GAO

United States General Accounting Office

Testimony

Before the Subcommittee on National Security, Veterans 

Affairs, and International Relations, Committee on 

Government Reform, House of Representatives

For Release

Expected at

10:00 a.m., EST

Thursday,

February 25, 1999

MAJOR MANAGEMENT 

CHALLENGES AND 

PROGRAM RISKS

Departments of Defense, 

State, and Veterans Affairs

Statement by Henry L. Hinton, Jr., Assistant Comptroller 

General, National Security and International Affairs 

Division

GAO/T-NSIAD/HEHS/AIMD-99-104

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Mr. Chairman and Members of the Subcommittee:

We are pleased to be here today to discuss major management challenges 

and program risks confronting the Departments of Defense (DOD), State, 

and Veterans Affairs (VA). Our testimony is derived from a special series of 

reports we recently issued on this subject entitled Performance and 

Accountability Series: Major Management Challenges and Program Risks. 

The series contains separate reports on 20 agencies—one on each of the 

cabinet departments and on most major independent agencies as well as 

the U.S. Postal Service. As a companion volume to this series, we have also 

issued an update to those government operations and programs that our 

work has identified as “high risk” because of their greater vulnerabilities to 

waste, fraud, abuse, and mismanagement.

As requested, our testimony today will focus on (1) the management 

challenges DOD, State, and VA must address to improve the efficiency of 

their support functions and (2) whether these departments are meeting 

performance and accountability goals and measurements that are required 

under the Government Performance and Results Act of 1993.

Results in Brief For each of the three agencies—DOD, State, and VA—we have identified 

and reported management challenges that have hampered the efficiency of 

their support functions in carrying out their missions. To their credit, each 

of the agencies has implemented a number of initiatives to improve their 

operations, but more remains to be done. These challenges, many of which 

have been long-standing in scope, also underscore the critical role that the 

principles of performance-based management, as embraced in the Results 

Act, can play in successfully providing the products, services, and results 

that taxpayers expect. 

For many years, we have reported significant problems at DOD that cut 

across many of its program areas. These problems can be categorized into 

systemic management challenges, which deal with issues such as financial 

management, information management, weapon systems acquisition, and 

contract management; and program management challenges, which deal 

with issues related to infrastructure, inventory management, and 

personnel. DOD has implemented a number of Departmentwide reform 

initiatives that are intended to improve some of its processes along with 

key business practices. Despite DOD’s military successes, many of DOD’s 

programs and operations are still vulnerable to fraud, waste, abuse, and 

mismanagement, and need improvement. Overcoming these challenges 
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requires DOD to address the underlying causes, such as cultural barriers 

and service parochialism, that limit opportunities for change. To address 

these problems, DOD must have an effective overall strategic plan for the 

agency and all levels of the organization that includes goals, performance 

measures, and time frames for completing corrective actions. The Results 

Act provides the framework for resolving high risk and other problems and 

for providing greater accountability in DOD’s programs and operations. 

However, DOD has not fully embraced the underlying principles in the 

Results Act.

In our past and ongoing work at State, we have identified a number of 

performance and management challenges State faces in carrying out its 

mission, such as providing enhanced overseas security, upgrading its 

information systems, strengthening financial accounting and controls, 

enhancing controls over the issuance of visas, integrating other foreign 

affairs agencies’ functions into the Department, and improving its strategic 

and performance planning. State is making progress in addressing these 

issues. For example, State is now devoting substantial resources to 

developing a strategy to enhance its information management capacity and 

security as well as its financial management systems. State has also 

completed strategic and annual performance plans under the Results Act. 

However, these plans had their strong points but often fell short on meeting 

Results Act requirements. For example, State’s strategic plan addressed 

neither the potential impact of the consolidation of the foreign affairs 

agencies on its systems nor the potential for other agencies to have 

functions duplicative of State’s. State’s performance plan revealed similar 

deficiencies.

For many years, we have reported significant management problems at VA. 

These problems include obsolete infrastructure, poor monitoring of the 

effects of health service delivery changes on patient outcomes, inadequate 

data, and ineffective management of non-health-care benefits and 

management information systems. VA has made progress in developing a 

framework for managing and evaluating changes in health care service 

delivery, as required by the Results Act; however, much more needs to be 

done to achieve Results Act requirements. For example, VA must continue 

to set results-oriented goals for compensating disabled veterans and 

develop effective strategies for improving disability claims processing and 

vocational rehabilitation. VA must also improve its management 

information to help it ensure that veterans have equitable access to care 

across the country, that it maintains its capacity to serve special 

populations, and that it can meet enrolled veterans’ demand for care.
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Challenges Facing the 

Department of Defense

Managing and overseeing an estimated $1 trillion in assets and annual 

budget of over $250 billion, or about one-half of the government's 

discretionary funding, is an enormous task. As the United States begins the 

new millennium as the world's sole superpower, it continues to lead the 

world with superior military forces. The effectiveness of U.S. forces is well 

evidenced by experiences in the Persian Gulf and Bosnia. Also, the DOD 

has implemented a number of Departmentwide reform initiatives that are 

expected to improve its financial management, information management, 

and defense weapon systems acquisition processes and other key business 

practices. However, DOD still faces challenges with many of its key 

performance and management processes. A number of these challenges 

have been included on our high risk list for many years (see app. I). 

Successfully addressing these challenges can yield fiscal dividends that the 

Department could use to meet priorities such as readiness and 

modernization needs. The challenges DOD faces can be grouped into two 

categories: (1) systemic problems with management processes related to 

plans, finances, information, acquisition, and contracts and (2) specific 

problems related to infrastructure, inventory, and personnel programs. 

Summaries of the challenges that need to be addressed follow.

Systemic Management 

Challenges

Serious Financial Management 

Weaknesses Persist

DOD continues to struggle to overcome the many problems brought about 

by decades of neglect and to fully institute sound financial management 

practices. These problems range from being unable to properly account for 

billions of dollars in assets to being unable to produce reliable and timely 

information needed to make sound resource decisions. The most recent 

audits of DOD’s financial statements—for fiscal year 1997—resulted in the 

identification of serious deficiencies across the full spectrum of DOD’s 

recordkeeping and controls systems. For example:

• DOD has not properly accounted for and reported billions of dollars of 

property, equipment, inventory, and supplies. Recorded information on 

the number and location of several military equipment items—such as 

F-4 engines and service craft—was not reliable, on-hand quantities of 

inventories differed by 23 percent from inventory records at selected 

major storage locations, and over $9 billion in known military operating 

materials and supplies were not reported.
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• DOD has not estimated and reported on material environmental and 

disposal liabilities. While DOD reported nearly $40 billion in estimated 

environmental cleanup and disposal liabilities for fiscal year 1997, its 

reports excluded costs associated with military weapon systems or 

training ranges—these undisclosed liabilities are likely to be an 

additional tens of billions of dollars. 

