GAO's High-Risk Program (15-MAR-06, GAO-06-497T).		 
                                                                 
GAO audits and evaluations identify federal programs and	 
operations that in some cases are high risk due to their greater 
vulnerabilities to fraud, waste, abuse, and mismanagement.	 
Increasingly, GAO also has identified high-risk areas that are in
need of broad-based transformations to address major economy,	 
efficiency, or effectiveness challenges. Since 1990 with each new
Congress, GAO has reported on its high-risk list. GAO's most	 
recent update, in January 2005, presented the 109th Congress with
the latest status of existing and new high-risk areas warranting 
attention by both the Congress and the administration. Lasting	 
solutions to high-risk problems offer the potential to save	 
billions of dollars, dramatically improve service to the American
public, strengthen public confidence and trust in the performance
and accountability of our national government, and ensure the	 
ability of government to deliver on its promises.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-497T					        
    ACCNO:   A49158						        
  TITLE:     GAO's High-Risk Program				      
     DATE:   03/15/2006 
  SUBJECT:   Accountability					 
	     Defense capabilities				 
	     Defense cost control				 
	     Defense procurement				 
	     Federal agency reorganization			 
	     Flood insurance					 
	     Homeland security					 
	     Hurricane Katrina					 
	     Hurricanes 					 
	     Pension plan cost control				 
	     Pensions						 
	     Postal service					 
	     Productivity in government 			 
	     Program abuses					 
	     Program management 				 
	     Property losses					 
	     Risk management					 
	     Strategic planning 				 
	     Weapons systems					 
	     GAO High Risk Program				 
	     National Flood Insurance Program			 

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GAO-06-497T

     

     * Long-term Fiscal Challenge
     * New High-Risk Area: National Flood Insurance Program
     * Status of Other Selected High-Risk Areas
          * DOD High-Risk Areas Persist
          * Management of DOD's Weapon Systems Acquisitions and Contractor
            Oversight
          * U.S. Postal Service Transformation Efforts and Long-term Outlook
          * Implementing and Transforming DHS
          * PBGC Single-Employer Insurance Program
     * Emerging Issues
     * Both the Executive Branch and the Congress Have Important Roles
     * Forward-looking Focus Needed

Mr. Chairman, Senator Akaka, Members of the Subcommittee:

Thank you for the opportunity to discuss GAO's work related to high-risk
areas identified in our 2005 high-risk update. As you know, we are
scheduled to provide our next full update in January 2007, at the
beginning of the 110th Congress. Today, I will talk about continuing
efforts to address problem areas that we have identified through our
high-risk program, discuss several individual high-risk issues, as well as
a range of emerging issues and longer range challenges facing our
government. I am also today designating a new high-risk area, the National
Flood Insurance Program.

I want to commend both of you and this Subcommittee in drawing needed
attention to these important problems. Since our last update report in
January 2005, the hearings you have held and follow-up you have done has
been helpful, particularly for high-risk issues within the Department of
Defense.

As you know, this administration has looked to our high-risk program to
help shape various governmentwide initiatives such as the President's
Management Agenda. Clay Johnson, OMB's Deputy Director for Management, has
directed agencies to develop action plans, complete with goals and
milestones for reducing risk in areas GAO has designated as high risk.
This is very encouraging, although a sustained effort will be needed.

The "high-risk" program was begun in 1990 under the direction of my
immediate predecessor, the Honorable Charles A. Bowsher. Since 1993, we
have issued reports providing updates on the program at the onset of each
new Congress. This effort, which is actively supported by your
subcommittee, as well as the full Senate Committee on Homeland Security
and Governmental Affairs and the House Committee on Government Reform, has
brought a much-needed focus to problems that are impeding effective
government and costing the taxpayers billions of dollars each year.

During my tenure as Comptroller General, our high-risk program has
increasingly focused on those major programs and operations that are in
need of urgent attention and transformation in order to ensure that our
national government functions in the most economical, efficient, and
effective manner possible. We also continue to focus on federal programs
and operations when they are at high risk because of their greater
vulnerabilities to fraud, waste, abuse, and mismanagement.

As this subcommittee knows, we have made hundreds of recommendations to
improve these high-risk operations. Moreover, our focus on high-risk
problems contributed to the Congress enacting a series of governmentwide
reforms to address critical human capital challenges, strengthen financial
management, improve information technology 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. Since our program began, the government
has taken high-risk problems more seriously and has made long-needed
progress toward correcting them. In some cases, progress has been
sufficient for us to remove the high-risk designation.

For example, in our most recent update, Student Financial Aid Programs was
one of the three areas for which we removed the high-risk designation.
This area had been on the high-risk list since 1990, and provides an
example of the importance and benefit of a strong management commitment
and a sustained effort in addressing these often long-standing problems.
In 1998, the Congress established the Department of Education's
(Education) Office of Federal Student Aid as the government's first
performance-based organization, thus giving it greater flexibility to
better address long-standing management weaknesses with student aid
programs. In 2001, Education created a team of senior managers dedicated
to addressing key financial and management problems throughout the agency,
and in 2002, the Secretary of Education made removal from GAO's high-risk
list a specific goal and listed it as a performance measure in Education's
strategic plan. Education continued to improve the financial management of
student financial aid programs, taking additional steps to address our
concerns about systems integration, reporting on defaulted loans, and
human capital management, which led to the removal of the high-risk
designation for this area last year.

In fact, 8 of the 16 areas removed from the list over the years were among
the 14 programs and operations we included on our initial high-risk list
in 1990 at the outset of our program. These results demonstrate that
sustained attention and commitment by the Congress and agencies to
resolving serious, long-standing high-risk problems have paid off, as root
causes of the government's exposure for over half the areas on our
original high-risk list have been successfully addressed.

To determine which federal government programs and functions should be
designated high risk, we used our guidance document, Determining
Performance and Accountability Challenges and High Risks.1  In determining
whether a government program or operation is high risk, we consider
whether it involves national significance or a management function that is
key to performance and accountability. We also consider whether the risk
is

o an inherent problem, such as may arise when the nature of a program
creates susceptibility to fraud, waste, and abuse, or

o a systemic problem, such as may arise when the programmatic; management
support; or financial systems, policies, and procedures established by an
agency to carry out a program are ineffective, creating a material
weakness.

