United States Government Accountability Office

GAO Testimony 

Before the Subcommittee on Oversight of Government 

Management, the Federal Workforce, and the District 

of Columbia, the Committee on Homeland Security 

and Governmental Affairs, U.S. Senate 

THE UPCOMING 

TRANSITION 

GAO’s Efforts to Assist the 

111th Congress and the 

Next Administration 

Statement of Gene L. Dodaro 

Acting Comptroller General of the United States 

For Release on Delivery

Expected at 2:30 p.m. EST 

Wednesday, September 10, 2008

 

GAO-08-1153T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

September 10, 2008

THE UPCOMING TRANSITION 

GAO’s Efforts to Assist the 111th Congress and the 

Next Administration 

Highlights of GAO-08-1153T, a testimony 

before the Subcommittee on Oversight of 

Government Management, the Federal 

Workforce, and the District of Columbia, 

the Committee on Homeland Security and 

Governmental Affairs, U.S. Senate 

To view the full product, including the scope 

and methodology, click on GAO-08-1153T. 

For more information, contact J. Christopher 

Mihm, Managing Director, Strategic Issues, at 

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

The upcoming 2009 transition will 

be a unique and critical period for 

the U.S. government. It marks the

first wartime presidential transition

in 40 years. It will also be the first 

administration change for the

relatively new Department of 

Homeland Security operating in the

post 9/11 environment. The next 

administration will fill thousands of 

positions across government; there 

will be a number of new faces in 

Congress as well. Making these 

transitions as seamlessly as

possible is pivotal to effectively 

and efficiently help accomplish the 

federal government’s many 

essential missions. 

While the Government

Accountability Office (GAO), as a 

legislative branch agency, has 

extensive experience helping each 

new Congress, the Presidential

Transition Act points to GAO as a 

resource to incoming 

administrations as well. The Act 

specifically identifies GAO as a

source of briefings and other 

materials to help presidential

appointees make the leap from 

campaigning to governing by

informing them of the major 

management issues, risks, and 

challenges they will face. 

GAO has traditionally played an 

important role as a resource for 

new Congresses and 

administrations, providing insight 

into the issues where GAO has 

done work. This testimony 

provides an overview of GAO’s 

objectives for assisting the 111th 

Congress and the next 

administration in their allimportant transition efforts.

GAO will highlight issues that the new President, his appointees, and the 

Congress will confront from day one. These include immediate challenges 

ranging from national and homeland security to oversight of financial 

institutions and markets to a range of public health and safety issues. GAO 

will synthesize the hundreds of reports and testimonies it issues every year so

that new policy makers can quickly zero in on critical issues during the first 

days of the new administration and Congress. GAO’s analysis, incorporating 

its institutional memory across numerous administrations, will be ready by 

the time the election results are in and transition teams begin to move out. 

Objectives for GAO’s Transition Efforts

• Provide insight into pressing national issues. 

• Highlight the growing need for innovative, integrated approaches to 

solve national and global challenges. 

• Document targeted opportunities to conserve resources that can be 

applied to new initiatives. 

• Underscore critical capacity building needs in individual agencies 

that will affect implementation of whatever new priorities are 

pursued. 

• Help inform the management improvement agendas of Congress 

and the new administration. 

• Monitor the implementation of the Presidential Transition Act 

provisions and identify potential improvements for future 

transitions. 

GAO will provide congressional and executive branch policy makers with a 

comprehensive snapshot of how things are working across government and 

emphasize the need to update some federal activities to better align them with

21st century realities and bring about government transformation. In keeping 

with its mission, GAO will be providing Congress and the executive branch 

with clear facts and constructive options and suggestions that elected officials 

can use to make policy choices in this pivotal transition year. GAO believes 

the nation’s new and returning leaders will be able to use such information to 

help meet both the nation’s urgent issues and long-term challenges so that our 

nation stays strong and secure now and for the next generation.

