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HOW TO SAVE TAXPAYER DOLLARS: 

CASE STUDIES OF DUPLICATION IN THE 

FEDERAL GOVERNMENT 

HEARING 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

MAY 25, 2011 

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 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

MARK BEGICH, Alaska 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

SCOTT P. BROWN, Massachusetts 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JERRY MORAN, Kansas 

MICHAEL L. ALEXANDER, Staff Director 

JONATHAN M. KRADEN, Counsel 

NICHOLAS A. ROSSI, Minority Staff Director 

J. KATHRYN FRENCH, Minority Director of Governmental Affairs 

TRINA DRIESSNACK TYRER, Chief Clerk 

PATRICIA R. HOGAN, Publications Clerk and GPO Detailee 

LAURA W. KILBRIDE, Hearing Clerk 

(III) 

C O N T E N T S 

Opening statements: Page 

Senator Lieberman ........................................................................................... 1 

Senator Collins ................................................................................................. 2 

Senator Coburn ................................................................................................. 5 

Senator Johnson ............................................................................................... 18 

Senator McCain ................................................................................................ 20 

Senator Pryor .................................................................................................... 24 

Senator Carper ................................................................................................. 26 

Prepared statements: 

Senator Lieberman ........................................................................................... 35 

Senator Collins ................................................................................................. 36 

Senator Coburn ................................................................................................. 38 

WITNESSES 

WEDNESDAY, MAY 25, 2011 

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

Government Accountability Office ...................................................................... 5 

Hon. Daniel I. Gordon, Administrator, Office of Federal Procurement Policy, 

Office of Management and Budget ..................................................................... 8 

Vivek Kundra, Federal Chief Information Officer, Administrator, Office of 

E-Government and Information Technology, Office of Management and 

Budget ................................................................................................................... 11 

ALPHABETICAL LIST OF WITNESSES

Dodaro, Hon. Eugene L.: 

Testimony .......................................................................................................... 5 

Prepared statement .......................................................................................... 50 

Gordon, Hon. Daniel I.: 

Testimony .......................................................................................................... 8 

Prepared statement .......................................................................................... 81 

Kundra, Vivek: 

Testimony .......................................................................................................... 11 

Prepared statement .......................................................................................... 92 

APPENDIX 

Charts submitted by Senator Collins ..................................................................... 41 

Wall Street Journal article titled ‘‘Billions in Bloat Uncovered in Beltway,’’ 

submitted by Senator McCain ............................................................................. 46 

Responses to post-hearing questions for the Record from: 

Mr. Dodaro ........................................................................................................ 99 

Mr. Gordon ........................................................................................................ 102 

Mr. Kundra ....................................................................................................... 106 

(1) 

HOW TO SAVE TAXPAYER DOLLARS: 

CASE STUDIES OF DUPLICATION IN 

THE FEDERAL GOVERNMENT 

WEDNESDAY, MAY 25, 2011 

U.S. SENATE,

COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:03 a.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Joseph I. Lieberman, Chairman of the Committee, presiding. 

Present: Senators Lieberman, Carper, Pryor, Collins, Coburn, 

McCain, and Johnson. 

OPENING STATEMENT OF CHAIRMAN LIEBERMAN 

Chairman LIEBERMAN. Good morning and welcome to this hearing. Thanks to our witnesses for being here, a distinguished group 

of witnesses. 

This hearing is on the recent report issued by the Government 

Accountability Office (GAO) whose title is ‘‘Opportunities to Reduce 

Potential Duplication in Government Programs, Save Tax Dollars, 

and Enhance Revenue.’’ I do not know that there could be a more 

timely report issued, particularly as we urgently grapple with our 

runaway deficits and debt, and the worry among the American people that our great country is heading over a financial cliff grows 

more anxious and deep. 

The origin of this report will probably not be surprising to people 

who follow such things. The report is the result of an amendment 

that was introduced, and passed the Senate, by Senator Coburn, 

interestingly enough, to last year’s request for an increase in the 

national debt limit. 

I am sorry that Senator Coburn is not here. He is on his way and 

we are going to give him the right to give an opening statement. 

I do want to thank him for what he did and this report really justifies his introduction of the amendment. 

The report lists a series of programs, agencies, offices, and initiatives with duplicative goals and activities within departments. In 

addition to listing 34 areas where there exists potential duplication, overlap, and fragmentation, the report also summarizes 47 additional areas where opportunities exist either to reduce the cost of 

government operations or enhance our revenue collections. 

The focus of today’s hearing is on the duplication in Federal programs and agencies. The cost savings and revenue section, howVerDate Nov 24 2008 09:37 Feb 22, 2012 Jkt 067641 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 P:\DOCS\67641.TXT SAFFAIRS PsN: PAT
2 

ever, also provides very significant and interesting ideas, and for 

Congress and the Administration, opportunities to confront these 

twin problems of the deficit and the debt. 

I hope, Mr. Dodaro, that you will discuss the report in general, 

as well as the specific topic areas that we are going to focus on 

today. Just very briefly, those three topic areas are enterprise architecture, a key mechanism for identifying potential overlap and 

duplication; the consolidation of Federal data centers, providing opportunity to improve government efficiency and achieve significant 

cost savings; and collecting improved data on interagency contracting to minimize duplication in a way that could help the government leverage its vast buying power. 

So this is an excellent report. We have a great panel of witnesses 

to help us understand how we can assist the Congress and the Administration in implementing some of these ideas to reduce our deficit and our long-term debt. So I look forward to your testimony 

and the question and answer period. 

OPENING STATEMENT OF SENATOR COLLINS 

Senator COLLINS. Thank you, Mr. Chairman. There has never 

been any doubt that wasteful duplication is a serious problem in 

the Federal Government, but it was not until the GAO released its 

March report that we had such overwhelming, quantifiable evidence exposing just how serious this problem is. For that reason, 

I am grateful to the GAO, and also to Senator Coburn who, as the 

Chairman has mentioned, sponsored the amendment requiring this 

report and its subsequent annual updates. 

The findings of the report are not surprising since we have always known that there was waste and duplication. Still, GAO’s 

conclusion that the 81 areas quantified have opportunities for 

eliminating duplication, reducing operational costs, or enhancing 

revenue is an urgent call for action. At a time when our country 

has an unsustainable debt of $14 trillion, there simply can be no 

excuse for such waste, duplication, and inefficiency. 

I also want to point out that this duplication and overlap not 

only does not serve the taxpayer well, but also it is not beneficial 

to participants in Federal programs. To cite just one example, a low 

income person with a disability may confront a bewildering maze 

of some 80 programs offering transportation assistance. So this 

kind of fragmentation, overlap, and duplication serves neither the 

taxpayer nor the beneficiary. 

What is the cause of such duplication? At times, the President, 

seeking to put his own imprint on the budget to demonstrate his 

priorities, proposes a new program despite the fact that similar 

ones already exist. In other cases, it is Congress that creates those 

silos without checking to see if a similar silo already exists. 

Committee jurisdictions contribute to the problem, as each committee wants to carve out its own program to respond to its constituency. There are no bad intentions here. Just the opposite. It 

is the proliferation of good intentions that has created the problem. 

We in Congress see a problem, we want to fix it, we introduce a 

bill, we fight hard to pass that bill, we work to see that our program is fully funded, and to implement it. 

3 

Some of this duplication is actually happening within a single 

agency. In such cases, the agency head should help to sound the 

alarm and request the legislative fix. To address cross-agency redundancy, the President, in his State of the Union address, announced a plan to consolidate and reorganize programs in order to 

reduce duplication. But from my perspective, that important work 

appears to be proceeding at a snail’s pace. 

Perhaps the greatest irony of all is the fact that 20 agencies 

housing 56 different programs are all redundantly trying to improve the financial literacy of the American people. I would suggest 

that the American people could teach the Federal Government a 

thing or two about financial literacy. In difficult fiscal times, we 

should pay for something once, not dozens of times. 

And that is far from the only problem. The GAO found duplication across the government in a wide range of programs. In fact, 

it appears to me the GAO found duplication virtually everywhere 

that the agency looked. This duplication is hardly trivial in a financial sense. 

The duplication in programs to promote ethanol production, for example, deprives us of almost $6 billion every year. Not only is 

that unacceptable, given our $14 trillion debt, but also think of 

what that means for other competing priorities for scarce resources. 

Thousands of Americans with HIV/AIDS right now are on waiting 

lists for life saving medicines because the Federal program for people who cannot afford those medicines has run out of money. 

One topic to be covered today by the Comptroller General is the 

role of enterprise architecture as a tool that agencies should use to 

help identify and expose areas of duplication and waste. Now, enterprise architecture sounds like something out of Star Trek, but 

in reality, it is a blueprint that visually lays out the critical missions of an agency. And on top of that skeleton, agency officials 

then overlay the activities and programs that the agency is actually 

operating to see if they match those core missions. 

I would note, however, that enterprise architecture is being implemented only on an agency-by-agency basis. It cannot help eliminate duplication across multiple agencies unless someone is looking 

at all the blueprints at once. 

Another topic that we will hear about today is the use of the 

interagency contracts, strategic sourcing, and procurement. When 

properly used, the interagency contracts can save money and improve efficiency. By allowing agencies to order from other agencies’ 

existing contract vehicles, the Federal Government is able to leverage its enormous purchasing power and it can provide for a streamlined, more cost-effective method of contracting. 

But I have long been concerned that there are too many interagency contracts across government for the same goods and services. Unchecked proliferation limits the potential to maximize purchasing power, and thus, increases the cost of doing business with 

the Federal Government. 

Now, I know this past December that the Federal Acquisition 

Regulation (FAR) was amended to require agencies to develop a 

business case to justify the creation of a new contracting vehicle, 

and my hope is that those reforms will minimize duplicative contract vehicles. 

4 

1 Charts submitted for the Record by Senator Collins appear in the Appendix starting on page 

41. 

There is so much here that we need to address. I am convinced 

that if we could eliminate redundancy, duplication, and overlap, 

that we can literally save billions of dollars, and we can do so in 

a way that would actually improve the delivery of government programs and services. 

So I thank the Chairman for holding this important meeting 

today and I look forward to hearing our witnesses. 

Chairman LIEBERMAN. Thanks, Senator Collins. I agree with you. 

The results of the GAO study and the recommendations are really 

stunning and have enormous potential for exactly the kinds of savings that all of us are looking for. I was thinking that I hope somebody has given a copy of this to Vice President Biden and the bipartisan leadership group that is focused on the deficit and debt 

ceiling requirements. 