Further, we consider qualitative factors, such as whether the risk

o involves public health or safety, service delivery, national security,
national defense, economic growth, or privacy or citizens' rights, or

o could result in significantly impaired service; program failure; injury
or loss of life; or significantly reduced economy, efficiency, or
effectiveness.

In addition, we also consider the exposure to loss in monetary or other
quantitative terms. At a minimum, $1 billion must be at risk-major assets,
revenue sources, and so on.

Before making a high-risk designation, we also consider the corrective
measures an agency may have planned or under way to resolve a material
control weakness and the status and effectiveness of these actions. When
legislative and/or agency actions, including those in response to our
recommendations, result in significant and sustainable progress toward
resolving a high-risk problem, we remove the high-risk designation. Key
determinants here include a demonstrated strong commitment to and top
leadership support for addressing problems, the capacity to do so, a
corrective action plan, and demonstrated progress in implementing
corrective measures. These determinations are based on the independent and
professional judgment of appropriate GAO personnel. Consistent with these
criteria, we removed the high-risk designation for three areas and
designated four new high-risk areas as part of our January 2005 update
report.

Our objective for the high-risk list is to bring "light" to these areas as
well as "heat" to prompt needed "actions."

Long-term Fiscal Challenge

The specific issues I will discuss today-indeed, the specific issues we
discuss in the high-risk reports-all take place in the context of what is
arguably our greatest risk: the long-term fiscal outlook. We are currently
on an imprudent and unsustainable fiscal path. We are a debtor nation-and
we are borrowing from abroad at record rates. And on the domestic fiscal
front the miracle of compounding works against us. This will only get
worse on our current path. Importantly, if we act before a crisis forces
us to act, we can, over time, turn compounding from an enemy to potential
ally.

GAO's high-risk series is part of our effort to assist the Congress in
dealing with one of its important obligations-to exercise prudence and due
care in connection with taxpayer funds. Even if we were operating in a
time of surplus, no government should waste its taxpayers' money. Further,
it is important for everyone to recognize that waste, fraud, abuse, and
mismanagement are not victimless activities. Resources are not unlimited,
and when they are diverted for inappropriate, illegal, inefficient, or
ineffective purposes, both taxpayers and legitimate program beneficiaries
are cheated. Both the administration and the Congress have an obligation
to safeguard benefits for those who deserve them and avoid abuse of
taxpayer funds by preventing diversions. Beyond preventing obvious abuse,
the government also has an obligation to modernize its priorities,
practices, and processes to meet the demands and needs of today's changing
world.

While we should have zero tolerance for fraud and abuse, we must also
recognize that we will never in fact achieve zero fraud and abuse.
Acknowledging this is not giving in; rather, it means we recognize that
safeguarding taxpayer funds will be an ongoing effort.

We should also have zero tolerance for waste-but here we must recognize
that "waste" is a much more difficult concept than "fraud" or "abuse." The
term can be used for things we all would agree are waste-for example,
paying too much for supplies or unnecessary redundancy or duplication of
administrative functions. The term is also, however, sometimes used in the
debate about government activities and priorities. One citizen may see a
given program or initiative as wasteful while another sees it as an
important governmental activity. This debate should be part of the
reexamination of programs and activities. I would suggest that it is
wasteful to allocate limited revenues based on wants versus needs versus a
more threat-based, risk-based, or other targeted approach.

In previous testimonies, I have discussed oversight and stewardship of
taxpayer funds on three levels:

o vulnerability to fraud, waste, and abuse;

o improving the economy, efficiency, and effectiveness of programs; and

o a fundamental reassessment of government programs and activities-whether
designed as spending programs or tax preferences.

All three levels are important. While the high-risk series is heavily
targeted to the first two of these, it provides information and insight
into the third.

New High-Risk Area: National Flood Insurance Program

We will continue to use the high-risk designation to draw attention to the
challenges associated with the economy, efficiency, and effectiveness of
government programs and operations in need of broad-based transformation.
Our list of issues continues to evolve over time. Our objective is to
reflect important problem areas identified in our work, with a goal of
identifying the root causes of vulnerabilities and actions needed on the
part of the agencies involved and, if appropriate, the Congress. In this
vein, I would like to call your attention to the National Flood Insurance
Program (NFIP).

o It is highly unlikely that the NFIP will generate sufficient revenues to
repay funds borrowed from the Treasury to cover claims for the
unprecedented magnitude and severity of flood losses resulting from
hurricanes in 2005, as well as any exposure for future claims coverage in
catastrophic loss years.

o Over the last 15 years we have reported on a variety of issues that
affect the program, including concerns related to the sufficiency of the
program's financial resources, compliance with mandatory purchase
requirements, the costly impact of repetitive loss properties, and most
recently our concerns about FEMA's billion dollar flood map modernization
efforts and management and oversight of the NFIP.

o FEMA has taken some steps to address these concerns, for example, by
working to reduce the number of subsidized properties and repetitive loss
properties insured by the NFIP, increase participation in the program,
implement requirements of the Flood Insurance Reform Act of 20042 and
improve its management and oversight of the program, and more
strategically plan to update the nation's flood maps, the foundation of
the NFIP. Nonetheless, the agency faces long-standing and complex
challenges that make it likely that these issues will continue.

For these reasons, we are today designating a new high-risk area: the
National Flood Insurance Program (NFIP).

The unprecedented magnitude and severity of flood losses resulting from
hurricanes in 2005 illustrated the extent to which the federal government
has exposure for flood claims coverage in catastrophic loss years and the
decision for this designation. The nation's flood losses in 2005 created
unprecedented challenges for the Federal Emergency Management Agency
(FEMA) as the Department of Homeland Security (DHS) organization
responsible for managing the NFIP. As shown in figure 1, FEMA estimates
that Hurricanes Katrina, Rita, and Wilma are likely to generate claims and
associated payments of about $23 billion--far surpassing the total of
about $15 billion in claims paid in the entire history of the NFIP up to
those events.

Figure 1: NFIP Claims Payments from 1968 to August 2005 and Estimated
Payments for Hurricanes Katrina, Rita, and Wilma

About 90 percent of all natural disasters in the United States involve
flooding. However, flooding is generally excluded from homeowner policies
that typically cover damage from other losses, such as wind, fire, and
theft. Because of the catastrophic nature of flooding and the inability to
adequately predict flood risks, private insurance companies have largely
been unwilling to underwrite and bear the risk of flood insurance. The
NFIP, established in 1968, provides property owners with some insurance
coverage for flood damage. From its inception in 1968 until August 2005,
the NFIP paid about $15 billion in insurance claims, primarily from
policyholder premiums that otherwise would have been paid through
taxpayer-funded disaster relief or borne by home and business owners
themselves.

