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94–903 PDF 2016

S. Hrg. 114–435 

REDUCING UNNECESSARY DUPLICATION IN 

FEDERAL PROGRAMS: BILLIONS MORE COULD 

BE SAVED 

HEARING 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

APRIL 14, 2015 

Available via the World Wide Web: http://www.fdsys.gov/ 

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

RON JOHNSON, Wisconsin Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

JONI ERNST, Iowa 

BEN SASSE, Nebraska 

THOMAS R. CARPER, Delaware 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

CORY A. BOOKER, New Jersey 

GARY C. PETERS, Michigan 

KEITH B. ASHDOWN, Staff Director 

PATRICK J. BAILEY, Chief Counsel for Governmental Affairs 

SEAN C. CASEY, Senior Professional Staff Member 

JOSHUA P. MCLEOD, Professional Staff Member 

ROLAND R. FOSTER, Senior Policy Advisor 

GABRIELLE A. BATKIN. Minority Staff Director 

JOHN P. KILVINGTON, Minority Deputy Staff Director 

TROY H. CRIBB, Minority Chief Counsel for Governmental Affairs 

DEIRDRE G. ARMSTRONG, Minority Professional Staff Member 

BRIAN F. PAPP, JR., Minority Legislative Aide 

LAURA W. KILBRIDE, Chief Clerk 

LAUREN M. CORCORAN, Hearing Clerk 
(III) 

C O N T E N T S 

Opening statements: Page 

Senator Johnson ............................................................................................... 1 

Senator Carper ................................................................................................. 2 

Senator Ernst .................................................................................................... 11 

Senator Heitkamp ............................................................................................ 13 

Senator McCaskill ............................................................................................ 15 

Prepared statements: 

Senator Johnson ............................................................................................... 19 

Senator Carper ................................................................................................. 21 

WITNESSES 

TUESDAY, APRIL 14, 2015 

Hon. Eugene L. Dodaro, Comptroller General of the United States, U.S. 

Government Accountability Office; accompanied by Cathleen Berrick, Managing Director, Defense Capabilities and Management; Cynthia Bascetta, 

Managing Director, Health Care; Paul Francis, Managing Director, Acquisitions and Sourcing Management; Barbara Bovbjerg, Managing Director, 

Education, Workforce, and Income Security; Mark Gaffigan, Managing Director, Natural Resources and Environment; David Powner, Director, Information Technology; Philip Herr, Managing Director, Physical Infrastructure; and James McTigue, Director, Strategic Issues ....................................... 3 

Prepared statement of Mr. Dodaro ......................................................................... 24 

APPENDIX 

Responses to post-hearing questions for the Record from Mr. Dodaro ............... 55 

(1) 

1The prepared statement of Chairman Johnson appears in the Appendix on page 19. 

REDUCING UNNECESSARY DUPLICATION IN 

FEDERAL PROGRAMS: BILLIONS MORE 

COULD BE SAVED 

TUESDAY, APRIL 14, 2015 

U.S. SENATE, COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Committee met, pursuant to notice, at 9:31 a.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Ron Johnson, Chairman of the Committee, presiding. 

Present: Senators Johnson, Lankford, Ernst, Sasse, Carper, 

McCaskill, Heitkamp, and Peters. 

OPENING STATEMENT OF CHAIRMAN JOHNSON 

Chairman JOHNSON. Good morning. This hearing will come to 

order. I want to welcome our Comptroller General of the U.S. Government Accountability Office (GAO), the Hon. Gene Dodaro. 

Thank you for all your good work. You mentioned earlier this is 

like your second home, your second office. We certainly appreciate 

all the good work you and your agency provide this Committee and 

the Congress. 

I do have an opening statement1 which I will, with unanimous 

consent, offer to enter into the record. 

Senator CARPER. OK. 

Chairman JOHNSON. We do want to make sure that this hearing 

is over no later than 10:25. We have a briefing with Secretary 

Kerry on some relatively important matters as well. 

I just want to say this is, I think, a very important subject. This 

particular report you have been doing these things for 5 years. This 

is your fifth year. You have identified 440 different areas of duplication, already saved $20 billion. There is $80 billion more to be 

saved over the next 8 or 9 years. 

This is an area that we need to explore, figure out exactly how 

to implement more of these. Apparently only about 37 percent of 

these recommendations have been implemented. So that is certainly what this Committee wants to explore, but we are really interested in hearing what you found out in 2015. 

With that, I will turn it over to our Ranking Member, Senator 

Carper. 
2 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. Mr. Chairman, thanks so much for pulling this 

together. To Gene, thank you very much to you and the team that 

you lead. We are delighted to see you, always delighted to hear 

from you. 

Whenever we talk about duplication, I think about Tom Coburn, 

and I know his spirit is here with us today. We actually talked a 

little bit about maybe he could come and share that side of the 

table with us this morning. It did not work out. But we are grateful 

for all the work that he has done and laying a good predicate. 

The issuance of today’s report continues GAO’s now 5-year examination of the Federal Government to identify major instances of 

fragmentation, overlap, and duplication. One of the big ones deals 

with the Department of Homeland Security (DHS). As you know, 

Mr. Dodaro, we have like a hundred and some committees and subcommittees that own a piece of the Department of Homeland Security. It is hugely wasteful, and I am not sure how we resolve that, 

but one of my goals for as long as I am here is to ratchet down 

that oversight and to give them at least a little bit of relief. 

Throughout the five reports, GAO has provided a number of recommendations for Congress and the Executive Branch that, if implemented, have the potential to reduce significant waste and make 

our government more efficient. 

Unfortunately, many of the topics discussed in GAO’s reports are 

complex and are difficult to solve. The issues cut across various departments and longstanding Federal programs that each have their 

own constituencies and, in many cases, provide the public with 

much needed services. 