GAO’s transition work also will highlight the need to modernize the machinery 

of government through better application of information technology, financial 

management, human capital, and contracting practices. GAO also will 

underscore the need to develop strategies for addressing the government’s 

serious long-term fiscal sustainability challenges, driven on the spending side

primarily by escalating health care costs and changing demographics. 
Chairman Akaka, Senator Voinovich, and Members of the Subcommittee: 

I am pleased to be here today to contribute to your hearing on the 

upcoming transition. As agreed with the Subcommittee, I will discuss the 

preparations under way at the Government Accountability Office (GAO) to 

meet our responsibilities under the Presidential Transition Act to assist the 

incoming administration as well as the 111th Congress. 

The 2009 presidential transition will be a unique and critical period for the 

United States. Our nation faces a wartime presidential transition for the 

first time in 40 years. In addition, this will be the first post-9/11 transition, 

with a relatively new Department of Homeland Security (DHS) grappling 

with the threats we face here at home while experiencing its first change 

in administration. The White House will need to fill thousands of 

appointments, some of which will be subject to Senate confirmation, 

across the federal government. And on Capitol Hill, with 26 House 

members and 5 Senators deciding not to seek reelection, there will also be 

congressional newcomers. 

While as a legislative branch agency GAO has extensive experience 

helping each new Congress, the Presidential Transition Act points to GAO 

as a resource to incoming administrations as well. The Act specifically

identifies GAO as a source of briefings and other materials to help inform 

presidential appointees of the major management issues, risks, and 

challenges they will face. The Act’s 2000 amendments to clearly bring GAO 

into the transition picture are consistent with the role we traditionally 

have played as an important resource for Congress and new 

administrations during transitions. For example, we update our High-Risk

list with the start of each new Congress to focus attention on areas in need 

of broad-based transformation or susceptible to waste, fraud, abuse, and 

mismanagement. During the last presidential transition, we identified for 

Congress and the then new administration key program and management 

issues in the major departments and across government. More recently, we 

assisted the 110th Congress by suggesting 36 areas for oversight based on 

our work. We take our role under the Presidential Transition Act very 

seriously; our planning to effectively perform this role is well under way. 

To do this, we will use our institutional knowledge and broad-based work 

on matters across the spectrum of government activities. 

Page 1 GAO-08-1153T 
My comments today center on the six objectives of our efforts to assist the 

upcoming transition as policy makers take on the serious challenges 

facing our country. 

Objectives for GAO’s Transition Efforts 

• Provide insight into pressing national issues. 

• Highlight the growing need for innovative, integrated approaches to 

solve national and global challenges.

• Document targeted opportunities to conserve resources that can be

applied to new initiatives. 

• Underscore critical capacity-building needs in individual agencies 

that will affect implementation of whatever new priorities are 

pursued. 

• Help inform the management improvement agendas of Congress and 

the new administration. 

• Monitor the implementation of the Presidential Transition Act 

provisions and identify potential improvements for future 

transitions. 

The next Congress and new administration will confront a set of pressing 

issues that will demand urgent attention and continuing oversight to 

ensure the nation’s security and well-being. The goal of our transition 

planning is to look across the work we have done and across the scope 

and breadth of the federal government’s responsibilities to offer insights 

into areas needing immediate attention. A few examples follow: 

Provide Insight into 

Pressing National 

Issues 

• Oversight of financial institutions and markets: As events over the 

past few days have underscored, oversight over the U.S. housing and 

financial markets will certainly be among the priority matters commanding 

the attention of the new administration and the 111th Congress. These 

sectors of our economy have been going through a period of significant 

instability and turmoil. Congress has taken a number of steps to address 

some of the immediate effects of the market turmoil including enactment 

of the Federal Housing Finance Regulatory Reform Act of 2008, which, 

among other things, strengthens regulation of the housing governmentsponsored enterprises (GSE) and provides authority to the Treasury to 

purchase any amount of Fannie Mae and Freddie Mac securities. We are 

closely monitoring a range of implications of the current market turmoil 

including the financial condition of GSEs and the implications of the 

Treasury exercising this new authority to stabilize GSEs. In addition, 

Page 2 GAO-08-1153T 
recent bank failures and growing numbers of banks on the “Watchlist” 

raise questions about the impact on the banking system and future federal 

exposures as well as on the bank insurance fund. We have a larger body of

work that involves auditing the Federal Deposit Insurance Corporation, 

the newly created Federal Housing Finance Agency, and the consolidated 

financial statements of the U.S. government, as well as evaluating ongoing 

developments in the housing and financial markets. We will draw on this 

work to provide observations and advice, as appropriate, on how best to 

ensure the stability of our nation’s financial system. 

