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27–016 PDF 2018

S. Hrg. 115–178 

DUPLICATION, WASTE, AND FRAUD IN FEDERAL 

PROGRAMS 

HEARING 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

APRIL 26, 2017 

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

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

RON JOHNSON, Wisconsin, Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

JOHN HOEVEN, North Dakota 

STEVE DAINES, Montana 

CLAIRE MCCASKILL, Missouri 

THOMAS R. CARPER, Delaware 

JON TESTER, Montana 

HEIDI HEITKAMP, North Dakota 

GARY C. PETERS, Michigan 

MAGGIE HASSAN, New Hampshire 

KAMALA D. HARRIS, California 

CHRISTOPHER R. HIXON, Staff Director 

GABRIELLE D’ADAMO SINGER, Chief Counsel 

PATRICK J. BAILEY, Chief Counsel for Governmental Affairs 

MICHAEL J. LUEPTOW, Investigative Counsel 

MARGARET E. DAUM, Minority Staff Director 

SARAH R. GARCIA, Minority Senior Counsel 

DONALD K. SHERMAN, Minority Senior Counsel 

CLAUDINE J. BRENNER, Minority Counsel 

LAURA W. KILBRIDE, Chief Clerk 

BONNI E. DINERSTEIN, Hearing Clerk 
(III) 

C O N T E N T S 

Opening statements: Page 

Senator Johnson ............................................................................................... 1 

Senator McCaskill ............................................................................................ 3 

Senator Lankford .............................................................................................. 17 

Senator Peters .................................................................................................. 20 

Senator Heitkamp ............................................................................................ 24 

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

Prepared statements: 

Senator Johnson ............................................................................................... 33 

WITNESSES 

WEDNESDAY, APRIL 26, 2017 

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

Government Accountability Office ...................................................................... 4 

Hon. J. Russell George, Inspector General for Tax Administration, U.S. Department of the Treasury .................................................................................... 6 

Hon. Rebecca M. Blank, Ph.D., Chancellor, University of Wisconsin-Madison .. 8 

Keith D. Repko, Medical Center Director, VA St. Louis Health Care System, 

Veterans Health Administration, U.S. Department of Veterans Affairs ......... 10 

ALPHABETICAL LIST OF WITNESSES

Blank, Hon. Rebecca M.: 

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

Prepared statement .......................................................................................... 86 

Dodaro, Hon. Eugene L.: 

Testimony .......................................................................................................... 4 

Prepared statement .......................................................................................... 34 

George, Hon. J. Russell: 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 72 

Repko, Keith D.: 

Testimony .......................................................................................................... 10 

Prepared statement .......................................................................................... 98 

APPENDIX 

Chart referenced by Senator Johnson .................................................................... 103 

Chart referenced by Senator Johnson .................................................................... 104 

Chart referenced by Senator Johnson .................................................................... 105 

Chart referenced by Senator Johnson .................................................................... 106 

Responses to post-hearing questions for the Record 

Mr. Dodaro ........................................................................................................ 108 

Mr. George ........................................................................................................ 115 

Mr. Repko .......................................................................................................... 117 

(1) 

1The prepared statement of Senator Johnson appears in the Appendix on page 33. 

DUPLICATION, WASTE, AND FRAUD IN 

FEDERAL PROGRAMS 

WEDNESDAY, APRIL 26, 2017 

U.S. SENATE, COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Committee met, pursuant to notice, at 10:01 a.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Ron Johnson, Chairman of the Committee, presiding. 

Present: Senators Johnson, Lankford, Daines, McCaskill, Carper, 

Tester, Heitkamp, Peters, Hassan, and Harris. 

OPENING STATEMENT OF CHAIRMAN JOHNSON 

Chairman JOHNSON. Good morning. This hearing will come to 

order. I want to welcome our witnesses. I appreciate your time and 

your testimonies, and I look forward to your oral testimonies and 

answering what I think will be some pretty interesting questions. 

I frequently say, from this podium, that the Government Accountability Office (GAO) and the Inspectors General (IGs), you are 

our go-to Agencies in government, doing so much to root out and 

identify and eliminate waste, fraud, abuse (WFA) as well as duplicated programs, which is what this hearing is about. 

The reports by GAO that really started with a pretty simple 

amendment, offered in 2010 by Senator Coburn, in the debate over 

increasing the debt ceiling—something we all hate to do, but, if we 

are going to do it, it is kind of nice to get some measure of control 

and a pretty simple concept—asking GAO to start issuing reports 

and doing inspections on different duplicative programs has resulted in $75 billion worth of savings over 7 years, which is pretty 

remarkable. Based on the amount of budget authority that GAO 

has—$3.8 billion over that same timeframe—that is a 20:1 return 

on investment (ROI), which is pretty good. And, I know your overall return on investment is what, Mr. Comptroller General? 

Mr. DODARO. I will put the microphone on for this: 112:1. 

Chairman JOHNSON. OK. And, I know the Inspectors General 

have a pretty good rate of return as well. So, I do ask unanimous 

consent (UC) that my written statement get entered in the record.1

Senator MCCASKILL. Without objection. 

Chairman JOHNSON. I do want to start with a couple of charts 

I have prepared here for the hearing, just to put things in context. 

We got a recent Congressional Budget Office (CBO) report on the 
2 

1The chart referenced by Senator Johnson appears in the Appendix on page 103. 

2The chart referenced by Senator Johnson appears in the Appendix on page 104. 

long-term debt and deficit,1 and they always report these things as 

a percent of gross domestic product (GDP). And, we go through a 

fair amount of effort to convert those to dollars, because I think it 

is just a little bit more meaningful. 

For the last number of years—because it has been a couple of 

years since they have updated their projection—I have been saying 

that the 30-year projected deficit is $103 trillion. Well, we have 

moved forward in time and we have not solved the problem. And, 

now, unfortunately, the projected deficit, over the next 30 years, is 

$129 trillion. That is about almost $10 trillion over the next decade, $37 trillion in the second decade, and $82 trillion in the third 

decade. And, to put that in perspective, the entire private net asset 

base of the United States—in other words, all of the assets held by 

businesses and households—is equal to $128 trillion. 

This is, by the way, to be tacked on top of our $20 trillion of 

debt—$62,500 for every man, woman, and child in America. 

What is unfortunate is, it seems like nobody is really paying attention to this. We are, certainly, not addressing it here in Congress, obviously, from the change from $103 trillion to $129 trillion, 

over the next 30 years. 

So, I wanted to put that in context. And, I have one other chart here, which also puts in context the $75 billion.2 And, Mr. Dodaro, 

in no way, shape, or form do I want this detracting from your efforts here, which I think are laudatory. But, just so that everybody 

understands, in that same 7-year period, where GAO with their 

great work—20:1 return on investment—saved $75 billion, we 

spent $25,000 billion. We borrowed $6.6 trillion of that—about 26 

percent. So, in other words, 26 cents of every dollar we spent, we 

borrowed. Again, this is just kind of showing the magnitude of the 

problem here. 

Again, I want to thank all of the witnesses. I think we are going 

to have a pretty good discussion with the Inspector General for Tax 

Administration, talking about refundable tax credits and the improper payments, fraud, and abuse of that program. Obviously, one 

of our favorite institutions are universities. And, one dear to my 

heart—all three of my kids went to the University of Wisconsin 

(UW) in Madison. We have Chancellor Rebecca Blank, and she is 

going to be talking about the duplication of different regulations 

imposed on research universities and just in general the overregulation—the difficult time that universities have dealing with Federal regulations on their operations. Then, we have Keith Repko 

from the Department of Veterans Affairs (VA) health system to 

talk about the problems in dealing with duplicative regulations in 

constructing health care facilities for the finest among us. 

So, again, I think this is going to be a really good discussion— 

again, this is all laid before us because of a pretty simple amendment by Senator Tom Coburn 7 years ago—and then, the excellent 

work of Gene Dodaro and all of his good people working at the Government Accountability Office. 

With that, I will turn it over to my Ranking Member, Senator 

McCaskill. 
3 

OPENING STATEMENT OF SENATOR MCCASKILL 

Senator MCCASKILL. I want to echo many of the comments of the 

Chairman, and I continue to be frustrated—along with my colleague and the former Ranking Member, Senator Carper, who has 

carped on improper payments for as long as I can remember. 

Senator CARPER. One of my favorite verbs: to carp. 

Senator MCCASKILL. There you go. [Laughter.] 

I think that GAO is such an important ally to this Committee. 

And, I want to take this opportunity, as I try to every time you are 

here, to make sure you tell all of the people in that big building 

that their work does matter. Even though it is too often ignored or 

set aside, what you all do is really important, and you are tremendous public servants. And, I love associating with the auditors at 

GAO, as a former auditor. 

Your annual duplication report sets out some important work 

that you have done in investigating how the Federal Government 

spends tax dollars. You consistently identify concrete steps that we 

can take—and the Executive Branch can take—to eliminate a lot 

of wasteful spending. You all have saved so much money for this 

country, but there is, obviously, a lot more work that we have to 

do. 

I want to welcome the other witnesses to the hearing today also. 

I especially want to welcome Keith Repko, who is here as the leader of the VA facilities in St. Louis. And, I do not think, probably, 

any other Members of this Committee can appreciate how nice it 

is to have that roll off my tongue, since we struggled in St. Louis, 

trying to fill this position for, literally, years on end. And, I think 

people need to realize some of the management problems in the VA 

can be borne out by the fact that we would open the head of the 

VA facility St. Louis job position and no one would apply. 

Now, that tells you something. That tells you that there is a real 

problem in either the support these managers are getting or what 

we are paying them. But, when you open a job that has that kind 

of responsibility and nobody wants it, it means that we still have 

a lot more work to do in figuring out how can—so thank you for 

filling this position. It has been badly needed—the stability there 

has been badly needed, and we are thrilled to have you today. The 

reason you are here, today, is because one of the things pointed out 

in this year’s report is the problems the VA has in managing construction. And, clearly, we have put a lot of capital into the VA. I 

have been somebody banging the table to get that done. I want to 

make sure our facilities are first-rate. I want to make sure they are 

adequate. I want to make sure that it is not a lack of facilities that 

is causing any undue delay or problems with our veterans getting 

health care. But, clearly, this report points out that this is not always being managed well, in terms of how these projects are being 

undertaken and how they are being executed. And, we want to 

spend a little bit of time on the management of those construction 

projects. 

I also want to echo the comment about the tax credits. I am glad 

you are here, Dr. Blank, to talk about grants and the problems, in 

terms of administrative burdens on grant recipients and also administrative burdens on reporting crime statistics, which are difficult for our universities right now. But, I am also glad you are 
4 

1The prepared statement of Mr. Dodaro appears in the Appendix on page 34. 

here, because I think we need to talk about the growth in improper 

payments and a new form of tax credit—refundable tax credit—and 

that is the amount of easily determined overpayments in the American Opportunity Tax Credit (AOTC). It may not be as large as the 

other refundable tax credits. It does not mean it will not be if we 

do not get a handle on this—and the notion that it is just as simple 

as double-checking with universities and seeing how many hours 

someone is actually going to college is pretty jaw-dropping—that 

we are allowing $1 billion to go out the door every year without 

just the rudimentary checks and balances as to determine whether 

or not those tax credits have actually been earned by students attending higher education. 

So, thank you all for being here. Thank you, Chairman, for having this hearing. And, I look forward to questions and comments 

as we move forward. 

Chairman JOHNSON. Thank you, Senator McCaskill. 

It is the tradition of this Committee to swear in witnesses, so if 

you will all rise and raise your right hand. Do you swear that the 

testimony you will give before this Committee will be the truth, the 

whole truth, and nothing but the truth, so help you, God? 

Mr. DODARO. I do. 

Mr. GEORGE. I do. 

Ms. BLANK. I do. 

Mr. REPKO. I do. 

Chairman JOHNSON. Thank you. 

Our first witness is Eugene Dodaro. Mr. Dodaro has been the 

Comptroller General of the U.S. Government Accountability Office 

since 2010 and has more than 40 years of experience at the Agency, including as Acting Comptroller General, Chief Operating Officer (COO), and head of the Accounting and Information Management Division. Mr. Dodaro. 

TESTIMONY OF THE HONORABLE EUGENE L. DODARO,1 COMPTROLLER GENERAL OF THE UNITED STATES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. DODARO. Thank you very much, Mr. Chairman. Good morning to you, Ranking Member McCaskill, Senator Lankford, and 

Senator Peters. It is a pleasure to be here. I appreciate very much 

the words that you said, complimenting GAO—and I will make 

sure to pass it along to all of the people in the Agency. We have 

such a dedicated, talented workforce, and they deserve to hear such 

compliments. 

I also want to assure this Committee, before I get into talking 

about this year’s duplication report, that I am worried about the 

overall fiscal health of the Federal Government. I issued a special 

report this past January, saying that the Federal Government is on 

a long-term unsustainable fiscal path, and I called for an action 

plan by Congress to deal with the fiscal policy changes that need 

to be made. 

Now, while there need to be changes made in fiscal policy, both 

on the spending and the revenue side—particularly, with entitlement programs—there are some other things that can be done. 
5 

And, addressing overlap, duplication, improper payments, and the 

tax gap are among those areas. 

This is our seventh annual report on overlap, duplication, and 

fragmentation—we report on what has happened over the last 6 

years with the 645 recommendations that we have made, to date, 

in the first 6 years: 51 percent of those have been implemented by 

Congress and the Executive Branch, 31 percent have been partially 

addressed, and 18 percent have not been addressed at all. 

As you pointed out, Mr. Chairman, $75 billion has already accrued in savings, but there is another $61 billion in the pipeline 

that will be accrued because of actions that have been taken. So, 

the total amount of savings is $136 billion, so far. 

Now, this year’s report adds 79 new actions in 29 different areas 

that range across the Federal Government. For example, in—from 

the Department of Defense (DOD), which could save tens of millions of dollars by better managing their virtual training programs 

and integrating them into operational training—and simple things, 

like advertising for recruitment purposes, where there are seven 

different advertising programs that could compete in the same 

market. Hundreds of millions of dollars could be saved in implementing our recommendations on Medicare and Medicaid—as in 

providing payments for uncompensated care that hospitals give. We 

think that formula is outdated and does not reflect the true 

amount of uncompensated care, particularly, since it is going down 

with the expansion of Medicaid, for example. There are other areas 

where improper payments could be reduced in Medicare and Medicaid, and we have a number of recommendations in that regard. 

Most of the improper payments of the $144 billion annual total in 

the Federal Government come from Medicare, Medicaid, and the 

Earned Income Tax Credit (EITC). So, I am glad we are addressing 

that today, and I am glad Russell is here to talk about that issue. 

So, with the new areas that we are adding, there are 395 open 

recommended suggestions that have not been implemented. I recently met with the Office of Management and Budget (OMB) Director Mick Mulvaney. And, I mentioned to him that we are going 

to be sending letters to each of the Departments and Agencies, outlining our open recommendations. The letters will give priority attention to those recommendations that I think the head of the 

Agency needs to pay personal attention to over the coming months. 

I have sent similar letters in each of the last 2 years. And, I think, 

this will be particularly helpful as Agency leaders go through their 

exercise of looking at reorganizing, streamlining, and gaining some 

more efficiencies in the Federal Government. Most of our open recommendations are addressed to the Executive Branch, but I also 

have what I call the ‘‘Senator Lankford appendix’’ to the testimony 

this year, where he asks every year, ‘‘What can the Congress do? 

Give us a list.’’ So, we have 61 open matters for Congress to consider. 

I would comment that most of the savings that have occurred, to 

date, have come from Congress taking action, and there are tens 

of billions of additional dollars that are still on the table that could 

be implemented and successfully achieved through implementing 

our open recommendations. 
6 

1The chart referenced by Senator Johnson appears in the Appendix on page 105. 

2The chart referenced by Senator Johnson appears in the Appendix on page 106. 

3The prepared statement of Mr. George appears in the Appendix on page 72. 

So, I look forward to continuing to work with Congress, and I 

look forward to continuing to work with the Executive Branch, 

which I am committed to do. I am now in the process of trying to 

meet all new Cabinet officials to talk about our working relationship and the recommendations that GAO has to make their operations more effective and efficient. 

So, thank you again for the opportunity to be here, today. And, 

I look forward to answering questions at the appropriate time. 

Chairman JOHNSON. Well, thank you very much. 

I actually have a couple of charts. Let us put up the first improper payment chart.1 Everybody has this in front of them. This 

just lays the groundwork, in terms of improper payments on refundable tax credits, just in these three programs: the Earned Income Tax Credit—and this is, I believe, 2015, correct?—$69.8 billion; the Additional Child Tax Credit (ACTC) is $28.5 billion; and 

the American Opportunity Tax Credit is $4.4 billion. Those are the 

refundable tax credits. Improper payments were $25.1 billion, or 

about 24 percent. 

And, the next chart shows how this has been a problem, certainly, for the 7 years of the duplication report,2 but, as I was talking to the Inspector General ahead of time—this has been going on 

for 20 years. And, in spite of all the good efforts, and publicizing 

this year after year after year, it does not look like we are making 

a whole lot of progress, as you can see how much money is being 

spent on the tax expenditure—on the tax credits—and how the improper payment rate still is above 20 percent—just stubbornly 

stuck there. 

So, again, that is kind of the backdrop for our next witness, J. 

Russell George. Since being nominated by President George W. 

Bush in 2005, Mr. George has served as the Treasury Inspector 

General for Tax Administration (TIGTA). Prior to assuming this 

role, Mr. George served as the Inspector General of the Corporation 

for National and Community Service (CNCS). In addition to his 

work as an Inspector General, he served as a member of the Integrity Committee of the Council of Inspectors General for Integrity 

and Efficiency (CIGIE). Mr. George. 

TESTIMONY OF THE HONORABLE J. RUSSELL GEORGE,3 INSPECTOR GENERAL FOR TAX ADMINISTRATION, U.S. DEPARTMENT OF THE TREASURY 

Mr. GEORGE. Thank you, Chairman Johnson, Ranking Member 

McCaskill, and Members of the Committee. I appreciate the opportunity to testify on tax-related improper payments. 

TIGTA has conducted a number of reviews that evaluate efforts 

by the Internal Revenue Service (IRS) to reduce erroneous and improper refundable tax credit payments. My comments today will 

highlight our ongoing work. 

Refundable credits are designed to help low-income individuals 

reduce their tax burden or to provide incentives for other activities. 

Because these tax credits are refundable, they are vulnerable to 

unscrupulous individuals who file fraudulent claims. To date, the 
7 

Earned Income Tax Credit remains the only refundable credit the 

IRS has designated as high risk for improper payments. However, 

TIGTA has continued to report that the IRS’ improper payment 

risk assessments for the Additional Child Tax Credit and the 

American Opportunity Tax Credit, also known as the education 

credit, substantially understate the risk of improper payments for 

these credits. 

These credits, collectively, accounted for more than $100 billion 

claimed during tax year 2015. For fiscal year (FY) 2016, the IRS 

issued an estimated $25 billion in potentially erroneous payments 

for these credits. This represents a significant loss to the Federal 

Government. 

In addition, the assessment of the risk related to premium tax 

credit improper payments continues to present challenges for the 

IRS. This credit, created by the Affordable Care Act (ACA), assists 

individuals and families in paying for their health insurance. Unlike other refundable credits, the IRS is not solely responsible for 

administering the premium tax credit. As a result, the IRS cannot 

effectively assess the risk of improper payments for this credit on 

its own. The IRS and the Department of Health and Human Services (HHS) continue to work on a methodology to effectively measure improper payments relating to this credit. 

To reduce certain fraudulent and improper payments, Congress 

enacted the Protecting Americans from Tax Hikes (PATH) Act of 

2015. Among other provisions, the act moves up the deadlines for 

Forms W–2, Wage and Tax Statement, and other income information-related documents, as well as provides the IRS additional time 

to verify EITC and additional tax credits that are based on the income individuals report on their tax returns. 

According to the House Ways and Means Committee, these integ- rity provisions are projected to save roughly $7 billion, over 10 

years, by reducing fraud, abuse, and improper payments in refundable credit programs. To date, our work related to this legislation 

has found that the IRS has properly withheld refunds for returns 

with EITC and additional tax credit claims and released those returns that were not identified for additional review. IRS management informed us that these claims are being verified solely 

against Form W–2 data to identify claims that have unsupported 

income. 

IRS management indicated that, for the 2017 filing season, they 

do not plan to use other income-reporting documents to systematically verify income reported on tax returns with refundable credit 

claims. The IRS has cited a number of technical challenges and 

timing issues that need to be addressed in order to use this information to verify income at the time tax returns are processed. 

In addition, the IRS was unable to implement processes to identify erroneous claims for the 2016 filing season for taxpayers filing 

tax returns for prior years to claim certain refundable credits, referred to as ‘‘retroactive claims.’’ Our review of tax year 2014 tax 

returns filed and processed during the 2016 filing season identified 

$35 million in refundable credits that were erroneously paid to taxpayers filing retroactive claims. 

Finally, the IRS still does not have the authority to correct tax 

returns, during processing, in which the information provided by 
8 

1The prepared statement of Ms. Blank appears in the Appendix on page 86. 

the taxpayer does not match information available to the IRS. As 

a result, the IRS must conduct an audit to address potentially erroneous refundable claims. Without correctable error authority, the 

IRS’ ability to address those potentially erroneous refundable credit 

claims that it identifies, remains limited. 

Mr. Chairman and Members of the Committee, we at TIGTA remain serious in our mandate to provide independent oversight of 

the IRS and its administration of the Nation’s tax system. As such, 

we plan to provide continuing coverage of the IRS’ efforts to identify and reduce improper refundable tax credit payments. 

Thank you for the opportunity to present my views. 

Chairman JOHNSON. Thank you, Mr. George. I did fail to point 

out the 7-year total on refundable tax credits—just those three 

areas is $441 billion and the improper payments is over $100 billion. It just shows the magnitude of the problem in just those three 

refundable tax credits—and with Obamacare—with even the House 

plan, we are looking at more refundable tax credits. 

Our next witness is Rebecca Blank. Ms. Blank became the Chancellor of the University of Wisconsin-Madison in July 2013. Prior 

to serving as Chancellor, Ms. Blank served as the Obama administration’s Secretary of Commerce. Under President Bill Clinton, she 

was a member of the Council of Economic Advisers. Chancellor 

Blank. 

TESTIMONY OF THE HONORABLE REBECCA M. BLANK, PH.D.,1

CHANCELLOR, UNIVERSITY OF WISCONSIN-MADISON 

Ms. BLANK. Thank you, Chairman Johnson, Ranking Member 

McCaskill, and Members of the Committee. I appreciate having a 

chance to say a few words about the regulation of Federal research 

at our Nation’s top universities. 

I was an economist prior to becoming Chancellor at the University of Wisconsin in Madison, and I believe deeply that we must do 

everything we can to help research universities thrive. These institutions hold the key to our future economic prosperity. 

But, they have also become some of the most regulated entities 

in this Nation. At least 35 Federal Agencies regulate our research 

at the University of Wisconsin, with multiple interpretations of the 

rules and many confusing, duplicative, and often unnecessary requests. 

So, my message today is very clear. We have added layer upon 

layer of regulation, and we are at a point where this is seriously 

impeding the productivity of our scientists. There are as many as 

23 different administrative responsibilities associated with every 

Federal research grant. Each of those steps requires time from either the researcher or the support staff. 

Ten years ago at UW, we had 50 full-time staff handling the regulatory compliance issues on human and animal research projects. 

Today, we have 80. There is not another function on campus that 

has added 30 full-time positions at a moment in time when we 

have actually been working hard to increase efficiency and reduce 

staff. 
9 

Still, much of the burden falls not on staff, but on teachers and 

researchers, taking valuable time away from both the classroom 

and the lab. 

The latest Federal Demonstration Partnership (FDP) survey indicates that, nationwide, scientists with Federal funding spent 

42 percent of their time on regulatory and administrative activities—about 4 hours in a 9-hour day. 

We recently surveyed our scientists at UW who do research involving human subjects. And, half of them—48.5 percent—told us 

they had given up—or almost given up—on at least one research 

study because of the red tape involved. We cannot afford to sideline 

potentially lifesaving research. 

The 21st Century Cures Act and the American Innovation and 

Competitiveness Act (AICA) took some big steps in reducing these 

administrative burdens, but, as GAO notes in their report, there is 

more to be done. So, let me give you two recommendations. 

First, two key provisions of the 21st Century Cures Act and the 

American Innovation and Competitiveness Act should be prioritized 

for implementation. The new Research Policy Board should be set 

up and streamlined grant application and reporting requirements 

need to be put in place as soon as possible. Right now, almost every 

Agency has different formats for submitting a research proposal, 

reporting on research progress, reporting on effort, reporting back 

on what your results are, and demonstrating compliance with the 

regulations. And, the Agencies have very different rules on how results should be saved and be made publicly available. That is confusing, costly, and inefficient. Recently, there was a report by the 

National Academy of Sciences (NAS) that details these problems. 

I encourage any of you with an interest to read through their much 

more extensive recommendations. 

Second, the implementation of the final rule should be 

prioritized. This allows low-risk projects to be subject to different 

restrictions than high-risk projects. The recently adopted final rule, 

scheduled to take effect in January 2018, aims to reduce regulatory 

burden on human subjects research that poses little to no risk to 

participants. For example, survey research should be subject to different rules than medical research that may be testing medical procedures on human beings. But, without clear guidance to address 

differences in how these regulations are interpreted and applied, I 

promise you that problems will persist. Let me give you an example. 

One of our pediatricians wants to create a registry to track 

health information from children across the State of Wisconsin, 

who have a very serious but relatively rare condition that can 

cause heart attacks at a young age. Sharing that information can 

improve medical care and can help keep health care costs down. 

We are actually 6 months into the effort to try to get approval for 

this project. And, we still have not been able to do so, because 

there are multiple sites that provide information to this registry. 

Every site is interpreting the regulations differently, and, therefore, every site is demanding different information from us and different restrictions. 

Let me be clear that I am not arguing that we should do away 

with all of the regulations governing research. Federal regulations 
10 

1The prepared statement of Mr. Repko appears in the Appendix on page 98. 

help us ensure research integrity, they increase access to research 

data and results, and they help protect human and animal subjects 

in research. But, we need to be smart about the regulations that 

we have and how we implement them. 

I have spoken today about the regulations affecting our research 

enterprise. But, let me note that my written testimony also gives 

a number of examples of excessive regulation that increases unnecessary costs and interferes with how we serve students. 

No Nation on Earth has been as successful as the United States 

in building remarkable institutions that offer an outstanding education and conduct the kind of basic research that fuels innovation 

and helps solve immediate problems in the real world. That is why 

the rest of the world wants to send us their best and brightest students. 

But, international preeminence does not come with a lifetime, 

forever guarantee. Excessive regulation of research universities can 

only erode their success over time. 

Thank you for your commitment to helping to bring this unwieldy system under control. With your help, great research institutions, like the University of Wisconsin, the University of Missouri 

(Mizzou), the University of Michigan (UM), and the University of 

Montana, will continue to keep this Nation on the cutting edge of 

innovation. 

Thank you. 

Chairman JOHNSON. Thank you, Chancellor. Again, I really want 

to thank you for bringing this to my attention a couple of years 

ago, when you came to my office. And, the Small Business Administration (SBA) has studies that put the costs of complying with 

Federal regulations at $2 trillion per year, which, if you divide that 

by the number of households, it is almost $15,000 per year, per 

household. So, I appreciate the fact that the university is grappling 

with this problem and that you are highlighting it—our entire Nation—our entire economy as well. So, again, this is really good testimony. I appreciate it. 

Our final witness is Keith Repko. Mr. Repko currently serves as 

Medical Center Director of Veterans Affairs of the St. Louis Health 

Care System where he oversees 3,000 employees. Prior to becoming 

Medical Center Director, Mr. Repko served as Deputy Director, 

where he led efforts to reduce veterans’ access time to be in the top 

25 percent of all VA facilities, as well as improved patient advocacy. Mr. Repko. 

TESTIMONY OF KEITH D. REPKO,1 MEDICAL CENTER DIRECTOR, VA ST. LOUIS HEALTH CARE SYSTEM, VETERANS 

HEALTH ADMINISTRATION, U.S. DEPARTMENT OF VETERANS 

AFFAIRS 

Mr. REPKO. Good morning, Chairman Johnson, Ranking Member 

McCaskill, Senator Lankford, and Senator Peters. Thank you for 

the opportunity to participate in this hearing and to discuss the design and construction projects at the Jefferson Barracks and John 

Cochran campuses of the VA St. Louis Health Care System. 
11 

The St. Louis Health Care System is a dual affiliated, full-service 

health care system that provides inpatient and outpatient care in 

medicine, surgery, neurology, psychology, rehab, and many other 

subspecialties. It is a two-division facility that serves veterans in 

east-central Missouri and southwest Illinois. The John Cochran Division, named after the late Missouri Congressman, is located in 

midtown St. Louis and comprises the medical center’s surgical capabilities, ambulatory care units, intensive care units, outpatient 

specialty clinics, and our emergency department. 

One of the top priorities for the Department has been improving 

access to care. In St. Louis, we have taken that to heart. While 

more work remains to be done, both the VA and St. Louis have 

made real progress. In FY 2016, St. Louis hired 385 staff members, 

including 36 physicians, 4 physician assistants (PAs), 93 nurses, 

and 252 other critical occupations. We have extended clinic hours 

at five of our locations and hold Saturday clinics at two of them. 

Additionally, we have increased the delivery of care by using telephone consults and secure messaging to better use our providers’ 

time, to improve access, and to meet veterans’ care needs where it 

is convenient for them. 

The Jefferson Barracks Division is a multi-building campus overlooking the Mississippi River in south St. Louis County. It provides 

psychiatric treatment, spinal cord injury treatment, geriatric care, 

rehab services, and has a domiciliary program for our homeless 

veterans. The VA is currently pursuing a major construction 

project on this campus that will enable us to better serve veterans’ 

health care needs for decades to come. 

The project is a joint Veterans Health Administration (VHA) and 

National Cemetery Administration (NCA) venture and will construct a total of five new buildings. The project will relocate primary care, mental health, and specialty care clinics out of its current 1920s-constructed building into a modern environment and 

allow for expansion of care. It will also construct a new patient 

aquatic and rehab facility, replacing an older facility that frequently we have to shut down in the heat of the summer due to 

the lack of adequate air-conditioning. Lastly, the project will replace an obsolete fire alarm system, construct a new support building, provide 800 net new parking spaces, and construct a facility 

to replace our obsolete engineering and consolidated warehouses. 