Mr. Dodaro, before I introduce you, we have blown up two of the 

charts,1 ‘‘Duplication and Overlap in Teacher Quality Programs,’’ 

and also ‘‘Duplication in Economic Development Programs.’’ There 

is a slightly modified Calvin and Hobbes cartoon there whose origin, I gather, may be the State of Maine. Is that true, Senator Collins? 

Senator COLLINS. This is true. 

Chairman LIEBERMAN. In its original, the word Congress did not 

appear. 

Senator COLLINS. This is Carl’s. I hope we do not get sued for 

copyright infringement. 

Chairman LIEBERMAN. Well, no. I think it is in the public domain. 

The first witness is Gene Dodaro, Comptroller General, at the 

U.S. Government Accountability Office. This is another great piece 

of work by GAO and, Mr. Dodaro, we thank you for it. 

Senator Coburn, would you like to give your opening statement 

now? 

Senator COBURN. I will be happy to. 

Chairman LIEBERMAN. Yes, go ahead, Senator Collins. 

Senator COLLINS. I was just going to make sure that Senator 

Coburn knew that you and I both praised him in absentia. 

Chairman LIEBERMAN. We did. 

Senator COLLINS. And as you have said before, that is the clearest test of true praise, when the person is not in the room. 

Chairman LIEBERMAN. That is what they told me in Washington. 

I do want to say, I was thinking, Senator Coburn, that though your 

membership in other groups may now be in doubt, we are always 

proud to have you as a Member of the Homeland Security and Governmental Affairs Committee. 

Senator COBURN. Well, I will be sure to let you know if I take 

a sabbatical from here. 

Chairman LIEBERMAN. Sabbaticals from here are impossible. 

Thank you and we welcome your opening statement. Now, what we 

said was that your amendment to the debt ceiling vote last year 

is what required, and then resulted in this extraordinary report 

which arrives at exactly the right time. Senator Coburn. 

5 

1The prepared statement of Mr. Dodaro appears in the Appendix on page 50. 

OPENING STATEMENT OF SENATOR COBURN 

Senator COBURN. Well, thank you and I thank the GAO for their 

work. I think the report is obvious, and the report only covers 

about a third of the Federal Government, and it was the easiest report for them to do out of the two others that they have left and 

owe us. But their work has been phenomenal. 

I also might note that most of this work was previously done and 

Congress did not pay attention to it, and Congress paid attention 

to it when we put it all together, and I think that speaks to part 

of our problem. And I know my colleagues are aware of the problems in front of us today, but it just shows you the power of combining good information in one report that then has an impact. 

My real hope is not that we will get the rest of the information, 

I know we will, but that we actually do something with it. Our 

founders made our process hard to make changes, and what you 

saw in duplication in this report comes from compassionate people 

wanting to try to make a difference in people’s lives, but not being 

compassionate enough about the dollars so they do not do a good 

enough job of oversight before they do additional things that are 

meant to do good. 

And so, the motivations are wonderful by our colleagues, but our 

techniques lack. My hope is that we can learn something from this, 

and that is why myself and several of our colleagues, 17, have said, 

We are not going to allow new bills to move through the Congress 

that do not eliminate things that are already doing the same thing, 

or we will make them better, put metrics on them, and are not 

going to eliminate another government program before they create 

a new one. 

So with that, I am appreciative of the work done. I am appreciative of the praise that the Chairman and Ranking Member have 

given me, but the Senate did that. I did not do it. The Senate 

agreed to that and when the Senate works together, we can accomplish good things. Thank you. 

Chairman LIEBERMAN. Thanks, Senator Coburn. 

Comptroller General, we welcome your testimony now. 

TESTIMONY OF HON. EUGENE L. DODARO,1 COMPTROLLER 

GENERAL, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. DODARO. Thank you very much, Mr. Chairman. Good morning to you, Ranking Member Collins, Senator Johnson, Senator 

McCain, and Senator Coburn. It is a pleasure to be here this morning to discuss our recent report. In the report, as you noted in your 

opening statements, we had listed 81 areas where we believe there 

is duplication, overlap, and fragmentation in Federal programs. 

There are also other opportunities to reduce costs, save money, and 

enhance revenue. 

The 81 areas touch hundreds of programs across the Federal 

Government and, indeed, touch virtually every major civilian agency, as well as the Department of Defense. Now, there are a couple 

of areas or categories I would point out this morning, the ones that 

you requested, Mr. Chairman, but also the first one is areas where 

there is potential duplication in Federal programs. 

6 

This is an excellent chart that lists all these areas—where there 

are similar programs trying to achieve similar objectives and, in 

many cases, serving similar populations. For example, there are 82 

programs that, either in part or as an allowable activity, are trying 

to improve teacher quality. There are over 80 programs trying to 

improve economic development opportunities for people. 

There are 44 different programs in the employment and training 

area that overlap one another in trying to provide similar services 

to similar areas. And then in the transportation surface area, there 

are over 100 programs that have developed over time. 

Now, the important part here is alluded to in your opening statements. These programs accumulated over time; in fact, some of 

them over decades. There is also, what we found, limited information on the effectiveness of some of these programs that make it 

difficult to make decisions going forward. 

Now, in some of these areas, as you pointed out, Senator Collins, 

the Administration has made some proposals for consolidation. In 

the teacher quality and education area, for example, they proposed 

combining 38 programs into 11. They have made proposals to combine some of the employment training programs. In the surface 

transportation area, they made a proposal to combine 50 of the programs into 5. 

So I think that this is a perfect opportunity for the Congress and 

the Administration to work together to rationalize these portfolio 

of programs to really clarify what the Federal role is, what exactly 

are the outcomes that the Federal Government is trying to achieve, 

how to measure that over time, and to reduce costs. There are a 

lot of associated administrative costs with these programs, along 

with the cost of the actual program outlays, that I believe there is 

a lot of opportunity to make changes. 

Now, in addition, as you point out, Mr. Chairman, we have a lot 

of recommendations to deal with what is a yawning net tax gap of 

an estimated $290 billion of taxes that are owed under the current 

system that are outstanding and not paid. 

And we have a number of recommendations to improve activities 

of the Defense Department, which are important, particularly in 

their business operations. We have a department that consumes 

half of the total amount of discretionary spending, and I would be 

happy to talk about those in the question and answer session. 

But specifically in the information technology (IT) area, where 

there is about an estimated $80 billion spent annually on IT services, we point out three areas where there are opportunities for 

savings. First is in the data center consolidation area. In 1998, 

there were 432 data centers, estimated, in the Federal Government. Last year, there were over 2,000. 

As the Federal agencies have tried to modernize their operations 

and increase their capabilities, they have wanted more computing 

power, but it has just grown in a fashion that has not been wellcoordinated. And as a result, there are redundant capabilities, 

under-utilized assets, and a significant amount of energy costs associated with running these data centers. There is a lot of money 

to be saved here. 

The Administration has started an initiative in this area which 

we support and are encouraged by, but our recent work for this 

7 

Committee looking at the data center consolidations, have identified the fact that the inventories of the Federal departments and 

agencies are not quite complete. In other words, all the centers are 

not yet listed, and the inventory of the assets within the centers, 

both hardware and software, is not yet complete. 

So we think that needs attention, and if the Office of Management and Budget (OMB) and the agencies focus on this area, we 

can see actually a good case of where plans can be enhanced that 

could yield the proper outcomes in this area that everybody is desiring to achieve. 

Now, also, OMB has put a Dashboard in place to track major IT 

investments. We think this is a big improvement over prior oversight efforts, to make sure that the cost, schedule, and performance 

of IT investments remain on track and that do not spiral out of 

control, as we have all seen in the past. 

We think this effort is good. I know there have been proposals 

introduced by this Committee to codify that Dashboard in law. I 

think that would be a good idea. But also, what we have suggested 

is there needs to be more current information posted on the Dashboard so that people can clearly get a good look at the current state 

of each of these IT investments. And there are also opportunities 

to look across the government, not just within individual departments and agencies, to look for duplicative investments. 

Now, a third area is enterprise architecture, as Senator Collins 

mentioned in her opening statement, that is a blueprint of exactly 

what the business systems operations are now and how IT systems 

support the business operations, and then explains the current 

state of affairs and the desired state of improvement. This can be 

used as a reference to make sure investments are not duplicative 

and that there are opportunities to conserve resources along the 

way. 

We think this is a real work in progress across the Federal Government right now. The Federal Government is not getting the full 

advantage of having enterprise architectures in place. 

I was particularly pleased, after our recent report, the Secretaries of Veterans Affairs and Defense have now agreed to address 

one of the areas we point out where they are both pursuing electronic health records systems, multi-billion dollar efforts that were 

not well-coordinated. 

Now they have committed, including to have a joint enterprise 

architecture, so that those systems can exchange information 

quickly. We think this has potential for savings, and more importantly, providing good services to our veterans. 

Now, on the contracting area, we point out a number of areas, 

and this is important because this represents over $530 billion a 

year in Federal spending. First is competition. Despite the advantages of competition, about 31 to 35 percent of the contracts over 

the past few years have been non-competitive, and that does not 

count ones that only have one bidder. 

Now, in some cases, it is legitimate and properly used, and in 

other cases, we think that more competition will lead to lower costs 

for the Federal Government and this will be a very positive development. The Administration has a proposal to reduce high-risk contracting by 10 percent. We are looking at the agencies’ progress in 

8 

1The prepared statement of Mr. Gordon appears in the Appendix on page 81. 

doing that over the last year and we will report to this Committee 

with our results. 

Also, we point out that award fees given contractors in the past 

have not been given for appropriate purposes. In fact, contractors 

have been paid award fees for sub-par performance. New procedures are in place now in the agencies in order to make sure that 

does not happen and the award fees are used appropriately, but 

they have to be adhered to. And as we have seen in the past, implementing good new policies is really something that would benefit from congressional oversight and would benefit from oversight 

by the Administration. 

The last two areas are interagency contracting and sourcing developments where the government could better utilize strategic 

sourcing and where they could better utilize their purchasing 

power. Now, the interagency contracting, as you point out, Senator 

Collins, works well when there is a good vehicle in place to do it. 

But right now, a lot of vehicles, particularly those where multiple 

agencies are getting together, not the government-wide vehicles 

that are already in place, and individual agencies are using enterprise-wide contracting. There is not a lot of visibility on these efforts. 

Now, OMB has put more requirements in place for business 

cases, but there really is not good information available across the 

Federal Government yet to make sure that these contracts produce 

good value, but are minimized, because too many of them can create increased procurement costs and stretch an already thin acquisition work force in terms of carrying out their responsibilities. 

Last, strategic sourcing has a lot of opportunities for the Federal 

Government, but again, better data is needed in this area. 