During the 1990s, we reported concerns regarding the NFIP, particularly
problems related to the sufficiency of the program's financial resources
to meet future expected losses and compliance with mandatory purchase
requirements. Our work has continued to focus on these issues since fiscal
year 2000, along with issues identified by our work regarding the
challenges FEMA faces in implementing its $1.5 billion flood map
modernization efforts and plans to address repetitive loss properties and
enhance its management and oversight of the program.

To limit the federal government's exposure for claims coverage in
catastrophic loss years, FEMA must continue to provide programs to help
states, communities, and individuals plan and implement mitigation
strategies to reduce damage to homes, schools, public buildings, and
critical facilities from future floods and other hazards for example, by
encouraging them to (1) adopt and enforce more stringent building codes
for construction in areas at risk of flooding and stricter development
regulations and zoning ordinances that steer development away from areas
at risk of flooding and (2) use public funds to acquire damaged homes or
businesses in flood-prone areas, demolish or relocate the structures, and
use properties for open space, wetlands, or recreational uses. FEMA must
also take effective action to address long-standing program issues and
meet several major challenges facing the NFIP that we have identified in
our prior work regarding the inherent solvency of the program, FEMA's
management and oversight of the program, and modernizing the nation's
flood maps to provide an accurate basis for the NFIP in the future.

The program's financial resources are insufficient to meet future expected
losses, in part because policy subsidies and repetitive loss properties
have contributed to continuing losses to the program. Specifically, the
program is not actuarially sound because of the number of policies in
force that are subsidized-about 29 percent at the time of our 2003
testimony on this issue.3 As a result of these subsidies, some
policyholders with dwellings that were built before flood plain management
regulations were established in their communities pay premiums that
represent about 35 to 40 percent of the true risk premium. In January
2006, FEMA estimated a shortfall in annual premium income because of
policy subsidies at $750 million. Moreover, at the time of our 2004
testimony,4 there were about 49,000 repetitive loss properties-those with
two or more losses of $1,000 or more in a 10-year period-representing
about 1 percent of the 4.4 million buildings insured under the program.
From 1978 until March 2004, these repetitive loss properties represented
about $4.6 billion in claims payments.

The extent of participation in the program may also contribute to its
financial insolvency. Specifically, the level of noncompliance with
current mandatory purchase requirements by affected property owners is
unknown and voluntary participation in the program is limited. Some in
Congress have expressed interest in assessing the feasibility of expanding
mandatory purchase requirements beyond current special high-risk flood
hazard areas.

It is essential that FEMA provide effective management and oversight of
NFIP operations because the agency largely relies on others to address
these issues. FEMA's role for the NFIP is principally one of establishing
policies and standards that others generally implement on a day-to-day
basis and providing financial and management oversight of those who carry
out those day-to-day responsibilities. For example, in our October 2005
report,5  we said that FEMA faces a challenge in providing effective
oversight of the 95 insurance companies and thousands of insurance agents
and claims adjusters who are primarily responsible for the day-to-day
process of selling and servicing flood insurance policies.

The unprecedented impact of Hurricane Katrina on hundreds of thousands of
homeowners in the Gulf Coast has also highlighted the importance of FEMA's
efforts to develop accurate, digital flood maps in implementing its $1.5
billion Flood Map Modernization program. Accurate, up-to-date flood maps
are needed for builders and developers to make good decisions on where to
build and to ensure that property owners have information on the flood
risks they face in rebuilding entire communities devastated by the
hurricanes. However, our work6 and the work of the DHS Inspector General7
has shown, among other things, that FEMA faces a major challenge in
working with its contractor and state and local partners of varying
technical capabilities and resources to produce accurate digital flood
maps. In developing those maps, we recommended that FEMA develop and
implement data standards that will enable FEMA, its contractor, and its
state and local partners to identify and use consistent data collection
and analysis methods for developing maps for communities with similar
flood risk. Some stakeholders have questioned the adequacy of FEMA's
estimates of the cost and schedule for completing its map modernization
efforts.

FEMA has taken some steps to address these concerns. Regarding its efforts
to improve the solvency of the program, FEMA reported that the number of
subsidized properties insured by the NFIP dropped from about 70 percent in
1978 to about 30 percent in 1999; however, this trend appears to have
slowed in that since 1999 FEMA reports that the number of subsidized
properties has only decreased by about 6 percent. Similarly, FEMA has made
efforts to reduce the number of repetitive loss properties. However, FEMA
has not yet implemented a pilot program authorized by the Flood Insurance
Reform Act of 2004 specifically targeting the most severely repetitive
loss properties, and, in any case, this program will only address a small
number of these properties. Specifically, about 6,000 repetitive loss
properties that have accounted for about $792 million in losses since 1978
could be considered for mitigation efforts funded through the pilot
program.

FEMA also has efforts under way to increase participation in the NFIP by
marketing flood insurance policies. However, as noted in a recent
evaluation of mandatory compliance conducted for FEMA,8 FEMA does not have
a central role in implementing the mandatory purchase requirement. The
evaluation recommended that FEMA should explore opportunities to exercise
a leadership role in promoting compliance and in assisting the federal
entities for lending regulation to meet their obligations related to the
mandatory purchase of flood insurance.

Regarding FEMA's management and oversight of the program, the agency is
implementing the Flood Insurance Reform Act (FIRA) of 2004. However,

as we noted in our report,9 FEMA's use of a sampling strategy for quality
control purposes uses an approach that is not statistically valid, and
thus does note provide management with the information needed to assess
the overall performance of the private insurance companies who sell flood
insurance. FEMA needs this information, including the overall accuracy of
the underwriting of NFIP policies and the adjustment of claims, to have
reasonable assurance that program objectives are being achieved. FEMA
program officials did not agree with our recommendation stating that the
agency's method of selecting samples for operational reviews was more
appropriate than the random probability sample we recommended.

