GAO

United States Government Accountability Office

A

Testimony

Before the Subcommittee on the Federal Workforce and 

Agency Organization, Committee on Government Reform, 

House of Representatives

For Release on Delivery

Expected at 2:00 p.m. EDT

Wednesday, July 13, 2005

21ST CENTURY 

CHALLENGES 

Transforming Government 

to Meet Current and 

Emerging Challenges

Statement of David M. Walker

Comptroller General of the United States

GAO-05-830T
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Highlights

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www.gao.gov/cgi-bin/getrpt?GAO-05-830T.

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and methodology, click on the link above. 

For more information, contact J. Christopher 

Mihm at (202) 512-6806 or mihmj@gao.gov. 

Highlights of GAO-05-830T, a testimony 

before the Subcommittee on the Federal 

Workforce and Agency Organization, 

Committee on Government Reform, 

House of Representatives 

July 13, 2005

21ST CENTURY CHALLENGES 

Transforming Government to Meet 

Current and Emerging Challenges 

Long-term fiscal challenges and other significant trends and challenges 

facing the United States provide the impetus for reexamining the base of the 

federal government. Our nation is on an imprudent and unsustainable fiscal 

path driven by known demographic trends and rising health care costs, and 

relatively low revenues as a percentage of the economy. Unless we take 

effective and timely action, we will face large and growing structural deficit 

shortfalls, eroding our ability to address the current and emerging needs 

competing for a share of a shrinking budget pie. At the same time, 

policymakers will need to confront a host of emerging forces and trends, 

such as changing security threats, increasing global interconnectedness, and 

a changing economy. To effectively address these challenges and trends, 

government cannot accept all of its existing programs, policies, functions, 

and activities as “givens.” Reexamining the base of all major existing federal 

spending and tax programs, policies, functions, and activities offers 

compelling opportunities to redress our current and projected fiscal 

imbalances while better positioning government to meet the new challenges 

and opportunities of this new century. 

In response, agencies need to change their cultures and create the capacity 

to become high-performing organizations, by implementing a more resultsoriented and performance-based approach to how they do business. To 

successfully transform, agencies must fundamentally reexamine their 

business processes, outmoded organizational structures, management 

approaches, and, in some cases, missions. GAO has hosted several forums 

to explore the change management practices that federal agencies can adopt 

to create high-performing organizations. For example, participants at a 

GAO forum broadly agreed on the key characteristics and capabilities of 

high-performing organizations, which can be grouped into four themes: 

• a clear, well-articulated, and compelling mission; 

• focus on needs of clients and customers; 

• strategic management of people; and 

• strategic use of partnerships. 

A successful reexamination of the base of the federal government will entail 

multiple approaches over a period of years. The reauthorization, 

appropriations, oversight, and budget processes should be used to review 

existing programs and policies. However, no single approach or institutional 

reform can address the myriad of questions and program areas that need to 

be revisited. GAO has recommended certain other initiatives to assist in the 

needed transformations. These include (1) development of a 

governmentwide strategic plan and key national indicators to assess the 

government’s performance, position, and progress; (2) implementing a 

framework for federal human capital reform; and (3) proposing specific 

transformational leadership models, such as creating a Chief Operating 

Officer/Chief Management Official with a term appointment at select 

agencies. 

The daunting challenges that face 

the nation in the 21st century 

establish the need for the 

transformation of government and 

demand fundamental changes in 

how federal agencies should meet 

these challenges by becoming 

flatter, more results-oriented, 

externally focused, partnershiporiented, and employee-enabling 

organizations. 

This testimony addresses how the 

long-term fiscal imbalance facing 

the United States, along with other 

significant trends and challenges, 

establish the case for change and 

the need to reexamine the base of 

the federal government; how 

federal agencies can transform into 

high-performing organizations; and 

how multiple approaches and 

selected initiatives can support the 

reexamination and transformation 

of the government and federal 

agencies to meet these 21st century 

challenges. 
Page 1 GAO-05-830T 

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here to discuss GAO’s work on the transformation of 

government in the 21st century. The daunting challenges that face us in this 

new century establish the need for this transformation and demand 

fundamental changes in what the government should do, how the 

government should do business, and how we should finance government. 

Federal agencies will need to become flatter, more results-oriented, 

externally focused, partnership-oriented, and employee-enabling 

organizations.

In summary, I will discuss three areas today:

• how the long-term fiscal imbalance facing the United States, along with 

other significant trends, establish the case for change and the need to 

reexamine the base of the federal government;

• how federal agencies can transform into high-performing organizations, 

including GAO’s own efforts to transform; and

• how multiple approaches and selected initiatives can support the 

reexamination and transformation of the government and federal 

agencies to meet these 21st century challenges.

This testimony draws upon our prior work and GAO’s insights on 21st

century challenges and the reexamination of the base of the federal 

government, organizational transformation and high-performing 

organizations, and federal programs and operations that GAO has 

designated to be high risk. We conducted our work in accordance with 

generally accepted government auditing standards.

The Case for Change: 

Long-Term Fiscal 

Challenges and Other 

Significant Trends 

Establish the Need for 

Reexamining the Base

Let me begin by laying out the case for change. As Congress is well aware, 

the nation faces a number of significant forces that are already working to 

reshape American society, our place in the world, and the role of the 

federal government. Our capacity to address these and other emerging 

needs will be predicated on when and how we deal with our large and 

growing long-range fiscal imbalance. As I have said before, our nation is 

on an imprudent and unsustainable fiscal path driven largely by known 

demographic trends and rising health care costs. These trends are 

compounded by the presence of near-term deficits arising from new 

discretionary and mandatory spending as well as lower revenues as a share 
Page 2 GAO-05-830T 

of the economy. Unless we take effective and timely action, we will face 

large and growing structural deficit shortfalls. Not only would continuing 

deficits eat away at the capacity of everything the government does, but 

they will erode our ability to address the wide range of emerging needs and 

demands competing for a share of a shrinking budget pie. 

