U.S. GOVERNMENT PRINTING OFFICE

64–553 cc WASHINGTON : 2000

S. Hrg. 106–538

MEETING THE CHALLENGES OF THE MILLENNIUM

HEARING

BEFORE THE

COMMITTEE ON

GOVERNMENTAL AFFAIRS

UNITED STATES SENATE

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

MARCH 29, 2000

Printed for the use of the Committee on Governmental Affairs

(

For sale by the Superintendent of Documents, Congressional Sales Office

U.S. Government Printing Office, Washington, DC 20402

(II)

COMMITTEE ON GOVERNMENTAL AFFAIRS

FRED THOMPSON, Tennessee, Chairman

WILLIAM V. ROTH, Jr., Delaware

TED STEVENS, Alaska

SUSAN M. COLLINS, Maine

GEORGE V. VOINOVICH, Ohio

PETE V. DOMENICI, New Mexico

THAD COCHRAN, Mississippi

ARLEN SPECTER, Pennsylvania

JUDD GREGG, New Hampshire

JOSEPH I. LIEBERMAN, Connecticut

CARL LEVIN, Michigan

DANIEL K. AKAKA, Hawaii

RICHARD J. DURBIN, Illinois

ROBERT G. TORRICELLI, New Jersey

MAX CLELAND, Georgia

JOHN EDWARDS, North Carolina

HANNAH S. SISTARE, Staff Director and Counsel

ROBERT J. SHEA, Counsel

HENRY R. WRAY, GAO Detailee

JOYCE A. RECHTSCHAFFEN, Minority Staff Director and Counsel

SUSAN E. PROPPER, Minority Counsel

DARLA D. CASSELL, Administrative Clerk

(III)

C O N T E N T S

Opening statements: Page

Senator Thompson ............................................................................................ 1

Senator Lieberman ........................................................................................... 3

Senator Voinovich ............................................................................................. 4

WITNESS

WEDNESDAY, MARCH 29, 2000

Hon. David M. Walker, Comptroller General, U.S. General Accounting Office,

accompanied by Gene Dodaro, Chief Operating Officer

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

Prepared statement .......................................................................................... 33

APPENDIX

GAO report entitled ‘‘Managing for Results, Barriers to Interagency Coordination,’’ March 2000, GAO/GGD–00–106 ............................................................... 98

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MEETING THE CHALLENGES OF THE

MILLENNIUM

WEDNESDAY, MARCH 29, 2000

U.S. SENATE, COMMITTEE ON GOVERNMENTAL AFFAIRS, Washington, DC.

The Committee met, pursuant to notice, at 10:40 a.m., in room

SD–342, Dirksen Senate Office Building, Hon. Fred Thompson,

Chairman of the Committee, presiding.

Present: Senators Thompson, Voinovich, and Lieberman.

OPENING STATEMENT OF CHAIRMAN THOMPSON

Chairman THOMPSON. The Committee will come to order, please.

The Committee on Governmental Affairs is holding this hearing

this morning to discuss the major management challenges facing

the Federal Government in the 21st Century. We will hear from

one witness—the Comptroller General of the United States, Mr.

David Walker.

Today we will hear the Comptroller General’s view on what

issues provide the greatest challenges for the Federal Government.

Just last month, he recited an all too familiar litany of duplication,

waste, fraud, mismanagement, and other Federal performance

problems in testimony before the Senate and House Budget Committees.

The GAO High-Risk List of those Federal activities most vulnerable to waste, fraud, and abuse has gone from 14 problem areas in

1990 to 26 problem areas today. Only one high-risk problem has

been removed since 1995. Ten of the 14 original high-risk problems

are still on the list today, a full decade later.

Likewise, Inspectors General identify much the same critical performance problems in their agencies year after year.

Collectively, these core performance problems cause Federal taxpayers countless billions of dollars each year in outright waste.

They also exact a real toll on the ability of agencies to carry out

their missions and serve the needs of our citizens.

Despite these good economic times, polls recently showed that

Americans have little trust or confidence in their Federal Government. They want the Federal Government to work, but they do not

think that it does. Unfortunately, our citizens have ample reason

for concern. Much of what is done in Washington is inefficient and

wasteful.

To address this problem, Congress passed the Results Act, a law

which is aimed at making government agencies report to Congress

and the American people about what works and what does not.

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1The GAO Report entitled ‘‘Managing for Results, Barriers to Interagency Coordination,’’

March 2000, GAO/GGD–00–106 appears in the Appendix on page 98.

This week, agencies will release their first ever performance reports. These will give Congress a real chance to judge the effectiveness of the programs it put in place.

But there are problems with these performance reports, many of

which mirror the challenges that Mr. Walker will describe in his

testimony. Agencies do not employ sound financial management

practices, so they do not have the information they need to manage

programs on a daily basis. Therefore, much of the information in

performance reports will not be reliable.

The Executive Branch manages its human capital in a haphazard way. Agencies do not take advantage of the Results Act to

tie their human capital management practices to the goals set forth

in their plans. Information technology projects in the Federal Government are beset by failure because agencies do not plan appropriately, in Results Act documents and elsewhere, for their procurement implementation as required by the Clinger-Cohen Act.

The Results Act is a tool to better manage the Federal Government, and we need to rely on it more. But poor management is not

the only problem. Few would dispute that the government in Washington cannot do effectively all that Congress has asked it to do.

The Federal Government of today is a cacophony of agencies and

programs, many of which are directed at the same problems.

In conjunction with this hearing, we are releasing a report by

GAO that details the many challenges agencies face when coordinating among themselves their duplicative functions. According to

this report, mission fragmentation and program overlap are widespread in the Federal Government, and cross-cutting program efforts are not well-coordinated.1

In one example, GAO describes 50 programs administered by

eight Federal agencies that provide services for the homeless. Of

these 50 programs, 16 programs, with over $1.2 billion in obligations, were focused on helping only the homeless. The remaining 34

programs, with about $315 billion in obligations, were focused on

helping low-income people in general, including the homeless.

This is just one of the myriad areas where duplication and overlap serve to undermine the missions of the program.

Clearly, the time has come to take a comprehensive and fresh

look at what the Federal Government does and how it goes about

doing it. There is an obvious need to bring some order out of this

chaos.

Senators Lieberman, Voinovich, Brownback, Roth, and I have introduced legislation which establishes a commission to bring the

structure and functions of our government in line with the needs

of our Nation in the new century. The bill has been carefully crafted to address not just what our government should look like, but

the more important question of what our government should do.

Of course, meaningful reform of the Federal Government will not

come from simply reshuffling current organizational boxes and redistributing current programs. We need to conduct a fundamental

review of what Washington does and why.

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The commission will take a hard look at Federal programs, departments, and agencies to ask such questions as: How can we restructure agencies and programs to improve the implementation of

their statutory missions, eliminate activities not essential to their

statutory missions, reduce the duplication of activities; and how

can we improve management to maximize productivity, effectiveness, and accountability for performance results?

I think much of Mr. Walker’s testimony will speak to these questions. We look forward to hearing his thoughts on the critical challenges facing the Federal Government of the 21st Century and

what we can do to better prepare for it.

Senator Lieberman.

OPENING STATEMENT OF SENATOR LIEBERMAN

Senator LIEBERMAN. Thanks, Mr. Chairman.

Thank you for convening this hearing, and thanks also for your

very excellent opening statement.

I hope this will be the first of several hearings that will discuss

how we in government can respond to the extraordinary changes

that are occurring in our society and in our world, changes brought

about particularly by technological advancements, but also by our

expanding and increasingly global economy, and in a very different

way, by the new and diverse threats to our Nation and to our

world.

In order for our government to respond best to these new challenges, we have got to take a hard look at our structure and our

organization to see whether, in the new world, in the new century,

it is serving our purposes, including the new purposes that government will have to respond to because of changing circumstances

and realities in the world.

I am very pleased that the Comptroller General is here today to

talk about his plans for ensuring that the General Accounting Office can meet the American public’s needs during this period of dramatic change and also for hearing his ideas about how we in government generally, and Congress particularly, can meet those

needs.

I hope and I believe he will give us his thoughts on the government for the 21st Century Act which Chairman Thompson, Senator

Voinovich and I and a few others in the Senate have introduced,

or actually, reintroduced, yesterday.

In the last century, America made stunning progress on many

fronts. When you think about it, you can just cite so many—the

near universal use of telephones and automobiles, major breakthroughs in civil rights, understanding the structure of DNA. And

we suffered through some terrible experiences and developments as

well, such as the two world wars, some new and virulent diseases

such as AIDS, and the creation of hazards to our lives and our environment that either did not exist or that we were unaware of in

previous centuries.

Somebody once said to me: If there is one constant in the world,

it is change. We know that the 21st Century will offer its own remarkable, dramatic changes, and with them, opportunities and real

challenges.

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Just as our society was profoundly influenced by technology in

the last century, particularly toward the end, we know that

changes in the new millennium will be driven by even more powerful, and in some ways, fantastic technological developments, and

those will have a major impact on our country and also on our government and the way we organize it.

So we have an opportunity now, at the beginning of this new century, to look at the architecture of our government and its processes and to make adjustments which are necessary to improve its

ability to respond to all of these opportunities and challenges. That

is what the commission created under the government for the 21st

Century Act is designed to do.

We also, as Senator Thompson has indicated, have to continue to

implement reforms previously passed by Congress, such as those

required by the Government Performance and Results Act, that

will help convert and create agencies that are high-performing organizations, with clearly-defined missions and results-oriented

management. These efforts will help agencies make better use of

their resources, more efficient use, and also hopefully help them respond more effectively to the subject matter that they are charged

with dealing with.

