GAO STRATEGIC PLAN 2002-2007 
ii GAO STRATEGIC PLAN 2

COREVALUES

Fisca

Health care needs and financing

Education and protection of children

Work opportunities and worker 

protection

Retirement income security

Effective system of justice

Viable communities

Natural resources use and 

environmental protection

Physical infrastructure

Address Current and Emerging Challenges to the Well-BeiAddress Current and Emerging Challenges to the Well-Bei

Financial Security of the American People Financial Security of the American People related to . . . related to . . .

Diffuse security threats

Military capabilities and readiness

Advancement of U.S. interes

Global market forces

Respond to Changing Security Threats and the Challenges Respond to Changing Security Threats and the Challenges 

Global Interdependence Global Interdependence involving . . . involving . . .

Roles in achieving federal 

objectives

Human capital and other capacity for 

serving the public

Progress toward results-orien

accountable, and relevant go

Fiscal position and financing 

government

Help Transform the Federal Government Help Transform the Federal Government’s Role and How It Role and How It 

Does Business to Meet 21st Century Challenges Does Business to Meet 21st Century Challenges by assessing . . by assessing . . 

Client and customer service

Leadership and management focus

Institutional knowledge and experience

Process improvement

Employer of choice

Maximize the Value of GAO by Being a Model Federal Agency Maximize the Value of GAO by Being a Model Federal Agency 

a World-Class Professional Services Organization a World-Class Professional Services Organization in the areas of in the areas of 

Provide Timely, Quality Service to the Congress and the Provide Timely, Quality Service to the Congress and the 

Federal Federal Government to Government to . . . 

J

Demographics

Security 

and 

Preparedness

Globalization

Changing 

Economy

Science 

and 

Technology

Quality 

of 

Life

Governance

Accountability Integrity Reli

Accountability Integrity Rel
GAO STRATEGIC PLAN 2002-2007 

through 2007, an update to the strategic plan we issued 2 years ago.

Our first strategic plan, which was published in spring 2000, was an importan

stone, providing a solid foundation for how we will support the Congress and 

the American people in the coming years. With the plan as our blueprint, we 

realigned GAO’s structure and resources to better address long-term goals and 

tives for helping the Congress in its legislative, oversight, and investigative role

also committed to updating the plan every 2 years, coinciding with each new 

gress, to make sure our efforts remain a vital and accurate reflection of the m

issues facing the Congress and the nation.

In fact, the world has changed considerably since our last plan. Two years ag

were in a period of peace and prosperity, with large budget surpluses project

the future. Today, the country is at war against terrorism, both within and outs

borders. The economic outlook, already uncertain before September 11, contin

be difficult to predict. And for the first time in several years, the federal gover

is facing the return of budget deficits. 

At the same time, a number of other changes are occurring that also have sign

ramifications for national policy, and consequently, for the Congress and GAO

United States faces not only a major preparedness effort to address security th

but it also has to come to grips with the long-term fiscal challenge of caring fo

growing elderly population. It must also adapt its policies to a society and an 

economy that are increasingly global in nature, connected by new technologie

supported by knowledge-based industries. Security and preparedness, the ch

economy, globalization, changing demographics, advances in science and tec

nology, concern for quality of life, and changing governance structures—thes

the major forces shaping the United States and its place in the world, and are 

themes for our strategic plan. They help frame the broad areas where we asp

make important contributions. 

While the overall framework of our strategic plan is still valid, we are placing 

emphasis in a number of areas to reflect the altered agenda of policymakers:

■ Recognizing that the Congress and the federal government will focus consid

effort and resources on homeland security, we are proposing to increase ou

emphasis on overseeing the efficiency and effectiveness of efforts across the 

and private sectors to protect against and respond to various forms of terro
ii GAO STRATEGIC PLAN 2

others in the accountability community, we sought to make sure that it reflect

needs of the Congress. We also sought feedback from our own staff, whose 

continued commitment and involvement are essential to meeting our goals. 

Since the attacks on America began, the focus of citizens on government has 

dramatically. GAO has a vital role to play in our system of government, by pro

the oversight, insight, and foresight to support the Congress in fulfilling its 

constitutional responsibilities and by helping the government to work better o

behalf of all Americans. This updated strategic plan will help to ensure that w

succeed in that role.