Over the next few decades, as the baby boom generation retires and health 

care costs continue to escalate, federal spending on Social Security, 

Medicare, and Medicaid is expected to grow dramatically. Other federal 

fiscal commitments, such as environmental cleanup and veterans’ benefits, 

will also bind the nation’s fiscal future. GAO’s long-term budget 

simulations illustrate the magnitude of this fiscal challenge. Figures 1 and 

2 show these simulations under two different sets of assumptions. Figure 1 

uses the Congressional Budget Office (CBO) January 2005 baseline through 

2015. As required by law, that baseline assumes no changes in current law, 

that discretionary spending grows with inflation through 2015, and that all 

tax cuts currently scheduled to expire are permitted to expire. In figure 2, 

two assumptions about that first 10 years are changed: (1) discretionary 

spending grows with the economy rather than with inflation and (2) all tax 

cuts currently scheduled to expire are made permanent. In both 

simulations discretionary spending is assumed to grow with the economy 

after 2015 and revenue is held constant as a share of Gross Domestic 

Product (GDP) at the 2015 level. Also, in both simulations long-term Social 

Security and Medicare spending are based on the 2005 trustee’s 

intermediate projections, and we assume that benefits continue to be paid 

in full after the trust funds are exhausted. Long-term Medicaid spending is 

based on CBO’s December 2003 long-term projections under their midrange 

assumptions.1

1

 For additional discussion of our budget simulations, see GAO, Our Nation’s Fiscal 

Outlook: The Federal Government’s Long-Term Budget Imbalance, at 

http://www.gao.gov/special.pubs/longterm/longterm.html.
Page 3 GAO-05-830T 

Figure 1: Composition of Spending as a Share of GDP, Under Baseline Extended

Notes: In addition to the expiration of tax cuts, revenue as a share of GDP increases through 2015 due 

to (1) real bracket creep, (2) more taxpayers becoming subject to the alternative minimum tax (AMT), 

and (3) increased revenue from tax-deferred retirement accounts. After 2015, revenue as a share of 

GDP is held constant.

0

10

20

30

40

50

2004 2015 2030 2040

Percent of GDP

Net interest

Social Security

Medicare and Medicaid

All other spending

Revenue

Source: GAO’s March 2005 analysis.

Fiscal year
Page 4 GAO-05-830T 

Figure 2: Composition of Spending as a Share of GDP Assuming Discretionary 

Spending Grows with GDP After 2005 and All Expiring Tax Provisions Are Extended

Notes: Although expiring tax provisions are extended, revenue as a share of GDP increases through 

2015 due to (1) real bracket creep, (2) more taxpayers becoming subject to the AMT, and (3) increased 

revenue from tax-deferred retirement accounts. After 2015, revenue as a share of GDP is held 

constant.

As both these simulations illustrate, absent policy changes on the spending 

and/or revenue side of the budget, the growth in spending on federal 

retirement and health entitlements will encumber an escalating share of the 

government’s resources. Indeed, when we assume that recent tax 

reductions are made permanent and discretionary spending keeps pace 

with the economy, our long-term simulations suggest that by 2040 federal 

revenues may be adequate to pay little more than interest on the federal 

debt. Neither slowing the growth in discretionary spending nor allowing 

the tax provisions to expire—nor both together—would eliminate the 

imbalance. Although revenues will ultimately be part of the debate about 

our fiscal future, making no changes to Social Security, Medicare, 

Medicaid, and other drivers of the long-term fiscal gap would require at 

least a doubling of taxes in the future—and that seems both inappropriate 

0

10

20

30

40

50

2004 2015 2030 2040

Fiscal year

Percent of GDP

Net interest

Social Security

Medicare and Medicaid

All other spending

Source: GAO’s March 2005 analysis.

Revenue
Page 5 GAO-05-830T 

and implausible. Accordingly, substantive reform of Social Security, 

Medicare, and other major mandatory programs remains critical to 

recapturing our future fiscal flexibility.

The government can help ease our nation’s future fiscal burdens through 

actions on the spending and/or revenue side that reduce debt held by the 

public, increase saving for the future, and enhance the pool of economic 

resources available for private investment and long-term growth. 

Economic growth is essential, but our long-term fiscal gap is simply too 

great to grow our way out of the problem. Closing the current long-term 

fiscal gap would require sustained economic growth far beyond that 

experienced in U.S. economic history since World War II. Tough choices 

are inevitable, and the sooner we act the better.

In addition to the nation’s large and growing long-term fiscal imbalance, 

policymakers must confront a host of emerging forces and trends shaping 

the United States, which GAO highlights in its strategic plan for serving 

Congress.2

 We face a world in which national boundaries are becoming 

less relevant in addressing a range of economic, security, social, public 

health, energy, and environmental issues. The shift to a knowledge-based 

economy and additional productivity gains are having significant impacts 

on the job market. Scientific research and technological developments are 

improving and even extending life, but they are also raising profound 

ethical questions for society. Accompanying these changes are new 

expectations about the quality of life for Americans and how we should 

measure the nation’s position and progress. Governance structures are 

evolving in order to contend with these new forces and an accelerating 

pace of change. These broad themes—changing security threats, 

increasing global interconnectedness, the changing economy, an aging and 

more diverse population, scientific and technological change, concern for 

quality of life, and evolving governance structures—present both 

challenges and opportunities to our economy and our society.

If government is to address these challenges and trends effectively, it 

cannot accept all of its existing programs, policies, and activities as 

“givens.” Many of the federal government’s programs, policies, functions, 

and activities were designed decades ago to address earlier challenges. 

Outmoded commitments and operations constitute an encumbrance on the 

2

 GAO, GAO’s Strategic Plan for Serving the Congress and the Nation (2004-2009) 

(Washington, D.C.: March 2004).
Page 6 GAO-05-830T 

future that can erode the capacity of the nation to better align its 

government with the needs and demands of a changing world and society. 

Accordingly, reexamining the base of all major existing federal spending 

and tax programs, policies, functions, and activities by reviewing their 

results and testing their continued relevance and relative priority for our 

changing society is an important step in the process of assuring fiscal 

responsibility and facilitating national renewal. Reexamining the base 

offers compelling opportunities to redress our current and projected fiscal 

imbalance while better positioning government to meet the new challenges 

and opportunities of this new century. 

In our recent publication 21st Century Challenges: Reexamining the Base 

of the Federal Government, we focused on these challenges and trends, 

along with GAO’s institutional knowledge and issued work, to identify 

reexamination areas and suggest some questions to use for this 

reexamination.3

 The specific questions were informed by a set of generic 

evaluation criteria which are useful for reviewing any government 

program, policy, function, or activity; these are displayed in table 1. 

Table 1: Generic Reexamination Criteria and Sample Questions

Source: GAO.

3

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

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

Relevance of 

purpose and 

the federal 

role

Why did the federal government initiate this program and what was the 

government trying to accomplish?

Have there been significant changes in the country or the world that relate 

to the reason for initiating it? 

Measuring 

success

Are there outcome-based measures? If not, why? 

If there are outcome-based measures, how successful is it based on these 

measures? 

Targeting 

benefits

Is it well targeted to those with the greatest needs and the least capacity to 

meet those needs? 

Affordability 

and cost 

effectiveness

Is it using the most cost-effective or net beneficial approaches when 

compared to other tools and program designs?