Upon completion, the project will decrease the amount of infrastructure maintained and operated by VHA through the demolition 

of energy-inefficient and underutilized buildings. It will also provide approximately 30 acres to the NCA for the expansion of the 

Jefferson Barracks National Cemetery. Without this land, the cemetery will be closed to burials in several years. The total project 

cost is $366 million. And, it was approved as a VA major project 

in 2004, partially funded in 2007, designed in 2008, started to be 

constructed in 2010, and is scheduled to be completed in 2020. Currently, the project is 52 percent complete and has no cost overruns. 

The John Cochran campus also has a major project that was 

funded for design in 2010. The project proposes to construct a new 

inpatient bed tower and allow for the expansion of specialty care 

clinics—with an estimated cost of $433 million. In 2015, all of VA’s 

major projects, including the John Cochran project, were reevalu-
12 

ated and rescored through the Strategic Capital Investment Planning (SCIP) process to ensure the project’s requirements are still 

valid and that the project remained a high priority for the Department. The St. Louis John Cochran project did not score high 

enough to be included in the 2015–16 budget cycle, and, therefore, 

it is currently not actively being developed by the Department at 

this time. However, the project is eligible to be reconsidered in 

SCIP and will be reconsidered for funding in a future budget year. 

In closing, each day we move toward our goal of improving and 

streamlining our processes, in order to provide the exceptional care 

that veterans earned and deserve. Mr. Chairman, this concludes 

my statement. Thank you for the opportunity to testify before the 

Committee today. And, I am pleased to respond to any questions 

from you and Members of the Committee. 

Chairman JOHNSON. Thank you, Mr. Repko. 

I will start the questioning with Mr. Dodaro. Quite honestly, 

when you take a look at the number of recommendations that have 

not been addressed at all in government, it is actually surprisingly 

low. The fact that you have over 50 percent fully implemented, 30- 

some percent partially implemented, and less than 20 percent not 

implemented is really a testament to, I think, what you have been 

able to accomplish in getting your recommendations implemented. 

You said that Congress has actually passed laws that have been 

the primary reason for doing that. And, you have 61 recommendations now. Can you give us some kind of sense how many different 

laws—just kind of in general—it took to get that level of implementation? And, what would you contemplate with your recommendations, right now? Would you, maybe, suggest this Committee try 

and put those 61 recommendations into one piece of legislation and 

try to get that out on the floor and get it passed? Or, is this more 

effectively done kind of individual bill by individual bill? 

Mr. DODARO. The approaches that have been taken, in the past, 

have mostly been bill by bill. For example, in eliminating the direct 

payments to farmers, it was handled through the Farm Bill. Congress let the ethanol tax credit lapse, so they did not actually have 

to do anything—and it went away. But, I think any legislative vehicle that you can come up with would be an appropriate vehicle. 

Some of the recommendations to Congress for action have not 

been addressed for a number of years, and I am concerned that 

they could get stuck in the normal legislative process. So, perhaps, 

having a combined omnibus, if you will—or a package—would help. 

So, I think, any legislative vehicle would be good. 

Chairman JOHNSON. I know, in past Congresses—I know Senator 

Ayotte and Senator Manchin tried to propose legislation that would 

have forced the Agencies to do this. But, I would love to work with 

Senator McCaskill and work with GAO. 

Senator MCCASKILL. Yes. 

Chairman JOHNSON. And, let us craft something that will actually impose that requirement on the Agencies to implement these 

things. 

Mr. DODARO. I think the past efforts have been focused on getting Agencies to implement all of our recommendations. I think it 

would be better if you target the specific recommendations that you 

are comfortable with that we have included—particularly, the ones 
13 

on the list of 61 for Congress to take action on. And then, there 

are other opportunities for Congress to put some pressure on the 

Administration to implement some of our other suggestions. 

Chairman JOHNSON. So, we will work in a bipartisan fashion 

with your staff and different Senators. And, we will figure out what 

that list is. And, we will get a piece of legislation. I think Leader 

McConnell would be very open to—he is looking for bipartisan 

pieces of legislation to move across the goal line. So, let us definitely do that. 

Mr. George, I remember—I think it was your 2012 report. You 

listed 10 addresses with—I believe it was the Earned Income 

Tax Credit—where there were multiple filings. And, the top address—I think there were 24,000 filings requesting and obtaining 

$46 million of refundable tax credits. Was that the Earned Income 

Tax Credit or was that the Additional Child—— 

Mr. GEORGE. There were so many instances of people taking advantage of the tax system using that scheme, sir. So, it may have 

been the Earned Income Tax Credit. It could also have been the 

First Time Homebuyer Tax Credit (FTHBC) or the Additional 

Child Tax Credit. 

Chairman JOHNSON. So, my question was—I mean, to me, one address with 24,000 claims—$46 million. I know we are not making a whole lot of progress. Have we at least closed down that 

abuse after all of these years? Or, has the IRS still failed on that 

part? 

Mr. GEORGE. I have to give—as I noted in my testimony—the 

IRS some credit, as it relates to the Earned Income Tax Credit. As, 

Senator, you and I spoke about out in the hall—and then as you 

discussed your opening remarks—and my comments—the amount 

of improper payments for the Earned Income Tax Credit was in excess of $20 billion a year a few years ago. And, even though it is 

now roughly $16 or $17 billion, it is still moving in the right direction. Even though there was a slight uptick in the last—— 

Chairman JOHNSON. But, again, my question was: To me, it 

would be pretty simple to take a look at an address and say, well, 

we are not going to allow—if there are more than 10 refundable tax 

credits claimed, we are going to take a look at that. It is absurd 

that 24,000 claims went through one address. Have they fixed that 

problem at least? 

Mr. GEORGE. They have not fixed it, no. No, they still have the 

problem, sir. 

Chairman JOHNSON. Yikes. Part of the problem with these is the 

individual taxpayer identification number, correct? Rather than the 

Social Security number? 

Mr. GEORGE. That is correct. 

Chairman JOHNSON. That is just rife with abuse. 

Mr. GEORGE. As it relates—— 

Chairman JOHNSON. Can you describe that? 

Mr. GEORGE. Yes. Congress passed legislation that now requires 

the use of a Social Security number or, if you are a green card 

holder, the use of that number, for the Earned Income Tax Credit. 

However, for the Additional Child Tax Credit, which, again, is a 

growing problem—while we at the IG’s office believe that Federal 

law does require that same restriction, the IRS has taken a dif-
14 

ferent position on that issue. While we, again, have debated this 

back and forth with the lawyers at the Department, they will 

not—— 

Chairman JOHNSON. Well, let us tack that onto our GAO piece 

of legislation here. 

Chancellor Blank, I do want to give you an opportunity, because 

I thought your written testimony about other overregulation was 

pretty powerful. As I am hearing your testimony too, what you are 

asking for is not no regulation, but some common regulation—some 

uniformity, so that you are not trying to comply with umpteen different reporting requirements that could all be grouped together— 

and provide common forms. Can you just talk about some of the 

other parts of your written testimony? 

Ms. BLANK. That is absolutely correct. Right now, we have different forms for conflict of interest and different forms for reporting, submitting, and saving data. And, it becomes incredibly complex when a university like Wisconsin—like other big research universities that are getting research funding from many Federal 

Agencies—and every one has different requirements. 

In my written testimony, I talk, not just about the research 

issues, but about the issues relating to students. One of the regulatory issues there that I find most compelling relates to the 

Jeanne Clery Disclosure of Campus Security Policy and Campus 

Crime Act (Clery Act), which regulates how we deal with crime statistics on our campus. It is a very important Act—very useful and 

valuable to us for tracking. But, certain interpretations of what the 

Clery Act—what the Department has put upon us, include such 

things as the requirement that, for any place where our students 

spend more than two nights, we have to collect local crime statistics and report them as if they were on our campus. So, whether 

our students—we had engineering students going off to an Elon 

Musk competition recently. Our athletic teams, obviously, often will 

spend multiple nights over—that takes an enormous amount of 

time and effort, working with local police in those areas. And, quite 

honestly, it results in a reporting of crime statistics that has nothing to do with our students and is simply a misperception about 

what type of crime is happening on campus. 

So, that type of interpretation of the law just makes life very difficult and increases our expenses in ways that are not helpful. 

Chairman JOHNSON. I will come back to this. Senator McCaskill. 

Senator MCCASKILL. Thank you. 

Let me first do the VA. Mr. Dodaro, your 2017 report talks about 

the management of medical facility construction projects. And, basically, what I gather from the report is that you have an Agency 

within the VA that is supposed to be overseeing this at each local 

site, but there is not appropriate coordination between the onsite 

personnel and this part of the VA that is supposed to be managing 

all of these construction projects. Is that a fair summary? Or, can 

you fill in—— 

Mr. DODARO. There is really not good coordination. Now, the VA, 

generally speaking, is a very decentralized organization with very 

little oversight and accountability from the central organizations of 

the VA. I could say that, broadly speaking—that applies to health 

care and that applies to disability as well. 
15 

In this case, the change orders that were being approved were 

not going through regular, timely process and design changes. And, 

you could see these add to the cost of the projects. So, we asked 

them to put that under a better control process, so that the change 

orders could be approved in time and so everybody knew what the 

consequence of the change orders would be, and design processes 

there as well. 

I think the big change that Congress required is now, going for- ward, any project over $100 million is to be run by someone outside 

of the VA. Most of these projects right now are run by the Army 

Corps of Engineers, so you actually have people that are experts 

in construction projects. The projects under $100 million are still 

being run by the VA. And, some of the projects that were over $100 

million that were not new—some of them were transferred, like the 

Denver project that ran into a lot of problem under VA management. 

Now, the responsibility—if the construction is done by the Army 

Corps of Engineers or another organization—is for the VA to come 

up with the costs of activating the facility—actually putting the 

medical equipment in there and preparing it for operations. And so, 

that should help a lot by taking the big new construction projects 

out of the hands of the VA and putting them with the Army Corp 

or another competent organization. 

Senator MCCASKILL. So, going forward, the Army Corps will be 

doing the projects that are as large as Cochran—— 

Mr. DODARO. Anything over $100 million—it will either be the 

Corps or—the legislation requires somebody other than the VA. So 

far, they have gone with the Corps. 

Senator MCCASKILL. Yes. 

Mr. DODARO. They could choose someone else, but the Corps is 

the only one so far. 

Senator MCCASKILL. I am proud that we do not have cost overruns with the projects in St. Louis. Mr. Repko, I think that is terrific. I know we are a little bit behind schedule, but a lot of that 

has to do with how quickly the VA has decided to request the 

money. 

I think one thing that Americans need to realize is that Congress 

has been very generous to the VA. Since FY 2008, we have funded 

177 percent of the requests from the VA. In FY 2009, we funded 

183 percent of the requests. In FY 2010, 106 percent and in FY 

2011, 100 percent. FY 2012 was the only time since FY 2008 that 

we funded less than 100 percent of the request that was made by 

the VA. I do not think there is anybody else in government that 

has that kind of track record, in terms of securing appropriations— 

particularly, for capital. Even the military does not have that kind 

of success rate, as it relates to capital. So, I am glad there are not 

overruns. 

I do want to bring to your attention that I have recently learned 

that there have been some concerns regarding the quality of the 

ongoing construction at the facility at Jefferson Barracks. And, we 

have been in contact with the VA IG about this, and we have been 

assured that they are looking into it. Are you aware of any of these 

concerns about the integrity and quality of the construction that is 

ongoing there? I know it is not your direct responsibility, but are 
16 

you aware of any problems? Have they been brought to your attention? 

Mr. REPKO. Just recently—actually, working with your staff in 

preparing for this—I became aware of some. But, I can tell you 

what—we have had a very good relationship with the facility. In 

fact, we have a team that works for the medical center—so works 

for my office—that interfaces—and that is their full job—to interface with the construction folks in the central office for the VA. 

And, our project is managed by the VA Office of Construction and 

Facilities Management (CFM), because it was prior to that other 

regulation. 

I can tell you we have daily conversations—my staff does—with 

CFM staff, in managing the project—and myself and my Associate 

Director have weekly and monthly meetings with our staff. And, at 

this point, we have no concern of any serious issues with this 

project, either—moving forward—either in quality—I can tell you, 

I served as Chief Engineer for 12 years. And, in those years, I managed a lot of projects and had staff that managed a lot of projects. 

I can tell you that there is no such thing as a 100-percent perfect 

contractor or project. I would say that contractors would say that 

there is no such thing as a 100-percent perfect customer. But, I can 

say that, in our project, CFM is working through any issues. And, 

like I said before, there is nothing significant, either in quality— 

that I am aware of—or any concern that would jeopardize this 

project. 

Senator MCCASKILL. OK. Moving on to the tax credits, I tried to 

take a look at the education tax credit. One of the things that 

jumped out at me, Mr. George, was that, of the 3.6 million returns 

with questionable education credit claims, 49 percent of them—almost half of them—were prepared by a tax preparer. 

Mr. GEORGE. Yes. 

Senator MCCASKILL. Do we not have something in place that, if 

there are tax preparers that are doing this—I mean, is that why 

one address is responsible for all of those, because that is somebody 

who has put a shingle out in a community saying, ‘‘Let me prepare 

your tax returns?’’ 

Mr. GEORGE. There have been examples of that, Senator, but the 

IRS, in response to recommendations that we have made and concerns expressed by Congress, has begun outreach to tax preparers, 

who, in all candor, are at the front line, in terms of helping to 

avoid tax fraud. 

Senator MCCASKILL. So, you think that, for 50 percent of these 

questionable education credit claims, these preparers just did not 

know any better? Or, were they trying to get over? 

Mr. GEORGE. Well, I do not want to impugn everyone’s reputation. There is no question that some of it is ignorance and some of 

it was malfeasance. 

Senator MCCASKILL. I would be interested, if it is possible, to 

know if these tax preparers were individual proprietors or if they 

were some of the large chains that do tax preparation. Obviously, 

if this is something that is endemic, it seems to me that the basics 

are making sure that a refundable tax credit that your agency is 

preparing for a client would follow the rules as to the Form 1098 

and as to how long they are in school, as well as to the appropriate 
17 

institutions that qualify, which are the three big ones on that particular credit that always raise the flag. 

Mr. GEORGE. We will endeavor to give you that information, but 

if I may, Senator, I do not want to let the IRS completely off of the 

hook here. The IRS has not used every avenue that it could to confirm that someone who applies for that credit is entitled to it. So, 

for example, the Department of Education (ED) has a list of databases, which the IRS—for free—or for a nominal fee at least—could 

have access to—— 

Senator MCCASKILL. And, they are not doing that? 

Mr. GEORGE. They are not doing it. 

Senator MCCASKILL. OK. That is ridiculous. 

Mr. GEORGE. They are not doing it. 

Senator MCCASKILL. That is totally ridiculous. 

Mr. GEORGE. And, it applies to additional credits, too. I have said 

this many times before at other hearings, but, whenever there is 

third-party reporting of income, it is almost a 99-percent compliance rate. But, once the IRS fails to have access to that third-party 

reporting and relies solely on an individual, the compliance rates 

drop dramatically. 

Senator MCCASKILL. Finally, I know I am out of time, but I really would like—and if you want to, I will wait until the next round 

for you to answer it—but I think it is important that, when you report to this Committee or any other Committee, you at least give 

us a sense as to whether or not the lack of staff—there have been 

dramatic staff cuts at IRS. No question we are leaving money on 

the table. I am not aware of any business that is in the kind of financial trouble we are in that decides it is a good idea to cut the 

receivables department. And, for some reason, because of politics, 

we have decided around here that the way that we are going to 

make points with our constituents is by cutting the IRS. Well, that 

is like cutting off our nose to spite our face, because these are the 

people we need to bring in the receivables. And, it does not make 

sense to me. And, I would like for you at some point—I know I am 

2 minutes over, and the Chairman has been indulgent. We can 

wait until the next round to answer that. 

Chairman JOHNSON. Very indulgent. [Laughter.] 

Mr. GEORGE. Thank you. 

Chairman JOHNSON. I would point out that we have given the 

IRS a lot more responsibility in these things as well. So, it is a real 

problem. 

Also, I just want to be clear. The address used on a tax return 

is the taxpayer’s address, not the preparer’s address. So, again, 

24,000 returns. It implies there are 24,000 people living at that address, which is, again, a pretty simple thing to check with databases. Senator Lankford. 

OPENING STATEMENT OF SENATOR LANKFORD 

Senator LANKFORD. That is a very crowded house, is what that 

is. [Laughter.] 

Thank you all for being here and for the work that you are doing 

to be able to bring some of these issues to light. We appreciate that 

very much. 
18 

Mr. Dodaro, we have talked often about a bill that Senator 

McCaskill and I have worked on and tried to get done in the last 

session of Congress called the Taxpayers Right-to-Know Act. What 

you have done in the duplication work is phenomenal. What we 

tried to get accomplished in the last session, and what we can 

hopefully get accomplished very soon, is to be able to get some of 

these evaluation tools that are out there. We are missing a tool and 

you are missing a tool. We wait for this report yearly. When it 

comes out, it is something we should be able to pull immediately 

just with the Agencies making that information available. 

Mr. DODARO. Right. 

Senator LANKFORD. Every taxpayer should be able to pull this information. We should be able to see how things are evaluated. We 

should be able to see the basic spin patterns. It should not be a 

‘‘rocket science request’’ of our Agencies—they already have that information—just to be able to make it available. 

So, are there any other comments you want to make, as we have 

talked about before, on the Taxpayers Right-to-Know Act and that 

particular bill? 

Mr. DODARO. I would urge Congress to complete passage of that 

bill and send it to the President for signature. I think it would 

make a huge difference in identifying overlap, duplication, and 

fragmentation in the Federal Government as well as provide a better accountability tool to Congress and the Agencies. 

One of the biggest difficulties we have had in executing our responsibility under this requirement to produce this report is the 

lack of information that is available on the costs of programs. Have 

they ever been evaluated? What has the evaluation shown? This 

would have that information automatically available and be a 

much more efficient way to address this issue. So, I would encourage its passage. 

Senator LANKFORD. Well, we look forward to that. It has passed 

unanimously in the House. And, it seems to get caught up in the 

Senate. And so, we will try to work toward final passage on that, 

to be able to get that done. 

You mentioned in your report this year the uncompensated care 

issue in hospitals, which is an incredibly difficult issue to wrap 

your head around. I would like for you to be able to talk through 

anything you can about it. This balances out whether the Federal 

Government—as they pay hospitals for uncompensated care that 

comes in—or they pay it under the Medicare or the Medicaid portion. Talk us through that, because that is a $1 billion savings, but 

that is also a very big issue to hospitals. 

Mr. DODARO. Yes. And, it has been a big issue for years. The 

problem that we identified is that, right now, in order to determine 

how to pay uncompensated care, the Center for Medicare & Medicaid Services (CMS), uses the Medicaid workload of that particular 

hospital. They do not have actual numbers on what the uncompensated care has been, so they use a proxy. That proxy is not a good 

proxy. And, of course, with the expansion of Medicaid under the Affordable Care Act, there are more people insured, so there should 

be less uncompensated care, in theory and in practice. And, right 

now, payments do not reflect that change. 
19 

The second part of this that is a problem is, when CMS pays hospitals under the Medicare program for uncompensated care, it does 

not take into consideration what it has already paid under the 

Medicaid program. So, there is a possibility that CMS could be 

compensating hospitals more than once for the same costs. 

So, we have recommended to CMS that it collect the actual cost 

figures for uncompensated care and reimburse the hospital based 

on the actual uncompensated care costs. CMS has agreed with 

that, but does not plan to implement it until 2021. They want to 

give the hospitals time to adjust. I would encourage Congress to 

encourage CMS to act more quickly. Given the unsustainable nature of these two programs and the need to reduce their costs, CMS 

should do it quicker. 

Senator LANKFORD. You brought to CMS an issue that you identified before with the Affordable Care Act and the way the subsidies are done in areas where there is fraud potential there and 

areas you all tested. 

Mr. DODARO. Right. 

Senator LANKFORD. You brought to them eight recommendations 

about what to do. CMS said they were going to do it, and then did 

not implement any of those. 

Mr. DODARO. CMS told us they are still trying to work through 

doing the fraud risk assessment. We understand it is almost complete. We are looking now at the premium tax credit, and its implementation by both CMS and the IRS. And, we should have a report 

available this summer for Congress. That will be our first complete 

look at that whole process. As Mr. George mentioned, both the IRS 

and CMS have responsibilities under that credit, so we are looking 

at both. 

Senator LANKFORD. Thank you. 

Russell, we have talked before about this as well—and that is 

the EITC and all of the refundable tax credits. Often, the IRS will 

come back and say this falls on preparers. As has been mentioned, 

about half of them actually have a preparer. IRS has said that, if 

we get a certification on these preparers, then we will get fewer 

mistakes. But, they attempted to do that about 6 years ago and 

failed. And then, they are trying to come back at it again. 

The recommendation has been made to IRS before—instead of 

having a requirement that is a mandatory requirement for all of 

your preparers to go through a certification, you just say to preparers, ‘‘If you are going to get faster returns, you then have to go 

through this certification. If you are going to be a preparer, your 

return, if you are not certified, may take 3 months to come back. 

If you are certified, it may take 21 days.’’ And, to be able to just 

tell them, ‘‘If you want to be a certified IRS tax preparer and get 

faster returns to your clients, you have to do this.’’ That way they 

get training in the EITC. Why would that not work? 

Mr. GEORGE. Senator, before responding—and I neglected to do 

this at the outset of my comments to questions—since President 

Reagan, every President has issued a directive indicating that tax 

policy is within the sole discretion of the Assistant Secretary for 

Tax Policy. And so, the answers that I am giving you are not on 

behalf of the entire Department or the Administration. 

Senator LANKFORD. Fine. 
20 

Mr. GEORGE. But, there is no question that that is an idea that 

is worthy of consideration. But, as you pointed out, there 

was a sensible proposal to have certification. And, for some reason—again, whether it was the industry or others—it was not accepted. 

Senator LANKFORD. Mr. Dodaro. 

Mr. DODARO. Certainly, I could add on to this point. We recommended to the IRS several years ago that they should regulate 

the unenrolled tax preparers. They went ahead with a proposal. It 

got taken to court. The court found that the IRS did not have the 

statutory authority. So, I think Congress could give some authority 

in this area. It could be a good program. I think Congressional support would be important. We have an outstanding recommendation 

to do this. It is one of the things that we mentioned in our ‘‘HighRisk List Report.’’ 

Senator McCaskill mentioned that there is a high error rate associated with paid preparers. We sent an undercover team in to 19 

tax preparers to try to see if they would give us the right answer. 

Only 2 of the 19 gave us the right answer. 

Senator LANKFORD. That is not surprising in some ways, but it 

is stunning. And, one quick comment on this, Mr. Chairman, for 

the VA as well. Thank you for stepping up and taking the lead in 

the St. Louis VA and other areas. We have a brand new Director 

in the Oklahoma City VA, Mr. Vlosich, who is doing a fantastic job 

in trying to help with a turnaround. We are the poster child for 

what GAO has mentioned on construction issues. Currently, our 

seventh floor is not usable. Our third floor is not usable. We cannot 

get a parking lot finished outside. And, it has been a chain—the 

elevator does not work in the middle of the building. It has been 

just a chain of issues with contractors that Director Vlosich is 

trying to help us unpack and to be able to fix. But, this issue has 

been an ongoing issue. It is not new. But, I appreciate everyone 

stepping up to be able to take the lead and to be able to help us 

in that—as our Oklahoma City Director has done—as others have 

done as well. So, thank you. 

Mr. REPKO. I know Wade, and it is my privilege and honor to 

serve in this capacity. Thank you. 

Chairman JOHNSON. Senator Peters. 

OPENING STATEMENT OF SENATOR PETERS 

Senator PETERS. Thank you, Mr. Chairman. And, thank you to 

each of our witnesses for being here today and for your testimony. 

We certainly do appreciate it. 

Dr. Blank, I owe you a special debt of gratitude, not solely because of your long track record in public service, which, of course, 

is distinguished, but also because you are the former dean of the 

Gerald R. Ford School of Public Policy at the University of Michigan. 

Ms. BLANK. It was one of the excellent jobs that I have had in 

the past. 

Senator PETERS. Well, that was the right answer to that—even 

though it was not a question. [Laughter.] 

Senator MCCASKILL. She is not Big Blue anymore, though. She 

is all Badger, my friend. 
21 

Chairman JOHNSON. I was going to say, then she moved to God’s 

country. 

Senator PETERS. Point well taken, Senator. But, I will tell you, 

actually, I have several of my staff, including some of the folks who 

are in this room today, who appreciate your service at the University of Michigan. 

Ms. BLANK. Thank you. 

Senator PETERS. And, at the Gerald Ford School. So, thank you. 

And, Mr. Dodaro, I also want to add to my colleagues’ comments 

to thank you and your staff for your tireless work in putting this 

report together, as well as your other report. I am encouraged to 

hear that the $75 billion figure that we have been given is soon to 

grow quite rapidly as well—and it is because of the tireless work 

of everybody there. So, please add my thanks to the other thanks 

that you have received from my colleagues. 

Also, before I ask a couple of questions here, Mr. Chairman and 

Ms. Ranking Member, I would like to join in your efforts to get 

greater compliance with these GAO recommendations as well. In 

fact, I am working right now with Senator Gardner. We have a bill 

before this Committee called the Congressional Oversight to Start 

Taxpayer (COST) Savings Resolution, which would require hearing 

from the relevant Committees on these reports within a 90-day 

time period. So, however that may integrate with the work that 

you and Senator McCaskill are doing, I think there is a great opportunity for us to come together to make sure that what we have 

seen in performance continues. 

The first question I have relates to what we have been talking 

a fair amount about today, and this is the payments, particularly 

for the Earned Income Tax Credit and other credits, as far as compliance. The figures are stunning. The fact that you have 20,000 returns going to one address is stunning. And, I say that—and the 

fact that I am really a founding member of the Senate Payments 

Caucus with Senator Rounds, looking at modern payments technology. I had a chance, recently, to be at one of these payments 

companies to see the work that they are doing in fraud detection. 

The private sector has really figured this out, because fraud is not 

just a problem with the EITC. Any kind of payments you are making as a company, if you are in the payments business, there is a 

lot of fraud out there. And, they have made great strides and have 

limited it substantially. And, the new technologies that are coming 

on board are really incredibly impressive. 

To what extent do you think we need to just be looking at modern payments technology? It seems as if the IRS is not using any 

of it. This is to both Mr. George and to Mr. Dodaro. 

Mr. GEORGE. Well, thank you, sir. I will say this: The IRS is not 

in a position to not disclose mistakes that occur or fraud that occurs when it is questioned by Congress, the IG, or GAO. I have 

worked in the private sector, Senator, and I am not questioning 

your point directly. But, a lot of times, banks will not disclose when 

their systems are broached, because they do not want to shock 

stockholders or regulators or what have you. Whereas, again, the 

IRS is not in that position. 

There is no question that the IRS, in theory, could implement 

changes in their processes that could make it more difficult for peo-
22 

ple to engage in unscrupulous behavior. But, they are so malleable—‘‘they’’ being the ‘‘bad guys,’’ as I call them—that it is very 

difficult for the IRS to keep up with it. As Senator McCaskill pointed out, it is partially a resource issue. As I pointed out before, the 

IRS sometimes simply does not implement changes that we think 

would be simple—and I believe you were in the room when I talked 

about how—if they shared more information with other Departments, such as the Department of Education, as it relates to the 

American Opportunity Tax Credit. 

This is a little factoid I wanted to make sure that I conveyed to 

you before the end of this hearing. And, this is an opportunity to 

do so. The IRS did, on its own, make a request to Congress for 

what is called ‘‘correctable error authority,’’ which would allow 

them to—if they saw mistakes or different types of information 

that they have, versus what the taxpayer provided, they would be 

able to change the taxpayer’s tax filing form and give the taxpayer 

the opportunity to contest the information if it hurts the taxpayer, 

in terms of causing more of a tax liability than they think they are 

entitled to. 

Now, if the IRS were given that authority, we estimate that it would cost the IRS approximately $1.50 to implement that change. 

But, without that, the only way the IRS can do it is through an 

audit of the tax return. And, the audit costs roughly $300 per taxpayer. 

So, there are changes that could be made, but the IRS needs 

more authority. And, there again, they need to be able to cooperate 

more with other government Agencies. 

Senator PETERS. Actually, with the time remaining, just one 

other question that is important—and we can talk further, Mr. 

Dodaro, about this issue offline. But, I want to draw attention to 

the issue in the duplication report about the challenges that we 

face in maintaining some of our satellite weather monitoring capabilities. I am the Ranking Member on the Committee that oversees 

the National Oceanic and Atmospheric Administration (NOAA). I 

am also a member of the Senate Armed Services Committee 

(SASC). And, you identify work—or duplication—between the Department of Defense and NOAA and what we need to do in order 

to have these essential capabilities operating. 

Could you speak, generally, on how the Defense Department may 

need to rely on and collaborate with NOAA and other Agencies on 

this issue moving forward? 

Mr. DODARO. It is very important to have collaboration between 

the Department of Defense and NOAA. NOAA is the gateway to a 

lot of the international agreements that our government has with 

satellite systems around the world that could be available to provide assistance. That is one of the problems that we identified in 

the Defense Department efforts. They did some outreach to NOAA, 

but did not follow up and did not have a formal process for doing 

it. And, as a result, DOD made some inaccurate assumptions about 

the availability of a European satellite, which would dictate what 

kind of coverage they would have, both for cloud characterization 

as well as in defense theaters of the imagery of weather situations 

that they would need for military purposes. And, as a result, they 

had to conduct additional analysis and come up with different 
23 

plans. This could have been avoided through a more formal process. We have suggested they do that. The Air Force has signed 

some agreements with NOAA, but they do not cover the rest of the 

Department of Defense. And, it does not focus on the actual exchange of data that would occur—or should occur—between the 

parties. This has been a longstanding problem. 

Senator PETERS. Right. 