If you would like to know more about specific areas of GAO’s work, you will 

detailed strategic supplements on our Web site at www.gao.gov/sp.html that d

the performance goals, key efforts, and potential outcomes for each of our str

objectives. Links on that Web page will also take you to our agency’s perform

and accountability reports. If you have questions, please contact me, at 202-51

or walkerd@gao.gov, or Gene L. Dodaro, Chief Operating Officer, at 202-512-5

dodarog@gao.gov.

Sincerely yours,

David M. Walker

Comptroller General

of the United States
GAO STRATEGIC PLAN 2002-2007 

Mission Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Statutory Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Strategies and Means . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Themes for the Plan: Forces Shaping the United States and Its 

Place in the World . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Security and Preparedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Globalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

The Changing Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Science and Technology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Quality of Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Goal 1: Provide Timely, Quality Service to the Congress and 

the Federal Government to Address Current and Emerging 

Challenges to the Well-Being and Financial Security of the 

American People . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

The Health Needs of an Aging and Diverse Population . . . . . . . . . . . . . 

The Education and Protection of the Nation’s Children . . . . . . . . . . . . . 

The Promotion of Work Opportunities and the Protection of Workers. . . 

A Secure Retirement for Older Americans . . . . . . . . . . . . . . . . . . . . . . . 

An Effective System of Justice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

The Promotion of Viable Communities . . . . . . . . . . . . . . . . . . . . . . . . . 

Responsible Stewardship of Natural Resources and the Environment . . . 

A Secure and Effective National Physical Infrastructure . . . . . . . . . . . . . 

External Factors that May Affect Achievement of Goal 1. . . . . . . . . . . . . 

Goal 2: Provide Timely, Quality Service to the Congress and 

the Federal Government to Respond to Changing Security Threa

and the Challenges of Global Interdependence. . . . . . . . . . . . . . . 

Respond to Diffuse Threats to National and Global Security. . . . . . . . . . 

Ensure Military Capabilities and Readiness. . . . . . . . . . . . . . . . . . . . . . . 

Advance and Protect U.S. International Interests . . . . . . . . . . . . . . . . . . 

Respond to the Impact of Global Market Forces on U.S. Economic and S

Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

External Factors that May Affect Achievement of Goal 2. . . . . . . . . . . . . 
iv GAO STRATEGIC PLAN 2

External Factors that May Affect Achievement of Goal 3. . . . . . . . . . . . . 

Goal 4: Maximize the Value of GAO by Being a Model Federal 

Agency and a World-Class Professional Services Organization . . 

Sharpen GAO’s Focus on Clients’ and Customers’ Requirements. . . . . . . 

Enhance Leadership and Promote Management Excellence . . . . . . . . . . 

Leverage GAO’s Institutional Knowledge and Experience. . . . . . . . . . . . 

Continuously Improve GAO’s Business and Management Processes . . . . 

Become the Professional Services Employer of Choice. . . . . . . . . . . . . . 

External Factors that May Affect Achievement of Goal 4. . . . . . . . . . . . . 

Performance Measures and Evaluations . . . . . . . . . . . . . . . . . . . . 

Key Performance Measures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Evaluations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Consultations and Relationships with Other Agencies. . . . . . . . . 
GAO STRATEGIC PLAN 2002-2007 

DOD Department of Defense

FAR Federal Acquisition Regulation

FEMA Federal Emergency Management Agency

FY fiscal year

GAO General Accounting Office

GDP gross domestic product

GNMA Government National Mortgage Association (Ginnie Mae)