I know that the GAO has been instrumental in evaluating agencies’ progress in implementing these reforms, and in another sense,

the GAO is looking inward to determine whether its current structure is functioning as well as we would like it to, to meet Congress’

needs not just today but in the future.

The agency’s strategic plan which we will be discussing today

identifies many of the challenges that will confront government in

the coming years and sets out a plan for how to deal with them.

So I am very pleased that the Comptroller General is here and

that he and GAO generally are focusing on these questions to help

us remain as effective as possible in the future, and I look forward

to the testimony this morning.

Thanks, Mr. Chairman.

Chairman THOMPSON. Thank you very much.

Senator Voinovich.

OPENING STATEMENT OF SENATOR VOINOVICH

Senator VOINOVICH. Mr. Chairman, I want to thank you for holding this hearing, and I do not think it could come at a better time.

We have begun a new century, and in less than 10 months, we

will welcome a new administration. The time is right for us to step

back and really think about what the Federal Government needs

to do and what it needs to look like if we are to meet the needs

and expectations of the American people in the next century.

Mr. Chairman, the Subcommittee on Oversight of Government

Management was fortunate earlier this month to hear from Comptroller General Walker on the importance of human capital. He and

I share the view that we cannot have a government that is ready

for the 21st Century if we do not have the work force that takes

us there.

Years of neglect have taken their toll on the ability of the Federal Government to attract the best and brightest employees. Civil

servants already working for the Federal Government are among

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the best in the world, but they cannot be expected to thrive when

they receive inadequate training and few incentives for excellence.

My Subcommittee has undertaken an effort to evaluate the

human capital policies of the Federal Government and to determine how we can better empower Federal employees to do their

best for the American people. When you look at the statistics—by

the year 2004, 50 percent of the people in the Federal work force

could retire—we are in trouble today. The real challenge is the

quality and the technology that we can bring to government. If we

do not have quality and if we do not have the technology, we are

not going to be able to serve and do the job we are supposed to be

doing for the American people.

I also want to thank and express my support to Senator Thompson for the legislation establishing a commission to review the Executive Branch and make recommendations for reform. Although I

have only been in Washington for a short time, I have served as

a mayor and a governor, and I know how important organization

is for the successful accomplishment of goals.

I have been frustrated by the overlap and duplication that I have

found in Federal agencies and program and, worse, the difficulty

of getting at the roots of some of these things. For example, we

have 570 education programs, and surely some of those are redundant. I held two hearings in my Subcommittee last year to examine

the extent to which the Departments of Education and Health and

Human Services were coordinating these programs. To my dismay,

GAO testified there was little coordination. Health and Human

Services and Education are now making an effort in this area, but

it is just a drop in the bucket compared to the pervasive overlap

and duplication found across the Federal Government.

I was interested that when we asked GAO to evaluate these programs, we were told that no methodology existed by which to

evaluate them.

I also think the Federal Government could benefit from some

fresh eyes looking at its operations and organizational structure.

When I was governor and as mayor, we set up an Operations Improvement Task Force. At the State level, we had over 300 people,

experts in their field, volunteer 150,000 hours to look at every nook

and cranny of State Government and to make recommendations for

improvement, including the elimination of departments. And I

want to say this to my colleagues on this Committee, what we are

talking about is a very, very difficult task. We eliminated two departments and eliminated overlap, and it was like pulling teeth to

get anything done. If you think we can change some of these Federal departments with some group coming in and making recommendations, without staying on it day in and day out, it will

never happen.

The Chairman and I were talking coming back from voting this

morning, and it is going to take a President who will get up early

in the morning and go to bed late at night to stay on top of it to

make some of these changes.

As an editorial comment, Mr. Chairman, I would like to say

wouldn’t it be nice if in this Presidential election, we could be talking about some real problems confronting America, including the

fact that if we do not get busy, we will be in deep trouble in terms

6

1The prepared statement of Mr. Walker appears in the Appendix on page 33.

of providing the services that the American people want and need

and functioning in this new economy in which we find ourselves.

So I am looking forward to your testimony, Mr. Walker, but I

hope everybody understands that a commission with good members—the best members—will get nowhere unless it becomes a

cause celebre for the next President and for this Congress to stay

on top of it on a regular basis, indicating that we understand how

important it is for the future of our country.

Thank you.

Chairman THOMPSON. Thank you very much. Mr. Walker.

TESTIMONY OF HON. DAVID M. WALKER,1 COMPTROLLER GENERAL, U.S. GENERAL ACCOUNTING OFFICE, WASHINGTON,

DC, ACCOMPANIED BY GENE DODARO, CHIEF OPERATING

OFFICER

Mr. WALKER. Thank you, Mr. Chairman, Senators Lieberman

and Voinovich. I appreciate the opportunity to appear before you on

this very important topic.

I would like to note at the outset that Gene Dodaro, who is our

chief operating officer, is accompanying me. Gene is No. 2 at GAO,

and he has led an extensive team in putting together our strategic

plan. He has led the day-to-day efforts in putting together the plan

which providers the framework for my testimony today. It is out of

recognition for his efforts and those of others that he deserves to

be here with me.

Second, I would like to note that this is the first hearing I have

actually had before this full Committee since being confirmed as

Comptroller General in October 1998 and that my wife, Mary, is

observing this hearing. She is the attractive brunette in the second

row back to my right and your left.

Senator LIEBERMAN. The attractive and long-suffering brunette.

[Laughter.]

Mr. WALKER. Well, we have been married for over 28 years,

Senator——

Chairman THOMPSON. It is a good thing there is only one brunette in that row. [Laughter.]

Mr. WALKER. As you know, Mr. Chairman, I have a fairly

lengthy statement that I would like to have submitted for the

record, and I would now like to summarize that information for

you.

Chairman THOMPSON. Yes, I have read through it over the last

3 days. [Laughter.]

Mr. WALKER. Thank you, Senator.

Up on the right, I would like to draw your attention to three

charts. The chart on the left deals with managing in the new millennium. It presents an outline of my oral remarks this morning.

In the middle is a one-page summary of our new strategic plan

that was referred to by Senator Lieberman. Obviously, there is a

lot more detail behind it, but this summary is a touchstone for

what I am going to be speaking about today.

The chart on the far right presents an excerpt from the report

that you mentioned, Mr. Chairman, which is going to be released

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today: ‘‘Managing for Results: Barriers to Interagency Coordination.’’

I am also going to use some powerpoint materials as a tool to

help facilitate our discussion. I think it is only appropriate that

this Committee be a leader in technology and also able to look at

cross-governmental issues as we now focus on the challenges that

face us in the 21st Century.

With that, I would like to make a few opening remarks before

I start the powerpoint presentation. Our Nation stands at an important crossroads. There have been significant changes both from

a national security standpoint and from an economic security perspective.

From a national security perspective, the cold war is over, and

we won. From an economic security perspective, after years and

years of annual battles over budget deficits, we, at least for the

short term appear to have slain the deficit dragon. We now have

both unified surplus and an operating surplus.

However, we are not out of the woods yet. Our long-range budget

simulations, as you will see, clearly demonstrate that America

faces serious fiscal challenges in the future, due to known demographic trends.

In addition, we know that there are rising public expectations for

government, and yet, lower public opinions of government.

We need to focus at this important crossroads on what government does and how government does it. In that regard, the six key

themes that are outlined in our strategic plan provide a framework

for discussing where we are and the challenges that confront us.

These six key themes, importantly, have no boundaries. They

have no boundaries globally, domestically, within government, or

within GAO. As a result, one of the things that we are seeing is

a greater need to take a longer, broader, more integrated, and more

horizontally look across different levels of government to address

these challenges.

The first theme is globalization. This graph demonstrates that

world exports doubled over the past 35 years from about 12 percent

to 24 percent. Foreign investment in the United States has

increased to over $200 billion. The recent financial crises in Thailand, Indonesia, Korea, Russia, and Brazil have served to demonstrate how we really are in one world from an economic sense

and how things that happen all around the globe can have significant ripple effects here in the United States.

From a security perspective, we no longer have a single major

adversary. We have new, diverse, and diffuse threats to our national security. For example, there are a number of countries that

possess weapons of mass destruction, whether they be nuclear,

chemical, biological or otherwise. At least nine countries have

weapons of mass destruction that are of concern to the United

States. As a result, the United States is spending more and more

on such matters as anti-terrorism, on which we spend at least $10

billion a year and have at least 40 departments and agencies engaged in related activities.

The size of active duty personnel for the military has been reduced dramatically over the last 10 years. It is down by approximately a third. Yet we are now starting to experience recruitment

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and retention problems for a variety of reasons, including the

tempo, and frequency of deployments, other quality of life considerations, and the fact that in our very strong economy with very low

unemployment, and opportunities abound for a variety of individuals, including those in the military. Increased spending has been

proposed in light of years of decline, but we do face a number of

other challenges with regard to national security.

From a demographic perspective, since 1950, there has been a 50

percent increase in the percentage of the proportion that is over 65.

The proportion will increase by 70 percent between now and the

year 2030. This has very serious financial repercussions for the solvency and sustainability of entitlement programs and also has significant implications with regard to the ripple effect on the Federal

budget for the future.

Another demographic issue is the dependency ratio—the number

of workers supporting retirees. In 1955, there were approximately

eight individuals working for each person over 65. The ratio is now

down to 3.4 to 1, and is expected to decline to approximately 2 to

1 by the year 2030.

The first baby boomer turns 65 in the year 2011, and that will

represent the beginning of our approching demographic tidal wave.

