2006 and 2007, respectively.
Our fiscal year 2007 budget request includes approximately $502 million in
direct appropriations and authority to use about $7 million in estimated
revenue from rental income and reimbursable audit work. Table 1 summarizes
the changes we are requesting in our fiscal year 2007 budget.
Table 1: Fiscal Year 2007 Budget Request, Summary of Requested Changes
Dollars in thousands
Cumulative percentage
Budget category FTEs Amount change
FY 2006 enacted budget authority 3,217 $489,560
Less: rescission (4,896)
FY 2006 revised budget authority $484,664
FY 2007 requested changes
Nonrecurring fiscal year 2006 costs ($5,380) (1%)
Mandatory pay costs 50 18,469 3%
Price level changes 4,073 4%
Relatively controllable costs 7,528
Adjustment due to rounding 1
Subtotal - requested changes 50 $24,691 5%
Total FY 2007 budget authority
required to support GAO operations 3,267 $509,355
Source: GAO.
Our fiscal year 2007 budget request supports three broad program areas:
Human Capital, Engagement Support, and Infrastructure Operations.
Consistent with our strategic goal to be a model agency, we have
undertaken a number of initiatives to implement performance-based,
market-oriented compensation systems; adopt best practices; benchmark
service levels and costs; streamline our operations; cross-service and
outsource activities; and leverage technology to increase efficiency,
productivity, and results.
The Human Capital Program provides the resources needed to support a
diverse, highly educated, knowledge-based workforce comprising individuals
with a broad array of technical and program skills and institutional
memory. This workforce represents GAO's human capital-its greatest
asset-and is critical to the agency's success in serving the Congress and
the nation. Human Capital Program costs represent nearly 80 percent of our
requested budget authority.
To further ensure our ability to meet congressional needs, we plan to
allocate approximately $17 million for Engagement Support to:
o conduct travel, a critical tool to accomplish our mission of
following the federal dollar cross the country and throughout the
world, and to ensure the quality of our work;
o contract for expert advice and assistance when needed to meet
congressional timeframes for a particular audit or engagement; and
o ensure a limited presence in the Middle East to provide more
timely, responsive information on U.S. activities in the area.
In addition, we plan to allocate about $91 million-or about 18 percent of
our total request-for Infrastructure Operations programs and initiatives
to provide the critical infrastructure to support our work. These key
activities include information technology, building management, knowledge
services, human capital operations, and support services.
Performance, Results, and Plans
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 that 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 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 also explored the financial
crisis that weakened the airline industry and the impact of this situation
on the traveling public and airline employees' pensions. We performed this
work in accordance with our strategic plan for serving the Congress,
consistent with our professional standards, and guided by our core values
(see appendix 1). See table 2 for examples of how GAO assisted the nation
in fiscal year 2005.
Table 2: Examples of How GAO Assisted the Nation in Fiscal Year 2005
Goal Description GAO provided information that helped
to....
1 Provide timely, quality o Improve the transition from
service to the Congress and active duty to civilian status for
the federal government to veterans with serious war-related
address current and emerging injuries
challenges to the well-being o Address long-term health care
and financial security of the financing pressures on state and
American people. local government budgets
o Identify challenges associated
with transferring the Medicare
appeals process from the Social
Security Administration and HHS
o Improve patient safety at
Department of Veterans' Affairs
hospitals
o Improve the security of Social
Security numbers
o Address the challenges of pension
reform
o Strengthen the security screening
process for passengers and checked
baggage at the nation's airports
o Improve the oversight of Federal
Housing Administration single-family
and multifamily lenders
o Improve the oversight of
electricity markets by the Federal
Energy Regulatory Commission
o Identify challenges associated
with the Department of Energy's
(DOE's) nuclear facility designs
o Monitor the growth in the digital
television market
o Analyze issues contributing to
the declining financial condition of
the airline industry
2 Provide timely, quality o Improve the management of funds
service to the Congress and for the global war on terrorism
the federal government to o Increase the security of cargo
respond to changing security containers to prevent terrorist
threats and the challenges of activity
global interdependence. o Alert the Congress to issues
affecting the DOD's major weapon
systems
o Analyze funding options for a new
federal foreign assistance
program-the Millennium Challenge
Account
o Promote government efforts to
address threats to the security of
the nation's information systems
o Strengthen the visa process as an
antiterrorism tool
o Improve management of the U.S.
