United States Government Accountability Office

GAO Testimony 

Before the Committee on Homeland 

Security and Governmental Affairs, 

U.S. Senate

 

UNITED STATES 

GOVERNMENT 

ACCOUNTABILITY OFFICE

Supporting the Congress 

through Oversight, Insight, 

and Foresight 

Statement of David M. Walker 

Comptroller General of the United States 

This testimony was amended on March 22, 2007, to correct the legend 

shown in Appendix IV. It now correctly reflects FTEs and Budget in 

FY 2006 dollars. The original testimony reversed the FTE and budget 

amounts in the legend. 

This testimony was amended on May 16, 2007. The figure in Appendix IV

was updated: the FTE number for FY 2007 was changed to 3,159 from 

3,194. 

For Release on Delivery

Expected at 9:30 a.m. EDT

Wednesday, March 21, 2007

GAO-07-644T 
How GAO Assists the Congress

United States Government Accountability Office 

Why GAO Prepared This 

Statement

Highlights 

Accountability Integrity Reliability 

March 21, 2007

UNITED STATES GOVERNMENT 

ACCOUNTABILITY OFFICE 

Supporting the Congress through 

Oversight, Insight, and Foresight 

Highlights of GAO-07-644T, a testimony 

before the Committee on Homeland 

Security and Governmental Affairs, U.S. 

Senate 

GAO is a key tool for the Congress as it works to improve economy, 

efficiency, effectiveness, equity, and ethics within the federal government. 

To better meet the needs of the Congress, GAO has transformed itself to 

provide a range of key oversight, insight, and foresight services while 

“leading by example” in transforming how government should do business. 

GAO’s oversight work has traditionally focused on ensuring government 

entities are spending funds as intended by the Congress and complying with 

applicable laws and regulations, while guarding against fraud, waste, abuse, 

and mismanagement. For example, since the early 1990s, GAO has updated 

its list of government programs and operations across government that it 

identifies as “high risk.” It has contributed to the Congress enacting a series 

of governmentwide reforms and achieving tens of billions of dollars in 

financial benefits. Last November, GAO issued recommendations for 

oversight in the 110

th Congress ranging from Iraq, to food safety, to the tax 

gap. 

GAO work also provides important insight into what programs, policies, and 

operations are working well; best practices to be shared and benchmarked; 

how agencies can improve the linkages across the silos of government; and 

how different levels of government and their nongovernmental partners can 

be better aligned to achieve important outcomes for the nation. For example, 

GAO developed a number of crosscutting and comprehensive reviews of the 

preparedness for, response to, and recovery from the 2005 Gulf Coast 

hurricanes. GAO has issued over 40 related reports and testimonies, and in 

work for this Committee and others GAO is examining lessons learned from 

past national emergencies and catastrophic disasters—both at home and 

abroad—that may prove useful in identifying ways to approach rebuilding. 

 

Finally, GAO’s work can provide the Congress with foresight by 

highlighting the long-term implications of today’s decisions and identifying 

key trends and emerging challenges facing our nation before they reach 

crisis proportions. As the Chief Accountability Officer of the United States 

Government, the Comptroller General continues to call attention to the 

nation’s long-term fiscal challenge and the risks it poses to our nation’s 

future. 

Continuously improving on the critical role GAO plays in supporting the 

Congress will require enhancements to GAO’s resources and authorities. 

GAO’s fiscal year 2008 budget request seeks resources to allow it to rebuild 

and enhance its workforce, knowledge capacity, employee programs, and 

infrastructure. GAO will be proposing changes to its authority, such as the 

ability to administer oaths in conducting its work, relief from certain 

mandated reviews, additional human capital flexibilities, and the creation of 

a Board of Contract Appeals at GAO. Finally, the Comptroller General has 

noted that GAO should be increased in size over the next 6 years to address 

the current and anticipated needs of the Congress. 

The Committee sought GAO’s 

views on the role GAO has played

in assisting congressional oversight 

and the authorities and resources

GAO needs to further improve its 

assistance to the Congress. 

Today’s testimony discusses some 

of the ways that GAO has helped

“set the table” for this Committee, 

the Congress, the executive branch,

and the nation to engage in a

constructive and informed dialogue 

about the challenges and

opportunities our nation is facing

in the 21st century. It also 

discusses the authority and 

resources GAO will need to 

address the critical oversight and 

other needs of the Congress.

What GAO Recommends

This statement summarizes a 

comprehensive body of GAO’s 

published work in support of the 

Congress, much of which offered 

recommendations to address 

specific issues. As such, this 

statement makes no new 

recommendations. 

www.gao.gov/cgi-bin/getrpt?-GAO-07-644T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Gene Dodaro 

at (202) 512-5600 or dodarog@gao.gov. 
Mr. Chairman, Senator Collins, and Members of the Committee: 

I appreciate the invitation to talk with you today about the important role 

that GAO plays in supporting the Congress. I believe that GAO is a key tool 

for the Congress as it works to improve economy, efficiency, 

effectiveness, equity, and ethics within the federal government. I would 

like to share with you some of the many ways that GAO has transformed 

itself to provide a range of key oversight, insight, and foresight services to

the Congress while “leading by example” in transforming how government 

should do business. In this regard, I will highlight some of the ways that 

GAO has helped “set the table” for this Committee, the Congress, the 

executive branch, and the nation to engage in a constructive and informed 

dialogue about the challenges and opportunities we are all facing in the 

21st century. 