To achieve the wide-ranging reforms necessary to address its long-standing 

financial management deficiencies, we have made numerous 

recommendations to DOD regarding its need to upgrade the skills of its 

financial personnel and successfully overcome serious design flaws in its 

financial systems. DOD has many well-intentioned planned and ongoing 

financial management reform and improvement efforts, such as an action 

plan to identify short-term initiatives to address DOD’s financial reporting 

deficiencies. However, until DOD deals with these two key issues, 

resolution of its financial management problems is unlikely. 

Given the seriousness and long-standing nature of these weaknesses in 

DOD’s financial management operations, we are continuing to monitor this 

area as part of our high-risk program. Taken together, the material 

deficiencies in DOD’s financial operations represent the single largest 

obstacle that must be effectively addressed to obtain an unqualified 

opinion on the entire U.S. government’s consolidated financial statements. 

These weaknesses must be effectively addressed if DOD is to put into place 

the disciplined financial practices needed to produce credible financial 

information not only for financial statements but also for support of 

operational and budgetary decisionmaking and maintaining effective 

accountability over DOD’s vast resources.

Information Management and 

Technology Issues Pose Major 

Concerns

Information management and technology issues are key DOD management 

challenges. We are continuing to designate DOD’s information technology 

project management efforts as high risk. A primary short-term concern 

centers on the implementation of the Year 2000 conversions of

date-sensitive information on DOD's computer systems. In February 1997, 

we designated the Year 2000 problems as a governmentwide high-risk area. 

Another area of concern is information security for computer systems. 

Malicious attacks on these systems are an increasing threat to our nation's 

security. 

For an organization as large as DOD—with over 1.5 million computers, 

28,000 systems, and 10,000 networks-—addressing the Year 2000 problem is 

a formidable task and progress on the Year 2000 program is slow. In fact, 
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the Office of Management and Budget, in its November 15, 1998, report on 

federal agencies’ progress on Year 2000 conversion, has placed DOD on its 

“Tier 1” list—those agencies “where there is insufficient evidence of 

adequate progress.” DOD has an enormous effort underway to remediate 

its mission-critical systems and ensure that its key operational missions 

will continue to function after the century date change. However, that 

effort is at risk. We have issued 10 reports and the DOD Inspector General 

and audit agencies have issued 130 reports that continue to question the 

Department's management of its Year 2000 program. For example:

• The Department lacks reliable, timely information on program status.

• Component reports on systems compliance are often inaccurate.

• Contingency plans (developed in the event of system failure) are 

frequently not executable.

• Inconsistent guidance has led to false starts and uncoordinated efforts.

Another area of major concern is information security. Providing security 

over DOD’s vast array of networked computers is a major challenge. DOD’s 

computer systems are particularly susceptible to attack through 

connections on the Internet, which Defense uses to enhance 

communication and information sharing. The Defense Information 

Systems Agency estimated that attacks numbered in the hundreds of 

thousands per year and were successful 65 percent of the time and that the 

number of attacks was doubling each year.

Reports to DOD have included numerous recommendations related to 

specific control weaknesses as well as the need to establish a defined 

systems architecture and a comprehensive program for improved 

information security management. Based on our recommendations and 

legislative requirements DOD is taking a variety of steps to (1) develop a 

plan for evaluating, in an operational environment, Year 2000 compliance 

and (2) establish the Departmentwide Information Assurance Program to 

improve and better coordinate the information security-related activities of 

the military services and other DOD components. A sustained effort will be 

needed to ensure that these efforts are successful.

Weapon Systems Acquisition 

Problems Persist 

Effectively managing the weapon systems acquisition process continues to 

be a concern for DOD. Although DOD has increased its procurement 

budget, it consistently pays more and takes longer than planned to develop 

systems that do not perform as anticipated. DOD spends about $85 billion 

annually to research, develop, and acquire weapon systems. Although 
Page 6 GAO/T-NSIAD/HEHS/AIMD-99-104

DOD has many acquisition reform initiatives in process, pervasive 

problems persist regarding

• Questionable requirements and solutions that are not the most

cost-effective available. For example, DOD could have met its strategic 

airlift requirements and achieved a significant life-cycle cost savings by 

buying fewer C-17s than planned.

• Unrealistic cost, schedule, and performance estimates. For example, in 

restructuring the F-22 program, it is doubtful that the Air Force can 

offset the $13-billion projected increase in production costs because 

many of the cost-cutting initiatives it identified were not well defined. 

• Questionable program affordability. DOD tends to overestimate funding 

that would be available in the future, and underestimate program costs, 

resulting in the advent of more programs than could be executed as 

planned. For example, in analyzing the 1998 Future Years Defense 

Program, we found that funding for infrastructure activities was 

projected to increase, while procurement funding was projected to be 

lower than anticipated.

• The use of high-risk acquisition strategies. Acquisition strategies such 

as the acquisition of weapons based on optimistic assumptions about 

the maturity and availability of enabling technologies were being based 

on the need to meet the threat and to reduce acquisition costs. For 

example, DOD’s approval of the Joint Surveillance Target Attack Radar 

System’s full-rate production was premature and risky because the 

system’s operational effectiveness and suitability for combat were not 

yet demonstrated and plans to address deficiencies and reduce program 

costs were not completed.

Acquisition reforms under way by DOD have a sound basis and have the 

potential for improving the outcomes of weapon systems. Acquisition 

reforms and commercial practices can help produce better outcomes on 

DOD acquisitions if they help a program succeed in its environment.

Improved Processes and 

Controls Key to Reducing 

Contract Risk

DOD spends over $100 billion a year contracting for goods and services. 

Since 1995, we have reported DOD contract management as a high-risk 

area. Over the last few years, DOD has made several broad-based changes 

to its acquisition and contracting processes to improve DOD-contractor 

relationships and rules. DOD has given attention to acquisition reform 

initiatives, but we continue to identify risks in DOD's contracting activity, 
Page 7 GAO/T-NSIAD/HEHS/AIMD-99-104

including areas such as erroneous, fraudulent, and improper payments to 

contractors; payment of higher prices for commercial spare parts than 

necessary; and the award and administration of DOD health care contracts.