There are a variety of quality of life considerations that we have

to focus on. Yes, quality of life has improved for many Americans:

People are living longer; life expectancy has risen; and, people generally are living better. Unemployment has fallen to 4.3 percent.

However, not all Americans have shared in this prosperity.

Our work force has changed fundamentally. The proportion of

women and minorities in the work force has grown, and the nature

of work itself has changed such part-time and flexible work arrangements that are becoming prevalent in our society.

Many challenges remain, such as the increased gap between the

haves and the have-nots, as evidenced by net worth, and the 40

million Americans who lack health insurance.

Prosperity itself, in certain regards, is creating a whole set of

new stresses. Economic activity increases concerns about congestion, safety and environmental quality—urban sprawl being one example where all three of these come together. Our more technologically-based economy raises concerns about the adequacy of our

education system to enable us to compete on a global basis. Obviously, the ability to balance work and family considerations is of

increasing concern given the number of dual-income and single-parent families.

On the technology front, the number of internet users worldwide

has almost doubled in the last 2 years and is expected to double

again in the next 3 years. Businesses that produce computers, software, semiconductors and communications equipment have accounted for more than one-third of the entire growth in the U.S.

economy since 1992. This can not only transform our economy, but

can also transform the ways that government does business and

serves our citizens.

With regard to the fiscal front, this chart demonstrates that we

have moved from a period of continued deficits to a period of projected surpluses. However, these surplus projections are based

upon assumptions with regard to the level of discretionary spendVerDate 11-MAY-2000 11:27 Jul 25, 2000 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 64553.TXT SAFFAIRS PsN: SAFFAIRS
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ing and with regard to the level of health care inflation. Because

of the inherent uncertainty in these assumptions, CBO now has

three projections of our potential fiscal posture for the next 10

years. A return to increases in discretionary spending along the

lines of historical patterns and an increase in health care inflation

by a mere one percent a year would transform these surpluses to

growing deficits. Therefore, we have to view them with a sense of

caution.

But what about the longer term? Where do we look in the longer

term—which is extremely important because of the demographic

changes occurring in our country and the related challenges which

must be addressed.

In this regard, this next chart talks about the composition of

spending as a percentage of gross domestic product. The line that

goes across the top horizontally represents the revenue coming in

to the Federal Government as a percentage of gross domestic product. It is about 21.5 percent, roughly. That is close to, but not at

the historical maximum. One can determine the composition of the

revenue, but historically, there has been a limit to how much the

Federal Government has taxed its citizenry—or, stated differently,

how much its citizenry has allowed itself to be taxed.

The bar underneath that line shows, for 1999, the composition of

Social Security, Medicare and Medicaid, net interest and all other

spending. As you can see, there is a gap between the revenue line

and that bar. Therefore, we have had a surplus.

Unfortunately, if you look ahead and assume that we save every

dime of the Social Security surplus, but spend the on-budget surplus through either additional spending, ‘‘investments,’’ tax cuts, or

some combination thereof, this is what our fiscal future will look

like based upon the economic assumptions of CBO and based upon

the best estimate projections of Social Security and Medicare trustees as to the growth of those programs.

By the year 2030, we will significantly haircut discretionary

spending. By the year 2050, we will not have any money for discretionary spending and will not even be able to pay interest on what

will then be a mounting Federal debt.

This is of significant concern because discretionary spending includes some items that are in the Constitution of the United

States. I will come back to that.

There has been a significant change in the composition of Federal spending over the last several decades. There has been a huge

reduction in the percentage of the Federal budget going to defense,

and this has largely funded the increase in health care and other

costs.

How low can defense spending go? What about the escalating entitlement costs that constitute mandatory spending? When will we

begin to address these known demographic challenges?

As this bar graph shows, there has been a significant change in

the composition of the mandatory versus discretionary portion of

the budget. When John F. Kennedy was President, 70 percent of

the Federal budget was discretionary. Today, only about 30 percent

is discretionary. The proportion has reversed and the mandatory

portion is projected to increase further, which decreases the

amount of our future fiscal flexibility in the future and the choices

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and options that future generations will have to ask what government can do for them.

In that regard, what I would now like to do, Mr. Chairman is to

move onto some other issues. Things have changed dramatically in

the last several decades, but it is important to recognize that many

existing departments, agencies and programs were started decades

ago, based upon past needs and wants. These may or may not still

make sense today. In fact they may or may not be as high of a priority as many of the other challenges that we must face in the future.

We have short-term opportunities to make prudent choices about

how the surplus is put to use in order to better prepare us for the

future, and we have a number of long-term challenges such as the

demographic challenges and associated fiscal pressures that we

need to begin to address. We have an obligation to begin to address

those.

Now is the perfect time to ask what government does, what is

it appropriate for government to do, and how government should

go about doing whatever it needs to do.

There are certain things that only government can do, and there

are certain things that we must rely upon government to do. While

certain functions and activities could be privatized, there is one

thing that can never be privatized, and that is the duty of loyalty

to the greater good of all rather than the individual interests of a

few. Only government can do that.

We need to look, however, at whether these programs still make

sense for today and tomorrow and, if they do, how they can be effectively targeted and managed to maximize performance and assure accountability.

We need to look at existing management reforms and make sure

they help us to maximize performance and assure the accountability of government for the benefit of the American people. In the

case of the Government Performance and Results Act, it must be

more than an annual paperwork exercise. It must be a framework

and a foundation for how government does business every day.

In addition, the CFO Act is a lot more than getting clean opinions on the financial statements. Agencies can get clean opinions

on financial statements by engaging in heroic efforts, spending millions of dollars and months, or in some cases even a year after the

end of the year, to be able to get a clean opinion. Yet they may not

have the basic information needed to make timely and informed

judgments day-to-day.

IT, information technology, is a lot more than Y2K. However,

Y2K, I would submit to you, is an example of what government can

do in a positive and constructive fashion if it mobilizes and if the

legislative and Executive Branches work together to successfully

address the challenges that face the U.S. Government, our Nation,

and the world.

But in order to be able to make these existing management reforms become a reality, we are going, among other things to have

to make human capital, or people, a lot higher priority than it has

been in the past. In addition, we are going to have to effectuate a

cultural transformation in government. Many government entities

today are hierarchial, process-oriented, silohed, and inwardly foVerDate 11-MAY-2000 11:27 Jul 25, 2000 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 64553.TXT SAFFAIRS PsN: SAFFAIRS
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cused. Over time and through a number of concerted efforts, we are

going to have to convert government, in many cases, to being: More

partnerial, which means more empowerment but more accountability; more results-oriented, focused on outcomes rather than outputs; more integrated, transcending glass walls and boundaries to

work together to bring together the right skills at the right time

to get the job done; and, more externally focused on what the citizens want and need, than it has been historically.

As you can see in the next visual, there has been a significant

decline in the past several years in the number of new hires coming into government. Also, as we know, there has been a significant

reduction in the size of the Federal work force. In some cases, this

made good sense and was needed. But it is not just what is done,

it is how it is done. The result today is that you have many departments and agencies that downsized without considering skills, that

froze hiring for years, and that cut way back on their training programs in order to make their budget work. Many government agencies focused on doing what they had to do on Y2K but not on what

they needed to do to enhance information technology and make it

an enabling tool for knowledge-sharing and for getting our job done

more efficiently and more effectively.

The missing link in results-oriented government is the human

capital/people dimension. We must have modern human capital

practices to maximize performance and assure the accountability of

the Federal Government. We must link performance management

and reward systems to the strategic and performance plans of the

respective departments and agencies. If you do not do that, you will

never get where you want and need to be.

Looking forward, we need to search for new fiscal paradigms. We

need to look longer with regard to time frames, and we need to look

for different measures of success, because short-term surpluses can

be misleading. Because of the demographic challenges that we face,

many of our challenges are going to hit us in 10 to 20 years. Therefore, we need to make sure that we are having a longer-range perspective and that we are asking ourselves not only what is the impact of proposed fiscal actions today, but what is their impact on

tomorrow. Do they give us greater ability to effectively deal with

future challenges, or do they further restrict the options that future

generations will have to make some of their own choices?

In addition, from a performance perspective, we need to change

how government does business every day. Also we need to focus

more on cross-cutting programs and longer-range strategic issues.

This Committee is perfectly positioned to lead the way.

I am also pleased to say that the government for the 21st Century Act that has been mentioned by all of the Senators represents

one means to potentially achieve that end. This is the time to engage in a comprehensive review of what government does and how

it does it.

Whether we have surpluses or deficits, we have a continued fiduciary responsibility and stewardship obligation to make sure that

taxpayers are getting a decent return on their investment. We also

have a need to make sure that we are providing ourselves with additional fiscal flexibility to address the known challenges that are

on the horizon.

12

We at GAO, as Senator Lieberman said, are trying to lead by example. We are the leading accountability organization in the

United States and one of the leading in the world, if not the leading. As the agency that reviews others, we have a responsibility to

be as good or better than others in every key area. We are there

in many cases. Where we are not, we are taking steps to get there,

and we are going to stay there. Whether it be strategic planning,

financial management, information technology, or human capital

strategy, we have a responsibility to lead.

We are striving to do so: First, because it is appropriate; second,

because it makes business sense; and, third, it enhances our credibility.

In doing our work, we want to engage in a constructive manner

with departments and agencies and not just say what is wrong. We

want to try to help develop tools, techniques, and to provide information to help them make things better. We want to recognize

where progress is being made and to share best practices where

they exist.