As this Committee well knows, if the federal government continues on its 

current fiscal path it would gradually erode, if not suddenly damage, our 

economy, our standard of living, and ultimately even our domestic 

tranquility and our national security. To build public awareness of our 

fiscal challenges and the hard decisions that must be made, I have engaged 

in a number of actions, including participating 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. These 

challenges are driven primarily by known long-term demographic trends 

and rising health care costs. These town hall forums, and related “outside 

the Beltway events,” popularly referred to as the “Fiscal Wake-Up Tour,” 

are led by the Concord Coalition and also include representatives from 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 a 

professional and nonpartisan manner in order to increase public 

awareness and hopefully accelerate actions by appropriate federal, state, 

and local officials. 

In addition to the great fiscal challenge we face, the world in which we live 

and in which the federal government and the Congress operate is rapidly 

changing because of numerous borderless trends, such as globalization,

changing security threats, societal change, and scientific and technological 

advancement. These forces are exerting increasing pressure on the current

outmoded state of the federal government, presenting fundamental and 

difficult public policy, organizational, operational, and funding decisions. 

As such, these trends are driving the public, the executive branch, and the 

Congress to engage in a fundamental reexamination of the government 

Page 1 GAO-07-644T 
and its priorities. At the center of this reexamination are basic questions 

about what the government does, how it does it, who does it, and how it is

financed. 

Such a broad and fundamental reexamination of the federal government is 

going to test political wills, agency cultures, and oversight frameworks. As 

you know, the traditional committee structures loosely aligned with 

federal budget categories do not always lend themselves to addressing the 

many crosscutting and long-range challenges facing our nation. However, 

this Committee is uniquely positioned in the Senate to take the long view 

and reach across jurisdictional boundaries to confront the challenges and

capitalize on related opportunities with a unity of spirit and of purpose. 

The members of this Committee—and you are not alone in the Congress—

have recognized the importance of oversight in beginning to address our 

many 21st century challenges. Hearings, investigations, and special studies

that come with oversight can help not only to reveal the underlying causes 

of these challenges, but also—importantly—help educate the American 

people about the makeup of these challenges so that the nation, and the 

Congress, is better prepared to confront them together. In this regard, I 

believe that to be effective, congressional oversight needs to be 

constructive. For example, related hearings and other activities should 

offer opportunities for leading federal agencies to share best practices and 

facilitate governmentwide transformation. They should also hold people 

accountable for delivering positive results in an economical, efficient, 

effective, ethical, and equitable manner. This balanced approach is likely 

to help accelerate progress while avoiding a further erosion of the public’s 

trust and confidence in government.

GAO also seeks to help provide the insight and foresight to complement 

the oversight work we have performed for the Congress for many years. 

Our oversight work has focused on ensuring that government entities are 

spending funds for their intended purposes; and complying with applicable 

laws and regulations, and guarding against fraud, waste, abuse, and 

mismanagement. Our work also provides important insight on what 

programs, policies and questions are working well; best practices to be 

shared and benchmarked; how agencies can improve the horizontal 

linkages across the silos of government; and how different levels of 

government and their nongovernmental partners can become better 

aligned to achieve important outcomes for the nation. Finally, our work 

can provide the Congress with foresight by highlighting the long-term 

implications of today’s decisions and identifying key trends and emerging

challenges facing our nation before they reach crisis proportions. 

Page 2 GAO-07-644T 
Our work increasingly brings a combination of oversight, insight, and 

foresight to bear on our nation’s most pressing and important emerging 

issues. The following are two recent examples. First, in January 2007, we 

issued a report containing a series of issue papers for the Congress to 

consider in developing an oversight agenda for securing, stabilizing, and 

rebuilding Iraq.1

 Those papers built on our ongoing work and the 67 Iraqrelated reports and testimonies we have provided to the Congress since 

May 2003. By spanning the security, political, economic, and

reconstruction prongs of the U.S. national strategy in Iraq, our work helps 

the Congress maximize the benefits of its oversight dollars by minimizing

the possibility of overlap and duplication by any individual inspector 

general. Our Iraq work has focused on keeping the Congress current and 

informed on key topics of direct interest, such as the U.S. strategy and 

costs of operating in Iraq, training and equipping the Iraqi security forces, 

selected governance and reconstruction issues, the readiness of U.S. 

military forces, and achieving desired acquisition outcomes. 

Second, also in January of this year, we issued a new publication, titled 

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.2

 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, who will do the government’s business, and 

how we should measure success. We strive to continue to be an invaluable 

tool for helping the Congress review, reprioritize, and revise existing 

mandatory and discretionary spending programs and tax policies. 

Although our work often entails multiple elements of oversight, insight, 

and foresight, I will use these terms as categories to highlight just some of 

the ways that GAO has helped in framing the challenges and opportunities 

facing the nation, as well as possible ways forward in addressing them. 

 1

GAO, Securing, Stabilizing, and Rebuilding Iraq: Key Issues for Congressional

Oversight, GAO-07-308SP (Washington, D.C.: Jan. 9, 2007). 

2

GAO, Fiscal Stewardship: A Critical Challenge Facing Our Nation, GAO-07-362SP 

(Washington, D.C.: Jan. 31, 2007). 