Best 

practices

Is the responsible entity employing prevailing best practices to discharge 

its responsibilities and achieve its mission?
Page 7 GAO-05-830T 

In the report, we also describe 12 broad reexamination areas, based in large 

measure on functional areas in the federal budget, as shown in figure 3.

Figure 3: Twelve Reexamination Areas

Since health policy is both a driver of our long-term trends and a new area 

of oversight for this subcommittee, I will use it to illustrate the 

reexamination challenges and questions. Between 1992 and 2002, overall 

health care spending rose from $827 billion to about $1.6 trillion; it is 

projected to nearly double to $3.1 trillion in the following decade. This 

price tag results, in part, from advances in expensive medical technology, 

including new drug therapies, and the increased use of high-cost services 

and procedures. Many policymakers, industry experts, and medical 

practitioners contend that the U.S. health care system—in both the public 

and private sectors—is in crisis. 

Despite the significant share of the economy consumed by health care, U.S. 

health outcomes continue to lag behind many other industrialized nations. 

The United States now spends over 15 percent of its gross domestic 

product on health care—far more than other major industrialized nations. 

Yet relative to these nations, the United States performs below par in such 

measures as rates of infant mortality, life expectancy, and premature and 

preventable deaths. Moreover, evidence suggests that the American people 

are not getting the best value for their health care dollars. 

Given this picture, there are a number of important questions that need to 

be addressed. Among them are the following:

• How can we perform a systematic reexamination of our current health 

care system? For example, could public and private entities work 

Source: GAO.

Defense 

Education and Employment 

Financial Regulation and Housing 

Health Care 

Homeland Security 

International Affairs

Natural Resources, Energy and 

Environment

Retirement and Disability

Science and Technology

Transportation

Governance Tax System

Mission Areas

Crosscutting Areas
Page 8 GAO-05-830T 

jointly to establish formal reexamination processes that would 

(1) define and update as needed a minimum core of essential health care 

services; (2) ensure that all Americans have access to the defined 

minimum core services; (3) allocate responsibility for financing these 

services among such entities as government, employers, and individuals; 

and (4) provide the opportunity for individuals to obtain additional 

services at their discretion and cost?

• How can we make our current Medicare and Medicaid programs 

financially sustainable? For example, should the eligibility requirements 

(e.g., age, income requirements) for these programs be modified? 

• How can health care tax incentives be designed to encourage employers 

and employees to better control health care cost? For example, should 

tax preferences for health care be designed to cap the health insurance 

premium amount that can be excluded from an individual’s taxable 

income?

• How can technology be leveraged to reduce costs and enhance quality 

while protecting patient privacy?

Health care is not, of course, the only area in which fundamental change is 

necessary. All of our federal agencies must become high-performing 

organizations. I will turn now to a discussion of the elements that can help 

to make such a transformation a reality.

Transforming Federal 

Agencies into HighPerforming 

Organizations: Key 

Elements of 

Transformations

Government is being transformed by the challenges and trends I discussed 

previously. As a result, federal agencies must change their cultures and 

create the institutional capacity to become high-performing organizations 

that can adapt to the changing demands of the 21st century, by 

implementing a more results-oriented and performance-based approach to 

how they do business. 

Unfortunately, in many cases, the government is still trying to do business 

in ways that are based on conditions, priorities, and approaches that 

existed decades ago and are not well suited to addressing 21st century 

challenges. For example, some agencies do not yet have sufficient abilities, 

leadership, and management capabilities to transform their cultures and 

operations. As you know, on a biennial basis, GAO updates its list of highrisk areas for the federal government, and most recently did so in January 
Page 9 GAO-05-830T 

of this year.4 Increasingly, GAO also is identifying high-risk areas to focus 

on the need for broad-based transformations to address major economy, 

efficiency, or effectiveness challenges. To illustrate, several of these highrisk areas include the U.S. Postal Service transformation efforts and longterm outlook, implementing and transforming the Department of 

Homeland Security (DHS), and the Department of Defense’s (DOD) 

approach to business transformation, as shown in table 2. GAO will 

continue to use the high-risk designation to highlight additional areas 

facing major transformational challenges.

4

 GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: January 2005).
Page 10 GAO-05-830T 

Table 2: GAO’s 2005 High-Risk List

Source: GAO. 

a

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

effectively address this high-risk area. 

b

Two high-risk areas—Collection of Unpaid Taxes and Earned Income Credit Noncompliance—have 

been consolidated to make this area. 

c

The IRS Financial Management high-risk area has been incorporated into this high-risk area.

2005 High-Risk Areas

Addressing Challenges In Broad-based Transformations

• Strategic Human Capital Managementa

• U.S. Postal Service Transformation Efforts and Long-Term Outlooka

• Managing Federal Real Propertya

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

Infrastructures

• Implementing and Transforming the Department of Homeland Security

• Establishing Appropriate And Effective Information-Sharing Mechanisms to Improve 

Homeland Security

• DOD Approach to Business Transformationa

• DOD Business Systems Modernization

• DOD Personnel Security Clearance Program

• DOD Support Infrastructure Management

• DOD Financial Management

• DOD Supply Chain Management (formerly Inventory Management)

• DOD Weapon Systems Acquisition

Managing Federal Contracting More Effectively 

• DOD Contract Management

• DOE Contract Management

• NASA Contract Management

• Management of Interagency Contracting 

Assessing the Efficiency and Effectiveness of Tax Law Administration

• Enforcement of Tax Lawsa, b

• IRS Business Systems Modernizationc

Modernizing and Safeguarding Insurance and Benefit Programs

• Modernizing Federal Disability Programsa

• Pension Benefit Guaranty Corporation Single-Employer Insurance Programa

• Medicare Programa

• Medicaid Programa

• HUD Single-Family Mortgage Insurance and Rental Housing Assistance Programs

Other

• FAA Air Traffic Control Modernization
Page 11 GAO-05-830T 

To successfully navigate transformation across the government, these and 

other agencies must fundamentally reexamine not only their business 

processes, but also their outdated organizational structures, management 

approaches, and in some cases, missions. GAO has hosted several forums 

bringing together senior leaders from the federal sector, executives from 

the private and not-for-profit sectors, and members of academia, to explore 

the specific change management practices that federal agencies can adopt 

to create high-performing organizations. In September 2002, in anticipation 

of the creation of DHS, we convened a forum of these leaders to identify 

useful practices and lessons learned from major private and public sector 

organizational mergers, acquisitions, and transformations that federal 

agencies could implement to successfully transform their cultures.5

 These 

key practices are summarized in the broad categories displayed in figure 4. 

