Key Efforts to Support the Congress

As is the case with each new Congress, we are beginning to have  discussions with regard to many new requests for GAO’s professional,  objective, fact-based, nonpartisan, and non-ideological information,  analysis, and recommendations. On November 17, 2006, I was pleased to  offer three sets of recommendations for your consideration as part of the  agenda of the 110th Congress. The first recommendation suggests targets  for near-term oversight; the second proposes policies and programs in  need of fundamental reform and re-engineering; the third lists governing  issues. The proposals represent an effort to synthesize GAO’s institutional  knowledge and special expertise and suggest both the breadth and the  depth of the issues facing the new Congress. We at GAO stand ready to  assist the 110th Congress in meeting its constitutional responsibilities. To  be effective, congressional hearings and other activities should offer  opportunities to share best practices, facilitate governmentwide  transformation, and promote accountability for delivering positive results.
On January 9, 2007, we presented GAO’s assessment of the key oversight  issues related to Iraq for consideration in developing the oversight agenda  of the 110th Congress and in analyzing the President’s revised strategy for  Iraq. This assessment was based on our ongoing work and the 67 Iraq- related reports and testimonies we have provided to the Congress since  May 2003. Our work spans the security, political, economic, and  reconstruction prongs of the U.S. national strategy in Iraq. The broad,  crosscutting nature of this work helps minimize the possibility of overlap  and duplication by any individual inspector general. Our work has focused  on the U.S. strategy and costs of operating in Iraq, training and equipping  the Iraqi security forces, governance and reconstruction issues, the  readiness of U.S. military forces, and achieving desired acquisition  outcomes. Our current work draws on our past work and regular site visits  to Iraq and the surrounding region, such as Jordan and Kuwait. We plan to  establish a presence in Iraq beginning later this fiscal year to provide  additional oversight of issues deemed important to the Congress; subject  to approval by the U.S. Department of State and adequate funding. We  have requested supplemental fiscal year 2007 funds of $374,000 to support  this effort.
In January of this year, we also issued our High-Risk Series: An Update,  which identifies federal areas and programs at risk of fraud, waste, abuse,  and mismanagement and those in need of broad-based transformations.  The issues affecting many of these areas and programs may take years to  address, and the report will serve as a useful guide for the Congress’s  future programmatic deliberations and oversight activities. Issued to  coincide with the start of each new Congress, our high-risk update, first  issued in 1993, has helped Members of the Congress who are responsible  for oversight and executive branch officials who are accountable for  performance. Our high-risk program focuses on major government  programs and operations that need urgent attention or transformation to  ensure that our government functions in the most economical, efficient,  and effective manner possible. Overall, our high-risk program has served  to identify and help resolve a range of serious weaknesses that involve  substantial resources and provide critical services to the public. Table 1  details our 2007 high-risk list.
In February of this year, we issued a new publication entitled Fiscal  Stewardship: A Critical Challenge Facing Our Nation that is designed to  provide the Congress and the American public, in a relatively brief and  understandable form, selected budget and financial information regarding  our nation’s current financial condition, long-term fiscal outlook, and  possible ways forward. In the years ahead, our support to the Congress  will likely prove even more critical because of the pressures created by  our nation’s current and projected budget deficit and growing long-term  fiscal imbalance. Indeed, as the Congress considers those fiscal pressures,  it will be grappling with tough choices about what government does, how  it does business, and who will do the government’s business. GAO is an  invaluable tool for helping the Congress review, reprioritize, and revise  existing mandatory and discretionary spending programs and tax policies.
In addition, I have participated in a series of town hall forums around the  nation to discuss the federal government’s current financial condition and  deteriorating long-term fiscal outlook, including the challenges posed by  known long-term demographic trends and rising health care costs. These  forums, popularly referred to as the “Fiscal Wake-up Tour,” are led by the  Concord Coalition and also include the Heritage Foundation, the  Brookings Institution, and a range of “good government” groups. The  Fiscal Wake-up Tour states the facts regarding the nation’s current  financial condition and long-term fiscal outlook in order to increase public  awareness and accelerate actions by appropriate federal, state, and local  officials.

