Managing in the New Millennium: Shaping a More Efficient and Effective
Government for the 21st Century (Testimony, 03/29/2000, GAO/T-OCG-00-9).
After nearly 30 years of budget deficits, a combination of tough policy
choices and remarkable economic growth has led to budget surpluses. At
the same time, the Cold War has ended, and the United States has won The
United States enters the 21st century largely freed of the deficit
burdens of the recent past but challenged by new forces--from
globalization to emerging security threats--that are shaping America's
role in the world. The Comptroller General's testimony focuses on four
topics that are critical to strengthening the performance and
accountability of federal agencies and to improving the public's respect
for and confidence in government. First, dynamics, such as increased
globalization, rapid technological advances, demographic changes, new
security concerns, and quality of life issues, are prompting basic
changes in how government does its job. A higher premium is being placed
on governmental responsiveness, integrated approaches, results
orientation, and accountability. Second, current surpluses provide a
tremendous opportunity to focus on longer-term fiscal challenges, such
as health care. Third, the United States now has an opportunity and an
obligation to look at what government should be doing and how it does
it. Prudent decisions are required if government is to continue
delivering the services that Americans want, need, and can afford.
Fourth, the time is now to reconsider the fiscal and performance models,
structures, and processes that Congress uses to fulfill its oversight
responsibilities. Real improvements in performance and management call
for disciplined and determined efforts by the executive branch and
continued oversight by Congress.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: T-OCG-00-9
TITLE: Managing in the New Millennium: Shaping a More Efficient
and Effective Government for the 21st Century
DATE: 03/29/2000
SUBJECT: Accountability
Performance measures
Internal controls
Reengineering (management)
Globalization
Public administration
Strategic planning
Budget surplus
Productivity in government
Fiscal policies
IDENTIFIER: DOD National Missile Defense System
Medicare Program
Social Security Program
Medicare Trust Fund
Medicaid Program
Malcolm Baldridge National Quality Award Program
President's Quality Award Program
SDI Theater High Altitude Area Defense System
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GAO/T-OCG-00-9
United States General Accounting Office
GAO
Testimony
Before the Committee on Governmental Affairs
U.S. Senate
For Release on Delivery
at 10:30 a.m. EST
Wednesday
March 29, 2000
GAO/T-OCG-00-9
MANAGING IN THE NEW MILLENNIUM
Shaping a More Efficient and Effective
Government for the 21st Century
Statement of David M. Walker
Comptroller General of the United States
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(966714)
Statement
Managing in the New Millennium: Shaping a More
Efficient and Effective Government for the 21st
Century
Page 37 GAO/T-OCG-00-9
Mr. Chairman, Senator Lieberman, and Members of
the Senate Committee on Governmental Affairs:
I appreciate the opportunity to be here this
morning to discuss the unique budget and oversight
issues that face you and other Members of Congress
at this time in better positioning our national
government to meet current and emerging
challenges.
The cold war has ended, and we won. In addition,
after nearly 30 years of budget deficits, the
combination of hard choices and remarkable
economic growth has led to budget surpluses. As a
result, we transition into this new century with
different security concerns and an improved
financial position relatively free of the deficit
constraints of the recent past. In order to
prepare effectively for the future, however, we
must fully explore the major dynamics that will
shape the United States and its place in the world
and adequately prepare the federal government to
meet the challenges that lie ahead. The Senate
Governmental Affairs Committee is uniquely
positioned to consider these broad-based and
crosscutting challenges and what needs to be done
to address them.
As we stand at these crossroads, I would like
today to focus on four topics that are critical to
strengthening the performance and accountability
of the federal government and are fundamental to
improving the American public's respect for and
confidence in government.
First, dynamics, such as increased globalization,
rapid technological advances, shifting
demographics, changing security concerns, and
quality of life considerations, are prompting
fundamental changes in the environment in which
the federal government operates and are placing
more of a premium on governmental responsiveness,
integrated approaches, results orientation and
accountability.
Second, current surpluses provide a
tremendous opportunity to rise out of the 1-, 3-,
or 5- year budget horizon of recent deficit
debates and to focus on longer-term fiscal and
management challenges as we move into the 21st
century. This is especially important given the
significant fiscal demands on health care and
other areas that will be engendered by the
demographic tidal wave that is due to hit us early
in the century, when the "baby boom " generation
starts to retire.
Third, we now have an opportunity and
obligation to take a comprehensive look at what
government should be doing and how it does it.
Future fiscal challenges call for prudent
stewardship of our national government to ensure
delivery of the services that Americans want, need
and can afford. In this regard:
� There is a critical need in the short term to
continue to effectively implement the management
reform structure that Congress has put in place to
provide for more effective and accountable
government. This is critical since the government
will not be able to maximize its performance and
ensure its accountability without modern and
effective human capital practices.
� Human capital issues are the missing link in
the management framework Congress has provided,
and there is an urgent need to develop and
implement modern human capital practices for the
federal government.
Fourth, this is an opportune time to
reconsider the fiscal and performance models,
structures, and processes that the Congress uses
to fulfill its oversight responsibilities.
Addressing the themes that I have outlined calls
for hard choices and persistent attention. Real
improvement in performance and management calls
for a disciplined and determined process by the
executive branch, and continued oversight by the
Congress.
Throughout this testimony I draw on the
breadth of our work at GAO and propose that we
continue to strengthen and expand our strategic
partnership with Congress to help address the
challenges that face the federal government in the
21st century.
The Forces Shaping the United States and Its Place
in the World
We have identified six themes that represent
dynamics with profound implications for
congressional decision-making and government
management in the next century:
� Globalization
� Security
� Demographics
� Quality of life
� Technological innovation
� Government performance and accountability
Globalization
Globalization, or the interdependence of
enterprises, economies and governments, presents
new opportunities for U.S. producers and
consumers, but also new challenges for the
country.
With rapid advances in technology and the ease
with which people, enterprises, and goods can
cross borders, the economies and activities of
nations have become increasingly interdependent.
From 1960 to 1997, world exports increased from
about 12 percent to about 24 percent of world GDP
(gross domestic product). As shown in figure 1,
multinational enterprises are an important part of
the trend towards globalization. In 1997, 63
percent of U.S. exports and 40 percent of U.S.
imports were associated with U.S. parent
corporations or their foreign affiliates.
The U.S. has been a principal architect of an open
world trading system and has benefited greatly.
However, open trade has increased the complexities
of maintaining the U.S. economy. Interdependence
of the U.S. and foreign economies is illustrated
by foreign investment in U.S. business, which has
increased to over $200 billion in 1998, an amount
nearly 3 times that invested the year before.
Figure 1: World Exports as Percentage of GDP
As the U.S. economy becomes increasingly linked
with the global economy, international trade is
growing in importance as a foreign policy issue.
At the same time, significant national security
issues also need to be considered. The
effectiveness of regional and global trade
arrangements in achieving their desired outcomes
is being questioned at home and abroad. Critics
have expressed concern that the United States has
not been sufficiently aggressive in monitoring and
enforcing over 300 international trade agreements
that cover hundreds of billions of dollars in
trade and affect millions of U.S. jobs, and that
some decisions by the World Trade Organization
could compromise U.S. sovereignty.
Recent financial crises in developing nations
highlight the implications of the interdependence
of economies and financial systems. For example,
the emergence of financial difficulties in
Thailand in 1997 was followed by financial crises
in Indonesia and Korea, and eventually Russia and
Brazil. Fear that these crises could severely
affect U.S. economic and security interests have
(1) focussed attention on the interdependence of
U.S. and global economies and (2) raised questions
about what can be done to prevent or contain the
spread of such crises. The International Monetary
Fund is a key organization that the United States
and agencies such as the Departments of Treasury
and State cooperate with to maintain global
economic stability. Prompted by financial crises
and government corruption in some countries,
questions have been raised regarding their
effectiveness and roles in maintaining the health
of the global finance and trade systems and
resolving countries' financial crises.
Economic and financial interdependence are not the
only global trends with implications for this
country. Increased globalization of information
technology has resulted in significant new
security and privacy threats to our nation's
information network. Similarly, the spread of
diseases around the world, like AIDS, and the
global nature of environmental problems affect us
and also call for a coordinated international
response. Thus, in the future, federal responses
to problems will increasingly have to consider
international as well as national dimensions.
Security
The nation's security concerns reflect new,
diverse, and diffuse threats of national, economic
and personal dimensions.
Less restricted trade, expanding democracy and
capitalism, and rapidly developing technology have
broadened security concerns and changed the way
the United States prepares for conflict. In
addition to more conventional military threats,
the United States is confronting threats from
terrorism; the proliferation of weapons of mass
destruction; information warfare; the
international drug trade; and other more diffuse
sources, which are harder to identify, respond to,
and contain.
Figure 2: Countries With Weapons of Mass
Destruction Posing National Security Concerns
Sources: DOD and State Department.
The bombings in New York City in 1993 and in
Oklahoma City in 1995 have elevated concerns about
the spread of terrorism to the U.S. At least nine
countries posing national security concerns are
believed to have weapons of mass destruction
(nuclear, biological or chemical). More than 40
federal agencies, offices and bureaus spend over
$10 billion a year to combat terrorism.
The structure of U.S. armed forces has been
reviewed a number of times since the end of the
Cold War, resulting in substantial reductions. The
Congress has expressed concern that the forces
that remain may not be sufficient to implement the
national military strategy and may not be
sufficiently prepared to respond to the threats of
the 21st century. In February 1999, the President
proposed that DOD begin the first sustained
increase in defense spending in 15 years, calling
for additional resources totaling $112 billion
over the next 6 years. In particular, defending
the United States against an intercontinental
ballistic missile attack from a rogue nation and
protecting U.S. and allied deployed forces from
theater missile attacks is receiving considerable
attention and will result in substantial spending.
This year, activities leading to the President's
deployment decision on a National Missile Defense
system are moving ahead and improvements to key
theater missile defense systems, such as the
Theater High Altitude Area Defense system, are
being instituted. The President has proposed about
$24 billion in total funding of national and
theater missile defense from 2001 through 2005.
Increasing reliance on complex interconnected
computer systems essential to public well being
and the economy has created serious new
vulnerabilities should disruptions occur.
Protection of transportation, energy, emergency
services, financial services, and communication
systems is becoming increasingly important because
they rely heavily on information technology.