In a follow-on report, we identified the specific implementation steps for 

the key mergers and transformation practices raised at the forum.6

5

 GAO, Highlights of a GAO Forum: Mergers and Transformation: Lessons Learned for a 

Department of Homeland Security and Other Federal Agencies, GAO-03-293SP

(Washington, D.C.: November 2002).

6

 GAO, Results-Oriented Cultures: Implementation Steps to Assist Mergers and 

Organizational Transformations, GAO-03-669 (Washington, D.C.: July 2003).
Page 12 GAO-05-830T 

Figure 4: Cultural Changes and Key Practices Necessary for Successful 

Transformation

In November 2003, GAO held a related forum on the metrics, means, and 

mechanisms to achieve high performance in the 21st century public 

management environment.7

 There was broad agreement among the forum 

participants on the key characteristics and capabilities of high-performing 

organizations, which can be grouped into the following four themes:

• A clear, well-articulated, and compelling mission. High-performing 

organizations have a clear, well-articulated, and compelling mission; the 

strategic goals to achieve it; and a performance management system 

that aligns with these goals to show employees how their performance 

can contribute to overall organizational results.

• Focus on needs of clients and customers. Serving the needs of clients 

and customers involves identifying their needs, striving to meet them, 

measuring performance, and publicly reporting on progress to help 

assure appropriate transparency and accountability.

7

GAO, High-Performing Organizations: Metrics, Means, and Mechanisms for Achieving 

High Performance in the 21st Century Public Management Environment, GAO-04-343SP

(Washington, D.C.: Feb. 13, 2004).

High Performing 

Organizations

Flatter and more horizontal

Matrixes

Results-oriented

Proactive approaches 

Externally focused

Leveraging technology

Sharing knowledge

Managing risk

Forming partnerships

Employee empowerment

Current State

Hierarchical

Stovepipes

Process and output-oriented

Reactive behavior

Inwardly focused

Avoiding technology

Hoarding knowledge

Avoiding risk

Protecting turf

Employee direction

Transformation

Summary of

Key Practices

Committed, persistent, and

consistent leadership

Strategic planning

Organizational alignment

Integrated performance

management systems

Modern human capital

approaches

Effective communications

Employee involvement

Source: GAO analysis. 
Page 13 GAO-05-830T 

• Strategic management of people. Most high-performing organizations 

have strong, charismatic, visionary, and sustained leadership; the 

capability to identify what skills and competencies the employees and 

the organization need; and other key characteristics including effective 

recruiting, comprehensive training and development, retention of highperforming employees, and a streamlined hiring process.

• Strategic use of partnerships. Since the federal government is 

increasingly reliant on partners to achieve its outcomes, becoming a 

high-performing organization requires that federal agencies effectively 

manage relationships with other organizations outside of their direct 

control.

GAO has used these tools, and others, to fundamentally change our 

organization. Shortly after I was appointed Comptroller General, I 

determined that GAO should undertake a major transformation effort to 

better enable it to “lead by example” and better support Congress in the 21st

century. To provide the foundation for GAO’s transformation, we first 

developed a set of core values and a strategic plan for the 21st century. We 

used our strategic plan as a framework to align our organization, allocate 

its resources, and determine appropriate priorities and performance 

measures. For example, we streamlined and realigned the agency to 

eliminate a management layer, consolidated 35 issue areas into 13 teams, 

and reduced our field offices from 16 to 11. We also reallocated our 

resources to focus more on matrixing internally and partnering externally. 

In the human capital area and in all other management functions, we seek 

to lead by example in modernizing our policies and procedures. For 

example, in the human capital area, we have adopted a range of strategic 

workforce policies and practices, such as recruiting and succession 

planning strategies, as a result of a comprehensive workforce planning 

effort. We have also updated our performance management and 

compensation systems and our training and development programs to 

maximize staff effectiveness and fully develop the potential of our staff.

Given these challenges and trends, and the need for federal agencies to 

transform, where do we go from here? 
Page 14 GAO-05-830T 

The Way Forward: 

Multiple Approaches to 

Reexamine the Base of 

Government and 

Selected Initiatives to 

Support Government 

Transformation

In our system, the reexamination of programs and the transformation of 

agencies are not easy processes—there is little “low hanging fruit,” or few 

easy, quick fixes. Although resistance can be expected, there are cases 

where program areas and agencies have been reformed in the past that we 

can draw lessons from in going forward. A successful process to 

reexamine the base of the federal government will in all likelihood rely on 

multiple approaches over a period of years. The reauthorization, 

appropriations, oversight, and budget processes have all been used, on 

some occasions in the past, to review existing programs and policies. 

Adding other specific approaches and processes—such as temporary 

commissions to develop policy alternatives or executive reorganizations—

has been proposed. Each approach needs to be considered separately for 

each program area and organizational problem to determine which set of 

approaches is best tailored for each. 

Performance and analytic tools can play a vital role in facilitating 

reexamination. In this regard, the performance metrics and plans ushered 

in by the Government Performance and Results Act of 1993 (GPRA) have 

led to a growing supply of increasingly sophisticated measures and data on 

the results achieved by various federal programs. Agencies and the Office 

of Management and Budget (OMB) have been working over the years to 

strengthen the links between this information and the budget. Under the 

Administration’s Program Assessment Rating Tool (PART), for example, 

OMB is rating the effectiveness of each program in the budget over a 5-year 

period. Since the fiscal year 2004 budget cycle, OMB has applied PART to 

607 programs (about 60 percent of the federal budget).

In conjunction with the multiple reexamination approaches that can be 

used, GAO has, in the past, recommended or asked Congress to consider 

certain initiatives to assist in government and agency transformations. 

These include (1) requiring a governmentwide strategic plan and 

developing a set of key national indicators to help inform the plan; 

(2) implementing a governmentwide framework for federal human capital 

reform; and (3) proposing specific leadership models to address 

transformation challenges, such as creating a Chief Operating Officer 

(COO)/Chief Management Official (CMO) at select agencies.
Page 15 GAO-05-830T 

Governmentwide strategic 

plan and key national 

indicators

We have previously recommended that Congress consider amending GPRA 

to require the President to develop a governmentwide strategic plan to 

provide a framework to identify long-term goals and strategies to address 

issues that cut across federal agencies.8

 A strategic plan for the federal 

government, supported by key national outcome-based indicators to assess 

the government’s performance, position, and progress, could be a valuable 

tool for governmentwide reexamination of existing programs, as well as 

proposals for new programs.9

 Developing a strategic plan can help clarify 

priorities and unify stakeholders in the pursuit of shared goals. Therefore, 

developing a strategic plan for the federal government would be an 

important first step in articulating the role, goals, and objectives of the 

federal government. If fully developed, a governmentwide strategic plan 

can potentially provide a cohesive perspective on the long-term goals of the 

federal government and provide a much-needed basis for fully integrating, 

rather than merely coordinating, a wide array of federal activities. 