While these serious disruptions require immediate attention and careful 

monitoring, ongoing turmoil in the housing and financial markets has 

renewed concerns about whether the current system for overseeing and 

regulating financial institutions and markets is best suited to meet the 

nation’s evolving needs and 21st century challenges. Later this year we 

plan to issue a report describing the evolution of the current regulatory 

structure and how market developments and changes have introduced 

challenges for the current system. We believe this reassessment is needed

to ensure that these types of serious disruptions can be minimized in the 

future. As part of this work, we are also developing a framework to assist 

Congress in evaluating alternative regulatory reform proposals. 

• U.S. efforts in Iraq and Afghanistan: Policy and implementation issues 

will remain on the horizon for these and other international challenges. 

Hundreds of billions of dollars have been provided to the Department of 

Defense (DOD) for military operations in Iraq and Afghanistan as well as

U.S. efforts to help address security, stabilization and reconstruction, and 

capacity-building efforts in these countries. These efforts include 

developing security forces, rebuilding critical infrastructure, and 

enhancing the countries’ capacity to govern. Since 2003, we have issued 

more than 175 reports on military operations and various aspects of U.S. 

efforts to achieve the goals in Iraq and Afghanistan. Our transition work 

will highlight the major implementation issues that need to be addressed 

to ensure accountability and assess progress regardless of what policies 

are pursued.

• DOD’s readiness and capabilities: Extended operations in Iraq, 

Afghanistan, and elsewhere have had significant consequences for military 

readiness, particularly with regard to the Army and Marine Corps. Current 

operations have required the military to operate at a persistently high 

tempo with the added stress of lengthy and repeated deployments. In 

addition, because of the significant wear and tear on equipment, 

refocusing of training on counterinsurgency operations, and other factors, 

rebuilding readiness of U.S. forces is a major challenge for DOD. At the 

Page 3 GAO-08-1153T 
same time, DOD faces competing demands for resources given broadbased initiatives to grow, modernize, and transform its forces. We will 

offer our perspective on the competing demands DOD faces and the need 

to develop sound plans to guide investment decisions, as it reassesses the 

condition, size, composition, and organization of its total force, including

contractor support, to protect the country from current, emerging, and 

future conventional and unconventional security threats. 

• Protection at home: DHS must remain prepared and vigilant with 

respect to securing the homeland, particularly during the transition period 

when the nation can be viewed as being particularly vulnerable. In doing

so, it is important that the new administration address key issues that, as 

we reported, have impacted and will continue to impact the nation’s 

security and preparedness, including better securing our borders, 

enforcing immigration laws, and serving those applying for immigration 

benefits; defining key preparedness and response capabilities and building 

and maintaining those capabilities through effective governmental and 

external partnerships; and further strengthening the security and 

resiliency of critical infrastructure to acts of terrorism. In achieving its 

critical mission, we found that DHS needs to more fully integrate and 

strengthen its management functions, including acquisition and human 

capital management; more fully adopt risk-based principles in allocating

resources to the areas of greatest need; and enhance the effectiveness of 

information sharing among federal agencies and with state and local 

governments and the private sector.

• The decennial census: The results of the 2010 census are central to 

apportionment, redistricting congressional boundaries, and distributing 

hundreds of billions of dollars in federal aid. Soon after taking office, the 

new administration will face decisions that will shape the outcome of this 

central effort. Next spring the first nationwide field operation of the 2010 

decennial census will begin. During address canvassing, the Census 

Bureau will rely, for the first time, on hand-held computers to verify 

address and map information. Earlier this year, we designated the 

decennial census as a high-risk area, in part, because of ongoing 

challenges in managing information technology—including hand-held 

computers—and uncertainty over the total cost of the decennial census

and the Bureau’s plans for rehearsing its field operations. The Bureau has 

taken some important steps to get the census back on track but did not 

rehearse its largest and most costly field operation—non-response followup—and has little time for further course correction as it prepares to carry

out the national head count. 

