For Release on Delivery

Expected at

10 a.m.

Tuesday,

July 18, 2000

GAO/T-OCG-00-10

GAO: SUPPORTING

CONGRESS FOR THE

21ST CENTURY

Statement of David M. Walker

Comptroller General of the United States

Testimony

Before the Subcommittee on Government Management,

Information and Technology, Committee on Government

Reform, House of Representatives

United States General Accounting Office

GAO
Page 1 GAO/T-OCG-00-10

Mr. Chairman, Congressman Turner, and Members of the Subcommittee:

I am pleased to appear before you today to discuss the work of the

General Accounting Office (GAO). We welcome this opportunity to

highlight the important role that GAO plays to support the Congress for

the benefit of the American people.

In my testimony today, I will discuss the many national and international

concerns that confront our nation and the Congress, the ways in which

GAO can support the Congress now and in the future, and GAO’s

performance in accomplishing its mission. While GAO has evolved over

the years, its current mission is straightforward: GAO exists to support the

Congress in meeting its constitutional responsibilities and to help improve

the performance and accountability of the federal government for the

benefit of the American people.

GAO was created in 1921 as a result of the Budget and Accounting Act, a

law designed to improve government financial controls and management

in the aftermath of World War I. Wartime spending had increased the

national debt, escalated costs for many government purchases, and

created substantial disarray in the financial operations of the War

Department and other agencies. The Congress also recognized a need for

better financial information and controls over costs. As a result, the new

law required the President to prepare an annual budget, and it transferred

from the Department of the Treasury to GAO the government’s auditing,

accounting, and claims functions.

During the 1920s and 1930s, GAO focused on pre-audit payment work and

whether government spending had been handled legally. The bulk of

GAO’s work centered on the auditing of agency vouchers; GAO clerks

checked vouchers and settled the accounts of executive branch disbursing

officers. Departments and agencies sent their vouchers to GAO, which

checked the legality, propriety, and accuracy of expenditures.

GAO’s workload increased in the 1930s as federal money poured into New

Deal recovery and relief efforts to combat the Great Depression during

President Franklin D. Roosevelt’s administration. GAO, which started out

with about 1,700 employees, had a workforce that numbered nearly 5,000

by 1939. Although Washington remained the center of GAO’s activities, the

agency’s auditors first began doing fieldwork in the mid-1930s. For one

early fieldwork assignment, GAO looked at the operation of government

agriculture programs in Kentucky and several southern states.

Evolution of GAO
Page 2 GAO/T-OCG-00-10

With the U.S. entry into World War II, GAO faced enormous challenges.

The agency continued to do the same type of work it had done before the

war but with vastly increased volume. Defense production soared after

1941 as the nation’s factories geared up to meet the demands of war.

Government offices expanded, churning out mountains of expenditure

forms for GAO to examine. GAO reviewed defense contracts and audited

the accounts of Army and Navy disbursing officers. The war effort created

a blizzard of transportation vouchers for GAO to review as the government

used the nation’s rails and roads to carry freight and troops. GAO hired

additional audit clerks and freight examiners, nearly tripling the size of the

agency to nearly 15,000 by 1946. The paperwork was so intense that GAO

faced a backlog of 35 million unaudited vouchers in 1945 and had to spend

several years catching up on work. Overall, GAO handled a staggering

backlog of paperwork as a result of the war: in 1947, GAO reconciled 490

million checks and audited 92,000 accountable officers’ accounts, 5 million

transportation vouchers, 1.5 million contracts, and 260 million postal

money orders.

GAO’s wartime experiences spelled the end of the voucher-checking era.

The increase in paperwork showed how difficult it was for a single agency

to keep up with examining every government disbursement. The war also

highlighted a number of accountability issues. In the 1940s, then

Comptroller General Warren repeatedly pointed to the lack of

accountability of government corporations and problems with contract

fraud. Warren applauded the passage in 1945 of the Government

Corporation Control Act, which authorized the auditing of wholly owned

government corporations and mixed ownership corporations. Responding

to the requirements of the act, Warren created a Corporation Audits

Division in 1945. He began hiring accountants to perform annual audits of

government corporations.

With passage of the Budget and Accounting Procedures Act of 1950, GAO

as a whole shifted to comprehensive auditing of government agencies.

Instead of concentrating on individual fiscal transactions, GAO began

reviewing financial management and internal controls at government

agencies. Responsibility for checking vouchers shifted to the various

executive agencies, as GAO focused on prescribing accounting principles,

performing audits on agency sites, and checking financial controls and

procedures.

The move to comprehensive auditing represented a major turning point for

GAO. At the same time, GAO returned to its pre-war size. The agency

reduced the number of voucher clerks in its employ and began hiring
Page 3 GAO/T-OCG-00-10

accountants. Indeed, the modern GAO began to emerge in the 1950s and

1960s.

GAO responded to its new mission by recruiting and training a broader

array of staff, and working to set standards that professionalized the

workforce. To keep a watchful eye on spending at home and abroad, GAO

formally established a network of field offices throughout the United

States in the early 1950s and opened a European office in 1952. The scope

of GAO’s work expanded again during the 1960s as President Johnson

initiated the Great Society’s War on Poverty. The number of federal grantsin-aid rose sharply and the rapid growth in federally assisted programs

placed enormous administrative control burdens on government at all

levels.

Let me note at this point that all the Comptrollers General made

substantial contributions to GAO, and I am particularly pleased to be here

with my immediate predecessors, Elmer Staats and Charles Bowsher—

both made enormous contributions to the agency. First came Comptroller

General Staats, who took office in 1966, and was a driving force behind

GAO’s emphasis on program evaluation and making the agency’s work

more useful to the Congress.

The growth in congressionally based work, combined with the expansion

of government programs, was responsible for a significant change in the

makeup of GAO’s employees. GAO’s staff, mostly accountants, began to

change to fit these new assignments. In the 1970s, GAO started recruiting

social scientists, computer professionals, and experts in such fields as

health care, science, public policy, and information management. In 1980,

most of the agency’s auditors and management analysts were reclassified

as evaluators to reflect GAO’s varied work. During Staats’ tenure, GAO

relied on new technological tools as well as employees with diverse

academic degrees. In the 1970s and 1980s, the agency made increasing use

of computers in its audit and administrative operations.

Staats was also a leader in recognizing the importance of international

interaction in the accountability field. He made major contributions to the

development of the International Organization of Supreme Audit

Institutions (INTOSAI), which includes 179 countries, and he also created

an international fellows program at GAO to provide support, training, and

guidance to a cadre of key individuals from accountability organizations

worldwide. Eighty-nine countries have participated in the International

Auditor Fellowship Program and 279 individuals have graduated from the

program since 1979. Indeed, 12 former fellows have since become the
Page 4 GAO/T-OCG-00-10

Auditors General in their countries, and many more have served as

Deputies or in other high-level posts.

Comptroller General Bowsher also made major contributions to GAO and

to the improvement of financial management and government operations.

Bowsher continued the emphasis on personnel improvement,

strengthening the recruitment of people with diverse professional

backgrounds and providing them with improved tools and work

incentives. He expanded GAO’s training curriculum and strengthened the

Training Institute.

Bowsher also helped to lead the government’s growing emphasis on

management reform and performance and accountability issues. During

his tenure, Bowsher paid close attention to budget issues, warned about

the dangers of the increasing deficit, and worked to improve federal

financial management. In part due to GAO’s work and leadership, the

Congress passed a series of laws designed to improve the management

and performance of government, including:

• the Chief Financial Officers Act—which created CFOs in all major

agencies;

• the Government Performance and Results Act—which created a

requirement for measuring and reporting on agencies’ performance;

• the Paperwork Reduction Act of 1995—which streamlined government

paperwork and reporting requirements;

• the Government Management Reform Act—which requires the

government to prepare an annual consolidated financial statement audited

by GAO;

• the Federal Acquisition Streamlining Act—which is helping to make

government acquisition more efficient and effective; and

• the Single Audit Act.

During Bowsher’s tenure, GAO first began doing general management

reviews, which looked at broad organizational and management issues at

government agencies. GAO also initiated a series of high-risk reports, now

issued every 2 years, to provide information on federal activities

susceptible to waste, fraud, abuse, and mismanagement.

When I became Comptroller General in November 1998, I committed GAO

to helping the Congress address issues that will define the 21st century.
Page 5 GAO/T-OCG-00-10

Today, GAO conducts a wide range of financial and performance audits

and program evaluations and reviews the business and mission of

government. GAO’s work covers everything from the challenges of an

aging population and the demands of the information age to emerging

national security threats and the complexities of globalization. GAO is also

committed to management reform–to helping government agencies

become organizations that are results-oriented and accountable to the

public.

Ultimately, we may find that GAO needs a new name—the words “general

accounting office” do not really capture our more complex role anymore.

It might be more appropriate to consider something closer to “government

accountability office.” It more clearly conveys our role and the

expectations of our clients in the Congress, the press, and the public. It

might also help us in our recruiting efforts in the increasingly competitive

marketplace.

GAO’s core values of accountability, integrity, and reliability reflect its

dedication to good government and professional standards. Accountability

describes the nature of GAO’s work in helping Congress oversee federal

programs and operations to ensure effective and efficient government for

the American people. The agency’s work reflects integrity because it is

professional, objective, fact-based, nonpartisan, nonideological, fair and

balanced. GAO strives also for reliability by providing high-quality

information that is timely, accurate, useful, clear, and candid.

GAO relies on a workforce of highly trained professionals who hold

degrees in many academic disciplines, such as accounting, law,

engineering, public and business administration, economics, and the social

and physical sciences. I am extremely proud of GAO’s workforce, of its

dedication and excellence, and of its service to the betterment of

government and the country. One of my principal goals for GAO is that we

not only work to improve government, but that we also work to improve

ourselves. I look for GAO to become a model organization in the federal

government and I am convinced that, because of our employees, we will

achieve that goal.