Mr. DODARO. As you know, the next National Polar-orbiting 

Operational Environmental Satellite System (NPOESS) program— 

before, there was supposed to be coordination on the whole development of polar orbiting satellites. They were supposed to have combined programs into one capable of satisfying both civilian and 

military requirements. They never could come together. After years 

of efforts and billions of dollars, they could not reach agreement. 

So, the Obama administration decided they could develop their own 

efforts individually, because NOAA is responsible for one polar orbiting satellite for the afternoon orbit and the Defense Department 

is responsible for the polar orbiting satellite in the morning orbit. 

Our view, now, is that, even if that is the policy decision, DOD and 

NOAA need to talk to one another and to coordinate. And, they 

could use spare parts. They could exchange between each other. It 

just makes eminent sense. But, for some reason, they just are too 

sluggish in implementing this recommendation. 

We have broader issues and recommendations with the space 

programs at DOD. There are 60 different entities operating it. Nobody is in charge, and we have made recommendations that there 

need to be some organizational structure changes. 

So, I would be happy to talk to you or your staff more about this 

issue, along with our experts in the area, but it is very frustrating. 

And, billions of dollars get spent here without adequate management coordination. 

Senator PETERS. Well, I would like to have further conversations 

with you about that. It certainly makes sense to coordinate that. 

But, I am also concerned about, in the President’s budget, significant cuts to NOAA and what that would mean for weather satellites—and those satellites, as you mentioned, are important for 

the Department of Defense as well. And, a cut on that weather 

forecasting capability has impacts, not only with civilian operations, but for defense operations as well. 

Mr. DODARO. Yes. 

Senator PETERS. And, we have to think about this in a coordinated way. Would you agree? 

Mr. DODARO. I definitely agree. In fact, I added the environmental satellites issue to our ‘‘High-Risk List’’ several years ago, 

because of concerns about gaps in environmental satellite data coverage that could have significant consequences both for DOD and 

its operations, but also to weather forecasting within the United 

States. These could include public safety and economic consequences, if we do not get adequate warnings, so that people can 

take precautionary measures. So, I am very concerned about this 

area—and I would be happy to talk to you more about it. 

Senator PETERS. I appreciate it. Thank you so much. 

Mr. DODARO. Sure. 

Chairman JOHNSON. Thank you, Senator Peters. 
24 

I want to quickly pick up on two comments you made. It ‘‘makes 

eminent sense’’ and ‘‘for some reason we just cannot get this thing 

done,’’ and then go right to Mr. George, the error correction authority. As a business guy, if my comptroller comes to me and says, 

‘‘Well, we can correct this for $1.50 or we can keep doing it the way 

we are doing it right now that costs $300’’—again, it makes eminent sense that you would go the route where it only costs you 

$1.50. But, for some reason—can you describe why we have not 

done this? Has there been an attempt in law? Has somebody tried 

to block this? Is there any rationale for not giving the IRS that 

error correction authority, so we can do it for $1.50? 

Mr. GEORGE. I have no idea whether or not there was resistance 

within Congress, but they do need legislative authority to do it. 

And, they currently do not have that. 

Chairman JOHNSON. Gene? 

Mr. DODARO. Yes. The IRS has been given this math authority 

for very specific types of tax credits and other issues. They have 

not been given the broader authority that Russell suggests—and 

we have made a similar recommendation. And, I think, with proper 

safeguards, the authority could be designed, I think it goes perhaps 

to mitigate concerns that Congress has about giving the IRS too 

much authority. There is a good case for it. With proper safeguards, it should be put in place. Nobody wants to disadvantage 

the taxpayer and the due process that they have. 

Chairman JOHNSON. That would be the resistance—legitimate 

resistance about giving the IRS more power than it already has— 

kind of a suspect Agency. I got that. 

I will go right to Senator Heitkamp, if you are ready. 

OPENING STATEMENT OF SENATOR HEITKAMP 

Senator HEITKAMP. I am. Thank you so much. Thank you—and 

a very important topic. And, as we look at narrower and narrower 

spending opportunities and more and more cuts, obviously eliminating duplication and making this work right is critical. 

An area that Senator Lankford and I have been focused on has 

been Federal hiring. Last Congress, I introduced the Flexible Hiring and Improving Recruitment, Retention, and Education (HIRE) 

Act of 2016 to help the Federal Government hire and retain vibrant 

and effective Federal workers. I think that is absolutely critically 

important to supporting the work that the government does. 

This idea came out of the challenges that we had during the 

Bakken explosion, and then taking a look at the challenges that we 

have in hiring U.S. Border Patrol and U.S. Customs and Border 

Protection (CBP) folks on the Northern border. So, my bill would 

give Federal Agencies a toolkit, I think, of resources to make hiring 

and human resources (HR) more flexible, improving recruitment 

and retention. 

I think, Gene, my question is for you. Ensuring that Agencies 

have the resources they need, I think, is absolutely critical to addressing the Federal hiring challenges. And, it was really great to 

hear OPM’s launching of the Hiring Excellence Campaign (HEC). 

How do we maintain efforts like that? What do you see, in terms 

of Federal hiring duplication improvements that we can make in 

the hiring structure that will get us people who actually pay atten-
25 

tion to duplication and come to us with great ideas on how we can 

save the taxpayers money? 

Mr. DODARO. One of the things that we suggest and recommend 

in our report is that these be a broadview of hiring efforts. We 

looked at hiring by Agencies in 2014, and we found there were 105 

different hiring authorities Agencies used. But, Agencies used only 

20 authorities to hire 91 percent of the people hired during that 

year. 

And so, our recommendation to OPM is to determine whether the 

less used authorities are helpful. And, if not, maybe, we should 

eliminate them—refine them. Which ones are effective? Have they 

effectively communicated that across the Departments and Agencies? 

In some cases, there may be a need to give additional authority, 

but we found that there is plenty of authority available—and Agencies are not using it fully. The question is: Why not? That is what 

we have recommended that OPM do. But, so far, they have only 

looked at and evaluated a handful of the 105 hiring authorities 

that we suggested they review. 

Senator HEITKAMP. When you look at the aging of the Federal 

workforce and you look at how many people, theoretically, will need 

to be hired to replace people who are going to retire—I think it is 

like a third of the people in the next 5 years. 

Mr. DODARO. Yes, right. 

Senator HEITKAMP. How do we improve that process? And, how 

do we encourage some autonomy on the part of the Agencies, but 

still maintain an overall systematic approach? And, how do we 

avoid duplication and slowdowns in Federal hiring? 

Mr. DODARO. Well, one of the first things would be to go back to 

regularly appropriating the money on time before the fiscal 

year—— 

Senator HEITKAMP. Really? 

Mr. DODARO. Yes. 

Senator HEITKAMP. So, we have to do our job in order for them 

to do theirs? 

Mr. DODARO. I hate to bring this up. [Laughter.] 

But, operating under a continuing resolution (CR) that is less 

than last year’s money effectively limits—— 

Senator HEITKAMP. The most amazing thing, Gene, is that we all 

agree with you, but somehow it does not happen. 

Mr. DODARO. I know. But, I would start there. 

Senator HEITKAMP. OK. 

Mr. DODARO. And then, I think you need to have OPM look at 

the hiring authorities. I do not think it is a problem of hiring authorities, to be honest with you. I think it is just a matter of execution on the part of the Agencies to use the hiring authorities. I 

think there is a cultural problem here that most of the personnel 

departments in Departments and Agencies are rule-based. And, 

they view their responsibility to make sure nobody does anything 

wrong, as opposed to making sure that they are proactive and helping the managers bring in the people that they need as soon as 

possible. 

So, I think that Congress needs to push OPM and the Chief 

Human Capital Officers Council (CHCOC) to change that approach 
26 

and make them much more proactive and supportive of the clients 

in their Agencies. I have no problem at the GAO in hiring good 

people. If we have the money and the authority, we can bring them 

in. But, I see other Departments and Agencies struggling with that 

process. OPM is not providing enough leadership in this area. I 

think you should look for more leadership out of OPM and the 

Chief Human Capital Officers Council, and put more pressure on 

them to be more aggressive and helpful. 

Senator HEITKAMP. I know that you know that this is a major 

focus of our Subcommittee this year. And so, I just want to close 

by thanking you and all of you for your service—but especially you 

and your team, Gene. You guys—if only we would listen to you, I 

think we would be better at what we do. So, thank you so much 

for the great work that GAO does, and that you do, personally. 

Mr. DODARO. Thank you. 

Chairman JOHNSON. Senator Carper. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. Thank you, Mr. Chairman. Good morning, everybody. Good morning again. I apologize for being in and out. We 

have a hearing in the Senate Environment and Public Works 

(EPW) Committee that I serve on as well, so I have been trying to 

do justice to both. We are working on cloning here in Congress to 

take care of more than one assignment at the same time. [Laughter.] 

I do not think they have done it yet, but I understand the Administration is going to put out a tax proposal—tax reform proposal today. And, we will wait to see what the details look like. 

But, I understand that it has some steep rate reductions, maybe, 

in corporate taxes and some other taxes. And, the Congressional 

Budget Office would suggest that it is going to make the deficit a 

lot bigger by, maybe, trillions of dollars. And, the Administration 

says that the way to offset that would be growth. And, I hope they 

are right, because it is a lot of increase in the deficit. But, what 

it does—it makes more important what you are talking to us 

about—that we find other ways to do our work more cost-effectively 

going forward. 

I never understood why we are so intent on reducing the amount 

of resources we provide to the IRS to do their job. We provide constituent service. All of us have constituent services operations in 

our offices back in our home States. We have three counties in 

Delaware. We have offices in all three counties. And, we get a lot 

of inquiries that are tax-related and that pertain to the IRS. 

The IRS used to provide reasonably good responses. Over time, 

it has degraded. And, one of the reasons why is because, when we 

make changes in the Tax Code, we usually make them late in the 

calendar year—and they become effective beginning in the following calendar year. We do not make the Tax Code simpler and 

easy to understand and comply with. And then, to add insult to injury, we reduce the amount of resources that the IRS has to—either through technology or through people—help explain and work 

through all of this. It is mind-boggling to me. 

I am told that, for every dollar that we might increase for the 

resources of the IRS, we actually increase revenues by a substan-
27 

tial amount. Mr. Dodaro, do you know anything about that? Have 

you heard anything along those lines? 

Mr. DODARO. Yes. They do have a good return on the dollar investment for every dollar that they are given. What we have noted, 

though, is that the IRS cannot, generally, tell you which specific 

enforcement activities would lead to a greater marginal return on 

the investment. And so, we think that they ought to collect and use 

better information to determine what is the most effective way to 

get the additional ‘‘bang for the buck’’ and have better ROI information, in order to do that. So, with that, they could use whatever 

resources Congress gives them in a better way. 

Senator CARPER. Good. Thank you. Commissioner Koskinen was 

before the Senate Finance Committee not too long ago. And, I 

asked him about this, and he said, ‘‘We believe, for every extra dollar that we would be provided in resources, we could pay back $4.’’ 

I have heard other estimates that are even higher than that, but 

it sounds like real money to me. 

This might be a question for Russell George. Mr. George, it is 

nice to see you. One of the other things that the IRS has asked for 

is something called ‘‘streamlined critical pay authority,’’ which is 

something that you know a little bit about. Would you just take a 

minute to explain what it is and why you think it might be important, and the right thing for us to give them? 

Mr. GEORGE. Yes. Because of the technical nature of many of the 

responsibilities that they have, they have to compete with private 

sector entities in order to gain the expertise needed to fill those positions. And, because of the disparity between what the private sector pays and what the public sector pays, that authority allows, not 

a huge pay differential, but enough so that you can attract—and 

they have attracted—key and very effective officials—government 

workers. And, that authority expired recently. And, they lost every 

single one of the people who were hired under that authority. So, 

we highly support—and, actually, TIGTA recommended that that 

authority be provided once again to the IRS. 

Senator CARPER. Are you familiar also with the issue of folks 

who are preparing taxes and getting paid for it—and they are not 

certified public accountants (CPAs)—they are not necessarily 

accountants, but they are people who routinely prepare millions— 

maybe tens of millions of tax returns—and the work that they do 

is not always very accurate? 

Mr. GEORGE. Oh, most definitely. Earlier, Gene spoke about this, 

but we, too, at TIGTA have, in the past, conducted tests where we 

would send in people who were acting the role of people who needed tax returns completed. And, at the outset of that endeavor, the 

response rates were terrible. I mean, it was less than 50 percent 

accuracy, in terms of tax—— 

Senator CARPER. What would you suggest that we do about 

that—Congress? 

Mr. GEORGE. Well, because of limited resources, as was pointed 

out, the IRS is relying on Volunteer Income Tax Assistance (VITA) 

centers, more so. They still have their own tax assistance centers, 

but they are not fully staffed because of resource limitations. The 

IRS directs people to their website, which is helpful if you are computer literate. And, unfortunately, many people who are senior citi-
28 

zens or who are not financially able to gain access to computers are 

not able to take advantage of that. But, there are ways in which 

to address this. 

Senator CARPER. Thank you. Mr. Dodaro. 

Mr. DODARO. We have an outstanding recommendation that Congress give the IRS the authority to require some certification of 

these tax preparers—not an onerous thing, but some minimal educational certification requirements, because there are so many tax 

returns prepared by these preparers. A couple of other things Congress could do to help the IRS—— 

Senator CARPER. Good. Please. 

Mr. DODARO. One is to lower the threshold for the requirement 

to electronically file form W–2, for example. Right now, if you file 

250 or more information returns annually, then you have to file 

electronically. If you lowered that to 5 to 10 returns, then you 

would be OK. As of February 2017, The Social Security Administration (SSA) had received about 17 million paper returns. And so, 

they are still somewhat drowning in paper, even though more returns come in electronically. So, that would be a big help. 

Senator CARPER. OK. 

Mr. DODARO. You would need fewer people, because the paper returns have to be handled, they have to be coded, and they have to 

be converted. 

Also, it would be helpful to expand the mandate for partnerships 

and corporations, including S Corporations, to file tax returns electronically as well. These are very complicated entities, and having 

more information in an electronic format would be helpful. So, 

those are the things we would recommend. And, we talked earlier 

about giving IRS broader authority, so they could correct errors 

with proper safeguards to have taxpayers appeal if they think they 

have not been treated fairly. Expanded authority—as Russell pointed out before and as Senator Johnson mentioned—would also allow 

correction of tax returns without a costly audit. It just makes sense 

to give them that authority. And, between GAO and the IG, we 

could check to make sure they are using those authorities properly 

and not disadvantaging taxpayers. 

Senator CARPER. Mr. Chairman, the words of my father are ringing in my ears: ‘‘Just use some common sense.’’ And, I think we 

have heard about six good ideas here, today. And, I am interested 

in pursuing them, and I hope my colleagues will want to join me. 

Thank you. 

Chairman JOHNSON. I think we are. 

I know we are going to have a vote called here at 11:30, so we 

have a few more minutes left. But, I do want to go back to Chancellor Blank really quickly, because this is a duplication hearing. 

In your testimony—remind me again—how many different Agencies does your university report to in some way, shape, or form? 

Ms. BLANK. Forty-three. 

Chairman JOHNSON. Forty-three. Again, you are not opposed to 

regulation, but what you would like is some cooperation and coordination—uniform, common types of standards, correct? 

Ms. BLANK. Absolutely. 

Chairman JOHNSON. Is part of the problem not that you are reporting very similar things, but that each Agency has their own 
29 

process for developing their little questionnaire? How much do you 

think you could reduce it? Just really talk—if you can give one example of what we are talking about here. 

Ms. BLANK. It is hard to come up with dollar figures on something like this, and I think the real issue is the time of researchers 

actually going into teaching and research, as opposed to paperwork. 

So, let me give an example of a particular project where there was 

a great deal of interest in trying to use a variety of samples that 

another research project had collected. These are medical tissue 

samples. And, it took over a year for the researchers to work their 

way through a variety of approval processes. They finally simply 

gave up on the project entirely. It was very closely related to some 

of the issues around Alzheimer’s—had a real potential for expanding our research in that area. And, they essentially wasted a year 

of their time trying to get approvals on something that they simply 

could not get approvals for, because enough different Agencies and 

approval processes had to be gone through. All of them required 

different things. So, they just said, ‘‘This is not worth our time.’’ 

They gave up on it. 

Chairman JOHNSON. Kind of off of the top of your head, can you 

just name some of the Agencies? Not to point a finger at them, but, 

I mean, just going through—the U.S. Department of Agriculture 

(USDA), HHS, the Food and Drug Administration (FDA)—— 

Ms. BLANK. It is all of the major Agencies—the National Science 

Foundation (NSF), the National Institutes of Health (NIH), USDA, 

and the U.S. Department of Energy (DOE). Those are some of the 

big funders. 

I might also say that the IG’s office—while it does very good 

work—is also often a problem here. And, they often disagree with 

the Agencies on what certain standards should be. And so, they 

come in and audit us and hold us accountable for doing things the 

way the Agencies told us to do them and say that that is wrong, 

and then ding us in various ways for that. Without better coordination between the IG and the Agency, it means that there are two 

groups in each Agency coming at us—often with different standards and different beliefs. And, that type of coordination just has 

to start occurring. 

Chairman JOHNSON. In your testimony, you use the exact same 

language that I talk about—layer upon layer upon layer. I mean 

procurement policy. 

Ms. BLANK. Yes. 

Chairman JOHNSON. We have layer upon layer upon layer of different controls designed to prevent us from wasting a dollar. And, 

we probably spend billions trying to comply with all of the layers 

of regulation. So, we have to, in some way, shape, or form, figure 

out how to cut through that—provide some uniform standards on 

similar types of approvals, where you are not having to do—some 

of these things conflict, right? You have one over here. If you comply with this one, you are probably out of compliance with something over on the other—— 

Ms. BLANK. That is part of the problem, yes. 

Chairman JOHNSON. OK. Senator McCaskill, do you have anything? 
30 

Senator MCCASKILL. Yes. First, on the Do Not Pay (DNP) Working System, is it true that we are going to have to do something, 

in order to let the IRS get the full Death Master File (DMF)? 

Mr. DODARO. Yes. The Social Security Administration believes 

there needs to be an amendment to the Social Security Act for 

Treasury to get the full DMF. And, this includes about 10 percent 

more records. We think this is important and encourage Congress 

to do—— 

Senator MCCASKILL. That should definitely go in our legislation. 

The notion that we cannot figure out who has died before we pay 

them—I mean, we have talked about this in this Committee many 

times. 

Mr. DODARO. Right. 

Senator MCCASKILL. We pay and then chase, and that never has 

a good ending. We have to figure out how not to pay up front, instead of paying and chasing. It is just something basic, like knowing who is dead. It seems to me—— 

Mr. DODARO. Right. 

Senator MCCASKILL. If the Federal Government cannot figure 

that out, then there is no hope. [Laughter.] 

There is no hope. 

I wanted to briefly talk to you, Dr. Blank, because I care very 

much about the Clery Act—and I am painfully aware of how laborious that particular requirement is. And, I would not mind it 

being laborious if we were getting data that allowed us to actually 

get a handle on an apples-to-apples comparison—campus-to-campus—apples-to-apples comparison between communities and campuses. But, because the Clery Act does not mirror the Uniform 

Crime Reporting (UCR) at the Federal Bureau of Investigation 

(FBI), we—in fact, your report talked about, Gene, we do not 

even—there are like 16 different ways sexual assault is defined 

against 4 different Agencies that are collecting data. We have no 

hope of understanding this problem if the data that we are collecting is not done in a way that it can support good public policy— 

and there is no question that this is a problem here. 

Would your police department at the University of Wisconsin be 

willing, if we could do it, to do the same standards for Clery that 

they have for UCR? 

Ms. BLANK. We would be delighted to have that type of coordination. I might say that it is a further problem on our campus that 

the University of Wisconsin system requires us to report in a different format and in a different way as well. So, we have three different reporting standards on—— 

Senator MCCASKILL. You have Clery, you have UCR, and you 

have State. 

Ms. BLANK. Yes. 

Senator MCCASKILL. Yes. Well, it would be good if we could figure out a way just to make everybody do UCR. 

Ms. BLANK. I agree. 

Senator MCCASKILL. And then, you are doing the same definitions for each crime. You can compare community to campus—all 

of those things. And, I made the mistake in a public forum of saying that I thought Clery—I was not, frankly, as articulate as you 

were, talking about how important Clery is and that you want that 
31 

data. I just said that Clery is messed up—and, of course, everybody 

came down on my head like, ‘‘oh, my gosh, you cannot quit making 

campuses report this data,’’ which, of course, is not what I intended. I want the data to be good, and I want police departments 

to spend most of their time catching people who are doing bad 

things to people, rather than trying to figure out three different reporting standards. 

Ms. BLANK. I agree completely. 

Senator MCCASKILL. All right. Maybe we can put that in also. 

I want to also say that I think if we cannot get NIH and—especially, if we could just get NIH and the NSF to agree on one standard for reporting and have it be interchangeable—I mean, that 

would do a lot for all of the medical research facilities in this country. 

Ms. BLANK. Both the issue of putting in reports—reporting on effort and on conflicts of interest and on steady progress—as well as 

what happens after something is completed—where it gets filed. As 

you may know, there is a recent requirement that is going to be 

going into effect, asking us to file the data for all research that is 

federally funded. Every Agency is doing this differently, right? And, 

you get many projects that are funded by multiple Agencies. That 

creates just an enormous—— 

Senator MCCASKILL. And, by the way, the data is not very useful 

then. 

Ms. BLANK. Absolutely not. You cannot find it. 

Senator MCCASKILL. Because somebody comes along, and they 

have to go to four or five different databases. And, invariably, what 

happens is, we end up paying a contractor to make the databases 

talk to each other, when it would be much simpler if we would just 

require they do one set of data across Agencies. 

Chairman JOHNSON. We add another layer. 

Senator MCCASKILL. We add another layer. 

And, finally, I want to give you a chance, Mr. George, to talk 

about the problem at the IRS, because we are trying to starve them 

and make sure that they do not have adequate resources. I mean, 

right now, a taxpayer that has a serious problem that they need 

addressed—they are the customer of the IRS—they are sitting on 

the phone to talk to a real person—they are sitting on the phone 

for 10 hours—the customer. I mean, this is all under the idea of 

‘‘let us make sure the IRS—let us cut it and cut it and cut it, because we all hate the IRS.’’ OK. We all hate the IRS. Let us have 

enough people there, so they can do their job and serve the taxpayers that deserve to have their questions answered—and, particularly, deserve to catch the people that are trying to get tax 

credits that they do not deserve. 

Mr. GEORGE. Senator, the IRS is a revenue-generating arm of the 

Federal Government. It needs the resources necessary to help people comply with their tax obligations. There are studies that show 

that, the easier you make it to comply with your taxes, the more 

likely people are to do so. 

But, Senator, if I may just take one quick minute, because 

I—in response to a statement by the Chairman and by Senator Peters about multiple refunds going to tens of thousands of addresses—in response to our identifying this, the IRS has instituted some 
32 

changes. And, they just reported to us that, in April of this year, 

they were able to stop over 92,000 of these ill-gotten gains—almost 

half a billion dollars. So, some progress is being made there. 

Chairman JOHNSON. OK. I appreciate that. 

Senator MCCASKILL. That is good. 

Mr. GEORGE. I just wanted to give them credit. 

Chairman JOHNSON. And, by the way, I have been making this 

point for quite some time. The real solution here is simplifying the 

Tax Code. We can talk about tax reform. I would much rather be 

talking about tax simplification—tax rationalization. And then, I 

think, you actually could have an IRS that does its job—responds 

to the customers—the American taxpayer—and can actually do it 

with less money. But, it is about tax simplification. That is really 

the solution. So, hopefully, we can work together on that in a bipartisan fashion. 

I want to thank all of you. Again, this hearing, I think, has 

pointed us in a direction. You will see that this Committee has a 

tradition of working in a bipartisan fashion. You hear it from a 

number of Senators right here. We are going to hop on this, work 

with the Agencies, and work with all of you, quite honestly, to try 

and address the problems that you have so ably highlighted here. 

So, this is very valuable. This will result, I think, in very positive, 

bipartisan action. So, thank you very much. 

With that, the hearing record will remain open for 15 days, until 

May 11th at 5 p.m., for the submission of statements and questions 

for the record. 

This hearing is adjourned. 

[Whereupon, at 11:39 a.m., the Committee was adjourned.] 
(33) 

A P P E N D I X 
34 

For Release on Delivery 

Expected at 10:00 a.m. ET 

Wednesday, Apri126, 2017 

GA0-17-562T 

United States Government Accountability Office 

Testimony 

Before the Committee on Homeland 

Security and Governmental Affairs, U.S. 

Senate 

GOVERNMENT 

EFFICIENCY AND 

EFFECTIVENESS 

Opportunities to Reduce 

Fragmentation, Overlap, 

and Duplication and 

Achieve Other Financial 

Benefits 

Statement of Gene L Dodaro 

Comptroller General of the United States 
35 

W!iy GAO Did This Study 

This st~tement discusses: 

GOVERNMENT EFFICIENCY AND 

EFFECTIVENESS 

Opportunities to Reduce Fragmentation, Overlap, and 

Duplication and Achieve Other Financial Benefits 

What GAO Found 

GAO's 2017 annual report identifies 79 new actions that Congress and executive 

branch agencies can take to improve the efficiency and effectiveness of 

government in 29 new areas. Of these, GAO identified 15 areas in which there is 

evidence of fragmentation, overlap, or duplication. For example, GAO found that 

the Army and Air Force need to improve the management of their virtual training 

programs to avoid fragmentation and better acquire and integrate virtual devices 

into training to potentially save tens of millions of dollars. GAO also identified 14 

areas to reduce the cost of government operations or enhance revenues. For 

example. GAO found that the Department of Energy could potentially save tens 

of billions of dollars by improving its analysis of options for storing defense and 

commercial high-level nuclear waste and fuel. 

Congress and executive branch agencies have made progress in addressing the 

645 actions that GAO identified from 2011 to 2016. Congressional and executive 

branch efforts to address these actions over the past 6 years have resulted in 

roughly $136 billion in financial benefits, of which $75 billion has accrued and at 

least an additional $61 billion in estimated benefits is projected to accrue in 

future years. 

Status of 2011-2016 Actions as of March, 2017 

11511' Congress Executive branch Total number of actions number of actions number of actions 

Status {percentage) (percentage) (percentage) 

Addressed 36 293 329 

(38%) (53%) (51%) 

Partially addressed 9 192 201 

(9%) (35%) (31%) 

Not addressed 50 65 115 

(53%) (12%) (18'%) 

Total 95 550 645 

(100%) (100%) (100%) 

Source GAO I GA0-17-562T 

Further steps are needed to fully address the remaining actions GAO identified. 

GAO estimates that tens of billions of additional dollars would be saved should 

Congress and executive branch agencies fully address the 395 actions that 

remain open, including the 79 new actions GAO identified in 2017. While these 

open actions span the government, a substantia! number of them are directed to 

seven agencies: the Departments of Defense, Health and Human Services, 

Homeland Security, Veterans Affairs, the Internal Revenue Service, Office of 

Management and Budget. and the Social Security Administration. For example, 

the Department of Health and Human Services could potentially save over a 

billion dollars annually by better aligning its payments to hospitals for the 

uncompensated care they provide to uninsured and low~income patients. 

-------------United States Government Accountability Office 
36 

Chairman Johnson, Ranking Member McCaskill, and Members of the 

Committee: 

The federal government faces a long-term, unsustainable fiscal path 

based on an imbalance between federal revenues and spending. 1 While 

addressing this structural imbalance will require fiscal policy changes, in 

the near term opportuntties exist to take action in a number of areas to 

improve this situation, including where federal programs or activities are 

fragmented, overlapping, or duplicative. To call attention to these 

opportunities, Congress included a provision in statute for GAO to identify 

and report on federal programs, agencies, offices, and initiatives-either 

within departments or government-wide-that have duplicative goals or 

activities. 2 This effort, supported by the Senate Committee on Homeland 

Security and Governmental Affairs and others, has brought much-needed 

attention to these areas. 

In our 2011 to 2016 reports, we presented 645 actions in 249 areas for 

Congress or executive branch agencies to reduce, eliminate, or better 

manage fragmentation, overlap, or duplication; achieve cost savings; or 

enhance revenue from 2011 to 2016. 3 Congress and executive branch 

agencies have addressed 329 (51 percent) of those actions resulting in 

about $136 billion in financial benefits. 4 We estimate tens of billions more 

dollars could be saved by fully implementing our open actions. 5 

1

GAO, The Nation's Fiscal Health: Action 1s Needed to Address the Federal Government's 

Fiscal Future, GA0-17-237SP (Washington, D.C.: Jan. 17, 2017), and Financial Audit 

Fiscal Years 2016 and 2015 Consolidated Financial Statements of the US. Government, GA0-17-283R (Washington, D.C.: Jan. 12, 2017}, GAO's analysis of the federal fiscal 

outlook can be found at http:I/VV'MV.gao.gov/flscal_outlooklfederal_fisca!_outlook/overview. 

2Pub. L. No. 111-139, § 21, 124 Stat. 8, 29 (2010), codified at 31 U.S.C. § 712 note. 

3See GAO's Duplication and Cost Savings webpage for links to the 2011 to 2016 annual 

reports: http·ffWMN.gao.gov/duplication/overview. 

41n calculating these totals, we relied on individual estimates from a variety of sources, 

which considered different time periods and utilized different data sources, assumptions, 

and methodologies. These totals represent a rough estimate of financial benefits and have 

been rounded down to the nearest $1 billion. 

51n calculating this estimate, we relied on individual estimates from a variety of sources, 

which considered different time periods, and utilized different data sources, assumptions, 

and methodologies. These individual estimates are subject to increased uncertainty, 

depending on whether, how, and when they are addressed. This amount represents a 

rough estimate of financial benefits. 

Page 1 GA0-17·562T 
37 

Our 2017 annual report, which is being released today, presents 79 new 

actions across 29 new areas for Congress or executive branch agencies 

to reduce, eliminate, or better manage fragmentation, overlap, and 

duplication and achieve other financial benefits. 6 My testimony today 

describes (1) new issues identified in our 2017 annual report; (2) the 

progress made in addressing actions identified in our past reports; and (3) 

examples of open actions directed to Congress or executive branch 

agencies. My comments are based upon our 2017 annual report, as well 

as our update on the progress made in implementing actions that we 

have suggested in our previous annual reports. These efforts are based 

upon work we previously conducted in accordance with generally 

accepted government auditing standards. More details on our scope and 

methodology can be found in the full report. 