Performance, Results, and Plans

We anticipate that the funds requested for fiscal year 2008 will support  efforts similar to those just completed in fiscal year 2006. The following  discussions summarize that work.
In fiscal year 2006, major events like the nation’s recovery from natural  disasters, ongoing military conflicts abroad, terrorist threats, and potential  pandemics repeatedly focused the public eye on the federal government’s  ability to operate effectively and efficiently and provide services to  Americans when needed. Our work during the year helped the Congress  and the public judge how well the federal government performed its  functions and consider alternative approaches for improving operations  and laws when performance was less than adequate. For example, teams  supporting all three of our external strategic goals performed work related  to every facet of the Hurricane Katrina and Rita disasters—preparedness,  response, recovery, long-term recovery, and mitigation. We developed a  coordinated and integrated approach to ensure that the Congress’s need  for factual information about disaster preparedness, response, recovery,  and reconstruction activities along the Gulf Coast was met. We examined  how federal funds were used during and after the disaster and identified  the disaster rescue, relief, and rebuilding processes that worked well and  not so well throughout the effort. To do this, staff drawn from across the  agency spent time in the hardest hit areas of Louisiana, Mississippi,  Alabama, and Texas, collecting information from government officials at  the federal, state, and local levels as well as from private organizations  assisting with this emergency management effort. We briefed  congressional staff on our preliminary observations early in fiscal year  2006 and subsequently issued over 30 reports and testimonies on  Hurricanes Katrina and Rita by fiscal year end, focusing on, among other  issues, minimizing fraud, waste, and abuse in disaster assistance and  rebuilding the New Orleans hospital care system.
The following tables provide summary information on GAO’s fiscal year  2006 performance and the results achieved in support of the Congress and  the American people. Additional information on our performance results  can be found in Performance and Accountability Highlights Fiscal Year  2006 at www.gao.gov.
Table 2 provides examples of how GAO assisted the nation in fiscal year  2006.

	Outcomes of Our Work and the Road Ahead

During fiscal year 2006, we used 16 annual performance measures that  capture the results of our work; the assistance we provided to the  Congress; our ability to attract, retain, develop, and lead a highly  professional workforce; and how well our internal administrative services  help employees get their jobs done and improve their work life (see table  3). We generally exceeded the targets we set for all of our performance  measures, which indicate our ability to produce results for the nation and  serve the Congress.
In fiscal year 2006, our work generated $51 billion in financial benefits,  primarily from actions agencies and the Congress took in response to our  recommendations. Of this amount, about $27 billion resulted from changes  to laws or regulations, $10 billion resulted from agency actions based on  our recommendations to improve services to the public, and $14 billion  resulted from improvements to core business processes. See figure 2 for  examples of our fiscal year 2006 financial benefits.