Criminals, terrorists, and others, working
anonymously from remote locations and with
relatively limited resources, can now use
computers to severely disrupt this infrastructure.
An example of disruptions that could occur is
provided by recent denial-of-service attacks on
popular web-sites.
Demographics
Demographics, or the profound changes forecast in
the age and composition of our population, will
have enormous consequences for the retirement and
health care entitlement programs as well as
programs supporting the workforce.
The population is growing older. By 2030, about
one-fifth of the U.S. population is projected to
be over age 65 compared with about 13 percent in
1998. Also by 2030, Medicare beneficiaries, who
include the disabled as well as the elderly, are
expected to account for 20 percent of the
population. The result will be that fewer workers
will be paying into Social Security for every
person receiving benefits. In 1955, 9 persons were
paying into Social Security for every person
receiving benefits. Today, the ratio is down to
3.4 to 1, and, by 2030, it is projected to be
about 2 to 1.
Figure 3: Social Security Workers per Beneficiary
Source: Old Age Survivors and Disability Insurance
Trustees.
These trends will have enormous financial
repercussions for the solvency and sustainability
of federal entitlement programs. The Medicare
Hospital Trust Fund operated in the red since 1992
and is projected to face insolvency in 2015.
Social Security expenditures are expected to
exceed payroll tax revenues beginning in 2014,
with trust funds being depleted by 20341.
But crafting a solution to financing these
entitlement programs involves more than the
traditional approach of closing the gap between
projected expenditures and revenues over a fixed
time period, such as 75 years. Rather, any
financing solution needs to achieve sustainable
solvency that balances projected expenditures and
revenues without requiring us to frequently
revisit the financing of these programs.
Figure 4: Medicare Financing
Source: GAO analysis of data From the Office of
the Actuary, Health Care Financing Administration.
Figure 5: Social Security Finances
Source: GAO analysis of data From the Office of
the Chief Actuary Social Security Administration
The population is also becoming more diverse.
Women and minorities as a proportion of the
workplace have grown significantly. This trend,
along with increased use of part time and other
flexible work arrangements, has implications for
federal policies and programs on education,
training, childcare, and immigration, among
others. Although the growing entry of women and
minorities caused substantial growth in the U.S.
labor force in recent decades, this trend seems to
be changing. Projections for the future are that
the annual growth in the labor force will be only
about 1 percent in the short term and that this
growth rate may even decline in the long term.
These trends further exacerbating the current
tight labor market for specialized skills and key
sections of the economy suggesting the need for
more policies designed to encourage people to
retreat gradually from work, rather than plunge
into retirement.
Quality of Life
Quality of life has improved for many but not for
all Americans. At the same time, prosperity is
placing greater stresses on the quality of life.
The long period of strong economic performance has
been accompanied by economic prosperity. People
are typically living longer, with average life
expectancy rising to age 76 over the past 20
years, while unemployment has fallen to 4.3
percent, and violent crimes have dropped by 20
percent since 1990. The quality of the physical
environment has also improved, as levels of major
air and water pollutants have dropped since 1970.
However, many challenges remain. For example,
the disparities between the net worth of those
without a high school education and those with
more education increased between 1989 and 1998.
While unemployment has reached record or near-
record lows for African-Americans and Hispanics,
unemployment rates for these two groups still
stand at nearly twice the rate for whites, and
more than 40 million Americans lack health
insurance. Given the large federal role in health
care delivery and financing, there is a need to
weigh the needs of Americans against their wants
and the overall affordability of health care
considered by policy makers.
At the same time prosperity is placing
greater stresses on quality of life. Greater
economic activity, for example, increases air and
highway traffic and heightens concerns about
congestion, safety and environmental quality. The
shift to a more technologically based economy
raises long term concerns about education, while
population growth and geographic shifts, such as
urban sprawl, place greater strains on
transportation and other infrastructure. Over the
coming years, these demands for new investment
will increasingly come into competition with other
national priorities, creating difficult choices
for the federal government.
Technological Innovation
Technological innovation, especially in
information technology, has enhanced productivity,
but also created new vulnerabilities.
Information technology has transformed the
ways we communicate, learn, use information,
conduct commerce, practice health care and build
and design products. This trend is expected to
accelerate, with investment in information
technology expected to account for 40 percent of
all capital investment in the United States by
2004. Roughly 172 million people around the world
will be Internet access in the year 2000, and by
2003, and that number is expected to double.
Businesses that produce computers, software,
semiconductors, and communications equipment have
accounted for over a third of the growth in the
U.S. economy since 1992. Government too is being
affected, with information technology providing
new, more responsive and efficient ways of
delivering services and information to citizens,
in such areas as tax administration, higher
education, transportation safety and environmental
protection.
Figure 6: Internet Users Worldwide, 1998-2003
Source: eMarketer (1999).
The connectivity and interdependence created
through information technology also creates
vulnerabilities. Computer security risks
associated with the widespread use of information
create the potential for disruptions to federal
agencies and the private sector, in aviation,
banking, law enforcement, emergency services and
other critical services. The privacy and
confidentiality of medical records, credit
histories, and other personal data on millions of
individuals stored in electronic databases are
also at potential risk. Unless appropriately
controlled, computerized operations can offer
those with criminal or other malicious intentions
numerous opportunities for committing fraud,
tampering with data or disrupting vital operations
Government Performance and Accountability
Faced with public demand for more economical,
efficient, and effective government, countries
around the world are undertaking major reform
initiatives to improve government performance and
accountability. These reform efforts being
undertaken in major democracies are taking a
generally consistent direction, requiring
government organizations to focus more on results
and less on process.
In the United States, American citizens are
increasingly demanding improved government
services and better stewardship of public
resources. In an effort to meet these demands, the
federal government is adopting the principles of
performance-based management. Legislation enacted
in the 1990s has provided a statutory framework
that includes the Government Performance and
Results Act of 1993, the Chief Financial Officers
(CFO) Act and related financial management
legislation, information technology reform
legislation, including the Clinger-Cohen Act of
1996 and the Paperwork Reduction Act of 1995. As I
will discuss later, progress in implementing this
framework has been uneven across the agencies, and
certain areas, like human capital management, have
had little attention.
Much of the impetus for government reform came in
part as a reaction to poor performance, continuing
disclosures of waste, and chronic budget deficits.
However, the fact that the federal budget has
turned the corner from deficit to surplus does not
reduce the importance of effective and efficient
government-nor of fiscal discipline. After a
decade of focusing on deficit reduction, we know
there are pent-up demands for using the projected
budget surpluses. The challenge for policymakers
will be to meet public expectations of government
while maintaining the financial discipline
necessary to avoid a return to deficits.
Issues Influencing the Federal Government's Long
Term Fiscal Outlook
Our federal government has gone from budget
deficit to surplus as a result of a burgeoning
economy and difficult decisions by Congress and
the Executive Branch to control spending. Compared
to the deficits of recent decades, today's surplus
represents a historic turnaround, and current
projections show surpluses continuing over the 10-
year budget window.
Figure 7: Federal Spending and Revenues, 1950-
2010
Note: These projections assume that discretionary
spending grows at the rate of inflation after
2000.
Source: Budget of the U.S. Government, Fiscal Year
2001 and the Congressional Budget Office.
This picture of today's fiscal good fortune,
however, masks a change in the composition of
federal spending during the past few decades.
Relative to federal spending subject to annual
appropriations-defense and non-defense
discretionary spending-the share devoted to
federal health programs and Social Security
payments has grown steadily over time.
Correspondingly, the share available for all other
programs, including defense, has decreased.
Figure 8: Distribution of Federal Spending, 1962-
99
Source: Budget of the U.S. Government, Fiscal Year
2001.
Our long-term projections illustrate the
consequences for the federal budget, assuming
continuation of these trends. While we may enjoy
annual surpluses for some time, long-term
projections show a resumption of a pattern of
deficits emerging when a demographic tidal wave
hits. Because of this coming demographic shift, to
move into the future without making changes to
federal retirement and health programs-Social
Security, Medicare, and Medicaid-is to envision a
very different role for the federal government.
Even assuming, for example, that the Congress and
the President adhere to the often-stated goal of
saving the Social Security surpluses, our long-
term model shows a world by 2030 in which these
three programs alone would require more than three-
quarters of total federal revenue. Budgetary
flexibility would be drastically constrained, and
little room would be left for such programs as
national defense, the young, infrastructure, and
law enforcement.
Figure 9: Composition of Spending as a Share of
GDP Under "Eliminate Non-Social Security
Surpluses" Simulation
*The "Eliminate Non-Social Security surpluses"
simulation can only be run through 2066 due to the
elimination of the capital stock.
Note: Revenue as a share of GDP during the
simulation period is lower than the 1999 due to
unspecified permanent policy actions that reduce
revenue and increase spending to eliminate the non-
Social Security surpluses.
Source: GAO's January 2000 analysis.
In addition there are other looming fiscal
pressures such as:
� clean-up costs from federal operations that
yield hazardous wastes, including defense
facilities and weapon systems,
� future claims on federal insurance programs
by an increasing number of retired federal
employees and military personnel, and
� demands for new investment to modernize
physical infrastructure, public buildings,
transportation systems, and sewage and water
treatment plants that are beginning to deteriorate
or become obsolete.
Today's surplus represents both opportunity and
obligation. While the new surplus projections
offer an opportunity to address today's needs, we
should not forget our stewardship responsibility
to reduce the debt burden and increase the choices
we leave to future generations, to provide a
strong foundation for future economic growth, and
to ensure that future commitments are both
adequate and affordable. Continued debt reduction
and entitlement reforms are both critical to
promoting a more sustainable budget and economy
for the long term. In the near- and medium-term,
surpluses will depend on continued economic growth
and fiscal restraint.
Actions Needed for Government to Operate
Successfully in the 21st Century
The fiscal pressures associated with maintaining
and managing the surplus have increased the need
for more efficient and effective government and
will continue to require difficult choices.
Government performance and accountability need to
be enhanced in order to get the most out of
available resources, and forge effective
approaches to both the newly emerging and long-
standing problems facing the nation. The reforms
that have been adopted have profound implications
for what government does (the products and
services it delivers), how it is organized, and
how it performs. Yet, the reforms did not
encompass all areas of government management, in
particular human capital strategic planning and
management at a governmentwide level. To meet the
challenges of the 21st Century, the federal
government will need to:
� possess the effective management approaches
and tools needed to develop and maintain high-
performing organizations;
� implement the human capital practices needed
to support a focus on performance management and
economy, efficiency, and effectiveness; and,
� implement modern approaches for more
efficient and effective delivery of government
services.