Page 4 GAO-08-1153T 
While facing pressing issues, the next Congress and new administration 

also inherit the federal government’s serious long-term fiscal challenge—

driven on the spending side by rising health care costs and changing 

demographics. This challenge is complicated by the need to timely address 

developments such as the recent economic pressures and troubles in the 

housing and financial markets. Ultimately, however, the new 

administration and Congress will need to develop a strategy to address the 

federal government’s long-term unsustainable fiscal path. 

Planning for the transition will necessarily need to address the fact that 

achieving meaningful national results in many policy and program areas 

requires some combination of coordinated efforts among various actors 

across federal agencies, often with other governments (for example, 

internationally and at state and local levels), non-government 

organizations (NGO), for-profit and not for-profit contractors, and the 

private sector. In recognition of this fact, recent years have seen the 

adoption of a range of national plans and strategies to bring together 

decision makers and stakeholders from different locations, types of 

organizations, and levels of government. For example, the National 

Response Plan is intended to be an all-discipline, all-hazards plan that 

establishes a single, comprehensive framework for managing domestic 

incidents where involvement is necessary among many levels of 

government, the private sector, and nonprofit organizations. The response 

and recovery efforts after 9/11 and natural disasters, the nation’s 

preparations for a possible pandemic influenza, and the need to address 

global food insecurity are some of the many public issues that vividly 

underscore the critical importance of employing broad governance 

perspectives to meet global and national needs. Our transition work will 

highlight challenges the new Congress and next administration face in

devising integrated solutions to such multi-dimensional problems. Some 

examples follow: 

Highlight the Growing 

Need for Innovative, 

Integrated 

Approaches to Solve 

National and Global 

Challenges 

• Care for servicemembers: Over the last several years, more than 30,000

servicemembers have been wounded in action; many with multiple serious 

injuries such as amputations, traumatic brain injury, and post-traumatic 

stress disorder. We have identified substantial weaknesses in the health

care these wounded warriors are receiving as well as the complex and 

cumbersome DOD and VA disability systems they must navigate. While 

improvement efforts have started, addressing the critical continuity of care

issues will require sustained attention, systematic oversight by DOD and 

VA, and sufficient resources. 

Page 5 GAO-08-1153T 
• Health care in an increasingly global market and environment: The 

spread of severe acute respiratory syndrome (SARS) from China in 2002,

recent natural disasters, and the persistent threat of an influenza pandemic

all highlight the need to plan for a coordinated response to large-scale 

public health emergencies. Federal agencies must work with one another 

and with state and local governments, private organizations, and 

international partners to identify and assess the magnitude of threat, 

develop effective countermeasures (such as vaccines), and marshal the 

resources required for an effective public health response. Our transition 

work on these topics—including work related to such emergencies as 

SARS, Hurricane Katrina, pandemic influenza, bioterrorism, and TB—will 

highlight that federal agencies still face challenges such as coordinating 

response efforts and developing the capacity for a medical surge in mass 

casualty events. 

• Food safety: The fragmented nature of the federal food oversight system 

undermines the government’s ability to plan more strategically to inspect 

food production processes, identify and react more quickly to outbreaks of

foodborne illnesses, and focus on promoting the safety and integrity of the 

nation’s food supply. Fifteen federal agencies collectively administer at 

least 30 laws related to food safety. We have recommended, among other 

things, that the executive branch reconvene the President’s Council on 

Food Safety to facilitate interagency coordination on food safety 

regulation and programs. 

• Surface transportation: The nation’s transportation infrastructure—its 

aviation, highway, transit, and rail systems—is critical to the nation’s 

economy and affects the daily lives of most Americans. Despite large 

increases in federal spending on America’s vital surface transportation 

system, this investment has not commensurately improved the 

performance of the system. Growing congestion has created by one 

estimate a $78 billion annual drain on the economy, and population 

growth, technological change, and the increased globalization of the 

economy will further strain the system. We have designated transportation 

finance a high-risk area and have called for a fundamental reexamination

and restructured approach to our surface transportation policies, which 

experts have suggested need to recognize emerging national and global 

imperatives, such as reducing the nation’s dependence on foreign fuel

sources and minimizing the impact of the transportation system on the 

global climate change. 