Now, as Senator Coburn mentioned, this is our first installment 

of our report. We are already working on year two, and there are 

many other areas where there is duplication, overlap, fragmentation in Federal programs. We are committed to finding those and 

reporting them to the Congress so that they can take action on 

these areas. 

Thank you for the opportunity to be here this morning, and I 

would be happy to answer questions at the appropriate time. 

Chairman LIEBERMAN. Thank you very much for your testimony. 

Next we will go to Daniel Gordon, Administrator of the Office of 

Federal Procurement Policy within OMB. Good morning, Mr. Gordon. 

TESTIMONY OF HON. DANIEL I. GORDON,1 ADMINISTRATOR, 

OFFICE OF FEDERAL PROCUREMENT POLICY, OFFICE OF 

MANAGEMENT AND BUDGET 

Mr. GORDON. Good morning, Chairman Lieberman, Ranking 

Member Collins, Senator Coburn, Senator McCain, and Senator 

Johnson. Thank you for the opportunity to be here this morning. 

I cannot help remarking at the beginning, I think you all know I 

worked at GAO for 17 years. I had the honor of working for and 

with Mr. Dodaro and with members of his team that are here. It 

is an honor for me to be with Mr. Dodaro in front of you today. 

9 

I want to say, in terms of the report on duplication, that I think 

this is another instance of GAO doing a real service by reporting 

on areas of unjustified duplication in the Federal Government. We 

in the Administration have made much progress, but we very much 

appreciate the attention being brought to this issue, both by the 

GAO report and, of course, by this Committee’s work. 

In the area of contracting, the challenges of interagency contracting that we see today are largely an unintended byproduct of 

the very good procurement reform efforts from the mid and late 

1990s, efforts in which, I should say, Members of this Committee 

played a very important and positive role. 

In those reforms, agencies were, for example, encouraged to create multiple award, indefinite delivery, indefinite quantity (IDIQ), 

contracts under which task orders could be quickly issued, a feature that greatly facilitated interagency use. In addition, government-wide acquisition contracts (GWACs) for the purchase of IT 

were authorized, subject to a business case being submitted, of 

course, to the Office of Management and Budget. 

And third, I should mention that in the 1990s, as you know, the 

use of the General Services Administration (GSA) Federal supply 

schedules skyrocketed and we saw a phenomenon of more and 

more blanket purchase agreements (BPAs) proliferating under the 

schedule contracts. Those three tools were very much embraced by 

agencies, partly because it let them cope with the unhealthy combination of a declining and unsupported acquisition work force on 

the one hand, and dramatic increases in contracting spending on 

the other. 

However, as this growth occurred, our policy guidance and our 

management controls did not keep pace. A situation developed that 

some likened to the Wild West, and I believe that GAO was fully 

justified in putting interagency contracting on its High-Risk List in 

2005. 

The good news is that we have made noteworthy progress in addressing the root causes of high risk in interagency contracting. 

That said, we very much agree with GAO, both in its duplication 

report and in earlier work that GAO has done, that we have a lot 

of work to do to reap the benefits of interagency and agency-wide 

contract vehicles. GAO has concluded that the ongoing challenges 

can be addressed by expanding the use of business cases and improving the quality of available data. We agree on both points. 

I should point out that while the issue of too many interagency 

contracts has gotten a lot of attention, during my year-and-a-half 

as the administrator, I have come to believe that we also need to 

be concerned, and perhaps more concerned, about situations where 

we do not have an interagency contract where one could eliminate 

duplication and save us money. 

Far too often separate and redundant contracts and BPAs are 

awarded by each agency component to serve a narrow customer 

base which duplicates effort and denies us the benefit of the Federal Government being the world’s largest customer. 

As the Chairman and others have remarked, in these tough economic and budgetary times, we simply cannot afford the waste that 

this duplication represents. Let me briefly highlight three initiatives that we have underway to reduce the wasteful duplication. I 

10 

want to talk briefly about business cases, strategic sourcing, and 

better data. 

First, we will soon be issuing guidance that requires agencies to 

develop business cases to support their decisions to create a new 

contract. While in many ways this is based on the success of the 

business cases we use in connection with government-wide acquisition contracts—by the way, a model that was commended and recommended for broader use by the Acquisition Advisory Panel a few 

years ago—the new business cases will expressly require that agencies consider whether their new contract might be causing duplication with existing vehicles, and they are going to need to justify 

why they think a new contract would be needed. 

Second, I have a few words about strategic sourcing that a number of the members mentioned. We are aggressively promoting 

strategic sourcing to leverage the government’s buying power. As 

part of our initiative to reduce contracting costs, virtually every 

agency has been pursuing some form of strategic sourcing, but we 

are most focused on the government-wide front. 

Working with the various contracting agencies and working 

closely with my office, GSA established innovative governmentwide BPAs for office supplies last spring, and it is currently working on setting up government-wide contracts for other commodities, 

especially commodities in the IT space such as wireless services. 

And I should point out that my office is working very closely with 

Vivek Kundra and his office and his team, as well as with the 

agencies’ chief information officers (CIOs) as we move forward in 

that area. 

Let me just point out one detail of the office supplies’ BPAs and 

show you how different it is from what we have done in the past. 

For the first time, every Federal employee from every agency that 

uses a government purchase card to buy office supplies from the 15 

vendors, most of whom are small businesses—it does not matter if 

they make the purchase over the Internet, in the stores, by telephone, they can go in any way they want: They can go through the 

Web sites of the government, they can go through the Web sites of 

the vendors. They will automatically get the discount—that never 

existed before. It is somewhat shocking that it never existed before, 

but the fact is we are now getting it. Not only that, we are requiring the 15 vendors to give us frequent reports on everything that 

is being purchased. 

So for the first time, we are getting weekly reports of data, and 

I can tell you that the sales under those 15 BPAs are going up at 

a very quick pace. We are making progress, but as GAO likes to 

say, much work remains to be done. 

A few words about data. We are working to improve the availability and quality of data. The example from the office supplies’ 

BPAs is one specific case. We need to equip our agencies with good 

data so they can make well-informed decisions. In particular, I 

should say, I am personally troubled that we have this proliferation 

of agency and often component-specific BPAs. We do not know anything about them. If you ask me how many BPAs exist under the 

schedules, the answer is, I do not know. We have no visibility into 

BPAs, and as a result, we have started an effort several months 

ago where we are making some progress working with GSA so we 

11 

1The prepared statement of Mr. Kundra appears in the Appendix on page 92. 

will have a way for agencies to learn about BPAs. With improved 

visibility, I am hoping that we can reduce the duplication and consolidate our procurement volume. 

As I close, let me say, much still remains to be done. We need 

to consistently realize the full potential of interagency contracts. 

We very much look forward to continuing to work with this Committee and its Members, and with other Members of Congress, so 

that we can reduce duplication and achieve greater efficiencies and 

savings for our taxpayers. 

This concludes my oral statement, but obviously, I would welcome your questions when we get to the question and answer time. 

Thank you. 

Chairman LIEBERMAN. Thanks, Mr. Gordon. I appreciate that report on what your office has been doing, and I agree with you, more 

does need to be done. When I think about it, since both you and 

Mr. Kundra are in OMB, and I know Jack Lew, the Director of 

OMB, is at the table in the negotiations on the budget going on 

now under the auspices of the Vice President, I just wanted to formally ask you to make sure that a copy of this report is before 

them because I think it can help them achieve some of what they 

want to achieve now. 

Mr. GORDON. Thank you. I suspect they have it, but I will be absolutely sure that they have it. 

Chairman LIEBERMAN. Good. Thank you. 

The final witness on the panel is Vivek Kundra, Federal Chief 

Information Officer, Administrator of the Office of E-Government 

and Information Technology. Thanks for being here and please proceed. 

TESTIMONY OF VIVEK KUNDRA,1 FEDERAL CHIEF INFORMATION OFFICER, ADMINISTRATOR, OFFICE OF E-GOVERNMENT AND INFORMATION TECHNOLOGY, OFFICE OF MANAGEMENT AND BUDGET 

Mr. KUNDRA. Good morning, Chairman Lieberman, Ranking 

Member Collins, Senator McCain, Senator Johnson, and Senator 

Pryor. Thank you for the opportunity to testify this morning. 

During the State of the Union, President Obama spoke about 

overlapping programs and redundant spending across the Federal 

Government. The President stated that we live and do business in 

the information age, but the last major reorganization of the government happened in the age of black and white television. This 

Administration is focused on bringing the government into the information age, to drive up efficiencies and drive down costs. 

The main challenge is not new. The way projects are funded, 

agency by agency, bureau by bureau, program by program, prevents us from leveraging powerful and innovative technologies 

across the government. With these institutional silos, the best intended efforts for cooperation between and even within agencies 

often meet organizational friction. 

We need to look no further than the very infrastructure that 

powers our IT systems to see the evidence of wasteful and duplicative investments. The government operates more than 2,000 data 

12 

centers that power more than 24,000 Web sites, more than 500 

human resource systems, and more than 500 financial management systems. These are staggering numbers and, without a focus 

on reform, would continue to grow. 

Today I would like to highlight three elements of our approach 

to reverse these unsustainable trends and to stop this madness. 

First, eliminating duplicative IT infrastructure, requiring agencies 

to shut down the very data centers that have allowed these redundant systems and applications to sprout like weeds. 

We are leading the largest data center consolidation effort in history to eliminate at least 800 data centers in the next 4 years. As 

Mr. Dodaro mentioned, since 1998, the number of data centers has 

more than quadrupled from 432 to more than 2,000 data centers. 

Under this effort, 137 data centers will be closed by the end of this 

year, of which 39 have already been shut down. 

Shutting down data centers will free up resources to support mission critical activities, reduce the government’s overall energy and 

real estate footprint, and improve our IT security posture. In addition, starving this duplicative infrastructure, combined with a shift 

of the cloud, will help prevent the unchecked growth of systems. Already 15 agencies have identified approximately 100 collaboration 

systems serving 950,000 users that will move to the cloud. 

On May 9, GSA issued a request for proposals that pools the government’s purchasing power and enables us to consolidate these 

hundred-plus collaboration systems. The request for proposal is estimated at about $2.5 billion, which was developed in partnership 

with State and local governments and will be available for their 

use as well. 

Second, we are reforming IT management. To remove the structural barriers that get in the way of consistent execution, we developed a 25-point plan to reform Federal IT management. The plan 

is grounded in our efforts, since day one, to transform the management of Federal IT by shining a light on the performance of how 

these IT projects perform, and to also make sure that we are holding government managers accountable for the performance of these 

IT initiatives. 