Similar to GPRA's requirement that agencies consult with Congress as they 

develop their strategic plans, OMB should also be required to consult with 

Congress as it develops the governmentwide strategic plan. If fully 

implemented, the governmentwide strategic plan could also provide a 

framework for congressional oversight and other activities. To that end, 

we have also suggested that Congress consider the need to develop a more 

systematic vehicle for communicating its top performance concerns and 

priorities; develop a more structured oversight agenda to prompt a more 

coordinated congressional perspective on crosscutting performance 

issues; and use this agenda to inform its authorization, appropriations, and 

oversight processes. One possible approach would involve developing a 

congressional performance resolution identifying the key oversight and 

performance goals that Congress wishes to set for its own committees and 

for the government as a whole. Such a resolution could be developed by 

modifying the current congressional budget resolution, which is already 

organized by budget function. Initially, this may involve collecting the 

“views and estimates” of authorization and appropriations committees on 

priority performance issues for programs under their jurisdiction and 

working with crosscutting committees.

8

 GAO, Results-Oriented Government: GPRA Has Established a Solid Foundation for 

Achieving Greater Results, GAO-04-38 (Washington, D.C.: Mar. 10, 2004).

9

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

Position and Progress, GAO-05-1 (Washington, D.C.: Nov. 10, 2004).
Page 16 GAO-05-830T 

The development of a set of key national indicators that would provide 

information on a core set of information regarding the economic, 

environmental, social, and cultural condition of the nation over time, 

including safety and security, could be used as a basis to inform the 

development of a governmentwide strategic plan. The indicators could 

also link to and provide information to support outcome-oriented goals and 

objectives in agency-level strategic and annual performance plans. 

Currently, the National Academies are facilitating the development of a 

framework for a key national indicator system. As currently planned, this 

framework will include a description of the indicators in many areas, 

without the data, by the end of 2005.

Federal human capital 

reform

As I have repeatedly stated, people are an organization’s most important 

asset, and strategic human capital management should be the centerpiece 

of any effort to transform the cultures of government agencies. However, 

the existing federal personnel system is outmoded, and in some ways 

serves as a barrier to government transformation. GAO first placed 

strategic human capital management on the high-risk list in 2001 to focus 

attention on needed reforms. More progress in addressing human capital 

challenges was made in the last several years than in the previous 20, and 

additional significant changes in how the federal workforce is managed are 

underway.

To help advance the discussion concerning how governmentwide human 

capital reform should proceed, GAO and the National Commission on the 

Public Service Implementation Initiative hosted a forum on whether there 

should be a governmentwide framework for human capital reform and, if 

so, what this framework should include.10 There was widespread 

recognition among the forum participants that a “one size fits all” approach 

to human capital management is not appropriate for the challenges and 

demands government faces. However, a reasonable degree of consistency 

across the government is still desirable in a governmentwide framework 

that would include principles, criteria, and processes. We believe that 

future human capital reform should be put in operation only when an 

10 GAO and the National Commission on the Public Service Implementation Initiative, 

Highlights of a Forum: Human Capital: Principles, Criteria, and Processes for 

Governmentwide Federal Human Capital Reform, GAO-05-69SP (Washington, D.C.: Dec. 1, 

2004).
Page 17 GAO-05-830T 

agency has the institutional infrastructure in place to use the new 

authorities effectively. This infrastructure includes, at a minimum, 

• a strategic human capital planning process linked to the agency’s 

strategic plan;

• capabilities to design and implement a new human capital system 

effectively; and

• a modern, effective, credible, and validated performance management 

system that includes adequate safeguards to ensure the fair, effective, 

and nondiscriminatory implementation of the system.

Importantly, it is possible to enact broad-based human capital reforms that 

would enable agencies to move to a more market-oriented and 

performance-based system. However, any such effort should require that 

the agency not implement key reforms until after it meets certain 

procedural management assessment and independent certification 

requirements relating to the above-referenced criteria.

Transformational 

Leadership

We have reported that the personal involvement of top leadership in 

organizational transformation provides an identifiable source for 

employees to rally around during the tumultuous times created by dramatic 

reorganizations and transformations. Leadership must set the direction, 

pace, and tone for the transformation and should provide sustained and 

focused attention over the long term. This is because the experience of 

successful transformations and change management initiatives in large 

public and private organizations suggests that it can take at least 7 years 

until such initiatives are fully implemented and cultures are transformed in 

a substantial manner.

As DHS, DOD, and other agencies embark on large-scale organizational 

change initiatives to address 21st century challenges, there is a compelling 

need for leadership to provide the continuing focused attention essential to 

completing these multiyear transformations. We have reported that 

creation of a COO or CMO with term appointments at selected agencies 

could help to (1) elevate attention on management issues and 

transformational change, (2) integrate various key management and 

transformation efforts, and (3) institutionalize accountability for
Page 18 GAO-05-830T 

addressing these issues and leading this change.11 As I have testified on 

several occasions, one way to ensure sustained leadership over DOD’s 

business transformation efforts would be to create a full-time executivelevel II position for a CMO, who would serve as the Deputy Secretary of 

Defense for Management, or Principal Undersecretary. I have also stated 

that establishing a term that spans administrations underscores the 

importance of a professional, nonpartisan approach to this business 

management-oriented position. In April 2005, Senators Ensign, Akaka, and 

Voinovich introduced legislation (S. 780) to create a CMO/Deputy Secretary 

of Defense for Management position for DOD. The Deputy Secretary of 

Defense for Management would report to the Secretary of Defense and 

serve for a term of 7 years with an annual performance agreement.

Conclusions In establishing more results-oriented and performance-based cultures, 

government organizations and their leaders need to carefully select the 

best solution for their organizations in terms of structure, systems, and 

processes. Supporting new and more adaptable ways of doing business 

will be vital to successful transformation. Though progress is being made 

on many fronts, much remains to be done.

Regardless of the specific combination of reexamination approaches or 

selected initiatives adopted to transform the government and agencies, the 

ultimate success of this process will depend on several important 

overarching conditions:

• Sustained leadership to champion changes and reforms through the 

many stages of the policy development and subsequent implementation 

process.

• Broad-based input by a wide range of stakeholders.