In closing, we are at an important crossroads in our Nation’s history. There is a need to learn from the past but prepare for the future. This is the perfect time to address what government does and

how it does it. We must take additional steps to maximize the performance and assure the accountability of government for the benefit of the American people. And hopefully, by doing so, through

our collective efforts, we will in time be able to help increase the

public’s respect for and confidence in their government.

Thank you, Mr. Chairman. I am more than happy to answer any

questions you might have.

Chairman THOMPSON. Thank you, Mr. Walker.

I want to compliment you and Mr. Dodaro for your strategic plan

and for your testimony today. I joked about the length of your testimony, of course, and I know it was meant to be a document that

we can use, and indeed it is very important, because it focuses—

you have done what we in government ought to be doing all the

time, especially those of us in Congress, and that is focusing on

how we ought to spend our time and the problems that deserve our

attention.

I guess the importance of that dawned on me as I was going over

to vote a few days ago on a ‘‘sense of the Senate’’ resolution to welcome the farmers to town. That took an hour by the time we got

over there, we waited—we had to wait on some people—and got

back and so forth. That is all too typical of how we spend chunks

of our time around here.

But in your key themes, you have set forth all of it, all the things

that we ought to be spending our time on up here. Ninety or 95

percent of our time ought to be in these six categories:

Globalization—we all know the ramifications of that. It has to do

with trade policies, it has to do with technology in many respects.

That is all a part of it.

Security—you talked about our conventional security issues and

now the new threats that we have with the rogue nations, and the

increased technologies and capabilities that are on the horizon. We

do not have the big enemy anymore, but we have several little ones

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that are rapidly developing biological, chemical, and nuclear capabilities.

Demographics—that is going to be the tail that is already wagging the dog, and the direction in which we are going—Social Security and Medicare obviously will never go bankrupt. We talk in

those terms, but it will not happen. What we will do is raise taxes

on working young people, and we will become a Nation where we

simply have a younger group of people working for the benefit of

an increased retired group of people, and the Federal Government

will be the transfer agent, and we will have no money for anything

else. That is what is going to happen. And at the time these young

people get out and start working and try to buy their first homes

and so on, they are going to have astronomical FICA taxes, because

the older population will have more and more political clout as

there are more and more of them. So that is the direction in which

we are headed, and that is what you point out here.

Technological innovation—Government Performance and Accountability—you can distill it down even further; it looks to me

like everything falls under the category of peace and prosperity and

people’s view of their government, on which everything else is

based.

Peace—obviously, the security implications; prosperity—globalization and trade; demographics and what will happen if we do not

solve that problem. It all fits into those two categories, and underlying all that is people’s confidence in their own government.

I guess I think that that is probably the most important one, fundamentally. It seems to me that what is happening is that in this

time of peace and prosperity and this rising cynicism—you see it

in all the polls and surveys—rising cynicism, especially among

young people, young people who have never experienced a war or

a depression or even Watergate or any of those other depressing

things—cynicism toward government is at an all-time high, and a

lot of that has to do with waste, fraud and abuse issues; a lot of

it has to do with perceptions of corruption and things like that,

which we know are not really true, but that perception is out there.

What concerns me is in the future, when these things turn

around as they invariably do, and we do not have peace, we do not

have prosperity, a national leader or a group of national leaders

will go before the American people and say now we are in the soup,

we have a problem, we have a crisis—but here is the solution—we

are Americans, and we can do it together, and follow me—who is

going to follow anybody in this town with this kind of attitude that

we have that we can indulge in now because everything is OK?

So that is what you are talking about. You are talking about all

of it here, and what you have shown here should be a training film

for anybody coming into government. So thank you for spending

your time and laying all this out for us.

I guess my first question is this: You have demonstrated the

areas that we ought to be concentrating on, and you have shown

the trends on the one hand. And you have talked about it in terms

of what government ought to be doing better in terms of programs,

in terms of management, in terms of people and so on. How do

those two things interrelate? Specifically, what is it about what is

happening with regard to globalization, with regard to the demoVerDate 11-MAY-2000 11:27 Jul 25, 2000 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 64553.TXT SAFFAIRS PsN: SAFFAIRS
14

graphic time bomb that we are facing, with regard to the new security threats that we have? What does that tell us? Obviously, without all that, we need to be more efficient, and we need to deliver

services better, and we need more responsive programs, better people, and all that. But what is it about the world we live in today

and the changes that we are undergoing now that relates to these

government management-type problems?

Why is it more important today than it has been in times past,

and can you give some examples?

Mr. WALKER. I think it is a new ball game, Mr. Chairman. While

we are the only global superpower today, based upon economic,

military and political power and the combination of those three, we

are down from after World War II. At that time, we were over 50

percent of the entire global economy. Now we are down to a little

over 20 percent.

Things are very much interconnected. We are seeing more and

more issues that are going to have to be decided on a multilateral

basis, and more and more issues that are going to have to be addressed with State and local governments. In addition, there are

more and more issues that will transcend whatever boundaries we

have between departments, agencies, or programs.

I think the world has changed so much, and our position in the

world has changed——

Chairman THOMPSON. Europeans have a bigger demographic

time bomb than we do, and how they handle that and what happens with their economies will impact on us, for example—right?

Mr. WALKER. It will. Unfortunately, while they have a greater

problem than we do, they are not as transparent about it as we

are, and are less likely to be able to deal with it as quickly as,

hopefully, we will.

I think that what we have to recognize is that it is a new paradigm. We have to step back from incrementally addressing issues

by adding to the baseline, as we currently do. Whether it be budgeting, or oversight, or whatever else, rather than looking at the incremental differences, we need to step back and look comprehensively. We need to ask where we are, where we are going, how we

are going to get there, what government should be doing, and how

it should go about doing it. I think it is critically important.

Chairman THOMPSON. All of that is obviously true in regard to

what we need to do from the standpoint of the U.S. Senate and

Congress, and that translates in lots of different ways—where we

spend our money and so forth. But does it really relate to the management issues of government? Is it any more important now, in

light of these changes that are happening, that we get a handle on

waste, fraud, abuse, mismanagement, and inefficiency than it has

been in times past?

Mr. WALKER. There are several factors. First, as you pointed out,

public confidence and respect for government has markedly declined since the early sixties. If we are going to turn that around,

we are going to have to be able to demonstrate to the American

public that we are doing things that need to be done, and that we

are doing them well. In addition, we are going to have to rise above

fraud, waste, abuse, and mismanagement. Let me comment on that

for a second.

15

We should have zero tolerance for fraud, waste, abuse, and mismanagement, but they will never be eliminated. The Federal Government is the largest, most complex, most diverse entity on the

face of the Earth, bar none. So we should have zero tolerance, and

we should do everything we can do to try to deal with them.

On the other hand, we need to be able to change how government does business. Basic management reforms are needed to strategic planning, financial management, information technology, and

human capital strategy, and customer service. These are how government does business. The return on investment for basic management reform is multiple times higher than for what we spend

on eliminating fraud, waste, abuse, and mismanagement. We still

have to fight these problems, but we also have to focus on fundamental management reforms in the way that government does

business. Also, we have to get both the Executive Branch and the

Legislative Branch to look beyond the silos, to look above them,

and to recognize that many of the challenges that these themes relate to transcend borders. They are both multi-jurisdictional and

multi-geographic.

Mr. DODARO. Mr. Chairman, the area of technology gives a good

example of why you need broader, more integrated approaches. For

example, one issue that this Committee just reported out a bill on

is computer security.

In computer security, people can enter one agency’s system and

get into another agency’s system. So one agency can be a weak link

to being able to enter into other departments’ and agencies’ systems because there are trusted relationships between agencies. So

each agency has to improve computer security themselves, but they

also have to work together on an integrated basis across government to protect the sensitivity of records and to be able to provide

assurances to the public.

Also, there needs to be a broader look at how, in the digital age,

the government needs to interact directly with citizens and provide

services in a coordinated fashion. Each agency now is dealing with

the public in a way that is trying to use technology effectively, but

the government could be much more effective in an integrated

basis where the public could enter into web-based applications that

could easily transfer them to related departments and agencies

rather than having to enter into each department and agency individually.

So the need for integrated approaches across agencies is much

more important now, and technology is also making it more urgent

that, because of the rapid pace of change, government is more responsive. The whole question of sales on the internet, what to do

about electronic commerce—all those issues are breaking down, as

the Comptroller General said, barriers, and because those barriers

are being broken down, the Federal Government cannot have its

own barriers to problem-solving, and that is where we see the problem right now.

Chairman THOMPSON. So we can really use technology to attack

the cynicism problem to a certain extent, by being more responsive.

Mr. DODARO. I think that is integral.

16

Chairman THOMPSON. One more broad general question, and

then I will move on, and then maybe we can open it up and be a

little more informal with some give and take.

Are you familiar with the writings of Jonathan Rausch,

‘‘Demosclerosis,’’ and he has a new one out—he makes the point on

the broader issues that we talk about, the demographics and

globalization and any of these major issues, that it is not as if we

do not understand the nature of the problem. We really do. We

really know that what you are saying about what is facing us is

the truth. We have all this cynicism and desire for reform in the

abstract, but when it comes down to specifically doing something,

we are so big, and the government is so pervasive and has created

all these constituent groups out there who descend on us to protect

what we have given them every time we try to change anything.

So you have a handful of people trying to change one little thing,

and it is one of many things on their agenda—but you have a great

number of people out there whom it affects, and it is everything to

them, whether it be their subsidy or whatever. So that every time

anybody tries to make a little change, you are running up against

insurmountable odds, and therefore, nothing ever changes, and

there is no movement for bigger government, but there is really no

movement for smaller government, and everybody wants to do

something about the demographic problem, but nobody wants to

give up anything, even on trade issues. Everything you run into is

strong vested interests on each side.