Congress has an important role in encouraging the
implementation of the legislative framework
already enacted to strengthen government
performance and in creating new supportive
legislation and governance mechanisms. Decisions
also have to be made about the role of
government-i.e. what government should do and how
best to manage within continued fiscal restraint.
GAO will continue to assist this transition
through assessing agencies' progress and
identifying opportunities to strengthen government
accountability and performance.
Strengthen Management Practices to Improve
Government Performance
In the 1990's Congress and the federal government
laid out a statutory and management framework that
provides the foundation for strengthening
government performance and accountability. GPRA
required agencies to establish missions, goals and
performance measures that will tell taxpayers what
they're getting for their money. The CFO Act and
related legislation created a structure for more
businesslike management and reporting of the
government's finances. The Clinger-Cohen Act and
the Paperwork Reduction Act required agencies to
take an orderly, planned approach to their
information technology needs.
Congress has helped focus attention on the need
for effective implementation of this framework
through hearings and other communication with
agencies. In particular, this Committee has acted
to open an important dialogue with agencies.
August 17, 1999 letters to agencies summarized the
key management issues identified by GAO and the
Inspectors General and asked each agency to
indicate how it will address its high-risk areas
and major management challenges. Committee staff
is now holding bipartisan meetings with the
agencies to further discuss these issues and
needed actions. These letters and subsequent
meetings in follow-up to them demonstrate the
Committee's resolve and foster increased agency
attention to these areas.
We have seen some progress in agency efforts to
manage more economically and efficiently. But,
more needs to be done to achieve real and
sustained improvements to address the nation's
challenges. Implementing the management reforms
will help contain costs, provide services that
meet the public's needs, and enhance
accountability.
The job in the 21st century is to continue to
improve and to translate the intended reforms into
a day-to-day management reality across government.
Becoming high-performing organizations requires a
cultural transformation in government agencies.
Hierarchical management approaches will need to
yield to partnerial approaches. Process-oriented
ways of doing business will need to yield to
results-oriented ones. Siloed
organizations-burdened with overlapping functions,
inefficiencies and turf battles-will need to
become integrated organizations if they expect to
make the most of the knowledge, skills, and
abilities of their people. And finally, internally
focused agencies will need to focus externally in
order to meet the needs and expectations of their
ultimate clients-the American people.
Our work has consistently shown that many agencies
face long-standing and substantial challenges to
further progress. The major challenges that
agencies face in becoming high-performing
organizations include
� Adopting an effective results orientation,
� Strengthening financial management to better
support decision-making and demonstrate
accountability, and
� Improving the use of information technology
to modernize services and achieve results.
Adopting an Effective Results Orientation
The effective implementation of the statutory
framework to improve the performance, management
and accountability of the federal government,
although important, is not an end in itself.
Rather, the implementation of the framework is the
means to an end-improved federal performance
through enhanced executive branch and
congressional decisionmaking and oversight.
Performance improvements occur only when
congressional and executive branch decisionmakers
use information resulting from these reforms to
help inform decisions and improve the performance
and accountability of the federal government. GPRA
has the potential to help Congress and the
executive branch ensure that the federal
government provides the results that the American
people expect and deserve. It also has the
potential, if properly implemented, to help
improve the public's respect for and confidence in
their government. Substantial efforts have been
undertaken and progress clearly made. However,
much of GPRA's potential remains unrealized.
GPRA Implementation is at a critical stage for
agencies and Congress. In almost 2-1/2 years since
the requirements of GPRA were implemented across
the executive branch, Congress has been provided
with a wealth of new and valuable information on
the plans, goals, and strategies of federal
agencies. According to OMB, about 100 agencies
published a first set of strategic plans in 1997
and, as required, will issue updated plans by this
September. These agencies also issued annual
performance plans for fiscal years 1999 and 2000
and are issuing plans for 2001. OMB has issued
three governmentwide performance plans covering
fiscal years 1999, 2000, and 2001. Finally, by
March 31 of this year, agencies are to release
their first-ever performance reports covering
fiscal year 1999. Figure 11 is a time line of GPRA
requirements and other laws that make up the
statutory framework to improve the performance,
management, and accountability of the federal
government, including the CFO Act and the Clinger-
Cohen Act.
Figure 10: Time Line for Major Reports
a Although required to be submitted by January 31,
the governmentwide 5-year financial management
plans are generally issued in June or July.
b GPRA requires agencies' strategic plans to cover
a period of at least 5 years forward from the
fiscal year in which submitted. They are to be
updated at least every 3 years and are submitted
to OMB and Congress.
Source: GAO review of statutes.
The issuance of the first performance reports
in March 2000 represents a new and potentially
more substantive stage in the implementation of
GPRA. The performance reports offer the first
opportunity to systematically assess the agencies'
actual performance on a governmentwide basis and
to consider the specific steps that can be taken
to improve performance and reduce costs. These
annual reports on program performance can also
help congressional committees monitor and select
programs for more detailed reviews. The first
performance reports, and thus the completion of
the first full planning and reporting cycle of
GPRA implementation, also suggest that it is an
appropriate point to examine how GPRA can be more
fully integrated into executive branch and
congressional decisionmaking.
In our summary assessments of the fiscal year
1999 and fiscal year 2000 annual performance
plans, we highlighted a consistent set of areas
that we believe have the greatest potential for
improving the usefulness of GPRA to congressional
and executive branch decisionmakers.2 For example,
much more progress is needed in linking GPRA
performance goals to agency budget presentations,
so that the performance consequences of budget
decisions can be clearly understood. Similarly,
technology and human capital planning and
decisionmaking are too often not integrated into
considerations of programmatic results. In our
assessment of the fiscal year 2000 annual plans,
we found that most plans did not sufficiently
address how the agencies will use their human
capital to achieve results. In order for GPRA to
be truly effective, agencies must link their
performance measurement and reward systems to the
goals and measures included in their strategic and
performance plans.
We have seen that integrating GPRA into
agency operations does not come quickly or easily.
It requires dedicated and persistent leadership
within agencies that uses goals and performance
data as a basis for running organizations day-to-
day and for holding units and individuals
accountable. It requires leadership on the part
of OMB to ensure performance data are used to
inform budget decisions and that agencies take
GPRA seriously and use it to run their
organizations. Finally, it needs Congress in its
various capacities--oversight, authorization,
appropriation, and confirmation of political
appointees-to use GPRA in its efforts and to
underscore to agencies the importance it places on
effective implementation of the Act. We have made
recommendations in each of the last 2 years
intended to help congressional and executive
branch decisionmakers ensure that GPRA is
effectively implemented and used.
Congress has used GPRA practices in
decisionmaking and oversight. Congressional use of
GPRA concepts and practices-such as results-
oriented goal-setting and performance
measurement-in crafting legislation, although not
uniform, clearly exists and appears to be growing.
The Congressional Research Service (CRS) reported
in December 1998 on the provisions in public laws
and the associated committee reports from the
105th Congress that were relevant to the
implementation of GPRA.3 Although CRS notes that
the data must be read with caution, it found that
78 committee reports accompanying bills enacted
into law during the 105th Congress included
language related to GPRA or performance measures.
This language included endorsements of the
importance of GPRA; comments on the status of an
agency's implementation efforts, including the
quality of its plans; and other language. In
addition, CRS found that a number of laws enacted
during the 105th Congress incorporated GPRA
concepts and practices. These laws, for example,
required the development of a variety of
performance measurement systems to assess progress
in meeting statutory purposes. In some cases, the
statutory direction specified the goals and
performance measures to be used; in other cases,
the laws provided general categories of required
goals and measures. Overall, CRS found greater
attention to performance in laws and committee
reports in the 105th Congress than in the 104th
Congress.
Next Steps in Using GPRA
Recently, I used four broad themes to discuss the
significant performance problems in federal
programs and agencies that our work has
identified: 4
� Attack activities at risk of fraud, waste,
abuse, and mismanagement.
� Improve the economy and efficiency of federal
operations.
� Comprehensively reassess what the federal
government does.
� Redefine the beneficiaries of federal
government programs.
Concerted and continuing congressional oversight
is key to addressing the federal government's
persistent performance, management, and
accountability problems.
Attack Activities at Risk to Fraud, Waste,
Abuse, and Mismanagement. Over the years, our work
has shown that federal functions and programs
critical to personal and national security,
ranging from Medicare to weapons acquisition, have
been hampered by daunting financial and program
management problems, exposing the federal
government to waste and abuse. Since 1990, as part
of our "High-Risk" initiative, we have reported on
specific federal activities and functions that are
particularly vulnerable to waste, fraud, abuse,
and mismanagement.
The annual planning process under GPRA
provides an excellent vehicle for helping to
address high-risk functions and programs and to
ensure that clear accountability for progress is
established. In our assessment of the fiscal year
1999 performance plans, we noted that precise and
measurable goals for resolving mission-critical
management problems are important to ensuring that
the agencies have the institutional capacity to
achieve their more results-oriented programmatic
goals.5 Similarly, our assessment of the fiscal
year 2000 annual performance plans concluded that
plans with goals and strategies that address
mission-critical management challenges and program
risks show that agencies are striving to build the
capacity to be high-performing organizations and
reduce the risk of waste, fraud, abuse, and
mismanagement.6
Recent efforts to identify and reduce the level of
improper payments in Medicare show how GPRA can
help in focusing attention on mission- critical
problems. Following findings from the fiscal year
1996 financial audits conducted by the Inspector
General with assistance from GAO under the CFO
Act, the Department of Health and Human Services
(HHS) has begun to identify improper payments in
its financial statements for the $170- billion-a-
year Medicare fee-for-service program. HHS adopted
this improper payment quantification as a measure
for its annual performance plans that focus on
reducing the amount of improper payments each
year. Such measures are important to helping
Congress and the executive branch ensure that
program management is taking the steps needed to
reduce improper payments.