11 GAO, DOD’s High-Risk Areas: Successful Business Transformation Requires Sound 

Strategic Planning and Sustained Leadership, GAO-05-520T (Washington, D.C.: Apr. 13, 

2005); GAO, Department of Homeland Security: A Comprehensive and Sustained 

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

16, 2005); GAO, The Chief Operating Officer Concept and Its Potential Use as a Strategy to 

Improve Management at the Department of Homeland Security, GAO-04-876R

(Washington, D.C.: June 28, 2004); and GAO, Highlights of a GAO Roundtable: The Chief 

Operating Officer Concept: A Potential Strategy to Address Federal Governance 

Challenges, GAO-03-192SP (Washington, D.C.: Oct. 4, 2002).
Page 19 GAO-05-830T 

• Reliable data and credible analysis from a broad range of sources that 

provide a compelling fact-based rationale for changing the base of 

programs and policies for specific areas.

• Clear and transparent processes for engaging the broader public in the 

debate over the recommended changes.

Policy and organizational change is not an easy process, but one that we 

have no choice but to embrace to reclaim our fiscal future and make 

government relevant for this new century. We at GAO stand ready to help 

Congress address these challenges. 

Mr. Chairman, this concludes my prepared statement. I would be pleased 

to respond to any questions that you or other Members of the 

Subcommittee may have at this time.

For future information on this testimony, please contact J. Christopher 

Mihm, Managing Director, Strategic Issues, at (202) 512-6806 or 

mihmj@gao.gov. 

(450429)
At the center of any serious change management initiative are the people. 

Thus, the key to a successful merger and transformation is to recognize the 

“people” element and implement strategies to help individuals maximize 

their full potential in the new organization, while simultaneously managing 

the risk of reduced productivity and effectiveness that often occurs as a 

result of the changes. Building on the lessons learned from the experiences 

of large private and public sector organizations, these key practices and 

implementation steps can help agencies transform their cultures so that they 

can be more results oriented, customer focused, and collaborative in nature. 

Key Practices and Implementation Steps for Mergers and Organizational Transformations 

Practice Implementation Step 

Ensure top leadership drives the 

transformation. 

• Define and articulate a succinct and compelling 

reason for change. 

• Balance continued delivery of services with 

merger and transformation activities. 

Establish a coherent mission and 

integrated strategic goals to guide the 

transformation. 

• Adopt leading practices for results-oriented 

strategic planning and reporting. 

Focus on a key set of principles and 

priorities at the outset of the 

transformation. 

• Embed core values in every aspect of the 

organization to reinforce the new culture. 

Set implementation goals and a timeline to 

build momentum and show progress from 

day one. 

• Make public implementation goals and timeline. 

• Seek and monitor employee attitudes and take 

appropriate follow-up actions. 

• Identify cultural features of merging 

organizations to increase understanding of 

former work environments. 

• Attract and retain key talent. 

• Establish an organizationwide knowledge and 

skills inventory to exchange knowledge among 

merging organizations. 

Dedicate an implementation team to 

manage the transformation process. 

• Establish networks to support implementation 

team. 

• Select high-performing team members. 

Use the performance management system 

to define responsibility and assure 

accountability for change. 

• Adopt leading practices to implement effective 

performance management systems with 

adequate safeguards. 

Establish a communication strategy to 

create shared expectations and report 

related progress. 

• Communicate early and often to build trust. 

• Ensure consistency of message. 

• Encourage two-way communication. 

• Provide information to meet specific needs of 

employees. 

Involve employees to obtain their ideas and 

gain their ownership for the 

transformation. 

• Use employee teams. 

• Involve employees in planning and sharing 

performance information. 

• Incorporate employee feedback into new 

policies and procedures. 

• Delegate authority to appropriate organizational 

levels. 

Build a world-class organization. • Adopt leading practices to build a world-class 

organization. 

Source: GAO 

The Comptroller General convened 

a forum in September 2002 to 

identify useful practices and 

lessons learned from major private 

and public sector mergers, 

acquisitions, and organizational 

transformations. This was done to 

help federal agencies implement 

successful transformations of their 

cultures, as well as the new 

Department of Homeland Security 

merge its various originating 

components into a unified 

department. There was general 

agreement on a number of key 

practices found at the center of 

successful mergers, acquisitions, 

and transformations. In this report, 

we identify the specific 

implementation steps for the key 

practices raised at the forum with 

illustrative private and public 

sector examples. 

To identify these implementation 

steps and examples, we relied 

primarily on interviews with 

selected forum participants and 

other experts about their 

experiences implementing mergers, 

acquisitions, and transformations 

and also conducted a literature 

review. 

www.gao.gov/cgi-bin/getrpt?GAO-03-669.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact J. Christopher 

Mihm, (202) 512-6806 or mihmj@gao.gov. 

Highlights of GAO-03-669, a report to 

congressional requesters 

July 2003 

RESULTS-ORIENTED CULTURES

Implementation Steps to Assist Mergers 

and Organizational Transformations 
As we face the challenges of the 

21st century, the federal 

government must strive to build 

high-performing organizations. 

Nothing less than a fundamental 

transformation in the people, 

processes, technology, and 

environment used by federal 

agencies to address public goals 

will be necessary to address public 

needs. In high-performing 

organizations, management 

controls, processes, practices, and 

systems are adopted that are 

consistent with prevailing best 

practices and contribute to 

concrete organizational results. 

Ultimately, however, the federal 

government needs to change its 

culture to become more resultsoriented, client- and customerfocused, and collaborative in 

nature. 

On November 6, 2003, GAO hosted 

a forum to discuss what it means 

for a federal agency to be highperforming in an environment 

where results and outcomes are 

increasingly accomplished through 

partnerships that cut across 

different levels of government and 

different sectors of the economy. 

The forum included discussions of 

the metrics, means, and 

mechanisms that a federal agency 

should use to optimize its influence 

and contribution to nationally 

important results and outcomes. 

The forum included representatives 

of the public, not-for-profit, and 

for-profit sectors as well as 

academia who are knowledgeable 

of what it takes for organizations to 

become high-performing. 

www.gao.gov/cgi-bin/getrpt?GAO-04-343SP.

To view the full product click on the link 

above. For more information, contact J. 

Christopher Mihm, Managing Director, 

Strategic Issues on (202) 512-6806 or 

mihmj@gao.gov. 

Highlights of GAO-04-343SP. 

February 2004

HIGHLIGHTS OF A GAO FORUM 

High-Performing Organizations: Metrics, 

Means, and Mechanisms for Achieving 

High Performance in the 21st Century 

Public Management Environment 

There was broad agreement among participants at the forum on the key 

characteristics and capabilities of high-performing organizations, which 

comprise four themes as follows: 

• A clear, well-articulated, and compelling mission. Highperforming organizations have a clear, well-articulated, and 

compelling mission, the strategic goals to achieve it, and a 

performance management system that aligns with these goals to 

show employees how their performance can contribute to overall 

organizational results. 

• Strategic use of partnerships. Since the federal government is 

increasingly reliant on partners to achieve its outcomes, becoming a 

high-performing organization requires that federal agencies 

effectively manage relationships with other organizations outside of 

their direct control. 

