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WASTE AND INEFFICIENCY IN THE FEDERAL 

GOVERNMENT: GAO’S 2016 DUPLICATION REPORT 

HEARING 

BEFORE THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

APRIL 13, 2016 

Serial No. 114–79 

Printed for the use of the Committee on Oversight and Government Reform 

( 

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

http://www.house.gov/reform 


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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

JASON CHAFFETZ, Utah, Chairman 

JOHN L. MICA, Florida 

MICHAEL R. TURNER, Ohio 

JOHN J. DUNCAN, JR., Tennessee 

JIM JORDAN, Ohio 

TIM WALBERG, Michigan 

JUSTIN AMASH, Michigan 

PAUL A. GOSAR, Arizona 

SCOTT DESJARLAIS, Tennessee 

TREY GOWDY, South Carolina 

BLAKE FARENTHOLD, Texas 

CYNTHIA M. LUMMIS, Wyoming 

THOMAS MASSIE, Kentucky 

MARK MEADOWS, North Carolina 

RON DESANTIS, Florida 

MICK MULVANEY, South Carolina 

KEN BUCK, Colorado 

MARK WALKER, North Carolina 

ROD BLUM, Iowa 

JODY B. HICE, Georgia 

STEVE RUSSELL, Oklahoma 

EARL L. ‘‘BUDDY’’ CARTER, Georgia 

GLENN GROTHMAN, Wisconsin 

WILL HURD, Texas 

GARY J. PALMER, Alabama 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

MATT CARTWRIGHT, Pennsylvania 

TAMMY DUCKWORTH, Illinois 

ROBIN L. KELLY, Illinois 

BRENDA L. LAWRENCE, Michigan 

TED LIEU, California 

BONNIE WATSON COLEMAN, New Jersey 

STACEY E. PLASKETT, Virgin Islands 

MARK DESAULNIER, California 

BRENDAN F. BOYLE, Pennsylvania 

PETER WELCH, Vermont 

MICHELLE LUJAN GRISHAM, New Mexico 

JENNIFER HEMINGWAY, Staff Director 

DAVID RAPALLO, Minority Staff Director 

KATIE BAILEY, Government Operations Subcommittee Staff Director 

KATY ROTHER, Senior Counsel 

SHARON CASEY, Deputy Chief Clerk 


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C O N T E N T S 

Page 

Hearing held on April 13, 2016 .............................................................................. 1 

WITNESSES 

The Hon. Gene L. Dodaro, Comptroller General of the U.S., U.S. Government 

Accountability Office 

Oral Statement ................................................................................................. 5 

Written Statement ............................................................................................ 7 

Mr. John Dalrymple, Deputy Commissioner, Services and Enforcement, Internal Revenue Service, U.S. Department of Treasury 

Oral Statement ................................................................................................. 33 

Written Statement ............................................................................................ 35 

Mr. David Tillotson, Deputy Director, Defense Chief Management Officer, 

U.S. Department of Defense 

Oral Statement ................................................................................................. 45 

Written Statement ............................................................................................ 47 

Dr. Patrick H. Conway, Acting Principal Deputy Administrator, Deputy Administrator for Innovation and Quality, and Chief Medical Officer, Centers 

for Medicare and Medicaid Services, U.S. Department of Health and 

Human Services 

Oral Statement ................................................................................................. 53 

Written Statement ............................................................................................ 55 

APPENDIX 

2016–04–22 Dalrymple-IRS to Meadows-Hearing Follow-up Stingray ............... 104 

RESPONSE Dalrymple-IRS to Chaffetz QFRs 2016–05–18 ................................ 106 

2016–09–02 Tillotson-DOD to JC-Hearing Follow-up Questions ......................... 120 


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WASTE AND INEFFICIENCY IN THE FEDERAL 

GOVERNMENT: GAO’S 2016 DUPLICATION 

REPORT 

Wednesday, April 13, 2016 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, 

WASHINGTON, D.C. 

The committee met, pursuant to call, at 10:01 a.m., in Room 

2154, Rayburn House Office Building, Hon. Jason Chaffetz [chairman of the committee] presiding. 

Present: Representatives Chaffetz, Mica, Duncan, Jordan, 

Walberg, Amash, Gosar, Farenthold, Massie, Meadows, DeSantis, 

Buck, Walker, Blum, Russell, Carter, Grothman, Hurd, Palmer, 

Cummings, Maloney, Connolly, Cartwright, Kelly, DeSaulnier, and 

Lujan Grisham. 

Chairman CHAFFETZ. The Committee on Oversight and Government Reform will come to order. Without objection, the chair is authorized to declare a recess at any time. 

I appreciate the group that we have assembled today. This is always of keen interest, the duplication report. Government is so big, 

so wide, so expansive, we’re talking about trillions of dollars in expenditures, and we’re always seeking ways to make the government’s dollars more effective, more efficient. 

This morning the Government Accountability Office has released 

its sixth annual report on opportunities to reduce fragmentation, 

overlap, and duplication in the Federal Government to achieve financial and other benefits. And over the course of the 6 years, the 

GAO has highlighted 250 areas of the Federal Government and 

recommended more than 600 corrective actions. 

We cannot thank enough the men and women who serve in the 

GAO, the good work that they do, doing hard work, looking under 

the hood, and really coming up with important recommendations 

that we as Members of Congress desperately need in order to do 

our jobs properly. 

Forty-one percent of the recommended corrective actions have 

been fully addressed and closed, which GAO reports will save about 

$125 billion by the year 2025. This report reveals that persistent 

efforts to address inefficiencies and resolve wasteful spending can 

provide significant benefits to the public. Yet, with only 41 percent 

of actions addressed, more, obviously, needs to be done. And taking 

action at just three agencies, the Department of Defense, the Department of Health and Human Services, and the Internal Revenue 

Service, if we did just those three, we would save literally billions 


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upon billions of dollars. Combined, these agencies account for more 

than half of all Federal spending in fiscal year 2015. 

More than half of all corrective actions in GAO’s annual reports 

are directed at these three agencies. Yet, all three agencies have 

more than 60 percent of the recommended actions still open. For 

example, the GAO estimates the IRS could save hundreds of millions of dollars in increased revenue by enhancing its online services. 

In 2013, GAO recommended the IRS develop a methodology for 

its allocation of enforcement resources. The IRS developed a methodology, but to date it has chosen not to implement it. Such inaction costs taxpayers time and money. The IRS needs to explain 

their refusal to take this corrective action. 

In a new area highlighted in this year’s report, the IRS is using 

a paper-based system to receive and track tips on tax noncompliance through public referral programs in nine different offices. 

GAO estimates that coordination and information sharing could 

help the IRS identify and collect billions of dollars in tax revenue. 

It shouldn’t take a GAO report to point out that coordinating investigations prevents duplicative work and ensures taxpayer resources are used efficiently and effectively. 

In 2015, GAO recommended the Centers for Medicare and Medicaid Services should ensure States report accurate and complete 

data on State sources of funds. Seems fairly reasonable. GAO estimates that CMS could save the taxpayers hundreds of millions of 

dollars, but CMS has not taken this action. 

And in 2013, the GAO recommended the Department of Defense 

implement a plan to guide joint basing, meaning multiple military 

services using a single base to achieve efficiencies. The DOD has 

yet to complete this action, even though it could save as much as 

$2.3 billion over a 20-year period. 

Why do we need to come back year after year to discuss the same 

actions? That’s in part what we’re going to be discussing today. Obviously, the Federal Government has an obligation not to waste 

taxpayer dollars. We’re pulling money out of somebody’s pocket and 

then we’re trying to give it to somebody else and use that, and 

we’ve got to be very, very cognizant of this wasteful taxpayer 

spending. 

All Federal workers should consider it part of their job description to prevent waste and should embrace their role as fiduciaries 

for the American public. Disagreements over policy can lead to disagreements over appropriate spending, but the imperative to prevent waste is something we can all agree on on both sides of the 

aisle. When we know it’s about waste and inefficiency, we have to 

act. This GAO annual report provides a roadmap to tackling that 

known waste and inefficiency is out there. 

So we have a lot of questions, a host of questions here, but we 

do look forward to and want to maximize the time for member 

input. So with that, I’d like to recognize the ranking member, Mr. 

Cummings of Maryland, for his opening statement. 

Mr. CUMMINGS. Thank you very much, Mr. Chairman, for once 

again holding what has become a tradition for our committee and 

for making sure that GAO’s report gets the attention it warrants. 

This type of oversight is one of the core functions of our committee. 


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Today, we will focus on GAO’s sixth annual report on duplicative 

programs and opportunities for cost savings in the Federal Government. This report allows the executive branch and Congress to 

work together to identify critical areas where we can reduce waste 

and make Federal programs more efficient and effective. This report is interesting because it focuses on both the executive branch 

and Congress. 

Since 2011, GAO’s reports have consistently shown that Congress 

has been doing far worse than the executive branch in implementing GAO’s recommendations. Today’s report is no different. It 

shows that Congress could be doing much more to foster a more efficient, effective, and accountable government. 

According to the GAO, the executive branch has fully or partially 

completed 81 percent of GAO’s recommendations—81 percent. That 

is an impressive success rate, particularly in the light of the budget 

cuts agencies have endured in recent years. 

Congress, on the other hand, has implemented only about 46 percent of GAO’s recommendations. Even with that 46 percent, it’s 

kind of generous because GAO gives Congress credit for taking partial action by just moving a bill through committee, even if it has 

not been passed either in the House or the Senate. 

Mr. Chairman, during last year’s hearing you thanked GAO for, 

‘‘providing Congress and the executive branch with a roadmap to 

achieve needed savings.’’ According to the GAO, the administration 

has done a much better job of following that roadmap than we here 

in Congress. 

Specifically, GAO made 459 recommendations for the executive 

branch and 372 have now been fully or partially completed. In contrast, GAO has made 85 recommendations for Congress, but only 

37 of those have been fully or partially completed. GAO’s new report highlights areas where Congress could legislate right now to 

eliminate waste and duplication. 

For example, GAO recommended that Congress pass legislation 

to protect private citizens who report tax fraud to the IRS from retaliation by their employers. It is vital that we protect these whistleblowers and reward them for their service. 

That is why in February Senator Baldwin and I introduced the 

WARN Act. Our bill would increase incentives for people who blow 

the whistle on financial crimes, including misrepresentations of tax 

liabilities and public filings. The bill has been endorsed by many 

organizations, including POGO, Americans for Financial Reform, 

the AFL–CIO, and the Communications Workers of America, and 

I hope Congress can consider this bill this year. 

GAO also recommended that Congress lower the threshold requiring employers to electronically file W–2s to help IRS detect 

fraudulent refund claims. The GAO’s 2016 report also recognizes 

improvements by Federal agencies and includes a number of recommendations for Federal agencies going forward. For example, 

GAO highlighted a number of success stories at the Centers for 

Medicare and Medicaid Services, including eliminating duplicative 

contracts and improving processes for identifying improper payments. Through improvements to Medicaid, the Medicaid Integrity 

Program, CMS helped recover nearly $657 million of improper 

Medicaid payments in fiscal year 2015, according to the GAO. 


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On the flip side, GAO found that the Department of Defense still 

has 79 major weapon systems programs of a total acquisition cost 

of over $14 trillion. DOD spends $100 billion each year on these 

systems but has failed to strategically manage those investments, 

resulting in inefficiency and waste. Taxpayers and our troops deserve better than that. 

I want to thank all of our witnesses today. To Mr. Dodaro, you 

and your talented staff provide a critical service to the Congress 

and the American people with this annual report, as well as with 

the work you do every day to help ensure our tax dollars are spent 

wisely. And I hope that you will share with all of your employees 

how grateful we are for their pursuit of excellence and for them 

helping to provide us with the roadmaps to make a difference. 

And with that, Mr. Chairman, I yield back. 

Chairman CHAFFETZ. I thank the gentleman. 

We’ll hold the record open for 5 legislative days for any members 

who’d like to submit a written statement. 

Chairman CHAFFETZ. And we’ll now recognize our panel of witnesses. We have quite a few people to swear in. But we’re first 

pleased to welcome the Honorable Gene Dodaro, who’s the comptroller general of the United States at the United States Government Accountability Office. 

Sir, we’re pleased to have you come before our committee. Again, 

you are one of the more important people that we have come here, 

you have given your insight and your commitment to these issues. 

And, again, I can’t thank your staff enough for the great work that 

they do behind the scenes. 

A number of those key staff people are here. We wanted to maximize the opportunity for members to dive deeper into some of these 

issues. And pursuant to committee rules, we are going to swear 

these people in as well. 

These experts that are here include Ms. Cathleen Berrick, managing director for defense capabilities on the management team; 

Mr. Paul Francis, managing director, Acquisition and Sourcing 

Management team; Mr. Chris Mihm, managing director, Strategic 

Issues team; Ms. Nikki Clowers, managing director, Health Care 

team; Ms. Orice Williams Brown, managing director, Financial 

Markets and Community Investment team; Mr. Phillip Herr, managing director, Physical Infrastructure team; Ms. Barbara 

Bovbjerg, managing director, Education, Workforce and Income Security team; Mr. Seto Bagdoyan—I hope I pronounced it properly— 

Forensic Audits and Investigative Services team; and Mr. Dave 

Powner, director, Information Technology team. 

My apologies if I didn’t get all of those names proper. 

We also have Mr. John Dalrymple, deputy commissioner for services and enforcement at the Internal Revenue Service at the United 

States Department of Treasury; Mr. David Tillotson, deputy director and defense chief management officer at the United States Department of Defense; and Dr. Patrick Conway. 

And, Doctor, you’ve got a title here. Acting principal deputy administrator, deputy chief administrator for innovation and quality, 

and chief medical officer at the Centers for Medicare and Medicaid 

Services at the United States Department of Health and Human 

Services. 


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So I thank you again for all of your good work and for your being 

here. 

Pursuant to committee rules, all witnesses are to be sworn before 

they testify. For those on the panel as well as those accompanying 

Mr. Dodaro, if you all please rise and raise your right hand. 

Do you solemnly swear or affirm that the testimony you are 

about to give will be the truth, the whole truth, and nothing but 

the truth? 

Thank you. You may all be seated. 

Please let the record reflect that all witnesses answered in the 

affirmative. 

We would ask the four panelists that are here at the table to 

please limit your oral testimony to 5 minutes, then members will 

have ample time to ask questions. 

And, Mr. Dodaro,it’s your discretion if you want to yield time to 

particular individuals as we get into the questions, and we have a 

seat there if need be. But, Mr. Dodaro, you’re now recognized for 

5 minutes. 

WITNESS STATEMENTS 

STATEMENT OF GENE L. DODARO 

Mr. DODARO. Thank you very much, Mr. Chairman. Good morning to you, Ranking Member Cummings, members of the committee. We’re very pleased to be here today to discuss GAO’s sixth 

annual report on overlap, duplication, and fragmentation in the 

Federal Government, and also other opportunities to achieve cost 

savings and revenue enhancements. 

In this report, we introduce 92 new actions that the Congress 

and the executive branch can take in 37 different areas. And to 

give you some examples, in the overlap, duplication, fragmentation 

area, we highlight 12 areas. For example, we found that the Defense Department is procuring commercial services for satellites, 

and in the billion dollars that they spend, about 30 percent of that 

was spent outside their central procurement agency by the different services and other agencies throughout the Department. And 

as a result, in the central agency, the costs were about 15 percent 

less than purchasing it outside the central offices. So we think 

there’s better money to be saved there, tens of billions of dollars. 

We also found nine referral programs at IRS for whistleblowers 

and others to report improper activities that would give IRS some 

tips to follow up for tax enforcement purposes and potentially 

produce billions of dollars in additional revenue owed the government. But these systems were manually operated, they were fragmented, they weren’t coordinated, and there were a lot of opportunities to streamline and provide better communication to the people providing tips. 

Also, we found there was potential for duplicative healthcare 

spending between people who were on Medicaid or in the State exchanges. There’s some amount of transfer time that could be made 

if people’s income levels change or they become eligible for Medicaid or the services. But we found that activities outside that normal transition period, and we recommended that in order to minimize any duplicate Federal spending, that better coordination 


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would need to take place and better oversight by CMS over the 

Medicaid programs at the State level and with the exchanges. 

In areas of cost savings and revenue enhancements, we’ve got a 

number of recommendations this year that are new. We have opportunities to save a lot of money in overpayments for disability 

programs by the Social Security Administration. There are billions 

to be saved in revamping some of the payment policies that guide 

Medicare spending. There’s greater need for oversight to save—you 

could save hundreds of millions of dollars, if not billions, by greater 

oversight of CMS over Medicaid spending and the States’ activities. 