We talk about the people problem here, whether it be employees

or unions or whatever, even within the government. Therefore, we

wind up never accomplishing anything in terms of change or reform. It is a pretty bleak picture that he lays out.

What do you think about that philosophy and, if you think there

is some validity to it, how might we break through it?

Mr. WALKER. There are a lot of vested interests, and whatever

departments or agencies or programs or policies that exist, you

have people who have interest in assuring that those are perpetuated one way or another.

One of the things needed is a compelling reason to change. You

have to educate people as to why the status quo is simply not acceptable, and therefore, change is imperative.

Part of that, I believe, has to do with some of the challenges that

we just talked about. Many of the real challenges that we are going

to face might not be imminent today. We can pay Social Security

benefits today, and we can pay Medicare benefits today. The infrastructure has not crumbled yet. There are a number of areas where

we can get by today. On the other hand, we are going to have

major problems in the future if we do not address these challenges.

One thing we have to do is help people understand that the status quo is not acceptable. In some cases, quite frankly, it is not just

members and people in the Executive Branch—it is the public, especially Generation Xers. They are, in my opinion, standing on the

sidelines way too much when decisions are being made that will

have major effects on their lives in the future.

And as you properly pointed out, if some of these decisions are

not made before 2011–2020 with regard to entitlement reform, it

17

is going to be even tougher to make them then because of the political enfranchisement of certain groups.

I believe that the one thing that we have not done that we can

try, Mr. Chairman—and maybe a commission or something else

would—is to help people understand that the status quo is not acceptable and that, therefore, we are going to need to make some

changes.

How do we best go about it? There will be winners and losers.

It is going to require tough work, but if we are looking out for the

greater good, not just for today but for tomorrow, it is something

we need to do. It is something that I would say is more of a stewardship approach to issues rather than an ownership approach to

issues, which has historically been the case.

Gene, did you want to add to that?

Mr. DODARO. I think that once you convince people to change, the

real important dynamic is in what framework do you decide to

make changes. Right now, it is compartmentalized in the sense

that we look at individual agencies and even within individual

committees about how to attack problems, when a lot of times, the

solutions transcend departments.

Let us take food safety. We have identified a number of agencies

that are involved with food safety, but they are deciding whether

they are looking at inspecting meat or some other item; there is not

a coordinated view. The same thing in terrorism. We have identified 40 different agencies that are making efforts to counter terrorism. So the framework for making decisions, which is part of the

intent of establishing the Commission on Restructuring Government, is to look at new decisionmaking frameworks both within the

Executive Branch, and I would think also from an oversight standpoint, from the congressional side.

Chairman THOMPSON. That is one thing we hope this commission

that we are introducing will do. Someone said that people are not

willing to give up anything in order for another group to get something, but they would be willing to give up something for the benefit of their country if they are convinced that it is the latter and

not the former. So it is up to us to articulate that distinction, I

think is what you are saying.

Mr. WALKER. Yes—the collective best interest.

Chairman THOMPSON. Thank you very much. Senator Lieberman.

Senator LIEBERMAN. Thanks, Mr. Chairman.

Thanks, Mr. Walker, for a very stimulating testimony. It reminded me of what a colleague of mine in the Connecticut State

Senate used to say to us occasionally, which is that you have taken

us up onto the mountaintop to look at the green valleys below.

So I am going to go up there for a moment myself and say that

one of the thoughts that your testimony and your conversation with

Senator Thompson evokes in me is the difficulty and the special obligation that certain people and institutions in government have to

bring about change.

In other words, the comparisons to the private sector are often

too facile, but one thing—and it is apples and oranges, so it sometimes does not fit—but one thing that is a fact, certainly at a time

like this of rapid change, and we have seen it all around us, is if

you are not adapting, you are not applying the tools of the new

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technology, somebody else will, and you are going to lose your market, and therefore you are going to be in trouble and maybe have

to close up shop.

So that the market, while it is not a perfect mechanism—and, as

somebody else once said, it is a great mechanism, but it has no conscience—leave that aside, it does keep those who participate in it

sharp and relevant.

That is not automatically the case with government, because we

are not subject to normal market mechanisms. Now, sometimes, of

course, the people whom we serve, the taxpayers, rise up and push

us to change. But it seems to me there is a special responsibility—

and to put it another way, there is a special pressure on us in Congress who function in some ways as an elected board of directors

of this vast and, as you said, most complicated entity/corporation

in the world, and also on those like you who have this special oversight and mountaintop function to push us in these directions.

Then we have to confront the power of vested interests which exist

everywhere. People do not like to change, particularly when they

are living off the change, but the marketplace and the private sector just forces those changes whether people like it or not. It is

harder to do here.

As Senator Voinovich said earlier from his experience in Ohio,

and I can say the same for mine in Connecticut, I remember when

I was State Senate majority leader, and we had a new governor in

the mid-seventies, Governor Ella Grasso, and we had a budget deficit, and we had to do some tough things including raising taxes

for a while, but we wanted to prove that we were efficient, and we

had a reorganization of government effort, with a long list of agencies to be either reorganized or phased out. And over time, as the

bill worked its way from committee to the floor, the list grew smaller and smaller.

Chairman THOMPSON. How many departments did you wind up

adding? [Laughter.]

Senator LIEBERMAN. Of course, this was so long ago that it is

hard to recall, but I have a recollection that one of the few agencies

was the American and Francophone Cultural Commission, which

dealt with the support of Franco-American culture in Connecticut.

I do not know how that ended up there. So that is the challenge

we face, but you help us, and I think the commission that we are

talking about will help us by creating a center of independent, nonpolitical—and I mean that not in a partisan sense, but in the sense

of perhaps being too responsive to the interests and to point a way

ahead.

I do not know if you want to respond to that monologue, but I

invite you to if you would like to.

Mr. WALKER. First, I think the commission can be one means to

an end in trying to look at what government does. There have been

models in the past where commissions have been effective, and

there have been models in the past where they have not been effective. There were two Hoover Commissions. One of the Hoover Commissions focused on good government—how can government do

what it does better. The other was really inherently more policyfocused and much more of a lightning rod.

19

To the extent that the commission focuses on how government

does what it does, that is a ‘‘good government’’ issue. It is more difficult to talk about what government does, which raises vested interests. However, the discussion is needed.

I do not believe, however, that we should depend totally on the

commission. There is a lot that can and should be done today. For

example, Congress can engage in a much more constructive partnership with the GAO from an oversight perspective in addressing

known challenges.

For example, at least once a Congress or preferably once a year,

this Committee could examine selected major departments and

agencies or cross-governmental issues, which this Committee is

particularly well-positioned to address, in the light of the results of

our annual audits, the annual performance plans, GAO and other

strategic plans, our high-risk list, our performance and accountability series, and major outstanding GAO recommendations. GAO

could pull together a compendium of information that would provide a powerful basis for effective oversight that would focus on the

important issues rather than necessarily the periodic failures of

government that sometimes tend to be sensationalized.

Senator LIEBERMAN. I notice that in your testimony, you have

laid out a thoughtful recommendation—and picking up on what

you have just said—for greater government-wide planning in order

to assure a more coordinated and effective strategy for dealing with

serious problems. And when you mentioned that, you suggested

that this Committee might play a role in identifying what you call

‘‘cross-cutting performance concerns for priority congressional action.’’

What did you have in mind, a similar deal—how do you envision

the Governmental Affairs Committee performing this function?

Mr. WALKER. For example, the Committe could examine issues

that are inherently cross-cutting, for example, computer security in

the area of technology, human capital strategy, and acquisition reform ensuring that there are effective strategic plans that are

linked to human capital strategy, performance measurements and

rewards. The Committee could focus on areas that are where you

see not only cross-cutting, but where there is a linkage between

several of them.

In my view this Committee is uniquely positioned to address

issues that cross government.

Chairman THOMPSON. Computer security is one of those situations, I assume.

Senator LIEBERMAN. Computer security is one of those issues,

and Mr. Dodaro, I wanted to thank you for giving me a segue. You

talked about applying computer technology, and I am working on

a bill on E-Government which I am going to start marketing to my

colleagues to the left here soon and see if I can engage their interest. But that is another government-wide possibility which again is

happening, obviously, with fantastic speed in the private sector. As

I am sure you both know, it is happening in some government

agencies with real creativity, but the performance here, as I am

evaluating it as I go along, is quite mixed, and some agencies are

really still way back in the 20th century. That is how far back they

are. They are not moving rapidly.

20

So the notion here would be to put a bill in that would perhaps

create some central initiating authority over E-Government, somewhat like government security, and put pressure on agencies to update and to work on cross-government functions, in other words, to

see if we could realize over the Net some of the things that we always talk about. For instance, when a business deals with government, isn’t there a way to figure out how to go to one site and deal

with a host of permits or regulations rather than having to shop

all around? Obviously, E-Government allows for 24-hour government. My wife and daughter and even I occasionally are shopping

late at night, long after the stores are closed. People could be relating to government long after—and to pick up a point the Chairman

mentioned, we have the possibility here for a whole new generation

to engage a much greater percentage of our citizenry in interacting

with government, even interacting with more confidence and trust

than has happened in the past. So I appreciate your comment, but

I cut you off on something.

Mr. DODARO. Well, in terms of your question about what else we

have in mind for this Committee, one involves the Government

Performance and Results Act. In addition to requiring strategic and

performance plans of each department and agency, there was a requirement for a government-wide performance plan to be submitted

by OMB as part of the President’s budget submission, which has

been submitted, but there really was not any follow-on mechanism

that was put in place for congressional consultation and comment

on that plan, as it was for the individual departments and agencies. That plan is organized now around major budget functions,

which we thought was a reasonable start, but it needs to be put

in a broader, cross-cutting framework.