• Disaster response: Hurricane Katrina demonstrated the critical 

importance of the capability to implement an effective and coordinated 

response to catastrophes that leverages needed resources from across the 

Page 6 GAO-08-1153T 
nation, including all levels of government as well as nongovernmental 

entities. While the federal government has made progress since Katrina, as

shown in the recent response to Hurricane Gustav, we have reported that 

the administration still does not have a comprehensive inventory of the 

nation’s response capabilities or a systematic, comprehensive process to 

assess capabilities at the local, state, and federal levels based on 

commonly understood and accepted metrics for measuring those 

capabilities. We have work under way to identify the actions that DHS and 

the Federal Emergency Management Agency (FEMA) have taken to 

implement the provisions of the Post-Katrina Emergency Management 

Reform Act, which charged FEMA with the responsibility for leading and 

supporting the nation in a comprehensive risk-based emergency 

management system—a complex task that requires clear strategic vision, 

leadership, and the development of effective partnerships among 

governmental and nongovernmental entities. 

• Cyber critical infrastructures: Cyber critical infrastructures are 

systems and assets incorporating information technology—such as the 

electric power grid and chemical plants—that are so vital to the nation 

that their incapacitation or destruction would have a debilitating impact 

on national security, our economy, and public health and safety. We have 

made numerous recommendations aimed at protecting these essential 

assets and addressing the many challenges that the federal government 

faces in working with both the private sector and state and local 

governments to do so—such as improving threat and vulnerability 

assessments, enhancing cyber analysis and warning capabilities, securing 

key systems, and developing recovery plans. Until these and other areas 

are effectively addressed, our nation’s cyber critical infrastructure is at 

risk of the increasing threats posed by terrorists, foreign intelligence

services, and others. 

Also, more broadly, the Government Performance and Results Act of 1993

(GPRA) calls for a governmentwide performance plan to help Congress 

and the executive branch address critical federal performance and 

management issues, including redundancy and other inefficiencies. 

Unfortunately, the promise of this important provision has not been 

realized. The agency-by-agency focus of the budget does not provide for 

the needed strategic, longer range, and integrated perspective of 

government performance. A broader performance plan would provide the 

President with an opportunity to assess and communicate the relationship 

between individual agency goals and outcomes that transcend federal 

agencies. 

Page 7 GAO-08-1153T 
Our transition work will identify opportunities to limit costs and reduce 

waste across a broad spectrum of programs and agencies. While these 

opportunities will not eliminate the need to address more fundamental 

long-term fiscal challenges the federal government faces, concerted 

attention by the new administration could conserve resources for other 

priorities and improve the government’s image. Examples of areas we will 

highlight and for which we will suggest needed action follow: 

Document Targeted 

Opportunities to 

Conserve Resources 

That Can Be Applied 

to New Initiatives 

• Improper payments: For fiscal year 2007, agencies reported improper 

payment estimates of about $55 billion—including programs such as 

Medicaid, Food Stamps, Unemployment Insurance, and Medicare. The 

governmentwide estimate has steadily increased over the past several 

years; yet even the current estimate does not reflect the full scope of 

improper payments. Further, major management challenges and internal 

control weaknesses continue to plague agency operations and programs 

susceptible to significant improper payments. Addressing these challenges

and internal control weaknesses will better ensure the integrity of 

payments and minimize the waste of taxpayers’ dollars. 

• DOD cost overruns: Total acquisition cost growth on the 95 major 

defense programs in DOD’s fiscal year 2007 portfolio is now estimated at 

$295 billion, and of the weapon programs we assessed this year, none had 

proceeded through development meeting the best practice standards for 

mature technologies, stable design, and mature production processes—all 

prerequisites for achieving planned cost and schedule outcomes. DOD 

expects to invest about $900 billion (fiscal year 2008 dollars) over the next 

5 years on development and procurement, with more than $335 billion, or 

37 percent, going specifically for new major weapon systems. Yet, much of 

this investment will be used to address cost overruns rooted in poor 

planning, execution, and oversight. By adopting best practices on 

individual programs and strengthening oversight and accountability for 

better outcomes, as we have consistently recommended, cost and 

schedule growth could be significantly reduced.