I also find it important to keep in mind that while we must be 

careful to root out instances of unneeded duplication, the fact that 

more than one agency or program is focused on an issue does not 

always mean that we are wasting money and duplicating our efforts. Cybersecurity, protecting water quality, and assistance for 

disabled Americans are just a few areas that come to mind where 

it makes sense to have multiple Federal agencies bringing their expertise to bear to address critical needs. 

What the GAO report tells us is that we need sustained leadership and oversight in both the Executive Branch and Congress to 

decide where there is unnecessary duplication that can be eliminated or where we need better coordination among government 

programs with similar missions. 

As Gene will testify today, we have had significant success in recent years through this focus on duplication. GAO estimates Executive Branch and Congressional efforts to address suggested actions 

from GAO’s past reports have resulted in approximately $20 billion 

in financial benefits from fiscal years (FYs) 2011 through 2014, 

with another expected savings of $80 billion through 2023. And we 

need all those savings. 

One good example of this success was the passage last year of 

legislation that this Committee worked on extensively, the Federal 

Information Technology Acquisition Reform Act (FITARA). Much of 

this legislation was based on GAO’s good work identifying duplication and waste in the Federal Government’s purchase of information technology (IT), which totals about $80 billion a year. 
3 

1The prepared statement of Hon. Dodaro appears in the Appendix on page 24. 

FITARA will ensure that agencies continually look across their 

IT investments to eliminate wasteful spending. It also requires 

agencies to close unneeded data centers, and it requires the Administrator of the General Services Administration (GSA) to develop a 

strategy for the government to leverage its buying power for software. All these efforts should add up to billions of dollars in savings. 

I am going to hold it right there because we want to hear from 

you and we have a briefing coming up at 10:30 that we all want 

to get to. So, Gene, welcome and thank you so much for all of your 

work and leadership. 

Chairman JOHNSON. Thank you, Senator Carper. 

I also want to certainly pay tribute to Senator Tom Coburn. Oftentimes we tack on amendments to a piece of legislation and take 

votes on them, and they are messaging votes. This was far more 

than that. This was an amendment passed on a debt ceiling increase in 2010 that has had a real impact, provided us excellent 

information, and provided real savings, tens of billions of dollars of 

savings. So, again, this hearing really is a tribute to Senator Tom 

Coburn. We were hoping to have him as a witness here today, but 

we are obviously happy to have you, Mr. Dodaro. 

It is the tradition of this Committee to swear in witnesses, so if 

you will stand and raise your right hand. Do you swear that the 

testimony you will give before this Committee will be the truth, the 

whole truth, and nothing but the truth, so help you, God? 

Mr. DODARO. I do. 

Chairman JOHNSON. Thank you. Mr. Dodaro. 

Senator CARPER. Who are these people in the front line here? Is 

this is your A Team? Some of them look pretty familiar. 

Mr. DODARO. I only travel with the A Team. [Laughter.] 

TESTIMONY OF HON. EUGENE L. DODARO,1 COMPTROLLER 

GENERAL OF THE UNITED STATES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE; ACCOMPANIED BY CATHLEEN 

BERRICK, MANAGING DIRECTOR, DEFENSE CAPABILITIES 

AND MANAGEMENT; CYNTHIA BASCETTA, MANAGING DIRECTOR, HEALTH CARE; PAUL FRANCIS, MANAGING DIRECTOR, 

ACQUISITIONS AND SOURCING MANAGEMENT; BARBARA 

BOVBJERG, MANAGING DIRECTOR, EDUCATION, WORKFORCE, AND INCOME SECURITY; MARK GAFFIGAN, MANAGING DIRECTOR, NATURAL RESOURCES AND ENVIRONMENT; DAVID POWNER, DIRECTOR, INFORMATION TECHNOLOGY; PHILIP HERR, MANAGING DIRECTOR, PHYSICAL 

INFRASTRUCTURE; AND JAMES MCTIGUE, DIRECTOR, STRATEGIC ISSUES 

Mr. DODARO. Good morning, Mr. Chairman, Ranking Member 

Senator Carper, Senator Sasse, Senator Ernst. I am very pleased 

to be here to talk about our 2015 report. 

As you mentioned, Chairman, it is our fifth in the series—we 

identify 24 new areas that have 66 recommendations for actions 

going forward to either reduce or eliminate, overlap, duplication, 

and fragmentation in the Federal Government or achieve cost sav-
4 

ings or enhance revenues. Just a few quick examples from the report: 

First, in looking at oversight of consumer safety, we found a 

patchwork approach has developed over the years where there are 

at least 20 different agencies involved in some aspect of consumer 

protection. We found the system to be fragmented and having overlapping jurisdictions. We are recommending that the Congress take 

action to establish a formal coordinating mechanism for oversight 

of consumer protection. We think this will result in many inefficiencies being dealt with and a more efficient system and, importantly, better protection for the American public because it will 

eliminate regulatory gaps in consumer protection issues. 

In the area of non-emergency medical transportation—for people 

that—because of their age, disability, or income constraints are not 

able to get to medical appointments, so multiple Federal agencies 

provide rides. We found 42 different programs at 6 different agencies providing these services and not a lot of coordination going on. 

Here there is a coordinating council, but it has not met since 2008. 

Also, where we found coordination going on at the State and local 

level, two big Federal players are not really participating as much 

as they should be, and that is the Medicaid program and the Veterans Administration (VA) programs. 

So there are a lot of opportunities for cost sharing, ride sharing 

and achieving greater efficiencies. This is very important because 

our aging population continues to grow. This is an area where the 

Federal Government can achieve a lot more efficiencies and get 

people the medical treatment that they need. 

Also, we found in looking at the defense health system area a 

small system the U.S. Family Health Plan within the larger system. It was set up in the 1980s when some of the public health organizations were transferred, and were given responsibility for providing health care to defense families and retirees. The U.S. Family 

Health Plan remains a health care option required by statue to be 

available in certain locations. 