In June 2009, we launched the IT Dashboard, making information on the performance of IT projects such as budget and schedules publicly available for the first time, with a picture of every 

CIO right next to the IT project that they are responsible for. 

Using the Dashboard, we targeted wasteful IT projects through 

TechStat accountability sessions. These are face-to-face sessions 

where we bring in senior agency leadership to review the performance of these projects. 

We have already reduced life cycle costs of major IT investments 

by $3 billion and decreased the average time to deliver meaningful 

functionality from over 2 years down to 8 months. So far, agencies 

have conducted their own TechStat accountability sessions. There 

have been over 80 of these sessions that have led to accelerated 

deliverables and major changes in management of how these 

projects are being run. 

Enterprise architecture can be another valuable tool for lowering 

the cost of government operations. For example, architecture was 

used to cut the cost of connecting local police records management 

13 

systems to a nationwide system from $250,000 to $10,000 per system, saving the government millions of dollars. 

Yet, too often, as practiced, architecture is an aimless paperwork 

exercise, churning out artifact after artifact that serves only to fill 

metal cabinets across Washington. That is why, as part of our reform efforts, we are re-purposing the architecture community to 

find and eliminate duplication and move agencies to shared services. 

Third, we are streamlining service delivery to keep pace with the 

public’s demand for online services. The Federal Government must 

deliver services better, faster at a much lower cost. Today there are 

more than 24,000 Web sites of varying design, navigation, 

usability, and accessibility. Many of these are redundant, outdated, 

poorly maintained, or all of the above. 

Last month, President Obama issued an Executive Order directing agencies to streamline service delivery and improve the experience of their customers. As part of this effort, agencies are identifying Web sites that can be consolidated or eliminated to simplify 

access to government services and to lower the cost of government 

operations. 

In conclusion, eliminating duplicative IT infrastructure, reforming Federal IT management, and streamlining service delivery are 

at the core of the Administration’s approach to root out waste 

throughout government. Our focus on execution has already produced results from terminating redundant investments to eliminating wasteful infrastructure. 

I appreciate the Committee calling this hearing today, and it will 

require all of us to work together to address the magnitude of this 

problem from all levels of government, from the Legislative to the 

Executive Branch of the government. Thank you for the opportunity to testify. I look forward to answering any questions you 

may have. 

Chairman LIEBERMAN. Thanks very much, Mr. Kundra. We will 

have 7-minute rounds of questions. 

The GAO report makes clear, and Mr. Dodaro did in his testimony today, that it is too often difficult to provide precise estimates of the extent of unnecessary duplication among government 

programs because of the lack of good program performance data. 

In many instances, the report makes clear the lack of data also 

appears to be a cause of duplication; in other words, many of the 

Federal agencies do not seem really to know what resources they 

currently have available to them. Data centers and interagency 

contracts that we have been talking about are two good examples. 

And because of that information gap, a program or agency is 

more likely, of course, to duplicate existing resources than efficiently using what already exists. So I want to focus in on this and 

first ask you, Mr. Dodaro, why do you think OMB and the Federal 

agencies have had such a difficult time accumulating this information? 

Mr. DODARO. It needs to be a priority. 

Chairman LIEBERMAN. Right. 

Mr. DODARO. It has not been a priority in the past and there 

needs to be a concerted effort. There is turnover in officials. There 

are not incentives necessarily in place in all cases to collect the 

14 

data. And it is not that difficult. In the program evaluation area, 

I have been concerned for some time that the government’s capacity was basically downsized in the 1990s with other administrative 

support functions and there was not a lot of priority given. 

I was pleased to see that the Administration recently has provided some opportunities for people to have funding to be able to 

make investments. So having good information requires making 

good investments. Having good investments means there has to be 

a priority for spending, and, quite frankly, it has not reached that 

level. It is also one of the first areas to be cut in the downsizing 

environment. But without the information, you are prone to either 

have more duplication or you are going to miss opportunities for efficiencies. 

Chairman LIEBERMAN. Thanks for that. 

Mr. Gordon, please respond to that, and let me phrase it this 

way. The Committee has had testimony for years about problems 

with interagency contracting, and yet, it still is a practice. GAO 

makes clear that we do not actually have a comprehensive and accurate record of which agencies are using interagency contracts or 

even, in some cases, which interagency contracts exist. 

So respond, if you would, both to what Mr. Dodaro has just said, 

but also to why has it been so difficult—and I know you are relatively new where you are—to create a useful dataset on interagency contracting? 

Mr. GORDON. Thank you, Mr. Chairman. It is a very important 

question. It is a question that I have spent quite a bit of time worrying about in my year-and-a-half as the administrator. Several 

thoughts. One, as Mr. Dodaro said, there is the issue of making it 

a priority. I can assure you we are now making it a priority. 

Two, bringing together data IT systems can be expensive and 

time-consuming. We are trying to consolidate data. Many places in 

our procurement system we have all different databases and they 

are not interlinked, and as a result, our overwhelmed, overworked 

acquisition work force has to enter the same data again and again, 

and it is often hard to get the data. 

We are making significant improvement in terms of sharing data 

so that we can quickly find out. For example, through the new Federal Awardee Performance and Integrity Information System, we 

can now find out whether a company has been debarred. Our contracting officers can learn about the past performance far more easily in the past. We can get other information to help us. There are 

lots of challenges we could all point to, but we are making 

progress. 

Let me say a couple of words, if I could, sir, about interagency 

contracts in particular, because what I have learned and what we 

have learned is that there is some misunderstanding about the volume. If you look at the excellent Acquisition Advisory Panel report 

from a few years ago, you will see reference to $200 billion. That 

is a very high figure. 

When we drill down, we learn that all that represents is IDIQ 

contracting. It does not represent interagency or multiagency contracting. Our best estimate today is that we are talking not about 

$200 billion, but about $50 billion. That is a lot of money. But $50 

billion is a much smaller universe and, it turns out, we have much 

15 

better visibility than we thought we did because we thought there 

was $150 billion into which we did not have visibility. Of the $50 billion, if you look at it, something short of $40 billion 

is the schedules. We have lots of visibility in the schedules. Several 

billion dollars are the GWACs for IT. We have very good visibility 

there. What is left over is a small number of contracts. 

And we have been talking about putting together a centralized 

database. It has been a recommendation of GAO’s and it is something we have looked at seriously. I am somewhat concerned about 

the cost of putting that together, especially because we recently 

learned that there is at least one commercial company that has a 

database that many of our agency personnel have access to through 

a subscription. 

When we compared that commercial database to the GAO’s report identifying interagency contracts it turns out the commercial 

database picks up every one except for a couple that, in fact, had 

expired. So that it looks like the visibility is better than we realized 

in the past, but I in no way want to under-estimate the challenge 

of getting the information out, sharing the information, and training our work force. 

Chairman LIEBERMAN. So that is a really interesting answer. So 

is your thought now that you are going to more broadly use the 

commercial database than develop something new yourselves? 

Mr. GORDON. We are looking into it. We want to be sure that we 

use taxpayer funds wisely, as you can appreciate, Mr. Chairman. 

Chairman LIEBERMAN. Right. 

Mr. GORDON. It could be that it does not make sense to create 

a new government database that would, in a sense, be duplicating 

what the commercial database has. But I will tell you there is one 

huge gap. It is not interagency contracts or multiagency, it is single 

agency contracts. Way too often we will have a situation where the 

Department of X or a component within the Department of X does 

a contract for something where another component in the very 

same agency already has a contract and they do not know about 

it. 

Chairman LIEBERMAN. Yes. Well, that is unacceptable. 

Mr. Dodaro, did you want to add something? 

Mr. DODARO. Yes. I would just want to say for the record, we do 

not really care where they get the information from. 

Chairman LIEBERMAN. Right. 

Mr. DODARO. It ought to be done in a cost-efficient manner. So 

I just wanted to make that point. Our point was, if you need a 

database, you can either build it or buy it. It does not matter. 

Chairman LIEBERMAN. Thanks. My time is up. Senator Collins. 

Senator COLLINS. Thank you, Mr. Chairman. 

Mr. Gordon, I know that you were listening intently to the 

Comptroller General’s testimony this morning. Did you agree with 

his statement that more competition for Federal contracts helps to 

lower costs and improve quality? 

Mr. GORDON. As is often the case, I fully agree with the Comptroller General. On the particular point of competition, I agree and 

then some. Competition does more than lower costs and improve 

quality. It can bring us innovation, it can increase opportunities for 

small businesses, and it protects the system in terms of integrity. 

16 

We are pushing hard for competition and the fact is, we are getting 

results. 

As you know, we have given the agencies a goal of 10 percent reduction in the dollars going into high-risk contracts. We include 

both sole-source contracts and a different kind that GAO has been 

very helpful in highlighting, and that is one-bid contracts where 

you had a competition, but received one bid. The results are pretty 

good, but we still need to push harder. 

Senator COLLINS [presiding]. Mr. Gordon, in light of that statement, I find it very hard to understand why the Administration 

has considered two Executive Orders that would have exactly the 

opposite impact. They would drive up the cost of Federal contracting by shrinking the pool of bidders, and they would put small 

businesses at a particular disadvantage under the first Executive 

Order that I am going to discuss with you. That is the so-called 

High Road Draft Executive Order. 

Under this Executive Order, the Administration was considering 

giving extra points depending on the wages and the benefits that 

a company paid its employees. Now, there are small businesses 

that are very eager to do business with the Federal Government 

that could provide very good costs, excellent quality, the best value 

to the taxpayers, but that would lose points under the system the 

Administration was proposing because they were unable, at that 

point in their development, to reach the wage standards that the 

Administration would deem appropriate. 

A second Executive Order that the Administration has under 

consideration would actually require any entity that is bidding for 

any Federal contract to disclose political contributions from the 

previous 2 years. That, too, would discourage many businesses 

from applying to do work for the Federal Government. 

For example, if a business—and this applies to the executives, to 

the directors, to the affiliates of this business—supported conservative causes or Republican candidates, that business might well 

conclude that it is pointless to submit a bid for the contract. After 

all, why would this information be required if it were not going to 

be a factor in the source selection? 

Similarly, if there is a change in Administration and it is a Republican Administration, a firm that has been very active in supporting Democratic candidates and liberal causes might well conclude that since this information is being required, that it is pointless to bid. Both of these Executive Orders would have the result 

of shrinking the pool of bidders. 

So given what you have just said about the benefits of competition and having as healthy and robust competition as possible, 

which I totally agree with, why would the Administration be considering these two Executive Orders? 

Mr. GORDON. Senator Collins, I am not going to be speaking 

about draft Executive Orders. Neither I nor anyone in the Administration believes it is appropriate for us to be discussing drafts. But 

I will tell you the bottom line. 