Mr. Chairman, I am also proud of GAO’s accomplishments in supporting

the Congress and helping improve the performance and accountability of

government for the benefit of the American people.

During fiscal year 1999, GAO made substantial contributions to help the

Congress and the executive branch agencies improve government

programs and services. It provided more than $20 billion in direct financial

GAO’s

Accomplishments
Page 6 GAO/T-OCG-00-10

benefits, recommended over 600 actions that have led to improvements in

government operations, and provided 229 testimonies requested by

congressional committees. While many of GAO’s contributions cannot be

quantified in dollar terms, those that can be quantified show that GAO

returned over $57 for every $1 appropriated to the agency in fiscal year

1999.

Figure 1: Financial Benefits

GAO succeeds in its mission when its findings and recommendations lead

to improvements wherever federal dollars are spent. The following

examples illustrate some of the financial benefits that GAO has helped the

Congress and the executive branch achieve:

• To help the government better realize the value of its assets, GAO

suggested ways the Congress and the Department of Energy (DOE) could

increase the profitability of oil sold from the federally owned Naval

Petroleum Reserve at Elk Hills, California. GAO testified before the

Congress that the government would see a greater return from the sale of

Elk Hills than from retaining ownership. GAO’s suggestions for changes to

the sale process were adopted by DOE, resulting in proceeds of over

$1.5 billion above the original sale price.
Page 7 GAO/T-OCG-00-10

• GAO has helped agencies to achieve greater savings from more efficient

operations. The Congress recently enacted legislation based in part on

GAO’s recommendations to strengthen Medicare’s safeguards against

fraud and abuse. These improvements saved the Medicare program

approximately $2.2 billion over fiscal years 1998 and 1999. Similarly, GAO

recommendations included in Medicare program legislation will produce a

gradual reduction, through fiscal year 2001, in the overly generous

“adjustment factor” designed to compensate teaching hospitals for higher

Medicare costs. This legislative change is estimated to produce $1.5 billion

in savings for the program in fiscal years 1999 and 2000.

• GAO has made recommendations to streamline the tax system and help

support the Congress in its long-term fiscal decisions. Based on GAO’s

evaluations, for instance, the Congress changed the tax laws pertaining to

the Earned Income Tax Credit. Specifically, the government avoided an

estimated $1.3 billion in payments for the 5-year period ending in fiscal

year 2000 through changes to the wealth, capital gains, and passive income

tests for the Earned Income Tax Credit eligibility criteria. Similarly, as part

of the Small Business Job Protection Act, the Congress phased out tax

credits to corporations for certain income earned in Puerto Rico and U.S.

possessions. GAO’s work on this issue contributed to an estimated

$1.3 billion in financial benefits for fiscal years 1996 through 2000.

• GAO also helped the Congress and agencies identify and reduce

unnecessary spending. As part of its ongoing work in housing issues, GAO

has provided assistance to improve the accuracy of the Department of

Housing and Urban Development’s (HUD) budget and resource estimates.

GAO reported that HUD’s method for estimating funding for its Section 8

housing assistance resulted in requests that exceeded the agency’s needs.

The Congress directed HUD to submit revised estimates, after which

HUD’s fiscal year 1998 budget was reduced by about $1.3 billion in light of

the streamlined projections. As a result, the Congress also rescinded

$2.4 billion from HUD’s fiscal year 1998 supplemental request. GAO’s

recommendations helped HUD avoid additional costs of about $1.1 billion

in fiscal year 1999. Based in part on these examples, GAO audits and

recommendations helped the Department save an estimated $5.3 billion in

fiscal years 1998 and 1999.

• Similarly, as part of its assistance to the Congress in reviewing the fiscal

year 1999 Department of Defense (DOD) budget request for military

personnel, GAO identified areas where the budget could be reduced.

These included excess manpower costs due to over estimated military

personnel levels, unnecessary advance pay, and funds not needed due to

gains from changes in foreign currency exchange rates. As a result of
Page 8 GAO/T-OCG-00-10

GAO’s work, the Congress reduced the fiscal year 1999 military personnel

budget for active and reserve forces by about $609 million without

compromising overall readiness.

In addition to the financial benefits resulting from GAO’s work, the

agency’s efforts also contribute to numerous qualitative improvements in

government operations and services. During fiscal year 1999, GAO

contributed to 607 such benefits achieved by the government, a 13-percent

increase over fiscal year 1998. Benefits resulting from GAO’s

recommendations included better public safety and consumer protection,

more efficient and effective government operations and services, help in

ensuring Year 2000 readiness, and improvements to computer security.

Figure 2: Improved Government Operations Resulting From GAO

Recommendations

Some examples of GAO’s contributions to improved government

operations follow:

• GAO has assisted the Congress and the agencies in efforts to improve

public health. For example, since 1998 GAO has issued a series of reports

on Medicaid highlighting widespread inadequate health care quality in

some of the nation’s nursing homes. As part of its evaluation, GAO made a

series of recommendations to the Health Care Financing Administration

(HCFA) for improvements to its nursing home survey process and for

stronger enforcement in instances when nursing homes repeatedly violate

regulations and do not correct deficiencies. As a result, HCFA developed a

Public Health and Safety
Page 9 GAO/T-OCG-00-10

set of initiatives designed to improve patient care and eliminate

deficiencies. Based on GAO’s work, HCFA now requires states to

investigate serious complaints alleging harm to residents within 10 days,

has proposed an expansion of its enforcement programs by subjecting

homes with repeated serious deficiencies to immediate sanctions, and has

revised the protocols that state surveyors use to inspect nursing homes to

better focus the reviews.

GAO’s reports have also convinced some states to improve their oversight

of nursing homes. In response to GAO’s finding that serious complaints of

poor nursing home care frequently are not investigated for months,

Maryland’s legislature approved funding for a 57 percent increase in its

surveyor staff, and the state agency revamped its processes to emphasize a

faster review of serious complaints.

• GAO has also made significant contributions to improving criminal justice.

For instance, GAO has reported on the prevalence and costs of identity

fraud involving the illegal use of another person’s identifying information

(such as name, date of birth, or Social Security number) to commit

financial crimes. Illegal activities range from the unauthorized use of a

credit card to a comprehensive takeover of financial accounts. Largely in

response to GAO’s work, the Congress enacted legislation that

criminalized the theft and misuse of personal identifying information and

provided legal recognition for the victims of fraud.

• Transportation safety is another important area in which GAO has helped

to improve government operations and the public’s quality of life. In one

instance, GAO reported that the Federal Railroad Administration (FRA)

had few regulations involving passenger car safety for Amtrak or

commuter rail operations. As a result, inspectors provided little oversight

of passenger car safety. GAO recommended that the agency establish

appropriate criteria for the condition of safety control components on

passenger cars. Addressing GAO’s recommendation, FRA established

comprehensive structural safety standards for passenger equipment and

created more stringent safety standards for high-speed passenger rail

service.

• Many of the government’s large entitlement programs are susceptible to

fraud, waste, and mismanagement. One example of GAO’s contribution to

improving government performance and preventing fraud and waste is in

the Supplemental Security Income (SSI) program–the nation’s largest cash

assistance program for the poor. GAO reported that the program’s

financial integrity was ineffective because the program has overpaid

More Efficient

Government
Page 10 GAO/T-OCG-00-10

beneficiaries by more than $3.3 billion. The magnitude of overpayments,

and the Social Security Administration’s (SSA) inability to recover

outstanding SSI debt, led to the program’s inclusion on GAO’s high-risk

list. Based on GAO’s work, SSA is expanding its use of online data to

better verify financial information about recipients and prevent future

overpayments. SSA is also seeking statutory authority for additional tools

to recover current overpayments.

• GAO has played an important role in helping the Congress and the

agencies improve the government’s computer security and make more

effective use of technology in the delivery of federal services. The

Congress has been extremely concerned about the government’s ability to

prevent intruders from accessing government’s extensive computer and

information systems. As a result, over the past several years, GAO has

issued more than 80 reports on data and systems security including

hundreds of recommendations for correcting both individual weaknesses

and the systemic causes of security problems. GAO’s work has led to

improvements in many agencies, including the development of entitywide

security management practices. It has also led to computer security and

other information technology-related legislation.

In addition to its reviews of individual agencies, GAO has developed

techniques and practices that can be applied across the government. This

work has made significant contributions to agencies’ abilities to develop

and implement sound security policies. The information security

management practices identified in GAO’s executive guides have been

incorporated into policy guidance at many federal agencies. Additionally,

GAO’s Federal Information System Controls Audit Manual is now used by

most major federal audit entities to evaluate computer-related controls.

In discussing GAO’s contributions and accomplishments, it is important

that we engage in a select amount of research and development work to

ensure that GAO can meet the institutional needs of the Congress over the

long term. This investment has made major contributions to the

performance, stability, and accountability of the government and the

protection of tax dollars. As I will discuss later in this testimony, GAO’s

flexibility to engage in this important component of our work has been

increasingly constrained by other demands on our resources.

Among the most important work that GAO has done are reviews related to

the Year 2000 (Y2K) computing challenge. GAO’s work on Y2K began

through its research and development program, but the vital importance of

this issue has manifested itself in many congressional requests for work

that the agency received in fiscal years 1998 and 1999. In early 1997, GAO
Page 11 GAO/T-OCG-00-10

designated Y2K as a high-risk area to highlight the government’s exposure.

Throughout 1997, 1998, and 1999, GAO worked closely with the Congress

on Y2K issues–including this subcommittee. The Senate created the

Special Committee on Year 2000 Technology Problem and the House

called on this Subcommittee and the Subcommittee on Technology of the

Committee on Science to lead its Y2K monitoring. With leadership from

you, Mr. Chairman, and your colleagues, congressional committees

examined the implications of Y2K on various government operations and

in key economic sectors.