Well, in the 1990s, TRICARE came around. We now have the 

TRICARE managed care system throughout the United States and 

this system—the Department of Defense (DOD) U.S. Family Health 

Plan—is providing the same services to the same people who are 

getting TRICARE services in the same areas of the country. So we 

think with a carefully crafted transition to protect the beneficiaries, 

millions of dollars can be saved in administrative costs and savings 

to DOD. 

Another area we point out is the Strategic Petroleum Reserve. 

This was set up following the oil embargoes in the 1970s so that 

we have an emergency supply of oil should we need it given disruptions that might occur in the provision of oil from abroad. But as 

U.S. production has increased—we are now at record levels of production—there are plenty of reserves not only in the Strategic Petroleum Reserve but in private sector reserves, and we are far in 

excess of international requirements for the reserves. We think the 

Department of Energy (DOE) should reexamine the need for the 

size of this reserve, which could show that there may be the potential to reap billions of dollars in savings from selling some of the 

reserve, and reduce dramatically the administrative costs to keep 
5 

the reserve operating. Also its infrastructure is in need of repair 

and replacement and these repairs may cost less if you do not have 

the same size of reserve. 

Also, there is a group of designated cancer hospitals that were 

set up in the 1980s, when most cancer treatments were provided 

in the hospital versus outpatient care. This special system was set 

up to pay these hospitals at their cost as opposed to the prospective 

payment system of negotiated costs under fee-for-service. Given 

cancer treatment has evolved over the years and most people are 

receiving it as an outpatient service, we compared this old system 

to current approaches and included the cancer status of the patients and found that if these hospitals were treated the same as 

other teaching hospitals that provide cancer treatments, the Federal Government could reduce costs by $500 million a year by putting these hospitals on a more equitable basis. 

Now, with regard to areas that we have identified in the past, 

as you mentioned, Mr. Chairman, there were 440 actions; 39 percent have been partially addressed, 20 percent have not been addressed at all, and 37 percent have been fully addressed. And both 

of you have cited the savings that has resulted, $20 billion so far, 

and about another $80 billion in the works that will be saved as 

a result of actions taken. But there is plenty of money still left on 

the table to be addressed in these areas. 

A couple governmentwide issues that I have talked with this 

Committee before about I would reiterate. One is strategic sourcing 

across the Federal Government. Most of the private sector entities 

that we studied have most of their spending, about 90 percent of 

it, under strategic sourcing where they examine whether they can 

consolidate providers, and use their buying power to leverage better costs at the local level. The last time we looked at it the Federal 

Government only had about 5 percent of its procurement spending 

under strategic sourcing. We think this has enormous potential. 

Even a one-percent reduction in spending would result in $4 billion 

in savings. The Office of Management and Budget (OMB) has 

taken some actions in this regard but not yet set metrics or goals 

to achieve these savings, so we think the Congress’ intervention in 

this area would be helpful. 

Information technology acquisitions. I was here before this Committee in February talking about adding IT acquisitions and operation to out high rise list. Senator Carper, you mentioned the Federal Information Technology Acquisition Reform Act. That holds a 

lot of promise if effectively implemented for billions of dollars in 

savings, and so I would continue to urge this Committee to have 

active oversight over IT spending. Many savings and reductions in 

wasteful spending in this area can occur over time. 

Also, at DOD, we point out continued activities that could result 

in reducing their overhead costs, reducing some of their health care 

costs, and reducing the cost of acquiring weapon systems through 

implementation of our recommendations. 

We also have a number of recommendations in the Medicare and 

Medicaid areas and health care spending where there is an opportunity to revamp some of the payment policies that would save billions of dollars and provide greater oversight over activities. Particularly at the State level in the Medicaid program where tens of 
6 

billions of dollars are being approved in demonstration projects 

that do not have Congressional oversight and in our view are not 

budget neutral and cost the government more money. 

And, of course, I have talked about the problem with improper 

payments in the Medicare and Medicaid programs. We reiterate in 

our report the number of recommendations we have to reduce those 

improper payments. Last year in Medicare it was $60 billion; in 

Medicaid, $17 billion. 

We also have recommendations for a number of areas for benefit 

offsets that would be more appropriate and in accordance with the 

law. For example, we found circumstances where certain beneficiaries are receiving unemployment and disability insurance at 

the same time, and so the Federal Government is replacing lost 

revenue twice, and this could be rectified through a change in law. 

Also, in tax collections, we have recommendations where, we 

found a lot of people who have passports owe Federal taxes, one 

percent of the people who had passports when we looked at it have 

$5.8 billion in delinquent taxes. And if we decided that you cannot 

have a passport unless you pay your taxes, The Congressional 

Budget Office (CBO) estimates we could increase revenue by $500 

million over a 5-year period of time. And we have other areas 

where we think delinquent taxes could be collected. 

So the bottom line is, some good progress has been made. Where 

there has been big progress, though, it has involved the Congress 

passing legislation. Most of these areas where we cite savings, it 

took congressional action to achieve those savings, even though the 

agencies were moving in the right direction. So I would encourage 

this Committee and the Congress as a whole to continue to focus 

on these areas, and I think we will be a more efficient and effective 

government as a result. 

So thank you very much, Mr. Chairman, and the Committee. I 

appreciate being here today. 

Chairman JOHNSON. Well, thank you, Mr. Dodaro. 

I have three specific questions on some of the areas of duplication and fragmentation you talked about. Let me go right to the 

last one you mentioned, the duplicate payments of disability payments versus unemployment. Now, in normal State unemployment 

systems, you simply cannot collect unemployment if you are disabled, if you are not available for work. Is that correct? 