Unfortunately, we found that the fiscal year
2000 annual performance plans showed inconsistent
attention to the need to resolve the mission-
critical program risks that continue to undermine
the federal government's economy, efficiency, and
effectiveness. We found that in many cases,
agencies did not address significant management
challenges and program risks in their fiscal year
2000 performance plans. In those cases where
challenges and risks are addressed, agencies use a
variety of approaches, including setting goals and
measures directly linked to the management
challenges and program risks, establishing goals
and measures that are indirectly related to the
challenges and risks, or laying out strategies to
address them.
Improve the Economy and Efficiency of Federal
Programs. Effective congressional oversight can
improve federal performance by examining whether
agencies have the best, most cost-effective mix of
strategies in place to meet their goals. Agencies'
annual performance plans can help identify
opportunities for more economical and efficient
operations by systematically linking program
strategies to the results they are intended to
achieve.7 We have found that although agencies'
fiscal year 2000 plans contain valuable and
informative discussions of how strategies and
programs relate to goals, additional progress is
needed in explaining how strategies and programs
will be used to achieve results, including how
capital assets will be used to achieve results.
Specifying clearly in performance plans how
strategies are to be used to achieve results is
important to Congress and managers in order to
determine the right mix of strategies and to
maximize performance while limiting costs.
Comprehensively Reassess What the Federal
Government Does and How it Does it. It is
obviously important to periodically reexamine
whether current programs and activities remain
relevant, appropriate, and effective in delivering
the government that Americans want, need and can
afford. This includes assessing the effectiveness
of the tools that these programs embody, such as
direct spending, loan guarantees, tax incentives,
regulation, and enforcement. Many federal
programs-their goals, organizations, processes,
and infrastructures-were designed years ago to
meet the needs and demands as determined at that
time and within the technological capabilities of
that earlier era. For example, the Department of
Agriculture's Market Access Program (MAP)
subsidizes the promotion of U.S. agricultural
products in overseas markets. Despite changes made
to the program between 1993 and 1998, its results
remain uncertain. Our work has noted several
unresolved questions, including whether subsidized
promotions generate positive net economic returns,
increase exports that would not have occurred
without the program, and supplement rather than
supplant private sector spending.8
GPRA is perfectly suited for assisting Congress
and the executive branch in identifying and
addressing programs that may have outlived their
usefulness. Performance goals that focus on the
results of programs-and performance reports that
show what has been accomplished-will provide
critical information needed for making judgments
about the continuing value of a given program. As
goals are being set, Congress can make decisions
on whether the goals are appropriate and whether
the expected level of performance is sufficient to
justify the federal expenditure and effort. Later,
as results are being reported, Congress can
determine if the actual performance is sufficient
to justify continuing the program.
Redefine the Beneficiaries of Federal Government
Programs. Congress originally defines the intended
audience for any program or service on the basis
of certain perception of eligibility and/or need.
As with other issues, GPRA can help Congress as it
considers redefining program beneficiaries.
Examinations of agencies' goals and progress in
achieving those goals can highlight cases where
federal benefits could be better targeted to
improve results and/or cut costs.
Rationalization of crosscutting program areas
needs additional effort. Virtually all of the
results that the government strives to achieve
require the concerted and coordinated efforts of
two or more agencies. Yet our work has repeatedly
shown that mission fragmentation and overlap are
widespread. Unfocused and uncoordinated programs
waste scarce funds, confuse and frustrate program
customers, and limit overall program
effectiveness.
The Government Performance and Results Act can
provide the Office of Management and Budget,
agencies and Congress with a structured framework
for addressing crosscutting program efforts. OMB,
for example, can use the governmentwide
performance plan to integrate expected agency-
level performance. It can also be used to more
clearly relate and address the contributions of
alternative federal strategies. Agencies, in turn,
can use the annual performance planning cycle and
subsequent annual performance reports to highlight
crosscutting program efforts and to provide
evidence of the coordination of those efforts.
The fiscal year 2000 performance plans indicate
that agencies continue to make progress in showing
that crosscutting efforts are being coordinated to
ensure effective and efficient program delivery.
However, few agencies' performance plans attempted
to establish complementary performance goals,
mutually reinforcing strategies and common
performance measures for their crosscutting
programs. Food safety is one area where the
fragmented federal approach is inefficient and
hinders the government's efforts to actively
protect consumers. The Centers for Disease Control
and Prevention (CDC) estimated that food-borne
diseases cause approximately 76 million illnesses
and 5,000 deaths in the United States each year.9
However, the current system to ensure food safety
suffers from inconsistent oversight, poor
coordination, and inefficient allocation of
resources. As many as 12 different federal
agencies administer over 35 different laws
overseeing food safety.
More information on programs with mission
fragmentation and overlap, barriers to interagency
coordination and potential approaches for
improving the effectiveness and efficiency of
crosscutting programs can be found in our report
Managing For Results: Barriers to Interagency
Coordination (GAO/GGD-00-106, March 29, 2000)
which we are issuing today as background for this
discussion.
Build the Capacity to Gather and Use Performance
Information. Our work over the past several years
has identified limitations in agencies' abilities
to produce credible program performance and cost
data and identify performance improvement
opportunities. These limitations are substantial
and long-standing, and they will not be quickly or
easily resolved. For example, EPA has been
challenged to aggregate water quality data
provided by the states. This has made it difficult
for EPA to set priorities, evaluate the success of
its programs and activities, and report on its
accomplishments in a credible and informed way.
Similarly, we continue to be concerned about the
lack of capacity in many federal agencies to
undertake program evaluations.10 The absence of
program evaluation capacity is a major concern
because a federal environment that focuses on
results-where federal efforts are often but one
factor among many that determine whether goals are
achieved-depends on program evaluation to provide
vital information about the contribution of the
federal effort.
Under GPRA, agencies are to communicate to
Congress how they will verify and validate the
performance information that they will use to show
whether goals are being met. Discussing data
credibility and related issues in performance
reports also can provide important contextual
information to Congress. For example, Congress can
use this discussion to raise questions about
problems the agencies have had in collecting
needed results-oriented performance information
and the cost and data quality trade-offs
associated with various collection strategies.
Finally, GPRA requires agencies to include in
their performance reports summary findings of
those program evaluations completed during the
fiscal year covered by the report. Congress can
use such information to obtain a clearer picture
of the agencies' contributions to improvements in
citizens' lives.
Congressional committees of jurisdiction could
hold augmented oversight hearings. At least once
each Congress and preferably on an annual basis
committees could examine information in agencies'
plans and reports produced under the GPRA. These
assessments would assess the extent to which they
provide a reasonable return on investment--
providing the results that Americans want and need
at a reasonable cost--and to identify
opportunities for additional improvements in
agencies' management. This information on
missions, goals, strategies, resources, costs, and
results could provide a consistent starting point
for each of these hearings and allow for more
informed discussions about issues such as the
following:
� What progress is the agency making in
limiting its vulnerability to fraud, waste, abuse,
and mismanagement by addressing mission-critical
management challenges and program risks?
� Does the agency have the best mix of
programs, initiatives, and other strategies to
achieve results and operate in an economical and
efficient manner?
� Is the agency pursuing the right goals and
making progress toward achieving them.
Specifically, changing circumstances and/or
program performance may suggest that programs are
outdated and need to be revised or terminated?
� Are the eligibility rules for federal benefit
programs properly targeted and do opportunities
exist for reform, reduction, or termination based
on changing conditions and perceptions of need?
� Is the federal government effectively
coordinating its responses to pressing national
needs?
� Is the federal government achieving an
expected level of performance, especially in terms
of outcomes, for the budgetary and other resource
commitments that have been provided? More
directly, what type of return are the taxpayers
getting for their investment in the agency and its
programs?
� Are there efforts under way to ensure that
the agency's human capital strategies are linked
to strategic and programmatic planning and
accountability mechanisms?
� What is the status of the agency's efforts to
use information technology to achieve results?
Finally, through the appointment and confirmation
process, the Senate has an added opportunity to
make clear its commitment to high performance and
sound federal management by exploring with
nominees what they plan to do to ensure that their
agencies are striving to be high-performing
organizations.
As you know, Mr. Chairman, I am personally
committed to the successful implementation of
GPRA-I have seen in my public and private sector
careers how GPRA's purposes of improved
performance and accountability can be achieved
through the disciplined application of the goal-
setting, planning, performance measurement, and
reporting requirements of the Act. As a sign of my
commitment, within the coming weeks, GAO will for
the first time issue a strategic plan and
associated annual performance plan that are
consistent with the requirements and best
practices of GPRA. We seek, through our strategic
and annual planning process, to "lead by example"
by being a model for implementation of GPRA. We
do this even though we are not required to comply
with GPRA. Rather, we do it because GPRA's
requirements make good business sense. Most
important, our strategic and annual performance
plans will clearly set out our direction and show
how GAO aims to better support Congress in
carrying out its constitutional responsibilities
and in improving the performance and
accountability of the federal government for the
benefit of the American people.
As part of our goal to support the transition to a
more results-oriented and accountable federal
government GAO' s strategic plan calls for
analyzing and supporting federal efforts to
instill results-oriented management across the
government, by assessing:
� The effectiveness of agencies' and OMB's
management reform initiatives to create high-
performance organizations,
� The strategies and tools federal agencies use
to ensure accountability for results,
� The collection and use of performance
information and program evaluation results.
Strengthening Financial Management for
Decisionmaking and Accountability
This Committee has contributed to a focus on sound
financial management through its hearings and
focus on high-risk federal programs and management
challenges, and important efforts are underway in
a number of areas. There is a critical need to
continue the momentum toward real reform. In
particular, better financial information is
central to any meaningful reform.
Without timely and accurate information on the
full costs of programs, the government cannot
adequately ensure accountability, measure and
control costs, manage for results, nor make timely
and fully informed decisions about allocating
limited resources. However, such information has
historically not been routinely available across
government.
The CFO Act laid the legislative foundation for
the federal government to provide taxpayers, the
nation's leaders, and agency program managers with
reliable financial information through audited
financial statements. In addition to requiring
annual audited financial statements, the CFO Act
sets expectations for agencies to build effective
financial management organizations and systems and
to routinely produce sound cost and operating
performance information throughout the year. The
combination of reforms ushered in by GPRA and the
CFO Act will, if successfully implemented,
generate the necessary foundation to effectively
run performance-based organizations.