The bottom line is that we are committed to increasing competition. We are committed to increasing opportunities for small businesses in Federal contracting. We are committed to strengthening 

the professional character of our wonderful acquisition work force. 

17 

We are committed to protecting the integrity of our contracting 

system so that we never have the reality or the appearance of anything other than the appropriate evaluation factors being taken 

into account in source selection. We will protect our contracting 

system from any appearance of political influence. 

Senator COLLINS. Well, Mr. Gordon, I am asking you to discuss 

the policies underlying these Executive Orders, and you are the 

head of the Office of Federal Procurement Policy. You are intimately involved in setting procurement policy. Let me ask you a 

broader question. Are you aware of information that a contractor 

is required currently to submit with its proposal that is not intended to be used by the agency to make its decision on which contractor provides the best value? 

Mr. GORDON. There is information that we require from vendors 

competing for contracts even though we would not take it into account. That is information about lobbying activities. It is information about the executive compensation for their executives. Those 

factors are not taken into account, as you know, Senator Collins, 

because you have a depth of knowledge in this area that is very 

beneficial, I can tell you, to us in the procurement system. 

The only factors that are taken into account are the factors that 

are set out in what we call Section M, the evaluation criteria. 

There could be other information that is submitted, such as the 

ones I gave you. 

Even though it is submitted, even though there is disclosure, 

whether it is in the bid or elsewhere, that information cannot affect 

the award decision, and if it did, if there was information outside 

the evaluation criteria, as you know, a disappointed bidder that 

lost and felt that the wrong information was considered or improper information considered, can file a bid protest either at GAO 

or at the Court of Federal Claims. 

Senator COLLINS [presiding]. Well, let me make a very clear distinction here. The certification on lobbying that the FAR requires, 

is to certify that no appropriated funds are associated with trying 

to influence the outcome of the specific contract. That certification 

is to ensure that unlawful behavior does not occur. It is not unlawful, 2 years before bidding on a contract, to have contributed to a 

candidate or cause of your choice. 

The point that I am trying to make is, even if you could somehow 

require the reporting of political contributions and yet say that 

they should not be considered in the source selection, which to me 

raises the question of why you are requiring them to be reported, 

then you are missing the earlier point, which is that businesses are 

going to decide that the system is stacked against them and not 

bother to submit a bid, because otherwise, why would this information be required? 

My time has expired, but I may well come back to this. I hope 

that you will take a hard look at both of these Executive Orders 

and the policies behind them because if, in fact, this Administration is committed to expanding competition, as you eloquently said, 

it should not be issuing Executive Orders that is going to do exactly the opposite. 

I have taken over the gavel temporarily. Senator Johnson is next, 

then it will be Senator McCain, then Senator Pryor. 

18 

OPENING STATEMENT OF SENATOR JOHNSON 

Senator JOHNSON. Thank you, Senator Collins. I also want to 

thank you for raising this issue. I am every bit as concerned and 

alarmed about these two Executive Orders as you and I hope the 

Administration rethinks those very rapidly. 

But I will tell you that I am concerned about something else this 

Administration is doing. I have been watching Washington for 31 

years running a manufacturing plant and from my standpoint, this 

place is pretty broken. Our budget process is broken. Evidence of 

that is the fact that we have not passed a budget in the Senate for 

756 days now. 

It seems like this Administration is assuming that they are just 

going to automatically get an increase in the debt ceiling. I think 

that is a very irresponsible assumption. Monday, I went to the floor 

of the Senate and asked this Administration to start laying a contingency plan just in case. I think it is the responsible thing to do. 

I guess, Secretary Timothy Geithner, this morning said that their 

plan is for the Congress to pass a debt limit. Their fall-back plan 

is for Congress to pass a debt limit. And their fall-back fall-back 

plan is for Congress to pass a debt limit. Again, that is a very irresponsible assumption. So today, I will be sending a letter formally 

asking this Administration to develop some contingency plans just 

in case the debt ceiling is not increased. 

I guess I want to start out my questioning with members from 

OMB that are here. Is there any plans underfoot at all to start 

prioritizing essential service spending just in case the debt ceiling 

does not get increased? 

Mr. GORDON. Senator Johnson, I appreciate the importance of 

the question. It is not an area in which I feel comfortable responding. 

Senator JOHNSON. Having been in government awhile, this is not 

the first time we have ever started coming up against these deadlines. Has there ever been any kind of contingency plan developed 

in terms of prioritizing essential spending within the agencies just 

in case? 

Mr. GORDON. I can tell you that it is just not a question for the 

Administrator of Federal Procurement Policy to answer. 

Senator JOHNSON. Within OMB, who would be the person I 

would be calling to find out? 

Mr. GORDON. We are happy to relay the question back to our colleagues within the Office of Management and Budget. 

Senator JOHNSON. Well, Mr. Dodaro, let me ask you in terms of 

GAO’s efforts in something like that. Have you ever seen that type 

of prioritization just in case? 

Mr. DODARO. I am not aware of that outside of the Secretary of 

Treasury’s extraordinary authority to take measures so that the 

debt ceiling is not breached. 

Senator JOHNSON. Obviously you are a creature of Congress here, 

as is the Congressional Budget Office (CBO). Would those be the 

two agencies that would try and develop those types of plans, just 

in case? How would you work with CBO to figure out, if this happens? From my standpoint, if we do not get a debt ceiling increase, 

we will be looking at operating under about $2.6 trillion, I guess 

I would call it, a debt ceiling budget. That is what this AdministraVerDate Nov 24 2008 09:37 Feb 22, 2012 Jkt 067641 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 P:\DOCS\67641.TXT SAFFAIRS PsN: PAT
19 

tion has estimated revenue will be in 2012. Is there any effort, or 

how would we go about prioritizing spending under that type of 

scenario? 

Mr. DODARO. Well, that would be basically a policy decision by 

the Congress and by the Administration to take. I mean, there is 

really not an analytical answer to that question. It is really a policy 

matter. And we pointed out in legal decisions, the Secretary of the 

Treasury has the authority and broad discretion to be able to do 

that. 

Senator JOHNSON. One of the reasons I raise it in this hearing 

is you have laid out a list of duplicated programs here. Within that 

list have you prioritized, and I know you have said that it has been 

difficult to figure out how effective they are, but still, have you at 

all prioritized the effectiveness of those programs? 

Mr. DODARO. We have listed out which programs have had evaluations and have been proven to be effective and which ones have 

not had any evaluations at all. For example, in the domestic food 

assistance area, there are 18 different programs. Seven of those 

programs, including food stamps and the women’s and infant children’s area, have had performance evaluations and have proven to 

be effective in stemming hunger and achieving their objectives. But 

11 of the 18 programs have not been evaluated and there is limited 

information available. 

In the employment and training area, of the 47 programs only 

5 have had evaluations of impact of the programs since 2004. So 

there is very limited information available on those programs that 

makes it hard to make decisions. As I testified before you and other 

members of the two subcommittees on the Government and Performance Results Act Modernization, hopefully the requirement for 

OMB and the agencies to produce performance measures will yield 

better outcomes in the future. But right now, you have a really 

mixed hand that you are having to deal with. 

Senator JOHNSON. So what would be the most effective and efficient way to get the agencies to start actually taking a look at this? 

Because again, I am just highly concerned that if nobody is looking 

at this now, we will be in a crisis if we do not increase that debt 

ceiling, and we can potentially avoid that if we plan. 

Mr. DODARO. My suggestion would be to use the Administration 

proposals already for consolidation of the programs as a starting 

point for discussions. Also, we need to really ask tough questions 

about what is known about programs that do not have empirical 

evaluations with evidence, and what are the options for covering 

those services under broader programs so you reduce administrative costs. 

Senator JOHNSON. But again, that would be relying on the Administration, correct? 

Mr. DODARO. Well, no. Congress would have the ultimate decision. In the 81 areas that we have outlined in our report, well over 

a third of them will require legislative action to implement. The 

Administration could not implement them alone. 

I am just saying, to address your question of where do you start, 

I think that would be a helpful place. But I think the Congress 

ought to start by asking hard questions where there have not been 

20 

evaluations and a lot of money is being spent and more is proposed 

to be spent, is it really worth the risk? 

Senator JOHNSON. I mean, should potentially this Committee 

issue a letter to GAO, possibly CBO, to start that process of 

prioritizing? Again, just in case. Would that be helpful? 

Mr. DODARO. Well, again, I think that those decisions have to 

come from the Congress and the Administration. I mean, they are 

basically policy calls. We can tell you what is known about the existing portfolio programs to help you make those decisions, but it 

is really not our role to make those priority decisions. 

Senator JOHNSON. Mr. Chairman, I am new here, but again, I 

would suggest that potentially this Committee issue a letter to 

these agencies and ask them and request them to prioritize essential services just in case this debt ceiling does not get increased so 

that we can avoid a crisis in case that happens. Thank you. 

Chairman LIEBERMAN [presiding]. Thanks, Senator Johnson. I 

will be glad to work with you on that. There are two parts to this. 

I do not want to take really any more time on it, but one part is, 

if the debt ceiling is not increased, which I think most people think 

it ultimately will be—what kind of budget will we have based on 

projected revenues for next year? 

And then the other is how do we make sure we do not default 

on existing debt. And, of course, that is a question of prioritizing 

how you spend the $2.6 trillion in revenue. Presumably, one of the 

priorities for that spending would be to make payments on existing 

debt so as to not raise any questions about the full faith and credit 

of the United States. 

Senator JOHNSON. And again, I am not recommending this. I 

hope it does not happen, but if we are faced with what I would call 

a debt ceiling budget of $2.6 trillion, we would be able to pay for 

all the interest on the debt, about $256 billion; we can pay for all 

Social Security, which would be about $760 billion; and that would 

still leave $1.6 trillion for essential defense, security, health, and 

safety, and that budget itself would be over $800 billion larger than 

we were spending just 10 years ago under Bill Clinton’s last budget. 

So again, I am concerned that we are trying to fear-monger here, 

we are trying to scare the American public, and if we plan for this, 

it would not be pleasant, but it would not have to be a crisis if we 

plan. 

Mr. DODARO. The one other factor that just occurred to me, in 

many programs that are entitlement programs like the Medicare 

program, for example, the law dictates that money be spent to pay 

those services. So the law would have to be changed in order to 

deal with some of those situations other than the discretionary part 

of the budget. 

Chairman LIEBERMAN. That is a good point. Senator McCain. 

OPENING STATEMENT OF SENATOR MCCAIN 

Senator MCCAIN. Thank you, Mr. Chairman. I thank the witnesses. 