GAO produced a set of four guides to help organizations confront the

problem. GAO also issued over 160 reports detailing specific findings and

made over 100 recommendations to agencies and to the President’s

Council on Year 2000 Conversion for improving the government’s

readiness. For example, GAO recommended that the President’s Council

on Year 2000 Conversion require agencies to develop contingency plans

for all critical core business processes. Accordingly, the Office of

Management and Budget clarified its contingency plan instructions and,

along with the Chief Information Officers Council, adopted GAO’s

business continuity and contingency planning guide for federal use, thus

reducing the risks of disruption to major programs and services.

Finally, let me note that GAO is proud of its record in providing timely

service to the Congress. As figure 3 indicates, GAO has consistently

improved its ability to promptly meet congressional requests. In 1999, GAO

provided the Congress 96 percent of its products on time.
Page 12 GAO/T-OCG-00-10

Figure 3: Product Timeliness

Mr. Chairman, as I am sure you appreciate, the issues confronting the

Congress and the American people have grown more complex in recent

years. The pace of change has accelerated for government and for the

country as a whole. The increasing challenges facing the country over the

long term have had a long-lasting impact on the nature of GAO as an

organization and on how it supports the Congress. Where, in the early

years of GAO’s existence, changes to its roles and responsibilities and to

the demands placed on it occurred more slowly, there is no question that

the environmental changes affecting its mission in recent years have been

more persistent and have occurred more rapidly. In fact, the timeline of

major events in GAO’s existence (see figure 4) reveals the increasing

development, complexity and influence of difficult public policy issues

related to government activity and our accountability mission:

Complex Issues and

Governance

Challenges

0

20

40

60

80

100

67

91 93 96

1996 1997 1998 1999

Percent

FISCAL YEARS

87

4 Year

Average
Page 13 GAO/T-OCG-00-10

Figure 4: GAO History: 1921 to the Present

Likewise, it comes as no surprise that as a result of the increasing

complexity and breadth of issues facing the Congress, the legislature is

availing itself of GAO’s services and support on an unprecedented and

accelerating basis. While 70 percent of GAO’s work was done as a result of

congressional requests in 1996, it was 95 percent in 1999. Overall,

congressional requests for GAO work have increased from 10 percent in

1966, at the start of the Staats era, to 95 percent, at the beginning of my

term. Part of the reason for the Congress’s increased reliance on GAO in

recent years is the result of our ability to add unique value to the products

and service we provide. With the advent of agency inspectors general and

other similar organizations, GAO is no longer the only federal entity

charged with improving the accountability of government. Nevertheless,

GAO is the only agency that can consistently provide the Congress and the

executive branch with analysis, options, and recommendations that are

long range, broad, in coverage, and integrated in the development and

presentation of critical information. GAO’s efforts are multilateral and

cognizant of the international implications of issues ranging from security

to the environment. And they also reflect the nuances of American

federalism, ensuring that implications of service delivery and devolution

on state and local governments and on the private and nonprofit sectors

are factored into all of its work. In the end, there is no question that

effective stewardship must consider how increasingly diverse approaches

to public sector responsibilities are leading to diffuse accountability.

I am convinced that GAO is now entering another significant era that will

take its place on the timeline of the agency’s historic key events. GAO has

worked hard to make the transition from an accounting and pre-audit

environment to become a diversified, multidisciplinary accountability and

Budget and 

Accounting

Act establishes

GAO

Begins field 

work during

the Great 

Depression

Workload 

exploads

during WWII; 

staff temporarily 

triples

to 15,000

GAO's mission 

expandsshifts from 

individual

voucher

audits to 

comprehensive

audits; 

workforce 

reduced and

professionalization

begins

Workload

expands 

again due

to Vietnam

War and 

Great Society

programs

First

Yellowbook_

government

auditing 

standards

established

Renewed

focus on 

financial

management, 

deficit,

and budget 

issues 

broadens

GAO's work

Major 

government

management

laws created:

CFO Act

GPRA

Paperwork 

Reduction Act

Clinger-Cohen

Act

Management 

Reform Act

Acquisition

Streamlining

Act

all add to GAO 

workload while 

workforce

contracts
Page 14 GAO/T-OCG-00-10

professional services organization. As I have discussed, my predecessors

did a tremendous amount to ensure that GAO had the capacity and

capabilities to serve the Congress and prepare for the future during their

tenure. And I, at the start of the 21st century, have begun to do the same

thing.

Clearly, much has already changed as GAO has grappled with this critical

transition. As the following graphs show, GAO has over the years seen

considerable changes in its staffing and budget allocations—levels that,

unfortunately, did not generally reflect its workload and the growing

demands placed on it by the Congress. Reductions in its resource levels,

combined with increases and shifts in its workload have in recent years

prompted GAO to take strong measures to more efficiently accomplish its

mission. For example, GAO has taken significant steps to consolidate its

field office structure. GAO has been able to close field offices both in the

United States and overseas—much of it through attrition—and achieve

gains in productivity and collaborative work environments. At the same

time, GAO’s flexibility has been reduced by extensive changes to the mix

of its products—as mentioned, virtually all of its work is done at the

request of the Congress, and an increasing amount of that stems from

mandates.

The following charts highlights the changes I am discussing:
Page 15 GAO/T-OCG-00-10

Figure 5: GAO Staff Levels

Number of FTE staff

0

1000

2000

3000

4000

5000

6000

Fiscal Year

1966 1981 1999

4,136

5,182

3,275
Page 16 GAO/T-OCG-00-10

Figure 6: History of Field Office Structure

1984

1986

1988

1990

1992

1994

1996

1998

2000

0

20

40

Number of Offices

60

10

30

50

46

11
Page 17 GAO/T-OCG-00-10

Figure 7: Work Conducted for the Congress

In a nutshell, GAO currently stands at an important crossroads in its

history and in its ability to provide the unique support the Congress and

the American people expect from it. Many of the activities GAO has

undertaken are designed to ensure that the agency is properly positioned

to fully support the Congress as it faces the future.

Since I became Comptroller General, one of the most important activities

in which GAO has been engaged is the development of its first strategic

plan for the 21st century. This document is a blueprint for how GAO will

support the Congress as it continues to face complex issues and

challenges. Building on global changes that are impacting society on a

variety of levels, GAO’s strategic plan develops a comprehensive and

focused structure of long-term goals and objectives to support the

Congress in its legislative, oversight, and investigative roles. GAO worked

closely with legislative and committee leadership, individual members,

and staff in the development of this strategic plan. Thus, this plan not only

incorporates congressional views about what it believes to be important

and emerging issues, it also establishes a framework for seeing

fundamental constitutional responsibilities in the context of current

challenges and emerging changes in the coming years.

GAO has developed a set of strategic goals and objectives that will help to

support the Congress in its decision-making and improve the performance

and accountability of the executive branch. GAO’s plan presents four

strategic goals that will help the Congress perform its constitutional

responsibilities and ensure GAO’s ability to continue providing effective,

quality support to its clients.

90%

•

65%

2%

•

5%

23%

Research and Development Mandates Committee/Member Requests

10%

33%

1966 1981 1999

72%
Page 18 GAO/T-OCG-00-10

The due diligence that GAO has expended to develop its strategic plan in

concert with the Congress has identified a number of complex issues that

are not easily solved. These issues are reflected in the goals and objectives

of the plan and will serve as the guide for GAO’s work priorities in the

coming years. Many of these issues will take years to resolve satisfactorily,

but by focusing on these issues now, the Congress will be much better

positioned to meet its responsibilities for governing as it begins to

confront these current and emerging challenges.

There is no question that the cold war has ended, and we won. In addition,

after nearly 30 years of budget deficits, the combination of hard choices

and remarkable economic growth has led to budget surpluses. As a result,

we transition into this new century with different security concerns and an

improved financial position relatively free of the deficit constraints of the

recent past. In order to prepare effectively for the future, however, we

must fully explore the major dynamic that will shape the United States and

its place in the world and adequately prepare the federal government to

meet the challenges that lie ahead. This subcommittee is uniquely

positioned to consider these broad-based and crosscutting challenges and

what needs to be done to address them.

Three of GAO’s strategic plan goals focus on how GAO can help support

the Congress in dealing with many complex issues and the challenges of

government. These goals, the strategic objectives, and the major thematic

issues that influence them are as follows:

GAO’s first strategic goal focuses on several of the aspirations of the

American people defined by the Founders: “to establish justice, insure

domestic tranquility...promote the general welfare, and secure the

blessing of liberty to ourselves and our posterity...” The country’s aging

and increasingly diverse population, rapid technological change, and

Americans’ desire to improve the quality of life all have major policy and

budgetary implications for the federal government. In particular, growing

commitments to the elderly will make it difficult for a smaller generation

of workers to finance competing claims on the nation’s future.

To support the Congress in its decision-making in this area, GAO will

focus significant resources on the following important strategic objectives:

• researching possible options to meet the health care needs of an aging and

diverse population;

• examining ways to ensure a secure retirement for older Americans;

Provide Timely, Quality

Service to the Congress

and the Federal

Government to Address

Current and Emerging

Challenges to the WellBeing and Financial

Security of the American

People
Page 19 GAO/T-OCG-00-10

• reviewing the social safety net for Americans in need;

• supporting efforts to provide for an educated citizenry and a productive

workforce;

• helping the Congress strengthen a system of justice that is effective in

controlling crime, illegal drug use, and illegal immigration;

• providing analysis and other support concerning the effectiveness of

investments in communities and economic development;

• researching ways to increase responsible stewardship of natural resources

and the environment; and

• helping the Congress maintain a safe and efficient national physical

infrastructure.