There’s also millions that could be saved by the Federal agencies 

having better access to excess personal property at DOD and ammunition that’s discarded but could be used by other Federal agencies so we don’t have to buy it twice in that process. And there’s 

some fees that could be raised that haven’t been raised in over 20 

years to help provide more resources, in particular to deal with deferred maintenance in our National Parks. 

To date, as Mr. Chairman mentioned and Mr. Cummings in their 

opening statements, Congress and the administration have acted 

on many of our recommendations. Of the 544 that we’ve made previously, 41 percent have been implemented, 34 percent partially, 20 

percent not yet implemented at all. There are tens of billions of dollars in additional savings to be had in the offing here if those recommendations are fully acted upon. 

To date, as you mentioned, Mr. Chairman, in your opening statement, it’s about $125 billion that have been saved or will be saved 

over the coming years. We’re pleased that the Congress has taken 

action. A lot of the large dollar savings have come from congressional action. And also in a number of areas where the agencies 

have taken action, it’s because of congressional urging as well. 

But there’s a lot more that could be done. I am very pleased to 

be here today to talk about those opportunities in addition to the 

new areas that we have added to the list. Thank you for holding 

this annual hearing. It makes a big difference in getting support. 

And I will pass on to our staff your thanks and appreciation for 

their hard work, Mr. Chairman, Congressman Cummings. Thank 

you for your comments. And I would be happy to answer questions 

at the appropriate point. 

[Prepared statement of Mr. Dodaro follows:] 


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Chairman CHAFFETZ. Thank you. 

Mr. Dalrymple, you are now recognized for 5 minutes. 

STATEMENT OF JOHN DALRYMPLE 

Mr. DALRYMPLE. Thank you. Chairman Chaffetz, Ranking Member Cummings, and members of the committee, I’m here to discuss 

findings of the Government Accountability Office, GAO, related to 

its sixth annual review of duplicative programs. We appreciate 

GAO’s studies of the IRS and its programs. Their findings, insights, 

and recommendations are invaluable to us as they help assure we 

are successful in accomplishing our mission of collecting over $3 

trillion annually. Without independent auditors and evaluators, we 

simply could not be as effective. 

Since fiscal year 2013, the IRS has taken action to address more 

than 82 percent of all of GAO recommendations made, including 

those highlighted in this report. Between fiscal year 2011 and 

2015, the IRS received more than 2,100 recommendations from 

GAO and our inspector general’s auditors, with GAO recommendations accounting for roughly 30 percent of those. 

Given the sheer number and scope of recommendations the IRS 

receives on a wide variety of areas, the reality of resource and 

budget limitations precludes us from taking every action recommended as quickly as we might prefer. The IRS has to look at 

total universe of recommendations across the enterprise through a 

larger lens and make strategic decisions about actions most important to address those audit findings. 

To that end, we very much appreciate the initiative GAO started 

this year where they review and prioritize the universe of open recommendations. This helps us better understand what they think 

are the most critical. 

Overwhelmingly, GAO and IRS are on the same page. Our top 

priorities are generally the same as theirs. This increases our confidence that we are acting on the most important recommendations 

first. 

The two IRS programs highlighted in this year’s GAO duplicative 

program study, referrals and identify theft, are illustrative of the 

value we get from GAO recommendations and the actions we take. 

IRS referral programs, which involve individuals and businesses 

reporting alleged noncompliance with tax laws, the GAO study reports several areas needing improvements, and we got right to 

work. We now have a team in place tasked with reengineering 

parts of the referral process to be more streamlined and effective. 

In fiscal year 2012 through 2015, about 93 percent of information 

referrals did not lead to audits, but about 7 percent did. This is a 

much higher overall audit rate, which is hovering around 0.7 percent for the general population. What’s more, the audits based on 

those referrals yielded over $209 million in addition tax assessments recommended. 

What these figures reveal is that our screening process is effectively identifying the productive referrals for audit and it’s making 

an important contribution to tax administration. With the improvements we plan to make as a result of the GAO recommendations, 

our referral processes are being streamlined and will be more efficient and effective. 


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While unique relative to other referrals, the GAO report on the 

IRS whistleblower program offers a snapshot in time for a program 

under constant scrutiny for its processes that are continually refined. Even before GAO began its most recent evaluation on the 

IRS whistleblower program, we had begun addressing the major 

issues that were identified. The GAO findings confirmed we were 

taking the right actions in streamlining the process for claims, 

making dramatic reductions to the inventory of cases at particular 

phases of the process, and instilling new leadership with a strong 

background in bringing about operational efficiencies. 

Another IRS program highlighted in this year’s GAO duplicative 

program report is our identify theft program, which GAO has almost continually reviewed in recent years and prompted important 

program improvements. As we confront the growing problem with 

stolen identify refund fraud, the IRS is using a multipronged approach to protect taxpayers and their information. 

The IRS has made this area a high priority and has been making 

steady progress. The additional $290 million in fiscal year 2016 

funds afforded to IRS by the Congress had allowed us to allocate 

more resources to combating this insidious crime. About 2,000 individuals have been convicted on Federal charges related to refund 

fraud involving identify theft over the past few years. Using our 

improved filters, we stopped 1.4 million returns last year and kept 

criminals from collecting about $8.7 billion in fraudulent refunds. 

GAO has been helpful in identifying areas where improvement to 

this program can be made. We have acted on those recommended 

improvements and continue to look for ways to strengthen our defenses against this crime and stop the victimization of taxpayers 

and the entire tax ecosystem. 

I’d be happy to take questions at the proper time. Thank you. 

[Prepared statement of Mr. Dalrymple follows:] 


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Mr. MEADOWS. [Presiding.] Thank you so much for your testimony. 

Mr. Tillotson, you are recognized for 5 minutes. 

STATEMENT OF DAVID TILLOTSON 

Mr. TILLOTSON. Thank you, Mr. Chairman. First of all, good 

morning to the chair, ranking member—— 

Mr. MEADOWS. Can pull the mic a little bit closer to you? Thank 

you. 

Mr. TILLOTSON. Certainly. Is that better? 

Very good. Thank you to the chair, Ranking Member Cummings, 

members of the committee. Thank you for the opportunity to discuss the Department’s progress on addressing the General Accountability Office’s findings related to duplication, fragmentation, and 

overlap in the Department. 

I also want to add my thanks to those of the chair and the ranking member to the Honorable Mr. Gene Dodaro and the GAO for 

the work that they do. Candidly, while one is not always happy to 

hear that we could be doing things better, the truth is we all know 

full well that we can do things better. And in fact, as the acting 

deputy chief management officer for the Department of Defense, 

that’s actually my job description, is to find those things. So to be 

perfectly honest, having assistance in identifying opportunities 

bothers me not at all. So we look forward to our continued work 

with the Government Accountability Office. 

As the ADCMO or assistant deputy chief management officer, I 

provide direction and advice on improvements to business processes 

and practices in the Department with a particular emphasis on 

finding efficiencies in overhead and mission support. So clearly our 

intent of my office and Mr. Dodaro align very well. 

Last year, the deputy secretary asked the DCMO office to put together a series of efficiency initiatives that would help free up 

needed funds to meet emerging needs within the top line of the Department. Initiatives we are leading include headquarters reduction, service contract requirements reviews, information technology 

optimization and business optimization to include exchanges and 

commissaries. We’ve also been working on select business processes, to include the hiring process, conference approvals, and the 

process for coordinating and promulgating DOD issuances. 

When completed, these initiatives will result in $7.7 billion in 

forecasted savings over the period from fiscal year 2017 to 2021 

and a further reduction of 25 percent of headquarters costs. Several 

of these topics are areas that were identified either in previous 

GAO reports or in the current 2016 report. 

The Department appreciates the GAO’s work in this area. The 

GAO identified a total of 101 recommendations directed solely to 

the Department in its first four annual reports from 2011 to 2014 

and we have fully addressed or partially addressed 87 percent of 

these recommendations. The GAO identified an additional 19 recommendations in 2015 for the Department, and we’ve fully or partially addressed 47 percent of those. I fully acknowledge that 

means we have more to do, and we will continue to make progress. 

One specific area in which we have made significant progress is 

in the area of DOD contract management for broad acquisitions. In 


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its High Risk Series Update Report published in February 2015, 

the GAO recognized progress made regarding the management and 

oversight of contracting techniques, noting that departmental leadership has taken significant steps to plan and monitor progress 

over the last several years. As a result, the GAO made a decision 

to remove contracting techniques and approaches from the scope of 

the DOD contract management high risk areas. 

Another example of the Department’s progress, and it aligns with 

a recommendation made in the 2016 report, involves the management of leased space. In 2014, the Department, using a baseline of 

5.4 million square feet of DOD-occupied space in the national capital region set out to reduce that space. Our initial plan calls for 

reduction of 1.2 million square feet prior to 2020. To date, we’ve 

eliminated 267,000 square feet of leased space use in the national 

capital region by making better use of government space, and we 

intend to get an additional 886,000 square feet out of reductions in 

leased space use by 2020, which will save $43 million a year. 

In addition to those 14 efforts, we are going to look more broadly 

across the entirety of DOD property and broadly across the country. So I anticipate more progress in that area. 

Mr. Chairman, Ranking Member, the Department looks forward 

to continuing to work both with this committee and with the GAO 

to continue to implement recommended actions. We take our duty 

to be a steward of the taxpayers’ dollars very seriously and we look 

forward to continuing to work on the opportunities identified in the 

2016 report. Thank you. 

[Prepared statement of Mr. Tillotson follows:] 


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Mr. MEADOWS. Thank you for your testimony. 

Dr. Conway, you’re recognized for 5 minutes. 

STATEMENT OF PATRICK H. CONWAY 

Dr. CONWAY. Thank you. Chairman Chaffetz, Ranking Member 

Cummings, and members of the committee, thank you for the invitation to discuss the Centers for Medicare and Medicaid Services 

operation of the Medicare and Medicaid programs. We share this 

committee’s commitment to serving beneficiaries and protecting 

taxpayer dollars. 

As stewards of the Medicare and Medicaid Marketplace and the 

Children’s Health Insurance Program, CMS is serving almost 140 

million Americans, and we want these programs to be as effective 

and efficient as possible. We view the GAO as an important partner in these efforts and appreciate and take seriously GAO’s work 

and their recommendations and are working to address and implement them. 

We are making important progress in all our efforts to reduce 

duplication, improve efficiency, and protect taxpayer dollars, all 

while providing our beneficiaries with high quality care. And last 

year we have implemented 38 GAO recommendations and have 

submitted approximately 100 additional recommendations to the 

GAO for their review and closure. 

One of our driving forces at CMS is changing the way health care 

is delivered in this country, moving towards paying providers based 

on quality rather than the quantity of care they give patients. As 

a practicing physician, I know how important this work is. Now an 

estimated 30 percent of Medicare payments are tied to alternative 

payment models and millions of American patients are benefiting 

from better-coordinated, improved quality of care. 

Our work to reduce hospital-acquired conditions such as ulcers, 

infections, and avoidable traumas represents over 87,000 lives 

saved and an estimated $20 billion in cost savings. We’ve seen an 

estimated 565,000 fewer hospital readmissions, meaning that beneficiaries didn’t have to experience an extra hospital stay and Medicare did not face expenses for extra care. 

Consistent with the recommendations from the GAO, CMS has 

taken several steps over the past years to improve transparency 

into supplemental payments in Medicaid and around the section 

1115 research and demonstration programs used for States to pursue innovations. We are collecting annual upper payment limit 

data, which includes provider-specific information, and continue to 

review payment methodology to determine compliance with statutory requirements. All section 1115 demonstrations are available 

publicly and include specific terms and conditions that must be followed as a result of the demonstration. We’ve also identified and 

made publicly available the criteria we’re using. 

As the healthcare delivery system moves towards more integrated care and away from fee for service, more States are using 

managed care to serve Medicaid beneficiaries. Recognizing these 

changes in GAO’s work, we proposed improvements to Medicaid 

managed care, aligning it with Medicare Advantage and private 

coverage plans, supporting State delivery system reform, promoting 

quality of care, strengthening program and fiscal integrity, incorVerDate Sep 11 2014 12:01 Jan 09, 2017 Jkt 000000 PO 00000 Frm 00057 Fmt 6633 Sfmt 6633 F:\22314.TXT APRIL

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porating best practices for managed long-term services and supports, and enhancing the beneficiary experience. 

A commitment to program integrity underpins all our work. CMS 

is moving away from a so-called ‘‘pay-and-chase’’ program integrity 

model towards one focused on prevention. Today we are utilizing 

sophisticated predictive analytics technology, the Fraud Prevention 

System, to identify investigative leads to further protect the Medicare program from inappropriate billing practices. In the first 3 

years of its implementation, the FPS identified and prevented $820 

million in inappropriate payments, and in calendar year 2014 alone 

the FPS had a 10 to 1 return on investment. 

At the direction of Congress, CMS is using risk-based screening 

of providers and suppliers to enhance our ability to screen providers upon enrollment and identify those that may be at heightened risk for committing fraud. These new tools have saved the 

Medicare program approximately $2.4 billion in avoided cost. We 

have deactivated billing privileges for more than 540,000 providers 

and suppliers that do not meet Medicare requirements and revoked 

an additional 34,000-plus providers and suppliers since 2011. 

Perhaps most importantly, increased screening efforts have allowed CMS to deny over 7,000 applications in the last 12 months, 

preventing these providers and suppliers from ever submitting a 

claim. We are also increasing our site visits to Medicare-enrolled 

providers and suppliers. 

CMS is dedicated to promoting better care, protecting patient 

safety, reducing healthcare costs, and providing people access to 

the right care at the right time, when and where they need it. This 

includes continually strengthening and improving Medicare and 

Medicaid programs that provide vital services to millions of Americans. 

We look forward to working with both the GAO and this committee towards our mutual goals of providing value and quality to 

all the beneficiaries we serve and taxpayers. Thank you. 

[Prepared statement of Dr. Conway follows:] 


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Mr. MEADOWS. Thank you, Dr. Conway. 

Thank each of you for your testimony. 

And I’m going to recognize the gentleman from Tennessee for a 

series of questions. But before I do that, I think it’s important as 

we look at this particular issue on duplicative services and efficiencies to recognize really one of the greatest assets that the Federal Government has, and that’s its Federal employees. And in 

doing that it’s very easy to start looking at the inefficiencies and 

the problems and undermine really our Federal workforce. 

So I wanted to go on record to say a thank you to the 99.5 percent of the Federal workforce that does an outstanding job each 

and every day. And sometimes we focus on that 0.5 percent and 

paint a very broad brush. I don’t want this hearing to do that as 

we really look at meaningful ways to make sure that we have a 

cost savings. 

And so with that I would recognize the gentleman from Tennessee, my good friend Mr. Duncan, for 5 minutes. 

Mr. DUNCAN. Well, thank you very much, Mr. Chairman. And 

thank you and Chairman Chaffetz for calling this hearing, an annual hearing that I think is one of the most important hearings 

that we hold each year. 

Mr. Dodaro, I think the work that your agency does is extremely 

important and valuable for us. 

I have several different questions. I won’t have time to get into 

all of them. But we have background information from the staff 

that says that the Department of Defense now has weapons acquisition programs that total $1.3 trillion, spending over $100 billion 

annually on weapon system acquisition. I know you’ve put out several recommendations over the years, and especially in 2011 a report saying it was very inefficient, their weapons acquisition program, and that there were duplications and so forth. 

Do you think that the Department of Defense has done enough 

in regard to your recommendations that you’ve made on that in the 

past or could there be additional savings in that area? 

Mr. DODARO. I think they can definitely do more. We’ve appreciated what they’ve done. They’ve adopted some of the best practices recommendations that we’ve suggested. They’ve begun looking 

at things. But I’m concerned that some of the reforms haven’t been 

implemented very consistently over time. I’ll ask Mr. Francis, who’s 

our expert in this area, to give you a more thorough answer. But 

there’s more that could be done. 

Mr. DUNCAN. All right. 

Mr. FRANCIS. Good morning, Mr. Duncan. 