GPRA Government Performance and Results Act

HHS Department of Health and Human Services

HIV human immunodeficiency virus

HUD Department of Housing and Urban Development

IMF International Monetary Fund

INS Immigration and Naturalization Service

IRA individual retirement account

IRS Internal Revenue Service

IT information technology

NATO North Atlantic Treaty Organization

OASDI Old-Age and Survivors Insurance and Disability Insurance

OMB Office of Management and Budget

SBA Small Business Administration

SES Senior Executive Service

TANF Temporary Assistance for Needy Families

USAID U.S. Agency for International Development

VA Department of Veterans Affairs
GAO STRATEGIC PLAN 2002-2007 

Mission Statement

GAO examines the use of public 

funds; evaluates federal programs 

and activities; and provides 

analyses, options, 

recommendations, and other 

assistance to help the Congress 

make effective oversight, policy, 

and funding decisions. In this 

context, GAO works to 

continuously improve the 

economy, efficiency, and 

effectiveness of the federal 

government through the conduct 

of financial audits, program 

reviews and evaluations, analyses, 

legal opinions, investigations, and 

other services. GAO’s activities are 

designed to ensure the executive 

branch’s accountability to the 

Congress under the Constitution 

and the federal government’s 

accountability to the American 

people.

Statutory Responsibilities

Through the Budget and Accounting Act of 1921, the Congress 

lished GAO in the legislative branch with the broad role of inv

gating “all matters relating to the receipt, disbursement, and 

application of public funds” and to “make recommendations lo

to greater economy or efficiency in public expenditures.” Since 

War II, the Congress has clarified and expanded that original c

■ The Government Corporation Control Act of 1945 provides 

with the authority to audit the financial transactions of gover

corporations.

■ The Budget and Accounting Procedures Act of 1950 assigns 

the responsibility for establishing accounting standards for th

federal government and carrying out audits of internal contr

financial management.

■ The Legislative Reorganization Act of 1970 and the Congress

Budget and Impoundment Control Act of 1974 authorize GA

conduct program evaluations and analyses of a broad range 

federal activities.

■ The Chief Financial Officers (CFO) Act of 1990 and the Gove

Management Reform Act of 1994 authorize GAO to audit ag

financial statements and annually audit the consolidated fina

statements of the United States.

■ Numerous other laws complement GAO’s basic audit and 

evaluation authorities, including the Inspector General Act o

providing for GAO-established standards for the audit of fed

programs and activities, and the Competition in Contracting 

1984, providing for GAO’s review of protested federal contra

actions.

Today, GAO examines the full breadth and scope of federal ac

and programs, publishes thousands of reports and other docum

annually, and provides a number of related services. The agen

looks at national and international trends and challenges to an

their implications for public policy. By making recommendatio

improve the practices and operations of government agencies, 
2 GAO STRATEGIC PLAN 2

Strategies and Means

For GAO, achieving strategic goals and objectives 

rests, for the most part, on providing professional, 

objective, fact-based, nonpartisan, nonideological, 

fair, and balanced information. Most of the information is gathered and reported in response to congressional requests for specific work. As authorized 

by GAO’s enabling legislation, the agency also independently undertakes research and development 

work. GAO develops and presents the information 

it gathers in a number of ways to support the Congress, including the following:

■ evaluations of federal programs, policies, 

operations, and performance;

■ oversight of government operations through 

financial and other management audits to 

determine whether public funds are spent 

efficiently, effectively, and in accordance with 

applicable laws;

■ investigations to assess whether illegal or 

improper activities are occurring;

■ analyses of the financing for government 

activities;

■ constructive engagements in which GAO works 

proactively with agencies, when appropriate, to 

help guide their efforts toward achieving positive 

results;

These specific strategies take the form of 

performance goals, each of which has a set 

efforts that connect with GAO’s day-to-day w

The detailed performance goals and key effo

each strategic objective are online in the “Str

Supplements” section at www.gao.gov/sp.ht

In addition, GAO builds strategic working re

ships with other national and international g

ment accountability and professional organiz

to broaden and leverage its institutional know

and experience, and in turn, to improve its s

to the Congress and the American public. Th

relationships focus on (1) using advisory pan

other bodies to inform GAO’s strategic and a

work planning and (2) initiating and support

laborative national and international audit, te

assistance, and other knowledge-sharing effo

Unlike large executive branch departments t

manage federal lands or maintain extensive fa

and systems across the country and, in some 

instances, around the world, GAO is a relativ

small agency that depends almost totally on 

type of resource to achieve its strategic goals 

objectives: its people. GAO’s staff, numbering 

3,200, are arrayed in 14 research, audit, and 

tion teams backed by staff offices and missio

port units (see fig. 1). Approximately three q

of GAO’s staff are based in the Washington, 

headquarters. The rest are deployed in field 

across the country (see fig. 2). 
GAO STRATEGIC PLAN 2002-2007 

To achieve its strategic goals and objectives, GAO 

must maintain a workforce of highly trained professionals with degrees in many academic disciplines, 

including accounting, law, engineering, public and 

business administration, economics, and the social 

and physical sciences. To maximize their productivity, GAO must make steady investments in information technology. It must also ensure the safety 

and security of its people, information, and assets. 

