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“Effective Government in a Time of Significant Challenges”

by Gene L. Dodaro

Comptroller General of the United States

Before the National Academy of Public Administration

Washington, D.C.

November 17, 2011

Good morning. It’s an honor to be here today to deliver the keynote remarks for the 

Academy’s fall meeting. The meeting agenda reflects many of the difficult and pressing 

challenges facing our nation. 

Long-Term Fiscal Outlook

Central among them is the struggle to place our national government on a more 

sustainable long term fiscal path. The financial market crisis and the resulting economic 

downturn occurred against a backdrop of fiscal trends that were unsustainable even 

before these shocks. For several years, GAO has published long-term fiscal 

simulations illustrating this structural imbalance. GAO’s most recent update on the 

government’s long-term fiscal outlook showed the provisions of the Budget Control Act 

of 2011 have improved the federal government’s fiscal outlook. The Act requires at least 

$2.1 trillion in deficit reduction from 2012–2021. But even with the Act, our simulations 

demonstrate there still is a longer term problem that needs sustained attention. 

Moving to a more sustainable, long-term fiscal path will not be easy. We don’t know yet 

what actions the Joint Select Committee on Deficit Reduction, better known as the 

―Super Committee,‖ may take. Additionally, reaching a sustainable path over the long 

term will require addressing the major drivers of the federal budget--demographics, 

rising health care costs, and revenues.

The major policy decisions about fiscal policy and the shape and the role of the federal 

government will—and should—be made by elected officials. That does not mean there 

is no role for federal, state, and local managers. In fact, managers should look for ways 

to provide even greater service to elected officials when they face a challenging 

environment.

The Challenges We Face: Roles for Managers

Let me talk about a few ways in which managers can contribute. First, we must pay 

attention to people. Budget cuts and workforce reductions can make employees, who 

came into government because they cared about the public good, feel devalued. 

Engaging them in the effort to improve government operations will be good both for 

morale and for government itself.

In addition to keeping up staff morale, there are a number of ways in which managers 

can help elected officials address the challenges facing our government and the 

American people. Some challenges are long standing, others are newly emerging.

 
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Globalization 

One of the trends we have long included in our strategic plans is global 

interdependence. As all of you know, economies, politics, information sharing, public 

health, and many other human activities are now linked in ways that were unimaginable 

a generation or two ago. 

Some of these capabilities have led to significant improvements in the standard of living 

of U.S. citizens and others around the world. However, some of the more challenging 

implications of globalization are also apparent, such as the recent problems seen in the 

U.S. and the world financial markets. In terms of the crisis in the United States, the U.S. 

financial regulatory system simply failed to keep up with this trend and the systemic 

risks it posed. 

Today, GAO is playing an expanded role in this area. We’ve issued reports on 

emergency lending by the Federal Reserve and the costs and benefits of future financial 

regulation. We also are working on a series of reports on the implementation of rules 

designed to address some of the earlier weaknesses 

In addition, on the international side, we’ve seen progress on financial regulation and 

capital standards. Notably, there’s the Basel III accord, which strengthens bank capital 

requirements and introduces new regulatory requirements for bank liquidity and bank 

leverage. GAO is also working with other national audit offices around the world to 

increase understanding and cooperation on financial issues and to help shape 

international auditing and accounting standards. 

Of course, it is not just financial markets that have become more global. For example, 

most countries now ship food and medical products to the United States. From1998 to 

2008, the volume of these imports more than tripled. While these have undoubtedly 

had benefits to U.S. consumers, risks associated with these products also underscore 

the regulatory challenge that occurs when these major shifts occur in the patterns of 

production and trade. 

In the case of food, the system for ensuring food safety in this country remains 

fragmented among 15 agencies that administer more than 30 food-related laws. Many 

of these systems were designed at a time when imports were not such a significant part 

of U.S. consumption. 

Similar challenges exist in ensuring that drugs and medical devices are safe and 

effective. According to FDA, as much as 80 percent of the ingredients that go into our 

prescription drugs come from overseas. At the present time, thousands of foreign drug 

and medical device manufacturers are registered to market their products in this 

country. Unfortunately, the FDA has had an uphill battle in addressing foreign 

production. In 2008, GAO reported that the agency inspected just eight percent of such 

foreign establishments. At that rate, it would take FDA 13 years to inspect all of them. 

FDA has made some improvement but has a long way to go. 