Yes, I think one of the things that we’ve talked about is portfolio 

management, which is basically an approach for the Department to 

look at its weapon system portfolio as a whole. Because one of the 

looming problems for defense is when you get beyond the next 5- 

year plan, there’s much more demand for money for weapon systems than there’s money available. And so the Department has to 

take a more holistic look across weapon systems to see what the 

best mix of investments are for them. And right now the Department has multiple processes that are fragmented for budgeting requirements and acquisitions and the services all do their own 


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thing. So we pretty much have a process that optimizes for individual weapon systems, but we need to look more across the board. 

Mr. DUNCAN. All right. Well, thank you very much. 

The week before last I was on a trip with three Senators and another Member of the House and we met with Admiral Harris, who 

is the head of the Pacific Command. And we were talking about the 

problems the Defense Department is facing in acquiring some of 

the more expensive weapons and things that they need, and we 

talked about how that the costs have been shooting way up have 

been in the pay and benefits and so forth. 

And many top leaders have talked about that problem, how it’s 

cutting into being able to buy the equipment that they want, and 

Admiral Harris said that he thought that we needed to have another BRAC. 

Mr. Tillotson, do you have any opinion on that? 

And also, Mr. Dodaro, if you all looked into that? 

Mr. TILLOTSON. Surely. It is the Department’s position that another round of BRAC would be appropriate. Mr. Dodaro’s findings 

about the use of leased space and underutilization of government 

space relates to making better use of the space that we have and 

we certainly agree we should do that. 

But having said that, there’s a large amount of space that is 

more industrial and involves a lot of bases that are at this point 

largely underutilized and we do believe there’s excess capacity that 

could be reviewed. So we would endorse another round of BRAC. 

Mr. DODARO. There’s definitely excess property. Our work, 

though, focused on reviewing past BRAC rounds have shown that 

the Department needs to make additional improvements in its 

methodology for estimating BRAC savings and actually bringing 

those savings to realization. The initial estimates are far in excess 

of what DOD eventually achieves through the BRAC rounds due to 

continual changes in requirements and other things. 

So our opinion, if the Congress decides to grant them their request for another round of BRAC, they really need to implement 

our recommendations so that Congress has assurance that there 

really, at the end of the day, will be the savings that should be 

achieved through any process of this kind. We have many outstanding recommendations that the Department has not yet implemented in this regard. 

Mr. DUNCAN. Another area, before my time runs out, you mentioned potentially saving billions on Social Security disability payments. Will you tell us about what needs to be done in that area? 

Mr. DODARO. Yes. Right now people can receive full disability 

benefits and unemployment benefits at the same time. Now, there’s 

some ability, if somebody’s on disability, they can give permission 

to try to work, because, obviously, we want them to get back to 

work. But if they take a job and then they’re eventually laid off 

from that position, they can collect both benefits, and we don’t 

think that this is a prudent use of the Federal Government’s 

money, to get both full disability benefits and unemployment benefits at the same time. CBO’s estimated, I believe, they could save 

about $1.3 billion over a few year period if this change is made. 

Mr. DUNCAN. All right. Thank you very, Mr. Chairman. 

Mr. MEADOWS. I thank the gentleman. 


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The chair recognizes the gentleman from Pennsylvania, Mr. 

Cartwright, for 5 minutes. 

Mr. CARTWRIGHT. I thank Chairman Meadows. And I also thank 

Chairman Chaffetz for calling this important hearing. 

Mr. Tillotson, one of the issues GAO included in this year’s duplication report is DOD’s storage of occupational and environmental 

surveillance data. Am I correct in that? 

Mr. TILLOTSON. Yes. That’s correct. 

Mr. CARTWRIGHT. Can you explain what the term means, occupational and environmental surveillance data? 

Mr. TILLOTSON. Surely. As the Department conducts its industrial activities, there’s a requirement, commensurate with both law 

and OSHA standards, that we collect information on any conditions 

that may eventually cause us to have to go back and look at impacts on the workforce or impacts on the work environment. 

Mr. CARTWRIGHT. And so this has an impact on Active-Duty service men and women and also veterans. Am I correct in that? 

Mr. TILLOTSON. That is correct. 

Mr. CARTWRIGHT. All right. So DOD uses this information to 

track biological, chemical, and physical health hazards to our servicemen and our servicewomen, right? 

Mr. TILLOTSON. That is correct. 

Mr. CARTWRIGHT. All right. What benefit does DOD get from collecting that type of information? 

Mr. TILLOTSON. So two benefits come out of it. First of all, we 

collect it. If we link environmental issues with impacts on ActiveDuty servicemembers or even civilian workers, then it allows us to 

take corrective action to ensure that the condition does not continue. It also allows us to position ourselves to provide appropriate 

compensation should that condition actually emerge. And I think 

the Department is moving aggressively in the totality of its medical 

community to look at a better way to manage its medical information across both the Active-Duty and civilian force. So this is an activity area that’s got great attention in the Department with significant investment. 

Mr. CARTWRIGHT. I thank you for that. I think you just touched 

on it. The Department of Veterans Affairs also makes use of this 

type of environmental and health information to establish disability benefits for veterans. Am I correct in that? 

Mr. TILLOTSON. That is correct. 

Mr. CARTWRIGHT. So it’s critical this kind of information be accurate and useable to help protect our Active-Duty servicemembers 

and our veterans, right? 

Mr. TILLOTSON. Yes, sir. 

Mr. CARTWRIGHT. Mr. Dodaro, thank you for being here as well, 

and all your good work. 

According to GAO, it’s not clear that the quality of the data 

that’s being collected is reliable. In a report issued in May 2015, 

GAO said, ‘‘Some of the military services have developed their own 

guidance, resulting in inconsistent approaches in levels of effort, 

which has reduced DOD’s ability to be confident that the data are 

sufficiently reliable.’’ Have I read that correctly? 

Mr. DODARO. That’s correct. 


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Mr. CARTWRIGHT. So does it concern you that DOD does not 

know if the data it is collecting is accurate? 

Mr. DODARO. Yes, it does. 

Mr. CARTWRIGHT. Now, Mr. Tillotson, GAO recommended in that 

2015 report that DOD establish clear policies and procedures for 

performing quality assurance reviews of the data collected. DOD 

responded to GAO that it would need additional resources to clarify 

its policies. Is DOD taking any actions to improve the quality of the 

data it is collecting? 

Mr. TILLOTSON. Yes, we are in fact doing that. New policies are, 

in fact, in draft. They’re due to be issued this year. And we did 

make the resources available to do this, because we, like you, felt 

that this was an important undertaking to put in place. 

We’ve tied that into our broader issues of increasing standardization of medical practices across the Department. The establishment 

of the Defense Health Agency, the establishment of the Defense 

Health Program appropriation have all been value-added activities. 

This body, this Congress, has acted on those in prior years. 

Mr. CARTWRIGHT. Well, thank you for that. But separate from 

the question of quality is how the information is processed and 

whether that’s being done efficiently. According to the GAO report, 

OEHS data is stored in two different database systems. 

Mr. Dodaro, did GAO identify problems with the use of two separate systems? 

Mr. DODARO. I’m going to ask Ms. Clowers, who’s the head of our 

Health Care team, to respond, please. 

Ms. CLOWERS. Yes, sir, we did. We found, as you mentioned, 

there were two different systems, referred to as MESL and 

DOEHRS, in which the data is stored. So we found both potential 

for duplication of entry of the data, but importantly, that you 

couldn’t get a comprehensive sense of all of the issues that were 

being raised by the data with using two different systems. 

Mr. CARTWRIGHT. So two separate systems. 

Mr. Tillotson, why is DOD using two separate systems? 

Mr. TILLOTSON. So this is part of the corrective actions we have 

underway in the broader medical community. Prior to establishment of the Defense Health Program, prior to more integration 

across the Department, medical practices were run largely in the 

military departments. 

Mr. CARTWRIGHT. Well, I want to jump in here. It’s been more 

than 10 years since GAO first highlighted the issue of problems 

with DOD’s management of occupational health data. Mr. Tillotson, 

why is it taking so long to fix these problems? 

Mr. TILLOTSON. I can’t give you a satisfactory answer to that. I 

can tell you we are working on it and we are looking to resolve the 

issue. 

Mr. CARTWRIGHT. Well, look, we owe it to our servicemembers, 

Active-Duty men and women, and our veterans to collect this information accurately and to fix these problems, and I urge you to give 

it your every attention. 

Mr. TILLOTSON. Thank you, Congressman. We will. 

Mr. CARTWRIGHT. I yield back. 

Mr. MEADOWS. I thank the gentleman. 


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The chair recognizes the gentleman from Florida, Mr. Mica, for 

5 minutes. 

Mr. MICA. Well, thank you, Mr. Chairman. And thank you for 

holding this hearing. 

Again, some of the waste and inefficiency of the Federal Government is identified annually by GAO. And I appreciate what you’ve 

done, Mr. Dodaro, of bringing this to our attention. 

A couple of areas. First, some of DOD’s—you probably have one 

of the biggest hawks in Congress. I vote for everything. I voted for 

the omnibus because we cut, cut, cut DOD. But I sit in these hearings, and I’m the senior person now on the National Security Subcommittee on the panel, been on it since the beginning of time, and 

I see more and more waste. 

I see another report, Mr. Dodaro, that DOD, in fact, its inventory 

of properties and assets is almost nonexistent. Is that correct? 

Mr. DODARO. Yeah. We’ve been very concerned about the lack of 

good information with—— 

Mr. MICA. Yeah, they don’t have a good inventory even of their 

properties and their assets, and this report highlights it again. And 

that’s a concern. We have billions of dollars’ worth of assets, both 

domestically and internationally, and we can’t even account for it. 

So, again, I think this is troubling. 

Now, the other thing too is we work with some of the folks in 

the DOD committee, authorization committee. We did substantial 

acquisition reform. And you talk about procurement and acquisition, that’s part of problem. Isn’t it, sir? It’s the procedures. They’re 

cumbersome. They’re outdated. They’re bureaucratic. There’s red 

tape. And sometimes you don’t get the best buy for the taxpayers, 

right? 

Mr. DODARO. Well, that’s a problem, but it’s also a problem, as 

you point out, if you don’t know what you have, what condition it’s 

in—— 

Mr. MICA. Well, okay. Those are assets, but acquiring new assets, it’s just as bad. And one of the things that concerns me is we 

pass these reforms—now, I know it takes a while to implement, 

and I met with some of the folks. I have one of the biggest acquisition activities assimilation in the Army down in my district. I sit 

with the folks. We passed this stuff last year. Well, first there’s no 

secretary of Army in place, or there hasn’t been. Then there’s no 

chief of staff. Then there’s no one over the programs. You’ve got 

these vacancies, which is part of the problem. 

And I ask: Have you implemented the acquisition reforms? No. 

It’s no—sort of no, no, no I get. Or are they in place? No, no, no. 

Or decisions are somewhere in the chain of command. 

Maybe, Mr. Tillotson, you can tell us what’s happening there. 

Mr. TILLOTSON. Certainly. So let me address kind of all three of 

your issues. 

On the inventory, I agree with Mr. Dodaro, the inventory is not 

as it should be. It is part of the broader audit status of the Department, and, in fact, Mr. Dodaro, I, and the OMB folks are meeting 

this afternoon to talk about progress on audit, which will include 

inventory. So it’s an area we are aware of. 

Mr. MICA. So inventory we really can’t even audit because we 

don’t have—— 


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Mr. TILLOTSON. Correct. You have to have full existence and 

complete to do that. 

Mr. MICA. It’s troubling. 

Mr. TILLOTSON. We agree. 

On the issue of acquisition reform, Mr. Kendall has moved out 

quickly with the new guidance to put some of those new procedures 

in place. 

I would respond a little bit to Mr. Dodaro’s earlier remarks about 

strategic portfolio management. We agree, and, in fact, over the 

last 3 years the deputy secretary of defense has led a strategic 

portfolio review on an annual basis. So not only are the reviews 

done within the military departments across their business space, 

but then it comes to a departmental level where the vice chairman 

of the Joint Chiefs, the deputy secretary of defense, and all the 

heads of the agencies do a strategic review of all the investments 

and investment plans so that to your point and to Mr. Dodaro’s 

point, we can rationalize investments going forward. 

Mr. MICA. Well, we have a bill actually that deals with some 

property disposal and management. How many people in the audience own property? Raise your hand. Almost everybody, right? 

Okay. Would you have the Federal Government manage that property? Hell, no. You’d be nuts. And we do that. 

And the biggest property owner, probably the biggest one, is 

DOD. You can’t get anyone to make a decision to dispose of property. I’ve been trying—we have 177,000 acres at NASA sitting 

there, an extra 16,000 acres with the Air Force. I’m trying to get 

400 acres surplus property to transfer to do a commercial cargo 

center next to our port in Canaveral, not even in my district, 5,000 

jobs it would create, and I’ve been working on it for 4 years. 

The other thing too you got to do is you got to get some permanency to some of these military people. I’m now on my third commander. They change them every 2 years. We need to get these 

guys 3 years at least, maybe 4, some stability in the process. I was 

dealing with incompetent people in the past, then I get someone 

competent, and I got a second competent, but they’re there and 

gone. How can you manage anything with the turnover that we 

have? 

So just a little frustration, Mr. Chairman. But it drives me batty. 

Just one thing for the members. Did you see what the private 

sector did this past week in landing that booster rocket on the 

barge? You got to look at that and see what the private sector can 

do when we unleash the private sector. God forbid we should give 

them a lease on doing things with private property and moving 

projects ahead. 

Thank you. I yield back the balance of my time. 

Mr. MEADOWS. I thank the gentleman from Florida. I know that 

excess properties has been something that has been a priority for 

the gentleman from Florida for a long time. 

Mr. MICA. Mr. Chairman, incidentally, the bill that we’re passing, I don’t know if I said it, it does not apply to DOD—— 

Mr. MEADOWS. Right. 

Mr. MICA. —the one that everyone’s been working on. And that’s 

something we need to look at. Thank you. 


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Mr. MEADOWS. The chair recognizes the gentlewoman from Illinois, Ms. Kelly, for 5 minutes. 

Ms. KELLY. Thank you, Mr. Chair. 

And welcome to the witnesses. 

Dr. Conway, last year the United States spent over a trillion dollars on Medicare and health-related expenditures. I think we can 

all agree that there are opportunities to increase efficiency and reduce waste in Medicare and Medicaid spending. 

I’m the chair of the Congressional Black Caucus Health Brain 

Trust, so this is something I’m very interested in and meet with 

a lot of people that are concerned with the future of Medicaid and 

Medicare. 

I want to start by clarifying what is covered by the term ‘‘improper payments.’’ Improper payments covers both overpayments 

and underpayments. Is that correct? 

Dr. CONWAY. That is correct. So improper payments is both overpayments and underpayments. 

Ms. KELLY. Okay. And improper payments can include payments 

made to fraudulent claims, but it also can include legitimate claims 

that include mistakes. Is that right? 

Dr. CONWAY. Yes, it can. A proportion is fraudulent claims. But 

the majority of improper payments are actually due to documentation or other errors in the submission of the claim that was for, on 

further review, often legitimate medical service. 

Ms. KELLY. Okay. One area GAO identified for potential duplication is in healthcare coverage for people who are hovering around 

the poverty line and moving between Medicaid and the federally 

subsidized coverage provided through the Affordable Care Act exchanges. In the report GAO released today it said that HHS concurred with GAO’s recommendations and highlighted the actions 

the Department has already taken to ensure the accuracy of Medicaid eligibility determinations made through the exchanges. 

What steps has CMS taken to ensure the recipients of Medicaid 

or Federal subsidies are not receiving duplicative coverage? 

Dr. CONWAY. Yes. So we appreciate the GAO’s work here. Let me 

describe briefly some of steps that we’ve taken. 

One, the account transfer process. We have accounts transferring 

between Marketplace and Medicaid working closely with our States 

and private health plans on a daily basis. We now review account 

transfers on a weekly basis. 

In terms of duplicative coverage, either by Medicaid and Marketplace, and the most common reason for this, to give you a tangible 

example, somebody may have Marketplace, for example, coverage, 

lose their job, then qualify for Medicaid. 

We do what’s called data matching with the States. We’ve been 

working closely with the States as they have a critical role here. 

We are doing periodic data matching now. 

So we continue to work through the set of issues, both testing 

systems with States and private health plans, both at the Federal 

and State level. And through data matching and using data, reducing any people that may have coverage both in Marketplace and 

Medicaid at the same time. 

Ms. KELLY. Okay. Another area was how CMS verifies the eligibility of Medicare providers and suppliers. And they found without 


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stronger controls and better verification, CMS may be making payments to providers without a legitimate address, whose licenses 

have expired or have been revoked, or in some cases who have actually died. One recommendation made was to upgrade the software. 