21 

1The article submitted by Senator McCain appears in the Appendix on page 46. 

Mr. Dodaro, I am looking at a Wall Street Journal article that 

I am sure you probably saw.1 It is titled, ‘‘Billions in Bloat Uncovered in Beltway,’’ as a result of your investigation. I am sure you 

are aware of that. It said, GAO highlighted 80 different economic 

development programs at the Department of Commerce, Department of Housing and Urban Development, and Department of Agriculture (USDA); $6.5 billion last year overlap. It goes on to highlight a number of programs, including some of the military programs that you have identified. It says there are 130,000 military 

and government medical professionals, 59 Defense Department 

hospitals, etc., and clinics that could benefit from consolidating administrative management and clinical functions. And it identifies 

some other Department of Defense programs. 

But on these duplicative Federal programs, has there been any 

change? Has there been any consolidation, to your knowledge, since 

this report was made? 

Mr. DODARO. Not to my knowledge, no. 

Senator MCCAIN. Not a one? 

Mr. DODARO. Not one. 

Senator MCCAIN. Now, why is that, Mr. Gordon? It has been 

well-known now for some period of time. Can we not consolidate 

one program somewhere in one of these agencies? 

Mr. GORDON. Senator McCain, these are programs outside of the 

world of procurement, but I can tell you that in the world of procurement, GAO’s report on duplication talks about the improvements that we have made in addressing duplication in issue after 

issue. And I think that we are making progress, but we certainly—— 

Senator MCCAIN. Tell me one duplicative procurement program 

that has been eliminated. 

Mr. GORDON. It is not a procurement program that is being 

eliminated, sir. It is strategic sourcing so that we are buying government-wide instead of—— 

Senator MCCAIN. Well, tell me one program that has been consolidated. 

Mr. GORDON. In procurement, it is not a matter of consolidation. 

It is buying—— 

Senator MCCAIN. It is if there is duplication in procurement, Mr. 

Gordon. I am familiar with procurement procedures. If, for example, the Marine Corps is paying $85,000 for mine rollers and the 

Army mine roller costs between $77,000 to $225,000, that is duplication, Mr. Gordon. Tell me one that has been eliminated, one duplicative program that has been eliminated. 

Mr. GORDON. By creating government-wide BPAs, agencies are 

not needing to contract on their own. 

Senator MCCAIN. So there is presently duplication in Defense 

procurement that I know of for sure that I can identify for you. 

Would you tell me one that has been consolidated? 

Mr. GORDON. I am not aware of specific programs. 

Senator MCCAIN. Thank you. That is what I thought. In all due 

respect, Mr. Chairman, we see these and it makes headlines and 

everybody’s eyebrows are raised at all of these programs and dupliVerDate Nov 24 2008 09:37 Feb 22, 2012 Jkt 067641 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 P:\DOCS\67641.TXT SAFFAIRS PsN: PAT
22 

cation that the GAO has, at our insistence, identified and yet, there 

is no change. Nothing happens. Kicking the thousand-pound 

sponge. 

So maybe, Mr. Chairman, we ought to have Mr. Lew come over 

here and testify since apparently these witnesses are unable to answer the questions, and clearly Mr. Gordon, even in the area of his 

specific responsibility, is unable to identify a single duplicative procurement program that has been eliminated. 

So, here our taxpayers see the results of very important studies 

and they are astonished by it, and yet, we hear really good testimony, but we do not hear of any specific actions that have been 

taken to eliminate what has been highlighted by the GAO. 

Do you know, Mr. Dodaro, of duplicative programs that have 

been eliminated? 

Mr. DODARO. No. The only area that I know some action has 

been taken on that I can recall offhand, as I mentioned in my opening statement, the Secretaries of Veterans Affairs and Defense 

have agreed to take some action to try to bring their two multi-billion-dollar procurements for electronic record systems under a joint 

architecture and a joint program. 

Senator MCCAIN. They have agreed to try to take action? 

Mr. DODARO. Right. They have agreed to do that. So I am aware 

of that. I might also say, Senator McCain, that in each of our future annual reports we will be providing an accounting of exactly 

what happened from the recommendations that we made in the 

prior year. So we are planning to keep a running list and a scorecard on what actions have been taken to address those problems 

so that Congress has a good record of that. 

Senator MCCAIN. Well, it is terribly frustrating and you have to 

wonder what needs to be done to eliminate some of the 82 different 

teacher quality branches of different bureaucracies. Maybe we have 

to start line-by-line authorization bills of eliminating them ourselves since clearly the Administration is not acting. 

I just would like to mention, Mr. Gordon, I was entertained by 

your answer to Senator Collins about how information gathered 

would have no impact on the decisionmaking process and the 

award of contracts. That, sir, is really entertaining. Then why in 

the world would they want to get that information if it was not 

used? And would you support gathering that same information 

from unions that compete for government projects? 

Mr. GORDON. Senator McCain, you have me in a situation where 

I would be commenting on a draft Executive Order and I am not 

going to do that. 

Senator MCCAIN. I see. Are you confirmed by the Senate? 

Mr. GORDON. Yes, sir. 

Senator MCCAIN. And it is part of the questioning, that if you are 

asked for your personal opinion, you will give it to the Committee? 

Mr. GORDON. I do not recall the question, but if I was asked 

that—— 

Senator MCCAIN. That is part of the Armed Services Committee. 

Well, I will not pursue it. 

Mr. Gordon, for you to say that information that is gathered by 

businesses, especially along the lines of political contributions, 

would not be used in determining the award of a contract, of 

23 

course, is something that some of us who have been around too 

long, have to accept that kind of assertion. 

The only other question that I had, Mr. Chairman, is concerning 

the Alaska native corporations and the tribally-owned firms that 

get exceptions from the $4.5 million and $6 million caps from small 

businesses. Are you familiar with that practice, Mr. Dodaro? 

Mr. DODARO. Yes, Senator McCain. 

Senator MCCAIN. And do you think that is fair to other small 

business owners? 

Mr. DODARO. Well, there are policies in place. About 4 years ago, 

we issued a report on that area saying that the oversight needed 

to be put into place to make sure that what is passed by the Congress and then the regulations are implemented. 

We are currently looking again, at the request of Congress, into 

that program. We just had a team back from doing field work in 

Alaska. We are planning to issue a report in October and we would 

be happy to have you briefed on that. 

Senator MCCAIN. Thank you, I appreciate it. As you know, the 

Washington Post and other media have exposed really some incredible abuses of this program, which has been made non-competitive, 

and has increased dramatically the cost to taxpayers, not only besides the fact, I guess, it has enriched lobbyists here in Washington 

who have no tribal allegiance or identification except that they are 

lobbyists. One of them was exposed to have made $500,000 a year 

off this contracting business, which obviously goes back to cost the 

taxpayers. 

Do you have a comment on that, Mr. Gordon? 

Mr. GORDON. Yes, sir. Senator McCain, we take the concerns 

very seriously. As I am sure you know, the Small Business Administration (SBA) has recently revised its regulations so that we could 

be more certain that the benefits are going to the communities that 

Congress intended when Congress legislated these special arrangements. 

In addition, SBA has been cracking down. We have had companies suspended for fraud in this area. We need people to understand that these are statutory privileges, but they are not to be 

abused, and when they are being abused, we will crack down. 

Senator MCCAIN. I am glad to hear that. Unfortunately, in the 

past both this and previous Administrations—apparently there 

have been significant abuses. 

I thank you, Mr. Chairman. I thank the witnesses. 

Chairman LIEBERMAN. Thanks, Senator McCain. 

I think that I will talk to Senator Collins about this, but I think 

it is quite appropriate for the Committee to, after this hearing, 

write to OMB and the relevant agencies to ask them what their response to the report is. In other words, what actions they are taking now to eliminate some of the duplication in these Federal programs. We will do a draft of a letter and then circulate it to members of the Committee. 

Mr. GORDON. We would welcome that opportunity, Mr. Chairman. 

Chairman LIEBERMAN. Good. We will do that. Senator Pryor. 

24 

OPENING STATEMENT OF SENATOR PRYOR 

Senator PRYOR. Thank you. Mr. Chairman, that was one of my 

first questions. I was going to follow up on what Senator McCain 

was asking. 

In my conversations with some of the agencies, which is not exhaustive at all, the response has generally been that they are looking at the GAO report and they are ‘‘considering what that might 

mean for that agency.’’ 

And my question for Mr. Gordon and Mr. Kundra is, are you seeing agencies moving out of the consideration stage and actually 

doing things, implementing things, and taking action to try to save 

taxpayer dollars? Mr. Gordon, do you want to take that first? 

Mr. GORDON. Sure. But I know my colleague will also have 

points to raise. Absolutely. As I mentioned, Senator Pryor, the 

GAO report recognizes the progress that we are already making. 

We have fewer GWACs than we had a few years ago. We have better oversight into contracting than we had previously. We have 

government-wide BPAs which we never had in the past so that we 

had these duplicative BPAs. 

Senator CARPER. Could I just interrupt for a second? GWACs, 

BPAs. We go through acronyms every day. Could you just not use 

so many acronyms, please? Thank you. 

Mr. GORDON. Thank you, Senator Carper. I appreciate that. You 

know, I used to be a law teacher and when I was a law teacher, 

I always said it is important to avoid acronyms. I apologize for slipping up on that very point. 

In the 1990s, we were authorized by statute to allow agencies to 

hold government-wide acquisition contracts for IT. I get to say IT, 

right? But they proliferated. We had too many. We had a Wild 

West atmosphere out there. We are now taking our role, in terms 

of approving business cases, much more seriously so that you now 

have very few of these government-wide acquisition contracts, and 

the ones you have we are supervising much more closely. 

And again, as I said in my opening comments, in the world of 

strategic sourcing, you now have situations where any Federal employee can get the benefit of these government-wide blanket purchase agreements where, in the past, these were always agencyspecific and even component-specific. So there are direct examples 

of duplication which we have fixed over these past 24 months. 

Mr. KUNDRA. When it comes to information technology, there are 

a couple of big things going on to eliminate duplication. First is 

data centers, where agencies are collaborating in shutting down 

these 800 data centers. We have already shut down 39 of the data 

centers. There are 137 data centers that will be shut down by the 

end of this calendar year, which will be a 40 percent reduction at 

the end of all these data centers being shut down. 

Second is joint procurements. Fifteen agencies have come together to move collaboration systems. These are 100 systems that 

are going to be moved to the cloud saving the government millions 

of dollars. 