The need for DOD to achieve effective control over its payment process 

remains an imperative. DOD receives about a billion dollars a year in 

checks from defense contractors. While some of these are the results of 

contract changes that result in reduced prices, others represent errors by 

DOD’s payment center. DOD is considering the use of private contractors, 

through a process known as recovery auditing, to identify overpayments. 

In addition to erroneous payments, weak systems and internal controls can 

leave DOD vulnerable to fraud and improper payments. Our September 

1998 report discussed two cases of fraud that resulted from a weak internal 

control environment.1

 In one instance, the lack of segregation of duties and 

other control weaknesses provided Defense Finance and Accounting 

Service employees a level of access to the vendor payment system that 

allowed them to enter contract and payment information and remittance 

addresses needed to create payment vouchers. No one individual should 

control all key aspects of a transaction or event without appropriate 

compensating controls.

In recent years, DOD has significantly changed the way it acquires goods 

and services by removing what were considered barriers to efficient and 

effective use of the commercial marketplace. A major focus of these 

changes is the adoption of commercial buying practices. We and the DOD 

IG have found that DOD needs to strengthen the quality of its price 

analyses. For example, the IG found that DOD had not formulated good 

procurement and management strategies for commercial parts in the 

acquisition reform environment. As a result, DOD was paying higher prices 

for commercial spare parts than necessary.

DOD’s implementation of health care management programs, particularly 

the TRICARE Program, further illustrates DOD’s difficulty in managing 

contracts. TRICARE was established during a period of military 

downsizing and budget concerns to contain costs and maintain access to 

and the quality of health care for DOD’s 8.2 million beneficiaries. However, 

TRICARE’s implementation, entailing the award of seven competitively bid, 

5-year contracts, has been fraught with problems. All seven contracts, 

1Financial Management: Improvement Needed in Air Force Vendor Payments Systems and Controls

(GAO/AIMD-98-274, Sept. 28, 1998).
Page 8 GAO/T-NSIAD/HEHS/AIMD-99-104

totaling about $15 billion, were protested. As a result, DOD and the 

competitors incurred added costs, and the program was significantly 

delayed. Three of the protests were sustained, resulting in further delays. 

While DOD is taking steps to improve its payment process and controls, it 

will likely take an extended period of time to get its payment problems 

under control. Similarly, DOD is taking steps to simplify its procurement 

approach for health care contracts. Whether DOD can successfully 

develop and launch the new method, and whether what it designs will 

reduce the current volume of contract changes or control health care costs 

remains to be seen. 

Program Management 

Challenges

Defense Infrastructure Can Be 

Better Streamlined

Although DOD has substantially downsized its force structure over the past 

7 to 10 years, it has not reduced operations and support costs 

commensurately because the services are reluctant to consolidate 

activities that span service lines and reduce capacity as necessary. DOD 

has found that infrastructure reductions are difficult and painful because 

achieving significant cost savings requires up-front investments, the 

closure of installations, and the elimination of military and civilian jobs. 

Further, DOD’s ability to reduce infrastructure has been affected by service 

parochialism, a cultural resistance to change, and congressional and public 

concern about the effects and impartiality of decisions. For fiscal

year 1998, DOD estimated that about $147 billion, or 58 percent of its 

budget, would still be needed for infrastructure requirements, which 

included installation support, training, medical care, logistics, force 

management, acquisition infrastructure, and personnel. 

The Secretary of Defense’s November 1997 Defense Reform Initiative 

Report emphasizes the need to reduce excess Cold War infrastructure to 

free up resources for force modernization. Initiatives included privatizing 

military housing and utility systems, emphasizing demolition of excess 

buildings, and consolidating and regionalizing many defense support 

agencies. The Secretary noted that DOD continued to be weighed down by 

facilities that are too extensive for its needs, more expensive to maintain 

than it can afford, and detrimental to the efficiency and effectiveness of the 

nation’s armed forces. Likewise, he noted that DOD must do a better job of 

managing facility assets on its remaining bases. The Defense Reform 
Page 9 GAO/T-NSIAD/HEHS/AIMD-99-104

Initiatives are steps in the right direction, but collectively they do not 

provide a comprehensive long-range plan for facilities infrastructure. We 

have cited the need for such a plan but have noted that DOD’s past plans 

were not focused on long-term comprehensive strategies for facilities 

revitalization, replacement, and maintenance and were not tied to 

measurable goals to be accomplished over specified time frames or linked 

to funding. The Results Act underscores the need for improved planning 

for facilities infrastructure. Improved infrastructure planning can help 

agency components and programs to develop outcome-oriented goals and 

performance measures that are linked to and support agencywide goals. 

In February 1997, we identified defense infrastructure as a high-risk area, 

and it remains on our high-risk list. We have identified numerous areas in 

which infrastructure activities can be eliminated, streamlined or 

reengineered to be made more efficient in the following areas: acquisition 

infrastructure, central logistics, installation support, central training, force 

management, and medical facilities and services.

Inventory Management Problems 

Persist in DOD

DOD’s inventory management practices continue to be ineffective and 

inefficient. As a result, DOD spends more than necessary to procure 

inventory, yet items are not available when needed. In 1990, we identified 

DOD’s management of secondary inventories (spare and repair parts, 

clothing, medical supplies, and other items to support the operating forces) 

as a high-risk area because levels of inventory were too high and 

management systems and procedures were ineffective. 

DOD has had inventory management problems for decades. Some 

examples of DOD’s problems follow:

• Adequate inventory oversight has yet to be achieved. In 1995, we 

reported that DOD’s strategic plans for logistics called for improving 

asset visibility in such areas as in-transit assets, retail level stocks, and 

automated systems. DOD will not completely implement its current 

plan until 2004.

• DOD has not taken sufficient steps to ensure the accuracy of inventory 

requirements to preclude the acquisition of unneeded items. For 

example, the Navy could have eliminated about $13 million of planned 

program requirements for 68 of 200 items we reviewed because the 

requirements were also included in the reorder-level requirement.

Recently, the Congress enacted legislation requiring the Defense Logistics 

Agency and the services to develop and submit schedules for implementing 
Page 10 GAO/T-NSIAD/HEHS/AIMD-99-104

best commercial practices in the acquisition and distribution of inventory 

items. DOD recognizes potential opportunities in adopting best practices. 

DOD seeks to reengineer its support activities and business practices by 

incorporating many business practices that the private sector companies 

have used to become leaner, more agile, and highly successful. Since 1991, 

we have issued 11 reports that identify significant opportunities for DOD to 

test and adopt, where feasible, best inventory management practices used 

in the private sector to improve logistics operations and lower costs.