Dr. CONWAY. Yes. Thank you for that question. We are doing 

that. We agree with the recommendation. We’re updating the software. We’re doing four major actions in this area. One, the software updates for address verification and other verification modalities. Two, increase site visits so that we are visiting sites at an increased frequency. Three, more continuous monitoring of data and 

checking with postal data and other sources in terms of the enrollment process. So we are upgrading our systems and using data to 

address these program integrity issues. 

Ms. KELLY. Do you have enough people and the right people in 

place to carry this out? 

Dr. CONWAY. Thank you for the question. You know, managing 

resources in the Federal Government, I’ve managed both in the private sector and the Federal Government, is incredibly challenging. 

We have, you know, in total approximately 6,000 CMS employees 

trying to manage a program of huge scope and complexity. I think 

whether it’s program integrity or quality arenas or other policies or 

Marketplace Medicaid, we have a staff, and I appreciate the comments earlier, that I think is mission driven, wants to deliver on 

that mission. When you look at our employee viewpoint surveys, 

that comes across clearly. The other thing that comes across is a 

feeling that they don’t always have the resources and the training 

and the ability to improve the system as much as they would want. 

Ms. KELLY. Okay. And just quickly, Mr. Dodaro, just any comments about what you just heard or anything you want to add? 

Mr. DODARO. No. I’m very pleased that CMS has taken action on 

a number of our recommendations in these areas. There are still 

some outstanding recommendations, particularly as it relates to 

Medicaid. I’m very concerned that we’ve not had a good oversight 

over the managed care portion of Medicaid at the State level. CMS 

is in the process of instituting a process that will provide more audits of what’s going on in the managed care portion of Medicaid at 

that level. 

I’m still concerned, though, that we have a disagreement with 

them about the definition of budget neutrality for demonstration 

projects. The ones that we’ve looked at we don’t believe have been 

budget neutral and it’s costing the Federal Government tens of billions of dollars in additional money. They’ve made their criteria 

more transparent, as Dr. Conway says, but we don’t agree with the 

implementation of the criteria that we’ve seen in those areas. 

There’s also many things that we’ve recommended that Congress 

could do to streamline spending in Medicare and the Medicaid program as well. 

So we’re pleased. We’ve had ongoing dialogue with CMS. We plan 

to continue that and to press for full implementation of our outstanding recommendations. 

Ms. KELLY. Okay. Thank you. And I yield back. 

Mr. MEADOWS. I thank the gentlewoman. 


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The chair recognizes the gentleman from Michigan, Mr. Walberg, 

for 5 minutes. 

Mr. WALBERG. Thank you, Mr. Chairman. 

And thanks to the panel for being here. And, Mr. Dodaro, thanks 

for the heavy lifting and sharp penciling and pinpointing that you 

continue to do. One man’s opinion in an overlarge Federal Government, but nonetheless. 

One area that I’m interested in is the unobligated balances that 

are out there. Some staggering in nature, at least to my opinion. 

Is there any value to allowing agencies to hold excess appropriations to the next fiscal year? And I guess I would add quickly to 

that, at what point does it become a problem? 

Mr. DODARO. Yeah. I think, you know, agencies need—and it depends on the program and the activity. So it’s variable. They need 

to have a little bit of a potential buffer depending on the nature 

of the programs. But the ones we looked at, they had set criteria 

for what they thought they needed in addition to hold in appropriations. They were well above their own criteria. And that’s why we 

called it excess. 

So the amount of unobligated balances that we had pointed out 

in those areas are ones that, in our view, should be deobligated or 

rescinded by the Congress. 

Mr. WALBERG. And specifically, let me get to a specific one here 

in the State Department, one area I’ve been in fact dealing with 

back in the district, the Consular and Border Security Programs. 

It was $440 million over its target for unobligated balances in fiscal 

year 2014. How did that account end up almost half a billion dollars over target? 

Mr. MIHM. Well, sir, as Mr. Dodaro mentioned, is that very often 

these types of programs, accounts for service, that you mentioned 

over at State Department environment, or Department of Energy 

was another, will have spending obligations or needs that will cross 

fiscal years. 

Our point to this is, is that they have had targets that they have 

put in place of the amount of money that they need to have each 

year to handle that type of flexibility or to understand that their 

spending will cross years. When this is way out of whack, as it was 

with consular services, as it was with parts of the Department of 

Energy, they need to be able to roll that back or at least they need 

to have greater transparency and understanding as to what money 

they actually need, how they’re going to spend it, and then be publicly reporting on where they are on that. 

Mr. WALBERG. I guess my concern would be, if that’d be the case, 

and they said at 25 percent—— 

Mr. MIHM. Yes, sir. 

Mr. WALBERG. —why not fix the problem by next year just saying we’re going to set it at 40 percent? That doesn’t seem to get 

in touch with reality of trying to live within one’s means and truthfully set those targets. 

Mr. MIHM. Well, setting it at—you know, they could flex—you 

know, move it each year and say: We’re going from 25 percent to 

40 percent or even down beyond that. What the goals—and, again, 

these are goals that they have set for themselves. These are based 


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on historically what they think they need to carry over from year 

to year—— 

Mr. WALBERG. And they have to justify it? 

Mr. MIHM. Yes, but not at the level that we think that there 

should be that level of transparency. And that’s the whole point on 

this. 

RPTR DEAN 

EDTR ZAMORA 

Mr. DODARO. One of the things we do every year, Congressman, 

is we scrub a lot of these accounts and provide the information to 

the appropriation committees. And in some cases, the appropriations committees will not approve additional money if there are 

large carryover balances. And so we keep an eye on these activities 

quite a bit. And the agencies have to justify, but we try to flag 

these for the appropriators so that they can focus on whether or 

not to take action. 

Mr. WALBERG. Have any Customs and Border Patrol officials 

been held accountable for, as I see here, 2012, 2013, 2014, right 

around 40 percent than where they have ended up over target, 

have any accountability, thus far? 

Mr. MIHM. There typically isn’t accountability at any individual 

level on this or even an institutional level. What we are talking 

about is improving management processes that get a better transparency and better management over time so that you don’t—there 

will be fluctuations, sir, is exactly what you are saying and that is 

to be expected. But what we do want to see is that if you set your 

own targets, you ought to be able to pretty consistently hit those 

targets, and if not, have good explanations to the Congress and others as to why a particular year was an anomaly. 

Mr. WALBERG. Well, another problem—and thank you for that 

answer. Another problem that State, for instance, in their area of 

fraud prevention, they claim that they had that level of balance develop because fraud prevention activities fees could only be spent 

on antifraud activities. They didn’t have enough fraud to spend it 

on? Do they have that significant problem in not being able to use 

the funds at other portions of their budget or their processes? 

Mr. MIHM. Well, what we found, sir, is that, you know, when we 

look at all agencies across government, and State is no different 

than this, is that there are very often internal control weaknesses 

that are in place and opportunities for agencies to tighten up their 

antifraud activities. Certainly, we think, you know, within the parameters of the 25 percent, that that is something that State or 

any other agency ought to be able to improve internal controls with 

that amount of resources. 

Mr. WALBERG. I see my time has expired. I yield back. 

Mr. MEADOWS. I thank the gentleman from Michigan. 

The chair recognizes the gentleman from Arizona, Mr. Gosar for 

5 minutes. 

Mr. GOSAR. Thank you, Mr. Chairman. 

Mr. Dalrymple, in your own written testimony you state that the 

IRS is making steady progress on a vast majority of actions recommended by the GAO. However, in 2013 the Treasury Inspector 

General for Tax Administration recommended the Wage and Investment Division of the IRS assess the value of information referVerDate Sep 11 2014 12:01 Jan 09, 2017 Jkt 000000 PO 00000 Frm 00078 Fmt 6633 Sfmt 6633 F:\22314.TXT APRIL

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ral process. Why has the IRS not acted on this recommendation 

yet? 

Mr. DALRYMPLE. Well, we have begun acting on the GAO recommendation. We literally have a team of folks from across our 

various organizations looking at the referral program. We intend, 

within the 60 days from the date of the report, to actually put together a timeline. Our intentions at this point in time are to limit 

the number of organizations that have referrals. In other words, we 

intend to bring the referral process down to, you know, one centralized activity. And our intention is to, at some point in time in the 

very near future, have an online opportunity for taxpayers to make 

referrals. 

So we are looking at all of the recommendations that have been 

made both by the GAO and the Treasury Inspector General for Tax 

Administration. And I believe we are going to be quite responsive 

to the issues that have been raised. 

Mr. GOSAR. You know, there is an old adage, trust is a series of 

promises kept. The IRS is behind the 8 ball on that one. Can you 

explain why the IRS has failed to better coordinate and share information between programs? 

Mr. DALRYMPLE. Well, a lot of these programs grew up over time. 

So, for example, we—— 

Mr. GOSAR. Well, I know. But what is happening is, is that you 

should have a constant evaluation and, you know, predication as 

an ongoing exercise, and we haven’t seen that. 

Mr. DALRYMPLE. Well, in this particular instance, we had a series of referral programs that grew up in each individual operating 

division over a period of time. Now, should we have looked at that 

and addressed it earlier? Yeah, I think we should have. The fact 

is that my view of this is that the auditors were very helpful in 

terms of focusing our attention on this. And now that we have focused attention on it, we are taking action. 

Mr. GOSAR. And so we can expect some results here shortly? 

Mr. DALRYMPLE. Absolutely. 

Mr. GOSAR. Okay. Mr. Dodaro, as you may know, fraud within 

and throughout the VA is rampant. With regards to unemployment 

benefits, why doesn’t the VA use IRS data to verify applicants’ selfreported earnings? 

Mr. DODARO. I am not sure. I will have to give you an answer 

for the record for that. 

Mr. GOSAR. I appreciate that. I am going to go to a second one. 

What does the VA need to do to make sure that the process for determining unemployment eligibility is applied uniformly? 

Mr. DODARO. Yeah, no. I am sorry, on this one, on the VA one 

I am going to have to get back to you on that. 

Mr. GOSAR. You know, this is critical. I love you guys, but the 

VA is a mess, an absolute disgusting mess. And we need some actions in regards to this. And, you know, it behooves us to have 

those ideas, the facts so that Congress can address those. 

Mr. DODARO. We will get you the facts. I will get you an answer 

today. But, you know, we agree in terms of the criticality of the 

VA. I added them to our high risk list last year in terms of health 

care that needs to be addressed. 


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Mr. GOSAR. We would also like to have some models that they 

can follow so that we are not reinventing the wheel for them. So 

I think they need some parenting outright. 

I am going to bring up another one. It is the prevailing wage. I 

believe in a fair wage for a fair job that is fair to the taxpayers. 

But we have seen a huge rise in the number of businesses going 

out of business because of the Department of Labor in regards to 

the calculation of prevailing wage. This is a huge issue across the 

country. Do you see an equitable aspect of just recalculating this 

in a very transparent fashion? 

Mr. DODARO. Yeah, we have not looked at that issue in a while, 

so I would have to go back and take a look. We did a long time 

ago, but it has been a number of years since we have had the resources to be able to look at it again. 

Mr. GOSAR. We would love you to because, you know, I think 

from the standpoint, as long as it is a transparent schedule, which 

has been the major complaint for particularly smaller business 

along the lines in my district, in my State, we have had a lot of 

subcontractors, small contractors put out of business in regards to 

working with the Department of Defense. And this would be something that, I think, that both sides could go along with, making 

sure that it is a transparent schedule, that it is a fair wage for a 

fair job, and fair to the taxpayer. 

Mr. DODARO. We will take a look at that. I understand your concern. 

Mr. GOSAR. I appreciate it. And thank you for what you do. 

Mr. DODARO. Sure. 

Mr. GOSAR. I yield back. 

Mr. MEADOWS. I thank the gentleman. 

The chair recognizes the gentleman from North Carolina, Mr. 

Walker for 5 minutes. 

Mr. WALKER. Thank you, Mr. Chairman. Thank you gentlemen 

and others for being here today. I have got a couple of questions. 

I would like to start with Mr. Dodaro. Why is the referral process 

being conducted by hand and through the mail? Isn’t this an archaic, kind of out-of-date process? Can you speak to that for a 

minute? 

Mr. DODARO. Yes, it is archaic. 

Mr. WALKER. Okay. 

Mr. DODARO. And particularly given the volume of complaints. I 

think at one information referral office had 87,000 referrals one 

year. And so they are manually reading them. But then when they 

refer it to another part of the IRS, they manually look at it again 

as well. So I am very pleased, as Mr. Dalrymple indicated, they are 

going through an online electronic process, but this is outdated. 

Mr. WALKER. So, Mr. Dalrymple, you did talk about the plans to 

move it online. Can you give us a little more specificity on what 

that looks like and a timeline? 

Mr. DALRYMPLE. Well, we are just in the planning stages right 

now so I really can’t give you any more specificity about exactly 

what it is going to look like. We have to, you know, engineer that 

process, et cetera. But it is pretty clear to us that our process isn’t 

working for either the taxpayers or for us at this point in time. So 

we are going to make some major changes to that program. 


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Mr. WALKER. I hear that sounds like you have got some great intentions there. But in your forecasting, is there any kind of 

timeline? I know you said you are talking about some plans. Can 

you be a little bit more specific? 

Mr. DALRYMPLE. We will be responding to the GAO reports in 

May. And at that point in time, we will have a timeline together 

that will actually lay out what we are going to do and a timeline 

for getting it done. 

Mr. WALKER. Okay. I look forward to seeing that in May. 

Mr. Dodaro, how might greater coordination between the referral 

programs increase savings for the IRS and the American taxpayer? 

Can you talk about that for a minute? 

Mr. DODARO. Sure, sure. I mean, well, first of all, I think it will 

increase the timeliness. A lot of the information that it gets, you 

know, they need to react quickly in order to be able to move and 

investigate, evaluate the referral, whether it is legitimate or not, 

and apply resources properly. Secondly, it will enable them to get 

back to whoever made the lead, if they identified themselves, in a 

way that will encourage people to send additional information in 

there as well. 

As Mr. Dalrymple mentioned, the percentage of returns that the 

IRS has been auditing on their own has been going down. So they 

are auditing less returns, so that makes the ability to get leads and 

referrals all that more important and put it at a greater premium. 

So this will enable them to move more quickly. It will enable them 

to ferret out which ones they should spend time on and dedicate 

time on. So I believe this has high potential. 

Mr. WALKER. It sounds like it. It is very encouraging to hear. I 

know the GAO has identified a lack of leadership within many levels of the IRS referral programs. What are we doing to improve 

this failure of leadership over programs that have the potential to 

reduce the tax gap? Can you speak to that? 

Mr. DODARO. Sure. I will ask Mr. Mihm to take over. 

Mr. MIHM. Well, thank you, sir, for the question. As Mr. 

Dalrymple noted in his conversation on an earlier question, is that 

the problem with the referral programs is that they grew up over 

time on a singular basis. And so one division within our business 

unit within the IRS would have a referral program, versus another 

one would have a referral program. And so they were viewed as referral programs rather than an integrated set of initiatives that are 

underway. Very similar to what local governments do when they 

have a 311 number, where you don’t have to know what your problem is when you call. There is no wrong door. That is what needs 

to happen with the referral program. 

We shouldn’t make someone that has an issue referred understand and have to navigate the various processes and programs 

that are existing within the IRS. And I know from Mr. Dalrymple 

and his colleagues that that is something that they are committed 

to. 

Mr. WALKER. Okay. I have one more question. It is a little 

lengthy so stay with me here. When whistleblowers contact the 

IRS, they are potentially taking considerable risk. I think we would 

agree with that part. Despite this, the IRS takes years to process 

claims with poor communications that goes back to these whistleVerDate Sep 11 2014 12:01 Jan 09, 2017 Jkt 000000 PO 00000 Frm 00081 Fmt 6633 Sfmt 6633 F:\22314.TXT APRIL

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blowers. Why are we not taking steps to evaluate the effectiveness 

of the whistleblower pilot program and other steps to improve communication with these people that come forward? 

Mr. DODARO. Yeah. We have looked at the whistleblower program and made a number of recommendations. They need to more 

timely get back. The IRS has the pilot program underway. They 

need to evaluate whether or not that is going to be successful and 

meet the needs of the people who are providing the information. 

But communication here is really important. 

The other thing that we point out in our evaluation is there are 

monetary awards for whistleblowers. And so far, the IRS has only 

issued about 31 specific monetary awards. So they have to look at 

whether or not they are providing enough incentives for people, 

both in communication and into awards. 