Regarding map modernization efforts, FEMA issued the Multi-Year Flood
Hazard Identification Plan10 that describes FEMA's strategy for updating
flood maps used for NFIP purposes and addresses several of our
recommendations. The current version of the plan (version 1.5, issued June
2005) updates FEMA's anticipated schedule and funding for flood map
updates through fiscal year 2009. While the plan establishes levels of
risk for determining the level of data definition and reliability used for
flood maps, it does not define criteria (high population, high density, or
high anticipated growth) or how the agency will apply them in assigning
risk categories for flood maps to determine the level of data definition
and reliability needed for future mapping projects. Echoing these
concerns, the DHS Inspector General in reviewing the plan also concluded,
among other things, that the plan should be revised to improve the
sequencing and funding for mapping efforts in high-risk areas.11  Finally,
some have questioned the adequacy of FEMA's estimates of the cost and
schedule for completing its map modernization efforts. For example, the
FEMA Office of Inspector General reported on this issue in September 2000
noting that implementation would cost $750 million between 2001 and 2007.
When we reported on the plan in March 2004, FEMA's estimated cost had
increased to $1 billion for a 5-year program from 2003-2008. By September
2005, when the DHS Office of Inspector General reviewed the status of the
program, the estimated budget was $1.5 billion for a 6 year program
extending to 2009. In testifying on the issue in July 2005, a
representative of the Association of State Flood Plain Managers cited an
analysis conducted by the Association in August 2005 which estimated that
FEMA's map modernization program could cost as much as $2-3 billion.

The increasing frequency, severity, and economic impact of flood events on
the nation place increasing pressure on FEMA and DHS to address these
concerns and enhance the program's ability to provide an insurance
alternative to disaster assistance and reduce future flood damage through
floodplain management. Under my authority, we are currently reviewing the
NFIP in light of the unprecedented demands and unique challenges the
hurricanes of 2005 placed upon FEMA and Gulf Coast communities. As part of
this effort, we are also reassessing many of the longstanding issues and
concerns we and others have raised regarding the key aspects of the
program I have discussed here today. In conducting our review, we have,
and plan to continue to, coordinate our efforts with this subcommittee and
other key Congressional stakeholders to ensure that you are informed and
continue to have the opportunity to provide input to our ongoing efforts.

The complex and, in many cases, long-standing nature of the management
challenges associated with the NFIP and the flood map modernization
program (upon which the NFIP relies for producing accurate and readily
accessible flood maps) will continue to increase the federal government's
exposure to potentially billions of dollars of NFIP claims for coverage in
future catastrophic loss years. This suggests the need for greater and
sustained national focus and management attention by both FEMA and DHS.
Just as flood insurance reform legislation in 199412 and 2004 mandated
changes to improve the effectiveness of, and participation in the program,
the Congress, too, will continue to play an important role through
legislative actions needed to assist FEMA and DHS in addressing these
challenges. Our objective in making this new high-risk designation today
is to draw that needed attention and, in turn, action.

Status of Other Selected High-Risk Areas

For other areas on our 2005 high-risk list, efforts to address problems
continue on several fronts, but major challenges remain. I want to touch
on several current high-risk issues today.

DOD High-Risk Areas Persist

Given its size and mission, the Department of Defense (DOD) is one of the
largest and most complex organizations to manage in the world. DOD spends
billions of dollars each year to sustain key business operations that
support our forces, including information systems and processes related to
acquisition and contract management, financial management, supply chain
management, business system modernization, and support infrastructure
management. Recent and ongoing military operations in Iraq and Afghanistan
and new homeland defense missions have led to newer and higher demands on
our forces in a time of growing fiscal challenges for our nation. For
years, GAO has reported on inefficiencies, such as the lack of sustained
leadership, the lack of a strategic and integrated business transformation
plan, and inadequate incentives. Moreover, the lack of adequate
transparency and appropriate accountability across DOD's major business
areas results in billions of dollars of wasted resources annually. To its
credit, DOD has embarked on a series of efforts to reform its business
operations, including modernizing underlying information technology
(business) systems. However, serious challenges and inefficiencies remain.
In fact, eight individual items on GAO's high-risk list and several
government wide high-risk areas apply to DOD. At the highest levels, DOD's
civilian and military leaders appear committed to reform; however, the
department faces significant challenges in achieving its transformation
goals. In addition, this overall transformation effort will take many
years of sustained attention by leaders at all levels in order to succeed.

Management of DOD's Weapon Systems Acquisitions and Contractor Oversight

One area in particular that I would like to highlight today pertains to
DOD's management of its major weapon systems acquisitions and its
contractors. As the largest buyer in the federal government and as the
agency entrusted with the nation's defense, DOD has an obligation to
ensure that its funds are spent wisely and result in weapons systems and
capabilities being delivered to the warfighter when needed. Over the last
5 years, DOD has doubled its planned investments in new weapon systems
from about $700 billion in 2001 to nearly $1.4 trillion in 2006. Overall,
DOD now spends more than $200 billion annually on goods and services.
While DOD eventually fields the best weapon systems in the world, we have
consistently reported that the programs take significantly longer and cost
significantly more money and deliver fewer quantities and capabilities
than the business cases that supported the acquisitions originally
promised. Similarly, we have reported that DOD is unable to assure that it
is using sound business practices to acquire the goods and services needed
to meet the warfighter's needs. DOD's policies may incorporate best
practices, but its actual decisions and actions are not consistent
therewith. Unfortunately, DOD has a track record of over promising and
under delivering in connection with key acquisition and other business
outcomes.

We have identified DOD's weapon systems and contract management as
high-risk areas for more than a decade. While each has some unique issues
that can be addressed on a case-by-case basis, there are other elements
that need to be addressed from a broader acquisition context. In this
regard, we testified earlier this month that the business case and
business arrangements were key to the success of the Army's Future Combat
System (FCS).13 The FCS is a networked family of weapons and other systems
in the forefront of efforts by the Army to become a lighter, more agile,
and more capable combat force. In total, projected investment costs for
the FCS are estimated to be about $200 billion. While we found a number of
compelling aspects of the FCS program, the elements of a sound business
case for such an acquisition program-firm requirements, mature
technologies, a knowledge-based acquisition strategy, a realistic cost
estimate, and sufficient funding-are not yet present. Similarly, we noted
that just as important, DOD needed to ensure the FCS's business
arrangements, primarily in the nature of the development contract and in
the lead system integrator approach, preserved the government's ability to
make informed business decisions in the future.