The strategies GAO will use to ensure that it has the 

human capital it needs to carry out its responsibilities and that its human capital, business processes, 

information technology, and other resources are 

well managed and secure are covered under the 

fourth strategic goal of this plan.

Figure 2: GAO’s Offices

Acquisition 

and Sourcing 

Management

Defense 

Capabilities and 

Management

Financial 

Management 

and Assurance

Health 

Care

International 

Affairs 

and Trade

Natural 

Resources and 

Environment

Strategic 

Issues

Teams

Applied 

Research 

and Methods

Education, 

Workforce, and 

Income Security

Financial Markets 

and Community 

Investment

Information 

Technology

National 

Preparedness

Physical 

InfrastructureAdm

and 

Seattle

San Francisco

Los Angeles

Denver

Dallas

Chicago Dayton

Huntsville Atlanta

Norfolk

Bosto

Washing
4 GAO STRATEGIC PLAN 2

the agencys strategic plan takes into account the 

forces that are likely to shape American society, the 

United States’ place in the world, and the role of the 

federal government. This section discusses these 

forces through the seven themes that form the context for what GAO hopes to accomplish—its goals 

and objectives—and that suggest the major trends 

ahead and their implications for congressional decision making. 

Because the plan GAO published in 2000 presaged 

the diffuse nature of the threats to national security 

in the post–cold war period, the themes have not 

changed substantially. GAO has, however, updated 

them to factor in the changes in national and world 

conditions that have occurred in the last 2 years. 

Significant changes, of course, flow from the terrorist attacks on September 11: a war against terrorism and a national preparedness effort that may 

last for years to come. 

But changes flow from other sources as well. GAO 

has, for instance, added a discussion of trends in the 

U.S. and world economies, such as the evolution of 

knowledge-based industries, that appear likely to 

affect public policy. It has also taken into account 

the results of the 2000 census in the discussion of 

demographics, as well as evolving dimensions of 

quality of life. The discussion of globalization was 

expanded to acknowledge the growing concerns of 

civil society groups about its adverse consequences, 

and the discussion of technology was broadened to 

include biotechnology and medical sciences in 

addition to information technology. Finally, the discussion of government performance and accountability was reoriented to focus on governance 

issues, emphasizing particularly the importance of 

examining the different tools and actors involved in 

carrying out federal government policies. 

address

■ the national and global response to terroris

other threats to personal and national secu

■ the increasing interdependence of enterpr

economies, civil society, and national 

governments, referred to as globalization;

■ the global shift to market-oriented, knowle

based economies;

■ an aging and more diverse population;

■ advances in science and technology and t

opportunities and challenges created by th

changes;

■ the quality of life for the nation, communi

families, and individuals; and

■ the more diverse nature of governance stru

and tools.

Any significant changes in these areas over th

6 years, the period covered by this plan, wil

GAO’s ability to meet its goals and objectives

will therefore continue to track developmen

these areas to make sure that its plan remain

responsive to the needs of the Congress, the 

government, and the American people.

Security and Preparedness

The terrorist attacks of September 11 launch

series of profound changes. The resulting n

imperative and resolve to prepare for and co

terrorism and other threats to personal, finan

and national security are now overarching fo

likely to reshape American and international 

ties, and consequently the roles of all levels 

ernment. Every program team within GAO 
GAO STRATEGIC PLAN 2002-2007 

and development, biomedical studies, manufacturing, infrastructure, information technology, 

energy, and for many other areas significantly favor 

the United States. 

Figure 3: Military Technology Investment, 1997

Note: Military expenditures per member of the armed forces serves 

as a rough measure of the level of military technology in a country.

Source: State Department.