GAO’s Fiscal Year 2008 Request to Support the Congress

Our fiscal year 2008 budget request seeks the resources necessary to allow  GAO to rebuild and enhance its workforce, knowledge capacity, employee  programs, and infrastructure. These items are critical to ensure that GAO  can continue to provide congressional clients with timely, objective, and  reliable information on how well government programs and policies are  working and, when needed, recommendations for improvement. In the  years ahead, our support to the Congress will likely prove even more  critical because of the pressures created by our nation’s current and  projected budget deficit and growing long-term fiscal imbalance. GAO is  an invaluable tool for helping the Congress review, reprioritize, and revise  existing mandatory and discretionary spending programs and tax policies.
Consistent with our strategic goal to be a model agency, we continuously  assess our operations to ensure that GAO remains an effective, high- performing organization, providing timely, critical support to the Congress  while being fiscally responsive. Our objective is to be an employer of  choice; maintain skills/knowledge, performance-based, and market- oriented compensation systems; adopt best practices; benchmark service  levels and costs against comparable entities; streamline our operations to  achieve efficiencies; assess opportunities for cross-servicing, outsourcing,  or business process re-engineering; and leverage technology to increase  efficiency, productivity, and results. We also continue to partner within  and across the legislative branch through the legislative branch Chief  Administrative Officers, financial management, and procurement councils.
Transformational change and innovation is essential for progress. Our  fiscal year 2008 budget request includes funds to regain the momentum  needed to achieve these goals. Our fiscal year 2008 budget request will  allow GAO to    address supply and demand imbalances in responding to congressional  requests for studies in areas such as health care, homeland security, the  global “war on terrorism,” energy and natural resources, and forensic  auditing;   address our increasing bid protest workload;    be more competitive in the labor markets where GAO competes for talent;    address critical human capital components, such as knowledge capacity  building, succession planning, and staff skills and competencies;    enhance employee recruitment, retention, and development programs;  restore program funding levels and regain our purchasing power;    undertake critical initiatives necessary to continuously re-engineer  processes geared to increasing our productivity and effectiveness and  addressing identified management challenges; and   pursue critical structural and infrastructure maintenance and  improvements.
Our fiscal year 2008 budget request represents an increase of $41.7 million  (or 8.5 percent) over our fiscal year 2007 funding level and includes about  $523 million in direct appropriations and authority to use about $7.5  million in offsetting collections as illustrated in table 5. This request  reflects a reduction of nearly $5.4 million in nonrecurring fiscal year 2007  costs used to offset the fiscal year 2008 increase.
Mandatory pay and uncontrollable cost increases. We are requesting  $24.9 million to cover anticipated mandatory performance-based pay and  uncontrollable inflationary increases resulting primarily from annual  across-the-board and performance-based increases, annualization of prior  fiscal year costs, and an increase in the number of compensable days in  fiscal year 2008. These costs also include uncontrollable inflationary  increases imposed by vendors as the cost of doing business.
Rebuilding our capacity. Our fiscal year 2007 budget request sought  funds to support an increase of 50 FTEs from 3,217 to 3,267. However, in  order to manage within expected funding levels in fiscal year 2007, we will  significantly curtail hiring by about 50 percent below the previous year,  resulting in a projected FTE utilization of 3,159—well below our planned  level. In fiscal years 2007 and 2008, we anticipate attrition of over 600 staff  that will result in a significant drain on GAO’s knowledge capacity or  institutional memory. Further, almost 20 percent of all GAO staff will be  eligible for retirement by the end of fiscal year 2008, including almost 45  percent of our senior executive service.
Thus, in fiscal year 2008, we are seeking funds to rebuild our staff and  knowledge capacity. In fiscal year 2008, we plan to hire about 490 staff— the maximum that we could reasonably absorb—increasing our FTE  utilization to 3,217. While we are tempering our immediate FTE request,  increasingly higher demands are being placed on GAO. We are  experiencing supply and demand imbalances in several areas of critical  importance to the Congress (e.g., health care, homeland security, and  energy and natural resources). We have also seen an increase in the  number of bid protest filings.
Also, to remain competitive in the labor markets, we need to increase  employee benefits in areas such as student loan repayments and transit  subsidies where funding constraints in fiscal year 2007 limit our flexibility.  For example, effective in January 2007, the IRS increased the monthly  benefit for transit subsidies for eligible employees who commute using  public transportation. GAO, however, is unable to extend this increased  benefit to staff.
In addition, we need to ensure that staff have the appropriate tools and  resources to perform effectively, including training and development,  travel funds, and technology. And when our staff perform well, they  should be appropriately rewarded.
Undertake critical investments. We are requesting funds to undertake  critical investments that would allow us to implement technology  improvements and streamline and re-engineer work processes to enhance  the productivity and effectiveness of our staff, conduct essential  investments that have been deferred as the result of funding constraints  and cannot continue to be deferred, and implement responses to changing  federal conditions, such as smart card technology. Also, during recent  years, we reduced, deferred, and slowed the pace of critical upgrades (e.g.,  engagement and administrative process upgrades) and deferred  nonessential administrative activities. In fiscal year 2008, we would like to  have sufficient funding to take action to protect our current investments  and continue to be a model agency and lead by example.
Legislative authority. We are requesting legislation to establish a Board  of Contract Appeals at GAO to adjudicate contract claims involving  contracts awarded by legislative branch agencies. GAO has performed this  function on an ad hoc basis over the years for appeals of claims from  decisions of the Architect of the Capitol on contracts that it awards.  Recently we have agreed to handle claims arising under Government  Printing Office contracts. The legislative proposal would promote  efficiency and predictability in the resolution of contractor and agency  claims by consolidating such work in an established and experienced  adjudicative component of GAO and would permit GAO to recover its  costs of providing such adjudicative services from legislative branch users  of such services.
We also plan to request legislation that will assist GAO in performing its  mission work and enhance our human capital policies, including  addressing certain compensation and benefits issues of interest to our  employees. While there are a number of important provisions, today I will  only discuss several of the significant ones. Regarding provisions  concerned with mission work, we have identified a number of legislative  mandates that are either no longer meeting the purpose intended or should  be performed by an entity other than GAO. We are working with the  cognizant entities and the appropriate authorization and oversight  committees to discuss the potential impact of legislative relief for these  issues.
Another provision would update the existing authority of the Comptroller  General to administer oaths when appropriate for an audit or  investigation. The Comptroller General has long had the authority to  “administer oaths to witnesses when auditing and settling accounts”.  Because of the variety of audits and investigations GAO now performs, we  propose the deletion of “when auditing and settling accounts” so that in  those limited circumstances where appropriate, the Comptroller General  may authorize the administration of oaths to witnesses. To keep the  Congress apprized of difficulties we have interviewing agency personnel  and obtaining agency views on matters related to ongoing mission work,  we will suggest new reporting requirements. When agencies or other  entities ignore a request by the Comptroller General to have personnel  provide information under oath, make personnel available for interviews,  or provide written answers to questions, the Comptroller General would  report to the Congress as soon as practicable and also include such  information in the annual report to the Congress.