Military Personnel Issues Need 

Attention

DOD’s personnel programs to recruit, train, and retain a high-quality

active-duty enlisted workforce have not received the management 

attention needed to ensure their successful operation. The military 

services recruit tens of thousands of new enlistees each year who fail to 

complete their contracts. 

Our body of work in this area indicates that DOD faces an especially 

significant challenge in retaining the hundreds of thousands of new recruits 

it enlists each year. While each new enlistee signs a contract ranging from 

2 to 6 years, most first-term contracts are for 4 years. Despite this 

contractual obligation, we found that between fiscal year 1982 and 1993, 

31.7 percent of all enlistees did not complete their first terms of service. 

First-term attrition is costly: DOD estimates that the services’ recruiting 

and training investment in each enlistee during the first term is an average 

of $35,532. For fiscal year 1993 we calculated that the services spent

$1.3 billion on the 72,670 enlistees who entered the services in fiscal

year 1993 and departed prematurely. Enlistees were separated because of 

inadequate screening prior to enlistment; ineffective service procedures for 

selecting the best candidates for recruiting duty; and enlistee misconduct, 

medical conditions, performance problems, drug use, pregnancy and 

parenthood.

We have made a number of recommendations to which DOD is now 

responding. It has formed a joint service working group and agreed to 

prepare a report by October 1999 documenting service initiatives to reduce 

attrition. Examining the roles of all persons involved in recruiting and 

retaining enlistees is in keeping with the intent of the Results Act, which 

requires agencies to clearly define their missions, to set goals, and to link 

activities and resources to those goals. Recruiting and retaining wellqualified military personnel are among the goals included in DOD’s 

strategic plan required under the Act.
Page 11 GAO/T-NSIAD/HEHS/AIMD-99-104

Addressing the Challenges 

in DOD

To address the management and performance problems we have cited, 

DOD has taken actions in the high risk and other areas and has made 

progress in improving some of them. DOD has had some success in 

addressing its inventory management problems, is working to reform its 

weapon systems acquisition process, has recognized the need for 

infrastructure reductions, and has identified initiatives to reduce attrition 

of military personnel. For example, in May 1997, the Secretary of Defense 

issued the Report of the Quadrennial Defense Review, which examines 

America’s defense needs from 1997 to 2015, including issuing a blueprint 

for a strategy-based, balanced, and affordable defense program. In 

addition, DOD’s latest efforts to reform operations and processes are 

contained in the Secretary’s DRI Report, in which DOD proposed to 

revolutionize its business and support operations by identifying and 

adopting best business practices from the private sector.

Despite DOD’s military successes, many of its programs and operations are 

still vulnerable to fraud, waste, and abuse, and mismanagement, and need 

improvement. To meet these challenges, DOD must address their 

underlying causes, such as cultural barriers and service parochialisms. 

DOD must have an effective overall strategic plan that includes goals, 

performance measures, and time frames for completing corrective actions. 

In our view, the Results Act provides the framework for resolving high risk 

and other problems and for providing greater accountability in DOD’s 

programs and operations.

DOD, however, has not fully embraced the underlying principles in the 

Results Act. The Secretary of Defense has stated that the May 1997 

Quadrennial Defense Review will serve as DOD's overall strategic planning 

document and is intended to fulfill the requirements of the Results Act. 

Our review of DOD’s strategic plan and its February 1998 performance plan 

disclosed many areas where improvements could be made. The principal 

shortcomings in DOD’s plan center on weaknesses in (1) establishing 

results-oriented performance goals with explicit strategies and time frames 

for achieving them and (2) addressing what DOD has done or plans to do to 

resolve its persistent management problems. In our opinion, DOD needs to 

work closely with the Congress now to develop performance goals and 

measures. Addressing these areas would provide congressional 

decisionmakers and DOD the information necessary to ensure that DOD’s 

plans are well thought out for resolving ongoing problems, achieving its 

goals and objectives, and becoming more results oriented, as expected by 

the Results Act.
Page 12 GAO/T-NSIAD/HEHS/AIMD-99-104

Challenges Facing the 

Department of State

As the lead agency for the conduct of foreign affairs, State has enormous 

responsibilities as it works to shape a more secure, prosperous, and 

democratic world for the benefit of the American people. A substantial 

amount of State's nearly $2.7 billion annual budget for the administration of 

foreign affairs is spent on what could be called "business" functions that 

support its broad mission. The Department has a worldwide network of 

operations to maintain its headquarters and more than 250 overseas posts, 

as well as about 35 other U.S. agencies that operate overseas. State 

provides security for thousands of U.S. personnel and facilities abroad. In 

addition, State operates a network of communications facilities around the 

globe that are critical to its foreign affairs mission.

In carrying out its important mission, State faces a number of significant 

management challenges that, if not met, could affect its ability to function 

effectively in the 21st century. These challenges are not simple: they cover 

a wide spectrum of State operations and responsibilities around the world. 

Key among these challenges are issues State faces in enhancing overseas 

security, improving its information and financial management systems, 

integrating other foreign affairs agencies' functions into the Department, 

enhancing the controls over the issuance of visas, and improving its 

strategic and performance planning.

Enhancing the Management 

of Security Programs for 

Overseas Personnel and 

Property

The need to adequately protect employees and their families overseas may 

very well be the single most important management issue currently facing 

the State Department. The acts of terrorism in Kenya and Tanzania claimed 

more than 260 lives and injured thousands in August 1998. Worldwide, 

several embassies found themselves either shut down or unable to provide 

normal services because of threatening situations. The monetary 

requirements for undertaking security enhancements will be significant, as 

will the management and technological challenges. State received $1.45 

billion in emergency funding to rebuild the embassies in Kenya and 

Tanzania, relocate other embassies, and improve security for other 

facilities serving U.S. personnel worldwide. State reports that it has 

completed security surveys of over 200 posts and formulated six internal 

working groups to direct and track program implementation. One initiative 

will require the accounting system to accumulate spending data on areas 

such as equipment acquisition and construction. 