Mr. DODARO. That is correct. But in a lot of the disability programs, the goal is for those people who can be rehabilitated to go 

back to work. And there are some rules that say they can work for 

a certain limited period of time so they could get off the disabled 

rolls. And so some people end up having employment status even 

though they are receiving disability payments, and this is where 

this gap can occur. 

Chairman JOHNSON. OK. But, again, this is an unintended overlap. 

Mr. DODARO. Yes. 

Chairman JOHNSON. This is not something that was contemplated in legislation. This is an unintended consequence. 

Mr. DODARO. That is exactly right, Mr. Chairman. And, we think 

it could be easily rectified through legislation without, unduly af-
7 

fecting anyone, and CBO estimates about $1.2 billion that could be 

saved. 

Chairman JOHNSON. Again, a billion here, a billion there, you 

end up with real money, right? 

Mr. DODARO. Right. 

Chairman JOHNSON. In terms of cancer outpatient, are you basically saying because when this program was first set up it 

incentivized payment for inpatient cancer treatment versus now 

the market has moved toward outpatient, which is more cost-effective? Is that the discrepancy there? 

Mr. DODARO. Yes. When the system was set up—and this was set 

up in the 1980s—there was concern, as Medicare moved to a prospective payment system where they would pay under a fee-forservice approach, that it would not sufficiently cover the costs of inpatient cancer care. So these hospitals get reimbursed for their full 

cost as opposed to the negotiated payments for both inpatient and 

outpatient care. And the Centers for Medicare and Medicaid (CMS) 

has reformed their payment process to take into account more recent and contemporary cancer treatments. So if everybody is treated on a level playing field, you could save $500 million a year. 

Chairman JOHNSON. OK. I want to talk a little bit about the Department of Defense Family Health Plan. I know in the private sector it is not unusual where you have a husband and wife working 

at two different companies, and they both take family insurance. 

You basically have duplicated coverage. Is that the case here? Or 

is it simply we have two different systems and—it is not like we 

have dual coverage, but we have dual administration. There is no 

need to have two separate health systems. 

Mr. DODARO. That is exactly right. In this case, you have two 

separate systems that serve the same potential population, and the 

people can be served in either system. What is unique, though, is 

that the DOD Family Health Plan in legislation was given commercial provider status. So DOD cannot even get information from 

them on their costs, their profit margins, and administrative costs. 

They negotiate a fee every year with them. It takes about 8 

months, according to DOD, so there is a lot of administrative effort 

and cost that goes into this. They have to keep separate data systems. We talked to the people who provide TRICARE managed coverage across the United States and they said that they could easily 

provide coverage to these beneficiaries. DOD would realize millions 

of dollars in administrative savings. And, importantly, this system 

is not integrated into the DOD system. For example, if you are in 

TRICARE, DOD can send you to a military hospital for treatment 

ahead of time. Not so with this separate system. 

Chairman JOHNSON. How many people are in that separate system? 

Mr. DODARO. It is about 134,000 people. 

Chairman JOHNSON. OK. I do want to, because my time is always short. In terms of actually implementing your recommendations, again, I mean, 37 percent fully implemented. That is not bad. 

Thirty nine percent partially implemented. What prompts agencies 

to implement your recommendations? What are things that we 

could potentially do to get higher levels of implementation? What 

are the road blocks? 
8 

Mr. DODARO. Well, first of all, a number of our recommendations 

require legislative action. So I think more focused attention by the 

Congress can really help in this regard. One of the barriers is that 

you have entrenched constituencies of these programs that have 

evolved over years, and so they are difficult to deal with. More visibility over time for these issues will help. 

The agencies can be prompted to act by a wide variety of reasons. 

Some of our recommendations have been consistent with things 

that they want to do over time, but they need legislative support, 

like, the DOD health care system that we talked about. So the 

agencies also have initiatives underway—they are facing enormous 

budgetary pressures to bring down their costs, so some of our suggestions are welcome cover for them to reduce some of their costs 

over a period of time. 

The big barriers, though you can see this in our statistics. Forty 

percent of actions that require one agency to take action to reduce 

overlap and duplication are fully addressed. Where multiple agencies have to act to address duplication or overlap across agencies, 

only 25-percent of actions have been fully addressed. This is where 

Congress and OMB come into play. They need to take a more active role. Where the agencies have more parochial interests and do 

not have the authority like in this consumer protection area that 

I mentioned, because a number of these agencies are independent 

regulatory agencies it is more difficult. They are not subject to 

OMB regulatory review processes, and so OMB’s reach is limited, 

and only the Congress can help address these issues. 

We also found, anomalies in the Consumer Protection area. For 

example, the responsibility for labeling of toy firearms and imitation firearms, rests with the National Institute of Standards and 

Technology (NIST). It is a legacy of things that happened in the 

past—to have our scientists focus on that activity when the Consumer Product Safety Commission (CPSC) takes care of all other 

labeling for toys and has presence where they are imported. It does 

not make sense. 

There is a lot of opportunity here to rectify things that have developed over the years that have just become generally accepted. 

Chairman JOHNSON. Certainly I want our staff to work with your 

agency to very specifically delineate what legislation needs to be 

passed, work with you in terms of exactly how to write the legislation. I do not know to what extent you already have all that out, 

but let us really prioritize this. Let us get those specific pieces of 

legislation, and let us come up with, again, a very well defined, delineated list, and let us start working on that. 

Mr. DODARO. We would be happy to do so. 

Chairman JOHNSON. Thank you. Senator Carper. 

Senator CARPER. Thanks. 

Mr. Dodaro, I have more questions certainly than I have time, 

and what I will do is follow-up in writing on some of these questions. 

What I would like to do, I want to talk a little bit about the Internal Revenue Service (IRS). Tomorrow is April 15, and it is on 

the minds of a lot of people, and the question about how can we 

enable them to do their jobs more effectively. But before I do that, 

you have heard me talk about how do we leverage the effectiveness 
9 

of this Committee, along with GAO, along with OMB and the administration, in finding ways to get better results for less money. 