We looked at one element of a sound business arrangement-the award and
incentives fees provided to the contractors to promote excellence in
performance-in a report issued in December 2005.14 In that report, we
noted that DOD programs routinely engage in award-fee practices that do
not hold contractors accountable for achieving desired outcomes and
undermine efforts to motivate contractor performance, such as

o evaluating contractors on award-fee criteria that are not directly
related to key acquisition outcomes (e.g., meeting cost and schedule goals
and delivering desired capabilities to the warfighter);

o paying contractors a significant portion of the available fee for what
award-fee plans describe as "acceptable, average, expected, good, or
satisfactory" performance; and

o giving contractors at least a second opportunity to earn initially
unearned or deferred fees.

As a result, DOD paid out an estimated $8 billion in award fees on
contracts in GAO's study population, regardless of whether acquisition
outcomes fell short of, met, or exceeded DOD's expectations.

We have identified numerous other examples in which DOD failed to execute
its contracts properly, creating unnecessary risks and paying higher
prices than justified. For example, in March 2005, we reported that
deficiencies in DOD's oversight of service contractors placed DOD at risk
of paying the contractors more than the value of the services they
performed.15 In other reports, we identified numerous issues in DOD's use
of interagency contracting vehicles that contributed to poor acquisition
outcomes.16

These issues, along with those we have identified in DOD's acquisition and
business management processes, present a compelling case for change.17 By
implementing the recommendations we have made on individual issues, DOD
can improve specific processes and activities. At the same time, by
working more broadly to improve its acquisition practices, DOD can set the
right conditions for becoming a smarter buyer, getting better acquisition
outcomes, and making more efficient use of its resources in what is sure
to be a more fiscally constrained environment. Then, assessments such as
the Quadrennial Defense Review can be valuable. Unless changes are made,
however, DOD will continue on a course where wants, needs, and
affordability are mismatched, with predictably unsatisfactory results.

U.S. Postal Service Transformation Efforts and Long-term Outlook

In 2001, we placed the Postal Service's (the Service) transformation and
long-term outlook on our high-risk list because it faced formidable
financial, operational, and human capital challenges that threatened its
long-term viability. We called for prompt, aggressive action by the
Service in addressing these challenges and for a structural transformation
that would modernize the Service's outdated business model. Since then,
the Service has made significant progress in addressing some of the
challenges we identified, such as cutting costs, improving productivity,
downsizing its workforce, and improving its financial reporting. Much of
the Service's recent financial success, however, was due to legislation
passed in 2003 that reduced the Service's annual pension benefit payments,
thus enabling the Service to achieve record net incomes, repay over $11
billion of outstanding debt, and delay rate increases until January 2006.
Despite the temporary relief provided by the legislation, the Service
continues to face many challenges that will increase pressure for rate
increases both in the short term and over time. These challenges include

o generating sufficient revenues as First-Class Mail volume declines and
the mail mix changes to volume growth in primarily lower contribution
mail;

o controlling costs and improving productivity as growth in expenses
continues to outpace revenues; compensation and benefit costs rise;
workhour reductions become more difficult to realize and the number of
delivery points continues to increase;

o addressing other financial issues, such as growing unfunded retiree
health obligations, required multi-billion dollar escrow payments, and
military service pension obligations;

o managing workforce changes related to retirements and network
consolidations;

o providing reliable data to assess performance;

o maintaining high-quality universal services; and

o addressing external uncertainties, such as pending postal reform
legislation, four vacancies on the Postal Service's Board of Governors,
and potential security risks from biohazard and other threats.

Recently, the Service issued an updated Strategic Transformation Plan
(Plan) that details its goals and strategies for the next 5 years. We
support the intent of the Plan, including the Service's recent efforts to
begin optimizing its operating network. However, as we recently reported,
the success of the Service's optimization efforts will require enhanced
transparency of its decision-making criteria, effective coordination with
all key stakeholders, and a process for evaluating and measuring
performance. Furthermore, we continue to believe that the Plan's
incremental steps alone cannot remedy the major challenges facing the
Service. Despite its efforts, the Service's underlying business model
depends on growing mail volume to mitigate rate increases and cover its
universal service costs. This model is unsustainable because it lacks the
necessary incentives and flexibilities to achieve sufficient cost savings
needed to offset growing personnel costs, declining mail volumes, and the
continued expansion of the Service's delivery network. We continue to
believe that comprehensive postal reform is urgently needed to modernize
the Service's business model.

Recognizing that the future of postal services remains at risk, the House
and Senate have each passed postal reform bills that now are pending
conference deliberations. Both bills would give the Service additional
flexibility in pricing and allow it to retain earnings, create incentives
to reduce costs and increase efficiency, reduce the administrative burden
of the rate-making process, enhance transparency and accountability,
eliminate the escrow fund, transfer military service pension costs back to
the Department of the Treasury (the Treasury), and begin prefunding
retiree health benefits. The legislation aims to encourage cost cutting
that could restrain future rate increases and also improves the fairness
and balance of cost burdens for current and future ratepayers by beginning
to prefund retiree health benefits. It is important that this legislation
be enacted as soon as possible to begin the Service's overdue transition
to a modernized business model. Although the legislation may result in
short-term rate increases, these increases are likely to be more modest
and predictable than the significant and frequent rate increases that
would be needed if no action is taken to eliminate the escrow requirement,
transfer military service pension costs back to the Treasury, and begin
prefunding growing retiree health benefit obligations.

Implementing and Transforming DHS

We designated DHS's transformation as a high-risk area in 2003 because DHS
had to transform 22 agencies into one department, DHS inherited a number
of operational and management challenges from its component legacy
components, and failure to effectively address its management challenges
and program risks could have serious consequences for our national
security. Overall, DHS has made some progress, but continues to face
serious challenges in several key areas, such as strategic planning,
management, programmatic areas, and forming effective partnerships to
achieve desired outcomes.

o DHS's strategic plan does not detail the associated resources necessary
to carry out its mission and achieve its strategic goals and to
demonstrate the viability of the strategies and approaches presented for
achieving its long-term goals. In addition, stakeholder involvement in the
planning processes of DHS programs requiring stakeholder coordination to
implement has been limited. Also, DHS has called for risk-based approaches
to prioritize its resource investments for critical infrastructure.
However, while some components of DHS have taken initial steps to apply
elements of risk management to operations and decision making, DHS has not
completed a comprehensive national threat and risk assessment for the
department. Any risk-based approach must involve efforts from and
commitment by DHS, the administration, and the Congress. Moreover, DHS
continues to face challenges in sustained leadership.