Page 3 GAO-07-644T 
GAO’s work helps to facilitate holding agencies accountable for delivering 

positive results in an economical, efficient, effective, ethical, and equitable

manner. I would like to highlight just a few of our recent efforts to assist 

the Congress in identifying and addressing areas for continued or 

additional oversight: 

Helping the Congress 

through Oversight 

Identifying pressing oversight issues for the Congress: On 

November 17, 2006, I provided three sets of recommendations for 

consideration as part of the agenda of the 110th Congress.3

 The first set of 

recommendations suggested targets for near-term oversight, such as the 

need to reduce the tax gap—the difference between the amounts 

taxpayers pay voluntarily and on time and what they should pay under the 

law. The second proposes policies and programs in need of fundamental 

reform and reengineering, such as reforming Medicare and Medicaid to 

improve their integrity and sustainability. The third listed various 

governance issues that need to be addressed, such as the need for various 

budget controls and legislative process revisions in light of current deficits 

and our long-range fiscal imbalance. The proposals, which synthesized 

GAO’s institutional knowledge and special expertise, point to both the 

breadth and the depth of the issues facing the Congress. Appendix I 

provides a complete list of the 36 recommendations in our letter. 

Identifying high-risk areas: We provide updates to our list of 

government programs and operations that we identify as “high-risk” at the 

start of each new Congress to help in setting congressional oversight 

agendas. These reports, which have been produced since the early 1990s, 

have brought a much-needed oversight focus to a targeted list of major 

challenges that are impeding effective government and costing the 

government billions of dollars each year. They help the Congress and the 

executive branch carry out their responsibilities while improving the 

government’s performance and enhancing its accountability. In recent 

years, we have also identified several high-risk areas to focus on the need 

for broad-based transformations to address major economy, efficiency, 

effectiveness, relevance, and relative priority challenges. In fact, our focus

on high-risk challenges contributed to the Congress enacting a series of 

governmentwide reforms to strengthen financial management; improve 

information technology practices; instill a more effective, credible, and 

 3

GAO, Suggested Areas for Oversight for the 110th Congress, GAO-07-235R (Washington,

D.C.: Nov. 17, 2006). 

Page 4 GAO-07-644T 
results-oriented government; and address critical human capital 

challenges. 

Further, our high-risk program has helped sustain attention from members 

of the Congress who are responsible for oversight and from executive 

branch officials who are accountable for performance. This Committee 

has a particular interest in a number of areas on our latest high-risk list. 

For example, implementation and transformation of the Department of 

Homeland Security (DHS), protecting the federal government’s 

information systems, establishing appropriate and effective informationsharing mechanisms to improve homeland security, and Department of 

Defense (DOD) supply chain management. In part because of the oversight 

and legislative efforts of the Congress, of the 47 areas that have appeared 

on our high-risk list since 1990, 18 improved enough to be removed from 

the list. Such leadership can be invaluable in identifying and putting in 

place the kinds of change needed to address these often long-standing 

problems. 

In our recent January 2007 High-Risk Series update, we added three new 

high-risk areas; (1) financing the nation’s transportation system, 

(2) ensuring the effective protection of technologies critical to U.S. 

national security interests, and (3) transforming federal oversight of food 

safety. But we also reported that progress had been made in all existing 

high-risk areas, and that progress was sufficient in two areas for us to 

remove high-risk designation: (1) U.S. Postal Service transformation 

efforts and long-term outlook, and (2) HUD single-family mortgage 

insurance and rental housing assistance programs. This Committee has 

provided valuable leadership to efforts to gain needed improvements in 

high-risk areas. In this regard, and, as one example, I want to acknowledge 

the key commitment and contribution of this Committee in passing postal 

reform legislation last December. This action was one of the primary 

reasons we felt that we could take the Postal Service’s transformation and 

long-term outlook off of our high-risk list in January. As I have been 

testifying on the need for comprehensive postal reform since 2001, I 

believe that the recently passed legislation will provide opportunities to 

build a sound foundation for modernizing the Postal Service, reassessing 

the service standards required by the American people, and ensuring 

continued affordable universal postal services for the future. Our work 

related to areas we have designated as high-risk has also had a financial 

impact. In fiscal year 2006 alone, actions by both the Congress and the 

executive branch in response to GAO’s recommendations resulted in 

approximately $22 billion in financial benefits. Appendix II lists the 

current high-risk areas. 

Page 5 GAO-07-644T 
Identifying systemic federal financial management challenges: As I 

testified yesterday, for the 10th consecutive year, GAO was unable to 

express an opinion on the federal government’s financial statements due 

to the government’s inability to demonstrate the reliability of significant 

portions of the financial statements.4

 Federal agencies will need to 

overcome three major impediments to our ability to render an opinion on 

the federal government’s financial statements: (1) resolving serious 

weaknesses in DOD’s business operations, including pervasive, complex, 

long-standing, and deeply rooted financial management weaknesses; 

(2) adequately accounting for and reconciling intragovernmental activity 

and balances; and (3) developing adequate systems, controls, and 

procedures to ensure that the consolidated financial statements are 

consistent with the underlying audited agency financial statement, 

balanced, and in conformity with generally accepted accounting 

principles. In testimony earlier this month,5

 I outlined the principal 

challenges and ideas on how to move forward to fully realizing world-class 

financial management in the federal government. Additionally, I have 

suggested to the Congress that it may be time to consider further revisions 

to the current federal financial reporting model. Such an effort could 

address the kind of information that is most relevant and useful for a 

sovereign nation; the role of the balance sheet in federal government 

reporting; the reporting of items that are unique to the federal government,

such as social insurance commitments and the power to tax; and the need 

for additional fiscal sustainability, intergenerational equity and 

performance reporting.