Coast Guard's Deepwater Program
o Shape the debate on improving
military pay and benefits
o Strengthen the U.S. strategic
export control system
o Identify improvements needed to
secure critical IT systems used by
U.S. financial markets
o Report to the Congress on the
2005 base realignment and closures
(BRAC) defense transformation
3 Help transform the federal o Increase the public's
government's role and how it understanding of the federal
does business to meet 21st government's long-term fiscal
century challenges. challenges
o Implement governmentwide civil
service reforms
o Oversee federal tax policy
o Increase debts collected from
criminals
o Decrease improper payments made
by the USDA Food Stamp Program and
other federal agencies
o Manage multibillion dollar IT
modernizations and investments at
the Department of Homeland Security
(DHS) and Office of Personnel
Management
o Improve agencies' strategic
purchasing practices
o Examine changes in key areas of
federal activity that could affect
the federal government's fiscal
future
o Enhance the knowledge base on
comprehensive national indicators
o Improve postal operations through
reform legislation
4 Maximize the value of GAO by o Foster among other federal
being a model federal agency agencies GAO's innovative human
and a world-class capital practices, such as broad pay
professional services bands; performance-based
organization. compensation; and workforce planning
and staffing strategies, policies,
and processes
o Share GAO's model business and
management processes and other
transformation-related information
with counterpart organizations in
the United States and abroad
Source: GAO.
Outcomes of Our Work and the Road Ahead
During fiscal year 2005 we monitored our performance using 14 annual
performance measures that capture the results of our work; the assistance
we provided to the Congress; and our ability to attract, retain, develop,
and lead a highly professional workforce (see table 3). For example, in
fiscal year 2005 our work generated $39.6 billion in financial benefits,
primarily from actions agencies and the Congress took in response to our
recommendations. Of this amount, about $19 billion resulted from changes
to laws or regulations, $12.8 billion resulted from agency actions based
on our recommendations to improve services to the public, and $7.7 billion
resulted from improvements to core business processes. See figure 1 for
examples of our fiscal year 2005 financial 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. For instance, we documented 75 instances where information we
provided to the Congress resulted in statutory or regulatory changes, 595
instances where federal agencies improved services to the public, and 739
instances where agencies improved core business processes or
governmentwide reforms were advanced. These actions spanned the full
spectrum of national issues, from ensuring the safety of commercial
airline passengers to identifying abusive tax shelters. See figure 2 for
additional examples of GAO's other benefits in fiscal year 2005.
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, primarily by executive branch
agencies. Putting these recommendations into practice will generate
tangible benefits for the nation over many years.
During fiscal year 2005, experts from our staff testified at 179
congressional hearings covering a wide range of complex issues (see
table 4). 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. Over 70 of our
testimonies were related to high-risk areas and programs (see table 5).
Table 3: Agencywide Summary of Annual Measures and Targets
Figure 1: GAO's Selected Major Financial Benefits Reported in Fiscal Year
2005
Description Amount
Reduced funding for a missile defense system. In an April 2003 $4.7
report, we stated that to successfully develop an effective and
suitable missile defense system, the Missile Defense Agency must be
willing to adopt knowledge-based acquisition practices that have
made other developers successful. Our report acknowledged that the
agency's development strategy for the Kinetic Energy Interceptor
Program included knowledge-based practices, but concluded that the
agency had not implemented two important practices: (1) using
well-developed technologies during system integration and (2) fully
testing a system before fielding it. In response, the Missile
Defense Agency is scaling back development of the Kinetic Energy
Interceptor Program until technologies are mature. Over a 5-year
period-from fiscal years 2005 through 2009-program funding will be
reduced by about $5.2 billion, which has a net present value of
about $4.7 billion.