Some progress has been made by individual agencies
in preparing annual financial statements. Of the
24 CFO Act agencies, 6 received an unqualified or
"clean" opinion on their financial statements for
fiscal year 1996, 11 for fiscal year 1997, 12 of
24 for fiscal year 1998, and 13 of 22 received an
unqualified opinion as of today for fiscal year
1999. However, certain major agencies have not yet
been able to obtain an unqualified opinion on a
consistent basis.
The most significant in this regard is DOD, which
represents a large percentage of the government's
assets, liabilities, and net costs. None of the
military services or the department as a whole has
yet been able to produce auditable financial
statements. For example, DOD has acknowledged that
the lack of a cost accounting system is the single
largest impediment to controlling and managing
weapon systems costs.11 We designated DOD financial
management to be a high-risk area in 1995 and it
remains so today, although we have seen increased
attention to begin to address many of these
issues. DOD recognizes the seriousness of its
problems and has a number of improvement
initiatives under way.
IRS was able to produce reliable information on
tax revenue collections, refund disbursements, and
unpaid tax assessments in fiscal year 1999.
However, this was only after investing
substantial, time-consuming and costly efforts to
overcome pervasive deficiencies in its financial
management and operational systems and controls.
Weaknesses in controls over unpaid taxes and
refunds have likely cost the federal government
billions of dollars. Additionally, serious
weaknesses prevented IRS from being able to
reliably report on the balances and uses of its
administrative appropriations in fiscal year 1999.
Specifically, they hindered IRS' efforts to
properly report the components of its net position
and its statements of net cost, changes in net
position, financing, and budgetary resources. IRS
has a number of initiatives planned or in process
intended to address these problems, and its top
management has demonstrated a commitment to this
effort. However, many of these initiatives are
long term and will take years to implement.
The U.S. Government, as a whole, also has not yet
been able to accurately report on a significant
portion of its hundreds of billions of dollars of
assets, liabilities and net costs due to
widespread financial system weaknesses, problems
with fundamental recordkeeping, incomplete
documentation, and weak internal controls,
including computer controls. These deficiencies
impair the government's ability to accurately
measure the full cost and financial performance of
programs. They also impinge on the safeguarding of
the government's extensive inventory of assets and
the proper recording of billions of dollars in
transactions.
Major problems we have reported12 include the
government's inability to:
� Properly account for and report billions of
dollars of property, equipment, materials and
supplies, primarily at the Department of Defense;
� Properly estimate the cost of most major
federal credit programs and the related loans
receivable and loan guarantee liabilities,
primarily at the Department of Agriculture;
� Estimate and reliably report material amounts
of environmental and disposal liabilities and
related costs, primarily at the Department of
Defense;
� Determine the proper amount of various
reported liabilities, including postretirement
health benefits for military employees;
� Accurately report major portions of the net
cost of government operations;
� Determine the full extent of improper
payments that occur in major programs and that are
estimated to involve billions of dollars annually;
� Ensure that all disbursements are properly
recorded; and
� Properly prepare the federal government's
financial statements, including balancing the
statements, accounting for billions of dollars of
transactions between governmental entities and
properly and consistently compiling the
information in the financial statements.
The Administration agrees with these deficiencies,
has designated financial management as a top
priority and has actions underway; but concerted
effort over a number of years will be needed to
achieve the legislative intent of the CFO Act.
Clean audit opinions are not the end-game; modern
financial systems are essential. While clean audit
opinions are essential to providing an annual
public scorecard, they do not guarantee that
agencies have the financial systems needed to
dependably produce reliable financial information.
Modern systems and good controls are essential to
reach the end goal of useful, relevant, reliable
day-to-day financial information to support
ongoing management and accountability.
Although clean audit opinions can be produced by
"heroic efforts", such efforts are not the
solution. For example, IRS' general ledger cannot
routinely provide reliable information on its
revenue, refunds, and unpaid tax assessments
needed to prepare its financial statements. To
develop reliable revenue and refund activity for
its fiscal year 1999 financial statements, IRS had
to use extensive, costly ad hoc procedures to
generate tax revenue and refund activity from its
legacy systems and then reconcile this information
with its general ledger. In addition, IRS and GAO
jointly developed estimates of the components of
unpaid tax assessments based on a statistical
sample of about 700 cases. This process resulted
in reliable information, but only after eight
months of substantial effort and after tens of
billions of dollars of adjustments to IRS records.
These costly procedures will need to be done
annually until IRS successfully replaces its
legacy systems.
The Federal Financial Management Improvement Act
of 1996 (FFMIA) focuses on making improvements in
the underlying systems to comply with federal
accounting standards, financial systems
requirements, and the government's standard
general ledger at the transaction level. For
fiscal year 1997, 20 of 24 agencies' financial
management systems did not substantially comply
with FFMIA requirements; 21 of 24 did not for
fiscal year 1998. For fiscal year 1999, auditors
for 19 of the 22 CFO Act agencies that have issued
audit reports as of today reported that those
agencies' financial systems did not substantially
comply with the Act. The two agencies that have
not yet issued their fiscal year 1999 financial
statement audit reports reported that their
financial systems did not substantially comply for
fiscal years 1997 and 1998.
Agencies are challenged to improve their critical
existing financial systems applications, which are
not designed to fully meet current accounting
standards and financial system requirements. OMB
reported in June 1998 that over 72 percent of
systems applications needed replacement or
significant upgrading over the next 5 years and
that many agencies lacked the resources to do so.
Some efforts have been delayed by preparation for
the Year 2000 computing challenge.
Cost accounting also remains a key challenge
in providing accountability and supporting GPRA.
Most agencies still need to develop measures of
the full costs of carrying out a mission,
producing products, or delivering services to
provide decision-makers with information on all
the resources used and permit comparisons of the
costs of various programs and activities and their
performance outputs and results. The development
of such measures is expressly required by federal
accounting standards. Developing the necessary
approach to gather and analyze needed program and
activity-level cost information will be a
substantial undertaking. While there is a broad
recognition of the importance of doing so, for the
most part, agencies have just begun this effort.
Streamline, simplify and link performance and
financial information. Accountability is enhanced
when Congress can examine the relationship between
agency financial information and program results.
A pilot program under the Government Management
Reform Act resulted in 10 agencies issuing
accountability reports for 1996. These reports
consolidate reporting requirements under several
statutes, including the CFO Act, FMFIA, GPRA,
Prompt Payment Act, and Debt Collection
Improvement Act. The accountability reports
include both program and financial information,
such as the audited financial statements and
performance measures reflecting performance in
meeting key agency goals. They provide the
opportunity for agencies to report a balanced set
of measures that link an agency's strategic
objectives to its financial performance, customer
satisfaction, the results of its business
processes and its efforts to improve. Twenty-two
agencies are expected to prepare accountability
reports for fiscal year 1999. The initial
experience with accountability reports has been
promising and we support congressional adoption of
this concept, or at a minimum reauthorization of
these pilots, which are to expire on June 30,
2000.
Next Steps
Congress can encourage the development of sound
financial data by continuing to hold hearings and
other discussions with agencies about their
progress in this area as well as the barriers to
and requirements for progress.
GAO is striving to lead by example through its
financial management practices. For the past 13
years we have received clean audit opinions on our
financial statements. Also, our auditors have
found us to be in full compliance with Federal
Financial Management Improvement Act requirements.
As another example of our decision to voluntarily
comply with congressionally created management
reforms and to "lead by example," I am also
pleased to report to the Committee that, several
days ago, GAO issued its first-ever Accountability
Report. This report discusses GAO's role in
serving Congress and the American People. The
Accountability Report is different from GAO's
previous years' Annual Report. It reviews GAO's
accomplishments in meeting its mission consistent
with applicable professional standards and our
core values of Accountability, Integrity, and
Reliability. The report also includes a summary
of GAO's new Strategic Plan, which was recently
developed with input from the Congress, our
financial statements, and an unqualified opinion
from the agency's independent auditor.
As the Accountability Report indicates, GAO helped
Congress and the federal agencies achieve many
important goals in fiscal year 1999. For example,
GAO's work resulted in more than $20 billion in
financial benefits, a return on investment of 57
to one, and over 600 specific actions leading to
more effective government. I am very proud of
these achievements and look forward to working
with Congress and other GAO professionals to make
equally important contributions in fiscal year
2000.
GAO's performance goals include strengthening
accountability for the government's assets and
operations and identifying needed improvements to
the financial management infrastructure by:
� Analyzing and interpreting financial
information and stimulating the development and
analysis of reliable cost data that supports
performance management and a better linkage
between budget, financial, and program results
information.
� Identifying opportunities to strengthen
financial organizations and evaluating financial
operations, systems, and internal controls;
� Evaluating the effectiveness of major
agencies' actions to address deficiencies reported
in prior financial audits; and,
� Annually auditing and reporting on the U.S.
government's financial statements and the adequacy
of internal controls;
Improving the Use of Information Technology to
Achieve Results
Information technology, if leveraged properly, can
be an effective tool for high quality, cost
effective government services. Information
technology is at the heart of improving
accountability and performance. The government is
heavily dependent on computer systems and networks
to implement vital public services supporting
national defense, revenue collections, and social
benefits. To the extent that billions in planned
annual obligations for information technology can
be spent more wisely, federal programs will
operate more efficiently and effectively. However,
the global expansion of information technology has
resulted in significant new information security
and privacy threats to our information networks
and technology infrastructure.
Resolving Serious Information Security Weaknesses.
Our nation's computer-based critical
infrastructures are at increasing risk of severe
disruption, as illustrated by the recent denial-of-
service attacks on popular Internet web-sites.
Massive computer networks provide pathways among
systems that, if not properly secured, can be used
to gain unauthorized access to data and operations
from remote locations. As a result, government
officials are increasingly concerned about attacks
from individuals and groups with malicious
intentions, such as terrorists and nations
engaging in information warfare.
Such risks are of particular concern at the
federal level. Recent audit reports issued by us
and by agency inspectors general show that most of
the largest federal agencies have significant
computer security weaknesses. These weaknesses
place critical federal operations, such as
national defense, tax collection, law enforcement,
air traffic control, and benefit payments at
significant risk of disruption, as well as fraud
and inappropriate disclosures. In February 1997
and again in January 1999, our reports to the
Congress designated information security as a
governmentwide high-risk area.13
Hearings by this and other congressional
committees have served to clarify this problem. In
November 1999, Chairman Thompson and Senator
Lieberman introduced S. 1993, the Government
Information Security Act of 1999, which seeks to
strengthen information security practices
throughout the federal government. S. 1993 updates
the legal framework that supports federal
information security requirements and provides for
a risk-based approach to implementing these
requirements. It also requires independent annual
audits of security controls, which would provide
valuable information to support strengthened
congressional oversight.