One of the things that we had suggested was that this Committee consider taking aspects of that government-wide performance plan, with the support of GAO, and targeting and trying to

set some performance targets for functions of government as well

as individual programs. That would allow the opportunity to revisit

the basic purpose of the programs, whether there was still a need

for them; it would give this Committee the ability to bring people

from different departments and agencies here to talk about the relationship between their various programs rather than just bringing up individual agencies one-by-one to justify their vested interests, as you point out.

That will help create new incentives to substitute in part for the

market test that you are talking about, because unless those new

incentives are there, it is very difficult. And you put your finger on

one of the most difficult problems that we continually face, and

that is how to get substitute incentives for market discipline in

government, and good oversight and broader oversight we think

would be helpful in that regard.

Senator LIEBERMAN. Well-said.

Let me ask one final general question. This really is an attempt

to help us understand how to better utilize what you have suggested today. These graphs are very interesting and very helpful.

This is one of the few documents I am actually going to take back

with me and put on my desk, because it does point the way in a

very concise form.

21

But I am wondering—you have cited the six key themes with

profound implications, and you have convinced me—but what do

we do with them, then? In other words, take one of them and work

it through. When you say these are the six key themes—what,

then? What should that lead us to do in relationship to our congressional, and particularly in this Committee our oversight responsibility for government operations and affairs? Could you run

through it for me?

Mr. WALKER. We first have to ask ourselves what several of us

must do. One of the things I would like to point out right now is

that we issued just last week our first accountability report for the

General Accounting Office. In the report, as you know, Senator

Lieberman, we look at the whole government—everything the government has done, is doing, or is thinking about doing anywhere

in the world. This Committee has the ability to look at cross-governmental challenges as well. It is uniquely positioned to do so.

We are reorganizing and realigning GAO, to try to recognize

these themes, minimize the number of silos, minimize our layers

of management and address a number of these challenges.

OMB needs to do the same thing for the Executive Branch. They

need to incorporate a number of themes, whether it be the six I

identified or others that they think are appropriate for looking at

these issues cross-government and developing performance standards that are focused on those themes.

I suggest that this Committee needs to think about what it can

do through oversight and other types of activities to encourage that

and to make sure that agencies are taking those issues seriously.

For example, I note that this Committee sent out letters to all the

major departments and agencies commenting on their last performance plan and that it——

Chairman THOMPSON. We are meeting with them agency-byagency now.

Mr. WALKER. Exactly. The letters were tailored, that is, customized for each agency. It was a bipartisan effort. The Committee

is now bringing in agency officials to talk about the letters in a

candid, constructive, and cooperative manner.

All of us have things that we can and should do, in particular

with regard to these cross-cutting challenges that face the government.

Senator LIEBERMAN. I know we could go on at length about this,

and I want to yield to Senator Voinovich, but just looking at the

first one—globalization. If you are telling us—and of course, I

agree—that globalization is now a new reality, and you have some

very powerful data in here—what should we do with that? What,

then? If we acknowledge it is happening, and it is going to continue

to happen and probably accelerate, what, then?

Mr. DODARO. There are certain targeted issues, for example, that

we are beginning to look at. Take the issue of trade agreements.

There are more than 300 trade agreements now that the United

States is party to, and there are 17 different agencies that are responsible for monitoring compliance with those trade agreements,

and that is expected to increase going forward.

We are concerned about whether the government has the capacity to monitor collectively these trade agreements.

22

Senator LIEBERMAN. OK, so you think maybe there is too much

overlap in those various agencies.

Mr. DODARO. There is overlap, but also looking at it from a government-wide perspective—is the Federal Government investing

the proper resources; is it planning as an organizational entity?

While each department is trying to plan for their role in monitoring

these trade agreements, is the Federal Government collectively

looking at the full set of requirements right now for monitoring the

trade agreements going forward? That is one example.

Another example could be some of the international organizations like the International Monetary Fund and the World Bank.

Are we as a government comfortable with their position, their financial practices, and their roles looking at the full set of available

tools?

Mr. WALKER. Senator Lieberman, you might want to take certain

sub-issues under globalization and focus on what is being done to

address them and make sure we do not have duplication, overlap,

or gaps.

Let me tell you one of the things that we have done in light of

our strategic plan—and Chairman Thompson knows this because

he participated in part of the session. I invited 12 of my colleagues,

auditor generals from around the world, to GAO, and we used our

strategic plan as a framework for discussion about mutual challenges that we face. In that room over 21⁄2 days, we had 70 percent

of global public expenditures represented—a very diverse group.

We started identifying opportunities where we have shared challenges and where we can share successes. We also identified areas

where we can share knowledge regarding data, experiences, practices, methodologies, and so forth.

I suggest that one thing this Committee can do is to focus on the

issues that are most important to you. You might get a start by focusing on a few issues and making progress on those few issues.

By doing that, others may seek to emulate your efforts.

Senator LIEBERMAN. Thank you very much. You have both been

very helpful.

Chairman THOMPSON. Can I make just one small comment—and

Senator Voinovich, I am sorry for taking so long to get to you. But

let me make a suggestion with regard to your question, Senator

Lieberman, with regard to what we do about these important

issues.

My suggestion would be that we spend more time on them. I was

looking at the testimony of Virginia Thomas, Senior Fellow, Governmental Studies, at Heritage before the House Rules Subcommittee on Rules and Organization of the House just a few days

ago. She had a footnote which referenced our Committee Report. I

had not picked up on this particular aspect of it—the Biennial

Budgeting and Appropriations Act Report.

She says here that, according to the report, ‘‘At least half of all

Senate roll call votes for each year since 1991 relate to the annual

budget. In 1996, 73 percent of all roll call votes were budget-related.’’

Senator LIEBERMAN. And I might add, as we all know, that a lot

of them—how can I put this gracefully—the budget votes often become an occasion for trotting out your favorite idea just to get a

23

vote on it and a little exposure, or indulging in partisan combat,

so they become vehicles. In other words, that is an extraordinary

percentage, and a lot of that is just that they become an occasion

for mischief—or advocacy—however you view it, and maybe often

a little of both.

Chairman THOMPSON. It consumes our every waking hour for big

portions of the year, and plotting and scheming and reacting to—

and not just the voting part of it.

Senator Voinovich.

Senator VOINOVICH. Thank you, Mr. Chairman.

I would like to stay on the mountaintop with Senator Lieberman

for a moment. First of all, as a relative newcomer to this group, I

would like to ask for a GAO study on whether Congress is organized to deal with the challenges, opportunities, and problems of

the 21st Century.

Mr. WALKER. We do not need a study, Senator.

Senator VOINOVICH. If you look at the committees, we have as

much overlap in our committees and everything else—in fact, it is

worse than the Federal Government—starting with our own situation. And logic would dictate that at the beginning of the 2-year

session, the most wonderful thing would be to have the leaders

spend time on a bipartisan basis identifying five or six things that

they should tackle during the Congress that are the most important to the American people, so we do not get off on a lot of these

‘‘flavor of the month’’ or ‘‘flavor of the day’’ things that we spend

so much time on and ignore all these other things that really need

to be done. I am really sincere about that—are we organized properly to get the job done.

Senator Thompson brought up the budget. Again, it seems to me

that ought to be something we should do, and it should be a layup shot. God knows if we will ever get to it this year because of

everything else that we are dealing with.

That is one observation, and I am really sincere about that. It

would be interesting, and maybe we can talk to the leadership

about whether we are organized properly. We are starting a new

century with a lot of different challenges than we had in the last

century—can we handle them?

The other thing, when you start talking about the big picture, is

unmet needs. We are talking about reducing taxes and spending

more money on new programs, and we really need to have someone

sit down and talk about what are the unmet needs. You can start

off with technology, and you can talk about the human capital crisis, you can talk about infrastructure needs. In another committee

I am on, we have $37 billion worth of projects that have either design or money into them that are funded by the Energy and Water

Appropriations Subcommittee, and we only spend about $1.4 billion

a year to fund those. So there is all this stuff stacked up out there

that we ignore.

The other thing is what is the role of the Federal Government.

People constantly come to me, and I am sure they come to you also,

and they say we want an increase in this, or we want you to do

that, and I stop them, and I say hold on a minute. We are having

a tough time taking care of the things that we are supposed to be

taking care of.

24

The next thing they say—and I think this is something that

needs to be unmasked—is you have this surplus.

And then I say to them if you look at the numbers, in 10 years,

70 to 73 percent of the money is going to be used for entitlements.

That means that that is all that is left to deal with nondiscretionary, defense, and paying the interest—and that gets into another favorite subject of mine, and that is to take the money we

have and get the interest cost down, because if we do not get the

interest cost down, we are not going to have money for some of

these other programs.

And then I ask them what the Federal Government should be

doing. In education, we are spending billions of dollars, which is an

important issue here, at the top of the polls, but what role do we

play in that issue?

I am talking about these bigger things, and the public needs to

be educated about them, and that should start to color the judgments that we make. If the public really understood the problems

we face, I think it would be easier for us to deal with those problems.

For example, on the surplus, I happen to believe that we have

to reform Social Security. The thing that frustrates me is that

when the Social Security surplus comes in, we either use it to reduce the debt or spend it. Most people think you can put it in a

box and lock it up like they do with their 401(k)s. But the fact is

that if we are going to deal with Social Security, in all probability

we are going to have to allow people to keep a lot more of their

money. In other words, they will put it in an account, but they will

not give it to us; if they do not give it to us, we cannot use it to

reduce the national debt or spend it.