Similarly, life expectancy, per capita income, access 

to computers and the Internet, and the like continue 

to grow in comparison to the rest of the world on 

the whole. In many instances, a lack of shared 

values, disagreements over foreign policy goals and 

objectives, and misperceptions of U.S. intent are 

contributing further to perceived differences.

This continued asymmetry, when combined with 

the other broad forces identified as themes in this 

strategic plan, are believed to have contributed to 

the nature and growth of viable global terrorist 

threats against U.S. interests, at home and abroad. 

Some commentators have noted that the widening 

weapons of mass destruction have become m

accessible; and new technology, particularly 

Internet access, has made coordination and e

more available and less costly. While before 

lated and widely dispersed adversaries were 

widely perceived as able to complete an atta

cessfully within U.S. borders, September 11 s

ingly ended this false sense of invulnerability

At the same time, more conventional threats 

and American troops are likely to be deploy

only in Afghanistan but in troubled regions l

Balkans and the Middle East. The United Sta

continue to face the challenge of maintainin

well-trained, equipped, and ready defense fo

that can respond to more than one regional c

at a time and that can perform well not just 

combat but also in peacekeeping. And even 

environment changes, the United States mus

manage the modernization of its weapons sy

and the safety and reliability of its nuclear w

stockpile. 

Prior to September 11, many commentators, 

including GAO, highlighted the existence of 

numerous vulnerabilities susceptible to a var

asymmetric attacks. But September 11 and t

sequent anthrax mail attacks underscored th

extremely diverse ways in which instrument

normal daily life could be used by terrorists 

exploit these vulnerabilities. September 11 a

emphasized that symbols of U.S. asymmetric 

tages, such as the World Trade Center and th

tagon, are likely targets, as are more tradition

perceived targets such as military bases, nuc

power plants, and other critical elements of 

transportation and utility infrastructure. Fina

September 11, the anthrax attacks, and the s

quent responses have emphasized the exten

180.0

85.0

15.4

0

20

40

60

80

100

120

140

160

180

200

Developing

Country Average

Developed

Country Average

U.S. Total

Dollars in Thousands per Member of the Armed Forces 
6 GAO STRATEGIC PLAN 2

governmental roles, initiatives, programs, and priorities will be evaluated.

These forces present both risks and opportunities. 

Risks have been exposed in many aspects of 

normal life, with perhaps many of the greatest dangers posed in areas that Americans have simply 

taken for granted. Terrorist weapons need not 

simply kill or injure large numbers to have the terrorists’ desired impact. Bioterrorism poses risks of 

unprecedented magnitudes, potentially striking at 

air and water supplies and food production chains, 

while using instruments of normal life such as the 

mail or air conditioning systems. Hazardous materials storage sites, airports, train stations, water chlorination plants, power stations, bridges, natural gas 

pipelines, national monuments, and government 

office buildings, have now become potential targets 

and crime scenes in addition to critical elements of 

the American economy and lifestyle. The availability and safety of such resources can no longer 

be taken for granted, and efforts must now be taken 

to safeguard them without significantly diminishing 

the function they play in everyday life, and in ways 

that are both affordable and sustainable. At the 

same time, opportunities exist to harness the new 

resolve and dedication of resources to adapt 

existing mechanisms and structures to the new job 

of fighting terrorism, while simultaneously augmenting their ability to perform their normal function, and meet other challenges such as epidemics, 

natural disasters, or infrastructure rationalization or 

recapitalization.

This new context requires a changed analytical 

focus. Traditional threat, risk, and criticality assessments will remain as valuable tools in the fight 

against terrorism, but the use of such assessments 

must continue to be viewed as fundamental policy 

decisions that must be made in a broader national 

To be successful in a long-term fight against 

rorism, the nation must embark upon strateg

are affordable, sustainable, and integrate the 

bilities of all levels of government, the privat

sector, community groups, and individuals. 

nation as a whole must foster and maintain c

ities that are adequate to address the broad, 

and unpredictable nature of asymmetric thre

is not affordable, sustainable, or feasible to a

to have everyone prepare for every possible 

gency. Regional approaches, public-private 

nerships, mutual assistance agreements, and 

capability-sharing methods will be increasing

employed. Composited or interlocking prot

strategies that call for different sectors to tak

ferent but complementary protective measur

provide the most affordable and sustainable 

approaches. And the focus on what capabili

necessary, where they are best resident, and 

information and resources must be shared to 

grate these capabilities will significantly affec

policy, legislative, program, and budget decis

the Congress debates how best to wage the 

against terrorism. 