State is also assessing its longer term security enhancement needs, and 

estimates that several billion dollars may be needed for additional embassy 
Page 13 GAO/T-NSIAD/HEHS/AIMD-99-104

construction. A key issue facing State is whether it will have the capacity 

to implement a major security construction program. In the early 1990s, we 

reported that State encountered several management problems in using the 

$1.47 billion in funds that were applied to the diplomatic security 

construction program during fiscal years 1986-1995. These management 

problems were related to inadequate staffing, poor program planning, 

difficulties in site acquisition, changes in security requirements, and 

inadequate contractor performance. All of these directly contributed to 

significant delays and cost increases in the majority of State's construction 

projects. For example, inadequate coordination within State in 

determining building requirements contributed to millions of dollars in cost 

increases in a project in Pretoria, South Africa. A lack of agreement within 

State on potential building sites delayed projects in Bogota, Colombia, and 

Tunis, Tunisia for several years and substantially increased costs. State has 

since undertaken a number of efforts to improve construction programs. 

Nevertheless, the scope of the problems encountered indicated that State 

had systemic weaknesses in its program management. 

In view of State's prior experiences and difficulties in implementing the 

security construction program, several questions and issues need to be 

addressed as part of today's efforts to formulate strategies for enhancing 

security.

• What would be the total costs to bring overseas posts into compliance 

with current security standards? 

• What actions would State need to take to ensure it has the management 

capability to implement a large-scale construction program?

• Are there adequate control mechanisms to ensure efficient and effective 

use of emergency funds and any subsequent funding for overseas 

security?

One issue that should be considered in addressing future security 

requirements is the sheer number of U.S. employees overseas. The security 

burden is directly associated with the size of the overseas work force. In 

our work on overseas staffing issues in the mid-1990s, we noted that the 

U.S. government (excluding military operational commands) employed a 

total of nearly 38,000 personnel overseas--split evenly between U.S. direct 

hire employees and foreign national employees. An important trend has 

been the increase in the number of overseas U.S. direct hires by the nonforeign-affairs agencies. A broad examination of how the U.S. government 

carries out its overseas role and related missions may now be needed in 

view of the increased security threats. State needs to take the lead in 
Page 14 GAO/T-NSIAD/HEHS/AIMD-99-104

working with other agencies operating overseas to examine their overseas 

staffing requirements and explore alternatives to reducing the number of 

U.S. employees overseas. 

Improving Information and 

Financial Management 

Systems 

State’s information resource management infrastructure has historically 

been inadequate to support the Department’s core foreign policy and 

administrative functions. We have reported that State relied on outdated 

and unsecured information and financial management systems that are 

vulnerable to Year 2000 problems and security breaches. State estimated in 

1997 that it would need $2.7 billion over 5 years to achieve a modernized 

global infrastructure. However, this estimate was not prepared through the 

rigorous analytical process called for in federal guidance designed to 

control costs and improve efficiency. State has since taken steps to 

improve its information security and adopted an improved approach to 

addressing its Year 2000 problems. It has also begun to incorporate a 

comprehensive capital planning and investment process into its 

information technology investments. However, State needs to ensure that 

it remediates on a timely basis its mission-critical systems. The Office of 

Management and Budget has designated State as a Tier 1 agency in its 

assessment of agencies’ Year 2000 progress, that is, State demonstrated 

insufficient evidence of progress in dealing with this problem.

In the financial management area, State received, for the first time, an 

unqualified opinion on its fiscal year 1997 financial statements. This 

achievement provides State with a foundation from which it can move 

toward being able to more routinely produce the timely and reliable 

financial information that is critical to making sound decisions that 

promote effective and efficient use of federal funds. To reach this goal, 

State needs to continue to bring its systems into full compliance with 

federal accounting and information management requirements. State also 

must work on solving related material internal control weaknesses if it is to 

adequately protect its assets and have timely, reliable data for cost-based 

decision-making, reporting, and performance management.

Effectively Reorganizing 

Foreign Affairs Agencies

The long-planned reorganization of the government's foreign affairs 

agencies is under way. In April 1997, the White House announced a plan to 

put matters of international arms control, U.S. Information Agency’s 

(USIA) public diplomacy, and other functions within a "reinvented" State 

Department. In October 1998, the Congress authorized the reorganization, 

which abolished the USIA and the Arms Control and Disarmament Agency 
Page 15 GAO/T-NSIAD/HEHS/AIMD-99-104

(ACDA) and consolidated and integrated those functions into State. The 

reorganization is intended to reinvigorate the foreign affairs functions of 

the United States within the State Department. About 3,000 employees of 

ACDA and USIA will be integrated into State. Potential areas identified for 

integration among the three agencies include legal affairs, congressional 

liaison, press and public affairs, and management. Central management 

functions that are to be integrated include IRM, overseas facilities and 

operations, logistics, diplomatic security, financial management, and 

human resources. In December 1998, State submitted a report to the 

Congress describing its reorganization strategy. 

State has indicated that during the transition, costs would likely increase 

because of the need to implement system conversions and transfers; in the 

longer term, overall staffing and costs may decrease. State faces several 

challenges in achieving the objectives of this reorganization. One major 

challenge is the technological difficulty of uniting the agencies, including 

integrating separate electronic mail and computer systems. Overall issues 

include whether the reorganization will actually produce identifiable 

efficiencies and improved performance in foreign affairs programming. As 

our prior work has indicated, many of the areas targeted for management 

consolidation need substantial reform. 

Effectively Managing the 

Visa Process

The Immigration and Naturalization Service (INS) estimated that as of 

October 1996, 5 million illegal aliens were residing in the United States. 

While not the primary source of illegal immigration, visa fraud is a 

significant matter of concern. State's consular officers at overseas posts 

are responsible for providing expeditious visa processing for qualified 

applicants. At the same time, they must prevent the entry of those who are 

a danger to U.S. security interests or are likely to remain in the United 

States illegally. In fiscal year 1997, over 7 million aliens applied for 

nonimmigrant visas, and 640,000 foreigners immigrated to the United 

States. Visa processing is a particular problem for some overseas locations 

where volume and/or security concerns are high. 

State has introduced new technologies, equipment, and controls designed 

to improve visa processing and reduce the incidence of fraud. State notes 

that progress has been made in several areas, including installation of 

machine-readable visa systems at all visa-issuing posts, online connectivity 

to Washington, D.C., data bases, and implementation of a first phase of a 

State-INS data-share program. Many improvements were made possible 

through State's temporary authority to retain fees charged foreigners 
Page 16 GAO/T-NSIAD/HEHS/AIMD-99-104

applying for nonimmigrant visas. Those fees generated millions of dollars, 

enabling the Department of State to invest in border security technology 

and to pay the salaries of nearly 2,000 employees. 