We believe that these kinds of reports can be a catalyst for greater Congressional and 

public awareness of the rapid changes in the external environment and the implications 

for the United States. They can also contribute to discussions on how to address these 

problems. 
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Beyond financial and other markets, globalization is also having an effect on how we 

ensure homeland security. GAO just issued a report on the 10th anniversary of 

September 11. While the Department of Homeland Security has made real progress in 

protecting this country from terrorist attacks, a lot more work remains before the 

Department realizes its full potential. Shortcomings persist in such key areas as border 

security, airline screenings, and emergency preparedness and response.

Visa overstays are a case in point. While visas issued to enter our country have 

received increased attention, our government still does not have a comprehensive 

system to track who leaves the country, when they do so, and to assure people comply 

with the terms of their visa. We’re continuing to work with Congress and DHS to 

strengthen management and data collection to help mitigate these risks.

In all of these areas, federal managers can bring their experience and expertise to bear 

to help spur progress. And in a time of fiscal challenges, it is particularly important that 

federal managers also help address a series of known, long-standing shortcomings in 

government operations. High on that list are federal contracting, overpayments, and 

tax administration and the tax gap. 

Contract Management

As GAO’s High-Risk List pointed out earlier this year, contract management is a 

government-wide problem. Over the years, GAO has raised concerns about contracting 

practices at agencies ranging from NASA to the Department of Energy to the 

Department of Defense. In fiscal 2010, the federal government spent about $535 

billion to acquire goods and services. On far too many of these contracts, significant 

shortcomings occur. 

The Administration deserves credit for its contracting reform initiatives, and I also want 

to acknowledge the important efforts of the Commission on Wartime Contracting. 

When it comes to contract management, GAO has identified four changes that could 

yield significant cost savings. First, minimize unnecessary duplication among 

interagency contracts. Second, introduce greater competition in awarding contracts. 

Third, use award fees more appropriately to promote improved contractor performance. 

And fourth, leverage the government’s vast buying power through greater use of 

strategic sourcing. 

Improper Payments 

Reducing improper payments could also yield significant savings. Congress and the 

Administration have both focused attention on this issue, but now we need to see 

results.

Estimated levels of improper payments across government have been rising steadily for 

years. In fiscal year 2010, improper payments jumped an estimated $16 billion to $125 

billion, largely because of significant increases in the outlays associated with 

unemployment insurance and the earned income tax credit program, both of which 

continued to exhibit very high error rates.
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Ten programs accounted for 94 percent of the $125 billion in improper payments. The 

problems for Medicare and Medicaid were particularly severe. 

The Tax Gap 

Billions more could flow to the Treasury by closing the difference between taxes owed 

and taxes paid. IRS last estimated the net tax gap in 2001at $290 billion. Many experts 

believe that the current tax gap is larger than that. 

No single approach will fully address the tax gap, but several strategies could boost 

taxpayer compliance. For example, Congress could simplify the tax code. In addition, 

IRS and Congress could act to enhance information reporting by third parties, expand 

compliance checking before refunds are issued, and improve data matching. We’ll also 

need to bring tax expenditures—preferences in the tax code - and the size of their 

foregone revenue under review. 

By themselves, the numbers I’ve just mentioned won’t close our fiscal gap, but they’re 

big numbers. We can’t afford to not solve these issues. Such waste and inefficiency 

undermine confidence in government and the public’s willingness to accept needed 

policy changes in other areas. 

Information Technology Investment 

It’s also time for government to become more consistent and successful in harnessing 

the power of technology. Wise technology investments can go a long way to help 

leverage scarce resources and maximize results. The government’s planning, 

implementation, and use of IT all continue to need further attention. Again, federal 

managers are essential to achieving progress in all of these areas. 

Performance Management

Additionally, shortcomings in the government’s ability to address issues in a holistic way 

over time have led to overlap and duplication in federal programs and activities. GAO’s 

recent report on duplication, overlap, and fragmentation cites a number of areas where 

such a holistic approach is needed. These include teacher quality programs, the 

military health system, surface transportation, and economic development initiatives. 

For many of the issues that we cited agencies need to collect more accurate and 

complete data on program outcomes and use the information to assess and compare 

programs' effectiveness. 

The GPRA Modernization Act of 2010 offers promise because it encourages a more 

coordinated and cross-cutting approach to achieving common goals. The Act requires 

the Office of Management and Budget to develop long-term priority goals for the federal 

government in a limited number of cross-cutting policy or program areas and in areas 

needing management improvement across government. Many of these management 

areas can be found on GAO’s High Risk List. They include financial management, 

human capital, information technology, procurement and acquisition, and real property. 