o Further, key areas of management pose challenges for DHS leadership,
including financial management, information technology, and human capital
and acquisitions. For example, DHS continues to face significant financial
reporting problems, as evidenced by the disclaimer opinion on its
consolidated financial statements in fiscal years 2005 and 2004 and
continuing financial reporting deficiencies at Immigration and Customs
Enforcement and the Coast Guard. DHS has made progress in implementing key
federal information security requirements, yet it continues to face
challenges in fulfilling the requirements mandated by the Federal
Information Security Management Act. The district court has partially
enjoined DHS's implementation of its human capital management system, and
the lack of clear accountability hampers DHS's efforts to integrate the
acquisition functions of its numerous organizations into an effective
whole

o Key challenges remain in DHS programmatic areas. A number of challenges
that had been experienced by the Immigration and Naturalization Service
have continued in the new organizations now responsible for immigration
enforcement functions. Several factors limit Customs and Border
Protection's ability to successfully target containers to determine if
they are high risk, including staffing imbalances. Although DHS has
crafted a strategic plan to show how US-VISIT is aligned with DHS's
mission goals and operations, the plan has yet to be approved, causing its
integration with other departmentwide border security initiatives to
remain unclear. In addition, delays by the Transportation Security
Administration continue in deploying technologies at checkpoints to screen
for explosives on the body.

o Finally, in the area of partnering, the response to Hurricane Katrina
demonstrated that DHS also faces challenges when coordinating efforts
across the federal government. During incidents of national significance,
including Hurricane Katrina, the overall coordination of federal incident
management activities is executed through the Secretary of Homeland
Security. Other federal departments and agencies are to cooperate with the
secretary in the secretary's domestic incident management role. Our
initial field work on the response to Hurricane Katrina indicates that a
lack of clarity in roles and responsibility resulted in disjointed efforts
of many federal agencies involved in the response, a myriad of approaches
and processes for requesting and providing assistance, and confusion about
who should be advised of requests and what resources would be provided
within specific time frames.

PBGC Single-Employer Insurance Program

We first designated the Pension Benefit Guaranty Corporation (PBGC)'s
single-employer insurance program-a program that insures benefits for 34.2
million workers and retirees in about 28,800 defined benefit pension
plans- for the high risk list in July 2003 because of concerns about its
long-term financial viability. The program remains high risk as the
program's financial condition has worsened from a $9.7 billion surplus in
2000 to nearly a $22.8 billion accumulated deficit as of the end of fiscal
year 2005. Recent years have produced several terminations of large
underfunded plans and the strong likelihood of additional terminations in
the near future. While cyclical economic conditions have contributed to
the program's financial troubles, it remains threatened by the results of
globalization and deregulation or competitive restructuring of industries
that have led to the bankruptcy of sponsors with large underfunded plans
and a regulatory framework that has permitted sponsors to defer plan
contributions. For example, total underfunding among insured
single-employer plans has exceeded $450 billion over the last two fiscal
years; $108 billion of the underfunding is attributable to plans sponsored
by companies whose credit quality is below investment grade.

Both the House and Senate recently passed comprehensive pension reform
bills, each with different features that must be resolved in conference.
The bills address many areas of concern that we previously highlighted,
including the appropriate interest rates for liability valuation, more
credible funding standards, increased premiums, addressing the funding of
shutdown benefits, improving the timeliness of disclosures to
participants, and clarifying the uncertain legal environment for hybrid
pension plans. A consequence of even carefully crafted and well balanced
reform is that some additional sponsors could choose to terminate their
plans in a defined benefit system that has already seen declines in
participation. However, such reform remains an important first step to
maintaining a financially stable pension system that protects the
retirement benefits of workers and retirees by providing employers
reasonable funding flexibility in return for enhanced transparency and
accountability for meeting the promises they make to their employees.

In many ways, the problems facing PBGC's single-employer program highlight
the broader challenges confronting 21st century American retirement
security. These challenges, including the long term financial weakness of
Social Security and Medicare, the decline of the private defined benefit
pension system, and our poor personal saving rate (which was negative in
2005), are severe and structural in nature. Unaddressed, these problems
will not only erode the retirement safety net that was painstakingly built
over several generations but threaten our nation's future economic
security and thus the basic living standards of the American people.

Emerging Issues

In addition to specific areas that we have designated as high risk, there
are other important broad-based challenges facing our government that are
serious and merit continuing close attention. One of these involves the
use of risk management, a strategy for helping policymakers make
investment and other decisions by assessing risks, evaluating
alternatives, and taking actions under conditions of uncertainty. Risk
management has applications for deliberate acts of terror as well as
natural disasters, such as hurricanes and earthquakes. We have recently
advocated using a risk management framework for making investment
decisions to develop capabilities and the expertise to use them to respond
to catastrophic disasters, such as Hurricane Katrina.18 Such a strategy
has been endorsed by the Congress and the President as a way to strengthen
the nation against possible terrorist attacks. In this regard, DHS has
been charged with establishing a risk management framework across the
federal government to protect the nation's critical infrastructure and key
resources. DHS's work is done in a setting where substantial gaps in
security remain, but resources for closing these gaps are limited. Within
this context, in January of last year, we noted that DHS had not completed
risk assessments to set priorities on where scarce resources were most
needed. Our December 2005 report examined the risk management efforts of
DHS and found that while a great amount of effort has been expended, there
is a long way to go in implementing risk management in a way that helps
inform decisions on programs and resource allocation.19 The most progress
has been made in assessing risks of individual assets, such as port
facilities and oil refineries. However, translating this information into
comparisons and priorities across assets and infrastructure sectors
remains a major challenge. DHS is unable to provide adequate assurance to
the Congress or the country that the federal government is in a position
to effectively manage risk in national security efforts.

DHS has much more to do to more effectively manage risk as part of its
homeland security responsibilities within current and expected resource
levels. In the short term, progress depends heavily on continuing to
improve policies and procedures for assessing risks, evaluating
alternatives, and integrating these efforts into the annual cycle of
program and budget review. An area that DHS believes needs further
attention is working with intelligence communities to develop improved
analysis and data on the relative probability of various threat scenarios.
Efforts to strengthen data, methodology, and policy would help inform
decisions on setting relative priorities and on making spending decisions.
In the longer term, progress will rest heavily on how well DHS coordinates
the homeland security risk management effort. Currently, various risk
assessment approaches are being used, and in many ways, these approaches
are neither consistent nor comparable. DHS has been challenged in
establishing uniform policies, approaches, guidelines, and methodologies
for infrastructure protection and risk management activities within and
across sectors. In addition, integrating disparate systems, such as risk
management with program and budget management, remains a long-term
challenge. Shifting organizations toward this nexus of using risk-based
data as part of annual management review cycles will take time, attention,
and leadership. The Secretary of DHS has said that operations and budgets
of its agencies will be reviewed through the prism of risk, but doing this
is made difficult by the level of guidance and coordination that has been
provided so far.