One of the important issues that reflect this goal and its objectives is

Demographics. The profound changes forecast in the age and

composition of our population will have enormous consequences for the

retirement and health care entitlement programs as well as programs

supporting the workforce.

The population is growing older. By 2030, about one fifth of the U.S.

population is projected to be over age 65, compared with about 13 percent

in 1998. Also by 2030, Medicare beneficiaries, who include the disabled as

well as the elderly, are expected to account for 20 percent of the

population. The result will be that fewer workers will be paying into Social

Security for every person receiving benefits. As shown in figure 8, in 1955,

almost 9 persons were paying into Social Security for every person

receiving benefits. Today, the ratio is down to 3.4 to 1, and, by 2030, it is

projected to be about 2 to 1.
Page 20 GAO/T-OCG-00-10

Figure 8: Social Security Workers per Beneficiary

Note: Projections based on intermediate assumptions of The 2000 Annual Report of the

Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability

Insurance Trust Funds.

Source: Office of the Actuary, Social Security Administration.

These trends will have enormous financial repercussions for the solvency

and sustainability of federal entitlement programs. The Medicare Hospital

Trust Fund has operated in the red since 1992 and is projected to face

insolvency in 2025. Social Security expenditures are expected to exceed

payroll tax revenues beginning in 2015, with trust funds being depleted by

2037.

But crafting a solution to financing these entitlement programs involves

more than the traditional approach of closing the gap between projected

expenditures and revenues over a fixed time period, such as 75 years.

Rather, any financing solution needs to achieve sustainable solvency that

balances projected expenditures and revenues without requiring us to

frequently revisit the financing of these programs.

0

1

2

3

4

5

6

7

8

9

10

1955 1965 1975 1985 1995 2005 2015 2025 2035 2045 2055 2065 2075

Workers per beneficiary
Page 21 GAO/T-OCG-00-10

Figure 9: Medicare’s Hospital Insurance Trust Fund Faces Insolvency in

2025

Note: Projections based on intermediate assumptions of The 2000 Annual Report of the

Board of Trustees of the Federal Hospital Insurance Trust Fund.

Source: GAO analysis of data from the Office Management and Budget and the Office of

the Actuary, Health Care Financing Administration.

-500

-250

0

250

500

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Billions of 2000 dollars

C ash surplus/deficit Hospital Insurance trust fund balance

Cash deficits

reemerge in

2009

Trust fund depleted

in 2025
Page 22 GAO/T-OCG-00-10

Figure 10: Social Security Finances

Note: Projections based on intermediate assumptions of The 2000 Annual Report of the

Federal Old-Age and Survivors Insurance and Disability Trust Funds.

Source: GAO analysis of data from the Office of the Chief Actuary, Social Security

Administration.

The population is also becoming more diverse. Women and minorities as a

proportion of the workforce have grown significantly. This trend, along

with the increased use of part-time and other flexible work arrangements,

has implications for federal policies and programs related to education,

training, childcare, immigration, and retirement, and other areas. Although

the increased presence of women and minorities caused substantial

growth in the U.S. labor force in recent decades, this trend seems to be

changing. Projections for the future are that the annual growth in the labor

force will be only about 1 percent in the short term and that this growth

rate may even decline over the long term. These trends further exacerbate

the current tight labor market for specialized skills and key sections of the

economy, suggesting the need for more policies designed to encourage

people to retreat gradually from work rather than plunge into retirement.

Another major concern is Quality of life. It has improved for many but

not for all Americans. At the same time, prosperity is placing greater

stresses on the quality of life.

-1 0 00

0

1 000

2 000

3 000

4 000

2 000 2 005 2 010 2 015 2 020 2 025 2 030 2 035 2 0 40 2 045 2 050

Cas h s urplus/def icit Trust funds balanc e

Ca s h d efici ts b egin

in 2 0 1 5

Tr ust fu n d s

dep l e ted in 2 03 7

20 00 Dol lar s in B il lion s
Page 23 GAO/T-OCG-00-10

The long period of strong economic performance has been accompanied

by economic prosperity. People are typically living longer, with average

life expectancy rising to age 76 over the past 20 years, while

unemployment has fallen to low levels, and violent crimes have dropped

by 20 percent since 1990. The quality of the physical environment has also

improved, as levels of major air and water pollutants have dropped since

1970.

However, many challenges remain. For example, the disparities between

the net worth of those without a high school education and those with

more education increased between 1989 and 1998. While unemployment

has reached record or near-record lows for African-Americans and

Hispanics, unemployment rates for these two groups still stand at nearly

twice the rate for whites, and more than 40 million Americans lack health

insurance. Given the large federal role in health care delivery and

financing, there is a need to weigh the needs of Americans against their

wants and the overall affordability of health care considered by

policymakers.

At the same time prosperity is placing greater stresses on quality of life.

Greater economic activity, for example, increases air and highway traffic

and heightens concerns about congestion, safety, and environmental

quality. The shift to a more technologically based economy raises long

term concerns about education, while population growth and geographic

shifts, such as urban sprawl, place greater strains on transportation and

other infrastructure. Over the coming years, these demands for new

investment will increasingly come into competition with other national

priorities, creating difficult choices for the federal government.

As the world grows more interconnected through open markets and

technology, the United States faces threats to its national security and

economy from new sources. Simultaneously, the federal government is

trying to promote foreign policy goals, sound trade policies, and other

strategies to help nations around the world that the United States now

depends on as military allies and trading partners. GAO expects to

continue its role in supporting efforts by the Congress and the executive

branch to assess and respond to changing threats to national security and

the challenges of global interdependence.

To support the Congress in its decision-making in this area, GAO will

focus significant resources on the following important strategic objectives:

• helping the Congress respond to diffuse threats to national and global

security,

Provide Timely, Quality

Service to the Congress

and the Federal

Government to Respond to

Changing Threats to

National Security and the

Challenges of Global

Interdependence
Page 24 GAO/T-OCG-00-10

• providing analysis and other support to ensure military capabilities and

readiness,

• supporting efforts to advance and protect U.S. international interests, and

• reviewing ways to recognize and respond to the impact of global market

forces on U.S. economic and security interests.

Several of the important themes influencing this goal and its objectives

include globalization and national security. Globalization, or the

interdependence of enterprises, economies, and governments, presents

new opportunities for U.S. producers and consumers, but also new

challenges for the country.

With rapid advances in technology and the ease with which people,

enterprises, and goods can cross borders, the economies and activities of

nations have become increasingly interdependent. From 1960 through

1997, world exports increased from about 12 percent to about 24 percent

of world GDP (gross domestic product). Multinational enterprises are an

important part of the trend towards globalization. In 1997, 63 percent of

U.S. exports and 40 percent of U.S. imports were associated with U.S.

parent corporations or their foreign affiliates.

Figure 11: World Exports as Percentage of GDP

Source: World Bank.

The United States has been a principal architect of an open world trading

system and has benefited greatly. However, open trade has increased the

complexities of maintaining the U.S. economy. Interdependence of the

U.S. and foreign economies is illustrated by foreign investment in U.S.

5

10

15

20

1960 1965 1970 1975 1980 1985 1990 1995

Percentage of GDP

0

25
Page 25 GAO/T-OCG-00-10

business, which has increased to over $200 billion in 1998, an amount

nearly three times that invested the year before.

As the U.S. economy becomes increasingly linked with the global

economy, international trade is growing in importance as a foreign policy

issue. At the same time, significant national security issues also need to be

considered. The effectiveness of regional and global trade arrangements in

achieving their desired outcomes is being questioned at home and abroad.

Critics have expressed concern that the United States has not been

sufficiently aggressive in monitoring and enforcing over 300 international

trade agreements that cover hundreds of billions of dollars in trade and

affect millions of U.S. jobs, and that some decisions by the World Trade

Organization could compromise U.S. sovereignty.

Recent financial crises in developing nations highlight the implications of

the interdependence of economies and financial systems. For example, the

emergence of financial difficulties in Thailand in 1997 was followed by

financial crises in Indonesia and Korea, and eventually Russia and Brazil.

Fear that these crises could severely affect U.S. economic and security

interests have (1) focused attention on the interdependence of U.S. and

global economies and (2) raised questions about what can be done to

prevent or contain the spread of such crises. The International Monetary

Fund is a key organization that the United States cooperates with to

maintain global economic stability. Prompted by financial crises and

government corruption in some countries, questions have been raised

regarding their effectiveness and roles in maintaining the health of the

global finance and trade systems and resolving countries’ financial crises.

Economic and financial interdependence are not the only global trends

with implications for this country. Increased globalization of information

technology has resulted in significant new security and privacy threats to

our nation’s information network. Similarly, the spread of diseases around

the world, like AIDS, and the global nature of environmental problems

affect us and also call for a coordinated international response. Thus, in

the future, federal responses to problems will increasingly have to

consider international as well as national dimensions.

The nation’s security concerns reflect new, diverse, and diffuse threats of

national, economic, and personal dimensions. Less restricted trade,

expanding democracy and capitalism, and rapidly developing technology

have broadened security concerns and changed the way the United States

prepares for conflict. In addition to more conventional military threats, the

United States is confronting threats from terrorism; the proliferation of

weapons of mass destruction; information warfare; the international drug
Page 26 GAO/T-OCG-00-10

trade; and other more diffuse sources, which are harder to identify,

respond to, and contain. Figure 12 shows the countries that possess

weapons of mass destruction posing national security concerns to the

United States.

Figure 12: Countries With Weapons of Mass Destruction Posing National

Security Concerns

Sources: DOD and State Department.

The bombings in New York City in 1993 and in Oklahoma City in 1995 have

elevated concerns about the spread of terrorism to the United States. More

than 40 federal agencies, offices, and bureaus spend over $10 billion a year

to combat terrorism.