Third, the Federal CIO Council, which is a council made up of 

CIOs across the Federal Government, has convened to share best 

practices and to discuss which systems they can leverage from each 

25 

other rather than beginning with a new procurement or starting 

with their own unique system. 

Fourth, what we have done over the summer is that we were 

able to halt about $20 billion worth of financial systems, terminating some of these financial systems and also creating an environment where agencies are going to be leveraging each other’s 

systems rather than going out there and building a brand new system. 

Senator PRYOR. So, Mr. Kundra, all those great things you have 

enumerated there, do you have a sense of how much money that 

will save the taxpayer every year? 

Mr. KUNDRA. With the data centers consideration, we expect a 

minimum of about $3 billion in savings in the first year. And the 

consolidation effort continues over the next 5 years. 

When it comes to cloud computing, we are forecasting potentially 

up to $5 billion in savings. Now, a lot of this will be a function of 

the procurements that are going to be put out on the street and the 

competitive nature of those procurements, but we expect to save at 

least $5 billion through that process. 

Senator PRYOR. Mr. Gordon, let me ask you, you mentioned a few 

moments ago blanket purchasing agreements, which all sounds 

good, but in your drive for efficiency and avoiding duplication, 

which I think we all agree we need to pursue, are you, in effect, 

squeezing out opportunities for small businesses to do business 

with the government? 

Mr. GORDON. Senator Pryor, it is an extremely important consideration for us. Let me tell you an answer that is very concrete. On 

those office supplies’ blanket purchase agreements, when we 

worked with GSA, we said to GSA from day one that not only do 

you need to be talking to other agencies to be sure what you are 

doing meets their needs, you need to talk to industry, large and 

small, you need to work with the Small Business Administration. 

And the results prove that it was worth that focus on small businesses. 

Of the 15 vendors that won the competition for office supplies’ 

blanket purchase agreements, 13 of them are small businesses, including service disabled vet-owned small businesses, and too often 

in the past when small businesses got schedule contracts, they 

never got any money under them. They had the piece of paper, but 

they were not actually getting sales. 

We watch this week by week. As of last week, sir, I can tell you 

the small business vendors were getting 74 percent of the dollars 

cumulatively under those blanket purchase agreements. This is a 

win for our small businesses. We would not have this be otherwise. 

We are getting savings of approximately 10 percent over what the 

agencies had been spending on office supplies, and at the same 

time, we are getting more dollars to small businesses. 

If I could give you one other example of duplication and consolidation that is helping our small businesses? I have to tell you it 

sometimes seems that the information out there is scattered in 

such a way that we are preventing small businesses from getting 

into the Federal marketplace. 

Just a few weeks ago, we consolidated, at the Federal Business 

Opportunities Web site, a whole cluster of information that small 

26 

businesses otherwise had to go hunting for all around different 

agencies’ Web sites. We need to help our small businesses get into 

the Federal marketplace and win Federal contracts. 

Senator PRYOR. Thank you. Thank you, Mr. Chairman. 

Chairman LIEBERMAN. Thanks very much, Senator Pryor. Now 

we know what BPAs are for the record. Have we defined GWACs? 

Mr. GORDON. I tried, sir. I must say, Senator Carper got me at 

something that I am so sensitive about. I apologize for that. Government-wide Acquisition Contracts. They are only for IT and they 

have been in existence for about 15 years now. 

Chairman LIEBERMAN. And they are different from airborne 

warning and control systems (AWACs). 

Mr. GORDON. Very different. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. GWACs are gliders. 

It is nice to have all of you here. Mr. Kundra, it is really unfortunate that Senator McCain could not stay and hear your response 

to the questions that he raised. I think the very encouraging work 

that you and your colleagues are doing with respect to consolidating the number of data centers we have and reducing them, I 

think you said, from about 2,000 down to around 800 over the next 

5 years or so, that is $3 billion. That is a lot of money. That is real 

money and we appreciate that. 

My Subcommittee had a hearing, colleagues, a couple of weeks 

ago and Mr. Kundra was good enough to join us at that hearing. 

We talked a little bit about cloud computing and how we can save 

money there. For a lot of people in the country who think when we 

talk about cloud computing it must have something to do with meteorological forecasts, why do you not just give us cloud computing 

101 and tell us how this is going to save money? 

Mr. KUNDRA. Sure. So the way to think about cloud computing 

is to think of it in the same context as you would water or electricity. It used to be that in the early days, that every house had 

its own well or had to generate its own power. And as technology 

evolved, we ended up building these grids, whether it was the electricity grid or it was the ability to distribute water centrally. 

In the same way as technology, if you think about how it is being 

deployed, every single agency is going out there and, for that matter, in many cases, if you looked at these 82 programs, they are 

going out there building their own data centers, putting behind it 

significant resources to power the computing infrastructure. So 

what we are trying to do is lower the cost of government operations 

by making sure that by shifting to the cloud, we are using technology much more like a utility, very much like electricity or water. 

On something as simple as email, when GSA and USDA decided to move email to the cloud, they were able to save about $40 million. Now, imagine as you scale that to far more complicated systems like financial systems, human resource systems, and some of 

the other infrastructure that the government leverages, we have an 

opportunity to save billions and billions of dollars across the Federal Government. 

Senator CARPER. Good work. Thank you for all the leadership 

that you are providing in this regard. I am going to follow up. And 

27 

also, thank you for responding to my recent letter about the cuts 

to the Electronic Government (E-Gov) Fund, which was part of the 

6-month continuing resolution. I am happy to hear that 

USAspending.gov and the IT Dashboard are still in operation. They 

say that sunshine is the best disinfectant and it is a pretty good 

one. 

I think shining a light on how the Federal Government is spending our taxpayer dollars is of benefit to just about everybody who 

is concerned about our current budget situation. I am also told that 

the Electronic Government Fund helps agencies consolidate their 

data centers. 

I just want to ask you if you could take a moment to discuss that 

piece of the Electronic Government Fund and how it has been affected by the recent budget cuts, and maybe what we need to do 

as a next step in that regard. 

Mr. KUNDRA. Sure. Originally there were about $34 million in 

the E-Gov fund and it was cut from $34 million down to $8 million. 

Now, every program that was supported by that fund has been affected. 

Whether it is USAspending.gov or the IT Dashboard, what we 

were doing in terms of performance of a lot of these programs, the 

resources we had dedicated out of that $34 million to advance data 

center consolidation and cloud computing, the priority for the Administration is obviously to make sure that we are in compliance 

with the statutory requirements such as USAspending.gov, and 

also to make sure that we continue to advance some of the high 

value initiatives like the IT Dashboard, which has led to billions 

of dollars in savings. 

The President’s budget in 2012 includes the $35 million request 

or $34 million request for the E-Gov fund, and part of that funding 

is to make sure that we continue to improve the platforms that 

have been deployed, whether it is shining light on $80 billion of IT 

investment, or with USAspending.gov, making sure that we are 

getting all the sub-award data, whether it is in contracting or in 

the grants world. 

The reality is that transparency is not free. It costs money and 

it takes resources. So we are doing our best with the $8 million 

funding that we have, but as an Administration, we are committed 

to advancing these open government initiatives because not only do 

they save taxpayer money, but they also create an ecosystem of innovation, in the case of data.gov, where we are able to tap into the 

ingenuity of the American people to help us develop third-party applications that would end up costing us millions of dollars. 

Senator CARPER. I would just say to my colleagues, one of the 

things we try to do on our Subcommittee on Federal Financial 

Management, Government Information, Federal Services, and 

International Security, is to leverage the effectiveness of a small 

Subcommittee, and as part of a powerful full Committee, and we 

leverage that by partnering with GAO and partnering with OMB, 

by partnering with the inspector generals across the government, 

and by partnering with a number of non-profit organizations, an 

organization like Citizens Against Government Waste, but also others. 

28 

And one of the things we found, I really learned this, I think, 

first from Senator Coburn, that one of the maybe most cost effective ways to leverage our interest in changing the culture around 

here from a culture of spendthrift to a culture of thrift, in trying 

to figure out how do we get better results for the same amount or 

less money, is to more effectively use the kind of transparency that 

is provided through some of the work that Mr. Kundra is doing. 

It is not much money. In looking at a budget that is in the hundreds of billions, trillions of dollars, and the spotlight this enables 

us to put on spending and to weigh if we have 10 programs, which 

are good, which are not, which are delivering. We are trying to do 

something like this with respect to energy consumption by the Federal Government and to use that transparency to help us. 

Really, bringing a lot of other folks, from the media, from people 

that are just out there on their own watching to see what we are 

doing and what is effective makes sense. It is really good stuff and 

my hope is that we can restore the money—it is a very modest 

amount of money—and help us so that we can do that and be supportive of your efforts. 

I just want to say again to you, Mr. Kundra, thank you so much 

for the great leadership that you are providing in this area. I know 

Mr. Gordon does as well. Mr. Dodaro I have a chance to work with 

on a regular basis and value what he does very much. Thank you 

all for being the good stewards that you are. 

Chairman LIEBERMAN. Thanks, Senator Carper. Thanks for the 

good work that your Subcommittee is doing. We appreciate it, 

though it is not as powerful as the full Committee. [Laughter.] 

Senator CARPER. We aspire to be. That would be the tail wagging 

the dog. 

Chairman LIEBERMAN. You do very well, really. We will do a 

quick second round here. 

Mr. Dodaro, I wanted to go to a slightly different focus, but also 

in the report, something you mentioned in your opening statement, 

and that is Department of Defense. As you know, there is a significant overlap in membership between this Committee and the Senate Armed Services Committee. We are really committed across 

party lines to protecting our national security. It is one of our constitutional responsibilities. 

But we understand that there will be pressure on spending in 

the Department of Defense. As you have seen, I am sure, in the 

last couple of days, Secretary Gates has given two speeches in 

which he has warned against cutting so deeply in defense that we 

begin to jeopardize our national security. So I wanted to ask you 

if you could talk a little bit about what some of the thoughts and 

recommendations GAO came up with regarding the Department of 

Defense budget. 

Mr. DODARO. I would be happy to, Senator. First, one of the 

areas we pointed out was the ability to consolidate medical commands. Right now, each of the services has their own medical command and there is an Under Secretary for Health as well that has 

a separate infrastructure as well. 

Here, the Department of Defense itself came up with recommendations several years ago of the amount of savings that 

could be realized from consolidation. But they could not agree on 

29 

the recommendations. I am sure this is no surprise to you that 

have served on the Armed Services Committee, but they have 

taken some modest steps. 

Chairman LIEBERMAN. Right. 