State will need to remain vigilant in a number of areas to further reduce the 

vulnerability of the visa system to fraud and abuse. These issues include 

(1) critical staffing gaps in overseas consular positions; (2) limitations in 

consular automated systems; (3) restrictions in the exchange of 

intelligence information with INS and other law enforcement agencies; and 

(4) weaknesses in the integrity of immigrant and nonimmigrant 

documentation, including the computerized systems used to produce them. 

The Department must also continue its efforts to encourage consular 

sections to implement best practices designed to streamline and rationalize 

the visa workload. Potential best practices include using travel agents for 

initial processing, establishing appointment systems to control workload, 

and allowing the payment of visa fees at a bank or other financial 

institution. In view of the increased international terrorist threats, 

continued attention to State's progress in addressing these issues will be 

needed.

Strengthening Strategic and 

Performance Planning at 

State 

State needs to strengthen its strategic and performance planning as part of 

its overall efforts to improve management. In its first strategic plan for 

foreign affairs, State formulated 16 foreign policy goals that cover a wide 

spectrum of U.S. national interests--national security, economic prosperity, 

American citizens and U.S. borders, law enforcement, democracy, 

humanitarian response, and global issues. Our review of that plan and the 

Department's annual performance plan for 1999 indicated that State's plans 

had their strong points but often fell short of meeting the requirements of 

the Results Act. 

One area of concern was that State's strategic plan addressed neither the 

potential impact of the consolidation of the foreign affairs agencies on its 

systems nor the potential for other agencies to have functions duplicative 

of State's. We have found that State's functional bureaus share 

responsibility with multiple U.S. agencies on various overlapping issues, 

including trade and export policy and international security functions. The 

strategic plan also did not address the serious deficiencies in State's 

financial accounting and information systems, noting only in general terms 

that several years will be required to develop performance measures and 

related data bases to provide sufficient information on the achievement of 

goals. 
Page 17 GAO/T-NSIAD/HEHS/AIMD-99-104

Our review of State's performance plan revealed similar deficiencies but 

also some encouraging points as well. For example, State's performance 

plan generally provided clear and reasonable strategies and goals in the 

areas of improving U.S. citizens' services and border security, and 

promoting democracy. In contrast, State's plan did not present a clear 

picture of its methods to meet strategic and performance goals in the areas 

of furthering economic prosperity, preventing international crime, and 

enhancing humanitarian assistance. Overall, the performance plan did not 

clearly indicate the Department's intended performance and was vague 

about how State will coordinate with other agencies. Further, State's 

performance plan did not provide sufficient confidence that the 

Department's performance information will be credible. It did not address 

how the known deficiencies in State's financial and accounting and 

information systems will affect performance measurement. In response to 

our work, State is attempting to improve its planning by developing clearer 

and more objective performance measures linked to performance goals 

and identifying partnerships with other agencies or governments to address 

crosscutting issues.

State’s initiatives have also received top-level management support in 

recent months as evidenced by the appointment of a permanent Chief 

Information Officer (CIO), and a deputy CIO for architecture and planning, 

the creation of a Deputy CIO position for the Year 2000 issue, and the 

assignment of information system security issues to the Deputy CIO for 

Operations.

Challenges Facing the 

Department of 

Veterans Affairs

The Department of Veterans Affairs (VA) is responsible for administering 

benefits and services that affect the lives of more than 25 million veterans 

and approximately 44 million members of their families. Through its 

budget--approximately $43 billion in fiscal year 1999--VA provides an array 

of health care benefits; non-health-care benefits, such as compensation and 

pension; and other supporting programs. Over 200,000 VA employees 

deliver these services from more than 1,000 facilities.

As required by the Results Act, VA submitted a strategic plan for fiscal 

years 1998 to 2003. In this plan, VA developed strategic goals covering all 

its major programs and included objectives, strategies, and performance 

goals to support its strategic goals. VA has made significant progress in 

developing a framework for managing and evaluating changes in service 

delivery. However, there are several management challenges VA must 
Page 18 GAO/T-NSIAD/HEHS/AIMD-99-104

overcome to meet its strategic goals of efficiently and effectively delivering 

services to veterans and their families. These challenges include:

• an infrastructure that does not meet current and future needs,

• inability to ensure that veterans have access to needed health care 

services,

• lack of outcome measures to assess the effects of managed care 

initiatives,

• ineffective management of non-health-care benefits programs, and

• ineffective management of information systems. 

VA Health Care 

Infrastructure Does Not 

Meet Current and Future 

Needs

Because of their age and recent changes in the way VA delivers health care, 

many of VA's facilities are no longer adequate for the way VA delivers 

health care services today and plans to deliver services in the future. For 

example, most VA facilities were constructed as hospitals with an array of 

bed sections, treatment rooms, surgical suites, and other accommodations 

and equipment for treating an inpatient population and are often poorly 

suited for delivering care to an ambulatory population on an outpatient 

basis. Although changing care practices and efficiency initiatives, such as 

emphasizing outpatient care and facility integration, have allowed VA to 

eliminate approximately half of its 52,000 acute-care hospital beds since 

1994, excess capacity remains. Furthermore, the veteran population is 

declining: VA projects that the number of veterans in the country will drop 

about 21 percent from 1997 to 2010. We have reported that if past 

efficiency trends and demographic projections are realized, VA will need 

only about 10,000 of its current 26,000 acute-care beds to meet veterans' 

health care needs in 2010. VA will likely need to close some facilities, but it 

also must plan for the needs of the increasingly older veteran population. 

As the nation's World War II and Korean War veteran populations age, their 

health care needs are shifting from acute hospital care to nursing home and 

other long-term care services. For example, the number of veterans aged 

85 and older is projected to increase to about 1.3 million in 2010, a fourfold 

increase from 1995.

The continued need for some VA facilities may be affected by the expanded 

authority to contract for health care services that the Congress provided VA 

in 1996. Under this authority, VA can contract with public or private 

providers, who can provide care at lower cost or care that VA does not 

offer in a particular geographic location. To the extent that VA uses this 

authority, it may create additional excess capacity in existing facilities.
Page 19 GAO/T-NSIAD/HEHS/AIMD-99-104

Integrating various clinical and support operations across some of its 

facilities is an important tool VA is using to meet current and future needs. 

Integrations are also intended to enhance the efficiency and effectiveness 

of VA's health care delivery system by reducing unnecessary duplication of 

services. We have reported that the 23 facility integrations involving 48 

health care facilities that have been completed or are under way will 

produce millions of dollars in savings that can be used to enhance veterans' 

health care. However, VA could do more. We have reported that 

consolidating services from four to three locations in the Chicago area 

could save $6 million to $27 million in future renovation costs. Although 

VA has recently developed a guidebook for planners to use in developing, 

implementing, and evaluating potential facility integrations, VA needs to 

apply this framework and evaluate its effectiveness in saving resources for 

both the short and the long term.