DOD introduced its version of a risk management framework in 2001 to
enable the department's senior leadership to better balance near-term
demands against preparations for the future. However, in November 2005, we
similarly found that additional steps are needed before this framework is
fully implemented and DOD can demonstrate real and sustainable progress in
using a risk-based and results-oriented approach to strategically allocate
resources across the spectrum of its investment priorities within current
and expected resource levels.20 We reported that while DOD has established
four risk areas-force management, operational, future challenges, and
institutional-as well as certain performance goals and measures, DOD's
risk management framework's measures (1) do not clearly demonstrate
results, (2) do not provide a well-rounded depiction of performance across
the department, and (3) are not being systemically monitored across all
quadrants. In addition, the framework's performance goals and measures are
not clearly linked to DOD's current strategic plan and strategic goals.

Without better measures, clear linkages, and greater transparency, DOD
will be unable to fully measure progress in achieving strategic goals or
demonstrate to the Congress and others how it considered risks and made
trade-off decisions, balancing needs and costs for weapon system programs
and other investment priorities. DOD faces four key challenges that affect
its ability to fully implement the risk management framework, or a similar
risk-based and results-oriented management approach: (1) overcoming
cultural resistance to the transformational change represented by such an
approach in a department as massive, complex, and decentralized as DOD;
(2) maintaining sustained leadership and clear accountability for this
cultural transformation; (3) providing implementation goals and timelines
to gauge progress in transforming the culture; and (4) integrating the
risk management framework with decision support processes and related
reform initiatives into a coherent, unified management approach for the
department. DOD recently stated in its Quadrennial Defense Review (QDR)
Report, issued last month, that it is now taking advantage of lessons
learned from the initial implementation phase to refine and develop a more
robust framework to enable decision making. Unfortunately, our preliminary
review of the QDR suggests that little progress has been made in choosing
between wants, needs, affordability, and sustainability in connection with
major Defense programs and acquisitions. Furthermore, more emphasis needs
to be placed on the Department's overall business transformation efforts.
We will continue to monitor DOD's efforts in these areas.

We will also continue to monitor other management challenges identified
through our work. While not high risk at this time, these areas warrant
continued attention. For example, at the U.S. Census Bureau (Bureau), a
number of operational and managerial challenges loom large as the Bureau
approaches its biggest enumeration challenge yet, the 2010 Census. The
Bureau will undertake an important census test and make critical 2010
Census operational and design decisions in the coming months-and we will
continue to closely monitor the Bureau's program to assist the Congress in
its oversight and the Bureau in its decision making.

Both the Executive Branch and the Congress Have Important Roles

Continued focus by both the executive branch and the Congress is needed in
implementing our recommended solutions for addressing these high-risk
areas.

Top administration officials have expressed their commitment to
maintaining momentum in seeing that high-risk areas receive adequate
attention and oversight. In fact, the current administration has looked to
our high-risk program in shaping such major governmentwide initiatives as
the President's Management Agenda (PMA), which has at its base many of the
areas we had previously designated as high risk. For example, in 2001, the
PMA identified human capital management, an area which we designated as a
governmentwide high-risk issue earlier that year, as a top priority.
Following our January 2003 update, in which we designated management of
federal real property a governmentwide high-risk area, the administration
added a Federal Asset Management Initiative to the PMA and the President
signed an executive order aimed at addressing long-standing federal real
property management issues.

More recently, the Office of Management and Budget (OMB) has led an
initiative to prompt agencies to develop detailed action plans for each
area on our high-risk list. These plans are to identify specific goals and
milestones to address and reduce the risks identified by us within each
high-risk area. Further, OMB has encouraged agencies to consult with us
regarding the problems our past work has identified, and the many
recommendations for corrective actions they have made. For example, in
cooperation with OMB, DOD has developed a plan to show progress toward the
long-term goal of resolving problems and removing supply chain management
from our list of high-risk areas within the department. DOD issued the
first iteration of the plan in July 2005 and, since then, has regularly
updated it. Based on our review of the plan, we believe it is a good first
step toward improving supply chain management in support of the warfighter
although the department faces challenges and risks in successfully
implementing its proposed changes across the department and measuring
progress. Since our October 2005 testimony before you, we have held
monthly meetings with DOD and OMB officials to receive updates on the plan
and gain a greater understanding of the initiatives DOD proposes to
implement. Progress to date on other individual plans has varied, but this
initiative offers the potential for helping to foster progress on
long-needed improvements. Such concerted efforts by agencies and ongoing
attention by OMB are critical; our experience over the past 15 years has
shown that persistence and perseverance is required to fully resolve
high-risk areas.

The Congress, too, will continue to play an important role through its
oversight and, where appropriate, through various legislative actions,
particularly in addressing challenges in broad-based transformations. As I
have repeatedly noted, the creation of a COO/CMO position in select
agencies, especially the Department of Defense, could help to elevate
attention on management issues and transformational change, integrate
various key management and transformation efforts, and institutionalize
accountability in leading these changes. I am pleased that you have both
endorsed this concept by introducing legislation to create deputy
secretary for management positions for the Departments of Defense and
Homeland

Security.21 I continue to believe that there is a strong need for such a
senior leadership position to provide the continued focus and integrated
approach required to address the significant and long-standing
transformation and management challenges facing these departments.

Over the past 13 months, your subcommittee alone has held 5 hearings
relating to our high-risk areas, covering the list in total as well as
individual areas in DOD, including personnel security clearances, supply
chain management, as well as business systems modernization and overall
business transformation. Together, committees and subcommittees in both
houses have held more than 60 hearings since our last high-risk update
report, involving 20 of the 25 areas on GAO's January 2005 high-risk list.
I have personally testified in many of these hearings. This level of
oversight, coupled with related legislation, where appropriate, is very
instrumental to making real and sustainable progress in these areas.