The structure of U.S. armed forces has been reviewed a number of times

since the end of the Cold War, resulting in substantial reductions. The

Congress has expressed concern that the forces that remain may not be

sufficient to implement the national military strategy and may not be

sufficiently prepared to respond to the threats of the 21st century. In

February 1999, the President proposed that DOD begin the first sustained

increase in defense spending in 15 years, calling for additional resources

totaling $112 billion over the next 6 years. In particular, defending the

United States against an intercontinental ballistic missile attack from a

rogue nation and protecting U.S. and allied deployed forces from theater

missile attacks is receiving considerable attention. This year, activities

leading to the President’s deployment decision on a National Missile

Defense system are moving ahead and improvements to key theater
Page 27 GAO/T-OCG-00-10

missile defense systems, such as the Theater High Altitude Area Defense

system, are being instituted. The President has proposed about $24 billion

in total funding of national and theater missile defense from 2001 through

2005.

Should disruptions occur, increasing reliance on complex interconnected

computer systems essential to public well-being and the economy has

created serious new vulnerabilities. Protection of transportation, energy,

emergency services, financial services, and communication systems is

becoming increasingly important because they rely heavily on information

technology. Criminals, terrorists, and others, working anonymously from

remote locations and with relatively limited resources, can now use

computers to severely disrupt this infrastructure. An example of

disruptions that could occur is provided by recent denial-of-service attacks

on popular web-sites.

American citizens are increasingly demanding improved government

services and better stewardship of public resources. The federal

government is adopting the principles of performance-based management

in an effort to address these demands. This approach to managing

government systematically integrates thinking about organizational

structure; program and service delivery strategies; and the use of

technology, reliable financial information, and effective human capital

practices into government decisions. Many initiatives now under way

across government to improve operations and strengthen accountability

are being driven by management reforms statutorily established by the

Congress.

The reforms that have been adopted so far have profound implications for

what government does, how it is organized, and how it performs its

services to the country and its citizens. Consequently, government

decisionmakers and managers are adopting new ways of thinking,

considering different ways of achieving goals, and using new information

to guide decisions. At the same time, with budget surpluses now projected

for the coming years, the U.S. government faces a new set of challenges, in

both the near and long terms, in making budget decisions.

To support the Congress in its decision-making in this area, GAO will

focus significant resources on the following important strategic objectives:

• analyzing the federal government’s long-term and near-term fiscal position,

outlook, and options;

Support the Transition to a

More Results-Oriented and

Accountable Federal

Government
Page 28 GAO/T-OCG-00-10

• examining ways to strengthen approaches for financing the government

and determining accountability for the use of taxpayer dollars;

• facilitating governmentwide management and institutional reforms needed

to build and sustain high-performing organizations and more effective

government; and

• recommending economy, efficiency, and effectiveness improvements in

federal agency programs.

A number of important issues influence this goal and its objectives. They

include a stable federal budgetary future, technological innovation, and

improvements in the operations and service provision of government

agencies.

Future Budget Issues. Our federal government has gone from budget

deficit to surplus as a result of a burgeoning economy and difficult

decisions by the Congress and the executive branch to control spending.

Compared to the deficits of recent decades, today’s surplus represents a

historic turnaround, and current projections show surpluses continuing

over the 10-year budget window, as figure 13 illustrates.

Figure 13: Federal Spending and Revenues, 1950-2010

Note: These projections assume that discretionary spending grows at the rate of inflation

after 2000.

0

5

10

15

20

25

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Percentage of GDP

Federal Spending

Federal Revenues

Surplus

Deficit

CBO Projection

(Growth of Spending

at the Rate of Inflation)
Page 29 GAO/T-OCG-00-10

Source: Budget of the U.S. Government, Fiscal Year 2001,Office of Management and

Budget and the Congressional Budget Office’s January 2000 projections.

This picture of today’s fiscal good fortune, however, masks a change in the

composition of federal spending during the past few decades. Relative to

federal spending subject to annual appropriations—defense and

nondefense discretionary spending—the share devoted to federal health

programs and Social Security payments has grown steadily over time.

Correspondingly, the share available for all other programs, including

defense, has decreased, as shown in figure 14.

Figure 14: Distribution of Federal Spending, 1962-99

Source: Budget of the U.S. Government, Fiscal Year 2001.

Our long-term projections illustrate the consequences for the federal

budget, assuming that these trends continue. While we may enjoy annual

surpluses for some time, long-term projections show a resumption of a

pattern of deficits emerging after the anticipated demographic tidal wave

hits. Because of this coming demographic shift, to move into the future

without making changes to federal retirement and health programs—

Social Security, Medicare, and Medicaid—is to envision a very different

role for the federal government. Even assuming, for example, that the

Congress and the President adhere to the often-stated goal of saving the

Social Security surpluses, our long-term model shows a world by 2030 in













1962

50%

13%

1%

6%

30%

Defense

Social Security

Health



Net Interest

Other

















1974

29%

21%

8%

8%

34%













1986

27%

20%

11%

14%

28%













1999 16%

23%

20%

14%

27%
Page 30 GAO/T-OCG-00-10

which these three programs alone would require almost three-quarters of

total federal revenue. Budgetary flexibility would be drastically

constrained, and little room would be left for such spending on programs

for national defense, the young, infrastructure, and law enforcement. The

government and the taxpayers will increasingly need to distinguish

between wants, needs, and affordability of programs and services in the

coming years. Figure 15 shows spending as a share of GDP under the

“Eliminate Non-Social Security Surpluses” simulation.

Figure 15: Composition of Spending as a Share of GDP Under “Eliminate

Non-Social Security Surpluses” Simulation

Note: Revenue as a share of GDP falls from its 2000 level of 20.3 percent to slightly below

CBO’s level due to unspecified permanent policy actions that reduce revenue and

increase spending to eliminate the non-Social Security surpluses. The “Eliminate NonSocial Security Surpluses” simulation can only be run through 2068 due to the elimination

of the capital stock.

Source: GAO’s April 2000 analysis.

In addition there are other looming fiscal pressures, such as:

• clean-up costs from federal operations that yield hazardous wastes,

including defense facilities and weapon systems;

• future claims on federal insurance programs by an increasing number of

retired federal employees and military personnel; and















0

10

20

30

40

2000 2030 2050

Percent of GDP

Social Security Medicare & Medicaid



 Net Interest All other spending

Revenue
Page 31 GAO/T-OCG-00-10

• demands for new investment to modernize physical infrastructure, public

buildings, transportation systems, and sewage and water treatment plants

that are beginning to deteriorate or become obsolete.

Today’s surplus represents both opportunity and obligation. While the new

surplus projections offer an opportunity to address today’s needs, we

should not forget our stewardship responsibility to reduce the debt burden

and increase the choices we leave to future generations, to provide a

strong foundation for future economic growth and to ensure that future

commitments are both adequate and affordable. Continued debt reduction

and entitlement reforms are both critical to promoting a more sustainable

budget and economy for the long term. In the near- and medium-term,

surpluses will depend on continued economic growth and fiscal restraint.

Technological innovation, especially in information technology, has

enhanced productivity, but also created new vulnerabilities.

Information technology has transformed the ways we communicate, learn,

use information, conduct commerce, practice health care, and build and

design products. This trend is expected to accelerate, with investment in

information technology expected to account for 40 percent of all capital

investment in the United States by 2004. Roughly 172 million people

around the world will have Internet access in the year 2000, and by 2003

and that number is expected to double. Businesses that produce

computers, software, semiconductors, and communications equipment

have accounted for over a third of the growth in the U.S. economy since

1992. Government too is being affected, with information technology

providing new, more responsive and efficient ways of delivering services

and information to citizens, in such areas as tax administration, higher

education, transportation safety, and environmental protection.
Page 32 GAO/T-OCG-00-10

Figure 16: Internet Users Worldwide, 1998-2003

Source: eMarketer (1999).

The connectivity and interdependence created through information

technology also creates vulnerabilities. Computer security risks associated

with the widespread use of information create the potential for disruptions

to federal agencies and the private sector in aviation, banking, law

enforcement, emergency services, and other critical services. The privacy

and confidentiality of medical records, credit histories, and other personal

data on millions of individuals stored in electronic databases are also at

potential risk. Unless appropriately controlled, computerized operations

can offer those with criminal or other malicious intentions numerous

opportunities for committing fraud, tampering with data, or disrupting

vital operations.

Faced with public demand for more economical, efficient, and

effective government, countries around the world are undertaking major

reform initiatives to improve government performance and accountability.

These reform efforts being undertaken in major democracies are taking a

generally consistent direction, requiring government organizations to

focus more on results and less on process.

95.4

130.6

172.0

223.0

282.0

350.0

0

50

100

150

200

250

300

350

1998 1999 2000 2001 2002 2003

Millions
Page 33 GAO/T-OCG-00-10

In the United States, American citizens are increasingly demanding

improved government services and better stewardship of public resources.

In an effort to meet these demands, the federal government is adopting the

principles of performance-based management. As mentioned earlier,

legislation enacted in the 1990s has provided a statutory framework that

includes the Government Performance and Results Act of 1993, the Chief

Financial Officers (CFO) Act of 1990 and related financial management

legislation, and information technology reform legislation, including the

Clinger-Cohen Act of 1996 and the Paperwork Reduction Act of 1995.

The impetus for government reform came in part as a reaction to poor

performance, continuing disclosures of waste, and chronic budget deficits.

However, the fact that the federal budget has turned the corner from

deficit to surplus does not reduce the importance of effective and efficient

government—nor does it reduce the importance of fiscal discipline. After a

decade of focusing on deficit reduction, we know there are pent-up

demands for using the projected budget surpluses. The challenge for

policymakers will be to meet public expectations of government while

maintaining the financial discipline necessary to avoid a return to deficits.