Avoided higher costs associated with a nuclear waste disposal 4.5
process. In a June 2003 report, we recommended that DOE pursue
legislative clarification from the Congress because of a legal
challenge that threatened DOE's ability to proceed with its less
costly strategy for treating and disposing of radioactive tank
wastes with lower concentrations of radioactivity. DOE estimated
that pursuing a more expensive treatment and disposal strategy
suitable for wastes with higher concentrations of radioactivity
would increase waste treatment disposal costs by $55 billion to $60
billion at its Savannah River Site. The Fiscal Year 2005 National
Defense Authorization Act contained a provision that clarified
DOE's authority to follow its planned treatment and disposal
strategy, thus avoiding a more costly process. We calculated that
the net present value of the cost avoidance for fiscal years 2005
through 2009 was about $4.5 billion.
Improved the Army's force structure. In a report examining the 3.4
Army's force structure, we recommended that the Army establish
mission criteria to provide a firmer basis for its Strategic
Reserve, Domestic Support, and Homeland Defense force requirements.
Such criteria would help to ensure that the Army had the right
number and types of soldiers available for these purposes. Rather
than request additional end strength, the Army reconfigured its
existing force's structure. In April 2003, DOD reported that the
Army had included force structure changes in its fiscal year 2004
budget, which supported increased units for military police;
military intelligence; special forces; and chemical, civil affairs,
and psychological operations. Based on this action, the Army has
been able to rebalance its force structure to create needed units
with minimal increases in authorized end strength. The amount shown
represents the net present value of the force structure changes
over a 5-year period (fiscal years 2004 through 2008).
Reduced the cost of federally subsidized housing projects. We 2.7
determined that the Department of Housing and Urban Development
(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. As a result 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. In fiscal year 2005,
we documented-using HUD data-that a financial benefit of about $2.7
billion in current dollars resulted from HUD's recapture of about
$2.5 billion of fiscal year 2003 dollars.
Avoided costs associated with higher payment rates at skilled 2.0
nursing homes. In 2002, we assessed the impact of a 16.6 percent
increase in Medicare's daily rate for skilled nursing facilities on
nurse staffing ratios. Our analysis showed that nurse staffing
ratios changed little from April 1, 2001, through September 30,
2002-the period during which the rate increase was in effect. In
fiscal year 2003, the cost to the federal government of reinstating
the payment rate increase was approximately $1 billion per year.
Since we issued our report, the Congress has considered reinstating
the rate increase, but it has chosen not to, largely on the basis
of our analysis. The net present value of the annual cost avoidance
for fiscal years 2004 and 2005 is $2 billion.
Increased tax revenues. We reported that the Internal Revenue 1.8
Service (IRS) did not have systems or procedures in place to allow
it to identify and actively pursue unpaid tax cases that may have
some collection potential. Based on our work, IRS has taken action
to better assess the potential for collecting unpaid tax assessment
cases and has used that information to better target its collection
efforts. Specifically, in 2004 IRS began implementing a
sophisticated modeling technology to identify productive and less
productive cases to ensure that its resources are devoted to cases
with a higher likelihood of collection and to help prevent
premature suspension of collection efforts. IRS's analysis of the
yield on collection cases after employing this modeling in fiscal
year 2004 shows that this yield increased by about $1.8 billion (in
current year dollars), or 8.4 percent from the previous year
(fiscal year 2003), without significant staffing level increases.
Ensured continued investment in the General Services 1.3
Administration's (GSA) online purchasing system. As of 2003, GSA
had spent $84 million to develop, implement, and maintain
Advantage, a system for ordering products and services online.
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 a system
such as Advantage, and 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. GSA projects over
$1.5 billion in financial benefits to result from electronic
transactions, spend analysis (analysis 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 net present value of just over $1.3 billion.
Reduced Navy and Air Force appropriations. DOD policy requires the 1.3
Defense Working Capital Fund to maintain cash levels to cover 7 to
10 days of operational cash and 6 months of capital asset
disbursements. Our analysis showed that the January 2004 reported
actual cash balance for the Air Force Working Capital Fund exceeded
the 10-day cash requirement by about $1.5 billion, and the Navy's
Working Capital Fund reported actual cash balance exceeded the
budgeted cash balance by $659 million and $408 million at the end
of fiscal years 2002 and 2003, respectively. The Congress reduced
the Navy and Air Force fiscal year 2005 Operation and Maintenance
appropriations by just under $1.3 billion due to excessive cash
amounts.