• Focus on needs of clients and customers. Serving the needs of 

clients and customers involves identifying their needs, striving to 

meet them, measuring performance, and publicly reporting on 

progress to help assure appropriate transparency and accountability. 

• Strategic management of people. Most high-performing 

organizations have strong, charismatic, visionary, and sustained 

leadership, the capability to identify what skills and competencies the 

employees and the organization need, and other key characteristics 

including effective recruiting, comprehensive training and 

development, retention of high-performing employees, and a 

streamlined hiring process. 

During the forum, the Comptroller General offered several options that 

the Congress, the executive branch, and others could pursue to facilitate 

transformation and to achieve high performance in the federal 

government. Several of the participants provided their views and 

experiences with these options. These options included: 

• establishing a governmentwide transformation fund where federal 

agencies could apply for funds to make short-term targeted 

investments, based on a well-developed business case; 

• employing the Chief Operating Officer concept or establishing a 

related senior management position, such as a Principal Under 

Secretary for Management and/or Chief Administrative Officer, to 

provide long-term attention and focus on management issues and 

transformational change at selected federal agencies; and 

• examining certain federal budget reforms, such as a biennial budget 

process, which could encourage the Congress and federal agencies to 

focus on long-range issues and possibly provide more time for 

oversight of existing government programs, policies, functions, and 

activities. 
www.gao.gov/cgi-bin/getrpt?GAO-04-38.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Patricia A. 

Dalton at (202) 512-6806 or 

daltonp@gao.gov. 

Highlights of GAO-04-38, a report to 

congressional requesters 

March 2004 

RESULTS-ORIENTED GOVERNMENT

GPRA Has Established a Solid 

Foundation for Achieving Greater Results 

GPRA’s requirements have established a solid foundation of results-oriented 

performance planning, measurement, and reporting in the federal 

government. Federal managers surveyed by GAO reported having 

significantly more of the types of performance measures called for by GPRA 

(see figure below). GPRA has also begun to facilitate the linking of 

resources to results, although much remains to be done in this area to 

increase the use of performance information to make decisions about 

resources. We also found agency strategic and annual performance plans 

and reports we reviewed have improved over initial efforts. 

Although a foundation has been established, numerous significant challenges 

to GPRA implementation still exist. Inconsistent top leadership commitment 

to achieving results within agencies and OMB can hinder the development of 

results-oriented cultures in agencies. Furthermore, in certain areas, federal 

managers continue to have difficulty setting outcome-oriented goals, 

collecting useful data on results, and linking institutional, program, unit, and 

individual performance measurement and reward systems. Finally, there is 

an inadequate focus on addressing issues that cut across federal agencies. 

OMB, as the focal point for management in the federal government, is 

responsible for overall leadership and direction in addressing these 

challenges. OMB has clearly placed greater emphasis on management issues 

during the past several years. However, it has showed less commitment to 

GPRA implementation in its guidance to agencies and in using the 

governmentwide performance plan requirement of GPRA to develop an 

integrated approach to crosscutting issues. In our view, governmentwide 

strategic planning could better facilitate the integration of federal activities 

to achieve national goals. 

Percentage of Federal Managers Who Reported Having Specific Types of Performance 

Measures Called for by GPRA 

Now that the Government 

Performance and Results Act 

(GPRA) has been in effect for 10 

years, GAO was asked to address 

(1) the effect of GPRA in creating a 

governmentwide focus on results 

and the government’s ability to 

deliver results to the American 

public, (2) the challenges agencies 

face in measuring performance and 

using performance information in 

management decisions, and 

(3) how the federal government 

can continue to shift toward a more 

results-oriented focus. 

GAO recommends that the Office 

of Management and Budget (OMB) 

improve its guidance and oversight 

of GPRA implementation, as well 

as develop a governmentwide 

performance plan. GAO also 

believes Congress should consider 

amending GPRA to require that 

(1) agencies update their strategic 

plans at least once every four 

years, consult with congressional 

stakeholders at least once every 

new Congress, and make interim 

updates to strategic and 

performance plans as appropriate; 

and (2) the President develop a 

governmentwide strategic plan. 

OMB generally agreed with our 

recommendations, but stated that 

the President’s Budget can serve as 

both a governmentwide strategic 

and annual plan. However, we 

believe the budget provides neither 

a long-term nor an integrated 

perspective on the federal 

government’s performance. 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-1.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Christopher 

Hoenig at (202) 512-6779 or 

hoenigc@gao.gov. 

Highlights of GAO-05-1, a report to the 

Chairman, Subcommittee on Science, 

Technology, and Space, Committee on 

Commerce, Science, and Transportation, 

U.S. Senate. 

November 2004

INFORMING OUR NATION 

Improving How to Understand and 

Assess the USA’s Position and Progress 

GAO studied a diverse set of key indicator systems that provide economic, 

environmental, social and cultural information for local, state, or regional 

jurisdictions covering about 25 percent of the U.S. population—as well as 

several systems outside of the United States. GAO found opportunities to 

improve how our nation understands and assesses its position and progress.

 

Citizens in diverse locations and at all levels of society have key 

indicator systems. Building on a wide array of topical bodies of knowledge 

in areas such as the economy, education, health, and the environment, GAO 

found that individuals and institutions across the United States, other 

nations, and international organizations have key indicator systems to better 

inform themselves. These systems focus on providing a public good: a 

single, freely available source for key indicators of a jurisdiction’s position 

and progress that is disseminated to broad audiences. A broad consortium 

of public and private leaders has begun to develop such a system for our 

nation as a whole. 

These systems are a noteworthy development with potentially broad 

applicability. Although indicator systems are diverse, GAO identified 

important similarities. For example, they faced common challenges in areas 

such as agreeing on the types and number of indicators to include and 

securing and maintaining adequate funding. Further, they showed evidence 

of positive effects, such as enhancing collaboration to address public issues, 

and helping to inform decision making and improve research. Because these 

systems exist throughout the United States, in other nations, and at the 

supranational level, the potential for broad applicability exists, although the 

extent of applicability has yet to be determined. 

Congress and the nation have options to consider for further action.

GAO identified nine key design features to help guide the development and 

implementation of an indicator system. For instance, these features include 

establishing a clear purpose, defining target audiences and their needs, and 

ensuring independence and accountability. Customized factors will be 

crucial in adapting such features to any particular level of society or 

location. Also, there are several alternative options for a lead entity to 

initiate and sustain an indicator system: publicly led, privately led, or a 

public-private partnership in either a new or existing organization. 