How do we waste less money? And what I have always looked for 

is a way to realign our efforts, and your work especially with the 

high-risk list is always very helpful for us every 2 years. I call that 

our ‘‘to-do list.’’ 

The administration’s budget had some things in it that I thought 

were very good and maybe some that were less appealing. But they 

have a number of recommendations in their budget that are actually designed to force us to do more of what works and less of what 

does not, and also there were some recommendations in the President’s budget that deal with duplication. And some of them the administration can do by themselves, but others require us, either authorizing language or funding in some cases. 

Do any come to mind that you would want to prioritize with respect to what the administration is saying we ought to do in this 

area where you concur, GAO concurs, that we have some work to 

do ourselves? 

Mr. DODARO. Yes. The first thing that comes to mind is the government pension offset for Social Security recipients, particularly 

for spouses and survivors. In law, Congress has said that if you are 

receiving another government pension, that is supposed to be something that is offset when you are calculating Social Security benefits because you are really not paying into the Social Security system. This is particularly true for State and local employees who 

have their own retirement systems. 

At the Federal level, the Office of Personnel Management (OPM) 

gives all the statistics on Federal employees to Social Security so 

these benefits can be offset. But there is no mechanism to get State 

and local pension information. We have suggested it could be done 

through IRS. The administration has a proposal—that it has put 

forth multiple times to do exactly what we think needs to be done 

in this area. There are estimated savings of between $2.4 and $6.5 

billion, depending upon how the mechanism is set up and the extent to which it is retroactive. 

The administration also has had proposals in the science, technology, engineering, and math (STEM) studies—to reduce the number of programs, and they brought that down from 209 programs 

to 158 programs. They are targeting for 136 programs. So we are 

supportive of that effort. 

Strategic sourcing is another area that I mentioned in my opening statement that they are proposing for savings. They have identified different categories of spending across the Federal Government to focus on although we think they need to be more aggressive in setting targets and tools for the agencies to have good plans 

on going forward. 

So those are some of the areas that first come to mind. I would 

be happy to provide others for the record. 

Senator CARPER. Thank you. Commissioner Koskinen is going to 

be with us tomorrow from the IRS, and you have given us at least 

one more issue that we might want to raise where we can be helpful to them and be consistent with what you all are recommending. 

Speaking of the IRS, we have this huge tax gap problem, and you 

have testified to it before. Folks who work at GAO have testified 
10 

to it before, and we are talking about not billions of dollars or tens 

of billions but hundreds of billions of dollars. And looking ahead to 

tomorrow but also thinking about today’s hearing, one of the issues 

that we are going to explore with the IRS is how to become more 

effective and more efficient when the Commissioner testifies tomorrow. 

As you know, the IRS budget has seen a dramatic decline during 

the last 5 years. The President’s budget requested an increase in 

funding and also gives the agency the flexibility it needs to redistribute itself to taxpayer service and provide more resources toward 

program integrity. In fact, I understand that for every $1 the IRS 

invests in program integrity and enforcement, the return I am told 

is about $5, $6, $7 by improving its ability to curb identity theft, 

fraud, and other problems. 

My question is: Do you agree that improving the IRS budget 

could improve its capabilities to actually carry out its mission? 

Mr. DODARO. There is no question that additional money focused 

on enforcement can yield additional revenues over time. But in 

making that decision, we have suggested that Congress also look 

at ways that IRS can more effectively use the resources that they 

have. 

Senator CARPER. Good. 

Mr. DODARO. We have identified, for example, that they do not 

have good information on return on investment. We know overall 

that investment can yield more revenues, but which initiatives 

yield better income? 

For example, we looked at field exams versus correspondence audits, which are less resource intensive. We found if you moved 

about $124 million from field exams into correspondence audits, 

you can get $1 billion more back in revenue. We think there is a 

lot more that could be done within the IRS to target their resources 

more effectively over time. 

I am concerned, though, that they have had cuts in both enforcement and service over time. My best advice to the Congress is to 

watch this very carefully, because I am concerned over time it 

might lead to an erosion of voluntary compliance if people cannot 

get the information that they need in order to comply, and that 

would be very hard to get back. Right now it is at a fairly high 

level. Even though we have a huge tax gap, voluntary compliance 

is not where we want it to be, but it can be worse over time. 

Also, there are things Congress can do to make IRS more efficient. We have a recommendation that they be given the ability to 

set standards for paid tax preparers outside the ones that they already do. Most of the people go to paid tax preparers to get their 

taxes done. The last time we looked at this—we did undercover 

work with 19 tax preparers. We found only 2 of the 19 gave us the 

right answers. Oregon had a program where they were regulating 

paid tax preparers, and they found better revenue yields. 

Also, we have recommended that Congress give IRS expanded 

math error authority to correct tax returns where they have data 

that clearly shows errors. The public would have an ability to appeal that, but it would save IRS from starting an audit and using 

all kinds of resources when they know right away that they have 
11 

other data that shows that the taxpayer made either an honest 

mistake or an error. 

Also, we have made recommendations that the Congress give IRS 

the authority to require more electronic filing of records. And we 

have other recommendations to improve efficiency. 

Senator CARPER. Well, those are great, and we appreciate every 

one of them and want to follow-up with you. And tomorrow our 

hearing is very timely. Thank you so much. 

Mr. DODARO. Sure. 

Chairman JOHNSON. Thank you, Senator Carper. 

A little editorial comment. If we simplified our Tax Code, that 

would make it a little bit easier to comply as well. 

Mr. DODARO. That is also one of our recommendations. 

Chairman JOHNSON. There you go. I agree with that one. Senator 

Ernst. 

OPENING STATEMENT OF SENATOR ERNST 

Senator ERNST. Thank you, Mr. Chairman. 