Eliminated the National Aeronautics and Space Administration's 1.1
(NASA) Prometheus 1 project. We issued a report questioning whether
NASA had established the initial justification for its investment
in the Prometheus 1 project and how the agency planned to ensure
that critical nuclear power and propulsion system technologies were
sufficiently developed to support deep space probes like the
Jupiter Icy Moons Orbiter. We also reported that the approved
Prometheus 1 funding profile was inadequate to support the planned
mission-a launch to Jupiter's Icy Moons in 2015. NASA has
subsequently deferred the Jupiter Icy Moons Orbiter mission
indefinitely, reducing the agency's funding needs by about $1.22
billion through fiscal year 2009; the net present value of this
reduction is over $1.1 billion.
Reduced the budget request for a new foreign assistance program. In 1.0
March and June 2004, we provided the Congress with information to
help it assess the President's $2.5 billion fiscal year 2005 budget
request for the Millennium Challenge Account-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 provided the
Congress with a framework for identifying relationships and
trade-offs between funding levels, compact length, and number of
compacts (i.e., agreements). Our analysis indicated that by
reducing assistance target levels, the length of compacts or both
with participating countries, the program could operate at a lower
funding level. We also estimated the effect of funding compacts
partly from future appropriations. Our work facilitated the
Congress's decision to reduce the appropriation for the Millennium
Challenge Account in fiscal year 2005 to $1.5 billion.
Source: GAO.
Figure 2: GAO's Selected Other (Nonfinancial) Benefits Reported in Fiscal
Year 2005
Other benefits that helped to change laws
Intelligence Reform and Our work is reflected in this law in different
Terrorism Prevention Act ways. In our May 2004 testimony on the use of
of 2004 (Pub. L. No. biometrics for aviation security, we reported
108-458) 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 the Transportation
Security Administration (TSA) to establish
system requirements and performance standards
for using biometrics, and establish processes
to (1) prevent individuals from using assumed
identities to enroll in a biometric system and
(2) resolve errors. 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, enacted in December 2004.
We conducted a body of work assessing the
physical screening of airport passengers and
their checked baggage. We found that the
installation of systems that are in line with
airport baggage conveyor systems may result in
financial benefits, according to TSA estimates
for nine airports. We also found that the
effectiveness of the advance passenger
screening under the process known as Secure
Flight was not certain. TSA agreed to take
corrective actions in these areas, and the
Congress required TSA in the Intelligence
Reform and Terrorism Protection Act to prepare
a plan and guidelines for installing in-line
baggage screening systems, and enacted
measures to promote Secure Flight's
development and implementation.
Real ID Act of 2005 (Pub. We reported on the verification of identity
L. No. 109-13) 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. The Congress established
federal identification standards for state
drivers' licenses and other such documents and
mandated third-party verification of identity
documents presented to apply for a driver's
license.
Ronald W. Reagan National We assisted the Congress in crafting major
Defense Authorization Act improvements to a program intended to
for Fiscal Year 2005 (Pub. compensate individuals who worked in DOE
L. No. 108-375) facilities and developed illnesses related to
radiation and hazardous materials exposure. In
a 2004 report, we identified features of the
originally enacted program that would likely
lead to inconsistent benefit outcomes for
claimants, in part because the program
depended on the varying state workers
compensation systems to provide some benefits.
We also presented several options for
improving the consistency of benefit outcomes
and a framework for assessing these options.
When the Congress enacted the Ronald W. Reagan
National Defense Authorization Act for Fiscal
Year 2005, it revamped this energy employees'
benefit program. Among other changes, this law
federalized the payment of worker compensation
benefits for eligible energy contractor
employees and provided a schedule of uniform
benefit payments.
Federal Lands Recreation Our work over the past several years has helped
Enhancement Act (Pub. L. the Congress to establish and assess the impacts
No. 108-447) of the recreational fee demonstration program.