Addressing governmentwide acquisition and contracting issues: 

Acquisition issues are heavily represented on GAO’s list of government 

high-risk areas,6

 and in the 21st century, the government needs to 

reexamine and evaluate both its strategic and tactical approaches to 

acquisition and contracting matters. GAO has played an important role in 

describing the current state of government contracting, identifying the 

 4

GAO, Fiscal Year 2006 U.S. Government Financial Statements: Sustained Improvement 

in Federal Financial Management Is Crucial to Addressing Our Nation’s Accountability 

and Fiscal Stewardship Challenges, GAO-07-607T (Washington, D.C.: Mar. 20, 2007).

5

GAO, Federal Financial Management: Critical Accountability and Fiscal Stewardship 

Challenges Facing Our Nation, GAO-07-542T (Washington, D.C.: Mar. 1, 2007). 

6

GAO’s 2007 high-risk list included contract management at DOD, the Department of

Energy, the National Aeronautics and Space Administration, and management of

interagency contracting. 

Page 6 GAO-07-644T 
challenges agencies face, and recommending specific steps agencies 

should take to improve their acquisition and contracting outcomes. I 

hosted a forum in July 2006 that brought together experts in the 

acquisition community from inside and outside the government to share 

their insights on challenges and opportunities for improving federal 

acquisition outcomes in an environment of increasing reliance on 

contractors and severe fiscal constraint.7

 The observations from that 

forum help frame many of the federal acquisition workforce challenges 

that the government is going to have to wrestle with. In addition, the 

Congress has assigned GAO the responsibility for adjudicating protests of 

agency procurement decisions. Our bid protest decisions address specific 

allegations raised by unsuccessful offerors challenging particular 

procurement actions as contrary to procurement laws and regulations. In

carrying out this role, GAO is instrumental not only in resolving the 

specific cases at hand, but also helping to focus attention on how various 

initiatives by both the Congress and the executive branch are being 

implemented in practice, and we provide Congress with assurance of 

enhanced transparency, performance and accountability in the federal

procurement system. 

Investing in GAO’s forensic investigation capabilities: This 

committee actively encouraged and supported the creation within GAO of 

the additional capacity provided by our new Forensic Audits and Special 

Investigations (FSI) team in May 2005. This unit integrates the strengths of 

GAO’s investigative, forensic audit, the FraudNet hotline, and analyst staff.

Since its creation, FSI has performed audits and investigations for 

numerous congressional committees focused on fraud, waste, and abuse 

and homeland and national security issues. Specifically, for this 

Committee and the Permanent Subcommittee on Investigations, FSI has 

delivered testimonies highlighting billions of dollars of delinquent federal

taxes owed by government contractors, over $1 billion of potentially 

fraudulent and improper hurricane Katrina and Rita individual assistance 

payments, tens of millions of dollars of waste associated with misuse of 

premium class travel at the State Department, and millions more of waste 

related to improper use of government aircraft at the National Aeronautics 

and Space Administration. FSI also testified that it was able to smuggle 

radioactive materials across the northern and southern borders using 

counterfeit documents. Recently, FSI hired a senior-level expert in 

 7

GAO, Highlights of a GAO Forum: Federal Acquisition Challenges and Opportunities in

the 21st Century, GAO-07-45SP (Washington, D.C.: Oct. 6, 2006). 

Page 7 GAO-07-644T 
procurement fraud, waste, and abuse, giving it the capability to do 

targeted work in this area. In fact, the first FSI work in this area is being 

performed at the request of this Committee and relates to allegations of 

fraud, waste, and abuse by contractors involved in recovery work 

following hurricanes Katrina and Rita. 

GAO’s work helps to identify programs, policies, and practices that are 

working well, and opportunities to improve their linkages across agencies, 

across all levels of government, and with nongovernmental partners in 

order to achieve positive national outcomes. The following are a few 

examples of our recent efforts to assist the Congress with such insight: 

Helping the Congress 

through Insight 

Providing a comprehensive framework for congressional oversight 

of hurricanes Katrina and Rita: We developed a number of crosscutting 

and comprehensive reviews of aspects of the preparedness for, response 

to, and recovery from the 2005 Gulf Coast hurricanes. In the immediate 

aftermath of the storms, 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 examined how federal funds were used 

during and after the disaster and identified the rescue, relief, and 

rebuilding processes that worked well and not so well throughout the 

effort. We issued over 40 related reports and testimonies to date, focusing 

on, among other issues, minimizing fraud, waste, and abuse in disaster 

assistance; rebuilding the New Orleans hospital care system; and 

developing the capabilities needed to respond to and recover from future 

catastrophic disasters. Building on this work, we continue to support your 

Committee and others through a range of audit and evaluation

engagements to examine federal programs that provide rebuilding 

assistance to the Gulf Coast, including the federal government’s 

contribution to the rebuilding effort and the role it might play over the 

long term. We are examining lessons learned from past national 

emergencies and catastrophic disasters—both at home and abroad—that 

may prove useful in identifying ways to approach rebuilding. 