In addition, this committee sponsored our efforts
to identify best practices for improving
information security management. This led to
issuance in May 1998 of our executive guide,
entitled Information Security Management: Learning
From Leading Organizations (GAO/AIMD-98-68), which
has been endorsed by the federal CIO Council and
is being used by numerous federal agencies to
bolster their ability to manage information
security risks. A companion guide was issued in
November 1999 entitled Information Security Risk
Assessment: Practices of Leading Organizations
(GAO/AIMD-00-33).
Concurrent with efforts to improve federal
information security, our government's focus has
broadened to include protecting privately
controlled critical infrastructures from computer-
based attacks. Such infrastructures are essential
to the national welfare and include systems
supporting public utilities, telecommunications,
finance, emergency services, as well as government
operations. These efforts began in 1996 with
establishment of the President's Commission on
Critical Infrastructure Protection. The
Commission's findings led to issuance, in 1998, of
Presidential Decision Directive (PDD) 63, which
created several new federal entities for
developing and implementing a strategy for
critical infrastructure protection and tasked
federal agencies with developing critical
infrastructure protection plans and establishing
related links with private industry sectors.
Most recently, in January 2000, the President
released a National Plan for Information Systems
Protection. As outlined in this plan, a number of
new, centrally managed entities have been
established and projects initiated to assist
agencies in strengthening their security programs
and improving federal intrusion detection
capabilities. 14 This first draft of the plan is
intended to begin a dialogue and lead to the
development of a more detailed blueprint for
protecting the nation's infrastructures. In
addition, on March 3, 2000, in response to recent
Internet disruptions, the President issued a memo
to the heads of executive departments and agencies
urging them to renew their efforts to safeguard
their computer systems against denial-of-service
attacks on the Internet. Congressional leadership
in this dialogue will be essential to help ensure
that any critical infrastructure protection plans
that are implemented are appropriate and cost-
effective.
Improving Management of Large-scale Information
Technology (IT) Investments. Large-scale agency
investments in IT, whether they are major system
modernization programs-such as the Federal
Aviation Administration's (FAA) air traffic
control modernization-or large system development
and acquisition projects-such as Custom Service's
Automated Commercial Environment, can cost
hundreds of millions and even billions of dollars
over their life cycles. In fact, federal agencies
invest about $38 billion to build, operate, and
maintain automated information systems each year.
If managed effectively, these investments can
vastly improve government performance and
accountability. If not, they can result in
wasteful spending and lost opportunities for
improving the delivery of services to the public.
For years, federal agencies have struggled with
delivering promised system capabilities on time
and within budget. IRS spent more than $3 billion
in the late 1980's and early 1990s on systems
modernization without producing commensurate
value. Accordingly, our work over the last decade
has focused on strengthening federal agency
management of IT investment. We continue to ask
whether agencies are spending their technology
dollars on the right things (i.e., investments
that return business value in excess of costs) and
whether they are investing in technology the right
way (i.e., employing management and engineering
practices that are disciplined and effective). In
particular, we developed guidance, Assessing Risks
and Returns: A Guide for Evaluating Agencies' IT
Investment Decision-making (GAO/AIMD-10.1.13, Feb.
1997), based on best practices in the public and
private sectors. We have also made hundreds of
recommendations to improve management of large-
scale IT investments in many major departments and
agencies.
Some agencies are making tangible
improvements. For example, the Customs Service has
developed an enterprise system architecture to
guide the development and evolution of its system
investments. It is in the process of implementing
disciplined investment management processes and
strengthening acquisition and development
capabilities for software intensive systems. At
the same time, we have been working with OMB and
the federal Chief Information Officers Council to
strengthen federal policies and guidance in light
of our experiences with federal agencies and the
need for agencies to implement IT legislation,
such as the Clinger-Cohen Act of 1996. Our
executive guide, entitled Maximizing the Success
of Chief Information Officers: Learning from
Leading Organizations (Exposure Draft) (GAO/AIMD-
00-83, March 2000) provides six principles of good
CIO management based on lessons learned from
leading CIO organizations in the private sector
and state governments. In addition, we have
raised several areas that should be addressed by
agency heads and Congress in order to enhance the
effectiveness of federal CIOs meeting the
challenges we have identified.
Nevertheless, much remains to be accomplished and
the challenges are formidable. While agencies are
making inroads toward strengthening IT management,
some have been slow to implement our
recommendations. For example, the National Weather
Service has made little progress in developing and
implementing a systems architecture that includes
all weather forecasting and warning systems to
guide its current and future systems development.
Also, many agency efforts to improve IT management
are still in the beginning stages and it is clear
that more needs to be done. At the same time,
agencies are now beginning to address deferred new
IT investment needs caused by their recent, and
appropriate, focus on the Year 2000 conversion
problem. As a result, we anticipate that agencies
will begin major modernization programs and large-
scale IT projects in the very near future, making
the need for fundamental improvements in the way
agencies manage IT investments even more urgent.
Next Steps
Congress can focus on the status of agency efforts
to:
� employ rigorous and disciplined system
investment and engineering practices, including
enforcing an enterprise systems architecture;
� use information technology to achieve
results; and,
� proactively managing risk to their computer
security.
For GAO to become a model of organizational
efficiency, effectiveness, and accountability in
the federal government, we must be able to
maximize the benefits of information technology.
Over the years, we have made important strides
in-and realized efficiencies by-introducing
technology into the organization. Most recently,
we have successfully managed the Y2K transition.
However, we need to maintain and enhance our
ability to take greater advantage of modern
technology and achieve an integrated
infrastructure that supports our client service,
strategic planning, human capital and business
process goals and objectives. To this end we are:
� developing a long-term comprehensive plan
for an integrated information technology approach;
� developing and implementing a short-term cost-
effective approach to quickly begin to satisfy
GAO's information needs;
� establishing performance and cost metrics
addressing the quality and value of information
technology services; and,
� ensuring the availability of required
information technology skills.
To help ensure that the federal government's $38
billion in annual obligations in information
technology is better managed to help achieve
greater program effectiveness and service
delivery, as well as improved economy and
efficiency in government operations, our strategy
will be to examine areas critical to the
government's and the nation's increasing
dependency on information technology by:
� Promoting approaches to better protect our
nation's information networks and technology
infrastructures,
� Helping to build the government's capacity to
use information technology to provide higher
quality, more cost-effective service to the
American public,
� Assessing federal agencies' efforts to
protect their computer information systems
infrastructure.
Develop and Implement Modern Human Capital
Practices
The government's human capital management has
emerged as the missing link in the statutory and
management framework that Congress and the
executive branch have established to provide for
more businesslike and results-oriented federal
government. Yet, federal employees are the ones
who will make the principles of performance
management work for government.
Federal employees should be viewed not as costs to
be cut, but as assets to be valued. Only when the
right employees are on board and provided the
training, technology, structure, incentives and
accountability to work effectively is
organizational success possible. Modern strategic
human capital management recognizes that employees
are a critical asset for success, and that an
organization's human capital policies and
practices must be designed, implemented, and
assessed by the standard of how well they support
the organization's mission and goals.
Human capital reforms will be necessary to
fully benefit from the performance-based
management and accountability framework that
Congress has created. I am optimistic that as the
government's understanding of the importance of
people to effective government grows, a new
consensus on human capital will emerge and any
needed and appropriate legislative reforms will be
accomplished. But, I am also strongly convinced
that we should not wait for the day when these
reforms will arrive, Instead, we can and should
take steps to align our human capital management
policies and practices with modern performance
management principles, within the constraints
imposed by current law.
Changes in the demographics of the federal
workforce, in the education and skills required of
its workers, and in basic federal employment
structures and arrangements are all continuing to
unfold. The federal workforce is aging: the baby
boomers, with their valuable skills and
experience, are drawing near to retirement; new
employees joining the federal workforce today have
different employment options and different career
expectations from the generation that preceded
them. In response to an increasingly competitive
job market, federal agencies will need the tools
and flexibilities to attract hire, retain, and
reward top-flight talent. More and more, the work
that federal agencies do requires a knowledge-
based workforce that is sophisticated in new
technologies, flexible, and open to continuous
learning. Agencies' employment structures and
working arrangements will also be changing, and
the workplace will need to accommodate greater
flexibility and uncertainty.
The implications of the downsizing of federal
workforce over the past decade are also
significant. From fiscal year 1990 to fiscal year
1999, the number of non-postal civilian federal
employees fell from about 2.3 million to about 1.9
million.
Figure 11: Federal Workers
Source: OPM, Federal Civilian Workforce
Statistics, 1990-1999
As shown in figure 13, new permanent hires
fell from about 118,000 in fiscal year 1990 to a
low of about 48,000 in 1994, before beginning a
slow rise to about 71,500 in fiscal year 1998.
Figure 12: Permanent Hires
Note: The number of permanent hires excludes SES
permanent hires and represents individuals, not
FTEs.
Source: GAO calculations based on OPM data.
In cutting back on the hiring of new staff in
order to reduce the number of their employees,
agencies also reduced the influx of new people
with the new competencies needed to sustain
excellence. Also, our reviews have found, for
example, that a lack of adequate strategic and
workforce planning during the initial rounds of
downsizing by some agencies affected their ability
to achieve organizational missions. For example,
Department of Housing and Urban Development (HUD)
initiated its 2020 Management Reform plan to,
among other things, correct several management
deficiencies, and set a goal to reduce staffing.
However, its target levels for reductions were not
based on a systematic analysis of the staff needed
to carry out its responsibilities and functions.
We are concerned because we have reported since
1994 problems with HUD's programs, including an
insufficient mix of staff with the proper skills.
We intend to do more work on the implications
of downsizing, but our view today is that the
widespread lack of attention to strategic human
capital management may be creating a fundamental
weakness in federal management, possibly even
putting at risk the federal government's ability
to efficiently, economically, and effectively
deliver products and service to the taxpayers in
the future. These shortcomings in the federal
government's human capital management systems
could well earn them GAO's high-risk designation
when the next High Risk Series is issued in 2001.