Under this trial program, the Congress
authorized the National Park Service, the Fish
and Wildlife Service, the Bureau of Land
Management, and the 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
visitor impacts. Since the program's inception
in 1996, we have identified issues that needed
to be addressed to improve the program's
effectiveness that 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
addressed these issues by passing the Federal
Lands Recreation Enhancement Act in December
2004. This act permits federal land management
agencies to continue charging fees at
campgrounds, rental cabins, high-impact
recreation areas, and day-use sites that have
certain facilities. The act also provides for a
nationally consistent interagency program, more
on-the-ground improvements at recreation sites
across the nation, enhanced visitor services, a
new national pass for use across interagency
federal recreation sites and services, and
public involvement in the program.
Consolidated Our work is reflected in this law in different
Appropriations Act, 2005 ways. At the time of our August 2003 report, the
(Pub. L. No. 108- 447) original 1999 expiration date for the franchise
fund pilots operating at the Departments of
Commerce, Veterans Affairs, Health and Human
Services, the Interior, and the Treasury and at
the Environmental Protection Agency had been
extended three times. 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. We concluded that increasing the
period of authorization would help ease concerns
of current and potential clients about franchise
fund stability and might allow franchise funds
to add new business lines, and we suggested that
the authorizations be extended for longer
periods. The Congress provided permanent
authority to the Treasury franchise fund in the
Consolidated Appropriations Act, 2005, passed on
December 8, 2004.
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 stated in our high-risk report on federal
real property that it may make sense to permit
agencies to retain proceeds for reinvestment in
real property where a need exists. Subsequently,
in the Consolidated Appropriations Act, 2005,
the Congress authorized the Administrator of 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 as authorized
for GSA's real property capital needs.
In December 2003, we reported that 184 out of
213 Alaska Native villages are affected, to some
extent, by flooding and erosion. However, these
villages often have difficulty qualifying for
federal assistance to combat their flooding and
erosion problems. In our report, we recommended
that the Denali Commission adopt a policy to
guide investment decisions and project designs
in villages affected by flooding and erosion. In
this legislation, the Congress provided the
Secretary of the Army with the authority to
carry out "structural and non-structural
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."
Consolidated Appropriations To improve the federal government's ability
Act, 2005 (Pub. L. No. 108- to collect billions of dollars of outstanding
447) criminal debt, we recommended in a 2001
report, that the Department of Justice work
with other agencies involved in criminal debt
collection, including the Administrative
Office of the U.S. Courts, the Department of
the Treasury (Treasury), and OMB, to develop
a strategic plan that would improve
interagency processes and coordination with
regard to criminal debt collection
activities. The conference report that
accompanied the Consolidated Appropriations
Act, 2005, directed the Attorney General to
assemble an interagency task force for the
purposes of better managing, accounting for,
reporting, and collecting criminal debt.
Encouraged improvements in Our report found that the Department of
the process for ensuring Education's (Education) system for resolving
states' compliance with noncompliance with the Individuals with
education laws for the Disabilities in Education Act is protracted.
disabled We found that resolution of noncompliance
cases often takes several years, in part
because Education took a year on average from
the time it identified noncompliance to issue
a report citing the noncompliance. We
therefore recommended that Education improve
its system of resolving noncompliance by
shortening the amount of time it takes to
issue a report of noncompliance and by
tracking changes in response times under the
new monitoring process. In response to our
recommendation, Education has instituted an
improved process for managing and tracking
the various phases of the monitoring process,
which includes the creation of a database to
facilitate this tracking. This new tracking
system will enable Education to better
monitor the status of existing noncompliance,
and thus enable the department to take
appropriate action when states fail to come
into compliance in a timely manner.
Identified a weakness in In 2004, we found that the 24-hour
Medicare's telephone 1-800-MEDICARE help line, operated by the
assistance service 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
call. 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 help line for assistance.
Highlighted the need for United States Department of Agriculture
increased security at a scientists at the Plum Island Animal Disease
federal disease research Center research contagious animal diseases
facility that have been found in other countries. The
mission of the facility, now administered by
DHS, is to develop strategies for protecting
the nation's animal industries and exports
from these foreign animal diseases. In our
September 2003 report, Combating
Bioterrorism: Actions Needed to Improve
Security at Plum Island Animal Disease
Center, we made several recommendations to
improve security at the facility and reduce
vulnerability to terrorist attacks. Among
other things, we recommended that the
Secretary of Homeland Security, in
consultation with the Secretary of
Agriculture, enhance incident response
capability by increasing the size of the
guard force. DHS has informed us that this
has been completed. According to the Director
of Plum Island, DHS has more than doubled the
number of guards assigned on each shift on
Plum Island.