• DOD secondary inventory: DOD expends considerable resources to 

provide logistics support for military forces, and the availability of spare 

parts and other critical items provided through DOD’s supply chains 

affects military readiness and capabilities. DOD officials have estimated 

that the level of investment in DOD’s supply chains is more than $150 

billion a year, and the value of its supply inventories has grown by tens of 

billions of dollars since fiscal year 2001. However, as we have reported 

over the years, DOD continues to have substantial amounts of secondary

inventory (spare parts) that are in excess to requirements. Most recently, 

in 2007, we reported that more than half of the Air Force’s secondary 

Page 8 GAO-08-1153T 
inventory, worth an average of $31.4 billion, was not needed to support 

required inventory levels from fiscal years 2002 through 2005, although 

increased demand due to ongoing military operations contributed to slight 

reductions in the percentage of inventory on hand and the number of years 

of supply it represents. In ongoing reviews of the Navy’s and the Army’s 

secondary inventory, we are finding that these services also continue to 

have significant amounts of inventory that exceeds current requirements. 

To reduce its investment in spare parts that are in excess of requirements, 

DOD will need to strengthen the accountability and management of its 

secondary inventory. 

• Oil and gas royalties: In fiscal year 2007, the Department of Interior’s 

Minerals Management Service collected over $9 billion in oil and gas 

royalties, but our work on the collection of federal royalties has found 

numerous problems with policies, procedures, and internal controls that 

raise serious doubts about the accuracy of these collections. We also 

found that past implementation of royalty relief offered some oil and gas 

companies during years of low oil and gas prices did not include 

provisions to remove the royalty relief in the event that oil and gas prices 

rose as they have, and this failure to include such provisions will likely 

cost the federal government tens of billions of dollars over the working 

lives of the affected leases. Finally, we have found that the federal 

government ranks lowest among the nations in terms of the percentage of

total oil and gas revenue accruing to the government. We have ongoing

reviews of Interior’s oil and gas leasing and royalty policies and 

procedures and reports based on this work should be publicly released 

within the next few months. 

• The tax gap: The tax gap—the difference between taxes legally owed and 

taxes paid on time—is a long-standing problem in spite of many efforts by 

Congress and the Internal Revenue Service (IRS) to reduce it. Recently,

IRS estimated a net tax gap for tax year 2001 of about $290 billion. We 

have identified the need to take multiple approaches to reduce the tax gap, 

and specifically have recommended ways for IRS to improve its 

administration of the tax laws in many areas, including payroll taxes, 

rental real estate income, the tax preparation industry, income sent 

offshore, collecting tax debts, and the usefulness of third-party 

information reporting. 

Ultimately, long-term fiscal pressures and other emerging forces will test 

the capacity of the policy process to reexamine and update priorities and 

portfolios of federal entitlement programs, policies, programs, 

commitments, and revenue approaches. In that regard, the “base” of 

government—spending and revenue—also must be reassessed so that 

Page 9 GAO-08-1153T 
emerging needs can be addressed while outdated and unsustainable 

efforts can be either reformed or eliminated. Tax expenditures should be 

part of that reassessment. Spending channeled through the tax code 

results in forgone federal revenue that summed to an estimated $844 

billion in 2007 and has approximated the size of total discretionary 

spending in some years. Yet, little is known about the performance of 

credits, deductions, and other tax preferences, statutorily defined as tax 

expenditures, which are often aimed at policy goals similar to those of 

federal spending programs. Because tax expenditures represent a 

significant investment of resources, and in some program areas are the 

main tool used to accomplish federal goals, this is a significant gap in the

information available to decision makers. 

While some progress has been made in recent years, agencies still all too 

often lack the basic management capabilities needed to address current 

and emerging demands. As a result, any new administration will face 

challenges in implementing its policy and program agendas because of 

shortcomings in agencies’ management capabilities. Accordingly, our 

transition effort will synthesize our wide range of work and identify the 

key management challenges unique to individual departments and major 

agencies. Additionally, our transition work will emphasize five key themes 

common to virtually every government agency. 