Mr. DODARO. But if they implemented the more significant of the 

alternatives there—we updated their estimates that were done by 

the Center for Naval Analysis, and they could save $250 to $400 

million a year by consolidating commands. And there are four or 

five different options for achieving that. Their medical costs are 

growing significantly. They went from $19 billion awhile back to 

about $42 billion. They are estimated to go to $60-some billion in 

the out years. There would be no sacrifice in quality here. 

Also, in a number of areas like urgent need requests coming out 

of the wars in Iraq and Afghanistan, there have been a proliferation of vehicles for achieving those. We have made recommendations to consolidate those which would better streamline the process. 

And gathering of intelligence, surveillance, and reconnaissance 

information has proliferated. There is not a good efficient means 

there and they need a better roadmap in that area. They have 

agreed with us in all these areas, by the way, and I think it is just 

a matter of the Department of Defense executing on the ideas going 

forward. 

Tactical wheeled vehicles is another area where we think that 

they are pursuing a separate procurement, as Senator McCain 

mentioned, when they already have existing vehicles and are not 

looking at it in a comprehensive way. 

We also reiterate a number of things that we have had on our 

High-Risk List for a while about spare parts and inventory. There 

are billions of dollars that they end up in inventory that are not 

needed to meet current requirements, and they need to be able to 

better forecast their requirements in those areas and to share information. Their systems are really antiquated in a lot of areas and 

they are not able to share information which would result in better 

information. 

They have over 2,300 business systems in place, and we have 

made recommendations for enterprise architectures there. They 

have begun developing them, but they have not federated them 

down to the individual services yet effectively as well. And, of 

course, we mentioned the weapons acquisition area is another area 

where they need to use portfolio management. I am encouraged by 

what the Secretary has done in that area. 

Chairman LIEBERMAN. Right. 

Mr. DODARO. But they also need to implement reforms successfully. We see some signs of improvement in more recent procurements, but the implementation will still be challenging. So those 

are a few of the areas at the Department of Defense. 

I might add, on your point about sending letters to the agencies, 

I think it is a really good idea, but in these program areas, the 

agencies individually can only take so much action. I will illustrate 

with teacher quality. Of the 82 programs, the Department of Education has the bulk of it, but by no means has control over the 

other programs. There are 10 different agencies that have those 

programs. 

30 

So in most of these areas, in addition to the agencies and what 

they could do, the Administration really needs to take a cross-cutting approach across the agencies. OMB has to take a leadership 

role. 

Chairman LIEBERMAN. But it has to come from OMB. 

Mr. DODARO. Yes, but I just offer that. 

Chairman LIEBERMAN. No, it is very helpful as we go forward 

and prepare those letters. And I assume that in some cases, this 

will require congressional action, too, because a lot of these programs are authorized by law. 

Mr. DODARO. Definitely. Many will require legislative change. In 

fact, a number of these areas are up for re-authorization. 

Chairman LIEBERMAN. Right. 

Mr. DODARO. The education area and surface transportation—so 

there are perfect opportunities here now to really make some headway. 

Chairman LIEBERMAN. Yes. I am going to look at that and maybe 

one of the other things we want to do here is to circulate the report, pull the report apart and circulate parts of it to the relevant 

committees, the subject matter. Like send the teacher quality section to the Education Committee, which is supposedly attempting 

to come up with an agreement on re-authorizing the so-called No 

Child Left Behind Act. 

Mr. DODARO. I am very encouraged by it. A number of committees have asked us for testimony on discrete pieces. I testified before the House Education and Work Force Committee on teacher 

quality and employment training programs. So we would be happy 

to work with you on that and support you. 

Chairman LIEBERMAN. Good. I note that in all the ideas you gave 

about defense, there was nothing that I would consider that would 

really jeopardize our national security. In other words, those are efficiencies, elimination of waste, duplication. So I appreciate that. 

Senator Collins. 

Senator COLLINS. Thank you, Mr. Chairman. 

Mr. Dodaro, let me follow up where the Chairman left off and 

ask your advice on where should we start? This report is overwhelming in many ways because it does transcend agencies. There 

are so many programs. You found problems virtually everywhere 

you looked. OMB clearly needs to take the lead because of the 

cross-cutting nature of this. But as far as low-hanging fruit, where 

should Congress start? 

Mr. DODARO. There are a number of areas that we recommend 

that either bills have been introduced or the Administration has 

made legislative proposals. For example, in the government pension offset area, this is an area where, for Federal workers, under 

survivor benefits, the pension is offset to account for the fact that 

Federal workers do not contribute to Social Security. Well, neither 

do some of the State and local entities. 

But the Social Security Administration does not have the information necessary to be able to offset those pension costs. We have 

recommended and the Administration has proposed legislation to 

require the Internal Revenue Service to collect simple information. 

They can add one line to a form. That is estimated by CBO to ultiVerDate Nov 24 2008 09:37 Feb 22, 2012 Jkt 067641 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 P:\DOCS\67641.TXT SAFFAIRS PsN: PAT
31 

mately save the government $2.4 to $2.9 billion. So I think that 

would be good. 

You mentioned in your opening statement the ethanol tax credit 

issue and we estimate, as you correctly point out, it is close to $6 

billion, $5.7 billion. That is well-developed. There have been bills 

introduced to be able to adress that. 

There is $640 million sitting at the Customs Service based on a 

temporary increase in a fee years ago—it has been almost a decade, 

I believe, it has been many years—that the Congress has not authorized the use of those funds. They could be used to offset future 

costs going forward as well. I think the other area is in the program areas where the Administration has already made proposals 

for consolidation. 

Those are good starting points to go forward. And there are other 

areas as well. I can provide a quick hits list to you to elaborate on 

those lists. But those are just a few off the top of my head that I 

think are ready to go. It is just a matter of pushing the legislation 

through and gaining, obviously, consensus and the proper amount 

of support. 

Senator COLLINS. Thank you. Mr. Kundra, I want to ask you 

about the consolidation of data centers that you discussed briefly. 

At our request, the GAO has been conducting a review of the Federal Government’s efforts to consolidate data centers. I was amazed 

to learn from the GSA that a typical Federal Government data center utilizes approximately 27 percent of its capacity, and that is far 

lower than the average for the private sector counterparts. In fact, 

GSA estimates that the manufacturer’s average utilization is 79 

percent. So clearly, we have a lot of excess capacity. 

Tell me more about how the Administration is proceeding to consolidate these centers to ensure that we do not have thousands of 

centers that are only partially used. 

Mr. KUNDRA. Sure. So one of the biggest problems in information 

technology is that as its infrastructure has been built out, the central processing unit (CPU) utilization, which is what you are referring to, is below 27 percent. Actually, the private sector, in some 

cases, is worse, and the reason is because they actually upgrade 

their infrastructure faster than the Federal Government does. So 

in many cases, the Federal Government has a higher utilization 

per CPU because we have not really upgraded that infrastructure. 

What is worse is if you look at storage utilization that is, on average, under 40 percent. What we are trying to do, and the reason 

we have been very focused on consolidating all this infrastructure 

is because it makes absolutely no sense, when you have two 

megatrends that are going the opposite way. So one is going from 

432 data centers to 2,094-plus in about a decade. Second is utilization is so low on all these assets. 

So what we are doing is we are actually very focused on not only 

consolidating these data centers, but also making sure that we are 

moving agencies to the cloud where we can leverage shared services, because one of the advantages of cloud computing is that you 

can actually pool a lot of resources and provide storage and compute power on demand, rather than just building all this capacity 

that is never utilized. 

32 

1 Chart submitted by Senator Collins appears in the Appendix on page 45. 

So the example I used, it is very much like electricity at home, 

that you only pay for what you use rather than having an entire 

power plant that is being run without it ever being used. 

Senator COLLINS. Clearly that move to cloud computing does 

offer the possibility of enormous savings. I am going to share with 

you the chart that we got from the GSA,1 and I know you cannot 

see it from there, but just to look at the bars. The smallest one is 

the typical Federal Government server, and these tall bars are 

manufacturing capacity utilization not just in the United States, 

but in France, Germany, Brazil, and Canada. So there is really 

quite a contrast that suggests that there are a lot of possibilities 

for saving money and consolidation in that area. 

Mr. KUNDRA. Absolutely. And that chart is actually a presentation that I put together at GSA. 

Senator COLLINS. Well, then, you are familiar with it. 

Mr. KUNDRA. I am very familiar. I put that chart together. 

Senator COLLINS. Well, it is an excellent chart. 

Mr. KUNDRA. Thank you. And the big point we were trying to 

make there is that if you look at IT where you have asset utilization that is under 27 percent compared to the manufacturing sector, in most countries, if you look at the entire European Union, 

Canada, Brazil, and the United States, asset utilization in the 

manufacturing sector is about 79 percent. The question we are asking is, why is it that in information technology it is OK for us to 

accept a 50 percent differential from the manufacturing sector? 

Senator COLLINS. Exactly. 

Mr. KUNDRA. That is why we are forcing a lot of this consolidation. 

Senator COLLINS. Thank you. And I thank our witnesses, also, 

but most of all, Mr. Chairman, I thank you for holding this hearing 

today. 

Chairman LIEBERMAN. Thanks, Senator Collins. Thanks for your 

partnership in this, also. It has been a productive hearing. 

The GAO report is an important one. It provokes us, challenges 

us, and most of all, it challenges, obviously, the Executive Branch. 

I always resist the business/government analogies because they are 

not quite perfect because government is held to other standards 

than businesses. 

And yet, I think part of what we need to feel now, and the budget crisis we are in really demands it, is that the people in charge 

of running the government are going over the way we are operating, the whole question. I appreciate, Mr. Kundra, some of the 

examples you have given which were very encouraging—of whether 

we are taking maximum advantage of advances, for instance, in information technology, which is what any chief executive officer of 

a company would demand of the people under him. In that case, 

they are accountable to their stockholders. 

But really, we are all accountable to the taxpayers, to say the obvious, and it is going to take a couple of big things, but a lot of 

small things, or seemingly small in a large budget. They include 

not just cuts, but better management, better use of IT, and reduction or elimination of duplication. And so, we are in this together. 

33 

I would like to commit, and I know Senator Collins would, to 

stay on this and we are going to follow with the letters we have 

talked about. I think it might be a good idea that we all reconvene 

later this year and just see what you can tell us then by way of 

a progress report. I know you are going to do another report of this 

kind next year. 

Mr. DODARO. Right. But we can be in a position later this year 

to give a scorecard on what has happened so far. 

Chairman LIEBERMAN. That would be great. We will keep the 

record of this hearing open for 15 days for additional questions and 

statements. I thank the witnesses very much. The hearing is adjourned. 

[Whereupon, at 11:55 a.m., the Committee was adjourned.] 

(35) 

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