Figure 1 outlines the definitions we have used since 2011 for 

fragmentation, overlap, and duplication for this work. 

6ren of the new actions were added to 6 existing areas. GAO, 2017 Annual Report: 

Additional Opportunities to Reduce Fragmentation, Overlap, and Duplication and Achieve 

Other Financial Benefits. GA0·17-491SP (Washington. D.C.: Apr. 26, 2017). 

Page2 GA0~17~562T 
38 

Figure 1: Definitions of Fragmentation, Overlap, and Duplication 

Fragmentation refers to those 

circumstances in which more than 

than 

GAO i GA0-17 ~2T 

Overlap occurs when 

agenc1es or 

goals, engage similar activities or 

to achieve them, or target 

Page3 

Duplication occurs when two or 

same beneficiaries, 

GA0-17-562T 
39 

New Opportunities 

Exist to Improve 

Efficiency and 

Effectiveness across 

the Federal 

Government 

Our annual report, the seventh in the series, identifies new areas where a 

broad range of federal agencies may be able to achieve greater efficiency 

or effectiveness. For each area, we suggest actions that Congress or 

executive branch agencies could take to reduce, eliminate, or better 

manage fragmentation, overlap, or duplication, or achieve other financial 

benefits. In addition to identifying new areas, we have continued to 

monitor the progress Congress and executive branch agencies have 

made in addressing actions we previously identified (see sidebar). 

Of the 79 new actions we identified in our 2017 annual report, 26 are 

directed at 15 areas in which we found evidence of fragmentation, 

overlap, or duplication in government missions and functions. As 

described in table 1, these 15 areas span a wide range of federal 

functions or missions. 

Page4 GA0-17-562T 
40 

Table 1: 2017 Fragmentation, Overlap, and Duplication Areas 

Mission 

Agriculture 

Defense 

General 

government 

Homeland 

security/law 

enforcement 

Fragmentation, overlap, and duplication area identified 

1. Federal Actions to Protect Pollinators and Improve Agricultural Production: Through better 

coordination with other federal agencies, the U.S. Department of Agriculture could reduce the potential 

for fragmentation among efforts to monitor the population and health status of wild, native bees that 

provide valuable pollination services to agriculture and the environment 

2. Anny and Air Force Virtual Training: The Army and Air Force need to improve the management and 

oversight of their virtual training programs to avoid fragmentation and more efficiently and effectively 

acquire and integrate virtual devices into operational training and potentially save tens of millions of 

dollars. 

3. Construction for Military Contingency Operations: By improving oversight of contingency 

construction projects, the Department of Defense (DOD) could potentially reduce duplication and save 

millions of dollars. 

4. Defense Weather Satellites: DOD could reduce the risk of gaps in weather sate!llte capabilities by 

establishing formal mechanisms for coordination and collaboration with the National Oceanic and 

Atmospheric Administration. 

5. Department of Defense Advertising: DOD should improve coordination and information sharing 

across its fragmented advertising programs for more efficient and more effective use of resources. 

6, Federal Critical Raw Materials Activities: To better manage fragmentation of agencies' critical raw 

materials activities, the Office of Science and Technology Policy should enhance interagency 

collaboration and take full advantage of agencies' expertise and resources. 

7. Federal Grant Awards: The National Park Service, Fish and Wildlife Service, Food and Nutrition 

Service, and the Centers for Disease Control and Prevention have not established guidance and a 

forma! process to ensure their grant~management staff review applications for potentia! duplication 

and overlap among grants in their agencies before awarding competitive grants and cooperative 

agreements. 

8. Federal Hiring: The Office of Personnel Management and agencies should identify opportunities to 

refine federal hiring authorities, expand access to specific authorities found to be highly efficient and 

effective, and eliminate those found to be less effective_ 

9. Grants for Transit Resilience: To mitigate the negative effects of fragmentation across federal 

funding streams, the Department of Transportation should examine the $3.6 blllion in funding the 

Federal Transit Administration awarded toward transit resilience projects for potential duplication with 

other resilience efforts. 

10. Recovery Operations Center Closure: A proposal for centralized analytics and investigative support 

for the oversight community would help Congress decide whether to authorize such an entity to 

mitigate the risk of potential duplication and fragmentation and provide valuable tools for targeting 

resources to help reduce improper payments. 

11. Use of the Do Not Pay Working System:a The Office of Management and Budget (OMS} needs to 

develop a strategy and additional guidance on the use of the Do Not Pay working system, and 

Congress should consider amending the Social Security Act to explicitly allow the Social Security 

Administration to share its full death file through the system to reduce improper payments and mitigate 

the risks associated with potential duplication. 

12. Missing and Unidentified Persons Data: The Federal Bureau of Investigation and National Institute 

of Justice could reduce overlap and fragmentation of data on missing and unidentified persons by 

evaluating and implementing options to improve data sharing, thereby helping to solve these cases 

more efficiently. 

Page 5 GA0·17·562T 
41 

Mission Fragmentation, overlap, and duplication area Identified 

13. Sexual Violence Data: OMB should convene an interagency forum to better manage fragmentation of 

efforts to collect sexual violence data that can improve the overall understanding of the scope of this 

problem in the United States. 

International 14. Foreign-Assistance Data Quality: As a key step to address the potential overlap in the collection and 

affairs reporting of foreign~assistance information, the Department of State, in consultation with U.S. Agency 

for International Development and OMS, needs to improve data quality to ensure consistency in 

published infonnation. 

Science and the 15. Administrative Requirements on Federal Research: To reduce universities' workload and 

environment compliance costs, the multiple agencies that award federal research grants should better coordinate 

and manage fragmentation and address variation in grants' administrative requirements. 

Soorce GAO I GA0.17-562T 

"The Do Not Pay Working System is a centralized data-matching service that allows agencies to 

review multiple databases to help verify a payee's eKgibility to receive the funds before making a 

payment. 

In addition to areas of fragmentation, overlap, and duplication, our 2017 

report presents 43 opportunities for Congress or executive branch 

agencies to take action to reduce the cost of government operations or 

enhance revenue collections for the U.S. Treasury across 14 areas of 

government (see table 2). 

Table 2: 2017 Areas for Cost Savings and Revenue Enhancement 

Mission 

Defense 

Energy 

General 

government 

Cost savings and revenue enhancement area identified 

16. Department of Defense (DOD} Commissaries: By managing its commissaries more efficiently, DOD 

could position itself to better achieve its cost savings target of $2 billlon. 

17. DOD Special and Incentive Pays: DOD needs to incorporate key principles of effective human 

capital management in its special and incentive pay programs, which could lead to program 

improvements that could save tens of millions of dollars annually. 

18. Navy Shipbuilding: The Navy could achieve cost savings from improved use of warranties and 

guarantees in shipbuilding. 

19. Storage of Defense and Commercial Nuclear Waste: The Department of Energy could potentially 

save tens of billions of dollars by improving its analysis of options for permanently storing defense 

high-level nuclear waste and commercial spent nuclear fuel. 

20. Department of Veterans Affairs (VA} Medical Facility Construction: VA could better avoid cost 

increases and schedule delays on its medical facility construction projects by improving management 

of facility construction. 

21. Government Purchase Cards: An increased focus on analyzing agency-wide purchase card use 

would provide federal agencies with opportunities to leverage the government's buying power and 

potentially obtain substantial cost savings on the billions spent annually using purchase cards. 

22 Inland Waterways Fuel Tax: The Internal Revenue Service could enhance revenue and better gauge 

whether vessel operators are complying with the inland waterways fuel tax by obtaining access to 

proprietary data from the U.S. Anny Corps of Engineers. 

PageS GA0·17·562T 
42 

Mission 

Health 

Income security 

Smtrce. GAO. I GA0-17-562T 

Cost savings and revenue enhancement area identified 

23. Land Mobile Radio Procurement: The Office of Management and Budget could improve agencies' 

communication abilities and reduce the hundreds of millions of dollars spent annually on !and mobile 

radio equipment by including this technology in its initiative to manage spending across government 

for commonly purchased goods. 

24. Refundable Tax Credits: The Internal Revenue Service could potentially realize hundreds of 

millions of do11ars in cost savings by improving the administration of three large refundable tax 

credits. 

25. Federal Payments for Hospital Uncompensated Care: By better aligning federal payments for 

hospitals' uncompensated care-services provided to uninsured and !ow-income patients for which 

hospitals are not fully compensated-with hospitals' costs, the Centers for Medicare & Medicaid 

Services could potentially save over a billion dollars annually. 

26. Medicaid Personal Care Services: The Centers for Medicare & Medicaid Services needs timely, 

complete, and consistent data on Medicaid personal care services so it can effectively monitor these 

services, which could lead to savings of tens of millions of dollars annually. 

27. Medicare Advantage Improper Payments: The Centers for Medicare & Medicaid Services could 

recover hundreds of millions of dollars in improper payments by improving its processes to audit 

payments made to Medicare Advantage organizations. 

28. Patient Protection and Affordable Care Act Enrollment: By strengthening enrollment controls and 

better managing fraud risk for health-insurance coverage provided under the Patient Protection and 

Affordable Care Act, the Centers for Medicare & Medicaid Services could realize cost savings 

associated with subsidies and related spending, which were estimated to cost $56 billion for fiscal year 

2017. 

29. Disability Insurance: The Social Security Administration could recover tens of millions of dollars 

annually in Disability Insurance (01) overpayments by increasing withholding rates of individuals' 

ongoing monthly Dl benefit payments. 

In addition to the new areas presented in this year's annual report, we 

identified 1 0 new actions that relate to 6 existing areas presented in our 

2011 to 2016 annual reports. 7 

Congress and 

Executive Branch 

Agencies Continue to 

Address Actions that 

Span the Federal 

Government 

As shown in figure 2, Congress and executive branch agencies have 

made progress in addressing or partially addressing many actions we 

identified from 2011 to 2016. As of March 2017, 82 percent of the 645 

total actions we had identified since 2011 have been addressed or 

partially addressed. See our online Action Tracker for the status of all 

actions. 

7 See appendix V of GA0-17 -491 SP for more information. 

Page7 GA0-17·562T 
43 

Benefits Related to 

Actions taken by Congress 

and Executive Branch 

Agencies 

Figure 2: Progress in Addressing 2011 to 2016 Actions as of March 2017 

Number of actions 

700 

600 

500 

400 

300 

200 

100 

2011 

Year 

2012 

Addressed 

Partially addressed 

Not addressed 

Source GAO I GA0-17-5621 

2013 2014 2015 2016 

Congress and executive branch agencies have addressed 329 (51 

percent) of the 645 actions we identified from 2011 to 2016 (see table 3) 8 

We found that these efforts have resulted in roughly $136 billion in 

financial benefits-$75 billion from 2010 through 2016, with at least an 

additional $61 billion in estimated benefits projected to be accrued in 

future years-' 

80f the 329 actions that have been addressed, 83 of them were closed (addressed or 

consolidated) since our last annual report in April 2016. Actions were assessed as of 

March 2017, when we completed the assessment of the status of previously identified 

actions 

9!n calculating these totals, we relied on individual estimates from a variety of sources, 

which considered different periods and utilized different data sources, assumptions, and 

methodologies. These totals represent a rough estimate of financial benefits and have 

been rounded down to the nearest $1 blllion 

Page 8 GA0-17-562T 
44 

Table 3: Status of 2011 to 2016 Actions Directed to Congress and the Executive Branch, as of March. 2017 

Status 

Addressed 

Partially addressed 

Not addressed 

Total 

Source GAO ! GA0-17-562T 

114th Congress' 115th Congress Executive branch Total 

(number of actions (number of actions (number of actions (number of actions 

[percentage]) [percentage]) [percentage]) [percentage]) 

36 36 293 329 

(38%) (38%) (53%) (51%) 

12 9 192 201 

(13%) (9%) (35%) (31%) 

47 50 65 115 

(49%) (53%) (12%) (18%) 

95 95 550 645 

(100%) (100%) (100%) (100%) 

Note: "Addressed" includes 30 actions categorized as "consolidated or other'' and three actions 

~closed-not addressed." Actions categorized as "consolidated or other" and "closed-not addressed~ 

are no longer assessed. In most cases, these actions were replaced or subsumed by new actions 

based on additional audit work or other relevant information. For example, actions categorized as 

"consoHdated or other'' may have been consolidated into other actions that we track based on 

subsequent audit work or significant changes in agency circumstances, or they may have been 

redirected from a congressional to an executive branch action, or vice versa. Actions may be "closednot addressed" if the action is no longer relevant or applicable. Six actions were categorized as 

"consolidated or other" and one as ''closed~not addressedH this year. 

8

ln assessing actions suggested for Congress, we applied the following criteria: "addressed" means 

relevant legislation has been enacted and addresses a!! aspects of the action needed; ~partially 

addressed~ means a relevant bill has passed a committee, the House of Representatives, or the 

Senate during the current congressional session, or relevant legislation has been enacted but only 

addressed part of the action needed; and ''not addressed" means a bill may have been introduced but 

did not pass out of a committee, or no relevant legislation has been introduced. At the beginning of a 

new congressional session, we reapply the criteria. As a result, the status of an action may move 

from "partially addressedp to "not addressed" if relevant legislation is not reintroduced from the prior 

congressional session. 

bin assessing actions suggested for the executive branch, we applied the following criteria: 

"addressed" means implementation of the action needed has been completed; "partially addressed" 

means the action needed is in development, or started but not yet completed; and "not addressed" 

means the administration, the agencies, or both have made minimal or no progress toward 

implementing the action needed. 

The progress Congress and executive branch agencies have made in 

addressing our open actions has resulted in significant financial benefits. 

Table 4 highlights examples of these results. 

Page9 GA0-17-562T 
45 

Table 4: Examples of Addressed or Partially Addressed Actions with Associated Cost Savings and Revenue Enhancements 

Area name (annual report Actions taken 

year, area numbert 

Farm Program Payments Congress passed the Agricultural Act of 2014, 

(2011, Area 35} which eliminated direct payments to farmers. 

Domestic Ethanol Production Congress allowed the Volumetric Ethanol Excise 

(2011, Area 13) Tax Credit to expire at the end of2011, which 

eliminated duplicative federal efforts directed at 

increasing domestic ethanol production. 

Tax Policies and Enforcement Congress amended the audit procedures 

(2015, Area 17) applicable to certain large partnerships to require 

that they pay audit adjustments at the partnership 

level. 

Financial benefit 

Savings of approximately $44 billion from fiscal 

years 2015 through 2023, of which $10 billion 

has accrued and $34 billlon is expected to 

accrue in fiscal year 2017 or later, according to 

the Congressional Budget Office (CBO) 

Reduced revenue losses by $29 billion in fiscal 

year 2012 to fiscal year 2016, according to GAO 

analysis. 

Increased revenue of $9.3 billion from fiscal 

years 2019 to 2025, according to the Joint 

Committee on Taxation. 

Strategic Petroleum Reserve 

(2015, Area 15) 

The Department of Energy completed a long-term Savings of $8 billion from selling crude oil from 

strategic review of the Strategic Petroleum the reserve from 2018 through 2025, according 

Reserve in August 2016, as Congress required in to CBO. 

2015. 

Combat Uniforms (2013, Area The Army chose not to introduce a new family of 

2) camouflage uniforms into its inventory. 

Agencies' Use of Strategic 

Sourcing (2013, Area 23) 

Real Estate-Owned Properties 

(2014, Area 18) 

Overseas Defense Posture 

(2012, Area 37) 

The Department of Veterans Affairs (VA) 

evaluated strategic sourcing opportunities and set 

goals and metrics such as increasing managed 

spending for information-technology (IT) products 

and services. 

The Department of Housing and Urban 

Development implemented improvements to its 

property custody approach including reducing the 

number of foreclosed properties that it acquires by 

using other means of resolving troubled 

mortgages. 

United States Forces Korea conducted a series of 

consultations with the military services to evaluate 

the costs and benefits associated with tour 

normalization, and the Department of Defense 

(DOD) decided not to move forward with the full 

tour normalization initiative because it was not 

affordable. 

Cost avoidance of about $4.2 billion over 5 years, of which $2.5 billion has accrued since 

fiscal year 2014 and $1.7 billion is expected to 

accrue in fiscal year 2017 or later, according to 

agency estimates. 

Cost avoidance of about $3.6 billion from fiscal 

years 2013 through 2015, according to agency 

estimates. 

Savings of as much as $3.4 billion from July 

2013 through June 2016, according to GAO 

estimates. 

Savings of an estimated $3.1 billion from fiscal 

years 2012 through 2016, according to agency 

estimates. 

Homeland Security Grants 

(2012, Area 17) 

Congress limited preparedness grant funding until Savings of $2.55 billion from fiscal years 2011 

the Federal Emergency Management Agency through 2013, according to GAO estimates. 

national preparedness assessment of 

Page 10 GA0-17-562T 
46 

Area name (annual report 

year, area numbert 

Overseas Military Presence 

(2011, Area 36) 

Treasury's Foreclosure 

Prevention Efforts (2016, Area 

17) 

lnforma~ion Technology 

Investment Portfolio 

Management (2014. Area 24) 

Defense Headquarters (2012, 

Area 34) 

Children's D1sabi!ity Reviews 

(2015, Area 21) 

Unobligated Balances (2016, 

Area 24) 

Source. GAO.j GA0.17·56ZT 

Actions taken 

DOD removed two brigade combat teams from 

Europe beginning in fiscal year 2013, as well as a 

number of support units that were no longer 

strategica!!y necessary on a permanent basis. 

The Department of the Treasury (Treasury) 

updated its analysis of estimated future 

expenditures for the Making Home Affordable 

program, reducing the estimated lifetime cost of 

the program. 

Seven agencies consolidated commodity IT areas 

to shared services in response to OMS's 2012 

guidance to review their portfolios and identify 

duplicative, low-value, and wasteful investments, 

contributing to savings. 

As required by Congress, DOD took steps to issue 

a plan to reduce the size of headquarters 

organizations, and Congress appropriated less 

than DOD requested for its fiscal year 2016 

appropriation. 

The Social Security Administration increased the 

number of Continuing Disability Reviews (CORs) 

for children receiving Supplemental Security 

Income (SSI) and expects to eliminate the CDR 

backlog for SSI children by the end of fiscal year 

2017, ensuring that only child SSI recipients who 

are eligible for benefits receive them. 

The Department of Energy's Western Area Power 

Administration (VVAPA} finalized a strategy to 

identify appropriate levels of unobligated balances 

within its Construction, Rehabilitation, Operation, 

and Maintenance (CROM) account, which focuses 

on maintaining reasonable and appropriate 

funding to ensure sustainability of the primary 

purposes of the account. 

Financial benefit 

Savings of approximately $2.3 billion in 

operations and support costs over 5 years, of 

which $1.8 bil!fon has accrued since fiscal year 

2013 and $500 million is expected to accrue in 

fiscal year 2017 or later, according to agency 

estimates. 

Savings of $2 billion as a result of deobligating 

funds in December 2016, according to agency 

estimates. 

Savings of an estimated $1.4 billion from fiscal 

years 2012 through 2015, according to agency 

estimates. 

Cost savings of approximately $609 million as a 

result of Congress reducing DOD's 2016 

operation and maintenance appropriation from 

the amount of DOD's budget request, according 

to GAO analysis, 

Cost savings of about $467 million as a result of 

the additional reviews conducted in fiscal year 

2013 and savings of more than $3 billion over 

time, according to GAO analysis. 

Cost savings of $92 million, as a result of 

decreasing the !eve! of unobligated balance as of 

fiscal year 2016 and returning the funds to 

Treasury, according to agency estimates. 

Note: The estimates in this report are from a range of sources. including GAO, executive branch agencies, the Congressional Budget Office, and the Joint Committee on Taxation. Some estimates have been updated since GAO's 2016 report to reflect more recent analysis. 

eC!ick the area name to go to GAO's online ActiOn Tracker for additional information. 

Page11 GA0·17·562T 
47 

Congress has also implemented a number of key government-wide 

statutory requirements in recent years that could help identify areas of 

fragmentation, overlap, or duplication, or help address issues we raise in 

this report, including the following: 

The Program Management Improvement Accountability Act. 10 

The act seeks to improve program and project management in certain 

federal agencies. Among other things, the act requires the Deputy 

Director of the Office of Management and Budget (OMB) to adopt and 

oversee implementation of government-wide standards, policies, and 

guidelines for program and project management in executive 

agencies. It further creates a Program Management Policy Council to 

act as an interagency forum for improving practices related to 

program and project management. This interagency collaboration and 

strengthened program management could help reduce fragmentation, 

overlap, and duplication among federal agencies. 

The Digital Accountability and Transparency Act of 2014 (DATA 

Act). 11 The DATA Act expands on previous federal transparency 

requirements to link federal agency spending to federal program 

activities so that taxpayers and policymakers can more effectively 

track federal spending. 12 Full and effective implementation of the act 

offers the promise of a much more complete and accurate 

understanding of federal spending by enabling-for the first time-the 

federal government as a whole to track these funds at multiple points 

in the federal spending life cycle, and significantly increasing the types 

and transparency of data available to Congress, agencies, and the 

general public. In what will be the first reporting of data in compliance 

with the act's requirements, agencies must submit second-quarter 

fiscal year 2017 data in compliance with the act's requirements for 

inclusion on USASpending.gov in May 2017. This information could 

potentially help identify areas of fragmentation, overlap, or duplication. 

Information Technology (IT) acquisition reform, known as the 

Federal Information Technology Acquisition Reform Act 

10Pub. L. No. 114-264,130 Stat.1371 (2016). 

11Pub. L. No. 113-101, 128 Stat. 1146 (2014). The DATA Act amended the Federal 

Funding Accountability and Transparency Act of2006. Pub. L. No. 109-282, 120 Stat. 

1186 (2006), codified at 31 U.S.C. § 6101 note. 

12GAO, DATA Act: OMB and Treasury Have Issued Additional Guidance and Have 

Improved Pilot Design but Implementation Challenges Remain, GA0-17-156 (Washington, 

D.C.: Dec. 8, 2016). 

Page 12 GA0-17·562T 
48 

(FITARA). 13 The effective and efficient acquisition and management 

of IT investments has been a long-standing challenge in the federal 

government. 14 FITARA holds promise for improving agencies' 

acquisition of IT and enabling Congress to monitor agencies' progress 

and hold them accountable for reducing duplication and achieving 

cost savings. FITARA includes several specific requirements related 

to existing areas in our fragmentation, overlap, and duplication work, 

such as implementing the federal data-center consolidation initiative, 

enhancing transf*3rency, improving risk management, and maximizing 

the benefits of government-wide software purchasing and the federal 

strategic sourcing initiative. 

The Improper Payments Elimination and Recovery Improvement 

Act of 2012 (IPERIA). 15 Improper payments are a long-standing, 

widespread, and significant problem in the federal governmenttotaling over $1.2 trillion since reporting requirements first began at 

some agencies in 2003. 16 IPERIA requires agencies to ensure that a 

thorough review of available databases occurs prior to the release of 

federal funds. We have identified numerous actions to reduce 

improper payments in several areas, such as Medicare improper 

payments, Medicaid improper payments, and refundable tax credits. 

13FITARA was enacted into law as a part of the Carl Levin and Howard P. "Buck" McKeon 

National Defense Authorization Act for Fiscal Year 2015, Pub. l. No. 113-291, div. A, title 

VIII, subtitle D.§§ 831-837, 128 Stat. 3292, 3438-3450 (2014). 

14GAO, Information Technology: OMB and Agencies Need to Focus Continued Attention 

on Implementing Reform Law, GA0-16-672T (Washington, D.C.: May 18, 2016). 

15Pub. L. No. 112-248, 126 Stat. 2390 (2013), codified at 31 U.S.C. 3321 note, as 

amended by the Bipartisan BudgetActof2013, Pub. L. No.113-67, §204, 127 Stat. 

1165, 1181 (2013), and the Federal Improper Payments Coordination Act of 2015, Pub. L. 

No. 114-109, §§ 2-4,129 Stat. 2225, 2225-27 (2015). 

16GAO, Improper Payments: Strategy and Additional Actions Needed to Help Ensure 

Agencies Use the Do Not Pay Working System as Intended, GA0-17-15 (Washington, 

D.C.: Oct. 14, 2016). 

Page 13 GA0-17-562T 
49 

Action on Remaining 

and New Areas Could 

Yield Significant 

Additional Benefits 

Significant Open Actions 

Directed to Congress 

While Congress and executive branch agencies have made progress 

toward addressing the 724 total actions we have identified since 2011, 

further steps are needed to fully address the 395 actions that remain 

open (i.e., partially or not addressed). 17 We estimate that tens of billions 

of dollars in additional financial benefits could be realized should 

Congress and executive branch agencies fully address open actions. 18 In 

addition to producing financial benefits, these actions make government 

more efficient; improve major government programs or agencies; reduce 

mismanagement, fraud, waste, and abuse; and increase assurance that 

programs comply with laws and funds are legally spent. 

Congress has used our work to identify legislative solutions to achieve 

cost savings, address emerging problems, and find efficiencies in federal 

agencies and programs. Our work has contributed to a number of key 

authorizations and appropriations. Congressional oversight has been 

critical in realizing the full benefits of our suggested actions, and it will 

continue to be critical in the future. In our 2011 to 2017 annual reports, we 

directed 97 actions to Congress, including 2 new congressional actions 

we identified in 2017. Of the 97 actions, 61 remained open (9 were 

partially addressed and 52 were not addressed) as of March 2017. 19 

Table 5 highlights areas with significant open actions directed to 

Congress. 

17The 724 total actions include the 79 new actions we identified in 2017. 

181n calculating this estimate, we relied on individual estimates from a variety of sources, 

which considered different time periods, and utilized different data sources, assumptions, 

and methodologies. These individual estimates are subject to increased uncertainty, 

depending on whether, how, and when they are addressed. This amount represents a 

rough estimate of financial benefits. 

19See app. I for information on open congressional actions. 

Page 14 GA0·17·552T 
50 

Table 5: Areas with Significant Open Actions Directed to Congress 

Annual 

report' 

2011 

2012 

2012 

2013 

2013 

2014 

2014 

2015 

2015 

2016 

2017 

Area description 

Social Security Offsets (Area 80): The Social Security Administration (SSA} needs data on pensions from noncovered 

earnings to better enforce offsets and ensure benefit fairness, which could result in estimated savings of $2.4 billion to 

$7.9 billion over 10 years if enforced both retrospectively and prospectively, according to the Congressional Budget 

Office {CBO) and SSA. The estimated savings would be less if SSA only enforced the offsets prospectively as it would not 

reduce benefits already received. 

Excess Uranium Inventories (Area 40): Giving the Department of Energy authority to sell or transfer excess uranium 

could provide substantia! revenue for the government In 2014, GAO estimated that actions in this area could increase 

revenue by about $1 billion. 

Stabilization, Reconstruction, and Humanitarian Assistance Efforts (Area 6): Improving the Department of Defense's 

(DOD) evaluations of stabilization, reconstruction, and humanitarian assistance efforts, and addressing coordination 

challenges with the Department of State and the U.S. Agency for International Development, could reduce overlapping 

efforts and result in the more efficient use of taxpayer dollars. Specifically, Congress should consider amending the 

legislation that supports the Overseas Humanitarian, Disaster, and Civic Aid~funded humanitarian assistance programDOD's largest humanitarian assistance program-to more specifically define DOD's role in humanitarian assistance, 

taking into account the roles and similar types of efforts performed by the civilian agencies. 

Crop Insurance (Area 19): To achieve up to $2 billion annually in cost savings in the crop insurance program, 

Congress could consider limiting the subsidy for premiums that are provided on behalf of individual farmers-as it limits 

the amount of payments to individual farmers in many farm programs-or reducing the subsidy or some combination of 

limiting and reducing these subsidies. 

Tobacco Taxes (Area 31): Federal revenue losses ranged from as much as $615 million to $1.1 billion between April 

2009 and 2011 because manufacturers and consumers substituted higher-taxed smoking tobacco products with similar 

tower-taxed products. To address future revenue losses, Congress should consider modifying tobacco tax rates to 

eliminate significant tax differentials between similar products. 

Disability and Unemployment Benefits (Area 8): Congress should consider passing legislation to prevent individuals 

from collecting both full Disability Insurance benefits and Unemployment Insurance (UI} benefits that cover the same 

period, which could save $1.9 bil!fon over 10 years in the Social Security Disability Insurance program, according to CBO. 

Advanced Technology Vehicles Manufacturing Loan Program (Area 13): Unless the Department of Energy can 

demonstrate demand for new Advanced Technology Vehicles Manufacturing (ATVM} loans and viable applications, 

Congress may wish to consider rescinding all or part of the remaining $4.2 billion in credit subsidy appropriations 

Medicare Payments to Certain Cancer Hospitals (Area 19}: To achieve almost $500 million per year in program 

savings, Congress should consider modifying how Medicare pays certain cancer hospitals. 

DOD US Family Health Plan (Area 6): To potentially save millions of dollars and eliminate duplication within DOD's 

health care system, Congress should terminate the statutorily required US Family Health Plan because it offers military 

beneficiaries the same health care benefit offered by other DOD health care contractors. 

Medicare Payments by Place of Service (Area 30): Medicare could save billions of dollars if Congress were to 

equalize the rates Medicare pays for certain health care services, which often vary depending on where the service is 

perforrned.c 

Use of the Do Not Pay Working System (Area 11): The Office of Management and Budget needs to develop a strategy 

and additional guidance on the use of the Do Not Pay working system, and Congress shouk:l consider amending the 

Social Security Act to explicitly allow the SSA to share its full death file through the system to reduce improper payments 

and mitigate the risks associated with potential duplication. 

Source GAO l GA0-17·562T 

Note: The estimates in this report are from a range of sources, including GAO, executive branch 

agencies, the Congressional Budget Office, and the Joint Committee on Taxation. Some estimates 

have been updated since GAO's 2016 report to reflect more recent analysis. 

Page 15 GA0·17·562T 
51 

Significant Open Actions 

Directed to Executive 

Branch Agencies 

aCiick on the year in the Annual Report column to go to the report in which this area was first 

introduced. 

bCiic!<. on the area identified to go to our online Act1on Tracker, which shows the current status of the 

for aU actions in the specified area. 