VA's restructuring efforts, particularly integrating administrative and 

clinical services across two or more medical centers, are complicated by 

affiliation agreements that VA facilities have with medical schools. Since 

VA's medical education program began in 1946, 130 VA medical centers 

have affiliated with 105 medical schools to provide training opportunities 

for medical students and residents. Transforming VA's health care delivery 

system from an inpatient to an outpatient focus, increasing reliance on 

primary care, and integrating services in fewer hospitals are all causing VA 

and medical schools to rethink their affiliation arrangements.

Restructuring efforts will also affect VA's support of the nation's medical 

needs during national emergencies. Since 1982, VA has served as the 

primary medical system backup to DOD. VA also works with the Federal 

Emergency Management Agency and the National Disaster Medical System 

during national emergencies. The integration of facilities' administrative 

functions, the consolidation of medical services in fewer VA locations, and 

VA's reduced reliance on providing specialized care may alter the way VA is 

able to support DOD and the federal emergency and disaster systems. 

However, VA has not specified how it will maintain its emergency backup 

functions in light of restructuring.

VA Is Unable to Ensure That 

Veterans Have Access to 

Needed Health Care 

Services

Because VA lacks accurate, reliable, and consistent information on how 

resources are being allocated, it cannot ensure that veterans who have 

similar economic status and eligibility priority have similar access to care 

regardless of the region of the country in which they live, as required by

the Congress. In fiscal year 1997, VA introduced a new resource allocation 
Page 20 GAO/T-NSIAD/HEHS/AIMD-99-104

system to begin to correct historical inequities in allocating resources, with 

the intent of improving the equity of veterans' access to care. Instead of 

allocating resources directly to medical centers on the basis of their budget 

for the previous year, VA now allocates funds to its 22 Veterans Integrated 

Service Networks (VISNs) based on the number of veterans each VISN has 

served. VISNs, in turn, allocate resources to the facilities in their 

geographic area. We have reported that while the new method has indeed 

improved the equity of resource distribution among VISNs, VA does not 

know if it is making progress in providing similar services to similarly 

situated veterans. VA's strategic plan does not include a goal for achieving 

equitable access, nor does VA monitor the extent to which equitable access 

is being achieved among or within VISNs.

Furthermore, VA has not been able to provide the necessary data to assure 

that it maintains its level of certain high-cost, specialized services, as 

required by the Congress. We have reported that much more information 

and analyses are needed to support VA's conclusion that it is maintaining 

its national capacity to treat special disability groups, including the four the 

Congress identified -- spinal cord dysfunction, blindness, amputation, and 

mental illness -- in the face of the many initiatives to become a more 

efficient provider of care. 

VA has not developed information to help ensure that it meets the likely 

increased demand for care generated by its new process for enrolling 

veterans in its health care system. As a result, VA's success in enrolling 

veterans may jeopardize the availability of care for some veterans. As part 

of its 1996 eligibility reform legislation, the Congress required VA to 

develop a priority-based enrollment system to allow VA to better manage 

access while operating within its budgetary limits. VA has determined that 

in fiscal year 1999 it will enroll all priorities and categories of veterans and 

serve each veteran who enrolls. Because enrolled veterans are eligible for 

all needed hospital and medical care from VA regardless of their priority 

category, access to care for higher-priority veterans may be jeopardized as 

medical centers provide care to all enrollees, including high income 

veterans without service-connected conditions. 

VA Lacks Outcome 

Measures to Assess the 

Effects of Managed Care 

Initiatives

Responsibility for monitoring quality assurance shifted several times in the 

last few years among headquarters and VISN offices, and VA's Inspector 

General and veterans' service organizations raised concerns that VA had 

weakened its quality assurance efforts with some of these shifts. In 

response, in fiscal year 1998, VA realigned the Office of Performance and 
Page 21 GAO/T-NSIAD/HEHS/AIMD-99-104

Quality to report directly to the Under Secretary for Health. The 

realignment has the potential to improve VA's quality assurance efforts 

because this office is situated to more readily identify emerging challenges 

across the health care system, implement and oversee local and national 

corrective actions when needed, and help create the single standard of care 

required by accrediting agencies.

VA has made little progress in developing, implementing, and evaluating 

results-oriented outcome measures to assess the health status of veterans. 

Instead, VA's efforts to determine how well it delivers health care have 

relied primarily on process-oriented performance measures. For example, 

in its performance plan, VA identifies performance measures such as the 

number of beds in use, the number of patients served, and the number of 

patients receiving certain diagnostic tests. Although these measures can 

provide useful information on progress toward meeting managed care 

goals, they provide little information on the specific impact of changes on 

the health status of veterans.

Moreover, VA has generally not performed the program evaluations 

necessary to determine whether its performance measures are the most 

appropriate or sensitive measures for assessing responses to treatment and 

changes in health outcomes. The need for such measures is critical, given 

the multitude of changes in delivering care that VA has introduced over the 

last few years. Indeed, the need is exacerbated by the flexibility VISNs and 

medical centers have in choosing how they deliver care in VA's 

decentralized management structure. VA recognizes that it needs to ensure 

that the changes made to improve its efficiency and effectiveness do not 

unintentionally compromise the health status of veterans. VA is not alone 

in its need to design, implement, and evaluate health outcome measures. 

Other public and private providers have recognized the necessity--and the 

difficulty--of creating such criteria and instruments.

VA's challenges in assessing outcomes are further complicated by poor 

data. We and others have reported numerous concerns with VA's outcome 

data. These concerns, which are similar to those with VA's access data, 

include inconsistent, incompatible, and inaccurate databases; changes in 

data definitions over time; and lack of timely and useful reporting of 

information to medical center, VISN, and national program managers.
Page 22 GAO/T-NSIAD/HEHS/AIMD-99-104

VA Faces Major Challenges 

in Managing

Non-Health-Care Benefits 

Programs

The non-health-care benefits which VA provides include disability 

payments, compensation, pension, housing credit assistance, and 

vocational rehabilitation assistance programs. We have reported that VA's 

current disability rating schedule does not reflect the economic loss 

experienced by veterans today and may not be equitably distributing 

disability compensation funds. In the late 1960s, VA conducted a study of 

the 1945 version of its disability rating schedule which concluded that at 

least some disability ratings in the schedule did not accurately reflect the 

average impairment in earning capacity among disabled veterans and 

needed to be adjusted. While VA has done little to ensure that the 

schedule's assessments of the economic loss associated with

service-connected conditions are accurate, successful implementation of 

the revised rating scale would likely require congressional action.