Observations, Options, and Next Steps 

Key indicator systems merit serious discussion at all levels of society, 

including the national level, and clear implementation options exist from 

which to choose. Hence, Congress and the nation should consider how to 

• improve awareness of these systems and their implications for the nation,

• support and pursue further research, 

• help to catalyze discussion on further activity at subnational levels, and 

• begin a broader dialogue on the potential for a U.S. key indicator system.

There has been growing activity 

and interest in developing a system 

of key national indicators that 

would provide an independent, 

trusted, reliable, widely available, 

and usable source of information. 

Such a system would facilitate factbased assessments of the position 

and progress of the United States, 

on both an absolute and relative 

basis. This interest emerges from 

the following perspectives. 

• The nation’s complex challenges 

and decisions require more 

sophisticated information 

resources than are now 

available. 

• Large investments have been 

made in indicators on a variety 

of topics ranging from health 

and education to the economy 

and the environment that could 

be aggregated and disseminated 

in ways to better inform the 

nation. 

• The United States does not have 

a national system that 

assembles key information on 

economic, environmental, and 

social and cultural issues. 

Congressional and other leaders 

recognized that they could benefit 

from the experiences of others who 

have already developed and 

implemented such key indicator 

systems. GAO was asked to 

conduct a study on: (1) The state of 

the practice in these systems in the 

United States and around the 

world, (2) Lessons learned and 

implications for the nation, and 

(3) Observations, options, and next 

steps to be considered if further 

action is taken. 
What Participants Said

United States Government Accountability Office

Why GAO Convened This 

Forum

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-69SP 

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact J. Christopher 

Mihm at (202) 512-6806 or mihmj@gao.gov. 

Highlights of GAO-05-69SP

December 2004

HIGHLIGHTS OF A FORUM 

Human Capital: Principles, Criteria, and 

Processes for Governmentwide Federal 

Human Capital Reform 

Forum participants discussed (1) Should there be a governmentwide 

framework for human capital reform? and (2) If yes, what should a 

governmentwide framework include? 

There was widespread recognition that a “one size fits all” approach to 

human capital management is not appropriate for the challenges and 

demands government faces. However, there was equally broad agreement 

that there should be a governmentwide framework to guide human capital 

reform built on a set of beliefs that entail fundamental principles and 

boundaries that include criteria and processes that establish the checks and 

limitations when agencies seek and implement their authorities. While there 

were divergent views among the participants, there was general agreement 

that the following served as a starting point for further discussion in 

developing a governmentwide framework to advance needed human capital 

reform. 

Principles 

• Merit principles that balance organizational mission, goals, and 

performance objectives with individual rights and responsibilities 

• Ability to organize, bargain collectively, and participate through labor 

organizations 

• Certain prohibited personnel practices 

• Guaranteed due process that is fair, fast, and final 

Criteria 

• Demonstrated business case or readiness for use of targeted authorities 

• An integrated approach to results-oriented strategic planning and human 

capital planning and management 

• Adequate resources for planning, implementation, training, and 

evaluation 

• A modern, effective, credible, and integrated performance management 

system that includes adequate safeguards to ensure equity and prevent 

discrimination 

Processes 

• Prescribing regulations in consultation or jointly with the Office of 

Personnel Management

• Establishing appeals processes in consultation with the Merit Systems 

Protection Board

• Involving employees and stakeholders in the design and implementation 

of new human capital systems

• Phasing in implementation of new human capital systems

• Committing to transparency, reporting, and evaluation

• Establishing a communications strategy

• Assuring adequate training

There is widespread agreement 

that the federal government faces a 

range of challenges in the 21st

century that it must confront to 

enhance performance, ensure 

accountability, and position the 

nation for the future. Federal 

agencies will need the most 

effective human capital systems to 

address these challenges and 

succeed in their transformation 

efforts during a period of likely 

sustained budget constraints. 

More progress in addressing human 

capital challenges was made in the 

last 3 years than in the last 20, and 

significant changes in how the 

federal workforce is managed are 

underway. 

On April 14, 2004, GAO and the 

National Commission on the Public 

Service Implementation Initiative 

hosted a forum with selected 

executive branch officials, key 

stakeholders, and other experts to 

help advance the discussion 

concerning how governmentwide 

human capital reform should 

proceed. 
Why GAO Convened This

Roundtable

The federal government is in a

period of profound transition that

requires a comprehensive review,

reassessment, reprioritization,

and reengineering of what the

government does, how it does

business, and, in some cases,

who does the government’s

business. Agencies will need to

transform their cultures so that

they are more results oriented,

customer focused, and

collaborative in nature. At the

same time, GAO’s work over the

years has amply documented that

agencies are suffering from a

range of long-standing

management problems that are

undermining their abilities to

efficiently, economically, and

effectively accomplish their

missions and achieve results.

On September 9, 2002, GAO

convened a roundtable to discuss

the application and the related

advantages and disadvantages of

the Chief Operating Officer

(COO) concept and how it might

apply within selected federal

departments and agencies as one

strategy to address certain

systemic federal governance and

management challenges. The

invited participants have current

or recent executive branch

leadership responsibilities,

significant executive

management experience, or both.

October 2002

HIGHLIGHTS OF A GAO ROUNDTABLE

The Chief Operating Officer Concept:

A Potential Strategy to Address Federal

Governance Challenges

The full special publication is available at www.gao.gov/cgi-bin/getrpt?GAO-03-192SP. For additional information about the special publication, contact J.

Christopher Mihm, Director, Strategic Issues on (202) 512-6806 or mihmj@gao.gov.

Highlights of GAO-03-192SP

Elevate attention on management issues and transformational

change. The nature and scope of the changes needed in many

agencies require the sustained and inspired commitment of the top

political and career leadership.

Integrate various key management and transformation efforts.

While officials with management responsibilities often have

successfully worked together, there needs to be a single point within

agencies with the perspective and responsibility—as well as

authority—to ensure the successful implementation of functional

management and, if appropriate, transformational change efforts.

Institutionalize accountability for addressing management

issues and leading transformational change. The management

weaknesses in some agencies are deeply entrenched and long standing

and will take years of sustained attention and continuity to resolve. In

addition, making fundamental changes in agencies’ cultures will

require a long-term effort. In the federal government, the frequent

turnover of the political leadership has often made it difficult to obtain

the sustained and inspired attention required to make needed changes.

Within the context of these generally agreed-upon themes, the

participants offered a number of ideas to help address management

weaknesses and drive transformational change.

United States General Accounting Office

What Participants Said

At the roundtable, participants generated ideas and engaged in an open

dialogue on the possible application of the COO concept. There was

general agreement that the following three themes provide a course for

action.

G A O

Accountability Integrity Reliability

Highlights

Accountability Integrity Reliability

Highlights
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