• Select a senior leadership team that has the experience needed to

run large, complex organizations: It is vitally important that leadership 

skills, abilities, and experience be among the key criteria the new 

President uses to select his leadership teams in the agencies. The Senate’s

interest in leveraging its role in confirmation hearings as evidenced by

Senator Voinovich’s request to us to suggest management-related 

confirmation questions and your interest in hearings such as this one will 

send a strong message that nominees should have the requisite skills to 

deal effectively with the broad array of complex management challenges 

they will face. It is also critical that they work effectively with career 

executives and agency staff. 

Given that management improvements and transformations can take years 

to achieve, steps are needed to ensure a continuous focus on those efforts. 

Agencies need to develop executive succession and transition-planning 

strategies that seek to sustain commitment as individual leaders depart 

and new ones arrive. For example, in creating a Chief Management Officer 

(CMO) position for DHS, Congress has required the DHS CMO to develop

a transition and succession plan to guide the transition of management 

Underscore Critical 

Capacity Building 

Needs in Individual 

Agencies That Will 

Affect 

Implementation of 

Whatever New 

Priorities Are 

Pursued 

Page 10 GAO-08-1153T 
functions with a new administration. More broadly speaking, though, the 

creation of a chief operating officer (COO)/CMO position in selected

federal agencies can help elevate, integrate, and institutionalize 

responsibility for key management functions and transformation efforts 

and provide continuity of leadership over a long term. For example, 

because of its long-standing management weaknesses and high-risk 

operations, we have long advocated the need for a COO/CMO for DOD to 

advance management integration and business transformation in the 

department. In the fiscal year 2008 National Defense Authorization Act, 

Congress designated the Deputy Secretary of Defense as the department’s 

CMO. 

• Strengthen the capacity to manage contractors and recognize 

related risks and challenges: Enhancing acquisition and contracting 

capability will be a critical challenge for many agencies in the next 

administration in part because many agencies (for example, DOD, DHS, 

the Department of Energy, and the Centers for Disease Control and 

Prevention) are increasingly reliant on contractors to carry out their basic 

operations. In fiscal year 2007, federal agencies spent $436 billion on 

contracts for products and services. At the same time, our high-risk list 

areas include acquisition and contract management issues that collectively 

expose hundreds of billions of taxpayer dollars to potential waste and 

misuse. To improve acquisition outcomes, we have stated that agencies 

need a concentrated effort to address existing problems while facilitating a 

reexamination of the rules and regulations that govern the governmentcontractor relationship in an increasingly blended workforce. For 

example, since agencies have turned to contractor support to augment 

their capabilities, they need to ensure that contractors are playing 

appropriate roles and that the agencies have retained sufficient in-house 

workforce capacity to monitor contractor cost, quality, and performance. 

• Better manage information technology (IT) to achieve benefits and 

control costs: A major challenge for the federal government is managing

its massive investment in IT—currently more than $70 billion annually. 

Our reports have repeatedly shown that agencies and the government as a 

whole face challenges in prudently managing major modernization efforts, 

ensuring that executives are accountable for IT investments, instituting 

key controls to help manage such projects, and ensuring that computer 

systems and information have adequate security and privacy protections. 

The Office of Management and Budget (OMB) identifies major projects 

that are poorly planned by placing them on a Management Watch List and 

requires agencies to identify high-risk projects that are performing poorly. 

OMB and federal agencies have identified approximately 413 IT projects—

Page 11 GAO-08-1153T 
totaling at least $25.2 billion in expenditures for fiscal year 2008—as being 

poorly planned, poorly performing, or both. OMB has taken steps to 

improve the identification of the Management Watch List and high-risk 

projects since GAO testified last September, including publicly disclosing 

reasons for placement on the Management Watch List and clarifying highrisk project criteria. However, more needs to be done by both OMB and 

the agencies to address recommendations GAO has previously made to 

improve the planning, management, and oversight of poorly planned and

performing projects so that potentially billions in taxpayer dollars are not 

wasted. 