These are some of the fundamental things that I think need to

be shared, the big picture things, because you are right, we deal

with this and that, but so often we do not step back from where

we are. I think this is a tremendous opportunity.

It is the same way with this Committee, Mr. Chairman. We

know there is a lot of stuff out there—my gosh, I hold hearings,

you hold hearings—but it would be great to work with Mr. Walker

and sit down and set some priorities and say these are the priorities that we are going to work on, and maybe there will only be

three of them, but we are going to saw away at these things—and

in addition to that, the people who are dealing with us know that

we are going to saw away; it is not one of these deals where we

come in and have a hearing and everybody says ‘‘I understand,’’

and they leave, and nothing happens.

We could set the example. We have all these great reports. The

question is where do we focus our attention. And I think that

would be a challenge, and you are right that if we could do that

in this Committee, maybe we could set an example for some other

committees doing oversight and spend our time where we are going

to get the biggest return on the expenditure of our effort.

Mr. WALKER. Senator, several comments. First, there are several

reasons why we did our strategic plan. One is that—as you know,

we are not covered by the Results Act—we voluntarily did it because we believe we should lead by example. We believe it makes

business sense. We did it because the GAO needs to look at things

25

differently, at how we can best serve our client, the Congress; best

serve the country; and, recognize the reality that it is a whole new

ball game and that, more and more, we have to look longer, more

broadly, more integrated, cross-functionally in order to address

challenges.

Frankly, I am hoping that the Congress will see this as a tool

for the Congress. In many ways, since we are a Legislative Branch

agency, this is something that we have the ability to do that the

Congress may not have the ability to do itself. It can not only help

us but it might be able to help the Congress focus on more strategic issues. Since 90 percent-plus of the work that we do is based

on either congressional mandate or congressional request, hopefully

this document will help to reform some of those mandates and requests such that we are asked to do work in the areas where we

can make the most difference.

I think it is also important to look at how you organize. We are

looking at how we are organized because we can control that. The

Congress may need to ask itself, and probably should ask itself, if

it is organized to effectively address these issues in the future.

That discussion should be bipartisan and bicameral, before we

would get involved.

The Executive Branch needs to do the same thing. Is the Executive Branch organized in a manner that makes sense for the future? We talk about unmet wants. I think it is more important to

focus on unmet needs. I also think it is important to focus on the

baseline, because part of the problem is that you are presented constantly with: Well, we want to keep everything we have already

got, but we have all these unmet needs. Therefore, we are just talking about adding. Although we have the surplus, it may or may not

happen in the longer term, and it is going to go away eventually

because of the demographic challenges. Therefore, we need to focus

not just on the incremental needs. We have to focus on the baseline. In many cases, the baseline made a lot of sense at the time

those decisions were made—20 years, 40 years, 60 years ago. One

of the greatest debates we need to engage in right now is not only

on the role of government but the fundamental difference between

wants, needs, and what we can afford.

Let me give you two examples, one on the domestic side and one

on the defense side. On the domestic side, we are spending a tremendous amount of money on health care. It is not just Medicare,

not just Medicaid, and not just veterans health. It is also tax incentives which involves a tremendous amount of money. Also, there

are regulatory burdens and costs associated with health care. Yet,

health care costs are on an ever-charging path upward.

Chairman THOMPSON. And we are talking about adding new entitlements.

Mr. WALKER. And we are talking about possibly adding to it.

We need to recognize that wants in health care are unlimited.

Everybody wants as much as they can get, and they prefer to pay

little or nothing for it.

Needs are very different. People need to have access to health

care at group rates, arguably. People arguably need to be protected

against financial ruin due to an unexpected catastrophic illness.

They may want more than that. They need inoculations for their

26

children and so on. There are certain needs. So are we focusing on

the needs? What about the wants, how much we can afford, and

what should the relative priorities be?

Another example is provided by weapons systems. What do we

need versus what we want to assure our security? We have the

technological ability, if given the money and the time, to do just

about whatever we want; but, do we need all the different platforms that we are building? Also, whom are we going to use them

against? What is the price from the standpoint of readiness, quality

of life, and other considerations, greater needs versus wants?

I think these are very serious debates. I would agree with you

that this Committee could take a few issues and say we want to

focus on—for example, E-Government or human capital. You could

pick a handful of issues that cross boundaries that relate to this

strategic plan to lead by example and make a difference. Somebody

has got to start.

Chairman THOMPSON. Tell me your thoughts about the Results

Act and where we stand now—not our hopes and aspirations and

possibilities, but realistically, where are we? Performance plans are

coming out on March 31. The initial plans that came out were not

overwhelming, to say the least. Many of the real problem areas, the

high-risk areas, were not even addressed.

Where do you think we are?

Mr. WALKER. First, we have had mixed reviews with regard to

implementation of GPRA. On one hand, you have agencies like the

Social Security Administration and the Department of Transportation that in our view are two of the better agencies with regard

to taking GPRA seriously and focusing on these plans.

On the other hand, there are others like HHS, State and DOD

that apparently are not taking it as seriously. It is more of an annual paperwork exercise. It should be a foundation for how they do

business and how they hold people accountable for results.

I think we do have an opportunity. I mentioned our accountability report. Others will have to be issuing theirs this week. This

provides us with a new data source, new information that could be

a valuable tool in trying to help focus congressional oversight efforts and OMB activities, etc.

I think that ultimately, in addition to trying to make sure the

Results Act works the way it is intended, we are going to have to

link it to institutional, team, and individual performance measures

through the human capital area.

People do what they are measured on and what they are evaluated on. Based on my experiences, we have major problems in the

government as it relates to human capital, in particular with regard to performance management. If we have good plans focused

on the right things, with meaningful measures, and can link that

into how people are measured and rewarded to some degree, then

you will really start getting results.

Chairman THOMPSON. You talk about the people and the personnel problem, and those are obviously points well-taken, but at

the heart of that, there is a management problem. When we looked

at the computer situation which we just passed out of Committee,

GAO has been telling us for years and years that at its heart, it

is a management problem. It is not as if we did not have the techVerDate 11-MAY-2000 11:27 Jul 25, 2000 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 64553.TXT SAFFAIRS PsN: SAFFAIRS
27

nical capability or, presumably, the right people in place. But we

have not had anybody cracking the whip, and that gets to another

problem. OMB has done a terrible job, in my opinion, with regard

to management issues. All the emphasis is on the budget now, and

there is just no emphasis on the management part. We have people

come up here who want to go over there, and instead of a realistic

plan to address the problems, they do not even acknowledge there

is one. Everything is public relations and touting so-called successes, and nobody is cracking the whip, and there is no accountability with regard to all this.

So that sure, we have a people problem, but it is not just the

technical aspect of it; it has to do with management and motivation—and I do not know what in the world you do about that.

Hopefully, the next administration, whichever it is, will do a better

job of addressing these management issues.

Senator VOINOVICH. Mr. Chairman, just to build on what you are

talking about, the issue is what is the structure within the government that is necessary for government to start paying attention to

the human capital needs that are so important to our future—or,

let us say, from a technological, management information, what vehicle is in place to deal with that. I grappled with that as Governor

of Ohio, because the thing was all over the place. How do you organize your management information within the framework of government so that it becomes a priority that cuts across all the departments, and how do you get coordination among all of them?

My observation, just building on what you have said, is that it

does not appear that it is being done today, and the issue is how

do you get it done. Is it OMB, is it personnel, or do you have some

particular group that just works on this day in and day out?

Mr. WALKER. First, it starts at the top. In any organization,

whether it is public sector, private sector or whatever, you have to

have the commitment of the person at the top in order to get it

done.

Then, it is a matter of who ends up leading that effort. OMB is

O, big B, little M, but it has been that way for a while. They do

not have nearly as many resources focused on the ‘‘M’’ as on the

‘‘B.’’ They need more attention, more focus, and more resources focused on the ‘‘M.’’.

Chairman THOMPSON. Kind of like us, as I think about it.

Mr. WALKER. They also have some open slots that they need to

fill. They need more focus, especially with regard to cross-cutting

issues. Now, they have done some things. They have the Presidential Management Objectives and the Priority Management Objectives. Some of those are cross-cutting, and many relate to our

high-risk list. However, the issue of management needs to be much

higher on the agenda. There needs to be much more concerted

focus across government. Even in the area of human capital, while

OPM can help, OMB has got to be involved. They have got to be

involved in a major way because they tie directly to the President.

Chairman THOMPSON. No question about it.

One more thing specifically. I know we have had some discussions about this that have been ongoing, but I want you to work

with us and majority/minority staff, and let us really give some attention—when these reports come out on March 31, let us give

28

some attention to what we do now. This may be our last hope for

a while, this Results Act. I have mixed feelings about it. We have

been passing laws around here for a long time, and I guess some

of them have done some good, and I am a little bit skeptical about

it, but some people think that we really have an opportunity with

the Results Act to make a difference. And it is a part of an almost

global movement to become more results-oriented. Everybody is

kind of wising up to the fact that you have got to look at performance. So we have to assume that there is a real possibility there.

Now we need to figure out how do we bring these agencies that

are coming in with these bogus documents and plans—what do we

do about them; how do we get those plans up and running? They

have the audacity to come in here, and they do not even address

some of the high-risk list areas. What do we do about that?