Forward-looking Focus Needed

Addressing the important problems identified by our high-risk program will
in many cases encompass the need for transformation and, for some
challenges, require action by both the executive branch and the Congress.
However, if we are going to meet the long-term fiscal challenge and other
emerging challenges confronting the nation, we must also engage in a
fundamental reexamination of what government does and how it does it, who
does it, and how it gets financed.

Although prompted by fiscal necessity, such a fundamental review of major
program and policy areas can also serve the vital function of updating the
federal government's programs and priorities to meet current and future
challenges. While we should be striving to maintain a government that is
free of waste, fraud, abuse, and mismanagement, it should also remain
effective and relevant to a changing society-a government that is as free
as possible of outmoded, duplicative, and ineffective commitments and
operations. Many current federal programs and policies, in fact, were
designed decades ago to respond to trends and challenges that existed at
the time of their creation, and may no longer be well suited, designed, or
targeted to address current national priorities.

Our recent entry into a new century has helped to remind us of how much
has changed in the past several decades-rapid shifts in the aging of our
population, globalization of economic transactions, significant advances
in technology, and changing security threats. If government is to
effectively address these trends, it cannot accept its existing programs,
policies, and activities as "givens." Outmoded, duplicative, and effective
commitments and operations are an unnecessary burden on the present and
future that can erode the capacity of our nation to better align its
government with the needs and demands of a changing world and society.

Last year, we pulled together our insights and previous work for the
Congress in another report, entitled 21st Century Challenges: Reexamining
the Base of the Federal Government ( GAO-05-325SP ). That report provides
policymakers with a comprehensive compendium of those areas throughout
government that could be considered ripe for reexamination and review. It
includes a number of illustrative questions for the Congress and other
policymakers to consider as they carry out their various constitutional
responsibilities. These questions span a broad range of budget categories
and federal operations, including discretionary and mandatory spending and
tax policies and programs.

Answering these questions and addressing the challenges raised in the 21st
century challenges report will invariably entail difficult political
choices between competing programs that promise benefits to many Americans
but are collectively unaffordable in the long run at current and expected
revenue levels. We recognize that this kind of examination and the hard
choices necessary to mitigate the risks inherent in conducting "business
as usual" may take a generation to address. But the potential disruption
from related changes can be lessened, and the options policymakers can
consider will be greater, if the necessary policy changes are made sooner
rather than later. However, in the final analysis, as you well know, only
elected officials can decide whether, when, and how best to proceed to
address these important issues.

We hope that our reports on our high-risk program, as well as our report
on 21st  century challenges, along with the follow-up work we are
committed to doing for the Congress, will continue to be used by various
congressional committees, such as yours, as you consider which areas of
government to examine and act on.

Mr. Chairman, Senator Akaka, and members of the subcommittee, this
concludes my testimony. I would be happy to answer any questions you may
have.

(450476)

GAO's High-Risk List

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.

www.gao.gov/cgi-bin/getrpt? GAO-06-497T .

To view the full product, click on the link above. For more information,
contact George Stalcup at (202) 512-9490 or [email protected].

Highlights of GAO-06-497T , a testimony before the Subcommittee on
Oversight of Government Management, the Federal Workforce, and the
District of Columbia, Committee on Homeland Security and Governmental
Affairs, U.S. Senate

March 15, 2006

GAO'S HIGH-RISK PROGRAM

GAO audits and evaluations identify federal programs and operations that
in some cases are high risk due to their greater vulnerabilities to fraud,
waste, abuse, and mismanagement. Increasingly, GAO also has identified
high-risk areas that are in need of broad-based transformations to address
major economy, efficiency, or effectiveness challenges. Since 1990 with
each new Congress, GAO has reported on its high-risk list. GAO's most
recent update, in January 2005, presented the 109th Congress with the
latest status of existing and new high-risk areas warranting attention by
both the Congress and the administration. Lasting solutions to high-risk
problems offer the potential to save billions of dollars, dramatically
improve service to the American public, strengthen public confidence and
trust in the performance and accountability of our national government,
and ensure the ability of government to deliver on its promises.

What GAO Recommends

GAO has made hundreds of recommendations related to areas it has
designated as high risk. Perseverance by the administration in
implementing GAO's recommended solutions and continued oversight and
action by the Congress are essential.

Our January 2005 high-risk update summarized progress to date in
addressing high-risk problems, corrective actions under way, and
additional actions needed. As part of that update, the high-risk
designation was removed for three areas and four new areas were added to
the high-risk list.

This administration has looked to our high-risk program on various
initiatives such as the President's Management Agenda. Also, federal
departments and agencies have shown a continuing commitment to addressing
the root causes associated with high-risk challenges. Since GAO's last
update, OMB has worked with agencies in getting action plans, with
specific goals and milestones, in place for individual high-risk areas.
This initiative offers potential for noteworthy progress, but implementing
and sustaining the effort will be key to success. The Congress, too,
continues to play an important role through its oversight and, where
appropriate, legislative action targeted at the problems within high-risk
areas. More than 60 hearings involving high-risk areas have taken place
since our last update.

Today, GAO is designating a new high-risk area: the National Flood
Insurance Program. The program, due to the unprecedented magnitude and
severity of floods resulting from hurricanes in 2005, has incurred recent
losses. These losses-estimated at $23 billion, more than the total claims
paid in the history of the program-illustrate the risk associated with the
federal government's exposure for claims coverage in catastrophic loss
years.

This statement also addresses several ongoing high-risk issues:

           o  DOD cannot ensure that the more than $200 billion it spends
           annually is used wisely and results in weapon systems and
           capabilities delivered to the warfighter as originally promised,
           or that its business practices, such as the fees paid to its
           contractors, promote good acquisition outcomes.
           o  The Postal Service has made significant progress in addressing
           some challenges related to its transformation efforts and
           long-term outlook but continues to face significant challenges,
           such as declining First-Class Mail volumes and an unsustainable
           business model, that threaten its financial viability.
           o  Although DHS has made some progress in the department's
           transformation and implementation, it continues to face
           significant challenges in several key areas, such as strategic
           planning, information sharing, disaster management and partnering
           with others.
           o  Terminations of large underfunded pension plans have created a
           $23 billion deficit for PBGC's Single Employer Insurance Program
           and additional claims seem likely in the near future; legislation
           is pending to address various aspects of these problems.
*** End of document. ***