Thus, GAO has established a strategic framew

guide its efforts to support the Congress and 

constructive suggestions to a wide range of p

and private interests. It entails 

1. examining the roles of government in fos

and maintaining integrated capabilities am

levels of government, the private sector, 

community groups, and individuals; 

2. identifying threats and risks and critical no

prioritize for protection; 

3. analyzing both the direct costs and secon

financial impacts of both response and 

preventative measures; 
GAO STRATEGIC PLAN 2002-2007 

movement of goods and people across borders, 

nations’ economies, cultures, and governments 

have become increasingly interdependent—that is, 

globalized. By many measures, this interdependence has grown in recent decades. 

One measure of growing worldwide interdependence is the total share of world goods and services 

that is traded. As shown in figure 4, from 1970 

through 2001, world exports increased from about 

12 percent to about 24 percent of world gross 

domestic product (GDP). Hence, all over the 

world, people are depending more and more on 

those in other nations to consume the goods they 

produce and to produce the goods they in turn 

consume.

Figure 4: World Exports of Goods and Services as 

a Percentage of World GDP, 1970 through 2001

Source: Calculated from International Monetary Fund data.

Figure 5: U.S. Exports and Imports as a Perc

of U.S. GDP, 1970 through 2000

Source: Department of Commerce, Bureau of Economic A

A companion to growing international trade 

strong increase in international financial flow

internationalization and liberalization of fina

markets worldwide, along with growing wea

many countries, have fueled huge increases 

cross-border investments. Gross capital flow

tive to GDP have grown almost 10-fold for in

trial countries since 1970. For the United Sta

financial inflows—comprising foreign holdin

U.S. stocks and bonds as well as foreign dire

investment in the United States—rose from a

percent to about 11 percent of U.S. GDP bet

1970 and 2000, as shown in figure 6. Net fin

outflows—reflecting similar investments abro

from the United States—have fluctuated ove

period, with an overall upward trend.

0

5

10

15

20

25

30

1970 1975 1980 1985 1990 1995 2000

Percentage of GDP

0

2

4

6

8

10

12

14

16

1970 1975 1980 1985 1990 1995 

Percentage of GDP

Exports

Imports
8 GAO STRATEGIC PLAN 2

Source: Department of Commerce, Bureau of Economic Analysis. 

An important part of the trend toward globalization 

is the growth of multinational enterprises. These 

firms—based in the United States with foreign affiliates or based in another nation with U.S. affiliates—

find advantages either in serving foreign markets 

more directly or in supplying their home markets 

more cheaply. In 1999, more than a third of sales of 

goods and services by U.S. firms in foreign markets, 

and by foreign firms in U.S. markets, were through 

multinationals. Thus, while their heightened role is 

to some extent reflected in increased international 

trade, it is also evident in measures of increasing 

flows of foreign direct investment among industrialized countries, which have grown more than 15-

fold since the mid-1970s. 

These linkages mean that governments must 

increasingly be aware of international dimensions 

when weighing policy options and taking action. 

For example, a financial crisis that began in east 

Globalization affects individuals, business an

organizations in a myriad of ways. Expande

kets for U.S. producers and the broader arra

goods available to U.S. consumers are amon

opportunities that economic globalization ca

vide. And increasing international economic 

ages have been associated with a rise in eco

growth, both in the United States and worldw

However, while many countries have benefi

from greater economic linkages, huge incom

disparities remain across countries and regio

can be seen in figure 7, differences in per ca

income across countries have largely continu

over the past 25 years, although China and I

stand out as poor countries that have shown 

significant gains. Even when differences in 

living across countries are taken into accoun

average incomes in 1999 were about 13 time

higher for countries in the high-income grou

than in the low-income grouping, compared 

about 14 times higher in 1975. Many analys

believe that these gaps pose increasing chall

for U.S. economic and security policies, as g

flows of people and information across bord

increase awareness of differences and foster 

resentments.