Again, there is also the obligation for Americans to distinguish between

needs, wants and affordability.

The effective implementation of the statutory framework to improve the

performance, management, and accountability of the federal government,

although important, is not an end in itself. Rather, the implementation of

the framework is the means to an end—improved federal performance

through enhanced executive branch and congressional decision-making

and oversight. Performance improvements occur only when congressional

and executive branch decisionmakers use information resulting from

these reforms to help inform decisions and improve the performance and

accountability of the federal government.

The government’s human capital management has emerged as the

missing link in the statutory and management framework that the

Congress and the executive branch have established to provide for a

results-oriented federal government.

Federal employees should be viewed not as costs to be cut, but as assets

to be valued. Only when the right employees are on board and provided

the training, technology, structure, incentives, and accountability to work

effectively is organizational success possible. Modern human capital

management principles recognize that employees are a critical asset for
Page 34 GAO/T-OCG-00-10

success, and that an organization’s human capital policies and practices

must be designed, implemented, and assessed by the standard of how well

they support the organization’s mission and goals.

As with the private sector, there have been—and will be—many changes

in the demographics of the federal workforce, the education and skills

required of its workers, and basic employment structures and work

arrangements used to accomplish jobs. The federal workforce is aging: the

baby boomers, with their valuable skills and experience, are drawing near

to retirement; new employees joining the federal workforce today have

different employment options and different career expectations than the

generation that preceded them. In response to an increasingly competitive

job market, federal agencies will need the tools and flexibility to attract,

hire, retain, and reward top-flight talent. More and more, the work that

federal agencies do requires a knowledge-based workforce that is

sophisticated in new technologies, flexible, and open to continuous

learning. Agencies’ employment structures and working arrangements will

also be changing, and the workplace will need to accommodate greater

flexibility and uncertainty.

The implications of the downsizing of federal workforce over the past

decade are also significant. From fiscal year 1990 through fiscal year 1999,

the number of nonpostal civilian federal employees fell from about 2.3

million to about 1.9 million. Moreover, new permanent hires fell from

about 118,000 in fiscal year 1990 to a low of about 48,000 in 1994, before

beginning a slow rise to about 71,500 in fiscal year 1998.

In cutting back on hiring of new staff in order to reduce the number of

employees, agencies also reduced the influx of new people with the new

competencies needed to sustain excellence. Also, our reviews have found,

for example, that a lack of adequate strategic and workforce planning

during the initial rounds of downsizing by some agencies affected their

ability to achieve organizational missions. We intend to do more work on

the implications of downsizing and of the government’s human capital

approach generally. Nevertheless, our view today is that the widespread

lack of attention to strategic human capital management may be creating a

fundamental weakness in federal management, possibly even putting at

risk the federal government’s ability to efficiently, economically, and

effectively deliver products and service to the taxpayers in the future.

Information Technology, if leveraged properly, can be an effective tool

for high-quality, cost-effective government services. Information

technology effectively integrated into strategic plans and performance

management practices can lead to increased customer satisfaction,
Page 35 GAO/T-OCG-00-10

government productivity gains, and significant cost reductions—

increasingly important attributes to a government with a declining

employee base.

Moreover, the government depends heavily on computer systems and

networks to implement vital public services supporting national defense,

revenue collections, and social benefits. The global expansion of

information technology has resulted in significant new information

security and privacy threats to our information networks and technology

infrastructure.

Such risks are of particular concern at the federal level. Recent audit

reports issued by us and by agency inspectors general show that most of

the largest federal agencies have significant computer security

weaknesses. These weaknesses place critical federal operations, such as

national defense, tax collection, law enforcement, air traffic control, and

benefit payments, at significant risk of disruption as well as fraud and

inappropriate disclosures. In February 1997 and again in January 1999, our

reports to the Congress designated information security as a

governmentwide high-risk area.

At the same time, the government does not always effectively plan,

procure, and implement major technology investments. For years, federal

agencies have struggled with delivering promised system capabilities on

time and within budget. IRS spent more than $3 billion in the late 1980s

and early 1990s on systems modernization without producing

commensurate value. Accordingly, our work over the last decade has

focused on strengthening federal agency management of IT investment.

We continue to ask whether agencies are spending their technology

dollars on the right things (i.e., investments that return business value in

excess of costs) and whether they are investing in technology the right

way (i.e., employing management and engineering practices that are

disciplined and effective). In particular, we developed guidance,1 based on

best practices in the public and private sectors. We have also made

hundreds of recommendations to improve management of large-scale IT

investments in many major departments and agencies.

1Assessing Risks and Returns: A Guide for Evaluating Agencies’ IT Investment Decision-making

(GAO/AIMD-10.1.13, February 1997).
Page 36 GAO/T-OCG-00-10

Besides supporting the Congress directly through helping the legislature

respond to emerging issues and government challenges, GAO also

supports the Congress by maximizing its own value and seeking to be a

model agency in the federal government. To successfully carry out its

responsibilities to the Congress and the American people, GAO first and

foremost must be perceived as credible and must lead by example. In

conjunction with the agency’s mission and core values, GAO must, among

other things, be professional, objective, fact-based, nonpartisan,

nonideological, fair, and balanced in all of its audit, investigation, and

evaluation work. The internal focus of the fourth goal provides a

framework for enhancing GAO’s effectiveness and helping to improve

performance and accountability throughout the agency.

To ensure its ability to support the Congress in its decision-making, GAO

will focus significant resources on the following important strategic

objectives:

• implementing a model strategic and annual planning and reporting

process,

• aligning human capital policies and practices to support the agency’s

mission,

• cultivating and fostering effective congressional and agency relations,

• developing efficient and responsive business processes, and

• building an integrated and reliable information technology infrastructure.

As mentioned throughout this testimony, GAO is utilizing its strategic plan

to help the Congress, the executive branch, and itself confront the many

current and emerging complex issues facing the American people. The

plan provides an opportunity to constructively manage a difficult process

of change and uncertainty regarding critical national and international

issues, now and in the future.

GAO is also utilizing the strategic plan to manage our own transition. The

plan not only represents a road map of how GAO will support the

Congress in handling issues faced by the country, but it also charts the

approach we will use to guide our efforts to strengthen that support and to

ensure that GAO has the capacity to serve the Congress effectively in the

21st century.

Likewise, to accomplish the objectives for GAO’s internal improvements

will take the dedication and persistence of all of our talented employees.

Maximize the Value of

GAO by Being a Model

Organization for the

Federal Government
Page 37 GAO/T-OCG-00-10

As you know, Mr. Chairman, I am personally committed to the successful

implementation of GPRA. I have seen in my public and private sector

careers how GPRA’s purposes of improved performance and

accountability can be achieved through the disciplined application of the

goal-setting, planning, performance measurement, and reporting

requirements of the act. That’s why GAO’s strategic plan and associated

annual performance plan are consistent with the requirements and best

practices of GPRA. We seek, through our strategic and annual planning

process, to “lead by example” by being a model for implementation of

GPRA. We are not required to comply with GPRA, but we believe that its

requirements make good business sense.

As another example of our decision to voluntarily comply with

congressionally created management reforms and to “lead by example,”

GAO issued in March its first-ever accountability report. This report

discussed how GAO’s work benefited the Congress and the American

people. The Accountability Report is different from GAO’s previous years’

annual reports. It reviewed GAO’s accomplishments in meeting its mission

consistent with applicable professional standards and our core values of

accountability, integrity, and reliability. The report also included our

financial statements and an unqualified opinion from the agency’s

independent auditor.

Realignment. In order to better support the Congress and maximize the

value of our strategic plan, in April I announced a realignment of GAO.

This realignment, the first in more than 15 years, will be implemented

beginning in October 2000, although the planning and transition activities

have already begun. As I’ve discussed in my testimony, the increasing

complexity of issues and the accelerating change in government—major

factors in GAO’s strategic plan—helped us realize that this realignment

was necessary to better position GAO for serving the future needs of the

Congress. Our goal is to better serve our client by making GAO more

responsive, more flexible – and more focused on our client. GAO must

become more capable of handling multiple responsibilities in a rapidly

changing environment—all while adhering to our core values and

applicable professional standards. We recognize that the government of

tomorrow must be leaner, that it must eliminate bureaucracy and multiple

management layers, that agencies must respect future fiscal and budgetary

realities, and that they must be performance-driven and results-oriented

organizations. GAO’s realignment is part of our effort to lead the federal

government by example—we are certain that this realignment will

eliminate management layers, reduce silos, and improve coordination,

productivity, and team-building throughout the organization.
Page 38 GAO/T-OCG-00-10

The realignment will ensure a continued ability to provide timely, quality

work; will build on efforts to provide broad oversight support; will

enhance client communications and feedback; and will maintain a highlevel of return on investment. The realignment also gives us a great

opportunity to comprehensively focus on how to make our processes

work better to serve our staff and our clients, and how we can broaden

and retool our products to make them as useful as possible to the

Congress in the years ahead. Moreover, the realignment will help us to

enhance our long-term capacity by improving recruitment and retention;

building a succession plan; focusing on emerging issues; and leveraging

technology opportunities for improvements to clients, processes, and

employees.

The realignment reduces the number of issue areas from 31 to 11.2 It

eliminates the traditional GAO divisions and strengthens team-based

matrix management. We are creating a risk-based management approach

that will reduce the number and sequential nature of our product reviews.

We will increase empowerment and accountability at the senior executive

level. We also will leverage new teams to focus on external issues

important to our many stakeholders, and on methodological issues, and

strategic studies. And we will create employee pools of generalists to

increase our flexibility and enhance development.