Mr. WALKER. Thank you, Mr. Dodaro. 

Mr. Chairman, I yield back. 

Mr. MEADOWS. I thank the gentleman. 

The chair recognizes the gentleman from Oklahoma, Mr. Russell 

for 5 minutes. 

Mr. RUSSELL. Thank you, Mr. Chairman. Thank you for all of our 

witnesses that are here today. We do appreciate what you do. I am 

a big fan of our government accounters and also our inspectors general and others that help us ferret out waste and have responsible 

government. 

Mr. Dodaro, the GAO found that the Commerce Department’s 

new innovative technologies and manufacturing or ITM loan guarantee program was essentially performing the same function as 

four other Federal loan guarantee programs. The program was set 

up, as you I am sure are aware, as a result of the 2010 reauthorization of the America COMPETES Act. And Congress specifically 

directed Commerce to avoid duplication. 

Given the preexisting programs, was it inevitable that ITM 

would overlap with existing loan programs, or was there more that 

Commerce could have done to avoid the now duplicate existing programs? 

Mr. DODARO. We think there is more that could be done. We 

have made a recommendation to Commerce to work with the SBA 

and National Institute of Standards and Technologies. I think what 

Congress was trying to do here was to deal with a niche that there 

may be some gaps in the capital markets for innovation for this 

particular purpose. And it is going to be very difficult, though, I 

think, to find what that niche is going to be and to avoid duplication with the other programs. 

I think that Congress was also, quite frankly, frustrated with the 

SBA’s lack of timeliness in meeting these needs. And so we have 

recommended that Commerce work with them to identify what 

these capital needs are. I am pleased that they haven’t made any 

loan guarantees yet until they can find out and make sure they are 

not duplicating. So we are going to stay on this. We have a regular 

requirement to review it. 

Mr. RUSSELL. The report also shows that ITM’s program is copying the forms and application process used by the Small Business 

Administration for its own loan program. How does this contribute 

to duplication in the issuance of loans? 


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Mr. DODARO. Well, it is going to duplicate it. Unless they follow 

our recommendation and find the right niche to focus on, it inevitably will result in duplication, in my opinion. 

Mr. RUSSELL. The GAO also recommended in the report that the 

Commerce Department create targeted marketing materials in coordination with the National Institute for Standards and Technology so that the program offers guarantees to manufacturers who 

do not currently have access to Federal loan guarantees. If NIST 

has the best overall idea of which borrowers would benefit most 

from the program, would you recommend, or the GAO, that the 

loan guarantee program simply be consolidated under NIST, or 

would one of the other agencies with a preexisting program, and 

if not, why not? 

Mr. DODARO. I think that is a possibility that has to be identified 

once Commerce does their homework and that there is a proper 

plan. I think at that point somebody ought to reassess. Now, I also 

would note, my understanding is Commerce has talked to other 

Federal departments and agencies about carrying out the program, 

and so far there have been no takers in that regard. So I think 

that, you know, I will be very interested to see what Commerce 

does with our recommendation. And once it has the marketing materials and once it has identified potential, you know, gaps in the 

capital markets, whether or not it could be done by another existing program or whether we really need another program. 

Mr. RUSSELL. Thank you for that. 

Mr. DODARO. I think the jury is out on that. 

Mr. RUSSELL. I appreciate that. 

And, Mr. Chairman, being a true conservative, I will yield back 

the balance of my time. 

Mr. MEADOWS. Well, I thank the gentleman from Oklahoma. 

The chair recognizes the gentleman from Alabama, Mr. Palmer 

for 5 minutes. 

Mr. PALMER. Thank you, Mr. Chairman. 

Mr. Dodaro, I really appreciate the work you guys do. I hate to 

say it, but I enjoy reading your reports. That probably speaks volumes about my personality. But I do want to go back to this issue 

of unobligated balances. And I know that you may or may not be 

in a position to make a judgment on whether or not this is sound 

fiscal policy, but I don’t think we can make the case that it is absolutely necessary to hold almost $900 billion in unobligated balances. Would you agree with that? 

Mr. DODARO. Yes. 

Mr. PALMER. Okay. My point here, then, is that we are going to 

debate over our budget in which we are being asked to increase 

spending by $30 billion. If we were to reduce the unobligated balances by approximately 3.5 percent, that would more than cover 

the increase in spending. Does it not make sense to do that, particularly in the context of if we are holding money in unobligated 

balances and then having to borrow money to fund other agencies, 

isn’t there an interest cost incurred in addition to the additional 

spending? 

Mr. DODARO. Well, it is definitely not an efficient way to operate. 

I would say, though, that I don’t believe it would be probably prudent to do an across the board kind of reduction there. I think you 


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have to look at targeted areas and agencies, and that is why we 

focused on specific areas. We do that every year for the Congress, 

you know, because in some cases it may make sense to have that 

and other cases not. But in no case should it be in excess of what 

the needs are. 

Mr. PALMER. Right. And I just use that as a generalization, not 

in specific. I think you would have to look at each agency individually. But the point is that it is not sound fiscal management. 

Mr. DODARO. That is correct. That is why we focus on it. 

Mr. PALMER. Okay. Mr. Dalrymple, I am going to direct some 

questions to you about the tax gap. And the inspector general for 

the Tax Administration, the Treasury Inspector General, issued a 

report and in his report said that there needs to be more timely 

and more accurate estimates of the tax gap. Currently, the IRS reports this about every 5 years. Has the IRS acted on the inspector 

general’s recommendations? 

Mr. DALRYMPLE. We intend to have the new tax gap report out 

later this month, as a matter of fact. So we are acting on it as we 

speak. 

Mr. PALMER. Can you tell me how much the IRS collected? What 

was the revenue total collected for 2015, fiscal year? It was over 

$3 trillion, wasn’t it? 

Mr. DALRYMPLE. It was over $3 trillion, yes. 

Mr. PALMER. Based on a report from the Urban Institute and the 

Brookings Institution, over the past 30 years the tax gap has 

ranged from 16 to 20 percent. Let’s just say it is 16 percent. And 

if $3 trillion came into the IRS last year, that means 16 percent— 

that is 84 percent of what should have been collected. Now, I won’t 

get into the math, but I will just give you an idea. That means that 

somewhere in the range of $500 billion to $550 billion went uncollected. What is the IRS doing to collect the taxes that are owed it? 

Mr. DALRYMPLE. Well, we have a number of initiatives. I mean, 

the tax gap itself, one of the things that needs to be completely understood about the tax gap is that it is made up of a lot of different 

moneys owed. And if we were going to go after every sort of last 

cent of the tax gap, it would be an incredibly intrusive process. 

Having said—— 

Mr. PALMER. Well, let me suggest this. Eighty-four percent of it 

is underreporting, 10 percent is underpayment, 6 percent is just 

flat nonfiling. And the point I am trying to make here—and this 

may not be the proper forum to do it—but, you know, even when 

you do collect some of the taxes, you still have a net gap of somewhere between $380 billion and $400 billion. And I am on the 

Budget Committee, and this is one of the things that makes me 

want to pull my hair out and at my age I don’t need to be doing 

that. We do everything in a 10-year window. And if it is $380 billion a year, that is $3.8 trillion in our 10-year window. Okay? 

And then we have got improper payments. That is another one of your reports I read, Mr. Dodaro, $124.7 billion in 2014. If that 

is the average, that is $1.25 trillion over that 10-year window. And 

we are looking at a $19 trillion debt? And we just identified $5 trillion? Okay. It seems to me that it begs for a flat tax, or a consumption tax, some way of collecting every dime that is owed the government. 


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So I just want to see if the IRS can be more diligent in making 

sure that we collect the revenue that is owed us because we have 

got some serious fiscal issues facing the country. 

Thank you for your indulgence, Mr. Chairman. I yield back. 

Mr. MEADOWS. I thank the gentleman. 

The chair recognizes the gentleman form Texas, Mr. Hurd for 5 

minutes. 

Mr. HURD. Thank you, Mr. Chairman, for saving the best for second to last. 

Mr. Dodaro, it is always a pleasure to see you, sir. And I want 

to shift gears a little bit, talking about Internet availability on tribal lands. The GAO report on tribal Internet access noted a lack of 

coordination between the FCC and USDA in their efforts to increase Internet access on tribal lands. What risks of duplication or 

inefficiency are presented by this lack of coordination? 

Mr. DODARO. I am going to ask Mr. Herr who lead that work to 

respond. 

Mr. HERR. Yes, thanks for the question. One of the challenges we 

saw there was that they were not doing coordinated training. And 

one of the challenges for the tribal groups is, one, getting to that 

training, but also just having the administrative staff to take advantage of some of those programs. 

Mr. HURD. Have the agencies made any progress on increasing 

coordination? 

Mr. HERR. We did the report last year. We will be following up 

with them this year. They concurred with the recommendations, so 

hopefully they are taking some steps forward. 

Mr. HURD. Is this lack of coordination creating a risk that the 

FCC and USDA is going to offer conflicting advice to folks seeking 

to increase access on their land? 

Mr. HERR. I think it is possible, yes. 

Mr. HURD. I am curious as you continue with this, so please keep 

us informed on that. 

Mr. HERR. We will. Thank you. 

Mr. HURD. Mr. Dodaro, to you and your team, commercial satellite communications procurement is something I’m interested in. 

And, Mr. Tillotson, we will get to you on some questions on this. 

And, Mr. Dodaro, first for you, or whoever on your team. How 

has the DOD commercial satellite procurement strategy changed 

over the past decade? 

Mr. DODARO. They have become more reliant on purchasing commercial satellite services. 

Mr. HURD. Was the DOD procurement policy willfully ignored, in 

your opinion? 

Mr. DODARO. Well, it definitely wasn’t followed. And I will leave 

it at that. 

Mr. HURD. And has the DOD or was the DOD procurement policy 

effectively communicated to the various components? 

Mr. DODARO. I will ask Mr. Francis to respond to that. He lead 

the work. 

Mr. FRANCIS. Mr. Hurd, my understanding is it was effectively 

communicated. There is a couple of things that get in the way. The 

two agencies that enforce the procurement policy for CENTCOM is 

the Defense intelligence security agency and the U.S. Strategic 


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Command. While they have authority, they don’t necessarily have 

enforcement powers, so there are some weaknesses there. 

And then the funding for satellite communications actually is 

done through the supplemental budget. So the incentives aren’t as 

strong, to be up front about that. And then when the agencies or 

components go around the normal procurement regulations, it is for 

reasons of exigency and so it becomes harder to enforce. 

Mr. HURD. Mr. Tillotson, why has the DOD ignored several recommendations over the past decade for more strategic commercial 

satellite procurement strategy? 

Mr. TILLOTSON. Sorry, I forgot to hit my button. So I would not 

agree that we have ignored the policy. In fact, let me just start 

with a couple of facts and figures. Since 2011, we have actually reduced expenditures on commercial satellite usage by $571 million. 

Right now DISA, the Defense Information Services Agency manages about 90 percent of commercial satellite communications. I 

think at the time the criticism was rendered or the findings were 

rendered, there were certainly issues in how coherent that policy 

should have been implemented. Since that time, the Department 

has put more energy and effort into this. 

GAO correctly identifies that there are two agencies involved. 

One is the Defense Information Services Agency, DISA, who does 

largely kind of the commercial backbone kind of work. And then 

there is the Strategic Command and the associated military department space agencies that do the military satellite communications. 

The Department has established the Defense Space Council so that 

we can—— 

Mr. HURD. So have all those entities been educated on what the 

DOD procurement policy is? 

Mr. TILLOTSON. Yes. Yes. 

Mr. HURD. So then why have some components independently 

procured satellite communications as opposed to following the department policy? 

Mr. TILLOTSON. So with the establishment of the Defense Space 

Council, in some cases we have deliberately allowed some of those 

contracts to continue because it is cheaper to continue the contract 

than simply to reissue the contract. Again, I will go back and point 

out, we have actually reduced commercial satellite communications 

use by $571 million since 2011. 

Mr. HURD. In my remaining 15 seconds, Mr. Dodaro, DHS and 

their human resources IT investments, what is the best next action 

there? 

Mr. DODARO. I think that this is a classic case for good congressional oversight to find out exactly what their current plan is. This 

to me was a classic case of mismanagement of this effort over a 

number of years. There are 422 different systems over there. There 

was lack of attention by management. They have supposedly now 

focused more on it in coming up with a validating business case 

again and a model. But I think congressional oversight would be 

very appropriate and prudent at this point to make sure that they 

right the ship here. 

Mr. HURD. Well, Mr. Dodaro, I do know someone that sits on 

Oversight and Government Reform and Homeland Security Committee, so I’ll make sure he follows up on it. 


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Mr. MEADOWS. I thank the gentleman for his personal interest 

on that particular topic. 

And the chair recognizes the gentleman from California, Mr. 

DeSaulnier for 5 minutes. 

Mr. DESAULNIER. Thank you, Mr. Chairman. And to Mr. Dorado, 

just thank you for your good work. It is always interesting and 

thrilling to be here in this committee and see a government agency 

doing so well, not that a lot of government agencies don’t do well. 

I want to ask you a couple of questions that sort of segues from 

the last comment about oversight. But the comparison between the 

executive branch implementing your recommendations and how 

you measure that versus us in Congress. And I am told this is really a partisan issue. It just happens between the administration and 

Congress, irrespective of who holds control over those levels of 

power. 

So, for instance, the GAO has made 459 recommendations of the 

executive branch and 372 have now been fully or partially completed, by your analysis. In contrast, the GAO has made 85 recommendations for Congress, but only 37 have been fully or partially completed. That is 46 percent as opposed to 81 percent. So 

over time, have you or your predecessors given friendly suggestions 

as to how we could be more successful or is it just part of our role 

as a deliberative process that makes it difficult? 

Mr. DODARO. I give friendly suggestions all the time, as often as 

I can. 

Mr. DESAULNIER. Well, hopefully they received it—— 

Mr. DODARO. And they are, and they are. But, you know, I pointed out in my opening statement, although the numbers, the percentages are different, where the big dollar savings have come 

from—— 

Mr. DESAULNIER. Is here. 

Mr. DODARO. —is through the Congress’ actions. I also pointed 

out that Congress has encouraged and indeed directed, for example 

in the Defense Authorization bill, certain actions by the DOD to 

implement our recommendations. So Congress has a little bit of a 

hand in the executive branch implementation as well. 

But I have got a long list of specific legislative recommendations 

for the Congress to act on that would save billions of dollars for— 

I can give examples now, if you’d like. For example, in Medicare, 

the number of hospitals have moved to do what they call vertical 

integration, which is to have physician practices operate as affiliates of the hospital. So people get certain services there the same 

as they could in a doctor’s office. But right now, the hospital—if 

they go to one of these hospital affiliated outpatient services, the 

government reimburses them much more than if you go to a physician office. We think it ought to be equalized. There are billions of 

dollars that could be saved there. There are certain cancer hospitals that were originally deemed special rate payment hospitals 

in the 1980s, when there weren’t that many hospitals providing 

cancer services, that if their payment rates are equalized now to 

other hospitals for similar treatments, you could save $500 million 

right there. 

On Medicare Advantage, there is an annual adjustment factor 

that is supposed to be made to compare it to fee for service. We 


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don’t think CMS is using the most up-to-date information to make 

that adjustment. And we think that they could—the last time we 

looked at it, we thought it could be several billion dollars, at least 

$2 billion to $3 billion could be saved, perhaps, on an annual basis 

going forward. 

We are recommending that the Congress take action to lower the 

requirement for electronic filing from 250 down to about 5, for employers. This will help the IRS have better ability to match and 

prevent identity theft, refund fraud, which last year, by IRS estimates, the government lost about $3 billion, and it could be more 

in that area. 

So we have got also recommendations to the Congress where 

they could eliminate payments that are made by the disability program, where people can also collect unemployment insurance at the 

same time so they are getting double benefits. And we don’t think 

that that is prudent to be able to do that. There is also—— 

Mr. DESAULNIER. Let me stop you there. 

Mr. DODARO. Okay. 

Mr. DESAULNIER. I get the sense you could go on long beyond my 

5 minutes. So all of those things I think we can agree on, all the 

members. 

Mr. CONNOLLY. So in other words, there are no savings to be 

had. Right? 

Mr. DESAULNIER. So is there a way—the way I read your report, 

it is sort of like when I was in local government and civil grand 

jury, you know, how many of these recommendations have you actually implemented? So since that is our measurement, I just wonder—and this is just an open-ended question. Perhaps you could respond to it at your leisure to me or to the chair. 