0

2

1970 1975 1980 1985 1990 1995 2000

Net U.S. Financial Outflows

Net Foreign Financial Inflows
GAO STRATEGIC PLAN 2002-2007 

Note: These country groupings contain 28 low-income, 45 middleincome, and 30 high-income countries as grouped by the World 

Bank based on 1975 per capita income. China and India are shown 

as a distinct grouping due to their size and strong income growth 

over the period. Countries’ per capita incomes are converted into 

dollars using purchasing power parity exchange rates, which take 

into account differences in costs of living across countries.

Source: GAO analysis of data from the World Bank, World 

Development Indicators 2001.

Concerns that globalization itself is adversely 

affecting individuals within the United States and in 

other countries have become an increasing focus of 

discussions about international trade and development policies. Civil society groups around the 

world have demonstrated, sometimes violently, at 

major gatherings of international organizations over 

the last 2 years. The groups’ concerns vary. Some, 

for instance, are concerned about how increased 

globalization affects workers in traditional manufacturing industries within the United States. Others 

focus on questions about the extent to which developing countries are affected by increasing trade and 

international investment flows. Still others believe 

that globalization poses a threat to the common 

good, such as when corporations based in countries 

with tough environmental safeguards opt to carry 

out environmentally destructive activities in countries where safeguards are less stringent. These 

concerns have been joined recently by a heightened 

awareness, even among strong proponents of 

The Changing Economy

Many of the issues facing the Congress and t

nation stem from the complex and changing 

of domestic and global economies. The last 

years of the 1990s saw a dramatic surge of p

tivity and economic growth, fueled in part b

nation’s shift to a knowledge-based econom

adoption of new technology, and a greater 

emphasis on public policies that rely on mar

forces and competition. In the coming years

United States faces the challenge of recoverin

the current recession and returning to strong 

nomic growth while meeting increased dema

spending to counter terrorism and improve se

Over the longer term, declining personal sav

coupled with the overall aging of the popula

presents significant challenges to meeting th

mitments to Social Security, Medicare, and o

national priorities.

After two decades of diminished expectation

reduced economic performance, the GDP gr

matically. As shown by figure 8, labor produ

growth accelerated from 1.5 percent per year 

early 1990s to 2.8 percent per year between 

and 2000. This growth can be attributed, in 

the move away from the nation’s traditional, 

facturing-based economy to one characterize

the production of information and services. 

for most of the past two decades, high-techn

manufacturing and knowledge-based service

grown at roughly double the rate of other m

turing industries. In light of forecasts for a s

downward in labor productivity growth for t

remainder of this decade, the challenge for t

future will be to sustain GDP growth.

1975 1987 1999

0

5,000

China/India

Low-Income Countries

Middle-Income Countries

High-Income Countries
10 GAO STRATEGIC PLAN 2

Note: Changes to labor productivity growth for the periods 2001-05 

and 2006-10 are estimates.

Source: Department of Commerce, Bureau of Labor Statistics, and 

DRI-WEFA (an economic information company).

The growing use of technology and knowledgebased services raises a number of policy issues. 

Because intellectual assets are the underpinning of 

a knowledge-based economy, investment in human 

capital is fundamental to continued growth. For 

policymakers, this shift requires greater attention to 

education and training, both for children and adults. 

The methods of preparing children for their futures 

as citizens and workers will have to be adapted for 

new needs. New importance will also have to be 

given to continuing education and training for 

adults, whose longer life expectancies will allow 

them to stay in the workforce longer—a prospect 

that also holds significance for retirement policies.

The shift to a knowledge economy also has implications for immigration policy. The emergence of 

technology-oriented industries has tended to create 

both high-paying jobs in computing and information technology and low-skilled jobs ultimately 

delivering the services these industries provide. To 

fill these jobs, the United States has come to rely 

increasingly on workers from other countries. At 

the same time, in light of heightened concern for 

homeland security, the relatively easy flow of 

workers into the country may be reassessed. Moreover, the need for both high- and low-skilled 

workers may also contribute to a long-term trend of 

of new and complex services whose value is 

difficult to calculate. While accurately and r

ously evaluating intangible assets and compl

goods and services has always been difficult

new features raise additional disclosure and 

reporting challenges for boards of directors a

investors, as well as for auditors and govern

regulators.