Other benefits that helped to improve services to the public
Other benefits that helped to promote sound agency and governmentwide
management
Recommended a process DOD spending on service contracts approaches $100
to increase the billion annually, but DOD's management of services
efficiency of DOD procurement is inefficient and ineffective and the
procurements dollars are not always well spent. Many private
companies have changed management practices based
on analyzing spending patterns and coordinating
procurement efforts in order to achieve major
savings. We recommended that DOD adopt the
effective spend analysis processes used by these
leading companies and use technology to automate
spend analysis to make it repeatable. In response,
DOD is developing new technology to do that.
According to DOD and contractor project managers,
one phase of the project was completed in December
2004. In March 2005, DOD approved a business case
analysis to seek follow-on funding for developing a
DOD-wide spend analysis system.
Improved the Air As part of our audit of Air Force purchase card
Force's oversight of controls, we identified transactions that Air Force
purchase card officials acknowledged to be fraudulent as well as
transactions potentially fraudulent transactions that the Air
Force had not identified. To improve Air Force
oversight of purchase card activity and facilitate
the identification of systemic weaknesses and
deficiencies in existing internal control and the
development of additional control activities, we
recommended that the Air Force establish an
agencywide database of known purchase card fraud
cases. In lieu of establishing a separate
agencywide database, during fiscal year 2003, the
Air Force Office of Special Investigations
initiated quarterly reporting on its purchase card
investigations to the DOD IG for macro-level
analysis of systemic weaknesses in the program. Our
ongoing collaboration with the DOD IG on DOD's
purchase card program confirmed that the Air
Force's Office of Special Investigations is working
effectively with DOD's IG on data-mining techniques
for detection of potentially improper and
fraudulent purchase card transactions. As a result
of our work, the Air Force has taken action to
reduce the financial risk associated with
undetected fraud and abuse in its purchase card
program.
Encouraged the Census For the 2000 Census, the United States Census
Bureau to produce Bureau (Bureau) printed material used to train
training materials in census workers only in English, except in Puerto
other languages Rico where training materials were available in
Spanish. However, to better prepare census
workers-some of whom speak Spanish as their first
language-to locate migrant farm workers and other
hard-to-count groups, we recommended that the
Bureau consider providing training materials in
languages other than English to targeted areas. In
response to our recommendation, the Bureau is
researching foreign-language data collection
methods as part of its preparations for the 2006
Census test and, more generally, plans to identify
areas and operations that will require in-language
training materials for areas with very large, new
migrant populations where it will not be possible
to hire bilinguals. Moreover, the Bureau's June
2005 request for proposals for a Field Data
Collection Automation System includes a requirement
for the contractor to provide training applications
and materials in English and Spanish for the
handheld computers enumerators are to use to count
nonrespondents.
Source: GAO.
Table 4: Selected Testimony Issues, Fiscal Year 2005
Goal 1: Address Challenges to the Well-Being and Financial Security of the
American People
o Head Start grants o Preparing for o Overseeing the U.S.