At the same time, we have taken a number of other important steps to

improve GAO to better serve the Congress. We’ve created a more effective

Engagement Acceptance and Review Meeting process to help senior

management direct and oversee work assignments. We’ve developed an

employee feedback system and facilitated an active employee suggestion

program that has achieved bottom-line benefits, and we have established a

Comptroller General Employee Advisory Council, with which I will meet

every quarter to discuss current and emerging issues of mutual interest

and concern. And, as I mentioned earlier, we are continuing to consolidate

and reduce our field offices to streamline our operations, reduce silos, and

improve productivity. Earlier this year, I announced that we would be

reducing our field offices from 16 to 11 effective November 2000.

Human Capital. As part of the realignment efforts, GAO needs to invest

more heavily in its people. Targeted investments need to be made in our

2GAO’s 11 teams will be Acquisition and Sourcing Management; Education Workforce and Income

Security; Finance and Assurance; Financial Markets and Community Investments; Health Care;

Information Technology; International Affairs and Trade; Military Strategy and Readiness; Natural

Resources and Environment; Physical Infrastructure; and Tax Administration and Justice.
Page 39 GAO/T-OCG-00-10

training, performance rewards and incentives, and performance appraisal

systems. We have begun efforts to strengthen and redesign our

performance appraisal system to better assess employee strengths and

weaknesses, identify training needs, reward and recognize exceptional

performance, and improve performance at all levels. We have a goal of

implementing a new performance appraisal system for our evaluators

beginning in fiscal year 2001, but no later than fiscal year 2002.

Efforts also are underway to develop a skills and knowledge inventory

system that will be used to identify skill gaps and training and succession

planning needs, both at an institutional and individual level, and to staff

assignments more effectively. We will continue to correct skill gaps and

increase staff productivity and effectiveness through training. To

maximize this investment, we are reviewing and updating our training

curriculum to address the organizational, behavioral, and technical needs

of our staff.

GAO’s overall human capital situation also is of growing concern. GAO

faces many of the same difficult personnel issues the executive branch is

now confronting. Our current human capital profile has succession

planning, structural, and skills imbalance problems that we need to

address if we are to maintain and build our capacity to support the

Congress and achieve the goals of our strategic plan in the 21st century.

For example, nearly 34 percent of our evaluator and related staff will be

eligible to retire by the end of fiscal year 2004. In addition, about 55

percent of our senior executives and 48 percent of our management

evaluators will become eligible to retire by that time. Other critical

positions, such as attorneys, criminal investigators, and mission support,

are also vulnerable.
Page 40 GAO/T-OCG-00-10

Figure 17: Current Evaluator and Related Staff Retirement Eligible by End

of FY 2004

Note: Current staff onboard at end of fiscal year 1999.

Another human capital issue is more structural in terms of staffing. As

illustrated in the following graphics, we are sparse at the entry-level—a

result of the 5-year hiring freeze we began in 1992—and rather bulky in the

middle. We have been more fortunate than many agencies, in that our

attrition rate is extremely low. We believe this low rate reflects the quality

and dedication of our employees as well as the strength of our recent

human capital management improvements. Cultural transitions of major

organizations are never easy to accomplish, and I would certainly not

claim that it will be easy for GAO. Still, through a combination of

employee communications and outreach efforts, most of our staff

recognize that change is not only good for GAO at this time, it is

imperative for the future.

Percent of Current Staff

0

10

20

30

40

50

0

21

32

47

55

34

Band I-D Band I-F Band II Band III SES All Staff

Staff Level
Page 41 GAO/T-OCG-00-10

Figure 18: GAO’s New Hires

GAO’s significant human capital imbalances and risks stem from dramatic

budgetary cuts, downsizing, hiring freezes, and other related actions from

1992 through1997. Over that period, GAO underwent budgetary cuts

totaling 33 percent in constant fiscal year 1992 dollars. In order to achieve

these budgetary reductions, GAO staff was reduced by 39 percent. These

actions have had a considerable impact on GAO’s human capital structure.

Figure 19 shows GAO’s human capital profile as of fiscal years 1989 and

2000.

0

50

100

150

200

250

300

1992 1993 1994 1995 1996 1997 1998 1999

Fiscal Years

206

17

33 26

51

262

130

3

Number of New Hires
Page 42 GAO/T-OCG-00-10

Figure 19: GAO’s Human Capital Profile

GAO has turned to contracted resources to achieve its mission and

mission-support requirements. Contract funding in inflation adjusted

dollars has increased from $13.1 million in 1981 to $29.2 million in 1999.

Clearly, GAO needs assistance to meet its looming human capital

challenges. The agency has made considerable progress in confronting its

problems, but more needs to be done. In order to effect the realignment,

strengthen our human capital profile, and position GAO to fulfill its

strategic plan and support the future needs of the Congress, GAO has

requested legislation from the Congress to

• give GAO the flexibility to appoint scientific, technical, or professional

staff to senior-level positions with the same pay, rights, and other

attributes as members of the Senior Executive Service;

• authorize voluntary early retirement for selected individual employees for

the purpose of realigning the agency’s workforce;

• authorize separation payments for realignment purposes; and

• authorize the Comptroller General to release officers and employees in

RIFs which are carried out for purposes of downsizing, realignment or

correcting skills imbalances.

This legislation would be a supplement to administrative actions that we

have taken and will be taking in the near future, and it is based on a sound

business case focused on enabling us to better support Congress in the

future. The legislation would be used to realign GAO, not to downsize it,

FY 1989 FY 2000

SES

BAND III

BAND II

26.8 BAND I

8.0

34.1

2.4 3.2

13.3

46.8

25.6 21.3

Mission (Percent)

Number of authorized staff

Mission Support2

3.1

5,204 3,275

OTHER1 4.3

11.1

74.1% 78.7
Page 43 GAO/T-OCG-00-10

and would only be for GAO—the legislation would have no effect on the

executive branch agencies. It also would provide relief from applying

certain reduction-in-force (RIF) provisions that could result in an even

more unbalanced workforce than exists today and a consequent

detrimental impact on our ability to serve the Congress. RIFs would be

used only as a last resort. I want to stress that our proposal would

maintain the statutory preference for veterans and that we have no

intention of de-emphasizing our attempts to attain and maintain a highquality and diverse workforce. Also, to provide us greater ability to attract

and retain technical talent, the legislation would provide authority

comparable to that of the executive branch to compensate selected

scientific and technical staff at senior-executive pay levels. We would use

such authority, if granted, sparingly to address specific targeted needs,

such as information technology specialists and actuaries.

Client Focus. The Congress continues to turn to GAO for assistance on

significant issues facing the nation—in fact, we face record demands for

our services. As illustrated in the following graphic, congressional requests

and mandates for GAO services have increased in recent years. From a

long-term historical viewpoint, requests for GAO’s services have never

been higher, and we anticipate that this historic growth will continue as

the Congress grapples with increasingly complex and contentious issues

requiring greater contextual sophistication. GAO, perhaps more than any

other organization, is positioned through its broad-based skills,

knowledge, and expertise to support the Congress in meeting

responsibilities that will only become more difficult as the 21st century

evolves. Figure 20 shows congressional requests as a percentage of GAO’s

work from fiscal year 1992 through fiscal year 1999.
Page 44 GAO/T-OCG-00-10

Figure 20: Work Conducted for the Congress, Fiscal Years 1992 - 1999

During fiscal year 1999, we were called upon to testify 229 times before 93

congressional committees or subcommittees as shown in Figure 21 below.

Examples of important testimonies that helped the Congress in its

oversight include our performance accountability and high-risk series,

which depict the government’s major management challenges and

program risks; Social Security reform proposals; financial and operational

aspects of the International Monetary Fund; DOD’s anthrax vaccination

program, and Medicare reform.

82 80

77

73

78

83

95

Fiscal Year

Percentage

1992

0

10

1993 1994 1995 1996 1997 1998 1999

96

30

40

50

60

70

80

90

100

Mandates

Committee/Member
Page 45 GAO/T-OCG-00-10

Figure 21: Testimonies

GAO has recently strengthened its client outreach program to assist both

GAO and the Congress in understanding how best to meet congressional

needs. We plan to meet regularly with the Senate and House leadership, all

Committee Chairs and Ranking Minority Members, and members of our

appropriations and oversight committees to obtain feedback on our

performance and to help guide work plans in the context of the strategic

plan. Our realignment is a critical component in improving our

communications and outreach with the Congress and ensuring that we

continue to maintain and foster ways to help the Congress meet its

responsibilities.

GAO has expanded its electronic link to Congress, and we are now

providing a list of active assignments. We plan to provide other products

and information through this link in the future. Through consultation with

key congressional leaders, members, and staff, we also have developed a

set of clearly defined, well documented, and transparent protocols,

intended to be consistently applied in setting priorities, allocating

resources, recognizing existing commitments, and serving the Congress.

These protocols will help GAO to better serve the Congress and improve

customer satisfaction, to close “expectation gaps” between the Congress

and GAO wherever they exist, to ensure equitable treatment of all

requesters consistent with the protocols, and to maintain and strengthen

GAO’s performance and accountability. We began implementing these

protocols in January of this year and will test them until August 2000. We

will finalize them by October 2000.
Page 46 GAO/T-OCG-00-10

GAO is also interested in fostering constructive engagement with

executive branch stakeholders and enhancing the partnership between the

Congress and GAO by strengthening oversight in order to improve the

performance and accountability of government. For instance, it is

important to work closely with agencies—while maintaining our

independence—and to utilize our skills, knowledge, and experience in

working cooperatively to improve government operations. For example,

we have successfully worked with a variety of agencies on Y2K and with

IRS to face management problems and improve government operations. I

am convinced there are additional opportunities for developing

constructive engagements while maintaining the integrity of our principal

mission as an accountability organization.