To meet the changing environment, federal
agencies need to give human capital a higher
priority than ever before and rethink how their
workforces are developed and deployed to enhance
achievement of organizational performance goals.
Although the civil service system is viewed by
many as outdated and in need of reform, there is
much that can and should be done today-by
individual federal agencies, the Office of
Personnel Management, the Office of Management and
Budget, GAO and Congress-to improve the way the
federal government manages its human capital, even
in the absence of any fundamental legislative
change. Our work with leading organizations in the
private sector and among governments at the state
and local levels and abroad has identified key
human capital approaches in high-performing
organizations15. Based on this work, values widely
applied by the Malcolm Baldrige National Quality
Award Program and the President's Quality Award
Program, and comments from officials from various
federal agencies and from human capital experts
within and outside government, we have developed
and published a human capital self-assessment
checklist16. The checklist was designed to help
agency leaders quickly scan their agencies' human
capital policies and programs and determine
whether they have addressed the areas necessary
for the workforce to be managed for results. The
questions in the checklist follow a five-part
framework-recognizing, of course, that all five
parts are, of necessity, interrelated and
overlapping:
Strategic Planning: Establish the Agency's
Mission, Vision for the Future, Core Values,
Goals, and Strategies
Organizational Alignment: Integrate Human Capital
Strategies With the Agency's Core Business
Practices
Leadership: Foster a Committed Leadership Team and
Provide Reasonable Continuity Through Succession
Planning
Talent: Recruit, Hire, Develop, and Retain
Employees With the Skills for Mission
Accomplishment
Performance Culture: Enable and Motivate
Performance While Ensuring Accountability and
Fairness for All Employees
Next Steps
OMB and OPM -the central management agencies with
the greatest influence on individual agencies'
human capital efforts-have substantial roles to
play in promoting and enabling broader application
of human capital principles.
OMB's role in setting governmentwide management
priorities and defining resource allocations may
be central to the adoption of human capital
considerations across government. The President's
fiscal year 2001 budget has added human capital
management to its list of Priority Management
Objectives (PMO). It is too early to tell whether
the steps regarding human capital management
outlined in the President's budget will lead to
greater attention to human capital concerns or
real improvement in the way the federal workforce
is managed. But the fact that these considerations
have been formally recognized as a management
priority is an encouraging sign, and creates a
clear opportunity to make real progress.
OPM has reported that it is developing a
"systematic methodology for workforce planning and
staff analysis that will provide user agencies
with a single, integrated interface to a vast
array of tools to facilitate their workforce
planning".17 Although we have not formally reviewed
OPM's progress in developing its workforce
planning model or associated web-based tools, its
efforts in this area would appear to be a
worthwhile step toward filling a need for better
guidance and tools from OPM in the workforce
planning area. As we stressed more than a decade
ago, OPM's leadership role should include working
with the agencies to better prepare the government
to meet future challenges, attack performance
improvement efforts with more vigor, and ensure
more effective oversight of the government's key
human capital concerns.18 Today, OPM can
potentially contribute greatly to agencies'
awareness of strategic human capital principles
and their capacity to put them to use. The next
thing needed from OMB-and from OPM-is a sustained
commitment to making these plans a reality.
Congress could enable reform by considering
the extent to which traditional "civil service"
approaches-the structures, oversight mechanisms,
rules and constraints-support the needs of a
government that is now adopting performance
management principles and whether fundamental
structural or policy changes needed for agencies
to adapt human capital management to the needs of
the next century. Ultimately, legislative reform
may need to be considered. In the meantime, within
the context of current law, Congressional
oversight of agencies' management improvement
efforts can target for special attention agencies'
efforts, if any, to take a more strategic and
integrated approach to managing their human
capital for results. Hearings could encourage
discussion of agency efforts to ensure that they
have the needed human capital and that the
agency's human capital strategies are linked to
strategic and programmatic planning and
accountability mechanisms. For agencies that
request legislative exceptions from current civil
service laws or regulations, Congress can require
that agencies "make their case" based on rational
and fact-based analyses of their needs, the
constraints under which they presently operate,
and the flexibilities available to them. Further,
through the appointment and confirmation process,
the Senate has an added opportunity to make
clearer its commitment to sound human capital
management and to explore what prospective
nominees plan to do to ensure that their agencies
recognize and enhance the value of their people.
At GAO, we hope to encourage and facilitate
the adoption throughout government of a greater
human capital focus, as well as of other
performance management principles, and to "lead by
example." Right now, we are making our own human
capital a top priority. GAO has completed an
extensive assessment of its "Human Capital
Profile". The profile depicts GAO's significant
human capital imbalances, and risks, stemming from
dramatic budgetary cuts, downsizing, hiring
freezes, and other related actions from 1992-1997.
Over that period GAO underwent budgetary cuts
totaling 33 percent in constant FY 1992 dollars.
In order to achieve these budgetary reductions,
GAO staff was reduced by 39 percent. In addition,
the retirement eligibility of the GAO workforce
has accelerated. By the end of 2004, about 34
percent of all GAO employees will be eligible to
retire.
In order to maximize GAO's existing economy,
efficiency and effectiveness to position the
agency for the future, and meet the increasingly
complex and multidimensional needs of the
Congress, GAO is seeking legislation to:
� Give GAO the flexibility to appoint
scientific, technical or professional staff to
senior level positions with the same pay, rights,
and other attributes as members of the Senior
Executive Service.
� Authorize voluntary early retirement for
selected individual employees for the purpose of
realigning the agency's workforce.
� Authorize separation payments for realignment
purposes.
� Authorize the Comptroller General to take
steps to realign GAO's workforce by considering
factors such as the agency's needs (i.e. strategic
plan) combined with the skills, performance and
knowledge of individuals.
By investing resources in our human capital
programs, we are hoping to enhance the value of
our people and, in turn, the value of GAO to
Congress and all Americans. We are also hoping to
demonstrate that other federal agencies if they
put their minds to it and are willing to make the
appropriate investments, can do much to improve
the way they manage people.
In addition, we hope to assist federal
agencies by:
� Providing conceptual frameworks and practical
tools to help agencies make substantial
improvements in their human capital management
policies and practices. The human capital self-
assessment checklist is one of our first efforts
in this area.
� Through our audit and evaluation work and
outreach efforts, learning more about the day-to-
day challenges that agencies face and developing
more rigorous, widely adaptable methodologies for
human capital assessment.
� Identifying and sharing with agencies best
practices in human capital skills, knowledge and
performance drawn from the private sector and from
governments at all levels and abroad.
Another way in which we intend to contribute is by
providing sound and reliable data gathering to
help inform a consensus on what governmentwide
human capital reforms may be needed. One thing we
can do is help bring to light common barriers that
agencies have identified as standing in the way of
their changeover to performance management
principles. It is becoming increasingly clear that
the system for federal employment must provide
agencies with sufficient flexibilities to tailor
their human capital approaches to their missions,
goals, strategies, and other circumstances-while
ensuring, meanwhile, that adequate safeguards are
in place to prevent abuses. We intend to give a
higher priority to studying the structure and
underlying assumptions of the civil service,
including the roles and responsibilities of the
central personnel agencies, and the effective
balance between flexibility and accountability.
Drawing on the human capital self assessments we
hope that agencies will perform, and on the work
we at GAO pursue at Congress' behest, we hope to
identify common themes and experiences across the
range of federal employers. The more commonalties
and shared perceptions we can identify, the more
likely it may be that we can reach a consensus on
reform.
Developing Government Structures for the
21st Century
To this point I have discussed action that
congress, executive agencies and this office can
undertake to improve the efficiency, effectiveness
and accountability of the federal government in
the near and medium term. But, the broad based and
rapid changes that confront government also call
for a more long term studied focus on the
fundamental structure of the federal government
and the processes used for service delivery,
decisionmaking and oversight.
In this context, it is appropriate to think about
changes not only to specific programs and
activities within the broad oversight questions
discussed in this statement, but also to
reconsider the fiscal and performance models,
structures, and processes that are used to
organize and manage our federal government and
those used by the Congress to fulfill its
oversight responsibilities. I would like to
conclude my statement by offering our observations
on what issues need to be examined in this regard.
Developing a New Fiscal Paradigm
As I have emphasized in previous testimonies
before the Congress, we must be mindful that
today's fiscal decisions have important
consequences for the kind of society and economy
we hand to the next generations of American
citizens. I firmly believe that we need to develop
a new fiscal paradigm that prompts a clearer focus
on and attention to the long-term implications of
current decisions. Specifically, continued debt
reduction and entitlement reforms are both
critical to promoting a more sustainable budget
and economy for the longer term. More importantly,
failure to do so will consign the nation to a long-
term future where, at current revenue levels, the
federal government may be able to afford little
more than paying for retirement checks and health
care for the elderly.
Our recent work discussing how other countries are
dealing with current surpluses can be informative
about the character of a new fiscal paradigm for
our nation. For example, some countries have
recognized that using fiscal targets such as debt-
to-GDP ratios can be useful to guide decision-
making in a world where achieving a current year
balance is no longer sufficient as a fiscal
compass. We reported that several foreign
countries, including New Zealand and Norway, have
succeeded in saving at least a portion of their
surpluses for several years, partly by adopting a
broader framework for budgetary decision-making
guided by explicit fiscal and economic goals that
provided a compelling rationale for continued
restraint.19
In addition, other nations have discovered that
greater transparency about the future cost of
commitments can be a useful method to prompt a
timely debate about current and future
affordability. Some foreign governments are
attempting to achieve this transparency by
incorporating accrual measures of longer-term
consequences in budget documents and
presentations. The federal government also could
consider where and to what extent greater
disclosure of the future costs of today's
commitments-possibly including accrual measures
for appropriate areas of our budget such as
pensions, federal insurance, and federal retirees'
health care costs-might enhance congressional
oversight.
Developing a New Performance Paradigm
Just as there is a need to rethink approaches to
fiscal decision-making models with the advent of
projected surpluses, so also there is a need to
consider changes to oversight of the performance
and management of the federal government. I have
discussed ways in which the executive branch and
Congress can use the information they will be
receiving about the costs, efficiency, and
effectiveness of federal programs and activities.