Is there a better measurement to get us to do what we need to 

do in a friendly manner? Because, for instance, you give us partial 

credit for passing a bill, even though it doesn’t become effectuated 

and signed into law. So it just strikes me that these measurements, 

when you look at the executive branch, it is pretty clear, either 

they have or have not or partially. With us you get big advantages, 

you say. So is there another way that we can measure that more 

clearly so we and the general public can understand it? 

Thank you, Mr. Chairman. 

Mr. DODARO. I will take a look at that. 

Mr. MEADOWS. I thank the gentleman. 

The chair recognizes the gentleman from Iowa, Mr. Blum for 5 

minutes. 

Mr. BLUM. Thank you, Chairman Meadows. And I would like to 

also thank the panel for being here today. I appreciate it very 

much. 

Mr. Dodaro, good to see you again. 

Mr. DODARO. Good to see you. 

Mr. BLUM. And I would like to commend you on the work that 

you do and the work that the GAO does. It is very impressive. I 

am a career businessman from the private sector, and I for one can 

appreciate what your department does, many times unsung, many 

times reports probably not read. But I share Mr. Palmer’s zest for 

reading your reports, and I think it is extremely important to the 


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taxpayers in this country the job that you do. So thank you very 

much. 

Mr. DODARO. Thank you for those comments. 

Mr. BLUM. I would like to, as opposed to digging into the details 

today, if you and I could just go to the 60,000-foot level, I would 

appreciate that. I would like to ask you a couple of questions. I am 

very interested, and I think my constituents are interested in your 

answers, and the taxpayers are as well. 

First question, has the Federal Government, in your estimation, 

your opinion, grown so large, so big that it cannot effectively—that 

is the key word—be managed any longer? Because as a businessman, I see this time and time again. And I am coming to the conclusion it is so large it can’t be managed. What is your opinion of 

that? 

Mr. DODARO. There are definitely challenges in this regard. Some 

of the Federal entities are very large entities. The Department of 

Defense, for example; the IRS is a large agency; HHS is huge. All 

three agencies represented today. But in my view, that there are 

good management practices that could be taken and to effectively 

manage these departments and agencies, but there are not consistently applied management practices that should be made that are 

made. And as a result, you don’t have as good of an effective management as you should to be able to do this. 

Mr. BLUM. Great point, great point. What needs to change or 

what needs to happen so that we apply management practices to 

this huge bureaucracy that we have here? What needs to change, 

in your estimation? 

Mr. DODARO. Yeah. No, no. 

Mr. BLUM. That is a very good point you raised. 

Mr. DODARO. Yeah, no. And it is a fair question. I think part of 

the issue is there needs to be stronger congressional oversight over 

the process. You know, when you think about it, the executive 

branch agencies—and we are about ready to have this happen 

again. Every change in the administration you take out your top 

3,000 political appointees and put all new people in there in these 

agencies. There are vacancies that occur over time. Nobody in the 

private sector would take your top tier management all at once and 

move them out. 

Mr. BLUM. Correct. 

Mr. DODARO. But that is part of our democracy and it is part of 

what happens. But Congress has a role for continuity purposes, for 

confirming new people to lead these agencies. I think there should 

be more attention by the executive branch on management capabilities and experiences of people who are put into these positions 

to manage them, that they have the right qualifications, and they 

have the right experience. And that there needs to be proper oversight and stewardship by the Congress to ensure that they effectively carry out their responsibilities. And the President needs to 

pay attention to management issues as well as policy matters when 

they come into place. 

And so this whole notion of management often gets a secondclass status compared to policy orientations. And that is a fundamental problem that plagues a lot of agencies. 


AKING-6430 with DISTILLER
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Mr. BLUM. We are going to spend nearly $4 trillion of our citizens’ money this next 12 months. What percentage do you think is 

ineffectively spent or is wasted due to things like duplication of 

services, due to waste, fraud, and abuse? Because strong America 

now estimates it is as high as 30 percent in the Federal Government. What is your estimation? Because you are here every day. 

You see it every—you are in the belly of the beast, so to speak. 

Mr. DODARO. Yeah. Right, right. It is hard to give you a good figure. But here is the way I look at it. All right? The way I look at 

it is we have the latest estimate of improper payments was $137 

billion for 2015. Since improper payments have been required to be 

reported by the Congress, it is over $1 trillion in improper payments. So you have a lot of money going out the door that perhaps 

shouldn’t be going out the door. Most of that is overpayments, not 

underpayments. 

You have a tax gap that we talked about briefly earlier, $385 billion in that tax gap, according to IRS’s last estimate. I am anxious 

to see what the new figure will be when it is released. That is a 

lot of money that should be coming in the door that is not coming 

in the door. And the duplication, tens of billions of dollars in additional money could be saved. 

Mr. BLUM. A billion here and there adds up, doesn’t it? 

Mr. DODARO. Fast. 

Mr. BLUM. And my last question to you is, what do we need to 

do as a Congress, as a government to help make the GAO—which 

I think is outstanding, by the way—more effective? What can we 

do? 

Mr. DODARO. Well, we need your support to implement our recommendations. I would do that number one. Most people in my position would say give me more money, but I would say implement 

our recommendations and work with us more. Congress is a great 

partner with us. We don’t have any enforcement authority at the 

GAO. We can’t compel people to implement our recommendations, 

but Congress can and that is our enforcement approach. 

Mr. BLUM. My time is up. And once again, I would like to commend you on the great job that your organization does. 

Mr. DODARO. Thank you. 

Mr. BLUM. And I yield back the time I don’t have, Mr. Chairman. 

Mr. MEADOWS. I thank the gentleman. 

The chair recognizes the gentleman from the 11th District of Virginia, my good friend, Mr. Connolly for 5 minutes. 

Mr. CONNOLLY. Thank you, Mr. Chairman. And just picking up 

on your last point, my colleague from Iowa, Gene, I don’t want you 

to miss the opportunity. Yes, of course, we ought to implement your 

recommendations. But every dollar we invest in the GAO has what 

return on it? 

Mr. DODARO. $134 back for every dollar invested. 

Mr. CONNOLLY. So to your point, I know it is not always a great 

idea on the conservative side of the aisle, but this one has a return 

on it. And so investing in the GAO is a very smart investment. 

Mr. MEADOWS. And I join the gentleman in supporting his notion 

there that we need to invest more in the GAO. 

Mr. CONNOLLY. I thank the chair. 


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You hear that, Gene? Run with it. For God’s sake, it is a special 

moment here. 

And, by the way, to Mr. Blum’s questioning too, this committee 

in the past has done, I think, some very thoughtful hearings on 

both the issue of improper payments, the largest single chunk of 

which—identifiable chunk—is Medicare fraud. And the second is 

money left on the table that the IRS could not collect, did not collect, but is owed. 

Those two categories, which if we actually could bring it down 

theoretically to zero, would be an enormous dent on the debt over 

10 years. I mean, it would be in the trillions of dollars. And it is 

something we ought to take a look at as a Congress because that 

is low-hanging fruit. I know it involves making the IRS more efficient and more effective, but it also has a return on it. And right 

now we need it. Thank you, Mr. Dodaro, for your thoughtful work 

again. 

I want to talk, Mr. Dalrymple, about identity theft, because identity theft, you know, diversion of refunds, especially at IRS, has 

now become almost epidemic, has it not? 

Mr. DALRYMPLE. That is true. 

Mr. CONNOLLY. That is true. And if I were to ask about identity 

theft at the IRS, say 8 or 10 years ago, it would have been a small 

part of your portfolio concern, would it not? 

Mr. DALRYMPLE. It would have been—— 

Mr. CONNOLLY. And if you can speak into the mic so we can hear 

you. 

Mr. DALRYMPLE. It would have been primarily 10 years ago, unrelated to refund fraud. 

Mr. CONNOLLY. Right. And today, best estimate, how many 

Americans are affected by refund fraud? 

Mr. DALRYMPLE. I don’t have estimates on how many people at 

this point, but I can tell you that—— 

Mr. CONNOLLY. Well, number of returns then. 

Mr. DALRYMPLE. 1.4 million returns—— 

Mr. CONNOLLY. Yeah. 

Mr. DALRYMPLE. —in 2015 equated to about $8.7 billion in refunds that were stopped. 

Mr. CONNOLLY. Right. And 10 years ago it would have been negligible? 

Mr. DALRYMPLE. Negligible, yes. 

Mr. CONNOLLY. And here is the other problem, is it not, it is virtually a cost-free crime? The chances of us identifying you for illegally diverting somebody’s refund, and prosecuting you, and convicting you, and even punishing you are pretty nil, are they not? 

Mr. DALRYMPLE. Well, we have prosecuted—— 

Mr. CONNOLLY. I didn’t ask that question. 

Mr. DALRYMPLE. —prosecuted a lot of people but—— 

Mr. CONNOLLY. A lot? 

Mr. DALRYMPLE. Two thousand folks. But it pales in comparison 

with the number of folks. 

Mr. CONNOLLY. Right, Right. That’s an improvement, but it is 

still a drop in the bucket. And again, I think Congress has to provide resources to beef up that effort and to help restore American 

confidence. I mean, here I am in a transaction with the Federal 


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agency trusting, of course, that that transaction will be protected. 

And as a matter of fact, it is not going to be, or for a lot of Americans. 

Mr. Dodaro, to what extent is this problem the IRS is experiencing a function of antiquated IT? 

Mr. DODARO. IT is definitely a solution to this issue for—one 

thing I would do—— 

Mr. CONNOLLY. Is it also part of the problem? 

Mr. DODARO. Well, there are benefits and risks associated with 

any information technology initiative. And the idea is to maximize 

your benefit, minimize your risk. Here I would give Congress very 

good credit for acting on our recommendation. 

For example, we found there was—one of the problems that they 

had was the IRS did not have the W–2 information from employers 

until April. And so the crooks were filing early, and the IRS didn’t 

have the W–2 to match. Congress fixed that in the last year, and 

now the IRS will be getting the W–2 information at the end of January. So this put them in a better position to identify this area. 

We think also Congress ought to lower the threshold for electronic filing of employers from 250 to 5 to 10, they will give more 

data. Now, the issue is, though, is can the IRS change its processes 

and systems to now take advantage of this electronic information 

that is available? And also, the IRS needs to do a better job of authenticating people before they are using their systems and the approach. 

So there are ways and techniques to do this. So if managed properly, IT can be a big help here, even though it is causing the problem to occur. 

Mr. CONNOLLY. Yeah. Well, I hope at some point we have a 

chance to talk more in depth about this. 

And, Mr. Chairman, we talked about it collaboratively, but so 

much of the IT at the IRS is legacy systems, antiquated systems, 

and multiple systems incompatible with each other and often not 

suitable for encryption. No wonder we have a growing problem. 

Thank you very much. 

Mr. MEADOWS. I would note to the IRS that is a code word for 

you need to come up with a plan to try to address it, because we 

are willing to work in a bipartisan way to help you address that 

problem. 

Mr. DALRYMPLE. We appreciate that. 

Mr. MEADOWS. All right. The chair recognizes the gentleman 

from Georgia, Mr. Carter for 5 minutes. 

Mr. CARTER. Thank you, Mr. Chairman, and thank all of you for 

being here today. We appreciate your presence here. This is very 

important. 

Mr. Dodaro, I want to start with you. I want to speak specifically 

on a project that is listed in your list of fragmentation and duplication, and that is the U.S. Embassy in Kabul. It is my understanding that the State Department didn’t—did not have either a 

strategic facilities plan nor did they follow their own cost containment and risk mitigation project—policies, I should say. Is that 

true? Is that the way you understand it? 

Mr. DODARO. I am going to ask Mr. Herr who lead the project 

to respond. 


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Mr. CARTER. I am sorry. Your name? 

Mr. HERR. Phil Herr. 

Mr. DODARO. Phil Herr. 

Mr. CARTER. Okay. 

Mr. HERR. That is correct, sir. 

Mr. CARTER. That is correct. So you are telling me that they 

didn’t have a strategic facilities plan, they didn’t follow their own 

cost containment and their own risk mitigation policies. 

Mr. HERR. Right. That is what we reported last year to this committee. 

Mr. CARTER. So what does this say about the State Department? 

What does this say about their construction planning in general? 

Am I to take from this that it is not very good at all? 

Mr. HERR. Well, I think in this case the conditions on the ground 

in Kabul are really challenging. We think that this kind of a plan, 

a 2-year to 5-year period that could be updated periodically would 

really help orient folks that come and go. Many people are serving 

1-year tours there. 

But to your point about Kabul, it does not look good there. We 

also have a large embassy construction program underway now. 

Mr. CARTER. So am I to understand that all these developments 

and how dangerous a place it became while it was under construction, they didn’t plan for that? And when they were planning, they 

didn’t know that in advance? 

Mr. HERR. Well, obviously, they would have known something. 

But the idea of an overarching plan, that was not in place, which 

we think would have been very helpful to them. 

Mr. CARTER. Would you say that the State Department’s failure 

to follow cost containment and to follow their own cost mitigation 

policies is a good stewardship of taxpayers’ money whenever we are 

talking about a project of the magnitude of $2.17 billion? 

Mr. HERR. No, I would not. 

Mr. CARTER. Mr. Dodaro or Mr. Herr, in your May 2015 report 

on the construction of the U.S. Embassy in Kabul, that is the one 

you referenced earlier. 

Mr. HERR. Yes. 

Mr. CARTER. You stated that the State Department’s failures to 

follow its cost containment/risk mitigation procedures likely contributed to the fact that the cost for this project increased 27 percent and that the project will finish 3 years later than it was 

planned. Is that correct? 

Mr. HERR. Yes. 

Mr. CARTER. So would I be correct in saying that when we are 

talking about a project of this magnitude, and the State Department is not only not following their own policies on this, what are 

we to expect for smaller projects? I mean, we are talking about a 

$2.17 billion project. That is big, even by our standards. 

Mr. HERR. I agree. 

Mr. CARTER. So I can only take from that and when we talk 

about smaller projects, that they are not doing that either and they 

are wasting money. 

Let me get to the point. I have belabored the point too long. Here 

is what is bothering me. Okay? I have the Federal Law Enforcement Training Center in my district in Glynco, Georgia. Okay? Full 


AKING-6430 with DISTILLER
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disclosure. Here is the State Department, needs to build a new 

training facility or says they need to build a new training facility 

for embassy personnel. And I understand that. And listen, all of us 

understand what happened in Benghazi. We don’t want it to ever 

happen again. We want to be as prepared as we can be. 

Initially, in the report comparing FLETC with where they are going to build it now at Fort Pickett, FLETC came in at $260-someodd million. Fort Pickett came in at $965-whatever million. Then 

they went back. And you even compared both sites, the GAO did, 

as did the State Department. In 6 different factors the site at 

FLETC came out ahead in 4 of the 6. Only one favored Fort Pickett. Yet they went back and they said, okay, let’s review it one 

more time. And then they came back and said, no, it is not going 

to be $965 million to do it at Fort Pickett, it is only going to be 

$465 million. We got it down that much. Huh? I mean, come on. 

I was born at night, but it wasn’t last night. I mean, seriously. So 

what did they do? They decide, well, we are going to build it in 

Fort Pickett because that is where it needs to go. And here we are 

duplicating. 

You know, it is one thing for us to come here and talk about 

where we have wasted money in the past, but my problem is I can’t 

let this go. It is with me. I have only been here for 15 months now 

and I just can’t let it go because I see us wasting money. Why are 

we doing—what can I do? Tell me. This is keeping me up at night. 

I want to sleep. Tell me what I can do. 

Mr. DODARO. Well, with regard—I mean, Congress has the power 

of the purse, and they need to use it when they don’t believe that 

the agencies are taking appropriate actions. I mean, you have the 

authority to be able to—nobody can spend money without Congress’ 

authority, and they can only spend it on what you tell them to 

spend it on. 

Mr. CARTER. I hope you can understand my frustration with this. 

This is very, very frustrating. And I guarantee you, I will bet you 

every penny I have got in my pocket that when it is finished at 

Fort Pickett, that it will be closer to $965 million than it will be 

to $465 million. You know that, I know that, and they know that. 

So you see why I am frustrated? You see why the American people 

are frustrated? 

Mr. DODARO. I look at this across government every day, so I 

share your frustration. 

Mr. CARTER. Well, then share with me how can I get used to it? 