0

!n 2015, Congress took some steps to address this by excluding services furnished by off~campus 

hospital outpatient departments from this higher payment, effective January 1, 2017. However, this 

exclusion will not apply to services furnished by providers billing as hospital outpatient departments 

prior to enactment of the legislation-that is, all providers billing as hospital outpatients during our 

study-who would continue to be paid under higher rate or to services provided by on~campus 

hospital outpatient departments. Congress later added providers meeting a mid~build requirement to 

the list of providers to which the exclusion would not apply. 

In our 2011 to 2017 annual reports, we directed 627 actions to executive 

branch agencies, including 77 new actions identified in 2017. Of the 627 

actions, over half-334-remained open (192 were partially addressed 

and 142 were not addressed) as of March 2017. While these open 

actions span the government, a substantial number of actions are 

directed to seven agencies that made up 84 percent-$3.6 trillion-of 

federal outlays in fiscal year 2016; see figure 3. 

Page 16 GA0·17·562T 
52 

Figure 3: Fiscal Year 2016 Outlays and Number of Open Actions since 2011, by 

Agency 

Source GAO 1 C:>AO·l7~562T 

Notes: Number of open actions includes actions that are partially addressed and not addressed. 

aTreasury's percentage of fiscal year 2016 outlays includes interest payments on the national debt 

As shown in figure 4, 10 agencies have at least 20 open actions. 

Page 17 GA0·17-562T 
53 

Figure 4: Number of Not Addressed and Partially Addressed Actions since 2011, by Agency 

Department of Defense 

Department of Health and Human Services 

lnternal Revenue Service 

Department of Homeland Security 

Office ol Management and Budget 

Social Scctlflty Administration 

DepaJiment of Veterans Affairs 

Department of the Treasury 

Department of Transportation 

Department of Agriculture 

Department of the Jntenor 

Department of Commerce 

O!her entities-a 

Enwonmenta! Pro!ection Agency 

Department of State 

Department of Energy 

Office of Personnel Management 

General Services Admm1stration 

Department of Justice 

Smail Busmess Admm1strat!on 

National Aeronaut1cs and Space Administration 

Departfi'lent of Housmg and Urban Development 

Department of Labor 

Nuclear Regulatory Commiss1on 

Nallonal Sc1ence Foundat1on 

Number of actions not addressed 

SotHCe GAO j GA0·17-5$2T 

Number of open actions 

Notes: Action status is as of March 2017. Individual actions are counted multiple tlmes when they are 

directed to more than one federal department or agency. As a result, the number of open actions 

shown in this figure totals 576 instead of 334: 334 is the total number of open actions directed to the 

executive branch as of March 2017. 

Page 18 GA0·17·562T 
54 

More Efficiently Targeting 

Defense Resources 

The number of actions "partially addressed» means the action needed is in development or started but not yet completed. The number of actions "not addressed" means the administration, the 

agencies. or both have made minimal or no progress toward implementing the action needed. Actions that were introduced in the 2017 annual report are counted as "not addressed.~ 

a..Other entities" reflects open actions directed to the following federal entities: The Executive Office of 

the President, National Security Council, Office of the Director of National Intelligence, Office of 

National Drug Control Policy, Office of Science and Technology Policy, Homeland Security Council, 

Consumer Financial Protection Bureau, Federal Reserve, U.S. Commission on International Religious 

Freedom, National Transportation and Information Administration, and the Federal Communications 

Commission. 

In our 2011 to 2017 reports, we directed 168 actions to the Department of 

Defense (DOD) in areas that contribute to DOD's effectiveness in 

providing the military forces needed to deter war and to protect the 

security of the United States. As of March 2017,95 of these 168 actions 

remained open. DOD represented about 15 percent of federal spending in 

fiscal year 2016, with outlays totaling about $637.6 billion. Our work 

suggests that effectively implementing our open actions, including those 

related to areas listed in table 6, could yield substantial financial benefits. 

2011 Weapon Systems Acquisition Programs (Area 38): Employing best management practices could help the Department 

of Defense (000) save money on its weapon systems acquisition programs. Given the trillion~dollar size of the portfolio, 

GAO estimates potential savings from addressing the remaining actions could be in the tens of billions of dollars over 

time. 

2013 Agencies' Use of Strategic Sourcing (Area 23): Selected agencies could better leverage their buying power and 

achieve additional savings by directing more procurement spending to existing strategically sourced contracts and further 

expanding strategic sourcing practices to their highest spending procurement categories. GAO estimates that savings of 

1 percent from selected agencies' procurement spending alone would equate to over $4 billion. 

2015 DOD Headquarters Reductions (Area 14): DOD could potentially achieve hundreds of millions of dollars in cost 

savings and help to ensure that headquarters organizations are properly sized to meet their assigned missions by 

reevaluating its ongoing headquarters-reductions efforts and conducting periodic reassessments of workforce 

requirements. 

2017 DOD Commissaries (Area 16): By managing its commissaries more efficiently, DOD could position itself to better 

achieve its cost savings target of $2 billion. 

Scurce:GAO jGA0·17·562T 

Note: The estimates in this report are from a range of sources, including GAO, executive branch 

agencies, the Congressional Budget Office, and the Joint Committee on Taxation. Some estimates 

have been updated since GAO's 2016 report to reflect more recent analysis. 

aCiick on the year in the Annual Report column to go to the report in which this area was first 

introduced. 

bCiick on the area identified to go to our online Action Tracker, which shows the current status of for 

all actions in the specified area, 

Page 19 GA0-17-562T 
55 

Improving the Efficiency of 

Health Care Programs 

In our 2011 to 2017 reports, we directed 98 actions to the Department of 

Health and Human Services (HHS) in areas that contribute to HHS's 

mission to enhance the health and well-being of Americans. HHS 

administers Medicare, which in fiscal year 2016 financed health services 

for over 57 million beneficiaries at an estimated cost of $696 billion. HHS 

also administers Medicaid, which covered an estimated 72.2 million lowincome people in fiscal year 2016 at a cost of $575.9 billion.Z0 HHS 

represents about 28 percent of the fiscal year 2016 federal budget, with 

outlays totaling about $1.2 trillion. As of March 2017, 56 of HHS's 98 

actions remained open. Our work suggests that effectively implementing 

these actions, such as those related to areas listed in table 7, could yield 

substantial financial benefits. 

Table 7: Examples of Areas with Open Actions Directed to the Department of Health and Human Services 

Annual 

reporta Area description 

Medicare 

2012 Medicare Advantage Payments (Area 45): To help ensure appropriate payments to Medicare Advantage plans, CMS 

should take steps to improve the accuracy of the adjustment made for differences in diagnostic coding practices 

between Medicare Advantage plans and traditional Medicare providers. We previously reported that these 

shortcomings in CMS's adjustment resulted in excess payments to Medicare Advantage plans totaling an estimated 

$3.2 billion to $5.1 billion over a 3-year period from 2010 through 2012. 

2013 Medicare Prepayment Controls (Area 25): More widespread use of prepayment edits could reduce improper 

payments and achieve other costs savings for the Medicare program, as well as provide more consistent coverage 

nationwide. 

2015 Medicare Postpayment Claims Reviews (Area 7): To prevent inappropriate duplicative postpayment claims reviews 

by contractors, the Centers for Medicare & Medicaid Services should monitor the Recovery Audit Data Warehousethe database developed in part to prevent duplicative reviews. 

2017 Federal Payments for Hospital Uncompensated Care (Area 25}: By better aligning federal payments for hospitals' 

uncompensated care-services provided to uninsured and low~income patients for which hospitals are not fully 

compensated-with hospitals' costs, the Centers for Medicare & Medicaid Services could potentially save over a 

billion dollars annually, 

Medicaid 

2014,2016 Demonstration Spending (Areas 21, 27): Federal spending on Medicaid demonstrations could be reduced by 

billions of dollars if the Department of Health and Human Services (HHS) improved the process for reviewing, 

approving, and making transparent the basis for spending limits approved for Medicaid demonstrations, including better 

ensuring that valid methods are used to demonstrate budget neutrality and implemented other actions and 

recommendations, such as establishing specific criteria for assessing whether demonstration spending furthers 

Medicaid objectives. 

200f the $575.9 billion. $363.4 billion was financed by the federal government and the 

remainder by states. 

Page 20 GA0-17-562T 
56 

Annual 

reporf 

2016 

2017 

Area description 

Payments to Institutional Providers (Area 29): CMS should take steps to improve the oversight of state Medicaid 

payments to institutional providers and better ensure that the federal government does not provide funds for excessive 

state payments made to certain providers, which could result in savings of hundreds of millions of dollars annually. 

Medicaid Personal Care Services Data (Area 26): CMS needs timely, complete, and consistent data on Medicaid 

personal care services so it can effectively monitor these services, which could lead to savings of tens of millions of 

dollars annually. 

Source GAO IG.A0..17-562T 

Enhancing Federal Revenues 

Note: The estimates in this report are from a range of sources, including GAO, executive branch 

agencies, the Congressional Budget Office, and the Joint Committee on Taxation. Some estimates 

have been updated since GAO's 2016 report to reflect more recent analysis. 

8

CHck on the year in the Annual Report column to go to the report in which this area was first 

Introduced. 

bClick on the area identified to go to our online Action Tracker, which shows the current status of for 

all actions in the specified area. 

In our 2011 to 2017 reports, we directed 83 actions to the Internal 

Revenue Service (IRS) in areas that contribute to effectively and 

efficiently providing quality service to taxpayers and enforcing the law with 

integrity and fairness to all. As of March 2017, 43 of these 83 actions 

remained open. The funding of the federal government depends largely 

upon IRS's ability to collect taxes-in fiscal year 2016, IRS collected 

about $3.3 trillion. Our work suggests that effective implementation of our 

open actions, such as those related to areas listed in table 8, could 

substantially increase revenues and result in other financial benefits. 

Table 8: Examples of Areas with Open Actions Directed to the Internal Revenue Service 

Annual Area description 

report8 

2013, Tax Policy and Enforcement (Areas 22, 17): By using more~rigorous analyses to allocate enforcement resources and 

2015 using data to improve management of enforcement programs such as large partnership and correspondence audits, 

among other things, the Internal Revenue Service (IRS) can increase revenue collections by billions of dollars. 

2014 Online Taxpayer Services {Area 17): IRS could potentially realize hundreds of millions of dollars in cost savings and 

increased revenues by enhancing its online services, which would improve service to taxpayers and encourage greater 

tax~law compliance. 

2016 IRS's Public Referral Programs (Area 6): IRS could potentially collect billions of dollars in tax underpayments through 

its nine public referral programs and save resources by better managing fragmentation and overlap, improving 

communication, and streamlining processes. 

2016 Identity Theft Refund Fraud {Area 22): IRS and Congress could potentially save billions of dollars in fraudulent 

refunds by improving the agency's efforts to prevent refund fraud associated with identity theft. 

Page 21 GA0·17·562T 
57 

Refundable Tax Credits (Area 24): IRS could potentially realize hundreds of millions of dollars in cost savings by 

improving the administration of three large refundable tax credits (the Earned Income Tax Credit, the Additional Child Tax 

Credit which is sometimes combined with its nonrefundable counterpart, the Child Tax Credit, and the American 

Opportunity Tax Credit). 

Source GAO !GAQ.-17·562T 

Improving the Efficiency and 

Effectiveness of Homeland 

Security Operations 

Note: The estimates in this report are from a range of sources, including GAO, execullve branch 

agencies, the Congressional Budget Office, and the Joint Committee on Taxation. Some estimates 

have been updated since GAO's 2016 report to reflect more recent analysis. 

8

C!ick on the year in the Annual Report column to go to the report in which this area was first 

introduced. 

bC!ick on the area identified to go to our online Action Tracker, which shows the current status for all 

actions in the specified area. 

In our 2011 to 2017 reports, we directed 78 actions to the Department of 

Homeland Security (DHS) in areas that contribute to the effective 

implementation of its mission to, among other things, prevent terrorist 

attacks from occurring within the United States, reduce U.S. vulnerability 

to terrorism, and help the nation recover from any attacks that may occur. 

In fiscal year 2016, DHS spent about $57.6 billion, about 1.3 percent of 

federal outlays. As of March 2017,37 of the 78 actions to DHS remained 

open. Fully implementing these actions, such as those related to areas 

listed in table 9, could result in financial benefits and substantial 

improvements in operations. 

2012 Homeland Security Grants (Area 17): The Department of Homeland Security (OHS} needs better project information 

and coordination among four overlapping grant programs and needs to establish a framework for assessing preparedness 

capabilities to identify gaps and prioritize investments. 

2012 Domestic Disaster Assistance (Area 51): The Federal Emergency Management Agency could reduce the costs to the 

federal government related to major disasters declared by the President by updating the principal indicator on which 

disaster funding decisions are based and better measuring a state's capacity to respond without federal assistance. 

2012 Border Security (Area 47): Delaying proposed investments for future acquisitions of border surveitlance technology until 

OHS better defines and measures benefits and estimates Hfe-cyc!e costs could help ensure the most effective use of 

future program funding_ 

2015 Vulnerability Assessments of Critical Infrastructure {Area 9): DHS could mitigate potentia! duplication or gaps by 

consistently capturing and maintaining data from overlapping vulnerability assessments of critical infrastructure and 

improving data sharing and coordination among the offices and components involved with these assessments. 

Source. GAO. I GA0.17·562T 

Note: The estimates in this report are from a range of sources, including GAO, executive branch 

agencies, the Congressional Budget Office, and the Joint Committee on Taxation. Some estimates 

have been updated since GAO's 2016 report to reflect more recent analysis. 

Page 22 GA0·17·562T 
58 

Advancing the Implementation 

of Government-wide Policies 

and Performance 

aCHck on the year in the Annual Report column to go to !he report in which this area was first 

introduced. 

bCiick on the area identified to go to our online Actton Tracker, which shows the current status for al! 

actions in the specified area. 

Many of the results the federal government seeks to achieve require the 

coordinated effort of more than one federal agency, level of government, 

or sector. The Office of Management and Budget (OMB) manages and 

coordinates many government-wide efforts. In our 2011 to 2017 reports, 

we directed 64 actions to OMB in areas to improve the efficiency and 

effectiveness of government-wide programs and activities. As of March 

2017, 34 of the 64 actions to OMS remained open. Fully implementing 

these actions, such as those related to areas listed in table 10, could yield 

substantial financial benefits and program improvements. 

Table 10: Examples of Areas with Open Actions Directed to the Office of Management and Budget 

Annual Area description 

report1 

2011 Tax Expenditures (Area 17): Periodic reviews could help identify ineffective tax expenditures and redundancies in 

related tax and spending programs, potentially reducing revenue losses by billions of dollars. 

2011 Government-wide Improper Payments (Area 46): Efforts to address the reported estimate of over $144 billion in 

government-wide improper payments for fiscal year 2016 could result in significant cost savings. 

2012 Federal User Fees (Area 43): Regularly reviewing federal user fees and charges can help the Congress and federal 

agencies identify opportunities to address inconsistent federal funding approaches and enhance user financing, thereby 

reducing reliance on general fund appropriations. 

2013 Geospatiallnvestments (Area 11 }: Better coordination among federal agencies that collect, maintain, and use 

geospatial information could help reduce duplication of geospatial investments and provide the opportunity for potential 

savings of millions of dollars. 

2014 Information Technology Investment Portfolio Management (Area 24): The Office of Management and Budget and 

multiple agencies could help the federal government realize billions of dollars in savings by taking steps to better 

implement PortfolioStat, a procesS to help agencies manage their information~technology investments. 

Source· GAO iGA0-17·562T 

More Efficiently Administering 

Services to Retirees and 

Disabled Citizens 

Note: The estimates in this report are from a range of sources, including GAO, executive branch 

agencies, the Congressional Budget Office, and the Joint Committee on Taxation. Some estimates 

have been updated since GAO's 2016 report to reflect more recent analysis. 

°Ciick on the year in the Annual Report column to go to the report in which this area was first 

introduced. 

bCiick on the area identified to go to our online Act1on T reeker, which shows the current status for a!J 

actions in the specified area. 

In our 2011 to 2017 reports, we directed 28 actions to the Social Security 

Administration (SSA) in areas that contribute to SSA providing financial 

assistance to eligible individuals through Social Security retirement and 

disability benefits and Supplemental Security Income (SSI) payments. As 

Page 23 GA0·17·562T 
59 

of March 2017. 25 of these 28 actions remained open. In fiscal year 2016, 

SSA spent about $979.7 billion, roughly 23 percent of federal outlays. 

While most of SSA's funding is used to pay Social Security retirement. 

survivors, and disability benefits from the Old-Age and Survivors 

Insurance Trust Fund and the Federal Disability Insurance Trust Fund, 

our work suggests that effective implementation of these actions, such as 

the examples listed in table 11, could yield substantial benefits. 

Table 11: Examples of Areas with Open Actions Directed to the Social Security Administration 

Annual Area description 

reporta 

2012 Social Security Benefit Coordination (Area 27}: Benefit offsets for related programs help reduce the potential for 

overtapping payments but pose administrative challenges. 

2016 Disability Insurance Overpayments (Area 32): To help prevent the loss of billions of dollars, the Social Security 

Administration (SSA) should take steps to prevent overpayments to beneficiaries of the Disability Insurance program and 

improper waivers of beneficiaries' overpayment debt. 

2016 Disability Reviews (Area 33): SSA may increase federal savings realized as a result of disabl!ity reviews by further 

considering factors that affect individuals' expected lifetime benefits when prioritizing its reviews of Disability Insurance 

and Supplemental Security Income cases. 

Source GAO ! GAQ.17·562T 

Improving Support and 

Services for Veterans 

Note: The estimates in this report are from a range of sources, including GAO, executive branch 

agencies, the Congressional Budget Office, and the Joint Committee on Taxation. Some estimates 

have been updated since GAO's 2016 report to reflect more recent analysis. 

8

Ciick on the year in the Annual Report column to go to the report in which this area was first 

introduced. 

11C!ick on the area identified to go to our on-line ActJOil Tracker, which shows the current status for a!/ 

actions in the specified area. 

In our 2011 to 2017 reports, we directed 44 actions to the Department of 

Veterans Affairs (VA) in areas that contribute to VA effectively and 

efficiently achieving its mission to promote the health, welfare. and dignity 

of all veterans by ensuring that they receive medical care. benefits, and 

social support. As of March 2017, 24 of these 44 actions remained open. 

In fiscal year 2016, VA spent about $179.6 billion-about 4 percent of 

federal outlays-for veterans' benefits and services. Our work suggests 

that effective implementation of these actions, such as those related to 

areas listed in table 12, could yield cost savings and efficiencies that 

would improve the delivery of services. 

Page 24 GA0·17·562T 
60 

2012 Military and Veterans Health Care (Area 15): The Departments of Defense (DOD) and Veterans Affairs (VA) need to 

improve integration across care coordination and case-management programs to reduce duplication and better assist 

service members, veterans, and their families. 

2013 Information Technology Operations and Maintenance (Area 30): Strengthening oversight of key federal agencies'-

inc!uding VA's-major information-technology investments in operations and maintenance provides opportunity for 

savings of billions of dollars in information-technology investments across the federal government. 

2016 VA's Individual Unemployability Benefit (Area 34): To potentially achieve cost savings, the VA should develop a plan 

to study whether age should be considered when deciding whether veterans are unemployable due to setVice-connected 

disabilities. By comparison, other benefit programs, such as Social Security Disability Insurance, consider retirement age 

a cause for ineligibility and convert benefits for those reaching their full retirement age to a Social Security retirement 

benefit. If it were determined that Total Disability Individual Unemployability benefits should be provided only to veterans 

younger than their full Social Security retirement age, the agency could achieve an estimated $15 billion in savings from 

2015 through 2023, according to the Congressional Budget Office. 

2017 Department of Veterans Affairs Medical Facility Construction (Area 20): VA could better avoid cost increases and 

schedule delays on its medical facility construction projects by improving management of facility construction. 

Source, GAO. !GA0-17-562T 

Note: The estimates in this report are from a range of sources, including GAO. executive branch 

agencies, the Congressional Budget Office. and the Joint Committee on Taxation. Same estimates 

have been updated since GAO's 2016 report to reflect more recent analysis. 

aclick an the year in the Annual Report column to go to the report in which this area was first 

introduced. 

bCilck on the area identified to go to our online Actron Tracker, which shows the current status for all 

actions in the specified area. 

We will continue to look for additional or emerging instances of 

fragmentation, overlap, and duplication and opportunities for cost savings 

or revenue enhancement Likewise, we will continue to monitor 

developments in the areas we have already identified. We stand ready to 

assist this and other committees in further analyzing the issues we have 

identified and evaluating potential solutions. 

Thank you, Chairman Johnson, Ranking Member McCaskill, and 

Members of the Committee, this concludes my prepared statement. I 

would be pleased to answer questions. 

Page 25 GA0·17·562T 
61 

GAO Contacts For further information on this testimony or our April 26, 2017 report, 

please contact J. Christopher Mihm, Managing Director, Strategic Issues, 

who may be reached at (202) 512-6806 or mihmj@gao.gov, and Jessica 

Lucas-Judy, Acting Director, Strategic Issues, who may be reached at 

(202) 512-9110 or lucasjudyj@gao.gov. Contact points for the individual 

areas listed in our 2017 annual report can be found at the end of each 

area in GA0-17-491SP. Contact points for our Congressional Relations 

and Public Affairs offices may be found on the last page of this statement. 

Page 26 GA0·17·562T 
62 

Appendix 1: Open Congressional Actions, by 

Mission 

In our 2011 to 2017 annual reports, we directed 97 actions to Congress, 

of which 61 remain open. Of the 61 open congressional actions, 9 are 

partially addressed and 52 are not addressed, as of March 1, 2017. See 

table 13. 

Table 13: GAO·Identffied Open Congressional Actions Related to Fragmentation, Overlap, Duplication, Cost Savings, or 

Revenue Enhancement, 2011 to 2017 

Mission 

Agriculture 

Defense 

Annual 

report 

2011 

2013 

2012 

Area Action summary 

Food Safety (Area 1) Congress should consider commissioning the National Academy of 

Sciences or a blue ribbon panel to conduct a detailed analysis of 

alternative food safety organizational structures. 

Congress should consider formalizing the Food Safety Working Group 

through statute to help ensure sustained leadership across food safety 

agencies over time. 

Catfish Inspection {Area Congress should consider repealing provisions of the 2008 Farm Bill 

1) assigning the U.S. Department of Agriculture (USDA) responsibility for 

examining and inspecting catfish and for creating a catfish inspection 

program. Implementing this action could save taxpayers $2.6 million 

annually, according to a Food Safety and Inspection Service estimate. 

Agricultural Quarantine 

Inspection Fees {Area 

18) 

Crop Insurance (Area 

19) 

Stabilization, 

Reconstruction, and 

Humanitarian 

Assistance Efforts 

(Area6) 

Congress should consider taking steps to allow the Secretary of 

Agriculture to set fee rates to recover the full costs of the Agricultural 

Quarantine Inspection program. Implementing this action could have 

resulted in savings of$93 million in fiscal years 2016 and 2017, 

according to GAO analysis. 

Congress may wish to consider either limiting the amount of premium 

subsidies that an individual farmer can receive each year-as it limits 

the amount of payments to individual fanners in many fann programsor reducing premium subsidy rates, or both limiting premium subsidies 

and reducing premium subsidy rates. Implementing this action could 

achieve up to nearly $2 billion per year in cost savings, according to a 

GAO estimate 

Congress should consider amending the legislation that supports the 

Overseas Humanitarian, Disaster, and Civic Aid-funded humanitarian 

assistance program-the Department of Defense's (DOD) largest 

humanitarian assistance program-to more specifically define DOD's 

role in humanitarian assistance, taking into account the roles and similar 

types of efforts performed by the clvilian agencies. 

2013 Joint Basing {Area 20) Congress should consider directing the Assistant Secretary of Defense 

for Energy, Installations, and Environment, in collaboration with the 

military services and joint bases, to evaluate the purpose of the program 

and determine whether the current goals, as stated in the 2005 Base 

Realignment and Closure Commission recommendation, are still 

appropriate, or whether goals should be revised; communicate these 

goals to the military services and joint bases, and adjust program 

activities accordingly; provide direction to the joint bases on 

requirements for meeting program goals, including determining reporting 

requirements and milestones; and determine any next steps for joint 

basing, including whether to expand it to other installations. 

Page 27 GA0-17-562T 
63 

Mission 

Economic 

development 

Energy 

Annual 

report 

2011 

2016 

2011 

Appendix 1: Open Congressional Actions, by 

Mission 

Area Action summary 

Essential Air Service Congress may wish to consider revising the program's operating 

{Area 42) requirements for providing air service to communities to improve 

efficiency and to better match capacity with community use. 

Treasury's Foreclosure 

Prevention Efforts {Area 

17) 

Federal Fleet Energy 

Goals (Area 12) 

This action is partially addressed. Congress has taken some action to 

address this action, such as revising the program's operating 

requirements most recently in the Consolidated and Further Continuing 

Appropriations Act of 2016. However, opportunities still exist to address 

this action, such as allowing flexibility in the number of flights provided. 

Congress may wish to consider assessing multimodal solutions, such as 

more cost..effective bus service to hub airports or air taxi service, to 

provide communities alternatives to Essential Air Service. 

Congress should consider rescinding any Department of the Treasury 

(Treasury)-deobligated excess Making Home Affordable (MHA) 

balances that Treasury does not move into the Hardest Hit Fund. 

The agency estimated $4.7 billion in potential excess funds, $2 billion of 

which Treasury deobligated in February 2016. As of March 1, 2017, 

Treasury had not deobligated MHA program funds beyond the $2 billion 

that it transferred to the Troubled Asset Relief Program-funded Hardest 

Hit Fund in February 2016. To the extent that Treasury identifies and 

deobligates any MHA funds that are likely to not be expended, these 

funds may then be available for Congress to rescind and use elsewhere 

for other priorities. 

Congress should consider changes in existing laws to streamline the 

requirements and provide fleet managers with more flexibility in meeting 

goals. 

Ol! and Gas Resources Congress may need to take action to require Interior to establish an 

(Area 45) annual production incentive fee or similar fee for nonproducing !eases. 

If the Department of the Interior (Interior) chooses not to take any action 

based on its study, examining how other oil and gas resource owners 

select fiscal parameters for leasing and adjusting oil and gas royalty 

rates, Congress may wish to provide additional guidance or take 

additional actions to direct Interior to improve its oversight of federal 

lands and waters and the revenues derived from production of ol! and 

gas. Implementing the actions in this area could result in approximately 

$1.7 billion in revenues over 10 years, according to an Interior estimate. 

2012 Excess Uranium Congress may wish to clarify the Department of Energy's (DOE) 

Inventories {Area 40) statutory authority regarding depleted uranium, explicitly providing 

direction about whether and how DOE may sell or transfer the tails in 

their current form. Depending on the terms of the legislation, and given 

the significant amount of tails in inventory, the government could garner 

substantial revenue as a result. 

Page 28 GA0·17·562T 
64 

Mission 

General 

government 

Annual 

report 

2014 

2015 

2011 

Appendix l: Open Congressional Actions, by 

Mission 

Area 

Advanced Technology 

Vehicles Manufacturing 

Loan Program {Area 

13) 

U_S Enrichment 

Corporation Fund {Area 

16) 

Simple Tax Return 

Errors (Area 56) 

Action summary 

If Congress sees merit in using the proceeds from the barter, transfer, or 

sale of federal uranium assets to pay for environmental cleanup of 

uranium enrichment plants, it could consider providing DOE with explicit 

authority to barter excess uranium and to retain the proceeds from all 

three types of uranium transactions (barter, transfer, and sale). Likewise, 

Congress could direct DOE to sell uranium for cash and make those 

proceeds available by appropriation for decontamination and 

decommissioning expenses at DOE's uranium enrichment plants. 

Implementing the two actions in this area could result in a increased 

revenue of about $1 billion, according to a GAO estimate. 

Unless DOE can demonstrate a demand for new Advanced Technology 

Vehicles Manufacturing loans and viable applications, Congress may 

wish to consider rescinding all or part of the remaining $4.2 billion in 

credit subsidy appropriations. Implementing this action could result in 

savings of $4.2 billion, according to a GAO estimate. 

Congress may wish to permanently rescind the entire $1.6 billion 

balance of the U.S. Enrichment Corporation Fund. Rescission may 

increase the transparency of federal agencies' budget presentations and 

help Congress have a clear understanding of how new funding requests 

relate to funding decisions for existing projects with continuing resource 

needs. 

Congress may want to consider granting the Internal Revenue Service 

{IRS) broader math error authority, with appropriate safeguards against 

misuse of that authority, to correct errors during tax return processing. 

This action is partially addressed. The Consolidated Appropriations Act, 

2016 gave IRS additional math error authority, but limited to certain 

circumstances. Giving IRS broader math error authority with appropriate 

controls would enable IRS to correct obvious noncompliance, would be 

less intrusive and burdensome to taxpayers than audits, and would 

potentially help taxpayers who underclaim tax benefits to which they are 

entit!ed.lmplementing this action could result in cost savings of $274 

million, between fiscal years 2018 and 2026, according to the Joint 

Committee on Taxation. 

S Corporations (Area Congress could require S corporations to use information already 

63) available to them to calculate shareholders' basis as completely as 

possible and report it to shareholders and IRS. 

Research Tax Credit Congress could eliminate the regular credit and add a minimum base 

(Area 65) amount (equal to 50 percent of a taxpayer's current spending) to the 

method for computing the alternative simplified credit 

Page 29 GA0-17-562T 
65 

Mission Annual 

report 

2012 

2015 

Appendix 1: Open Congressional Actions, by 

Mission 

Area Action summary 

New Markets Tax Congress should consider offering grants in lieu of credits to Community 

Credit (Area 66) Development Entities (CDE) if it extends the program again. If it does 

so, Congress should require the Department of the Treasury to gather 

appropriate data to assess whether and to what extent the grant 

program increases the amount of federal subsidy provided to loww 

income community businesses compared to the New Markets Tax Credit 

(NMTC): how costs for administering the program incurred by the 

Community Development Financial Institutions (CDFI} Fund, CDEs, and 

investors would change; and whether the grant program otherwise 

affects the success of efforts to assist lowwincome communities. One 

option would be for Congress to set aside a portion offunds to be used 

as grants and a portion to be used as tax credit allocation authority 

under the current structure of the program to facilitate comparison of the 

two program structures. 