Thank you, sir. It is good to have you back again today. I appreciate it. 

I enjoy these reports, and I am glad that you do them. I have 

noticed, though, that the number of programs that are identified 

for cost savings and those that are identified with fragmentation, 

they seem to decline every year. In 2011, I think there were 81 programs identified, and then in this current report there are 24. If 

you could just maybe walk through the process of how you choose 

those programs that are selected, if you think—are we moving in 

the right direction then? Are these just the programs that we are 

most likely to achieve or maybe some thoughts on how we get to 

these programs? 

Mr. DODARO. Right, and I would be happy to. When the legislation was first passed, as the Chair and Ranking Member mentioned, Senator Coburn was very interested in trying to move 

quickly. So what I agreed to do was to have GAO take a 3-year effort to try to comb through the entire Federal Government and 

identify the largest areas that we felt fit these categories. 

So we did a pretty good intensive sweep. It was very resource intensive. We started with the budget figures. Where does the money 

go? And we have a lot of institutional knowledge about government 

programs. Some of the area were based on work we had done in 

the past, and we were able to aggregate it. 

But to your point, the number of areas will continue to decline 

in my opinion because we focused on the biggest areas in the first 

3 years. The law requires us to have a regular process and schedule for producing these reports. Also, I felt it was very important 

to have a tracking system and a scorecard on what we have recommended to the Congress, and for the Executive Branch to keep 

these areas before our elected officials so that they could take action. We have seen that in a number of these cases, it takes a number of years to get action on our recommendations. 

So that is the reason for the decline; it was a big effort up front 

to comb through the Government. Now we are doing targeted reviews. 
12 

Senator ERNST. Very good. At least we are moving in the right 

direction. I feel very good about that. 

One thing that I did notice, there were comments about the serious mental health illnesses, and this is something, I have a very 

big passion overall when it comes to mental illness, but then also 

specifically with veterans. And so to see that the Department of 

Health and Human Service (HHS) and the VA, they have not been 

necessarily working together—and maybe you can speak to that, 

where you did identify that HHS is opposed to facilitating interagency coordination across the mental health programs and why 

HHS and the VA—why they are opposed to evaluating these programs. That seems very counterproductive to me. 

Mr. DODARO. Yes. 

Senator ERNST. If you could address that, please. 

Mr. DODARO. Cindy Bascetta, who is in charge of all our health 

care work and has a long history working in this area, can give you 

the details. But I was very disappointed in the agency’s response 

to not coordinate outside the agency in this particular area, and I 

believe congressional oversight would be helpful. 

Senator ERNST. Wonderful. Thank you, Cindy. 

Ms. BASCETTA. Good morning. 

Senator ERNST. Good morning. 

Ms. BASCETTA. We have ongoing work that is continuing to look 

at the coordination within the Department of Health and Human 

Services as well as across the Federal Government, and they have 

changed their tune a bit about our prior recommendation. So we 

do think that there will be increased action within Substance 

Abuse and Mental Health Services Administration (SAMHSA) to do 

much more in the way of leadership. 

Part of their initial hesitance was that they argued that CMS, 

in fact, was a payer but not a provider of services, which is true, 

but our report was not focused on the payment issue. It was focused on finding out which programs are most effective and gathering and disseminating that information across the programs that 

had the subject matter knowledge, including the civilian and the 

military and VA programs. We wanted them then to feed into a 

process where there would be a feedback loop. Those programs that 

were most effective would be reimbursed, and those that were not 

as effective or not evidence-based, if you will, would not receive reimbursement. 

So there is a long way to go in terms of measurement, but we 

are hopeful that there is more attention now being paid to this important area. 

Senator ERNST. Very good. I think that is very frustrating when 

you have agencies, when there are better ways of doing it, they are 

not implementing those. And I would echo that if there is legislation that we can work on to force the issue along, I am happy to 

do that. But this is a vulnerable population that we need to ensure 

is getting the best possible treatment, if at all possible. 

And then just briefly, I have been informed a little on a different 

topic, but I have been looking into the program and project management within the Federal Government, and it seems that there 

could be some opportunities there to increase efficiency in this area 

and cost-effectiveness. And it seems that there is no set career path 
13 

for project managers, just a few exceptions at the DOD and other 

Federal IT projects. But there is no job series that can track this, 

education requirements for that. I think that would be helpful in 

a way if we did have a program track for project managers. If you 

could speak to that. 

Mr. DODARO. Sure. Paul Francis, who heads up our acquisition 

work across the Federal Government, can speak to that. We have 

been concerned about the acquisition workforce, and we pointed out 

this area. You are absolutely on the right track here, and greater 

attention is needed. 

Senator ERNST. OK. Thank you. 

Mr. DODARO. Paul. 

Mr. FRANCIS. Good morning. 

Senator ERNST. Thank you, Paul. 

Mr. FRANCIS. I think when we talk about DOD, even though they 

have a lot of problems, they end up being probably the best agency 

at these types of things. So, with that caveat, in the Department 

of Defense we do find the program managers (PM)—rotate in and 

out of positions. If they stay in that career path, particularly if they 

are military, they are going to be career limited. So we have made 

recommendations that the Department of Defense make that a career path so people can succeed. 

And we also find that program managers for the government are 

not as well equipped to do negotiations with their industry counterparts. So they do not necessarily have the business acumen and the 

types of understanding of what incentives contractors come to the 

table with. So they need quite a bit of education and training and 

years in that career path to be able to be an equal partner at the 

table. 

Chairman JOHNSON. Thank you, Senator Ernst. 

Senator ERNST. Thank you. 

Chairman JOHNSON. Senator Heitkamp. And we are in good time 

right now as long as Senator Sasse does not come back. But if you 

can keep it to 7 minutes, I would appreciate it. 