Appendix I: Serving the Congress—GAO’s Strategic Plan Framework

In regard to GAO’s human capital flexibilities, among other provisions, we  are proposing a flexibility that allows us to better approximate market  rates for professional positions by increasing our maximum pay for other  than the Senior Executive Service and Senior Level from GS-15, step 10, to  Executive Level III. Additionally, under our revised and contemporary  merit pay system, certain portions of an employee’s merit increase, below  applicable market-based pay caps, are not permanent. Since this may  impact an employee’s high three for retirement purposes, another key  provision of the bill would enable these nonpermanent payments to be  included in the retirement calculation for all GAO employees, except  senior executives and senior level personnel.

	Concluding Remarks

In summary, I believe that you will find our budget request reasonable,  responsible, and well-justified given the important role that GAO plays and  the unparalleled return on investment that GAO generates. We are grateful  for the Congress’s continued support of our mutual effort to improve  government and for providing the resources that allow us to be a world- class professional services organization. We are proud of our record  performance and the positive impact we have been able to effect in  government over the past year and believe an investment in GAO will  continue to yield substantial returns for the Congress and the American  people. Our nation will continue to face significant challenges in the years  ahead. GAO’s expertise and involvement in virtually every facet of  government positions us to provide the Congress with the timely,  objective, and reliable information it needs to discharge its constitutional  responsibilities.
Madam Chair and Members of the Subcommittee, this concludes my  prepared statement. At this time, I would be pleased to answer any  questions that you or other Members of the Subcommittee may have.

Appendix I: Serving the Congress—GAO’s Strategic Plan Framework

GAO exists to support the Congress in meeting its constitutional responsibilities and to help improve the performance and ensure the accountability of the federal government for the benefit of the American people.
Provide Timely, Quality Service to the Congress and the Provide Timely, Quality Service to the Congress and the Federal Government to . . . Federal  Government to . . . . . .. . . Address Current and Emerging Challenges to the Well-Being Address Current and Emerging Challenges to the Well-Being and Financial Security of the American People related to . . . and Financial Security of the American Peoplerelated to . . .
Natural resources use and environmental protection . . .. . . Respond to Changing Security Threats and the Challenges of Respond to Changing Security Threats and the Challenges of   Global Interdependence involving . . .   Global Interdependence involving . . .
Key management challenges and program risks Fiscal position and financing of the government Maximize the Value of GAO by Being a Model Federal Agency and Maximize the Value of GAO by Being a Model Federal Agency and a World-Class Professional Services Organization in the areas of . . . a World-Class Professional Services Organization  in the areas of . . .
This is a work of the U.S. government and is not subject to copyright protection in the  United States. It may be reproduced and distributed in its entirety without further  permission from GAO. However, because this work may contain copyrighted images or  other material, permission from the copyright holder may be necessary if you wish to  reproduce this material separately.

Summary:
Why GAO Did This Study

This testimony is given in support of the fiscal year 2008 budget request for the U.S. Government Accountability Office (GAO) before the House Subcommittee on the Legislative Branch, Committee on Appropriations. The requested funding will help us continue our support of the Congress in meeting its constitutional responsibilities and will help improve the performance and ensure the accountability of the federal government for the benefit of the American people. GAO is especially appreciative of the Subcommittee's efforts to help us avoid a furlough of our staff during fiscal year 2007. Had we not received additional funds this year and not taken other cost minimization actions, GAO would have likely been forced to furlough most staff for up to 5 days without pay. At the same time, due to funding shortfalls, we were not able to make pay adjustments retroactive to January 7, 2007. Our testimony today focuses on key efforts that GAO has undertaken to support the Congress, our fiscal year 2006 performance results, our budget request for fiscal year 2008 to support the Congress and serve the American people, and proposed legislative changes.

What GAO Found

Our fiscal year 2008 budget request is designed to restore GAO's funding to more reasonable operating levels. Specifically, we are requesting fiscal year 2008 budget authority of $530 million, an 8.5 percent increase over our fiscal year 2007 funding level. The additional funds provided in fiscal year 2007 have helped reduce our requested increase for fiscal year 2008 from 9.4 percent to 8.5 percent. This funding level also represents a reduction below the request we submitted to the Office of Management and Budget (OMB) in January as a result of targeted adjustments to our planned fiscal year 2008 hiring plan. Our fiscal year 2008 budget request will allow us to achieve our performance goals to support the Congress as outlined in our strategic plan and rebuild our workforce capacity to allow us to better respond to supply and demand imbalances in responding to congressional requests. This funding will also help us address our caseload for bid protest filings, which have increased by more than 10 percent from fiscal years 2002 through 2006. Our workload for the first quarter of fiscal year 2007 suggests a continuation of this upward trend in bid protest fillings.