Governmental Bonds Congress should consider whether facilities, including hotels and golf 

(Area 67) courses, that are privately used should be financed with tax~exempt 

government bonds. 

Internal Revenue 

Service Enforcement 

Efforts (Area 44) 

Consumer Product 

Safety Oversight (Area 

4) 

Congress may wish to make owners of rental real estate subject to the 

same payment reporting requirements regardless of whether they 

engaged in a trade or business under current law. Implementing this 

action could result in savings of $2.5 billion between fiscal years 2011 

and 2020, according to the Joint Committee on Taxation. 

To help improve taxpayer compliance, Congress may wish to require 

payers to report service payments to corporations, thereby reducing 

payers' burden to determine which payments require reporting. 

Congress should consider transferring the oversight of the markings of 

toy and imitation firearms in section 5001 of title 15 of the U.S. Code 

from the Department of Commerce's National Institute of Standards and 

Technology to the Consumer Product Safety Commission. 

Congress should consider establishing a formal comprehensive 

oversight mechanism for consumer product safety agencies to address 

crosscutting issues as we!! as inefficiencies related to fragmentation and 

overlap such as communication and coordination challenges and 

jurisdictional questions between agencies. Different types of formal 

mechanisms could include, for example, creating a memorandum of 

understanding to formalize relationships and agreements or establishing 

a task force or interagency work group. As a starting point, Congress 

may wish to obtain agency input on options for establishing more formal 

coordination. 

2015 Tax Policies and Congress should consider revisiting the use of individual retirement 

Enforcement (Area 17) accounts (IRA) to accumulate large balances and considering ways to 

improve the equity of the existing tax expenditure on IRAs. Options 

could include limits on (1) the types of assets permitted in IRAs, (2) the 

minimum valuation for an asset purchased in an IRA, or {3) the amount 

of assets that can be accumulated in IRAs and employer-sponsored 

plans that get preferential tax treatment. 

Page 30 

Congress should consider expanding the mandate that partnerships and 

S corporations electronically file their tax returns in order to cover a 

greater share of filed returns. 

GA0-17 -562T 
66 

Mission 

Health 

Annual 

report 

2016 

2016 

2017 

2017 

2011 

2013 

Appendix 1: Open Congressional Actions, by 

Mission 

Area 

Financial Regulatory 

Structure (Area 5) 

Identity Theft Refund 

Fraud (Area 22} 

Recovery Operations 

Center Closure (Area 

10) 

Use of the Do Not Pay 

Working System (Area 

11) 

Medicare's Hearth Care 

Payments (Area 74) 

Medicaid Supplemental 

Payments (Area 26) 

Page 31 

Action summary 

Congress should consider whether additional changes to the financial 

regulatory structure are needed to improve (1) the efficiency and 

effectiveness of oversight; (2) the consistency of consumer and investor 

protections; and (3) the consistency of financial oversight for similar 

institutions, products, risks, and services. 

Congress should consider whether legislative changes are necessary to 

align the Financial Stability Oversight Council's authorities with its 

mission to respond to systemic risks. 

Congress should consider providing the Secretary of the Treasury with 

the regulatory authority to lower the threshold for electronic filing ofW-2s 

from 250 returns annually to between 5 to 10 returns, as appropriate, 

Implementing the actions in this area could result in savings of billions 

of dollars, according to IRS and GAO analyses. 

Congress may wish to consider directing the Council of the Inspectors 

General for Integrity and Efficiency (CIGIE) to develop a legislative 

proposal to reconstitute the essential capabilities of the Recovery 

Operations Center to help ensure federal spending accountability. 

Congress should consider amending the Social Security Act to explicitly 

allow the Social Security Administration to share its full death file with 

the Department of the Treasury for use through the Do Not Pay working 

system. 

Congress could exempt from the budget neutrality requirement savings 

attributable to policies that reflect efficiencies occurring when serv1ces 

are furnished together. 

This action is partially addressed. While Congress has exempted certain 

savings from the budget neutrality requirement, other services remain 

subject to this requirement. 

Congress should consider requiring the Administrator of the Centers for 

Medicare & Medicaid Services {CMS) to improve state reporting of nondisproportionate share hospital (OSH) supplemental payments, including 

requiring annual reporting of payments made to individual facilities and 

other information that the agency determines is necessary to oversee 

non-DSH payments 

This action is partially addressed. In January 2017, a bill, H.R 541, was 

introduced in the House of Representatives which, if enacted, would 

require annual state reporting of non-DSH supplemental payments 

made to individual facilities. However, as of March 2017, Congress has 

not enacted legislation to require such reporting. In addition, CMS has 

taken some action, including issuing a State Medicaid Director Letter 

requiring annual reporting of certain Medicaid supplemental payments 

and awarding a contract to review Medicaid supplemental payment 

information submitted by states. 

GA0-17-562T 
67 

Mission Annual 

report 

2014 

2015 

2015 

2016 

Appendix 1: Open Congressional Actions, by 

Mission 

Area 

Medicaid 

Demonstrat1on Waivers 

(Area 21) 

DOD US Family Health 

P!an {Area 6) 

Medicare Payments to 

Certain Cancer 

Hospitals (Area 19) 

Med1care Payments by 

Place of Service (Area 

30) 

Page 32 

Action summary 

Congress should consider requiring the Administrator of CMS to clarify 

permissible methods of calculating non-DSH supplemental payments. 

This action is partially addressed. In January 2017, a bill, H.R. 541, was 

introduced in the House of Representatives which, if enacted, would 

require CMS to issue guidance to states that identifies permissible 

methods for calculating non~DSH supplemental payments to providers. 

However, as of March 2017, Congress has not enacted legislation to 

require CMS to issue such guidance. In addition, CMS has taken some 

action, including issuing a State Medicaid Director Letter requiring states 

to submit non-DSH supplemental payment information and awarding a 

contract to review Medicaid supplemental payment information 

submitted by states. 

Congress should consider requiring the Administrator of CMS to require 

states to submit an annual independent certified audit verifying state 

compliance with permissible methods for calculating non-DSH 

supplemental payments. 

Implementing the actions In this area could result in hundreds of 

millions dollars in cost savings, according to GAO analysis. 

Congress could consider requiring the Secretary of Health and Human 

Services to improve the Medicaid demonstration review process, 

through steps such as improving the review criteria, better ensuring that 

valid methods are used to demonstrate budget neutrality, and 

documenting and making clear the basis for the approved limits. 

Implementing the actions in this area could result in billions of dollars 

in cost savings, according to GAO analysis. 

Congress should terminate the Secretary of Defense's authority to 

contract with the US Family Health Plan (USFHP) designated providers 

in a manner consistent with a reasonable transition of affected enrollees 

into TR!CARE's USFHP regional managed care program or other health 

care programs, as appropriate. Implementing this action could result in 

savings of$157 million from fiscal year 2018 through fiscal year 2022, 

according to GAO analysis. 

Congress should consider requiring Medicare to pay prospective 

payment system (PPS)-exempt cancer hospitals (PCH) as it pays PPS 

teaching hospitals, or provide the Secretary of Health and Human 

Services with the authority to otherwise modify how Medicare pays 

PCHs, and provide that a!! forgone outpatient payment adjustment 

amounts be returned to the Supplementary Medical Insurance Trust 

Fund. GAO estimated this action could result in savings of almost $500 

million per year. 

Congress should consider directing the Secretary of Health and Human 

Services to equalize payment rates between settings for evaluation and 

management office visits-and other services that the Secretary deems 

appropriate-and return the associated savings to the Medicare 

program. Implementing this action could lead to $1 billion per year in 

savings, according to estimates from MedPAC and the Bipartisan Policy 

Center. 

GA0-17-562T 
68 

Mission Annual 

report 

Homeland 2012 

security/law 

enforcement 

2013 

Income security 2011 

Appendix 1: Open Congressional Actions, by 

Mission 

Area Action summary 

Homeland Secunty Congress may want to consider requiring the Department of Homeland 

Grants {Area 17) Security (DHS) to report on the results of its efforts to identify and 

prevent unnecessary duplication within and across the State Homeland 

Security Grant Program, Urban Areas Security Initiative, Port Security 

Grant Program, and Transit Security Grant Program, and consider these 

results when making future funding decisions for these programs. 

Once the Federal Emergency Management Agency has completed a 

national preparedness assessment of capability gaps, Congress may 

wish to consider limiting the use of federal preparedness grant programs 

to fund only projects to fill identified, validated, and documented 

capability gaps that may (or may not) include maintaining existing 

capabilities developed. 

Immigration Inspection Congress may wish to require the Secretary of Homeland Security to 

Fee (Area 49) adjust the air passenger immigration inspection fee as needed so that 

collections are aligned with total inspection costs, if it is determined that 

total immigration fee collections do not cover total immigration inspection 

costs< 

This action is partially addressed. As of March 2017, Congress had not 

enacted legislation, as GAO suggested in February 2012, to adjust the 

air passenger immigration fee. However, Immigration and Customs 

Enforcement (ICE) and Customs and Border Protection (CBP) have 

identified the extent to which collections are aligned with total 

immigration inspection costs. Implementing this action would have 

increased annual revenues by $175 million in FY2012, according to 

GAO analysis. 

Congress may wish to require the Secretary of Homeland Security to 

direct ICE and CBP to establish a regular schedule to review and 

coordinate on the costs of their respective air passenger immigration 

inspection activities, and revise the proportion of the fee received by 

each agency accordingly, 

Checked Baggage Congress may wish to consider directing the Transportation Security 

Screening (Area 28) Administration (TSA) to study, in consultation with relevant industry stakeholders, whether the 90 percent federal cost share that TSA 

generally applies to cost sharing agreements for eligible airport facillty 

modification projects related to the installation of checked baggage 

screening systems is appropriate or should be adjusted. 

Congress may wish to consider whether an amendment to current 

legislation, or enactment of new legislation, is necessary and warranted 

if it is determined that a change in the current federal cost share that 

TSA generally applies to these cost~sharing agreements is appropriate. 

Implementing the actions in this area could result in savings of $234 

million from 2015 to 2027, according to a TSA estimate. 

Socia! Security Offsets Congress could consider giving IRS the authority to collect the 

(Area 80) information that the Social Security Administration {SSA) needs on 

government pension income to administer the Government Pension 

Offset and the Windfall Elimination Provision accurately and fairly 

Implementing this action could save $2.4 billion to $7.9 billion over 10 

years, if enforced both retrospectively and prospectively, based on 

estimates from the Congressional Budget Office and the SSA, 

Page 33 GA0-17-562T 
69 

Mission 

Information 

technology 

Annual 

report 

2014 

2013 

Appendix 1: Open Congressional Actions, by Mission 

Area 

Disability and 

Unemployment Benefits 

{Area 8) 

Action summary 

Congress should consider passing legislation to require the SSA to 

offset Disability Insurance benefits for any Unemployment Insurance 

benefits received in the same period. Implementing this action could 

save $1.9 billion between fiscal year 2016 and fiscal year 2025, 

according to the Congressional Budget Office. 

Federal Employees To help verify claimants' reported income and help ensure the proper 

Compensation and payment of benefits, Congress should consider granting the Department 

Unemployment Benefits of Labor the additional authority to access wage data. 

{Area 9) 

Veterans' and 

Survivors' Benefits 

{Area 23) 

Dissemination of 

Technical Research 

Reports (Area 1 0) 

Congress should consider passing legislation that would establish a 

look-back and penalty period for claimants who transfer assets for less 

than fair market value prior to applying for pension benefits. 

This action is partially addressed. In the 113th Congress, the House of 

Representatives passed H.R. 2189, which contained language to 

establish a 3~year look-back and penalty period for the VA pension 

program. However, the bill was not ultimately enacted. As of March 1, 

2017, there has been no legislative action taken in the current Congress. 

In January 2015, the Department of Veterans Affairs {VA) proposed 

regulations establishing a look-back and penalty period for the VA 

pension program. VA plans to promulgate final regulations in the 

summer of 2017. Implementing this action could result in savings of 

about $4 million annually, according to the Congressional Budget 

Office. 

Congress may wish to consider examining the appropriateness and 

viability of the fee-based model under which the National Technical 

Information Service {NTIS) currently operates for disseminating 

technical information to determine whether the use of this model should 

be continued. 

This action is partially addressed. Several bills were introduced during 

the 114th Congress, including H.R 443, S.787, S.1836, that had the 

potential to address this action. However, these bills were not ultimately 

enacted. As of March 1, 2017, there has been no legislative action taken 

in the current Congress. Additionally, the Department of Commerce 

Appropriations Act, 2015 and 2016, limited instances where NTIS could 

charge customers fees for reports. This requirement continues in effect 

under the Continuing Appropriations Act, 2017. 

Geospatial Investments Congress should consider assessing the impact of the disclosure 

(Area 11) restrictions of Section 9 of Title 13 and Section 412 of Title 39 of the 

U.S. Code in moving toward a national geospatial address database. If 

warranted, Congress should consider revising those statutes to 

authorize the limited release of addresses, without any personally 

identifiable information, specifically for geospatial purposes. Such a 

change, if deemed appropriate, could potentially result in significant 

savings across federal, state, and local governments. 

Page 34 

Implementing the actions in this area could result in savings of millions 

of dollars. 

GA0-17·562T 
70 

Mission 

International 

affairs 

Annual 

report 

2014 

2011 

2012 

2013 

2016 

Social services 2012 

Appendix 1: Open Congressional Actions, by 

Mission 

Area 

Interoperable Radio 

Communicattons 

Systems (Area 1 0) 

Antidumping and 

Countervailing Duties 

(Area 81) 

Area 20: Overseas 

Administrative Services 

(Area 20) 

Tobacco Taxes (Area 

31) 

Cargo Preference for 

Food Aid {Area 36) 

Hollsing Ass1stance 

(Area 28) 

Page 35 

Action summary 

Congress should consider requiring the Departments of Homeland 

Security (DHS), Justice (DOJ), and the Treasury (Treasury) to 

collaborate on the development and implementation of a joint radio 

communications solution that specifically requires the departments to 

establish an effective governance structure that includes a formal 

process for making decisions and resolving disputes, define and 

articulate a common outcome for this joint effort, and develop a joint 

strategy for improving radio communications. 

This action is partially addressed. Legislation has been enacted that is 

aimed at improving interoperable communications solely at DHS, but it 

does not require coordination across DHS, Treasury and OOJ as GAO 

suggested. Additionally, in the 114th Congress, the House of 

Representatives passed a bill (H.R. 2206) that would further address 

this action. However this bill was not ultimately enacted. As of March 1, 

2017, there has been no legislative action taken in the current Congress. 

Congress could eliminate the retrospective component of the U.S. 

antidumping and countervailing duty system and, instead, treat the 

antidumping and countervailing duties assessed at the time the product 

enters the country as final. 

Congress may wish to consider requiring agencies to participate in 

International Cooperative Administrative Support Services (ICASS) 

unless they provide a business case to show that they can obtain these 

services outside of ICASS without increasing overall costs to the U.S 

government or that their mission cannot be achieved within !CASS. 

Congress, as it continues oversight of the Children's Health Insurance 

Program Reauthorization Act (CHIPRA), may wish to consider 

equalizing tax rates on roll-your-own and pipe tobacco. 

Congress, as it continues oversight of CHIPRA, may wish to consider, in 

consultation with the Department of the Treasury, options for reducing 

tax avoidance due to tax differentials between small and large cigars. 

While recognizing that cargo preference serves policy goals established 

by Congress with respect to the U.S. merchant marine, including 

maintenance of a fleet capable of serving as a naval and ml!itary 

auxiliary in time of war or national emergency, Congress should 

consider clarifying cargo preference legislation regarding the definition of 

"geographic area" to ensure that agencies can fully utilize the flexibility 

Congress granted to them when it lowered the cargo preference for food 

aid requirement Implementing this action could result in millions of 

dollars of savings, according to GAO analysis. 

Congress may wish to consider requiring USDA and the Department of 

Housing and Urban Development (HUD) to examine the benefits and 

costs of merging those programs that serve similar markets and provide 

similar products. As a first step, Congress could consider requiring 

USDA and HUD to explore merging their single-family insured lending 

programs and multifamily portfolio management programs, taking 

advantage of the best practices of each and ensuring that targeted 

populations are not adversely affected. 

GA0·17·562T 
71 

Mission 

Training, 

employmen~ and 

education 

Soo~.GAO JGA0-17-!i62T 

{101957) 

Annual 

report 

2016 

Area 

Appendix 1: Open Congressional Actions, by 

Mission 

Action summary 

Post-9/11 Gl Bill 

Overpayments (Area 

37) 

Congress should consider granting the Department of Veterans Affairs 

explicit authority to require a minimum level of training for appropriate 

school officials. 

Notes: Unless otherwise indicated, actions ln this table are not addressed, meaning that a bllf may 

have been introduced but did not pass out of a committee, or no relevant legislation has been 

introduced. At the beginning of a new congressional session, we reapply the criteria. As a result, the 

status of an action may move from partially addressed to not addressed if relevant legislation is not 

reintroduced from the prior Congressional session. 

As of March 2017, nine actions are partially addressed. Partially addressed means a relevant bill has 

passed a committee, the House of Representatives, or the Senate, or relevant legislation has been 

enacted but only addressed part of the action needed. This table provides information on steps 

Congress took for actions that are considered partially addressed. 

This table provides estimates of cost savings or increased revenue where such information was 

available. 

Page 36 GA0-17-562T 
72 

HEARING BEFORE THE 

COMMITTEE ON HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATE SENATE 

"DUPLICATION, WASTE, AND FRAUD IN FEDERAL 

PROGRAMS" 

Testimony of 

The Honorable J. Russell George 

Treasury Inspector General for Tax Administration 

April 26, 2017 

Washington, D.C. 
73 

TESTIMONY 

OF 

THE HONORABLE J. RUSSELL GEORGE 

TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION 

before the 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

"Duplication, Waste, and Fraud in Federal Programs" 

April 26, 2017 

Chairman Johnson, Ranking Member McCaskill, and Members of the Committee, 

thank you for the opportunity to testify on refundable tax credit improper payments and 

their adverse effect on tax administration. 

The Treasury Inspector General for Tax Administration (TIGTA) was created by 

Congress in 1998 and is mandated to promote integrity in America's tax system. It 

provides independent audit and investigative services to improve the economy, 

efficiency, and effectiveness of Internal Revenue Service (IRS) operations. TIGTA's 

oversight activities are designed to identify high-risk systemic inefficiencies in IRS 

operations and to investigate exploited weaknesses in tax administration. TIGTA plays 

the key role of ensuring that the approximately 83,000 IRS employees' who collected 

more than $3.3 trillion in tax revenue, processed more than 244 million tax returns, and 

issued more than $400 billion in tax refunds during Fiscal Year (FY) 2016, 2 have done 

so in an effective and efficient manner while minimizing the risks of waste, fraud, and 

abuse. 

TIGTA's Office of Audit reviews all aspects of the Federal tax administration 

system and provides recommendations to: improve IRS systems and operations: 

ensure the fair and equitable treatment of taxpayers; and detect and prevent waste, 

fraud, and abuse in tax administration. The Office of Audit places an emphasis on 

statutory coverage required by the IRS Restructuring and Reform Act of 1998 

(RRA 98)3 and other laws, as well as on areas of concern raised by Congress, the 

Secretary of the Treasury, the Commissioner of Internal Revenue, and other key 

1 Total IRS staffing as of January 7, 2017. Included in the total are approximately 16,200 seasonal and 

part-time employees. 2 IRS, Management's Discussion & Analysis, Fiscal Year 2016. 3 Pub. L. No. 105-206, 112 Stat. 685 (1998) (codified as amended in scattered sections of 2 U.S. C., 5 

U.S.C. app., 16 U.S. C., 19 U.S. C., 22 U.S. C., 23 U.S C., 26 U.S.C., 31 U S.C., 38 U.S.C., and 49 

U.S C.). 
74 

stakeholders. The Office of Audit has examined specific high-risk issues such as 

identity theft, refund fraud, improper payments, information technology, security 

vulnerabilities, complex modernized computer systems, tax collections and revenue, 

and waste and abuse in IRS operations. 

TIGTA's Office of Investigations protects the integrity of the IRS by investigating 

allegations of IRS employee misconduct, external threats to IRS employees and 

facilities, and other attempts to impede or otherwise interfere with the IRS's ability to 

collect taxes. The Office of Investigations also investigates misconduct by IRS 

employees which manifests itself in many ways, including extortion, theft, taxpayer 

abuses, false statements, financial fraud, and identity theft. The Office of Investigations 

places a high priority on its statutory responsibility to protect all IRS employees located 

in over 670 facilities nationwide. In the last several years, threats directed at the IRS 

have remained the second largest component of the Office of Investigation's 

work. Physical violence, harassment, and intimidation of IRS employees continue to 

pose challenges to the implementation of a fair and effective system of tax 

administration. The Office of Investigations is committed to ensuring the safety of IRS 

employees and the taxpayers who conduct business in IRS facilities. 

TIGTA's Office of Inspections and Evaluations provides responsive, timely, and 

cost-effective inspections and evaluations of challenging areas within the IRS, providing 

TIGTA with additional flexibility and capability to produce value-added products and 

services to improve tax administration. The Inspection and Evaluation's work is not a 

substitute for audits and investigations. In fact, its findings may result in subsequent 

audits and/or investigations. Inspections are intended to monitor compliance with 

applicable law, regulation, and/or policy; assess the effectiveness and efficiency of 

programs and operations; and inquire into allegations of waste, fraud, abuse, and 

mismanagement. Evaluations, on the other hand, are intended to provide in-depth 

reviews of specific management issues, policies, or programs. 

TIGTA has conducted a number of reviews that evaluate the IRS's efforts to 

reduce erroneous and improper refundable credit payments. My comments today will 

highlight our prior and ongoing work. 

REFUNDABLE TAX CREDITS 

The IRS administers numerous refundable tax credits. The number of these 

credits has varied over time because some credits are available for a limited period that 

is set by law. Refundable credits are designed to help low-income individuals reduce 

2 
75 

their tax burden. For example, the Earned Income Tax Credit (EITC), created in 1975,4 

is used to offset the impact of Social Security taxes on low-income families and to 

encourage them to seek employment. Congress later created the Child Tax Credit 

(CTC) and the Additional Child Tax Credit (ACTC)S to reflect a family's reduced ability to 

pay taxes as family size increases. 

Other refundable credits provide incentives for specific activities, such as 

obtaining a college education or purchasing health insurance. For example, the 

American Opportunity Tax Credit (AOTC) allows individuals to receive a credit for 

higher education expenses up to $2,500 per student per year, with up to $1,000 being 

refundable. 6 More recently, the Patient Protection and Affordable Care AcF and the 

Health Care and Education Reconciliation Act of 2010• (collectively referred to as the 

Affordable Care Act or ACA), includes the Premium Tax Credit (PTC). The PTC is a 

refundable tax credit to assist individuals and families in purchasing health insurance 

coverage through an Affordable Insurance Exchange.• 

Although refundable credits provide benefits to individuals, the unintended 

consequence of these credits is that they can result in the issuance of improper 

payments and can be the targets of unscrupulous individuals who file erroneous claims. 

Refundable credits can result in tax refunds even if no income tax is withheld or paid; 

that is, the credits can exceed an individual's tax liability. Consequently, they pose a 

significant risk as an avenue for those seeking to defraud the Government. Whereas, 

nonrefundable tax credits are limited to the amount of an individual's income tax liability. 

Refundable credits do not have such a limitation. 

4 Tax Reduction Act of 1975 § 204, 26 U.S.C § 32. 5 The ACTC is the refundable portion of the Child Tax Credit. This credit phases out for taxpayers 

depending upon their income level. Taxpayers with earned income of less than $3,000 may be eligible 

for a refundable credit if they have three or more qualifying children and have paid Social Security taxes 

that exceed their EITC. 6 IRS Publication 970, IRS Tax Benefits for Education. 7 Pub. L. No. 111-148, 124 Stat. 119 (2010) (codified as amended in scattered sections of U.S. Code), as 

amended by the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 

1029. 

8 1d. 

9 The Exchange - also known as the Health Insurance Marketplace - is the place for people without 

health insurance to find information about health insurance options and to purchase health insurance. 

3 
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PROCESS TO ASSESS THE RISK OF REFUNDABLE CREDIT IMPROPER 

PAYMENTS 

The Office of Management and Budget defines an improper payment as any 

payment that should not have been made, was made in an incorrect amount, or was 

made to an ineligible recipient. 10 The Improper Payments Information Act (I PIA) of 

200211 requires Federal agencies, including the IRS, to estimate the amount of improper 

payments and report to Congress annually on the causes of, and the steps taken to 

reduce improper payments. The I PIA also requires agencies to address whether they 

have the information systems and other infrastructure needed to reduce improper 

payments. Subsequent amendments to the I PIA of 200212 revised the definition of 

improper payments and strengthened agency reporting requirements. In addition, the 

Office of Management and Budget issued supplemental improper payment guidance to 

the Department of the Treasury clarifying that all refundable tax credits are subject to 

the improper payment requirements. TIGT A is required to review on an annual basis 

the IRS's compliance with these requirements. 

The IRS assesses the risk of refundable credit improper payments by conducting 

an improper payment risk assessment for each refundable credit. In March 2017, we 

issued our draft report detailing the result of our assessment 13 of whether the IRS 

complied with the annual reporting requirements for FY 2016. We found that the IRS 

provided all required improper payment information to Department of the Treasury for 

inclusion in the Department of the Treasury Agency Financial Report Fiscal Year 2016. 

As an alternative to reporting an overall EITC improper payment rate of less than 

10 percent, the Department of the Treasury and the Office of Management and Budget 

collaborated on the development of a series of EITC supplemental measures. These 

include the percentage of EITC payments that were improper, the amount of revenue 

prevented or recovered through compliance activities, as well as the amount of revenue 

protected from Paid Tax Return Preparer treatments and the number of Due Diligence 

Penalties Proposed. The IRS complied with the reporting on these supplemental 

measures. 

10 OMB, Circular A-123 Appendix C, Requirements for Effective Estimation and Remediation of Improper 

Payments, revised Oct. 2014. 11 Pub. L. No. 107-300, 116 Stat. 2350. 12 Improper Payments Elimination and Recovery Act of 2010, Pub. L. No. 111-204, 124 Stat. 2224; and 

Improper Payments Elimination and Recovery Improvement Act of 2012, Pub. L No. 112-248, 126 Stat. 

2390. 

13 TIGTA, Audit No. 201740001, Compliance with Improper Payment Reporting Compliance in Fiscal 

Year 2016, report planned for April 2017. 

4 
77 

The Office of Management and Budget has declared the EITC a high-risk 

program that is subject to reporting in the Treasury Agency Financial Report. To date, 

the EITC remains the only refundable credit designated as high risk for improper 

payments. This is despite TIGTA's continued reporting that the refundable credit risk 

assessments for the ACTC and AOTC substantially understate the risk of improper 

payments for these credits. It should be noted that in response to prior TIGTA 

recommendations, the IRS revised its annual risk assessment process for the ACTC 

and AOTC credits. Using the revised assessment, the IRS concluded that the ACTC 

and AOTC presented a medium risk of improper payments for FY 2016. However, the 

medium risk continues to be contrary to the IRS's own compliance data, which shows 

that both the ACTC and AOTC programs present a high risk of improper payments. 

(Details on the estimated dollars in improper payments are provided later in my 

testimony.) 

Our review of these revised assessments found that they still do not include the 

use of available National Research Program (NRP)14 and IRS compliance data to 

quantify erroneous payments. Because the IRS does not rate these programs as high 

risk, it is not required to establish a corrective action plan to reduce the improper 

payments. It should be noted that the IRS is not required to perform a risk assessment 

of the EITC because the EITC is designated as a high-risk program by the Office of 

Management and Budget. For FY 2016, the IRS estimates EITC payments totaling 

$16.8 billion were issued improperly. 

To further demonstrate that the revised ACTC and AOTC risk assessments do 

not provide an accurate measure of improper payments, we used the IRS's 

methodology for these risk assessments to evaluate the EITC improper payment risk. 

Using the IRS's revised approach, the risk rating of EITC improper payments would be 

a medium, when clearly the risk is high and is designated as such by the Office of 

Management and Budget. In addition, for FY 2016 using the same methodology the 

IRS uses to estimate the amount of EITC improper payments we estimate $7.2 billion in 

ACTC payments and $1.1 billion in estimated AOTC payments were issued improperly. 

The dollar amounts of the estimated improper payments alone for these two credits 

meet the Office of Management and Budget definition of a high-risk program. 15 Yet the 

14 The NRP provides the IRS with compliance information that is statistically representative of the 

taxpayer population. The IRS uses each tax year's NRP results to update the EITC improper payment 

rate. 

15 The Office of Management and Budget defines a program as having significant improper payments 

when improper payments exceed both 1.5 percent of program outlays and $10 million of all program or 

5 
78 

IRS continues to knowingly erroneously classify the risk of these credits by not including 

a quantitative analysis of existing compliance data similar to the analysis we performed 

in its annual risk assessment of these credits. 

Finally, the assessment of the risk related to PTC improper payments continues 

to present challenges for the IRS. An agency is usually responsible for complying with 

the improper payment requirements for payments made from the agency's appropriated 

funds. The funds used to make PTC payments, including payments of the Advance 

Premium Tax Credit (APTC), 16 are drawn from the PTC budget fund included in the 

IRS's budget. However, unlike other refundable credits, the IRS is not solely 

responsible for administering the PTC. For example, the Department of Health and 

Human Services Centers for Medicare and Medicaid Services oversees implementation 

of certain ACA provisions related to the Exchanges. The Exchanges have sole 

responsibility for determining if an individual is eligible to use the Exchange to purchase 

health insurance as well as determining the amount of the APTC the individual is 

eligible to receive. Whereas, the IRS is responsible for determining an individual's total 

allowable PTC and ensuring that APTC paid to insurers is reconciled to the allowable 

PTC. Individuals whose APTC is less than their allowable PTC receive the additional 

credit on their tax return and those who received more APTC than the allowable PTC 

must repay the excess. 

Because the IRS and the Department of Health and Human Services are jointly 

responsible for the administration of the PTC, improper PTC payments can result from 

weaknesses in either agency's programs. As a result, the IRS alone cannot effectively 

assess the risk of PTC improper payments, estimate the improper payment rate and 

dollar amounts, or establish corrective actions to address the causes of and reduce 

improper PTC payments on its own. 