Recommending improved management structures for enhancing 

performance and ensuring accountability: We have identified a chief 

operating officer (COO)/chief management officer (CMO) position as one 

approach for building the necessary leadership and management structure 

that could be used to help to elevate, integrate, and institutionalize 

responsibility for key functional management initiatives, and provide the 

Page 8 GAO-07-644T 
continuing, focused attention essential to successfully completing 

multiyear, high-risk, business transformations.8

 Such a COO/CMO position

could be useful in selected agencies with significant transformation and 

integration challenges, such as DOD, DHS, and the Office of the Director 

of National Intelligence (ODNI), and would improve accountability within 

those agencies and to the Congress for outstanding business challenges. In

that regard, I was pleased to see that an amendment creating a Deputy 

Secretary for Management position at DHS was recently accepted by the 

Senate as part of the proposed Improving America’s Security Act of 2007, 

and that a similar position would be established in DOD with other 

legislation recently introduced in the Senate. As you know, in 2005, we 

reported that as currently structured, the roles and responsibilities of the 

DHS Under Secretary for Management contained some of the 

characteristics of a COO/CMO, but we suggested that the Congress should 

consider whether a revised organizational arrangement is needed at DHS 

to fully capture the roles and responsibilities of a COO/CMO position.9

While I believe that a COO/CMO position is highly desirable within DHS 

and ODNI, I believe it is essential for a successful business transformation

effort within DOD. 

Developing a framework for human capital reform: In recent years, 

many federal agencies, including DOD, DHS, and GAO, have achieved 

various legislative flexibilities in the human capital area. Others are 

seeking such authorities, and a risk exists that the system relating to civil

servants will fragment over time. In order to help prevent such a 

fragmentation and guide human capital reform efforts, we have proposed

that there should be a governmentwide framework. A forum that I hosted 

in 2004 outlined a set of principles, criteria, and processes that establish 

boundaries and checks while also allowing needed flexibility to manage 

agency workforces. To help build on this framework, we have provided

information on the statutory human capital authorities that the Congress 

has already provided to numerous federal agencies. Given that there is 

widespread recognition that a “one size fits all” approach to human capital

management is not appropriate for the challenges and demands 

 8

GAO, Highlights of a GAO Roundtable: The Chief Operating Officer Concept: A Potential

Strategy to Address Federal Governance Challenges, GAO-03-192SP (Washington, D.C.:

Oct. 4, 2002).

9

GAO, Department of Homeland Security: A Comprehensive and Sustained Approach

Needed to Achieve Management Integration, GAO-05-139 (Washington, D.C.: Mar. 16,

2005). 

Page 9 GAO-07-644T 
government faces, we have proposed a phased approach to reform—a 

“show me” test—that requires agencies to demonstrate institutional 

readiness before they are allowed to implement major human capital 

reforms. That is, each agency should demonstrate that it has met certain 

conditions before it is authorized to undertake significant human capital 

reforms, such as linking pay to performance. The Congress used this 

approach in the establishment of a new performance management system 

for the Senior Executive Service (SES), which required agencies’ systems 

to be certified before allowing a higher pay range for SES members. Using 

a governmentwide framework to advance needed human capital reform 

should be beneficial as the federal government continues to transform 

how it classifies, compensates, develops, and motivates its employees to 

achieve maximum results within available resources and existing 

authorities. 

Key national indicators initiative: A set of key and outcome-based 

national indicators can help to assess the overall position and progress of 

our nation in key areas, frame strategic issues, support more informed 

policy choices, and enhance accountability. A cooperative initiative to 

develop a key national indicator system emerged after we, in cooperation 

with the National Academies, convened a forum in February 2003.

10 This 

initiative is attempting to develop a key national indicator system for the 

United States.

11 In response to congressional interest in building upon 

lessons learned from other efforts both around the country and 

worldwide, we reported in November 2004 on the current state of the 

practice of developing comprehensive key indicator systems, identifying 

design features and organizational options for such a system in the United

States. We have also helped increase international understanding and use 

of indicator systems, such as through my participation in the Organisation 

for Economic Co-operation and Development’s (OECD) First World 

Forum on Key Indicators in 2004 and through my upcoming participation 

in OECD’s Second World Forum, Measuring and Fostering the Progress of 

Societies, in June 2007. As development of a U.S. key national indicator 

system progresses, we expect to continue to be involved, building upon 

prior efforts and in response to congressional interests. Finally, in my view 

such a key national indicator system is needed, and the Congress should 

 10GAO, Informing Our Nation: Improving How to Understand and Assess the USA’s 

Position and Progress, GAO-05-1 (Washington, D.C.: Nov. 10, 2004).

11GAO, Forum on Key National Indicators: Assessing the Nation’s Position and Progress, 

GAO-03-672SP (Washington, D.C.: May 2003). 

Page 10 GAO-07-644T 
strongly consider a public/private partnership in order to help it become a 

reality. 

Our products and assistance to the Congress also focus on a wide range of 

emerging needs and identify and address governance issues that must be 

addressed to respond to a broad range of 21st Century challenges and 

opportunities. I would like to highlight just a few of our recent efforts to 

assist the Congress with foresight. 

Helping the Congress 

through Foresight 

Increasing public understanding of the long-term fiscal challenge:

Since 1992, we have published long-term fiscal simulations in response to 

a bipartisan request from members of the Congress who were concerned 

about the long-term effects of our nation’s fiscal policy. Our current 

simulations continue to show ever-larger deficits resulting in a federal 

debt burden that ultimately spirals out of control.12 As the Chief 

Accountability Officer of the United States Government, I continue to call 

attention to our long-term fiscal challenge and the risks it poses to our 

nation’s future. I mentioned earlier my participation with the Concord 

Coalition, the Brookings Institution, and the Heritage Foundation in the 

Fiscal Wake-Up Tour. In our experience, having these people, with quite 

different policy views on how to address our long-range imbalance, agree

on the nature, scale, and importance of the issue—and on the need to sit 

down and work together on a bipartisan basis and start making tough 

choices now—resonates with the audiences. I have long believed that the

American people can accept difficult decisions as long as they understand 

why such steps are necessary. The Fiscal Wake-Up Tour has received the 

active support and involvement of community leaders, local colleges and

universities, the media, the business community, and both former and 

current members of the Congress. We have coordinated town hall 

meetings in 20 states to date with more planned in the future. 