For performance information to be useful and used, it must be reliable. Transparency 

also matters. The Act requires agencies to disclose more on the accuracy and reliability 

of their performance data. It also requires quarterly rather than annual reporting on 

priority goals. And that information must be posted on a public website. 
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Best Practices

In a constrained budgetary environment, adopting best practices is more important than 

ever. Two years ago GAO issued its first cost-estimating guide to help federal, state, 

and local officials develop more reliable cost estimates for government projects of all 

sizes. The federal cost-estimating community in particular has long needed better tools 

for preparing cost projections. GAO’s new manual will go a long way to bridge that gap. 

Following the broad success of our cost-estimating guide, we plan to also release one 

concerning best practices in scheduling next year. Our hope is that government 

agencies will be better able to avoid common problems, such as cost overruns, missed 

deadlines, and performance shortfalls.

GAO’s Experience

In fiscal times like these, leading and motivating agency workforces also takes on a 

greater urgency and presents a greater challenge. How do you keep your employees 

focused and motivated in the face of dramatic, sometimes painful, changes? How can 

you ensure that your agency continues to fulfill its mission and deliver results? Is it 

possible to lead and alter the discussion from challenges to opportunities? 

I offer a few insights from GAO’s recent experience in dealing with budget reductions. 

By looking ahead and being prepared, GAO was able to lessen the impact of these 

changes on the agency, its mission, and its employees. 

Our first priority was to ensure the continued high-quality of our reports and testimonies 

to Congress. Quality is GAO’s trademark. Our credibility depends on the quality of our 

work and is at the heart of what we do for Congress and the nation. 

At the same time, people are key to carrying out GAO’s mission. We recognized that 

the anxiety level at the agency was extremely high and potentially distracting 

We identified four areas that we needed to focus on and that ended up being extremely 

helpful to GAO during this process.

First, employee engagement was essential. We met regularly with our union, employee 

advisory groups, and staff at all levels of the agency. During this process, we sought 

everyone’s input on the choices we faced and on GAO’s future direction and shape. We 

even set up an internal process where every employee could submit ideas on where we 

could cut spending.

Second, GAO placed a premium on communications and dialogue with our staff. We 

kept them informed, listened to their concerns, and tried to counteract the rumor mill. In 

all our communications, we tried to set forth the principles we would follow and the 

goals we would strive to achieve. 

I also visited every field office and met with GAO’s teams. We posted regular notices 

on GAO’s intranet, and answers to a series of frequently asked questions on our 

intranet page. 
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These efforts culminated in an Oct. 19 presentation to all GAO employees, which fully 

outlined GAO’s budget challenges and the steps we were taking to deal with them. 

GAO employees came away with a clear understanding of what was happening, what 

we planned to do, and how that might affect them. 

Third, the choices GAO made were data-driven. We reviewed our budget line by line, 

expenditure by expenditure.

Fourth, we explored new ways of doing business. We’ve begun a complete review of 

GAO’s business processes and we are considering two new pilot projects. We’re 

hoping to introduce a much more liberal telework policy in two of our field offices. The 

pilot will likely include an office-sharing, hoteling model similar to those used by many 

professional services organizations in the private sector. To help reduce travel costs, 

GAO is also looking at bringing video conferencing to every worker’s desktop.

The Changes That Are Coming

The bottom line is that there is no standard, government-wide approach to the 

budgetary and other changes that are coming. Agencies will need to tailor their 

solutions to their specific needs. In some cases, this might involve the use of new 

technologies or employment strategies to gain efficiencies.

Human capital management is especially important in this environment. GAO has 

raised concerns about this issue for years. Given the impending wave of federal 

retirements, strong succession plans are urgently needed. At the same time, the pool of 

younger workers is shrinking and the federal government faces more competition for the 

skilled workers it needs.

In difficult times, a broad, strategic perspective is essential to governing well.

Managers will need to take responsibility for developing innovative approaches and 

creative solutions to many of the challenges I’ve discussed today. By being proactive, 

managers can, to a great extent, manage the changes that are coming, rather than 

letting those changes manage them.

The reality is that lean budgets are likely for some time to come. Clearly, difficult policy 

choices lie ahead. If our federal workforce is to remain effective and relevant, foresight, 

innovation, optimism, determination, and strategic thinking must be part of that process. 

The challenges are squarely before us, and I believe managers are up to the 

challenges. Our nation’s future depends on it.

Thank you all for your time and attention. I would be happy to take some questions.