How do we integrate what we are getting with the appropriations

process? How do we make sure that all this is—and I know that

in one way or another, it will be brought to the attention of the appropriators, but there needs to be some interaction, it seems to me,

between this Committee and the appropriators. There needs to be

a procedure and a mechanism, I think—an annual series of hearings where we choose certain agencies to highlight or put the spotlight on certainly would be a part of that. But how do we set up

a procedure where we can take what we are getting, go backward

and improve and encourage and cajole when necessary to get the

input right, because if it is garbage in, it is going to be garbage out.

These people are essentially, lest we forget, judging themselves,

and we are going to have to ride herd on that, or else all the grades

are going to be ‘‘A’’. And then, how do we go forward and make

sure there is some accountability and make sure there are some results for bad performance—budgetary or otherwise—and on a systematic basis where we have an integrated approach to dealing

with this.

Mr. WALKER. Mr. Chairman, we would be happy to work with

this Committee on a bipartisan basis to try to do that. You have

mentioned possibly holding hearings once a year on several issues

or with regard to certain departments or agencies or programs,

which is important. It would be important to make sure that those

are balanced, including not just the departments and agencies that

are not doing well, but also maybe some that are doing well, so

that we can share some best practices.

Chairman THOMPSON. And how much time should we realistically be devoting to that in terms of public hearings? Our staff is

already meeting with these agencies one-on-one. What kind of

things—just really getting down into the details—what kinds of

things should we be looking for? What should we be doing from a

staffing standpoint? What should we be issuing reports on versus

what should we be holding hearings on? We cannot hold hearings

all the time on just one issue.

Mr. WALKER. I understand. We would be happy to work with you

to come up with a proposed approach that would make sense for

this Committee as well as for us.

Chairman THOMPSON. I would think that a good deal of our effort

in the beginning stages of this is going to have to be going back

29

to some of these agencies and pointing out to them where their

plans are deficient and their methodology is deficient.

Mr. DODARO. In that regard, Mr. Chairman, the meetings which

have been held so far on a bipartisan basis are really resonating

with the agencies. Because they are in-depth, they are bringing all

the major management challenges together, and there is followthrough, and as a result, agencies see that the Committee is serious about these issues. That is one of the incentives that substitutes for market tests in the government is really sustained

follow-through. That is very important.

Mr. WALKER. What you may want to do as well, Mr. Chairman,

piggybacking on that bipartisan initiative that seems to be working

fairly well so far, is to pick some examples out of that effort. You

may want to pick one or two good examples of departments or

agencies that are doing a great job.

Senator LIEBERMAN. That is a great idea.

Mr. WALKER. And pick one or two examples where they are not

taking it seriously. Call them up on a targeted basis. It is balanced

then. You are talking about some that are doing a better job and

how are they going about it and why are they doing a better job,

and yet you are talking about some that are not.

Senator LIEBERMAN. Maybe we ought to ask you to award some

gold stars as well as noting where the high-risk agencies are, to

say who is performing well. I remember once when your predecessor was here, he gave us his testimony on the high-risk agencies, and I think that has been very helpful progress. And I agree

with you—sometimes I get frustrated because I see the same agencies appearing—but on the other hand, as you said in your last

high-risk report in January of last year, overall, agencies are taking the problem seriously and making progress to correct the problems.

But I remember asking him was anybody really standing out,

and at that time, Mr. Bowsher said the U.S. Army he thought had

been superb. I guess the answer would be different today.

Mr. WALKER. Yes. Times change.

Senator LIEBERMAN. It is a little bit like the effect of the Baldridge Prize for private sector success in innovation. Maybe we

ought to be giving out some blue ribbons as well.

Mr. WALKER. Senator, one of the things that we really try to do

in going about doing our work is to follow our three core values of

accountability, integrity and reliability. Accountability is what we

do; integrity is how we do it; reliability is how we want it to be received. Moreover, how we do our work directly relates to what you

are talking about. We want to be professional, objective, fact-based,

nonpartisan, nonideological, fair, and balanced. If somebody is

making progress, we want to acknowledge that. If somebody has

created a best practice, we want to share that.

I believe that that is important. In addition to maximizing the

performance and assuring the accountability of government, we

need to be concerned about public trust in government. If we do not

provide a more balanced report card on what these agencies are

doing and how they are doing, and if all we do is focus on the negative, it is no wonder that the public does not have much respect

or confidence in their government.

30

Senator LIEBERMAN. That is a good point.

Mr. WALKER. So we need to achieve results, but we need to be

constructive about how we go about it. We need to hold people accountable where they need to be held accountable.

Senator LIEBERMAN. You are right. A part of accountability—and

I am dealing with this as I work with a bill on education—is to be

prepared to sanction those who are performing below generally-embraced standards, but also to in some sense reward those who are

performing not just at the standards but well above them, to set

models for both.

Mr. WALKER. Let me give you one example of where there has

been a fundamental breakdown in accountability, and that is in

weapon systems development and acquisition. The Defense Department does not follow commercial best practices. We are doing some

work to help them understand what they are so that hopefully they

will. But the result of not following commercial best practices is

wasted money, compromised performance standards, and questionable cost-benefit on a number of platforms.

Yet, they assign people to these projects for 2 or 3 years, and by

the time it blows up, you have diffuse accountability. In many

cases, nobody is held accountable. In fact, people have punched

tickets and have gotten promoted because they have punched tickets, because they have been through this particular developmental

effort.

That is one example. There are many others that exist. What we

are trying to do there is help them understand what commercial

best practices are. I suggest that the Congress is going to have to

decide whether they ought to be required rather than encouraged

to follow these practices, given the stakes and the amount of funds

involved.

Senator LIEBERMAN. That is a very good example.

Mr. Chairman, if I may, I was really struck by the chart here

showing the distribution of Federal spending. I am on the Armed

Services Committee, and this really does show how defense spending has declined dramatically as a percentage of overall outlays

even while our responsibilities have grown. So there is a strong

case to be made on this graphic for more defense spending—but

that is not the end of it. Obviously, you have got to spend smart.

I am a big supporter of the Pentagon, but that is the largest single

organization in the world, a subpart of the U.S. Government, and

there are lots of ways in which they could be spending more smartly. So your work there is very, very important and very helpful.

Chairman THOMPSON. You need to keep telling us, too, what your

own manpower needs are. I know that sometimes, there has been

an issue raised as to whether or not you are being overtaxed by us,

some of your folks, in terms of trying to get some of this information on a timely basis.

The other thing I would suggest is that you have a fine line to

walk, and I think you do it well, in being nonpartisan and being

optimistic where things merit it. That is a problem that we have

as Members and as a Committee. Always talking about the negative, you increase the cynicism. But you are not going to do anything about the cynicism until you solve the problem, and you are

31

not going to solve the problem until you have some accountability

for those who are not doing the job.

I would encourage you—you are always very frank, but in some

of the reports that I have seen, it is a little bit like, ‘‘on the one

hand this, on the one hand that,’’ and you have an egregious situation there that you know the writer of the report knows is an egregious situation but will not say it. Where the facts merit it, where

we have a problem, bite the bullet—but where you do not have a

problem, my goodness, if you can come up here and praise some

people, we will bring them up here and shine a spotlight on them

and use them to embarrass the others. We are not just trying to

be negative. But where you have a real problem—just like you

were talking about with the weapons acquisition thing—that just

says it; that is just the way it is—where it is clear, encourage your

people to call it like it is and be able to justify it when you come

up here.

It is a fine line that you have to walk, but we really have to do

something to break through this massive resistance to change that

we all know about.

One final thing. You were talking about our people and our personnel problem and the downsizing that we have seen in terms of

numbers. Of course, we also know that a part of that has to do

with the military downsizing. We also know that the numbers are

difficult to track because we have outsourced more and more stuff.

We have a shadow government now of contractors who are doing

work that Federal employees used to be doing.

What is the significance of that? Are we hurting ourselves by

doing that? Are we going in that direction so we can all point toward the fact that we are downsizing government, or is it based on

a need that we have to move in that direction?

What have been the consequences of these things?

Mr. WALKER. Clearly, there was some need, but the need should

be based on a considered analysis, and that considered analysis

should be done on an agency-by-agency basis. Otherwise, you end

up having a circumstance where the people who do a good job get

penalized, and the people who do not do a good job maybe get off

lightly.

As I mentioned before, government has been downsized significantly, but in some cases, it is a matter of who is doing the work.

It is being done by the private sector through contracting rather

than through full-time equivalents or employees of the Federal

Government. I think one of the challenges that we have there is

that even if you are going to outsource a function, you cannot forget about your responsibilities to the public. You have to have the

skills internally that can manage cost and quality, and in some

cases, the agencies have not retained the skills internally to manage the cost and quality of the contractors.

In addition, we face a situation where a very significant percentage of the Federal work force is eligible to retire within the next

5 years. We have related succession planning challenges and challenges with regard to skills imbalances that exist in certain departments and agencies. I think we need to start addressing those.

You know that we have asked for legislation in the case of GAO,

to help us be able to more effectively meet Congress’ needs and the

32

needs of the American people within existing resource levels by giving us more flexibility, while protecting against abuse of individuals, which is incredibly important.

Like any other agency that is a professional services firm, we

have to be able to make more decisions based on skills, knowledge,

and performance. That is the foundation for making sound decisions while providing protections against abuse as it relates to individuals.

So this is a very important area, Mr. Chairman, not just for

GAO, but for the government, and we are hoping that you all will

help us to help you.

Chairman THOMPSON. Thank you very much. This has been extremely helpful, and we look forward to working with you on these

problems.

The record will remain open for a week after the close of the

hearing for any further submissions.

Mr. WALKER. Thank you, Mr. Chairman.

Chairman THOMPSON. We are adjourned.

[Whereupon, at 12:35 p.m., the Committee was adjourned.]

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