The Office of Management and Budget established an interagency working group 

in FY 2015 that included representatives from the IRS, the Department of the Treasury, 

the Department of Health and Human Services, and the Centers for Medicare and 

Medicaid Services. The group was established as a collaborative effort to develop a 

methodology to assess the improper payment risk across all payments made from the 

PTC budget fund account. The Interagency PTC Improper Payment Working Group 

worked with an outside vendor to complete a comprehensive risk assessment for the 

PTC for use in FY 2016. Using this assessment, the IRS determined that the PTC has 

activity payments made during the fiscal year reported or exceed $100 million at any percent of program 

outlays. 

16 An APTC is paid in advance to a taxpayer's insurance company to help cover the cost of premiums. 

6 
79 

a medium risk of improper payments. We will continue to review and report on IRS 

efforts to address the challenges in measuring PTC improper payments. 

LEGISLATION TO REDUCE FRAUDULENT AND IMPROPER REFUNDABLE 

CREDIT PAYMENTS 

Congress enacted the Protecting Americans from Tax Hikes (PATH) Act17 on 

December 18, 2015, which includes "program integrity provisions" intended to reduce 

fraudulent and improper EITC, CTC, ACTC, and AOTC payments. For example, one of 

the PATH Act's provisions is intended to ensure that the IRS has the information and 

time needed to verify the income of individuals claiming the EITC and ACTC before the 

related refund is issued. According to the House Committee on Ways and Means, 

these integrity provisions are projected to save roughly $7 billion over 10 years by 

reducing fraud, abuse, and improper payments in refundable credit programs. 

TIGTA has multiple ongoing reviews 18 to evaluate IRS actions to implement key 

provisions of the PATH Act. To date, our work has found that the IRS has withheld 

refunds as required for returns with an EITC or ACTC claim and released those returns 

that were not identified for additional review. IRS management informed us that all 

EITC and ACTC claims are being verified against Forms W-2, Wage and Tax 

Statement, data to identify claims that have unsupported income. Those that are 

identified as potentially fraudulent will be addressed as part of the IRS's fraud 

prevention programs. The remaining returns with an income discrepancy will be 

addressed as part of the IRS's overall Questionable Refund Program. 19 In September 

2014, TIGTA identified 677,000 Tax Year (TY) 20 2012 tax returns for which third-party 

Forms W-2 were not sent to the IRS by the employer for either the taxpayer and/or the 

spouse listed on the tax return. These tax returns claimed EITCs totaling more than 

$1.7 billion." 

17 Consolidated Appropriations Act of 2016, Pub. L. No. 114-113, Div. Q (2015). 18 TIGTA, Audit No. 201640031, Implementation of Refundable Credit Integrity Provisions, report planned 

for May 2017; TIGTA, Audit NO. 201640023, Individual Taxpayer Identification Number Deactivation 

Process, report planned for Aug. 2017; TIGTA, Audit No. 201740005, 2017 Filing Season, report planned 

for Sept. 2017; TIGTA, Audit No. 201740031, Implementation of Refundable Creditlntegrity Provisions 

Phase 2, report planned for Oct. 2017. 19 The Questionable Refund Program is a nationwide multifunctional program designed to identify 

fraudulent returns, to stop the payment of fraudulent refunds, and to refer identified fraudulent refund 

schemes to IRS Criminal Investigation field offices. 

2o A 12-month accounting period for keeping records on income and expenses used as the basis for 

calculating the annual taxes due. For most individual taxpayers, the tax year is synonymous with the 

calendar year. 21 TIGTA, Ref. No. 2014-40-093, Existing Compliance Processes Will Not Reduce the Billions of Dollars in 

Improper Earned Income Tax Credit and Additional Child Tax Credit Payments (Sept. 2014). 

7 
80 

However, IRS management indicated that for the 2017 Filing Season22 they do 

not plan to use Forms 1099-MISC, Miscellaneous Income, to systemically verify income 

reported on tax returns with EITC or ACTC claims. Management cited a number of 

challenges that need to be addressed to use this information to verify income reported 

at the time tax returns are identified. We will continue to review and report on the IRS's 

efforts to implement processes to use Forms 1099-MISC to verify income reported on 

returns claiming refundable credits. 

In addition, although the majority of the PATH Act provisions were effective 

January 1, 2016, and affect the processing of (TY) 2016 returns, one provision was 

effective December 18, 2015. This provision prevents taxpayers from filing an original 

or amended tax return for prior years (referred to as retroactive claims) to claim the 

EITC, CTC, ACTC, and AOTC when the Taxpayer Identification Number (TIN)23 used to 

claim the credit was not issued prior to the due date of the tax return. Our review of 

(TY) 2014 tax returns filed and processed during the 2016 Filing Season as of 

May 26, 2016, identified more than $34.8 million in CTCs, ACTCs, EITCs, and AOTCs 

claims that were paid to 15,744 taxpayers filing tax returns for years prior to when their 

TINs were issued. Each of the refundable credit claims associated with the returns we 

identified should have been disallowed by the IRS but were not. 

Management indicated that although the above provision was effective in 

December 2015, the IRS was unable to implement processes to identify erroneous 

claims for the 2016 Filing Season. For example, the IRS did not have the issuance 

dates associated with a Social Security Number (SSN) and Individual Taxpayer 

Identification Number (ITIN). 24 Consequently, the IRS needed to coordinate with the 

Social Security Administration to obtain the SSN issuance date and develop a 

methodology to identify the ITIN issuance date. Management further explained that, 

even if the IRS had the issuance dates, the modifications to its computer systems 

necessary to identify claims filed for the 2016 Filing Season would have been 

impossible to implement because the provision was enacted only 32 days prior to the 

start of the filing season. 

22 The period from January through mid-April when most individual income tax returns are filed. 23 A nine-digit number assigned to taxpayers for identification purposes. Depending upon the nature of 

the taxpayer, the TIN is either an Employer Identification Number, a Social Security Number, or an 

Individual TIN. 24 The IRS created the !TIN to provide Taxpayer Identification Numbers, when needed for tax purposes, 

to individuals who do not have and are not eligible to obtain an SSN. 

8 
81 

Finally, although the PATH Act gives the IRS more time to verify EITC and ACTC 

claims before refunds are issued, it does not expand the IRS's authority to systemically 

correct erroneous claims. The IRS, in conjunction with the Assistant Secretary of the 

Treasury for Tax Policy, has in each year since FY 2013 set forth a legislative proposal 

requesting additional error authority {hereafter referred to as correctable error authority) 

as part of its annual budget submission. The requested authority includes allowing the 

IRS to correct, during processing, tax returns when the information provided by the 

taxpayer does not match the information contained in Government databases {e.g., 

income information reported on the tax return does not match Forms W-2 from the 

Social Security Administration). 

In September 2014, we reported25 that because the IRS's compliance resources 

are limited; the IRS does not address the majority of potentially erroneous EITC claims 

it identifies. Currently, under the Internal Revenue Code, the IRS can use its math error 

authority to address erroneous EITC claims by systemically correcting mathematical or 

clerical errors on such claims. For example, it can correct entries made on the wrong 

line on the tax return or mathematical errors made in computing income or the EITC. 

However, the majority of potentially erroneous EITC claims that the IRS identifies do not 

contain the types of errors for which it has math error authority. To address those 

potentially erroneous EITC claims identified that cannot be addressed using math error 

authority the IRS must conduct an audit. The IRS estimated that it costs $1.50 to 

resolve an erroneous EITC claim using math error authority compared to $278 to 

conduct a pre-refund audit. 26 

Without correctable error authority, billions of dollars in identified potentially 

erroneous claims will continue to go unaddressed each year. It should be noted that the 

IRS has established processes and procedures that allow taxpayers to question the 

validity of IRS adjustments to their tax return. In July 2011, we reported that these 

procedures included sending a notice to taxpayers that shows the adjustments made to 

their tax returns.27 The notice also provides both a telephone number and mailing 

address for the taxpayer to contact the IRS should he or she question adjustments 

made to their tax return. Taxpayers who question the adjustments are given 60 

calendar days from the date of the notice to respond to the IRS and dispute the 

25 TIGTA, Ref. No. 2014-40-093, Existing Compliance Processes Will Not Reduce the Billions of Dollars in 

Improper Earned Income Tax Credit and Additional Child Tax Credit Payments (Sept. 2014). 26 Cost to use math error authority as of June 25, 2014, as provided by the IRS. The IRS provided the 

cost of a prerefund audit based on Fiscal Year 2010 financial data, which is the most current estimate 

available. 

27 TIGTA, Ref. No. 2011-40-059, Some Taxpayer Responses to Math Error Adjustments Were Not 

Worked Timely and Accurately (July 2011 ). 

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82 

adjustments. During this 60-day period, the IRS will place a freeze on the taxpayer's 

account to prevent the issuance of the portion of the refund associated with the error(s) 

identified or prevent the initiation of collection action resulting from any balance due. 

EFFORTS TO IDENTIFY AND REDUCE IMPROPER PAYMENTS 

The EITC, ACTC and AOTC are the three largest refundable credits the IRS 

administers and collectively accounted for more than $100 billion in credits claimed 

during TY 2015. The table below shows the amount of EITC, ACTC, and AOTC 

claimed by taxpayers during TY 2015. 28 

Refundable Credit Tax Returns Amount of Credit Claimed 

EITC 27.5 million $67.5 billion 

ACTC 19.2 million $26.0 billion 

AOTC 9.6 million $8.5 billion 

Total 56.3 million $102.0 billion 

The following highlights some of our work relating to these refundable credits. 

Earned Income Tax Credit- For FY 2016, the IRS estimates that more than 24 

percent of EITC payments, totaling $16.8 billion, were issued improperly. 

In September 2014, 29 we reported that the IRS has developed a strategy to 

reduce EITC improper payments. This strategy focuses on early intervention to ensure 

that individuals who claim the credit are in compliance with the EITC rules. The strategy 

includes education and outreach, enforcement actions, a paid tax return preparer 

compliance initiative, and legislative proposals. The IRS also performed compliance 

studies which found that EITC improper payments primarily result from two root causes 

- authentication and program design. 

Authentication errors include errors associated with the lack of available data to 

which the IRS can verify self-employment income, authenticate qualifying children, and 

verify filing status. Verification errors relate to the IRS's inability to identify 

28 Source is TIGTA's analysis of the IRS Individual Return Transaction File for Tax Year 2015. Individuals 

may have claimed more than one of the credits shown on a tax return. 29 TIGTA, Ref. No. 2014-40-093, Existing Compliance Processes Will Not Reduce the Billions of Dollars in 

Improper Earned Income Tax Credit and Additional Child Tax Credit Payments (Sept. 2014). 

10 
83 

underreporting and overreporting of third-party reported income, such as wages and 

errors that arise when more than one individual can claim a qualifying child. For 

FY 2016, the IRS estimated that 6 percent, or $1 billion, of improper EITC payments 

resulted from verification errors with the remaining 94 percent of improper EITC 

payments, or $15.8 billion, resulting from authentication errors. 

As previously noted, we have an ongoing review to assess the IRS's use of 

accelerated filing of income and withholding documents to identify erroneous claims. In 

addition, we are also conducting a review to assess the IRS's Return Preparer Outreach 

Strategy processes to identify and address return preparers filing returns with erroneous 

refundable credit claims. 

Additional Child Tax Credit- Using IRS's compliance data, we estimate that 

the IRS potentially issued $7.2 billion in ACTC improper payments during FY 2016. 

In March 2009, we reported a significant increase in ACTC claims by filers who 

were ineligible to obtain a Social Security Number.3° These individuals are not 

authorized to work in the United States and filed tax returns using an ITIN. For 

example, our updated analysis in response to a Congressional request31 identified that 

the amount of ACTC paid to these filers has grown substantially from $62 million in 

Processing Year 2001 to more than $3.4 billion in Processing Year 2015. It should be 

noted that ITIN filers are not eligible to claim the EITC but can claim the ACTC. 

In addition, in July 2011, we reported that a significant number of ITIN filers 

submitted multiple returns with ACTC claims for prior year tax returns (e.g., filing TYs 

2007, 2008, and 2009 returns at the same time). For example, in Processing Year 

2010, approximately 238,000 ITIN filers submitted more than 608,000 tax returns for 

multiple years at the same time and claimed just more than a $1 billion in ACTCs on 

those returns. The PATH Act contains a provision that excludes retroactive claims and, 

as previously indicated, we have an ongoing review to assess the IRS's processes to 

identify and disallow these claims. 

American Opportunity Tax Credit- Using IRS's compliance data, we estimate 

that the IRS potentially issued $1.1 billion in AOTC improper payments during FY 2016. 

30 TIGT A, Ref. No. 2009-40-057, Actions Are Needed to Ensure Proper Use of Individual Taxpayer 

Identification Numbers and to Verify or Limit Refundable Credit Claims (March 2009). 31 This analysis was conducted in response to an inquiry from the Legislative Director for the Chairman of 

the House Committee on Oversight and Government Reform, Subcommittee on Government Relations. 

11 
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In March 2015, we reported that although the IRS has taken steps to address 

some of our prior recommendations, processes still do not effectively identify taxpayers 

who claim erroneous education credits. 32 As a result, we estimated that in (TY) 2012 

more than 3.6 million taxpayers received more than $5.6 billion in erroneous education 

credits {$2.5 billion in refundable credits and $3.1 billion in nonrefundable credits). 

These 3.6 million taxpayers claimed credits but did not meet eligibility requirements and 

included taxpayers who erroneously claimed students for whom no Form 1098-T, 

Tuition Statement, was received by the IRS to substantiate that the students attended 

an eligible educational institution, 33 or claimed students who attended ineligible 

institutions34 or who attended less than half time. 

In response to our concerns, the IRS, in coordination with the Assistant Secretary 

of the Treasury for Tax Policy, submitted legislative proposals to establish the filing date 

for information returns (including the Form 1098-T) as January 31. This would enable 

IRS to verify claims at the time tax returns are processed. As of April 2017, such 

legislation has not been enacted. 

Included in the $5.6 billion erroneous education credit claims we identified are 

claims totaling an estimated $494 million whereby the taxpayers erroneously claimed 

the AOTC for the same students for more than four years. Requirements state that the 

allowable four-year period for which taxpayers can claim the AOTC for any one student 

includes any previous claims for the Hope Credit and applies to any four tax years; the 

tax years do not need to be consecutive. Therefore, if a student was claimed for the 

AOTC or Hope Credit in any four prior tax years, the student cannot be used by any 

taxpayer to claim the credit a fifth time. It should be noted that the request for 

correctible error authority would permit the IRS to correct errors in cases in which the 

taxpayer has exceeded the lifetime limit for claiming a deduction or credit. As such this 

authority could be used to address AOTC claims for which taxpayers erroneously claim 

the credit for the same students for more than four years. 

Finally, paid tax return preparers continue to prepare a significant number of 

returns with questionable education credit claims. More than 1.7 million (49 percent) of 

32 TIGTA, Ref. No. 2015-40-027, Billions of Dollars in Potentially Erroneous Education Credits Continue to 

be Claimed for Ineligible Students and Institutions (Mar. 2015). 33 Institutions of higher education are required to provide each student with a Form 1098-T and file a 

duplicate copy with the IRS. The Form 1098-T is to report payments received for qualified tuition and 

related expenses, scholarships and grants given, adjustments made for a prior year, and the name and 

location of the institution. 34 An eligible institution is any domestic or foreign postsecondary educational institution or training 

program that is certified to receive Federal student aid funding from the U.S. Department of Education. 

12 
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the 3.6 million tax returns we identified were prepared by tax return preparers. The 

potentially erroneous claims totaled more than $2.7 billion. This is similar to the 

percentage we have reported previously. 35 In response, the IRS developed a 

comprehensive enforcement strategy to increase tax return preparer compliance. In 

addition, the IRS stated that, prior to the start of the 2014 Filing Season, it sent 

educational letters to approximately 1,000 tax return preparers to alert them that they 

had filed AOTC claims that appeared to be erroneous. The letters reminded them of 

their responsibilities as tax return preparers and directed them to additional information. 

The IRS indicated that these tax return preparers' filing patterns and compliance with 

future AOTC claims will be tracked to determine if compliance has improved. 

We are conducting a follow-up analysis of the IRS's efforts to identify AOTC 

claims filed for more than four years and will include the results of our assessment in 

our 2017 Filing Season report, which will be issued later this calendar year. In addition, 

later this calendar year, we will be initiating a follow-up review to evaluate IRS efforts to 

identify questionable AOTC claims. 

In summary, the IRS issued an estimated $25 billion in potentially improper EITC, 

ACTC, and AOTC payments in FY 2016. This represents a significance loss to both the 

Federal Government and taxpayers. We at TIGTA take seriously our mandate to 

provide independent oversight of the IRS in its administration of our Nation's tax 

system. As such, we plan to provide continuing review of the IRS's efforts to identify 

and reduce improper refundable tax credit payments. 

Chairman Johnson, Ranking Member McCaskill, and Members of the Committee, 

thank you for the opportunity to share my views. 

35 TIGTA, Ref. No. 2011-41-083, Billions of Dollars in Education Credits Appear to Be Erroneous (Sept. 

2011). 

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Statement for the Record 

Chancellor Rebecca M. Blank 

University of Wisconsin-Madison 

Before the U.S. Senate Committee on Homeland Secnrity and 

Governmental Affairs 

Hearing on: "Duplication, Waste, and Fraud in Federal Programs" 

April 26, 2017 

10:00a.m. 

Chairman Johnson, Ranking Member McCaskill, and members of the Committee, thank you 

for inviting me to discuss regulatory requirements and their effect on scientific research at 

our nation's major research universities including the University of Wisconsin in Madison, 

where I serve as Chancellor. 

I was a practicing economist prior to becoming a university chancellor and I believe deeply 

that we must do everything we can to help research universities thrive. By providing both 

the skilled workforce and the innovative new scientific and technological ideas that will 

assure a strong and growing American economy, America's universities hold the key to our 

nation's prosperity. 

The American people invest billions of dollars a year in scientific research at universities 

like UW, and we take very seriously our responsibility to be good stewards of that 

investment. That means not only complying with federal regulations, but also flagging 

unnecessary, ineffective, and duplicative administrative requirements that diminish our 

productivity. 

Research universities are some of the most regulated entities in our economy. At UW, we 

have to meet regulations from at least 35 Federal agencies and Federal regulatory 

requirements have increased steadily over the past two decades. These regulations are 
87 

often a response to valid concerns, and many of them may be important to assure that we 

do our work as effectively and transparently as possible. But some of them have become 

overly burdensome. 

I want to share a few of my observations with you this morning, and talk about how we can 

ensure safety and accountability while reducing costly administrative requirements that 

are burying our scientists in paperwork. 

Recent legislation js a big step forward - but more can be done 

The 21st Century Cures Act and the American Innovation and Competitiveness Act are big 

steps in the right direction. I want to thank the members of this committee for supporting 

these bills. 

But there is still more that can be done, as the GAO notes in its report. 

Like nearly every public university in this nation, UW-Madison is facing severe financial 

pressures. If we're going to continue to educate 43,000 students a year, run a more-thanbillion-dollar research enterprise, and produce innovations that drive the economy, we 

cannot continue to waste precious resources on duplicative, unnecessary paperwork. 

Let me add that this is a burden not only on major research institutions, but also on smaller 

colleges that do research. 

Many of them, including the four-year colleges within the UW System, are having great 

success building small research enterprises that are driving the regional economy, but they 

don't have the financial ability to spend millions of dollars a year and hire dozens of people 

to work on compliance. 

Excessive regulation can put these smaller schools out of the research business. 

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88 

My message today is very clear: 

We have spent many years add in&: layer upon layer of federal replatjons. and we're 

at a point where this js seriously impedin&: the productivity of our scientists 

There are as many as 23 different pre-and post-award administrative responsibilities 

associated with federal research grants. Each of these steps requires time from either the 

researcher or from support staff. 

Ten years ago we had SO full-time staff handling regulatory compliance on human and 

animal research projects. Today we have nearly 80, and we're hiring more. I cannot think 

of another function on campus that has added 30 full-time positions in the last decade. In 

fact, the staff in many of our offices has been reduced as we've dealt with budget cuts and 

worked to become more efficient. 

Let me tell you a story. 

There are 340,000 sports-related concussions each year in U.S. high schools. This is a major 

public health problem. One of our investigators wanted to send a survey to student athletes 

and athletic trainers in about 50 high schools around Wisconsin to improve our 

understanding of how often concussions are reported, factors influencing how they are 

managed, and how they affect quality of life in high school athletes. 

This survey study triggered a raft of regulations under the Common Rule, additional Common 

Rule subparts related to participation of children, HIPAA Privacy Rule, HIPAA Security Rule, 

and FERPA. 

Ultimately, the investigator had to enter into formal agreements with every one of the athletic 

trainers and jump through additional hoops for each local school district 

3 
89 

This imposed major delays and additional costs, and certainly didn't improve anyone's safety. 

If anything, the regulations made it harder for us to understand and address a major public 

health issue. 

Much oftbis administrative burden falls directly on teachers and researchers. taking 

valuable time away from the classroom and the lab 

The latest Federal Demonstration Partnership survey reveals that, nationwide, scientists 

with federal funding spend up to 42 percent of their time- or about four hours in a ninehour day on regulatory and administrative activities. Over the course of one year at UWMadison, that's about two million hours our 2,200 faculty are spending on paperwork 

Imagine the discovery and innovation and teaching that could happen in two million hours! 

In research involving human subjects, the preparation of compliance materials has become 

a science unto itself- in fact, it's spawned an entirely new job: Regulatory Specialist. 

These are people employed by individual research teams for the sole purpose of handling 

massive quantities of paperwork 

Scientists who cannot afford a Regulatory Specialist either cancel their research project or 

take on very high administrative burdens themselves. 

We recently surveyed our scientists who do research involving human subjects. Nearly half 

( 48.5 percent) told us that in recent years they had given up, or almost given up, pursuing 

at least one research study because of the red tape. 

We can't afford to sideline potentially life-saving research. 

And we know the system can work better, because we've seen it work better. Just consider 

the battle against the Zika virus: 

4 
90 

Zika is a mosquito-borne illness that causes devastating birth defects. It has created an 

international public health emergency, and scientists at UW-Madison are leading the fight to 

control Zika. Several of them are posting their data publicly online in real time to quickly give 

others working to control the disease the best possible information. 

Because of the threat to public health, their initial proposal was given high priority and 

approved by the UW Institutional Animal Care and Use Committee (IACUC) and biosafety 

committees about a month after the researchers submitted their materials for approval. 

This was at a time when South America was seeing 20,000 new Zika infections every week, so 

even a one-month delay came at a significant cost, but this expedited process demonstrates 

what is possible with good communication and a common-sense approach. 

What Can Be Done? 

Let me turn to some specific recommendations for change. 

First, key provisions of recently adopted legislation should be prioritized for 

implementation 

The 21" Century Cures Act and the American Innovation and Competitiveness Act (AICA) 

take important steps towards reducing some of these administrative burdens, and there 

are two provisions in particular that should be top priorities. 

(1) OMB should immediately stand up the new Research Policy Board required 

by the 21st Century Cures Act. This board will give us a new way to work with 

federal agencies to coordinate and improve regulation, spot gaps in the system, 

and assess and minimize the regulatory burden. 

(2) Current grant application and reporting requirements should be 

streamlined and simplified as soon as possible, as required by the AICA. The 

5 
91 

GAO report notes that Federal agencies have made efforts along these lines, but 

have not fully addressed variation in the requirements, which limits the 

effectiveness of the changes. 

Right now nearly every agency has different formats for submitting a research 

proposal, reporting on research progress, and demonstrating compliance with 

regulations. And agencies have different requirements for how results should be 

saved and made publicly available. 

But there have been important steps, as the GAO points out, toward 

standardizing some post-award requirements, such as financial reporting. 

Possible additional changes include: 

Streamlining pre-award requirements 

• Standardizing grant formats across agencies 

• Eliminating duplicative reporting, and 

Implementing a unified federal system for report submission 

Implementing and enforcing these changes- already part of the AICA- can have a 

trans formative effect, which is why the Association of American Universities (AAU, the top 

62 public and private research institutions in the U.S. and Canada), along with the 

Association of Public and Land Grant Universities (APLU) and the Council on Governmental 

Relations (COGR) are all asking that this be prioritized. 

Second, the Final Rule should come with training and guidance to ensure proper 

interpretation and application 

The recently adopted Final Rule, scheduled to take effect January 2018, modernizes the 

Common Rule (last updated in 1991) governing human subjects in research. It covers 

research supported by 16 Federal departments and agencies, and the National Science 

Foundation. 

6 
92 

One important goal of the Final Rule is to reduce the regulatory burden on research that 

poses little or no risk to participants - for example, studies that involve simple observation. 

Right now, Institutional Review Board committees, which review and approve research 

involving human subjects, apply the same federal regulations designed for high-risk 

studies, to these low-risk studies. 

The Final Rule adds important exemptions and expedited review categories, but without 

better training for grant compliance officers and guidance to Institutional Review Boards to 

address differences in how these regulations are interpreted and applied, problems will 

persist. 

Let me give you an example of the problems caused by dueling interpretations of the rules: 

One of our pediatricians wants to create a registry to track health information from children 

across the state who have a very serious condition that can cause heart attacks at an early 

age. 

Registries like these are critically important to good patient care because they give healthcare professionals vital information on, for example, which treatments work and which don't. 

Among other things, that's the kind of information that helps keep health-care costs down. 

We are now six months into this process, and full approvals still have not been granted 

because there are multiple sites providing information to the registry, and each interprets the 

regulations a little differently. 

No one is arguing that this project should not comply with all applicable regulations. But this 

lengthy and expensive process is doing nothing to make these children safer. In fact, as with 

the concussion survey, the delays can have a negative impact. 

7 
93 

We will be very happy to see the Final Rule go into effect, and hope to see an expansion of 

the kinds of low-risk research that can qualify for a reduced level of regulation. 

Third, excessive audits should be reduced 

Our research administrators work in a world of constant audits by Inspectors 

General. These are in addition to the on-going annual "A-133" audits that attest to our 

having systems and procedures in place to provide proper stewardship of federal funds. 

These broad audits by Inspectors General from multiple Federal agencies are conducted 

frequently, and they're usually duplicative and unnecessary. In recent audits of research 

universities around the country, OIG questioned about $720 million in expenditures. 

Following review, only $580,000 of that was sustained. In other words, less than 0.1 

percent. 

These excessive audits are precisely what the Single Audit was designed to eliminate. They 

create an enormous and costly administrative burden. One recent audit took 4,500 hours 

of staff time. And their public release, often with allegations that are not ultimately 

sustained, threatens our institutional credibility. 

Time and money would be better spent on audits where there is due cause to believe that 

there's a genuine risk of fraud, waste, and abuse. 

We strongly support the call from both AAU and COGR to reduce this overreach by the 

Inspectors General. 

I have been talking about regulations that relate to research, but let me also mention some 

of the other regulations that we deal with, which govern student affairs. 

Re~:ulatjons desjgned to protect students are enforced jn ways that are confusing and 

contradictory. and may not serve the law's intent 

8 
94 

Let me give you three examples. 

1. The Clery Act 

The Clery Act, which we fully support, was designed to improve campus safety by sharing 

information with parents and students about crimes committed both on campus and noncampus property. 

But we now have multiple agencies collecting multiple data and categorizing it in multiple 

ways. And the result- as the GAO report points out- is a system that at times is hindering, 

rather than helping, our understanding of campus crime. 

Here's an example: the Department of Education has interpreted "non-campus property" 

to mean anyplace any student spends more than one night as part of a university event. 

If a group of students goes on a research trip with a professor, or participates in an athletic 

event, we have to reach out to local law enforcement and gather crime statistics on the 

hotel where they're staying. 

You can imagine that we spend hundreds of hours tracking information on properties all 

over the world. That's time that could be spent on actual crime prevention. But the worst 

part is, the information we gather is misleading because all non-campus properties are 

lumped together. So, many of the crimes we have to report occurred nowhere near our 

institution and have no bearing on campus safety. 

We recommend that the Department of Education's interpretation of "non-campus" 

property be re-evaluated so that we're providing useful crime statistics to families and 

students, and reducing what has become a major administrative burden. 

9 
95 

We also support the GAO's recommendation for an interagency forum to discuss the range 

of data collection efforts and determine ifthey are all necessary. 

2. Title IX enforcement 

We strongly support Title IX. It's been an extraordinarily valuable tool to address longstanding issues of discrimination. 

Here's the problem. Because federal research grants are linked to Title IX compliance, 

every agency that provides funding must separately ensure that we're complying. 

In the current academic year, we've been asked to respond to inquiries about our Title IX 

compliance by the Department of Education, the Nuclear Regulatory Commission, the U.S. 

Department of Agriculture, and NASA. Each group asks for different types of reports. 

Given the varied nature of the research activities taking place at UW -Madison, there is a 

long line of other Federal agencies that could, at any time, require us to demonstrate our 

Title IX compliance. 

We recommend consolidating Title IX enforcement within a single agency, which will not 

only ease this substantial administrative burden, but also help to ensure more uniform 

interpretation and enforcement of the law. 

3. Return to Title IV (R2T4) regulations 

One of the most administratively burdensome regulations related to students is the Return 

to Title IV calculation, commonly known as R2T4. This governs how we handle federal 

student aid when the student withdraws from school. 

This is consistently one of the top three most-cited weaknesses in the annual OMB A-133 

audits and for good reason- it's complex, confusing and duplicative. 

10 
96 

The Federal Student Aid Handbook dedicates a full 213 pages of instructions and guidance 

to this single regulation. Unfortunately, those 213 pages don't clarify a whole lot. 

By comparison, guidance on the Federal Pell Grant and calculation of the Afghanistan 

Service Grant cover just 38 pages. 

We recommend that the Department of Education simply use the information already 

reported to calculate how much the student owes, and notify students and institutions. 

This would ease a substantial administrative burden, reduce audit issues, and better ensure 

accurate calculations. 

Not all re~rulation is wasteful and unnecessary 

Let me be clear that 1 am not arguing that we should do away with all regulations governing 

students or research. 

A number of them are important for the safety and well-being of the more than 20 million 

students at colleges and universities across this nation. 

Similarly, we don't seek to return to the days when research was conducted with no rules. 