OPENING STATEMENT OF SENATOR HEITKAMP 

Senator HEITKAMP. Thank you, Gene. It is always informative, 

and I want to thank you and your staff for the tremendous work 

that you do. We know the challenges that you have, the same challenges that all these agencies have, which is trying to meet our expectations with the staff that you have. And so I just want to applaud this effort and applaud your work. 

I want to focus on CMS. In your report you said CMS could save 

billions of dollars by improving the accuracy of its payments to 

Medicare Advantage programs through methodo—you know that 

word. Yes, I will get there. [Laughter.] 

Adjustments to account for diagnostic coding differences between 

Medicare Advantage and traditional Medicare. 

Now, the Medicare program is a program that is going to be 

stressed into the future. We look at that booming deficit, and, it is 

not an understatement to say we do not necessarily have a deficit 

problem; we have a health care growth problem. So we should be 

looking for every penny of efficiency and savings that we can find. 
14 

Can you elaborate on what you mean? And billions of dollars 

sounds like a pretty sizable sum. What do we need to do to get that 

done? 

Mr. DODARO. Yes, right. What happens is you have the Medicare 

fee-for-service program. 

Senator HEITKAMP. Right. 

Mr. DODARO. And then you have the Medicare Advantage, which 

is on a capitated rate. But the Medicare fee-for-service providers 

have a different diagnostic coding system than the Medicare Advantage system. So in our analysis, the same person in both systems would look sicker in the Medicare Advantage system than 

they would in the fee-for-service system. 

Now, our whole philosophy as a government is to pay people who 

need more medical care or are sicker, if you will, at a higher rate 

than people who are healthy people and do not need it. So in order 

to make the systems comparable, there is a risk adjustment factor 

where they take into account the characteristics of the beneficiaries. 

We found they were not using the most recent data available to 

make this adjustment factor. They were not considering certain illnesses and diseases or other characteristics of the population. They 

were not considering which of the beneficiaries might also be eligible for Medicaid programs. And so we believe a better methodological adjustment factor could be put in place that would save the 

government billions of dollars. 

Senator HEITKAMP. Is this a problem across the board with Medicare Advantage? Or do we see some providers actually billing differently than other providers? 

Mr. DODARO. Let me ask Cindy to come back to the table. She 

is our health care expert. But while she is coming, the one area 

that I am also concerned about that our report touches on is the 

growth in managed care for Medicaid, where there are no real program integrity factors in place. So that is another area I am very 

concerned about because in Medicaid, managed care is growing exponentially. So some of these lessons for Medicare also potentially—— 

Senator HEITKAMP. The lessons for Medicare Advantage should 

be learned when we are moving toward managed care in Medicaid. 

Mr. DODARO. Exactly. 

Senator HEITKAMP. Cindy. 

Ms. BASCETTA. Your question was whether—— 

Senator HEITKAMP. My question is: Do we see a variance between different providers under the Medicare Advantage program? 

Ms. BASCETTA. No. As the Comptroller General said, they are 

paid under a capitated rate. The difference is in the risk scoring, 

which is a relative measure of the health needs of the beneficiary. 

Senator HEITKAMP. So the problem is institutional and systemic 

across the board. 

Ms. BASCETTA. It is, yes. 

Senator HEITKAMP. OK. The other thing, I want to make a point 

to Senator Carper’s point. I once upon a time in a former life took 

over as tax commissioner for Senator Conrad. We started a program called ‘‘Fair Share,’’ where we invested $1 of resources to the 

Tax Department and returned $10 and over a period of 10 years 
15 

proved time and time again that those investments, when targeted 

and used appropriately, could, in fact, advance a revenue goal. And 

so there is a lesson learned from State government. 

But I want to get to the report because there is a lot in there 

and, it is frustrating for those of us who look at it and say, Why 

are not we doing all of this as soon as possible? But when you do 

the report, do you say this is a no-brainer, this would be easy to 

do, it is low-hanging fruit and we ought to prioritize that project 

maybe over some of the stuff that is a little more difficult to do? 

Mr. DODARO. Yes, well, we are basically taking all the work that 

we do in GAO. What is in this report is really a small subset of 

the work that we do every year. We respond to about 900 requests 

a year from Congress and do a lot of different work. And about 80 

percent of our recommendations actually are implemented over a 4- 

year period of time. So what you have in this report is really 

the—— 

Senator HEITKAMP. Twenty percent. 

Mr. DODARO. Yes. 

Senator HEITKAMP. But what I am saying, within the 20 percent, 

have you ever said let us rank them and tell people—— 

Mr. DODARO. No, we have not done that. We have identified ones 

for cost savings and tried to identify available scoring on these actions. But, our belief is that, they are all important areas and they 

could yield efficiencies. And they are not concentrated in jurisdiction in any one committee. They are across the Federal Government’s activities. 

Senator HEITKAMP. I get what you are saying, but I hope you understand what I am saying, which is that there are probably some 

things that are easier to implement than other things that you are 

recommending in your judgment, and these are things that it 

would not be, irresponsible of the Senate to say we want this done 

not tomorrow but yesterday? 

Mr. DODARO. Yes, right. I think the easy things to do are in the 

37 percent that have already been implemented. 

Senator HEITKAMP. So all the 20 percent are equally difficult. Is 

that what you are telling me? 

Mr. DODARO. Right. 

Senator HEITKAMP. Well, thank you, and I will yield back my 

time. 

Mr. DODARO. But I will give thought to what you said. 

Chairman JOHNSON. Thank you, Senator Heitkamp. Senator 

McCaskill. 

OPENING STATEMENT OF SENATOR MCCASKILL 

Senator MCCASKILL. It is hard for me to know where to start. As 

you know, I feel like a bee in a flower patch when you are here, 

Comptroller. But, I want to try to spend just a few minutes on strategic sourcing. 