Because I have to get some sleep, and I am not sleeping tonight. 

Mr. MEADOWS. The gentleman’s time has expired. 

Mr. CARTER. Mr. Chairman, I need to know how I can get to 

sleep tonight. 

Mr. DODARO. My advice to you, I have never gotten used to it. 

Okay? You just have to work where you can to make improvements 

and make it better. 

Mr. CARTER. Thank you, Mr. Chairman. I apologize. 

Mr. MEADOWS. I thank the gentleman. 

And the chair recognizes the ranking member of the full committee, Mr. Cummings, the gentleman from Maryland, for 5 minutes. 

Mr. CUMMINGS. Thank you very much. 


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Mr. Dodaro, the Defense Department has 79 major weapon systems programs, with a total estimated acquisition cost of over $1.4 

trillion. In August of 2015, the GAO released a report on DOD’s 

process for buying weapon systems. That report said, ‘‘DOD and 

the military plan to acquire more weapons than they can afford, 

given the anticipated levels of funding.’’ 

Are you familiar with that report, Mr. Dodaro? 

Mr. DODARO. Yes, I am familiar with it. And I have the author 

here with me. 

Mr. CUMMINGS. Okay. And the GAO also found that the DOD 

makes decisions to invest in weapons on a piecemeal basis with 

each individual service making its own decisions about spending. 

According to the GAO, and if the DOD managed its investments as 

a department-wide portfolio rather than using this piecemeal approach, it would ensure that these investments are, ‘‘strategy driven, affordable, and balance near and long-term needs.’’ But the 

DOD is not doing that, are they? 

Mr. DODARO. Not to the extent we think they should. 

Mr. CUMMINGS. And according to the Congressional Budget Office, the DOD’s projected cost for weapons and other major equipment is going to increase by 21 percent by 2019 is a whopping $541 

billion. That is an enormous investment of taxpayer dollars. Do you 

believe that the DOD could save money if it used a portfolio approach rather than the piecemeal approach it is currently using? 

Mr. DODARO. Yes. I will ask Mr. Francis to explain why. 

Mr. CUMMINGS. All right. 

Mr. FRANCIS. Yes, Mr. Cummings, we think they can save 

money. What you can do with portfolio management is look at what 

is the right mix of weapons for a given level of funding. If you don’t 

do that to the extent that is possible, you end up optimizing for individual systems and then you will pay as much as you can to get 

those systems in. 

Now, the Department has taken some efforts, and I am sure Mr. 

Tillotson will have some comments on that. But the DOD does look 

at portfolios, but each organization looks at them differently, defines them differently, and they can’t integrate the budgeting and 

acquisition requirements processes. So you are right on the number. 

CBO estimates a bow wave in the out years for procurement. If 

you look at the Navy, the Navy is going to need about 30, 32 percent more money to bring the programs in that it already has underway. And we have Joint Strike Fighter that is going to start hitting peak years of $15 billion a year. So there is real questions 

about how we are going to manage all of that. And what you don’t 

want to do is do that system by system because you will give everything a haircut. 

Mr. CUMMINGS. Well, Mr. Tillotson, I am surprised to see that 

the DOD does not agree with most of the GAO’s recommendations. 

For example, according to the GAO, ‘‘DOD does not plan to designate the Deputy Secretary of Defense when appropriate delegate 

responsibility for overseeing portfolio management as we recommended.’’ Why is the DOD not planning to implement GAO’s 

recommendation? 


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Mr. TILLOTSON. So the Department actually agrees with the GAO 

on the intent to move in the direction of strategic portfolio management and to do a better job of it. So in fact, we are not in disagreement with the direction the GAO is suggesting. In fact, I would 

also state that over the last 3 years, the Deputy Secretary of Defense and the vice chairman have conducted strategic portfolio reviews across families weapon systems with this very outcome in 

mind that the GAO is suggesting of how do I make a more rational 

investment decision. 

I think the key here has been that the Department recognizes 

that the military departments tend to bring forward individual 

piece parts, and as a result we needed to integrate this at a department-wide level. That has been taking place now consistently for 

the last—we have actually executed it the last 2 years. There is a 

third round in progress. That is something that Deputy Secretary 

Work brought on board when he came and took the job. So we are 

moving in the direction the GAO suggests. 

Mr. CUMMINGS. The GAO also said, ‘‘DOD does not plan to require annual enterprise level portfolio reviews that integrate key 

portfolio review elements from the requirements, acquisition, and 

budget processes as we recommended.’’ Why not? 

Mr. TILLOTSON. I think the disagreement is more over the specifics of how to do it than it is over the intent. We think that the 

requirements process needs to be scrubbed at a portfolio level. The 

actual management of programs is a management of programs 

issue. We don’t want to make that the centerpiece of the decision, 

but then the actual decision of what resources do we apply against 

what programs is the place where the portfolio process comes back 

into being. So we are actually in agreement again with the intent 

of the GAO. I think the differences are in implementation. 

Mr. CUMMINGS. All right. I see that my time has run out. Thank 

you. 

Mr. MEADOWS. The chair recognizes the gentleman from Ohio, 

Mr. Jordan for 5 minutes. 

Mr. JORDAN. Thank you, Mr. Chairman. 

Mr. Dalrymple, how long have you been at the IRS? 

Mr. DALRYMPLE. I have been at the IRS for a total of about 33– 

1/2 years. I had a stint there, retired and come back. 

Mr. JORDAN. Oh, two tours. And what are your responsibilities 

exactly? 

Mr. DALRYMPLE. My responsibilities include all of the enforcement activities at the IRS, examination, collection, criminal investigation, all of the customer service activities, including telephone 

services, submission processing. 

Mr. JORDAN. Do you deal with the Tax Exempt Division? 

RPTR YORK 

EDTR ZAMORA 

Mr. DALRYMPLE. The Tax Exempt Division is part of—— 

Mr. JORDAN. In your 2 tours at the IRS, did you have any overlap with Ms. Lerner. 

Mr. TILLOTSON. Actually, I think I overlapped with Ms. Lerner 

for about 3 months. 

Mr. JORDAN. Just a short time. Okay. And do you report directly 

to the Commissioner, or is there someone—— 


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Mr. TILLOTSON. I do. 

Mr. JORDAN. —between—you report directly to the Commissioner. Okay. 

Now, my understanding of Mr. Dodaro’s report, thereis that $385 

billion tax gap. Is that accurate? Do you agree with that, with what 

they concluded? 

Mr. DALRYMPLE. We are going to put out a new tax gap report 

that actually—— 

Mr. JORDAN. Do you disagree? 

Mr. DALRYMPLE. —now on the end of the year, and that figure 

will be adjusted based on the new information we have. But it is 

not going to change dramatically. 

Mr. JORDAN. So he is close? 

Mr. DALRYMPLE. Yes, yes. 

Mr. JORDAN. All right. And then he has 112 recommendations. 

Right? I understand there is 112 recommendations for Treasury to 

implement to help deal with the fact that we are not collecting 

$385 billion. 

Mr. DALRYMPLE. I am not certain how many of the recommendations are exactly on point with the tax gap, but I—— 

Mr. JORDAN. Overall recommendations that they recommend that 

Treasury and IRS implement. 

Mr. DALRYMPLE. Actually, I believe there is—— 

Mr. JORDAN. How many are there, Mr. Dodaro? 

Mr. DODARO. I believe the 112 figure is correct. 

Mr. JORDAN. One hundred and twelve. Okay. And is it true, Mr. 

Dalrymple, that you have only implemented about 50? Seventy remain? You know, you haven’t dealt with, haven’t implemented, 

unimplemented? 

Mr. DALRYMPLE. We have unimplemented or partially addressed 

actions without question. 

Mr. JORDAN. Mr. Dodaro, how many have they put in place? 

Mr. DODARO. There is still about 63 percent that need to be implemented. 

Mr. JORDAN. So less than half. They have implemented less than 

half to deal with this huge tax gap. 

Changing subjects somewhat. So you are in charge of enforcement. Do you know anything, Mr. Dalrymple, about the StingRay 

technology? 

Mr. DALRYMPLE. I know about the—I know the technology exists. 

I know that we have employed it in certain circumstances. 

Mr. JORDAN. How many times did the IRS use this technology 

that mimics a cell phone tower, grabs up everyone in that particular area’s cell phone data, and gives the IRS, the same IRS that 

targeted people, access to people in that geographic location, the 

IRS knows where they are at and their cell number and cell information? How many times has the IRS used that technology? 

Mr. DALRYMPLE. I would have to come back with the exact number. I think it is about 37 times. 

Mr. JORDAN. Thirty-seven times. And in those 37 times, do you 

know if the IRS got a warrant to use that technology? 

Mr. DALRYMPLE. In every instance we would have had some sort 

of court—— 


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Mr. JORDAN. That is not what I asked. Did you get a warrant, 

probable cause warrant? 

Mr. DALRYMPLE. Again, I would have to come back to you on 

that. 

Mr. JORDAN. Can you get that back to me? 

Mr. DALRYMPLE. Certainly. 

Mr. JORDAN. Does the IRS have a nondisclosure with the FBI not 

disclosing that it is actually used? So when you employed it and 

you supposedly grab somebody’s—you know, not paid their taxes or 

whatever you are trying to get, did you disclose to them that you 

used StingRay technology to get them? 

Mr. DALRYMPLE. Disclose it to the FBI? 

Mr. JORDAN. No. Do you have an agreement with the FBI that 

says you will not disclose to the individual that you are using the 

technology to, I assume, get information from or maybe get that individual, not disclose to them or their counsel? 

Mr. DALRYMPLE. Again, I would have to answer that for the 

record. I am not certain. 

Mr. JORDAN. Okay. We would appreciate that as well. And do 

you know if the IRS has received the Jones memo that the Justice 

Department put together outlining how you will deal with StingRay, how Federal agencies will deal with StingRay technology, as 

we move forward? 

Mr. DALRYMPLE. I am not familiar with the Jones memorandum. 

Again, I would have to get back to you on that. 

Mr. JORDAN. Okay. So those four things. 

Mr. DALRYMPLE. Sure. 

Mr. JORDAN. How many times you have used it; did you get a 

warrant, probable cause warrant, not just something else or whatever the IRS says may be sufficient or based on what courts have 

said is not sufficient; do you have a nondisclosure with the FBI; 

and have you received the Jones memo. 

Mr. DALRYMPLE. We will get back to you on all four of those. 

Mr. JORDAN. I appreciate it. Thank you, Mr. Chairman. 

Mr. MEADOWS. I thank the gentlemen. And I want to add one 

thing to that in terms of StingRay technology. Since you are answering the gentleman back, I would like to ask if you have ever 

bifurcated the information, i.e., if you didn’t get a warrant, if you 

were following them into their personal household. And I would 

like you to respond to that as well. 

The chair recognizes the gentlewoman from New Mexico, Ms. 

Lujan Grisham. 

Ms. LUJAN GRISHAM. Thank you very much, Mr. Chairman. And 

I am going to kind of go off topic, and I apologize kind of. Except 

that I think that generally speaking, as Dr. Conway as the chief 

medical officer—and while I absolutely appreciate your discussion 

about ways to improve quality, and when we really do that, those 

investments, in fact, save money in the healthcare system. And I 

really want to talk about some issues that I am sure you are 

aware, and if you weren’t, this is a great place to make you aware. 

But I have talked about it in nearly every context that I can as a 

member of Congress. 

But given the situation in our State, our governor determined 

that all, 100 percent, of our behavioral health providers were enVerDate Sep 11 2014 12:01 Jan 09, 2017 Jkt 000000 PO 00000 Frm 00098 Fmt 6633 Sfmt 6633 F:\22314.TXT APRIL

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gaged in billing practices that rose to the level of a credible allegation of fraud and so suspended payments to all 15. Now, I disagree 

with that effort, but be that as it may, that is a decision that the 

executive makes and has full power to make that. 

Here is the issue for me, given that 3 years later the companies 

that came in are largely now gone, that there is no behavioral 

health—and let me repeat that—there is no behavioral health infrastructure, that there was no continuity of care. There was no 

transition plan requirement. There has been no requirement by the 

Federal Government for there to be accurate, credible—I want to 

use that word on purpose—credible data from the State of New 

Mexico, which HHS and CMS have both agreed are completely 

missing in this design. We have the worst public health outcomes 

in the country, including the second highest overdose deaths related by and large to a very fragile, very complex behavioral health 

population in the State of New Mexico. 

It would seem to me that as the chief medical officer, one rule 

is we know that hospitalizations, overdose, incarcerations, acute institutional care, is not the right investment for both cost savings 

or quality in terms of treating these patients. And I would guess 

that you probably are also very aware that when you have got a 

highly complex patient, say someone with schizophrenia, who has 

developed a relationship with a provider, who is now successfully 

on a medication management—which is very hard for many of 

these patients to achieve—and then that is completely taken away, 

and if you can get in, you see a different psychiatrist or psychologist every single time you try to get access. Wouldn’t you agree 

that this would not be the kind of investment or sound practices 

that any State or any Medicaid environment should be engaged in? 

Dr. CONWAY. Yes. So, Congresswoman, thanks for your question. 

And I am very aware of the issue and do agree that appropriate 

mental health and behavioral health treatment is critical to Medicaid beneficiaries. We, CMS, have had— have been working with 

the State, as you said, since 2013 on this issue. And recently, in 

March, responded in a letter summarizing some of that work. We 

are currently working to improve their behavioral health workforce. 

Ms. LUJAN GRISHAM. Can you talk about that a little? Because 

I should also mention to the committee, and for the record, that all 

15 have been cleared by the Attorney General. It has taken us 3 

years to get this administration to require the Human Services Department to repay these providers the millions of dollars that they 

are—but they are defunct. So what exact workforce investments 

are occurring in our State? Because I am really aware of very little. 

Dr. CONWAY. Yeah. So we are directly working with the State assuring that the State is currently following CMS payment suspension toolkit guidance with respect to—— 

Ms. LUJAN GRISHAM. But how does that get us a new workforce 

and behavioral health system up? 

Dr. CONWAY. So on the Medicaid side, we are working directly 

with the State on access-of-care issues, on ensuring proper networks. We both, from the program integrity side, have put in place 

guidance and are working directly with the State on these issues 

moving forward on the Medicaid side as was—— 


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Ms. LUJAN GRISHAM. Given that 3 years has gone by—and I 

apologize for interrupting you, but this—as a physician, I was a 

cabinet secretary for health, this is untenable. Can you provide 

something to this committee in writing that would talk about ways 

in which, God forbid this ever occurs in any other State anywhere 

ever again, what CMS ought to be doing to assure that you didn’t 

spend the kind of acute care dollars? 

And, in fact, Mr. Chairman, people lost their lives in my State 

and continue to do so. So I would appreciate that response in writing to this committee, if I may, Mr. Chairman. 

Dr. CONWAY. I agree with the principle of quality and safety and 

access to care being paramount, and we will provide a response. 

Ms. LUJAN GRISHAM. Thank you. Mr. Chairman, I yield back my 

time. Thank you, sir. 

Mr. MEADOWS. I thank the gentlewoman. 

The chair recognizes the gentleman from Wisconsin, Mr. 

Grothman for 5 minutes. 

Mr. GROTHMAN. Sure. We will do a followup on Mr. Jordan’s 

questions there to Mr. Dalrymple. 

First of all, could you explain what that StingRay technology is 

a little bit for our listening audience? 

Mr. DALRYMPLE. As I understand it, it is technology that allows 

law enforcement to capture cell phone information, basically. 

Mr. GROTHMAN. Okay. You said you didn’t know if you were getting a warrant. You said you used it 37 times. Do you think you 

should be getting a warrant? 

Mr. DALRYMPLE. I am not certain we didn’t get a warrant. So—— 

Mr. GROTHMAN. Well, the question is, though, do you think you 

should have? I mean, if it turns out you didn’t get a warrant, are 

you going to say that was an oversight? We screwed up? Are you 

going to say: We don’t need a warrant? I mean, what is the attitude of the IRS on this? 

Mr. DALRYMPLE. I am not certain, to be honest, what the requirements are for use of this technology, whether it is required to have 

a warrant or not. So I will respond to that question in full when 

we send the response back. 

Mr. GROTHMAN. Okay. You said you have used it 37 times. 

Mr. DALRYMPLE. I said I think we have used it about 37 times 

and I would get back to the committee on exactly how many times 

it has been used. 

Mr. GROTHMAN. Could be 36 or 38. Why did you use it? 

Mr. DALRYMPLE. I am sorry? 