• Address human capital challenges: Governmentwide, about one-third 

of federal employees on board at the end of fiscal year 2007 will become 

eligible to retire on the new administration’s watch. Certain occupations—

air traffic controllers and customs and border protection personnel among 

them—are projected to have particularly high rates of retirement eligibility 

come 2012. As experienced employees retire, they leave behind critical 

gaps in leadership and institutional knowledge, which could adversely 

affect the government’s ability to carry out its diverse responsibilities. 

Agencies must recruit and retain employees able to create, sustain, and 

thrive in organizations that are flatter, results-oriented, and externally 

focused, and who can collaborate with other governmental entities as well 

as with the private and nonprofit sectors to achieve desired outcomes. The 

Office of Personnel Management needs to continue to ensure that its own 

workforce has the skills needed to successfully guide agency human 

capital improvements and agencies must make appropriate use of 

available authorities to acquire, develop, motivate, and retain talent. 

• Build on the progress of the statutory management framework:

Over the last 2 decades, Congress has put in place a legislative framework 

for federal management that includes results-based management, 

information technology, and financial management reforms. As a result of 

this framework and the efforts of Congress and the Bush and Clinton 

administrations, there has been substantial progress in establishing the 

basic infrastructure needed to create high-performing organizations across 

the federal government. However, work still remains and sustained 

attention by Congress and the incoming administration will be a critical

factor in ensuring the continuing and effective implementation of the 

statutory management reforms. 

Page 12 GAO-08-1153T 
Initiated in 1990, GAO’s high-risk program has brought a much greater 

focus to areas in need of broad-based transformations and those 

vulnerable to waste, fraud, abuse, and mismanagement. It also has 

provided the impetus for the creation of several statutory management 

reforms. GAO’s current high-risk list covers 28 areas. Our updates to the 

list, issued every 2 years at the start of each new incoming Congress, have

helped in setting congressional oversight agendas. The support of this 

Subcommittee and others in Congress has been especially important to the 

success of this program. Further, administrations have consistently turned

to the high-risk list in framing their management improvement initiatives. 

The current administration in particular, working with this Subcommittee, 

has provided a valuable and focused effort in requiring agencies to develop

meaningful corrective action plans for each area that we have designated

as high-risk. As a consequence of efforts by Congress, the agencies, OMB, 

and others, much progress has been made in many high-risk areas, but key 

issues need continuing attention. Sustained efforts in these areas by the 

next Congress and administration will help improve service to the 

American public, strengthen public confidence in the government’s 

performance and accountability, potentially save billions of dollars, and 

ensure the ability of government to deliver on its promises. 

The world has obviously changed a great deal since the Presidential 

Transition Act of 1963. And while there have been periodic amendments to 

the Act, neither the Act nor the transition process itself has been subject to 

a comprehensive or systematic assessment of whether the Act is setting 

transitions up to be as effective as they might be. We will be monitoring 

the transition and reaching out to the new administration, Congress, and 

outside experts to identify lessons learned and any needed improvements 

in the Act’s provisions for future transitions. 

In summary, our goal will continue to be to provide congressional and 

executive branch policy makers with a comprehensive snapshot of how 

things are working across government and to emphasize the need to 

update some federal activities to better align them with 21st century 

realities and bring about government transformation. In keeping with our 

role, we will be providing Congress and the executive branch with clear 

facts and constructive options and suggestions that our elected officials 

can use to make policy choices in this pivotal transition year. The nation’s

new and returning leaders will be able to use such information to help 

address both the nation’s urgent issues and long-term challenges so that 

our nation stays strong and secure now and for the next generation. 

Help Inform the 

Management 

Improvement 

Agendas of Congress 

and the New 

Administration 

Monitor the 

Implementation of the 

Presidential 

Transition Act 

Provisions and 

Identify Potential 

Improvements for 

Future Transitions 

Page 13 GAO-08-1153T 
Chairman Akaka, Senator Voinovich, and Members of the Subcommittee, 

this concludes my prepared statement. I would be happy to respond to any 

questions you may have.

Page 14 GAO-08-1153T 
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Page 19 GAO-08-1153T (450708) 
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