management influenza pandemic food supply
o Retirement o Long-term health o Energy demand in
options for seniors care costs and the 21st century
o Postal service government budgets o Social Security
reform legislation o Veterans' reform
o Wildland fire disability claims o Meeting the future
management o Medicaid financing demand for energy in
o National air issues the United States
traffic system o Amtrak's Acela o Protecting nuclear
o Providing train material handled at
services to o Rural housing science and
seriously injured service environmental sites
veterans o Federal oversight o Federal real
o Endangered of the E-rate program property
Species Act
Goal 2: Respond to Changing Security Threats and the Challenges of
Globalization
o Army's modular o U.S. passport o Cargo security
forces fraud strategies
o Acquisition o Tactical aircraft o DOD security
challenges facing modernization clearances
the Navy's DD(X) o Unmanned aerial o Condition of Coast
destroyer program vehicles Guard aircraft and
o Oil for Food o Federal oversight ships used in deep
program of mutual funds to waters
o Managing ensure investor o Port security
violations of security o Transportation
restricted air space o DOD's business security issues
o Protecting U.S. transformation o Acquisition
officials overseas o DOD's national challenges facing the
from terrorist security personnel Army's future combat
attacks system systems
o Implementing laws
that protect the
security of
information
Goal 3: Help Transform the Federal Government's Role and How it Does
Business
o Long-term fiscal o Gaps in military o 21st century
issues affecting the pay and benefits challenges for the
o Human capital federal government
federal government transformation at DHS o Preparing for
o Reducing the tax emergencies at federal
o Air Force gap agencies
procurement protests o Pricing federal o U.S. government
o Space shuttle multiple award financial statements
workforce issues contracts o Performance
o Management and o Army National budgeting
control of DOD's Guard travel o Space acquisitions
excess property reimbursement issues and investment
o High-risk federal o Agencies' planning
programs continuity of o DHS's Student and
o Improper Payments operations plans Exchange Visitor
Information Act Information System
Source: GAO.
GAO's High-Risk Program
Issued to coincide with the start of each new Congress, our high-risk
update, first used in 1993, has helped Members of the Congress who are
responsible for oversight and executive branch officials who are
accountable for performance. Our high-risk program focuses on major
government programs and operations that need urgent attention or
transformation to ensure that our government functions in the most
economical, efficient, and effective manner possible. Overall, our
high-risk program has served to identify and help resolve a range of
serious weaknesses that involve substantial resources and provide critical
services to the public. Table 5 details our 2005 high-risk list.
Table 5: GAO's 2005 High-Risk List
2005 high-risk area Year designated high risk
Addressing challenges in broad-based
transformations
Strategic Human Capital Management a 2001
U.S. Postal Service Transformation Efforts and 2001
Long-Term Outlook a
Managing Federal Real Property a 2003
Protecting the Federal Government's Information
Systems and the Nation's Critical 1997
Infrastructures
Implementing and Transforming the Department of 2003
Homeland Security
Establishing Appropriate and Effective 2005
Information-Sharing Mechanisms to Improve
Homeland
Security
DOD Approach to Business Transformation a 2005
DOD Business Systems Modernization 1995
DOD Personnel Security Clearance Program 2005
DOD Support Infrastructure Management 1997
DOD Financial Management 1995
DOD Supply Chain Management (formerly Inventory 1990
Management)
DOD Weapon Systems Acquisition 1990
Managing federal contracting more effectively
DOD Contract Management 1992
2005 high-risk area Year designated high risk
DOE Contract Management 1990
NASA Contract Management 1990
Management of Interagency Contracting 2005
Assessing the efficiency and effectiveness of
tax law administration
Enforcement of Tax Laws a,b 1990
IRS Business Systems Modernization c 1995
Modernizing and safeguarding insurance and
benefit programs
Modernizing Federal Disability Programs a 2003
Pension Benefit Guaranty Corporation 2003
Single-Employer Insurance Program a
Medicare Program a 1990
Medicaid Program a 2003
HUD Single-Family Mortgage Insurance and Rental 1994
Housing Assistance Programs
Other
Federal Aviation Administration (FAA) Air 1995
Traffic Control Modernization
Source: GAO.
a Legislation is likely to be necessary, as a supplement to actions by the
executive branch, in order to effectively address this high-risk area.
b Two high-risk areas-collection of unpaid taxes and earned income credit
noncompliance-have been consolidated to make this area.
c The IRS financial management high-risk area has been incorporated in
this high-risk area.
Concluding Remarks
We are grateful for the Congress's continued support of our joint effort
to improve government and for providing the resources that allow us to be
a world-class professional services organization. We are proud of the
positive impact we have been able to affect in government over the past
year and believe an investment in GAO will continue to yield substantial
returns for the Congress and the American people. Our nation will continue
to face significant challenges in the years ahead. GAO's expertise and
involvement in virtually every facet of government positions us to provide
the Congress with the timely, objective, and reliable information it needs
to discharge its constitutional responsibilities.
This concludes my statement. I would be pleased to answer any questions
the Members of the Committee may have.
Appendix I: Serving the Congress-GAO's Strategic Plan Framework
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