That's dangerous. We need only think of the Tuskegee Syphilis Study to be reminded of the 

need for effective regulation. 

Federal research grants come with many strings for a number of good reasons: 

• To guard against improper spending of taxpayer dollars. 

• To help to ensure research integrity. 

• To increase access to research data and results. 

• And most important of all, to help protect humans and animals involved in research. 

11 
97 

We must operate from a shared set of ethical principles that guide scientific research. But 

the way in which these principles are translated into regulations by various federal 

agencies has created a system of unnecessary delays and expenses. 

Conclusion 

Our system of higher education is the envy of the world. Nineteen of the world's top 25 

universities- including UW-Madison- are in the U.S. 

No nation on earth has been as successful as the United States at building remarkable 

institutions that offer an outstanding education and conduct the kind of basic research that 

fuels innovation and helps to solve immediate problems in the real world. 

That's why the rest of the world sends their best and brightest students to be educated in 

the United States. 

But international preeminence doesn't come with a longterm guarantee. If you doubt that, 

just try to remember the last time you flew Eastern Airlines, drove an American Motors car, 

or turned on a Zenith TV. 

American research universities are a major reason why this country has been able to lead 

the world economy. Excess regulation of these institutions can only erode their success. 

I thank you for your commitment to bringing this unwieldy system under control, and I 

urge you to continue to look for ways to cut unnecessary strings and maintain necessary 

safeguards. In that way, you will position great research institutions like the University of 

Wisconsin to thrive, allowing us to continue to conduct research that leads to big 

discoveries and keeps this nation on the cutting edge of innovation. 

Thank you. 

12 
98 

STATEMENT OF 

KEITH D. REPKO 

MEDICAL CENTER DIRECTOR, ST. LOUIS HEALTH CARE SYSTEM 

VETERANS HEALTH ADMINISTRATION (VHA) 

DEPARTMENT OF VETERANS AFFAIRS (VA) 

BEFORE THE 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

APRIL 26, 2017 

Good morning, Chairman Johnson, Ranking Member McCaskill, and Members of 

the Committee. Thank you for the opportunity to participate in this hearing and to 

discuss the design and construction projects at the Jefferson Barracks and John 

Cochran campuses of the VA St. Louis Health Care System (St. Louis HCS). 

Our mission is to honor American's Veterans by providing exceptional health 

care that improves their health and well-being. The St. Louis HCS is a dual affiliated, 

full-service health care facility providing inpatient and outpatient care in medicine, 

surgery, psychiatry, neurology, and rehabilitation, and many other subspecialty areas. It 

is a two-division facility that serves Veterans and their families in east central Missouri 

and southwestern Illinois. The John Cochran Division, named after the late Missouri 

congressman, is located in midtown St. Louis and comprises the medical center's 

operative surgical capabilities, the ambulatory care unit, intensive care units, outpatient 

specialty clinics, and emergency department. 

Improving Access 

One of the top priorities for the Department has been improving access to care 

and the St. Louis HCS has taken that to heart. While more work remains to be done, 

both the VA and the St. Louis HCS has made real progress. During Fiscal Year (FY) 

2016, St. Louis HCS hired 385 staff, including 36 Physicians, four Physician Assistants, 

93 Nurses, and 252 other critical occupations. VASt Louis currently has a 9% vacancy 
99 

rate. In order to leverage limited space and enhance convenience for Veterans, we 

have extended clinic hours at five locations and hold Saturday clinics at two locations. 

Additionally, we have increased the delivery of care by telephone and secure 

messaging to better use provider time, improve access, and meet Veteran care needs 

without their traveling for a scheduled appointment. 

VA's Real Property Portfolio 

Before I talk specifically about the facilities in St. Louis, it is important to mention 

the state ofVA's Capital Portfolio overall, and Department's capital investment planning 

process. VA currently owns 6,227 buildings; 35,193 acres; and over 153 million square 

feet (SF). VA also has 1,951 leases with over 23 million SF. A building design life is 40 

years; however, the average age ofVA's facilities is 57 years old. Approximately 40% 

of VA's buildings are considered historic. Due to the age of facilities and changes in 

healthcare requirements, many of these buildings are inadequate for modern healthcare 

and should be replaced. Some ofVA's medical facilities also have significant critical 

safety and seismic issues that remain to be addressed. The 2017 VA Long Range 

Capital Plan showed that VA had a construction requirement of between $41 and $50 

billion. The 2017 VA capital programs funding request in the FY 2017 President's 

Budget was $1.9 billion for major and minor construction and non-recurring 

maintenance (NRM) programs. 

Major 528,110 

Minor 372,069 

NRM 1,057,473 

Total 1,957,652 

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100 

The Department prioritizes its capital investments each year, through the 

Strategic Capital Investment Planning (SCIP) process. Only the highest priority projects 

are included in the budget request. Projects not included in the budget request must recompete the following year. 

Jefferson Barracks Division Major Construction Project 

The Jefferson Barracks Division is a multi-building complex overlooking the 

Mississippi River in south St. Louis County. It provides psychiatric treatment, spinal cord 

injury treatment, a nursing home care unit, geriatric health care, rehabilitation services, 

and a rehabilitation domiciliary program for homeless Veterans. VA is currently 

pursuing a major construction project that will further enable us to better serve Veterans' 

health care needs for decades to come. The Jefferson Barracks Division project is one 

of the major construction projects that is currently on VA's Active development list. The 

active development list consists of 21 major construction projects that the Department is 

actively working on and planning to request funds in a future budget. 

Our Jefferson Barracks Major Project is a joint VHA and NCA venture and will 

construct a total of five new buildings. The project will relocate primary care, mental 

health and specialty care out of its current 1920's building into a modern environment 

and allow for the needed expansion of services. It will construct a new patient aquatic 

and rehab therapy building, to replace the existing facilities which have to frequently 

shut down during the hottest days of the summer due to the lack of adequate air 

conditioning. The project also replaces the existing central boiler/chiller plant and 

underground utilities -- some dating back to the 1920s -- that are failing and causing 

negative impacts on campus operations. In 2010, the campus suffered a total loss of all 

3 
101 

power approximately nine days. Just prior to that, the campus lost air conditioning 

during the heat of the summer, causing relocation of patients to other campuses. Lastly, 

the project will replace an obsolete campus fire alarm system, will construct a new 

support building, will provide 800 net new patient parking spaces, and will construct 

facilities to relocate engineering shops and a consolidated warehouse. 

Upon completion, the total project will decrease the amount of infrastructure 

maintained and operated by VHA through demolition of energy inefficient and 

underutilized buildings. It will also provide approximately 30 acres to the NCA for 

expansion of the Jefferson Barracks National Cemetery. Without this additional land, 

the cemetery would be closed to burials within several years. The total project cost is 

$366.5 million, which was approved as a VA major project in 2004. The project was 

partially funded in 2007, was designed in 2008, started construction in 2010 and is 

scheduled to be completed in 2020. This project is 52% complete with no cost over 

runs. 

Since this project was first conceived, scoped, and preliminarily designed, our 

method of delivering Primary Care has changed significantly. VA's current model of 

utilizing Patient Care Aligned Teams (PACTs) were not in place in 2004. This 

organizational arrangement, whereby a provider, a nurse, a licensed practical nurse, 

and a clerk all cohesively work together as a team to manage a panel of Veterans, 

utilizes space in a much different way than the previous Primary Care model that 

existed during the design phase. However, due to close coordination between the local 

medical facility and the Office of Construction, necessary space adjustments to the new 

building have been made without significant cost increases, construction delays or both. 

4 
102 

John Cochran Division Major Construction Project 

The John Cochran Major Project was funded for design in 2010. The project 

would construct a new inpatient bed tower and allow for the expansion of specialty care 

clinics. The total project cost was estimated at $433.4 million. In 2015 each major 

construction project (including those that had available funding) was revaluated and 

rescored through SCIP to ensure the project's requirements were still valid and the 

project remained a high priority for the Department. The St. Louis JC project did not 

score high enough to be included in FY 2015 and 2016 budget request, and therefore it 

is not being actively developed by the Department at this time. The project is eligible to 

be reconsidered in SCIP and considered for funding in a future budget. 

Conclusion 

In closing, each day, we move toward our goal of improving and streamlining our 

processes in order to provide exceptional care that Veterans have earned and deserve. 

Mr. Chairman, this concludes my statement. Thank you for the opportunity to testify 

before the Committee today. I would be pleased to respond to questions from you and 

Members of the Committee. 

5 
30-YEAR PROJECTED DEFICITS 

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107 

FEDERAL BUDGET FY16 

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Medicaid: $368b 

Veterans: $175b 

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Treasury Bureau of the Fiscal Service, Congressional Budget Office 
108 

Post-Hearing Questions for the Record 

Submitted to the Honorable Gene Dodaro 

From Senator Gary Peters 

"Duplication, Waste, and Fraud in Federal Programs" 

April 26, 2017 

1. Inspector General audits are an essential tool to ensure that taxpayer money is spent 

responsibly. Although Congress has made recent progress in reducing the 

administrative burden on our research universities by passing the American Innovation 

and Competitiveness Act, Dr. Blank raised concerns in her testimony that excessive 

audits can be counterproductive. How would you suggest threading the needle between 

reasonable and overly burdensome auditing processes that allow for effective oversight 

of taxpayer funds while promoting academic enterprise? 

Audits by offices of inspectors general are an important and necessary part of oversight of 

federally funded university research. As noted in our June 2016 report, when audits result in 

findings of noncompliance, such as grantees charging unallowable costs to grants, grantees 

may need to repay funding agencies for these costs.' Examples of inspector general audit 

findings cited in our report include instances of researchers (1) using grant funds for personal 

purchases and (2) charging their full-time salaries to federal grants at one university while 

simultaneously working full-time at another university or for-profit company. 

Federal agencies that fund university research could help reduce any burden associated with 

audits of such research by implementing one of the recommendations in our report. Specifically, 

the Department of Energy, National Aeronautics and Space Administration, Department of 

Health and Human Services (HHS), and the National Science Foundation (NSF) should 

coordinate to identify additional areas where they can standardize administrative requirements 

for federal research grants. As noted in our report, some of the findings in recent audit reports 

by the HHS and NSF offices of inspector general stemmed from differences in how auditors, 

agencies, and universities interpreted requirements. Greater standardization could reduce 

universities' administrative workload and costs of learning and complying with agencies' varying 

requirements. 

1

GAO, Federal Research Grants: Opportunities Remain for Agencies to Streamline Administrative Requirements, GA0-16-573 

(Washington, D.C.: June 22, 2016). 
109 

2. The GAO report on Federal Real Property Management published on January 3, 2017 

found that GSA is leasing high-security space in 20 foreign owned buildings, occupied 

by 26 federal agencies. Many tenant agencies were unaware of their building's ownership 

and had not taken steps to mitigate attendant risks, which can include money laundering 

and unauthorized cyber and physical access. What are your biggest concerns about how 

unknown foreign ownership could be putting our agencies at risk and potentially adding 

to their costs? 

GSA's incomplete information and lack of policies and procedures regarding foreign ownership 

of high-security leased space may undermine the security of the tenants' facilities. When GSA 

does not know the beneficial owners of the high-security properties that it is leasing, it lacks 

information that should be shared with its tenants for their facility risk assessments. Moreover, 

when tenant agencies lack information about the beneficial owners of their high-security 

facilities, they may not correctly evaluate the security risks and, consequently, not take the most 

appropriate steps to secure their buildings, leaving the facilities vulnerable. In our January 2017 

report, we recommended that GSA determine whether the beneficial owner of high-security 

space that GSA leases is a foreign entity and, if so, share that information with the tenant 

agencies so they can adequately assess and mitigate any security risks. In response, in March 

2017, GSA implemented a policy requiring staff to check for foreign ownership in the System for 

Award Management (SAM), the federal acquisition and award system when leasing space and 

notify tenant agencies in such cases. However, because SAM does not necessarily identify 

beneficial owners, GSA's action does not fully implement the recommendation. 

Regarding the security of the tenants' facilities, federal officials who assess foreign investments 

in the United States and some tenant agencies occupying high-security leased space told us 

that leasing space in foreign-owned buildings could present security risks such as espionage 

and unauthorized cyber and physical access. The Secret Service, for example, said that the 

protection of its information, technology, personnel, and space could be in jeopardy if the space 

were compromised through unannounced inspections, emergency repairs to the building, the 

use of foreign nationals to provide any type of service, and any unescorted access throughout 

the space by the facility owner or representatives. The Drug Enforcement Administration (DEA) 

indicated that its primary concern is the possible unauthorized access to its secure areas and 

information. 

Do GSA and agencies have the resources they need to effectively mitigate risk? 

We did not assess whether GSA and the agencies have the resources to effectively mitigate 

risk. However, knowledge of building ownership is a resource they are lacking. 
110 

Would re-evaluating and changing these leases potentially save security costs over 

time? 

Our engagement sought to improve GSA's high-security tenants' ability to assess and address 

potential risks, but did not assess the costs of amending lease terms or adding mitigating factors 

related to foreign ownership. As a result, we believe that implementing our recommendation 

would improve the security of high-security spaces but any budgetary consequences remain 

unclear. 

3. In the report on Federal Real Property Management, GAO recommended that GSA 

determine whether the beneficial owner of high-security leased space is a foreign entity 

and, if so, share that information with tenant agencies so they can adequately assess 

and mitigate any security risks. GSA already uses several processes to collect data, but 

they provide incomplete information on foreign ownership: the System for Award 

Management (SAM) collects information on companies' immediate and highest-level 

owners; GSA checks lessors' names in the Excluded Parties List System and Treasury's 

Specially Designated Nationals and Blocked Persons List; and lessors self-identify as 

foreign entities on lease applications. In addition, under a 2016 FinCEN rule making, 

financial institutions must identify beneficial owners of all foreign-entity customers. 

According to GAO's report, "GSA officials said that they do not have the ability or 

authority to check foreign ownership beyond the sources currently available to them." 

Specifically, what additional processes could GSA implement to identify foreign 

beneficial and direct owners, for existing and new federal leases? Should GSA include 

more specific questions in SAM and lease agreements, work more closely with the 

Treasury Department to verify the information companies self-report, and/or keep a 

database of beneficial ownership information or other specific data? 

We believe that GSA should take steps to identify the beneficial owner and inform high-security 

tenants when the owner is foreign. In response, in March 2017, GSA implemented a policy 

requiring staff to check for foreign ownership in the federal acquisition and award system when 

leasing space and notify tenant agencies in such cases. For the purposes of our report, we did 

not explore additional processes that GSA could utilize, such as including more specific 

questions in SAM and lease agreements, working more closely with the Treasury Department, 

and/or keeping a database of beneficial ownership information or other specific data. We 

believe GSA would be in the best position to assess how to identify beneficial owners. We also 

believe that the identity of the beneficial owner-the person who ultimately owns and controls a 

company-is the most useful information for tenants, but SAM does not always include the 

beneficial owner of the property. 

Beyond these sources, does GSA need additional legal authorities to carry out these 

changes? What specific guidance has GAO given to GSA on this issue? 

GSA officials said that they do not have the ability or authority to check foreign ownership 

beyond certain sources currently available to them, but GSA agreed with our recommendation 

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111 

to determine whether the beneficial owner of high-security space is a foreign entity and, if so, 

share that information with the tenant agencies for any needed security mitigation. Our 

recommendation did not prescribe how GSA should identify the beneficial owners of highsecurity space. Based on our review of relevant statutes and regulations, we did not find any 

clear indication as to whether GSA does or does not have the authority to check ownership 

more thoroughly than what is required by the Federal Acquisition Regulation. We did not 

provide GSA any specific guidance on this issue. However, implementing our recommendation 

could help GSA tenant agencies adequately assess and mitigate any security risks associated 

with foreign ownership. This was one of the recommendations included in GAO's May 25, 2017, 

priority recommendation letter to the Acting GSA Administrator. We will follow up on this 

recommendation to monitor GSA's progress in implementing it. 

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4. I was glad to see the attention paid to the issue of Government Purchase Cards to 

develop guidance that encourages federal officials to examine purchase card spending 

patterns to identify opportunities to obtain savings and to share information on such 

efforts. As one of the founders of Senate Payments Innovation Caucus, I believe the 

federal government must examine how organizations and agencies use purchase cards, 

and where possible, employ innovative practices to save time and money. Given that 

OMB has already established controls that reduce the risk of fraud, waste, and error in 

government charge card programs through the Circular A-123, it is concerning that GAO 

found that agencies in its small sample aren't following the guidance. Which agencies 

are responsible for monitoring adherence to the Circular A-123 among federal 

departments? 

Circular A-123 requires an agency to incorporate purchase card data into strategic sourcing 

analysis and recommends that agencies review and analyze purchase card spending patterns 

for opportunities to negotiate discounts, improve buying processes, and leverage buying power. 

OMB issued Circular A-123 but agencies are responsible for ensuring their compliance with the 

circular. 

What else could OMB or GSA do to identify other agencies with shortcomings in 

compliance Circular A-123? 

Our May 2016 report on purchase cards examined purchase card buying at six agencies, 

including the Departments of Defense, Veterans Affairs, the Interior, Homeland Security, and 

Energy, and the Environmental Protection Agency. 2 We made one recommendation to all six 

agencies to identify and share information on local purchase card initiatives, and made 

recommendations to the Departments of Defense and Energy to analyze purchase card data. 

The agencies generally agreed with our recommendations and are beginning to implement 

them. While these recommendations are targeted to the agencies in our review, we think these 

principles can be more broadly applied. As OMB continues to implement its strategic sourcing 

initiatives, there may be opportunities for further analysis of purchase card spending patterns. 

2

GAO, Government Purchase Cards: Opportunities Exist to Leverage Buying Power, GA0-16-526 (Washington, D.C. 

May 19. 2016). 

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Post-Hearing Questions for the Record 

Submitted to the Honorable Eugene L. Dodaro 

From Senator Steve Daines 

"Duplication, Waste, and Fraud in Federal Programs" 

April 26, 2017 

1. The April 2017 report features the Social Security Administration's Master Death File as a 

potential means for reducing the estimated over $144 billion in improper payments as of 

FY16. Alone, OMS's Do Not Pay working system prevented $680,000 in improper 

payments in FY15, but your report suggests that integrating data from the Master Death 

File with the Do Not Pay system could provide a more complete source of information to 

prevent payments to the deceased. To your knowledge, are these agency distributions 

on auto-pilot other than death verification from a database? Do you believe ifs within the 

agencies statutory bounds to establish automatic criteria to remove suspected deceased 

people from payments, for example people recorded alive at age 125? 

Agencies are responsible for making determinations about the disbursement of payments or 

awards, consistent with legal authority. The processes for making these determinations will vary 

by program given their various eligibility requirements and legal authorities. For example, due 

process requirements may prohibit automatic removal of beneficiaries from program payments 

without affording them an opportunity to respond within a certain period. We are not aware of 

any agencies that use such automatic criteria, and we did not assess their statutory authority to 

do so. 

For fiscal year 2016, 2.5 percent of the reported government-wide improper payment estimate 

was attributed to agencies' failure to verify data-such as death data or financial data-even 

though such data exist in government or third-party databases. One technique to avoid making 

improper payments is to verify eligibility through the use of data matching. The Do Not Pay 

(DNP) working system, a web-based, centralized data matching service, is one of many tools 

agencies can use to verify eligibility. 

In 2016, we reported that the 10 agencies we reviewed had used the DNP working system in 

limited ways, in part because of a lack of clear strategy and guidance from the Office of 

Management and Budget (OMB).' 

The most common way these agencies used the DNP working system was through its 

payment integration process, whereby the Department of the Treasury (Treasury) 

compares disbursements it makes with DNP databases. However, Treasury matches 

against only two databases (death data and excluded parties data), and because the 

matching is performed simultaneously with disbursement, agencies generally do not 

receive the results in time to prevent improper payments. For recurring payments, use of 

the payment integration process may help agencies avoid future improper payments, 

although an initial payment may not be identified as improper until after it has been 

made. 

3

GAO, Improper Payments: Strategy and Additional Actions Needed to Help Ensure Agencies Use the Do Not Pay Working 

System as Intended, GA0-17-15 (Washington, D.C.: Oct. 14, 2016). 

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Further, because the payment integration process is built into Treasury's payment 

process, it does not compare payments disbursed through other means, such as 

payments made by the Defense Finance and Accounting Service ($477 billion in fiscal 

year 2015). 

Aside from payment integration, we found that only 2 of the 10 agencies we reviewed 

used the DNP working system to review some of their payments on a pre-payment 

basis. Nine of the 1 0 agencies used some of the databases outside the DNP working 

system. 

OMB has not developed a strategy or communicated through guidance how it expects 

agencies to use the DNP working system. As a result, agencies may not effectively and 

efficiently use the system to help reduce improper payments. 

We recommended that OMB develop a strategy and communicate it through guidance to 

help ensure that agencies use the DNP working system effectively. OMB generally 

agreed with the concept of developing a strategy and stated that it would explore the 

concept further. 

Although agencies can use data matching to verify eligibility and prevent improper payments, it 

is also important to note that agencies may not always have access to the information 

necessary to make eligibility determinations. For example, for fiscal year 2016, 23.8 percent of 

the reported government-wide improper payment estimate was attributed to authentication 

issues. In these cases, agencies determined that an improper payment occurred because, 

among other things, no databases or resources existed to help make an eligibility determination, 

a beneficiary failed to report information needed for determining eligibility, or statutory 

constraints prevented an agency from accessing information relevant for determining eligibility. 

Specifically regarding death data, we reported in October 2016 that the DNP working system 

only has access to the Social Security Administration's Death Master File, which does not 

include state-reported death data. We asked Congress to consider amending the Social 

Security Act to explicitly allow the Social Security Administration to share its full death filewhich includes state-reported death data-with Treasury for use through the DNP working 

system. Sharing the full death file through the DNP working system would provide agencies 

additional data to help avoid making payments to deceased individuals. 

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Post-Hearing Questions for the Record 

Submitted to the Honorable J. Russell George 

From Senator Steve Daines 

"Duplication, Waste, and Fraud in Federal Programs" 

Apri126, 2017 

I. Mr. George's written testimony mentioned that taxpayers claimed $102 billion between 

three tax credits in 2015. Those credits were the Earned Income Tax Credit, the Child 

Tax Credit, and the American Opportunity Tax Credit. His written testimony also tells us 

that over $25 billion (over 24% of claims in 2015) on average was improperly paid in 

FY16. Mr. George, as Congress considers tax reform in the coming months, what 

succinct measures should Congress consider to reduce improper payments? In what 

percentage of instances would you say that illegal immigrants were a direct cause of these 

improper payments? 

What succinct measures should Congress consider to reduce improper pavments? 

The following legislative proposals would assist the IRS in improving the overall administration 

of refundable credits: 

• Providing the IRS with correctable error authority. The IRS requested this authority 

most recently as part of its Fiscal Year 2017 budget submission. This would give 

Treasury regulatory authority to permit the IRS to correct errors in cases in which: 

o The information provided by the taxpayer does not match the information contained 

in Government databases. According to the IRS, reliable Government data sources 

include information obtained from the Social Security Administration, the 

Department of Health and Human Services, the Federal Bureau of Prisons, and the 

States' Departments of Corrections. 

o The taxpayer has exceeded the lifetime limit for claiming a deduction or credit. In 

March 2015, we estimated that taxpayers received more than $494 million in 

American Opportunity Tax Credits (AOTC) in Tax Year 2012 for students that had 

been claimed for the AOTC for more than the four-year lifetime credit limit. 1 We 

forecast that the IRS could pay more than $4.2 billion in AOTCs over the next five 

years to taxpayers who claim a student for more than four years. 

o The taxpayer has failed to include documentation with his or her return that is 

required by statute. 

1 TIGTA. Re[ No. 20 15·40·027, Billions of Dollars in Potentially Erroneous Education Credits Continue to be 

Claimed for Ineligible Students and Institutions (Mar. 2015). 
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• Limit entities' ability to request extensions tor filing the Form 1 099-MJSC, Miscellaneous 

income, similar to the restrictions tor Form W-2, Wage and Tax Statement, enacted by 

the Protecting Americans (i-om Tax Hikes (PATH) Acr o[2015. The PATH Act 

accelerated the filing due date for Forms 1 099-MISC to January 31 so that these forms 

would be available for use in verifying income at the time tax returns were filed. 

However, entities who file Form 1099-MISC can receive an automatic 30-day extension 

of time to file and may receive an additional 30-day extension upon request. As a result, 

forms filed using these extensions will not be available for use by the IRS in timely 

verifying income. 

The following legislative proposals would improve the IRS's ability to verify the accuracy of 

AOTC claims: 

• Accelerating the tiling due date oft he Form 1098-T, Tuition Statement, to January 31. In 

general, educational institutions are required to provide Form I 098-T to students no later 

than January 31 each year. The Form 1098-T includes the information needed to 

determine eligibility for the AOTC. However, educational institutions are not required to 

file the Form 1098-T with the IRS until March 31.3 As such, these forms are not 

available for IRS use in verifying AOTC claims at the time the tax return is filed. 

In what percentage ofinstances would you say that illegal immigrants were a direct cause of 

these improper payments? 

We have not conducted analysis to address this question. However, to be eligible to claim the 

Earned Income Tax Credit (EITC), the primary taxpayer, spouse, and dependents on the tax 

return must have a valid Social Security Number. As such, an individual's immigration status is 

not a factor in the EITC improper payment rate. Based on our analysis of the IRS's National 

Research Program data, we estimated that $7.2 billion in Additional Child Tax Credit payments 

were improper in Fiscal Year 2016.4 Our further analysis of the IRS's National Research 

Program data determined that an estimated $6.3 billion involve filers with a Social Security 

Number. 5 For the American Opportunity Tax Credit, we estimated that $1.1 billion were 

improper in Fiscal Year 2016.6 Based upon further analysis, we estimate that $1 billion involve 

filers with a Social Security Number. 7 

'Consolidated Appropriations Act of2016, Pub. L. No.1 14-113, Div. Q (2015). 3 February 28 for paper filed forms. 4 We estimate that the potential ACTC improper payment rate for all Taxpayer Identification Number (TIN) types 

for Fiscal Year 2016 is between 22.7 percent and 27.8 percent and the potential improper payment dollars is 

between $6.5 billion and $7.9 billion. 5 For those filers with an SSN, we estimate that the potential ACTC improper payment rate for Fiscal Year 2016 is 

between 19.4 percent and 24.7 percent and the potential improper payment dollars is between $5.5 billion and 

$7. I billion. 6 We estimate that the potential AOTC improper payment rate for all TIN types for Fiscal Year 2016 is between 

19.6 percent and 28.7 percent and the potential improper payment dollars is between $900 million and $1.3 billion. 7 For those filers with an SSN, we estimate that the potential AOTC improper payment rate for Fiscal Year 2016 is 

between 19.1 percent and 28.3 percent and the potential improper payment dollars is between $800 million and 

$1.2 billion. 
117 

Answers to Questions for the Record 

Duplication, Waste, and Fraud in Federal Programs Hearing 

Committee on Homeland Security and Governmental Affairs 

United States Senate 

April 26, 2017 

Question from Senator Steve Daines 

Question 1: My home state of Montana has urged the VA to build a 60-bed stateoperated veterans' home in Butte for more than 6 years. The state provided its 

$5 million cost share up-front in 2011, yet the project has languished near the 

bottom of the VA's "Priority 1" List since February of 2012. Mr. Repko, your home 

state of Missouri also has two projects on the "Priority 1" list. Can you speak to 

actions the VA is taking to improve the scheduling and management of these 

projects? Should we expect to see an inflection point in the speed of progress 

for these approved projects? 

VA Response: The rules governing how the Department of Veterans Affairs (VA) ranks 

applications for grants on the priority list are set by regulation at 38 Code of Federal 

Regulations 59.50. The wait time of each project on the list depends on the project's 

rank and amount of funding available for the program during any given fiscal year. 

Questions from Senator Jon Tester 

Question 1: Please offer your perspective on the relationship between you and 

your staff, and VISN, and VA level staff who handle construction requirement 

development and procurement, and how you believe that relationship could be 

improved. Please focus on how better to handle the requirements development 

process. 

VA Response: VA has a great number of initiatives under way to increase Veterans' 

access to health care and benefits, which start at the local level by understanding the 

unique needs of the Veterans in our communities. Working harmoniously at the local, 

Veterans Integrated Services Network (VISN) and staff levels of VA, we have made 

great strides to reduce appointment wait times and to expand services to women 

Veterans and families, for example, but we can do more. The outcomes and results of 

VA construction projects at St. Louis have been achieved through such communications 

between the medical center, the VISN office, and VA Office of Construction and 

Facilities Management. As with all communications, there are opportunities to improve. 

VA St. Louis Leadership will continue to evaluate our relationship with department level 

construction offices to ensure communications are timely and enhance the requirements 

development process. 

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Æ 

Question 2: Please explain-from-your-perspective how VA can do a better job of 

communicating infrastructure needs and VA's plans to address those needs to 

stakeholders, like veterans' service organizations and local government. 

VA Response: On an annual basis, VA completes the Strategic Capital Investment 

Planning (SCIP) process. The SCIP process is a long range planning tool that 

integrates all capital investment needs across VA. SCIP drives investment and funding 

decisions by annually setting capital investment policy direction and objectives. Using 

gap analysis and projected utilization of services, SCIP identifies specific capital 

investments needed to close performance gaps in the areas of space, 

safety/compliance, security, utilization, access, seismic protection, facility condition 

deficiencies, parking, and energy. 

The results of the SCIP process are included in VA's annual budget submission to 

Congress. VA's budget submission is available online. Volume IV, Construction and 

Long Range Capital Plan can be found at the following site: 

https:/ /www. va .gov/budgetldocs/summarv/fy20 18VAbudgetVolumeiVconstructionlongR 

angeCapitaiPianAndAppendix.pdf. In addition to the budget submission, VA provides 

briefings on the SCIP process, the results, and the budget request to stakeholders, 

including members of Congress and their staff, Veterans' Service Organizations, and 

any other requestors. VA leadership also participates in Congressional budget 

hearings, where our capital needs are communicated to members of Congress and 

other witnesses and attendees. 

VA is always looking for ways to further enhance its communication with stakeholders 

and is receptive to ideas the Senator may have to enhance VA's communication of its 

infrastructure needs and plans to stakeholders.