Improving transparency in connection with financial, fiscal, budget, 

and selected legislative matters: Washington often suffers from both 

myopia and tunnel vision. This can be especially true in the budget debate

in which we focus on one program at a time and the deficit for a single 

year or possibly the costs over 5 years without asking about the bigger 

 12Additional information about the GAO model, its assumptions, data, and charts can be 

found at http://www.gao.gov/special.pubs/longterm/. For a summary of our most recent 

results, see The Nation’s Long-Term Fiscal Outlook: January 2007 Update, GAO-07-510R 

(February 2007). 

Page 11 GAO-07-644T 
picture and whether the long term is getting better or worse. Since at its 

heart the budget challenge is a debate about the allocation of limited 

resources, the budget process can and should play a key role in helping to

address our long-term fiscal challenge and the broader challenge of 

modernizing government for the 21st century. We are helping to increase 

the understanding of and focus on the long term in our policy and budget 

debates. To that end, I have outlined a number of ideas in a draft 

legislative proposal that we refer to as TAB—Transparency in Accounting 

and Budgeting. I have been sharing it with selected Members of Congress 

and others interested in this issue. The proposal would serve to 

• increase transparency in financial and budget reporting as well as in 

the budget and legislative processes to highlight our long-term fiscal 

challenges; 

• require publication of a summary annual report and periodic fiscal 

sustainability reports; and 

• require GAO to report annually on selected financial, fiscal, and 

reporting matters. 

I am hopeful that this committee will embrace this proposal and work with 

other interested members of Congress toward enactment of legislation 

advancing these important goals. 

Identifying 21st century challenges: In February 2005 we issued a 

report titled 21st Century Challenges: Reexamining the Base of the Federal

Government,13 in which we identified challenges our government—and 

nation—face. The report laid out the case for change and identified a 

range of challenges and opportunities. It also presented more than 200 

illustrative questions that need to be asked and answered. These questions 

look across major areas of the budget and federal operations, including 

discretionary and mandatory spending and tax policies and programs. 

Questions raised specific issues, such as how intelligence and information 

on threats can be shared with other levels of government, yet be held 

secure, and whether our current federal income-based tax system is 

adequate, equitable, competitive, sustainable, and administrable in an 

increasingly global economy. I am very pleased to see that this important 

report, among other things, is being used by various congressional 

 13GAO, 21st Century Challenges: Reexamining the Base of the Federal Government, 

GAO-05-325SP (Washington, D.C.: February 2005). 

Page 12 GAO-07-644T 
committees as they consider which areas of government need particular 

attention and reconsideration. 

Continuing to apply a strategic framework to GAO’s work: We will

be issuing products soon to help communicate the strategic framework we 

are using to guide all of our work, in support of the 110th Congress and in

light of the challenges the nation faces. Specifically, we will soon issue an 

update of our strategic plan, which describes our goals and strategies for 

serving the Congress for fiscal years 2007 through 2012. The broad goals 

and objectives of our plan have not altered dramatically since our last 

plan, but events such as the continuing war in Iraq and recent natural 

disasters account for modifications in emphasis. Appendix III provides a 

draft summary of GAO’s strategic plan framework for serving the Congress

(2007-2012). To assist policymakers and managers, we are also issuing 

separately a part of the strategic plan that contains detailed descriptions of 

the key themes and issues framing our strategic plan and their 

implications for governance. Those themes are listed in the text box 

below. We will also be issuing a report that brings together in one place 

the many strategic tools and approaches that we have identified or 

proposed that the Congress and others can use to help set priorities and 

move forward in addressing the government’s challenges. 

Themes from GAO’s Strategic Plan 2007-2012 

• Changing security threats 

• Sustainability concerns 

• Economic growth and competitiveness 

• Global interdependency 

• Societal change

• Quality of life 

• Science and technology 

Continuously improving on the critical role we play in supporting the 

Congress will require modest enhancements to GAO’s resources and 

authorities that I proposed in our fiscal year 2008 budget request and 

discussed in my Senate appropriations hearing.14 Our fiscal year 2008 

budget request seeks the resources necessary to allow us to rebuild and 

Congressional 

Support to Enhance 

GAO’s Effectiveness 

 14GAO, Fiscal Year 2008 Budget Request: U.S. Government Accountability Office, 

GAO-07-547T (Washington, D.C.: Mar. 16, 2007). 

Page 13 GAO-07-644T 
enhance our workforce, knowledge capacity, employee programs, and 

critical infrastructure. These items are necessary to ensure that we 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. 

Shortly after I was appointed Comptroller General in November 1998, I 

determined that the agency should undertake a major transformation 

effort. As a result, led by myself and many others, GAO has become a more 

results-oriented, partnerial, and client-focused organization. With your 

support, we have made strategic investments; realigned the organization; 

streamlined our business processes; modernized our performance 

classification, compensation, and reward systems; enhanced our ability to

attract, retain, and reward top talent; enhanced the technology and 

infrastructure supporting our staff and systems; and made other key 

investments. These transformational efforts have allowed us to model best 

practices, lead by example, and provide significant support for 

congressional hearings, while achieving record results and very high client 

satisfaction ratings and high employee feedback ratings without significant 

increases in funding. In fact, despite record results, GAO’s budget has 

declined by 3 percent in purchasing power from 2003 to 2007, as shown in 

appendix IV.