However, although individual authorization and
oversight committees are well suited to address
performance or financial issues affecting
individual agencies or programs, many of the key
performance questions are not confined to, and
cannot be addressed effectively on, an agency-by-
agency or committee-by-committee basis. Many
federal mission areas-from low-income housing
assistance to food safety to counter-terrorism-are
addressed by a wide range of mandatory and
discretionary spending programs, tax expenditures,
and regulatory approaches that cut across federal
agencies and committee jurisdictions.20 Similarly,
while budgetary choices should be more clearly
informed by performance considerations and a full
understanding of associated costs, the capacity to
align and relate this information to existing
appropriations structures and presentations is
complicated and very much in the early stages of
development.21
Given this environment, the Congress should also
consider the need for mechanisms that allow it to
more systematically focus its oversight on
problems with the most serious and systemic
weaknesses and risks. Today, the President is
required by the Government Performance and Results
Act to prepare and submit to the Congress as part
of the annual budget submission a governmentwide
performance plan that provides a "single cohesive
picture of the annual performance goals for the
fiscal year." First submitted with the fiscal year
1999 budget, the governmentwide performance plan
includes fiscal, management, and program
performance expectations. It provides a means to
present performance goals for the varied missions
of government and to identify the relative
contributions of a wide range of agencies,
programs, and strategies to address those mission-
based performance goals.22 At present, the Congress
has no direct mechanism to respond to and provide
a congressional perspective upon the President's
governmentwide performance plan. For example, the
Congress has no established mechanism to
articulate performance goals for the broad
missions of government, to assess alternative
strategies that offer the most promise for
achieving these goals, or to define an oversight
agenda targeted on the most pressing crosscutting
performance and management issues.
In the light of such considerations, the Congress
should assess whether its current structures and
processes are adequate to take full advantage of
the benefits arising from the reform agenda under
way in the executive branch. Following from this
assessment, Congress might consider whether a more
structured oversight mechanism is needed to permit
a coordinated congressional perspective on
governmentwide performance matters. As part of
such a mechanism, the role of the Governmental
Affairs Committee could be to identify
crosscutting performance concerns for priority
congressional attention.
Such reexamination has merit across government.
S.2623, introduced October in1998 by Chairman
Thompson, Senator Lieberman and others proposed a
mechanism for instituting a coordinated approach
to addressing some of the significant challenges
facing the federal government in the 21st century.
S.2623, which proposed an independent Commission
on Government Restructuring and Reform, was
noteworthy in that the duties of the Commission
would create opportunities to address a number of
the themes that I have discussed as critical to an
efficient, effective and accountable federal
government in the future. I have discussed ways in
which Congress and the Executive Branch could,
within current structures begin to address the
themes of:
� Attacking activities at risk of fraud, waste,
abuse and mismanagement;
� Improving the economy and efficiency of
federal operations;
� Reassessing what the federal government does;
and,
� Redefining the beneficiaries of federal
government programs.
� Rationalizing crosscutting program areas; and
� Building the capacity to gather and use
performance information.
However, approaches within current structures are
not sufficient. It is time to take a broad look at
the need for fundamental changes in the current
structure of the federal government. The
principles underlying S. 2623 are intended to
address many of these issues. Ultimately, what is
important is not the specific approach or process,
but rather the intended result of helping the
Congress better promote improved fiscal,
management, and program performance through broad
and comprehensive oversight and deliberation.
In summary, Mr. Chairman, you and I have discussed
the importance of congressional oversight in the
past, and I believe that is very timely to refocus
our efforts on this subject as we enter a very
unique period in our nation's history. Broad and
periodic reexamination of federal government
priorities, programs, and activities is an
important responsibility of the Congress to
maintain the public's respect for and confidence
in government and to ensure our capacity to meet
current and emerging needs. However, good
oversight is difficult work and often is not
headline grabbing. It requires taking a hard look
at existing programs and carefully reconsidering
the goals those programs were intended to
address-and whether those goals are still valid.
It involves analyzing the effectiveness of
programs and seeking out the reasons for success
or failure. It involves sorting through the maze
of federal programs and activities, in which
multiple agencies often operate many different
programs to address often common or complementary
objectives. However, revising and reforming
current programs and activities that may no longer
be needed or that do not perform well is fraught
with difficulties and leads to real "winners" and
"losers." Notwithstanding demonstrated weaknesses
in program design and shortfalls in program
results, there often seems to be little "low
hanging fruit" in the federal budget. In fact,
some argue that because some programs are already
"in the base" in budgetary terms, they have an
advantage over new initiatives and new demands,
even though these new initiatives may relate to
legitimate current and future needs and existing
programs may be based on past wants.
This is an opportune time for the Congress to
carefully consider how this Committee and all of
the Committees of the Congress will take advantage
of and leverage the new information and
perspectives coming from the reform agenda
underway in the executive branch. Prudent
stewardship of our nation's resources-whether in
time of deficit or surplus-is essential not only
to meet today's needs but also tomorrow's
commitments and demands.
If a new oversight model were to include annual or
biennial oversight hearings, GAO could enter into
a strategic partnership with Congress by
periodically synthesizing the wealth of
information that is being produced under the
legislative framework that Congress has enacted to
strengthen government performance and
accountability. Drawing on GPRA strategic plans
and performance plans and reports, financial audit
results, our own work in our High Risk and
Performance and Accountability series, annual
federal budget reviews, major government reports,
major open GAO recommendations, and the work of
inspectors general, we could provide Congress with
a broad perspective on performance in areas it was
focussing on. We could provide perspectives on:
� the most meaningful challenges faced in a
specific agency, cross-cutting area or broad
mission area such as those outlined in the
government-wide performance plan;
� cuts and investments that would contribute to
a government more efficient and effective in
meeting the wants and needs that Americans can
afford; and,
� the tools, such as regulations, legislation,
tax incentives, loan guarantees, enforcement
options, or direct spending that appear to be the
most effective in furthering a given government
mission.
Mr. Chairman, this concludes my prepared
statement. I would be pleased to answer any
questions you or the other members of the
Committee may have at this time.
_______________________________
1 Estimates are based on 1999 projections. New
estimates on Medicare financing are due to be
released March 30, 2000.
2Managing for Results: An Agenda To Improve the
Usefulness of Agencies' Annual Performance Plans
(GAO/GGD/AIMD-98-228, Sept. 8, 1998); and Managing
for Results: Opportunities for Continued
Improvements in Agencies' Performance Plans
(GAO/GGD/AIMD-99-215, July 20, 1999).
3 Performance Measure Provisions in the 105th
Congress: Analysis of a Selected Compilation,
Genevieve J. Knezo and Virginia A. McMurtry, The
Congressional Research Service, December 1998.
4Congressional Oversight: Opportunities to Address
Risks, Reduce Costs, and Improve Performance.
(GAO/T-AIMD-00-96, February 17, 2000.)
Managing for Results: Using GPRA to Help
Congressional Decisionmaking and Strengthen
Oversight (GAO/T-GGD-00-95, March 22, 2000).
5 GAO/GGD/AIMD-98-228, September 8, 1998.
6 GAO/GGD/AIMD-99-215, July 20, 1999.
7 Agency Performance Plans: Examples of Practices
that Can Improve Usefulness to Decisionmakers
(GAO/GGD/AIMD-99-69, Feb. 26, 1999).
8 Agricultural Trade: Changes Made to Market
Access Program, But Questions Remain on Economic
Impact (GAO/NSIAD-99-38, Apr. 5, 1999).
9"Food-related illness and death in the United
States", P.S. Mead, et. al. Emerging Infectious
Diseases, 5(5), Sept.-Oct. 1999. See also Meat and
Poultry: Improved Oversight and Training Will
Strengthen New Food Safety System (GAO/RCED-00-16,
Dec. 8,1999), and Food Safety: U.S. Needs a Single
Agency to Administer a Unified, Risk-Based
Inspection System (GAO/T-RCED-99-256, Aug.
4,1999).
10 GAO/GGD/AIMD-98-228, September 8, 1998.
11Department of Defense: Status of Financial
Management Weaknesses and Actions Needed to
Correct Continuing Challenges (GAO/T-AIMD/NSIAD-99-
171, May 4, 1999, p.20).
12 Financial Audit: 1998 Financial Report of the
United States Government (GAO/AIMD-99-130, March
31, 1999).
13High Risk Series: Information Management and
Technology (GAO/HR-97-9, February 1997) and High
Risk Series: An Update (GAO/HR-99-1, January
1999).
14Defending America's Cyberspace: National Plan for
Information Systems Protection: Version 1.0: An
Invitation to a Dialogue. Released January 7,
2000. The White House.
15Our examination of performance-based human
capital management in the private sector dates
back to at least 1995, when we sponsored a 2-day
symposium of 32 leaders from leading private
sector organizations and from governments at the
federal, state, and local level as well as from
abroad. From these discussions, we came to
understand how high-performing organizations value
employees as assets and align their "people
policies" with mission accomplishment. See
Transforming the Civil Service: Building the
Workforce of the future-Results of A GAO Sponsored
Symposium (GAO/GGD-96-35, Dec. 20, 1995). See also
Human Capital: Key Principles From Nine Private
Sector Organizations (GAO/GGD-00-28, Jan. 31,
2000)
16Human Capital: A Self-Assessment Checklist for
Agency Leaders (GAO/GGD-99-179, Sept. 1999)
17Annual Performance Plan-Fiscal Year 2001
(February 2000), p.90.
18Managing Human Resources: Greater OPM Leadership
Needed to Address Critical Challenges (GAO/GGD-89-
19, Jan. 19, 1989).
19 Budget Surpluses: Experience of Other Nations
and Implications for the United States (GAO/AIMD-
00-23, Nov. 2, 1999
20Managing for Results: Using the Results Act to
Address Mission Fragmentation and Program Overlap
(GAO/AIMD-97-146, Aug. 29, 1997.)
21Performance Budgeting: Fiscal Year 2000 Progress
in Linking Plans with Budgets
(GAO/AIMD-99-239R, July 30, 1999) and Performance
Budgeting: Initial Experiences Under the Results
Act in Linking Plans with Budgets (GAO/AIMD/GGD-99-
67, Apr. 12, 1999).
22The Results Act: Assessment of the Governmentwide
Performance Plan for Fiscal Year 1999
(GAO/AIMD/GGD-98-159, Sept. 8, 1998).
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