Moreover, the pervasive changes confronting the Congress and the nation

present an opportunity for the Congress to reconsider the approach it

takes to oversight responsibilities. Persistent attention, new models of

performance, and different oversight structures and processes may be

necessary to achieve this objective.

GAO is uniquely positioned to help the Congress examine what

government does and how government does business—by attacking

known areas of fraud, waste, abuse, and mismanagement; reassessing how

government provides services; improving the performance and

accountability of government agencies; and preparing for the

government’s long-term challenges. GAO can provide support to the

Congress for holding oversight hearings on major agencies and programs

on an annual basis. Based on its insight and knowledge of government

accountability, GAO can provide effectively packaged information about

agencies and programs from a variety of audit and program sources to

support the oversight work of congressional committees, including the

information resulting from the management reforms in the 1990s. GAO

resources can also be leveraged through the strategic plan, support of task

forces and other congressional oversight approaches, increased

communication with committees, and the selective use of detailees.

Information Technology. GAO also seeks to lead the government in the

strategic management and security of effective technology utilization.

Over the years, we have made important strides in—and realized

efficiencies by—introducing technology into the organization. Most

recently, we have successfully managed the Y2K transition. However, we

need to maintain and enhance our ability to take greater advantage of

modern technology and achieve an integrated infrastructure that supports

our client service, strategic planning, human capital, and business process

goals and objectives. To this end we are:
Page 47 GAO/T-OCG-00-10

• developing a long-term comprehensive plan for an integrated information

technology approach;

• developing and implementing a short-term, cost-effective approach to

quickly begin to satisfy GAO’s information needs;

• establishing performance and cost metrics addressing the quality and

value of information technology services;

• ensuring the availability of required information technology skills,

• replacing obsolete hardware and software agency-wide to help ensure the

efficiency and effectiveness in our operations and enhance our

productivity, and

• stabilizing and improving the responsiveness of our network.

It is clear that additional investments will be necessary in the coming

years to increase our enabling technology and knowledge management

efforts to meet the challenges of the future and effectively support

Congress.

Mr. Chairman, for GAO to continue maintaining the strength of its mission,

we are committed to find new ways to streamline our operations while

building on our responsiveness and flexibility. I am convinced that the

Strategic Plan we have articulated with the support of the Congress will

provide a strong framework for improving government and meeting the

nation’s challenges in the years ahead.

For GAO to achieve its mission and effectively support Congress in the

future, it will be important for us to have the support of the Congress. As I

have mentioned, demand for our work is essentially at an all time high,

especially with regard to mandates and requests from Congress. This

change in the composition of our work has left GAO less flexibility to

pursue R&D work—a component of our services to Congress that we

believe is vital to ensuring that we can help Congress recognize important

and emerging issues before they reach a crisis stage. Clearly, that was the

case with our work in the Y2K area and I have no doubt that there are

similar issues out there that we must be sure to identify and examine

before they become major problems. But this becomes harder and harder

for GAO to do as the demands for our work increase—requests and

mandates already represent 95 percent of our total workload.

GAO Initiatives and

Challenges
Page 48 GAO/T-OCG-00-10

It is also extremely important that we maintain and strengthen our

capacity to effectively serve the Congress and meet the growing demand

level in the future. This will require a more stable budgetary and personnel

environment than has been the case historically. Figure 22 clearly reflects

a resource environment that has changed dramatically in the last decade:

Figure 22: GAO Appropriations and Full-Time Equivalent Staff Levels

In an era of shrinking government capacity but expanding demands,

vigorous congressional oversight and growing requests requires a strong

GAO. It will certainly require a more stable GAO, in which budget and

personnel levels remain consistent from year to year and reflect a work

plan built from the strategic plan. A stable funding level not only supports

GAO’s strong return on investment of $57 for every $1 spent, it creates the

environment necessary to recruit, retain, compensate, train and motivate a

strong and capable workforce. It is increasingly clear that the continued

decline in the staff levels of the Congress will also necessitate that GAO

retain sufficient resources to ensure effective partnering with the

Congress as well as an institutional memory about government programs

and operations.

Without the broad-based assistance and experience of GAO to support the

Congress, the Congress would clearly lose opportunities for obtaining an

array of options, undertaking informed decision-making, and fully

Total FTE's (authorized levels for 1999 and 2000) 

1992 $

Number of FTE staff

0

1000

2000

3000

4000

5000

6000

5,325

5,055

4,578

4,342

3,677

3,341 3,245 3,275 3,275

0

100,000

200,000

300,000

400,000

500,000

Appropriations (1992 Dollars in thousands)

1992 1993 1994 1995 1996 1997 1998 1999 2000

Fiscal Year
Page 49 GAO/T-OCG-00-10

pursuing oversight—all important elements of the Congress’ constitutional

responsibilities. Without stable funding and personnel levels, it will be

extremely difficult for GAO engage in the types of partnering so critical to

the future oversight work needed to strengthen government’s performance

and accountability. GAO would also have difficulty in taking on some of

the expanded roles that Congress has asked of the agency in recent years,

such as assisting on task forces and commissions without any

commensurate adjustment for resources. As I’ve discussed in this

testimony, without some immediate stability, GAO faces many of the same

problems as other federal agencies in being able to effectively deliver

services now and in the future. Right now, considerable differences still

exist with respect to our appropriations levels in the House and the

Senate—stable funding for GAO next year is still not assured.

GAO needs funding to support the realignment so critical to our growing

mission. GAO has requested funding to improve compensation

comparability with the executive branch, strengthen performance reward

and recognition programs, reengineer our performance appraisal system,

and increase our staff productivity through training and development as

well as new information technology resources.

At the same time, flexibility may be just as important as resources. The

human capital legislation is one example. Another example is the

mandates issue. Its is becoming difficult to do R&D work, like Y2K, as I

mentioned earlier. Without GAO’s ability to pursue research and

development issues, many other consequential issues could go

unrecognized and ultimately create fundamental and serious problems for

the Congress and the American people. We must have a reasonable

amount of flexibility to address emerging challenges before they reach

crisis proportions. Thus, I would urge the Congress to not lose sight of the

important balance between mandates, requests, and research and

development in the mix of GAO’s work supporting the Congress.

In addition to the legislative support I’ve already discussed, GAO will be

assessing whether it may need additional authority from the Congress to

obtain certain types of records for conducting our work. As the budgets,

functions, and points of service of many government programs devolve to

state and local government, private entities and non-profit organizations,

and other third parties, it may become harder for GAO to obtain the

records it needs to complete audits and evaluations. For GAO to

effectively do its job and obtain all the facts, we must have unfettered

access to records no matter where the federal dollar goes and services are

delivered.
Page 50 GAO/T-OCG-00-10

As I’ve stressed, we are making major changes in how GAO will face the

future, both to support Congress and to lead the government in strategic

planning, human capital management, information technology, and other

areas. That is why GAO’s human capital legislation is so important. The

legislation is absolutely critical to an evolving GAO that is realigning

toward a 21st century Strategic Plan and more modern human capital

approaches to meet its mission.

Moreover, it will important for Congress to consider issues that will help

GAO to recruit, retain and motivate an effective workforce. Clearly, it is

important for GAO to continue to attract bright, able staff, which is

increasingly difficult given the excellent economy and private sector

competition. For GAO—and for most of the federal government—to

compete with the private sector, we must be able to have a more flexible

compensation system that can bring people into government employment

at attractive pay levels. This makes it incumbent on the government to

create incentives to recruit new employees and retain older employees.

Congress should consider establishing incentives such as debt relief for

school loans for new hires, an ability for staff that is eligible to retire to

retreat slowly into retirement through part time work, while obtaining a

portion of their pension, and a provision that allows federal employees—

like private sector employees—to keep frequent flier miles. Many

commercial firms, in recognition of the physical impact and disruption of

family life that results from frequent travel, allow their employees to keep

frequent flyer awards. The federal government has always considered

frequent flyer awards to be property of the government, and sought to

reduce travel costs by requiring their use only for official travel. Six years

ago the Congress enacted this requirement into law, and required the

General Services Administration to promote the use of frequent flyer

programs. It is time to examine whether the financial benefits of trying to

make use of frequent flyer benefits would be outweighed by the recruiting

and retention benefits of allowing personal use of those benefits.

Finally, one area I believe the Congress needs to begin thinking about is

the process for appointment of the Deputy Comptroller General. The

current process was established in 1982. The governing statute provides

that a committee consisting of the Comptroller General, the Speaker of the

House and President Pro Tempore of the Senate, the Majority and Minority

leaders, and the Chairmen and Ranking Minority Members of the Senate

Governmental Affairs and House Government Reform Committees

recommend an individual to the President for appointment. This process

has never worked and it is too complicated. There has been no Deputy

Comptroller General since Bob Keller passed away over two decades ago.

There are a number of possible alternatives to the current process that
Page 51 GAO/T-OCG-00-10

would avoid conflicts between the Congress and the administration. For

example, I could appoint a deputy with the approval of at least three

members of a panel consisting of the Chairmen and Ranking Minority

Members of our oversight committees. The Director of the Congressional

Budget Office appoints his deputy, whose term is tied to the Director’s just

as the Deputy Comptroller General’s term is tied to the Comptroller

General’s. Let me also note that Gene L. Dodaro, GAO’s Chief Operating

Officer, would make a terrific Deputy Comptroller General.

Mr. Chairman, this concludes my prepared statement. I would be pleased

to respond to any questions that you or the other Subcommittee members

have.
Orders by Internet

For information on how to access GAO reports on the Internet, send

an e-mail message with “info” in the body to:

Info@www.gao.gov

or visit GAO’s World Wide Web home page at:

http://www.gao.gov

Contact one:

Web site: http://www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

1-800-424-5454 (automated answering system)

Ordering Information

To Report Fraud,

Waste, and Abuse in

Federal Programs