In addition, a 1996 Congressional Budget Office report, found that VA was 

paying about 230,000 veterans about $1.1 billion in disability compensation 

payments annually for diseases or injuries neither caused nor aggravated 

by military service. VA regulations provide that a disease or injury resulting 

in disability is considered service-connected if it was incurred during a 

veteran's military tour of duty or, if incurred before the veteran entered 

service, was aggravated by service. No causal connection is required 

between the circumstances of the disability and official military duty. As a 

result, veterans can receive compensation for diseases related to heredity 

or life style, such as heart disease and diabetes, rather than military service, 

thus calling into question the fairness of VA's treatment of veterans who 

were disabled because of their service.

In another area of concern, the National Academy of Public Administration 

reported, in 1997, that the timeliness and quality of adjudication decisions 

and slow appellate decisions continued to be a major challenge in VA's 

compensation and pension program. VA reported in fiscal year 1997 that it 

took an average of 133 days to complete the processing of a veteran's 

original disability compensation claim. While this is substantially faster 

than the average of 213 days required in fiscal year 1994, VA's goal is to 

reduce the average to 53 days in fiscal year 2002. In September 1998, VA's 

OIG reported on its audit of three key compensation and pension claims 

processing performance measures. The OIG found that the performance 

measures lacked integrity because the compensation and pension 

program's automated information system was vulnerable both to reporting 

errors and to manipulation of data by regional offices to show better 

performance than was actually achieved.
Page 23 GAO/T-NSIAD/HEHS/AIMD-99-104

Other areas of concern are VA's Housing Credit Assistance and Vocational 

Rehabilitation programs. VA's Annual Accountability Report, Fiscal

Year 1997, described several deficiencies that contributed to VA's receiving 

a qualified opinion. Among the areas of concern was the level of control 

and accountability over the direct loan and loan sale activities. The 

auditors were unable to conclude that the $3 billion loans receivable 

account balance was accurate because of inadequate controls and 

incomplete records. In addition, the auditors identified a number of errors, 

including inaccurate recording of loan sales transactions and improper 

accounting for loan guarantees.

VA's vocational rehabilitation program continues to place few disabled 

veterans in jobs. Our 1996 review of records of about 74,000 applicants for 

vocational rehabilitation between October 1991 and September 1995, who 

were classified by VA as eligible for assistance, showed that only 8 percent 

had completed the vocational rehabilitation process by finding a suitable 

job and holding it for at least 60 days. VA is implementing a number of 

initiatives to address its compensation and pension claims processing and 

vocational rehabilitation performance weaknesses, including establishing 

performance measures for processing times and unit costs, initiating 

quality assurance efforts, and reassessing its business process 

reengineering.

VA Needs to Manage Its 

Information Systems More 

Effectively

VA has made progress in addressing its Year 2000 challenges but still has a 

number of associated issues to address. For example, VA faces significant 

information systems challenges. It does not know the full extent of its

Year 2000 challenges and could face widespread computer system failures 

at the turn of the century if its systems cannot adequately distinguish the 

year 2000 from the year 1900. Thus, veterans who are due to receive 

benefits and medical care could appear ineligible.

In addition, VA has not established effective controls to prevent individuals, 

both internal and external, from gaining unauthorized access to VA 

systems. VA's access control weaknesses are compounded by ineffective 

procedures for monitoring and overseeing systems designed to call 

attention to unusual or suspicious access activities. VA also does not have 

a comprehensive computer security planning and management program. If 

these control weaknesses are not corrected, VA operations, such as 

financial management, health care delivery, benefit payments, life 

insurance services, and home mortgage loan guarantees--and the assets 

associated with these operations--are at risk of misuse and disruption.
Page 24 GAO/T-NSIAD/HEHS/AIMD-99-104

Furthermore, VA has not yet institutionalized a disciplined process for 

selecting, controlling, and evaluating information technology investments, 

as required by the Clinger-Cohen Act. Information technology accounted 

for approximately $1 billion of VA's fiscal year 1999 budget request of

$43 billion. At the time of the budget request, VA decisionmakers did not 

have current and complete information, such as cost, benefit, schedule, 

risk, and performance data at the project level, which is essential to making 

sound investment decisions. In addition, VA's process for controlling and 

evaluating its investment portfolio has deficiencies in in-process and

post-implementation reviews. Consequently, VA does not know whether it 

is making the right investments, how to control these investments 

effectively, or whether these investments have provided mission-related 

benefits in excess of their costs. VA has concurred with most of the 

recommendations we have made to address information systems 

management issues, and has taken actions to implement many of them.

Summary To address the management and performance problems we have cited, 

DOD, State, and VA have taken actions in the high risk and other areas and 

have made progress improving some of them. For example, DOD has had 

some success in addressing inventory management problems, is working to 

reform its weapon systems acquisition process, and has recognized the 

need for infrastructure reductions. Although past and current efforts have 

resulted in progress in improving their operations, long-standing problems 

still exist. To address these problems, these agencies must have an 

effective overall strategic plan and performance plans that, among other 

things, include goals, performance measures, and time frames for 

completing the corrective actions. The Results Act provides the 

framework for resolving high risk and other programs and for providing 

greater accountability in agencies’ programs and operations. In our 

opinion, agencies such as DOD, State, and VA need to work closely with the 

Congress now to develop performance goals and measures. Addressing 

these areas would provide congressional decisionmakers and individual 

agencies the information necessary to ensure that plans are well thought 

out for resolving ongoing problems, achieving its goals and objectives, and 

becoming more results oriented, as expected by the Results Act.

Mr. Chairman, this concludes our statement. We would be happy to answer 

any questions you or the members of the Subcommittee may have.
Page 25 GAO/T-NSIAD/HEHS/AIMD-99-104
Page 26 GAO/T-NSIAD/HEHS/AIMD-99-104
Page 27 GAO/T-NSIAD/HEHS/AIMD-99-104

Appendix I

Department of Defense High-Risk 

Designations AppendIx i

High-Risk Area Year Designated as High Risk

Inventory Management 1990

Weapon Systems Acquisition 1990

Contract Management 1992

Systems Development and Modernization Efforts 1995

Financial Management 1995

Infrastructure Management 1997

(709394) Leert
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