Transformational change and innovation is by definition challenging and 

controversial, but at the same time is essential for progress. Our fiscal year 

2008 budget request includes funds to regain the momentum needed to

achieve our key goals. Specifically, our fiscal year 2008 budget request will 

allow us to 

• address supply and demand imbalances in responding to congressional 

requests for studies in areas such as health care, disaster assistance, 

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 we compete for talent; 

• address critical human capital components, such as knowledge 

capacity building, succession planning, and staff skills and 

competencies; 

Page 14 GAO-07-644T 
• enhance employee recruitment, retention, and development programs; 

• restore program funding levels and regain our purchasing power; 

• undertake critical initiatives necessary to continuously reengineer 

processes aimed at increasing our productivity and effectiveness and 

addressing identified management challenges; and 

• pursue deferred and pending critical structural and infrastructure 

maintenance and improvements. 

In my recent testimony, I noted that we would be seeking to increase 

GAO’s staffing level from 3,159 up to 3,750 over the next 6 years in order to 

address critical needs including supply and demand imbalances, high-risk 

areas, 21st century challenges questions, technology assessments, and 

other areas in need of fundamental reform. Furthermore, 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 receiving support from the State Department and approval of our 

supplemental budget request. 

In addition to providing the resources we need to support the Congress, 

we will also be seeking enactment of a set of statutory provisions that 

would enhance our ability to provide the Congress the information and 

analysis it needs to discharge its constitutional responsibilities. Among 

other things, we will seek to modernize authority for the Comptroller 

General and his/her authorized representatives to administer oaths in 

performance of the work of the office. To keep the Congress apprised 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 fail to respond to 

requests 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. These reporting 

requirements would be a supplement to existing GAO statutory 

authorities. 

GAO has authority to audit and access the records of elements of the 

Intelligence Community. Nevertheless, over the years, the Justice 

Department has questioned our authority in the area. In that regard, the 

Congress is considering S.82, The Intelligence Community Audit Act of 

2007, sponsored by Senators Akaka and Lautenberg. S.82 would reaffirm 

GAO’s existing statutory authority to audit and evaluate financial 

transactions, programs, and activities of the Intelligence Community. The 

Page 15 GAO-07-644T 
success of the Intelligence Community is obviously of enormous 

importance to the nation, and it commands significant budget resources. I 

believe that there are many areas in which GAO can support the 

intelligence committees in their oversight roles and, by extension, the 

Congress and the Intelligence Community. For example, we could review

human capital management, including pay for performance systems; 

information technology architectures and systems; acquisition and 

contract management; information-sharing processes, procedures, and 

results; and Intelligence Community transformation efforts, metrics, and 

progress. I would add that while GAO personnel with appropriate 

clearances and accesses have responsibly reviewed programs that deal

with technical sources and methods of intelligence collection, I am 

confident that there are very few cases in which our review of systems, 

processes, and their applications would require access to sensitive 

intelligence sources and methods or names of individuals. 

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 certain professional positions by increasing our maximum pay for 

other than the SES and Senior Level from GS-15, step 10, to Executive 

Level III. This authority has already been granted to selected other federal 

agencies, including DOD. 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 affect 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. 

We are also seeking enactment of 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. 

Page 16 GAO-07-644T 
Finally, we have identified a number of legislative mandates that are either

no longer meeting the purposes 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. 

I appreciate your support for our efforts to provide the best professional 

products and services to the Congress. GAO, of course, is not alone in 

helping the Congress. For example, the inspectors general of the various 

agencies and departments are essential partners in carrying out 

congressional oversight. In addition, the Congressional Research Service 

and Congressional Budget Office have important roles to play. However, 

GAO is uniquely positioned to provide the Congress with the timely, 

objective, reliable, and original research information it needs to discharge

its constitutional responsibilities, especially in connection with oversight

matters. We look forward to continuing to work with you on near-term 

oversight, fundamental review of the base of government, and approaches 

to this century’s governance challenges and opportunities. 

This concludes my prepared statement. I would be happy to respond to 

any questions the members of the Committee may have. 

Page 17 GAO-07-644T 
Page 18 GAO-07-644T 

Targets for Near-Term Oversight

1. Reduce the Tax Gap 

2. Address Governmentwide Acquisition and Contracting Issues 

3. Transform the Business Operations of the Department of Defense, Including 

Addressing All Related “High-Risk” Areas 

4. Ensure the Effective Integration and Transformation of the Department of Homeland

Security 

5. Enhance Information Sharing, Accelerate Transformation, and Improve Oversight 

Related to the Nation’s Intelligence Agencies

6. Enhance Border Security and Enforcement of Existing Immigration Laws 

7. Ensure the Safety and Security of All Modes of Transportation and the Adequacy of 

Related Funding Mechanisms

8. Strengthen Efforts to Prevent the Proliferation of Nuclear, Chemical, and Biological

Weapons and Their Delivery Systems (Missiles) 