It is frustrating to me, strategic sourcing. I do not know why this 

is hard for government. DOD, DHS, Department of Energy, and VA 

spent about $537 billion on Federal procurements in fiscal year 

2011. That is 80 percent of Federal procurements, but only 5 percent of those procurements are managed using strategic sourcing. 

And I am going to channel our Chairman here. In the private sec-
16 

tor, as much as 90 percent of the procurements are strategically 

sourced. 

If we just shaved one percent, off procurement spending just 

from these four agencies, we would get over $4 billion in savings. 

This is the definition of low-hanging fruit. Every year it is on the 

list. Every year, because these agencies are not bottom-line motivated, it just seems to go through the cracks. 

Let me give you one example for the record on a hearing that we 

had on food sourcing. In 2011, my Subcommittee at the time held 

a hearing looking at the Federal Government’s food service contracts, which are about $6.8 billion a year. The contractors—and, 

by the way, if this went on at CMS, there would be huge headlines. 

But the contractors are not giving us back the rebates that they 

are contractually required to give us. Just like the drug companies 

are contractually required to give back the drug rebates in the 

Medicaid program, the food companies are required to give us back 

the rebates as part of the contract. 

Two years ago, in front of this Committee, Joe Jordan, the head 

of the Office of Federal Procurement Policy (OFPP), said OMB was 

on top of it. He said the largest food service contracting agencies 

formed a team under Strategic Sourcing Leadership Council to 

gather data and to determine the best path forward. OMB told us 

they would have a report on this data in 2014, and we have heard 

nothing. 

Have you heard anything? Do you have any insight on this that 

could alleviate some of my frustration about how hard this appears 

to be for no good reason? 

Mr. DODARO. I share your frustration. I have been recently 

briefed by the head of OFPP, who came over and they tried to identify these different categories of spending that they are going to try 

to focus on; they are going to try to focus on IT first. But I urged 

them to move more aggressively in this area, and pick other categories as well. 

I think the Congress should negotiate with OMB on targets for 

reduced spending. Without targets for reduced spending, there is 

no incentive to move in this area. 

Now, that being said, there are also other problems—the private 

sector has better data on what they are spending the money on 

than the government has. 

Senator MCCASKILL. Right. 

Mr. DODARO. So, the data are limited. Paul Francis has been following this for years, and he will have additional insights. But I 

think unless there are these negotiated targets for reduced spending in those areas that are congressionally imposed, you are not 

going to see any big movement in this area at all. 

Senator MCCASKILL. And if you would, Mr. Francis, also address 

how effective you think it might be. DHS has done this, but you 

all cannot determine whether or not it is having any real impact. 

That is, making it one of the considerations on the Senior Executive Service (SES) bonuses—which, by the way, until very recently 

was like the sun coming up, an SES getting a bonus in government. It was never performance based. It was you get it if you get 

up and brush your teeth in the morning. 
17 

So do you think that it would be more effective if we also required that strategic sourcing efforts be part of a bonus calculation? 

Mr. FRANCIS. OK. So let me start with the broader issue of strategic sourcing, then come back. 

I think our first report on strategic sourcing was 2002, so movement has been extremely slow. We are doing a little bit better than 

5 percent now. I think DHS is actually at 20 percent. They are 

probably one of the best agencies. 

The reluctance has been to get into areas other than typical commodities. 

Senator MCCASKILL. Right. 

Mr. FRANCIS. We seem to have five different ways to buy pencils, 

but we will not go into engineering services. That is the hard stuff. 

So we have said just go in there and try and see what you can get. 

Gene is right about the targets. Unless it becomes important, it 

is not going to get done. And agencies get complacent. If they have 

the budget to pay for something, that kind of becomes the fair 

price; ‘‘We have the money for it.’’ 

Senator MCCASKILL. Right. 

Mr. FRANCIS. As the government moves toward strategic 

sourcing, I think we have to worry about complacency, because in 

the world of contracting, we tend to say—once we get a contract, 

we are done. 

Senator MCCASKILL. Right. 

Mr. FRANCIS. And industry is not done. They work every year, 

and anything that is a special service, they try to make it a commodity so they can get the market pressure to get them a better 

deal. 

So I worry a little bit going forward that in the government—we 

are going to get contracts in place and then say, ‘‘We are done,’’ 

which we are not. 

I do not know about direct links to bonuses, but they should be 

in SES contracts. Even DOD spends more money on services than 

it does products. Civilian agencies, way more, probably two or three 

times more on services. That type of emphasis I think should be 

in the contracts because that, coupled with targets, is a way to get 

attention on it. 

Senator MCCASKILL. Well, I think it would be terrific, Mr. Chairman—and I will yield the rest of my time because I know we are 

running short—if we would think about maybe doing a hearing on 

strategic sourcing as it relates to personal services contracts, because I think that is the Rubicon that we have not passed yet. That 

is where we probably need to shine a brighter light. Something for 

you to consider. 

Chairman JOHNSON. Well, and, of course, as you pointed out, 

there are a lot of dollars there, just low-hanging fruit. So we will 

certainly take that under advisement. Of course, you have a Subcommittee, too, that you can work on some of that. 

I appreciate Senator Lankford and Senator Peters coming here. 

I announced early on we have an important briefing coming up, 

and so I told Senator Booker—he wanted to ask one question, but 

we are just running out of time. And in fairness, I really cannot 

let you ask questions either. I fully encourage you to submit those 
18 

questions for the record. I think we have all got a lot of questions, 

because there is so much good work done by Mr. Dodaro and his 

office. 

Let me just conclude the hearing by thanking you, Mr. Dodaro, 

and all the members of your staff for doing great work. 

This hearing record will remain open for 15 days until April 29, 

5 p.m., for the submission of statements and questions for the 

record. 

This hearing is adjourned. 

[Whereupon, at 10:23 a.m., the Committee was adjourned.] 
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