Mr. GROTHMAN. Why did you use it? 

Mr. DALRYMPLE. We use it in the course of a tax investigation. 

Mr. GROTHMAN. Like what sort of crisis was there that you kind 

of had to know where people are? I mean, I would think that would 

be kind of a really major thing. Can you give me like a hypothetical 

or even real fact situation that caused you to have to use this stuff? 

Mr. DALRYMPLE. Well, we use it in drug cases. We use it in 

counterterrorism work that we do. I mean, we use it across a broad 

spectrum of activities that we have responsibility for. 

Mr. GROTHMAN. Those would be things that would be on just the 

IRS’ purview. Right? Terrorism and drugs—— 


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Mr. DALRYMPLE. It is things that we have responsibility for but 

not exclusively, yes. 

Mr. GROTHMAN. Like how do you mean responsibility? Just that 

somebody is not reporting income? 

Mr. DALRYMPLE. I am sorry? 

Mr. GROTHMAN. How do you mean responsibility? 

Mr. DALRYMPLE. I mean, we do a lot of counterterrorism work 

around anti-money laundering, drug cases that we are involved in 

that affect tax administration. So, yeah, we have responsibilities 

there. 

Mr. GROTHMAN. Are all the times you use it things for like terrorism related or drug related? 

Mr. DALRYMPLE. As I said earlier, I would have to get back to 

the committee on exactly when we used it and how. 

Mr. GROTHMAN. Okay. Well, we will go on to Mr. Dodaro. Okay. 

I want to ask you a little bit about disability benefits, what you are 

doing on that sort of thing. I would like to ask you, what do you 

do about overpayment on disability benefits, getting them back? 

Could you give us kind of an overview of what you are doing there? 

Mr. DODARO. Yes. We have issued a report on that. We feel that 

the Social Security Administration could do a much better job not 

only in preventing overpayments, but also their concern—they 

waived, permanently waived, repayment of about over $2 billion, I 

think, over a 10-year period of time. We think that they are not 

properly processing work requirements. 

When people start working, they are supposed to report that to 

Social Security, and then they are supposed to take action. But 

they weren’t effectively processing the returns very quickly for the 

work requirements because then they should take them off the disability roles and cut off their payments. 

Mr. GROTHMAN. I want to ask you a general question here on 

this disability. I, like I am sure just about every Congressman up 

here, gets constant complaints of people who are on disability who 

nobody can figure out why they are disabled. What are you doing 

about that, and what can you do about it? Can you comment on 

your position on that problem? 

Mr. DODARO. Yes. We do always have audits underway to look 

at the processes for the initial disability claims. What they are 

doing on continuing disability reviews, they are supposed to continue to evaluate these people. We made lots of recommendations 

to improve the process over there. Some of them have been implemented, some of them have not been implemented. Some require 

legislative action. 

Mr. GROTHMAN. How often do you check somebody? If I am on 

disability for a bad back today, how often am I going to be checked 

or see if it is all on the up and up? 

Mr. DODARO. It depends on—you know, we made recommendations that they target better criteria on that sort of thing. There 

are supposed to be reviews on a regular basis. I can provide for the 

record what that schedule is, but there is a schedule. They are behind in meeting the schedule. They have backlogs of cases. 

Mr. GROTHMAN. Okay. I am out of time, but I will talk to you 

later off the camera. 

Mr. MEADOWS. I thank the gentleman. 


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The chair recognizes himself for a series of questions. I want to 

thank all of you for your input today and the informative dialogue 

that we have had. Additionally, I would be remiss if I didn’t thank 

our staff here. It certainly is just an unbelievable, Herculean job 

that our staff does on a regular basis to not only prepare the members of Congress, but to really look in detail at the reports, Mr. 

Dodaro, that you provide. And so I want to just acknowledge them. 

Additionally, I would like to recognize a previous colleague, Dr. 

Coburn. Obviously, this was part of his brain trust, and the fact 

that we have duplicative services so long past him leaving the 

upper chamber, we continue to see the fruits of his vision. And so 

I want to acknowledge that as well. 

Mr. Dodaro, I want to come to you and certainly thank you and 

your staff, and really for the other witnesses, just to let you know, 

if the GAO ain’t happy, I am not happy. And I will just put it very 

bluntly. We are reading what they have, and I think in a bipartisan way we are willing to attack it. There may be some ideologically differing views on what we should attack first. But as much 

as I have tried to make the GAO be a political instrument, they 

won’t do that. They keep it in a nonpartisan. In fact, there are 

times when I want them to be outraged, and you get the calm, cool 

Gene Dodaro there going, well, we need to address this and address 

that. And I can’t, you know, I can’t evoke emotion out of him. 

And so I would say that because it is of benefit, I really believe, 

to the three of you who are here today because you have been 

asked to testify, because the implementation of those recommendations have really fallen short of where most of us believe that it 

should. And I say that in a kind way. But when you don’t implement the majority, words like ‘‘we are making progress,’’ really are 

like nails on a chalkboard to me. Because what I want to do is see 

a matrix of what you are going to get done, when you are going 

to get it done. And so that is what I would ask you. 

Mr. Dodaro, one of the things that has been shared with me is 

about shared services. And so we have had John come in a couple 

of times and talking about the benefits of potentially using shared 

services. We have had Ms. Cobert, Beth, come in and talk about 

some of the shared services that she is looking at. Now, thereis 

some challenges in terms of, you know, who is at fault, you know, 

if they don’t provide, and who is ultimately responsible. But are 

you looking at that? Can you look at that further? And perhaps 

maybe not across our entire Federal Government, but in terms of 

some of those duplicative services, how we could save some money 

where you have one agency using services that perhaps we don’t 

have to create individual departments. I will let you respond to 

that. 

Mr. DODARO. Yes. I mean, one classic good example of where 

there has been a lot of benefit, years ago there used to be a proliferation of payroll systems across the Federal Government. A lot 

of consolidation has taken place there through shared services operations. Even with the GAO, we use shared service providers. 

Mr. MEADOWS. Right. 

Mr. DODARO. So I don’t, you know, use them. So I think there 

is a lot of potential there. We have looked at it principally in the 

area of financial management services because that is common, in 


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terms of payroll processing and other things. So that is an area I 

would like, quite frankly if we had additional resources, to do more 

in, but we haven’t done a whole lot beyond the financial management area. 

Mr. MEADOWS. Well, if you would see if there is a couple of areas 

that we could address there more. I am making that official request 

today. Perhaps we look in the IT area. There is, you know, certainly some IT services that might be able to be shared. You know, 

I see some of our experts here from that particular field, but if you 

will look at it and get that back to the committee. 

Mr. DODARO. Sure. 

Mr. MEADOWS. Yes. 

Mr. DODARO. Sure. 

Mr. JORDAN. Mr. Dalrymple, the IRS sent a letter back to Mr. 

Chaffetz in November of last year. And at the bottom of page 2, top 

of page 3, at the end of the letter, it says: Until July 2015, the IRS 

had one cell site simulator, one StingRay, which was acquired in 

2011. In July 2015, you began the process to procure an additional 

cell site simulator. 

Do you know if the IRS has actually received a second StingRay? 

Mr. DALRYMPLE. I am not certain whether we have it or not. 

Again, I will get back to you on that too. We will come back. 

Mr. JORDAN. But the process was started, according to the letter. 

Mr. DALRYMPLE. Right. 

Mr. JORDAN. You know that? 

Mr. DALRYMPLE. That part I do know, so I will—— 

Mr. JORDAN. You don’t know if you got the second one or not? 

Mr. DALRYMPLE. I am not certain at this point. 

Mr. JORDAN. We need that information too. 

Mr. Dodaro, there is 112 recommendations that the GAO made 

to the IRS to deal with the tax gap. Were any of those recommendations for the IRS to procure another StingRay? 

Mr. DODARO. No. I have not heard of StingRay before this hearing. 

Mr. JORDAN. So you gave 112 things, good ideas to do to deal 

with a $385 billion tax gap, and they have implemented less than 

50 percent, 37 percent, according to what you said, of the recommendations you gave them, and yet they are using StingRay 

technology and potentially purchasing a second unit to potentially 

infringe upon Americans’ Fourth Amendment liberties. 

Mr. Dalrymple, that is why Mr. Grothman and I raised the questions we did. You know, why don’t you start with the 112 recommendations that Mr. Dodaro and his group did, the good work 

they did on how to deal with the fact we ain’t collecting the money 

we are supposed to collect in light of the fact we got a $19 trillion 

debt and everything else, instead of buying StingRay technology 

and potentially infringing upon the liberties of taxpaying Americans? 

Mr. MEADOWS. I thank the gentleman. 

Reclaiming my time, let me—Dr. Conway, I saw you shaking 

your head yes when Gene Dodaro talked about the fact that we 

needed to make sure that hospitals and private physicians, in 

terms of the amount of money that we are actually paying them 


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back. I saw you shaking your head that—and I don’t want to put 

words in your mouth—but it is not linear or fair. Is that correct? 

Dr. CONWAY. There is—in the President’s budget is a recommendation around site-neutral payments which would equalize 

payments for services across the hospital, outpatient, and physician 

setting. And as you know, Congress passed—— 

Mr. MEADOWS. Right. 

Dr. CONWAY. —legislation starting in January. 

Mr. MEADOWS. So, Dr. Conway, can we get to this committee 

within the next 120 days a plan on how CMS plans to address that 

particular recommendation? 

Dr. CONWAY. We will work to get back to you with that information. Yes, sir. 

Mr. MEADOWS. All right. So in 120 days, we will have some kind 

of response from you? 

Mr. CONWAY. We will attempt to meet that timeframe. 

Mr. MEADOWS. Okay. What timeframe would be reasonable, Dr. 

Conway? 

Okay. I see the person that actually is doing the work who says 

you can make the 120 days. All right. That is great. Thank you. 

And my final question, then I am going to recognize the ranking 

member for his closing remarks. 

Mr. Tillotson, let me share a concern that I have. We want to always give our fighting men and women the resources that they 

need. And yet what I heard today was a less than robust implementation of some of the GAO reports as it relates to your particular area. I also heard you saying, well, we are making progress 

and all of that. What I don’t want to do is see that 40 percent of 

what you implement that really have no impact, substantial impact, in terms of the bottom line, get implemented year after year, 

and the 60 percent that actually would make very systemic 

changes continue to get rolled over. And that is what I am seeing, 

that is what I am reading, is that we are making limited progress 

as it relates to that. And what happens is it makes it very difficult 

on someone who is trying to make those appropriation decisions on 

giving you the tools that you need, and yet we hear about gross inefficiencies. 

So it is incumbent upon you to help prioritize the recommendations that the GAO is making on an annual basis and say we are 

going to implement these. These have the most significant—will 

you be able to report back to this committee within 120 days on 

the top recommendations for the GAO that have yet to be implemented and how you are going to implement those? 

Mr. TILLOTSON. Mr. Chairman, we will report back. Thank you. 

Mr. MEADOWS. Within 120 days? 

Mr. TILLOTSON. Yes, sir. 

Mr. MEADOWS. All right. Thank you. With that, I will recognize 

the ranking member for his closing remarks. 

Mr. CUMMINGS. Mr. Dodaro, I just want to go back to Mr. Jordan’s questions. And talking about, I guess, not only recommendations that may have been made with regard to the IRS, but to 

other agencies, but let’s zero in on the IRS. How much—I mean, 

you take into consideration budget cuts. Right? 

Mr. DODARO. Yes, sir. 


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Mr. CUMMINGS. And the ability to get these things done? 

Mr. DODARO. Yes. Yes. We make sure that our recommendations 

are going to be, you know, cost-effective recommendations. Now, 

typically, when we make a recommendation, the agency has flexibility in how to implement it. We don’t tell them, you know, exactly 

how they need to implement the recommendation. So they have 

flexibility in order to do that. But we take that into account. And 

we believe our recommendations, if implemented, will be cost effective. Now, some of them require perhaps a little bit of an upfront 

investment to implement the recommendations, but we believe that 

the benefits will exceed the cost of implementing our recommendations. 

When I report to you and the rest of the members of the Congress that our recommendations implemented last year resulted in 

financial benefits over $70 billion, that is net of cost. So that is a 

net figure. So that is what we track. 

Mr. CUMMINGS. And we can do a lot better. Can’t we? 

Mr. DODARO. Yes. 

Mr. CUMMINGS. Is the DOD spending too big to count? 

Mr. DODARO. Well, they haven’t been able to account for it, let 

me put it that way. I mean, they are the only major Federal agency 

that has not been able to pass the test of an independent audit. 

They have—just in the last year alone, they have scaled back the 

audit requirements. They don’t prepare a full set of financial statements, only a 1-year budget data. And they have not been able to 

get an opinion on 1-year budget data. So I am concerned. 

As Mr. Tillotson mentioned, you know, I have been having meetings with the DOD—in fact, we have another one this afternoon— 

to focus on the areas where they need to make improvements. They 

are not fixing the underlying problems satisfactorily. And what 

they have promised me is that they were going to present a comprehensive corrective action plan for making the changes necessary 

to be able to do it. But right now, there is not proper accounting 

for the money that is being spent, and there is not proper oversight 

over the assets that the DOD has, the property, plant, and equipment issues that they have. And they are in need of significant improvement. 

Mr. CUMMINGS. And, of course, everything you just said just 

opens the door for all kinds of mischief, for lack of a more stronger 

word. 

Mr. DODARO. What we say is control problems. 

Mr. CUMMINGS. Yeah. All right. 

Mr. DODARO. In an unemotional fashion. 

Mr. CUMMINGS. All right. Thank you all very much. I appreciate 

it. 

Mr. MEADOWS. I thank the gentleman. 

Again, I want to thank each of you. Let me tell you why not only 

this hearing is important, but it sets a benchmark every year for 

us to look at. Whether it is a high-water mark or a low-water 

mark, we will leave that up for debate for another day. But in 

doing that, we need to set that standard for each one of you. What 

I would encourage each of you, I would hope that next year, that 

it is not the same 3 agencies that are here that have yet to implement. And let me tell you the reason why. 


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It is because along with that, improper payments of which we 

will have a hearing in the coming weeks, those improper payments 

go right across the same groups. You know, when we look at improper payments, whether it is Medicaid, Medicare, or any of those, 

certainly it is HHS and CMS having a role in that. You know, 

there is a headline today or within the last few hours, actually, 

‘‘The IRS admits that it encourages illegals to steal Social Security 

numbers for taxes.’’ Now, you can’t control what is in the press, but 

here my point is this, is that it is all about the earned income tax 

credit. And if there is something that is not allowing the IRS to go 

after those improper payments, because this is not the first hearing, I have been in four or five, where we continue to have this 

problem. Enough is enough. It is time that we address that problem. And if there is something from a statute standpoint that 

doesn’t allow you to share the Social Security numbers so that you 

can do the proper vetting that you need to do, let us know. We will 

work about that in a bipartisan way to address it. But I hope that 

this is the last hearing where we are not addressing that particular 

problem. 

From a DOD standpoint, you know, there is too many stories out 

there in terms of what we are spending. And the fact that you can’t 

pass an independent audit where you have the most responsible, 

hardest working people willing to put, you know, their lives on the 

line for the freedom of our country, and yet from an accounting 

standpoint we can’t do it. It is time that we get our house in order. 

And so I encourage all of you to work with the GAO on implementing those. I thank you. 

If there is no other further business before the committee, the 

committee stands adjourned. 

[Whereupon, at 12:33 p.m., the committee was adjourned.] 


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118 


AKING-6430 with DISTILLERInsert offset folio 67 here 22314.067
119 


AKING-6430 with DISTILLERInsert offset folio 68 here 22314.068
120 


AKING-6430 with DISTILLERInsert offset folio 69 here 22314.069
121 


AKING-6430 with DISTILLERInsert offset folio 70 here 22314.070
122 


AKING-6430 with DISTILLERInsert offset folio 71 here 22314.071
123 


AKING-6430 with DISTILLERInsert offset folio 72 here 22314.072
124 


AKING-6430 with DISTILLERInsert offset folio 73 here 22314.073
125 


AKING-6430 with DISTILLERInsert offset folio 74 here 22314.074
126 


AKING-6430 with DISTILLERInsert offset folio 75 here 22314.075
127 


AKING-6430 with DISTILLERInsert offset folio 76 here 22314.076
128 


AKING-6430 with DISTILLERInsert offset folio 77 here 22314.077
129 

Æ 


AKING-6430 with DISTILLERInsert offset folio 78 here 22314.078