9. Ensure a Successful Transformation of the Nuclear Weapons Complex 

10. Enhance Computer Security and Deter Identity Theft 

11. Ensure a Cost-Effective and Reliable 2010 Census 

12. Transform the Postal Service’s Business Model 

13. Ensure Fair Value Collection of Oil Royalties Produced from Federal Lands 

14. Ensure the Effectiveness and Coordination of U.S. International 

Counterterrorism Efforts 

15. Review the Effectiveness of Strategies to Ensure Workplace Safety 

Policies and Programs That Are in Need of Fundamental Reform and

Reengineering

1. Review U.S. and Coalition Efforts to Stabilize and Rebuild Iraq and Afghanistan 

2. Ensure a Strategic and Integrated Approach to Prepare for, Respond to, Recover, and 

Rebuild from Catastrophic Events 

3. Reform the Tax Code, Including Reviewing the Performance of Tax Preferences 

4. Reform Medicare and Medicaid to Improve Their Integrity and Sustainability 

5. Ensure the Adequacy of National Energy Supplies and Related Infrastructure 

6. Reform Immigration Policy to Ensure Equity and Economic Competitiveness 

7. Assess Overall Military Readiness, Transformation Efforts, and Existing Plans to 

Assure the Sustainability of the All-Volunteer Force 

8. Assure the Quality and Competitiveness of the U.S. Education System 

9. Strengthen Retirement Security Through Reforming Social Security, Increasing 

Pension Saving and Promoting Financial Literacy 

10. Examine the Costs, Benefits, and Risks of Key Environmental Issues 

11. Reform Federal Housing Programs and Related Financing and Regulatory 

Structures 

12. Ensure the Integrity and Equity of Existing Farm Programs

13. Review Federal Efforts to Improve the Image of the United States 

Appendix I: GAO’s Suggested Areas for 

Oversight for the 110th Congress 
Governance Issues That Should be Addressed to Help Ensure an Economical, 

Efficient, Effective, Ethical, and Equitable Federal Government Capable of

Responding to the Various Challenges and Capitalizing on Related Opportunities

in the 21st Century 

1. Review the Need for Various Budget Controls and Legislative Process Revisions in

Light of Current Deficits and Our Long-Range Fiscal Imbalance 

2. Pursue the Development of Key National Indicators 

3. Review the Impact and Effectiveness of Various Management Reforms Enacted in

Recent Years (e.g., GPRA, CFO Act, FFMIA, Clinger-Cohen, etc.) 

4. Review the Effectiveness of the Federal Audit and Accountability Community, 

Including the Oversight, Structure, and Division of Responsibility 

5. Modernize the Federal Government’s Organizational and Human Capital Models 

6. Reexamine the Presidential (Political) Appointment Process 

7. Ensure Transparency over Executive Policies and Operations 

8. Monitor and Assess Corporate Financial Reporting and Related Standards for Public 

Companies Accountability 

Source: GAO, Suggested Areas for Oversight for the 110th Congress, GAO-07-235R (Washington, D.C.: Nov. 17, 2006). 

Page 19 GAO-07-644T 
Page 20 GAO-07-644T 

Appendix II: GAO’s 2007 High-Risk List 

2007 High-Risk Areas 

Addressing Challenges In Broad-Based Transformations

• Strategic Human Capital Managementa

• Managing Federal Real Propertya

• Protecting the Federal Government’s Information Systems and the Nation’s Critical 

Infrastructures 

• Implementing and Transforming the Department of Homeland Security 

• Establishing Appropriate And Effective Information-Sharing Mechanisms to Improve 

Homeland Security 

• DOD Approach to Business Transformation

a

• DOD Business Systems Modernization 

• DOD Personnel Security Clearance Program 

• DOD Support Infrastructure Management 

• DOD Financial Management 

• DOD Supply Chain Management 

• DOD Weapon Systems Acquisition 

• FAA Air Traffic Control Modernization 

• Financing the Nation’s Transportation Systema (New) 

• Ensuring the Effective Protection of Technologies Critical to U.S. National Security 

Interestsa (New) 

• Transforming Federal Oversight of Food Safetya (New) 

Managing Federal Contracting More Effectively 

• DOD Contract Management 

• DOE Contract Management 

• NASA Contract Management 

• Management of Interagency Contracting 

Assessing the Efficiency and Effectiveness of Tax Law Administration

• Enforcement of Tax Lawsa

• IRS Business Systems Modernization 

Modernizing and Safeguarding Insurance and Benefit Programs 

• Modernizing Federal Disability Programsa

• Pension Benefit Guaranty Corporation Single-Employer Pension Insurance Program 

• Medicare Programa

• Medicaid Programa

• National Flood Insurance Programa

Source: GAO.

a

Legislation is likely to be necessary, as a supplement to actions by the executive branch, in order to

effectively address this high-risk area. 
Page 21 GAO-07-644T 

Appendix III: Serving the Congress—GAO’s 

Strategic Plan Framework 
Page 22 GAO-07-644T 

Appendix IV: Budget Authority in Fiscal Year 

2006 Dollars and Full-Time Equivalent Usage, 

Fiscal Years 1992 - 2007 

Dollars in millions Number of FTEs

Source: GAO.

0

100

200

300

400

500

600

700

0

1,000

2,000

3,000

4,000

5,000

6,000

FTEs

Budget in FY 2006 Dollars

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Fiscal year

$602

$573

$555 $563

$472

$411 $425 $423 $440

$481

$440

$495 $493 $490 $484 $479

3,224 3,189 3,194 3,159 3,269 3,210 3,110 3,192 3,245 3,275 3,341

3,677

4,342

5,055 5,325

4,578

(450579) 
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