Finally, the shift in the U.S. economy to know

based industries calls into question whether 

the traditional indicator of economic perform

should take into account investment in hum

ital and in other intangible assets, such as re

and development. As a result, the public po

issues of the future are likely to demand new 

rics that can measure the long-term strategic 

of government choices.

Other changes in the U.S. and world econom

have occurred because of government polici

liberalize trade and draw on greater market 

tition. The U.S. government and, increasing

eign countries have moved away from heavi

regulated or state-owned enterprises to more 

petitive markets. In the United States, the fe

government has deregulated industries such 

trucking, electricity, and telecommunications

Europe and elsewhere, governments have p

tized formerly publicly owned industries, and 

formerly planned economies have reorganiz

be more market oriented. Consequently, for

regulated industries have been forced to bec

more efficient as new competitors enter prev

protected markets. Nevertheless, as the blac

in California and the problems besetting the 

industry illustrate, effective government over

remains important. 

0.0

0.5

1.0

1961- 

65

1966- 

70

1971- 

75

1976- 

80

1981- 

85

1986- 

90

1991- 

95

1996- 

2000

2001- 

05

2006- 

10
GAO STRATEGIC PLAN 2002-2007 

offsetting trends change, personal saving must rise 

if growth in investment and productivity is to continue at recent levels. 

Figure 9: Declines in U.S. Personal Saving, 1990 

through 2001

Source: Department of Commence, Bureau of Economic Analysis.

By mid-2001, the U.S. economy was experiencing a 

recession that was exacerbated by declining consumer confidence in the wake of terrorist attacks. 

Moreover, the likely increased spending on national 

defense and homeland security will add to an 

already intense competition for resources among 

many national priorities. In the longer term, the 

level of aggregate saving may place even greater 

constraints on federal spending for national priorities, particularly Social Security and Medicare. 

GAO’s long-term budget model shows that simply 

paying for the higher retirement and health care 

costs associated with the baby-boom generation 

will limit budgetary flexibility (see fig. 10), while 

Note: In this simulation, discretionary spending grows with 

economy after 2002, and the expiring tax provisions under 

Economic Growth and Tax Relief Reconciliation Act of 200

extended through the end of the simulation period.

Source: GAO analysis, March 2002.

Demographics

Profound changes in the characteristics of th

population will occur in the coming decades 

because the population is growing older and 

becoming more diverse. According to the 2

census, the median age of the population is 

the highest it has ever been, and the most ra

increasing age group is the 45- to 54-year-old

baby boomers. As the baby boomers age, th

of the population aged 65 or older is project

grow from 12 percent in 2000 to about 20 pe

in 2030. At the same time, the growth of the 

force is expected to slow considerably, beco

negligible by 2050 (see fig. 11). 

Personal Saving

Net National Saving

0

1

2

3

4

5

6

7

Percentage of GDP

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

0

10

20

30

40

2000 2015 2030 205

Net Interest

Social Security

Medicare and Medicaid

All Other Spending

Revenue
12 GAO STRATEGIC PLAN 2

Note: Projections based on the intermediate assumptions of the 

Trustees’ report. 

Source: The 2002 Annual Report of the Board of Trustees of the 

Federal Old-Age and Survivors Insurance and Disability Insurance 

Trust Funds.

This decline in the number of working-age people 

compared with the rise in the number of elderly has 

obvious implications for the financial status of the 

Social Security and Medicare Trust Funds. Today, 

about 3.3 people pay into Social Security for every 

person receiving benefits (see fig. 12). By 2030, this 

ratio is projected to decline to about 2 to 1. 

Note: Projections based on intermediate assumptions of th

Trustees’ report. 

Source: The 2002 Annual Report of the Board of Trustees 

Federal Old-Age and Survivors Insurance and Disability In

(OASDI) Trust Funds.

Unless productivity increases, low labor forc

growth will lead to slower growth in the 

economy—and to slower growth in federal r

nues at a time when the expenditure deman

federal programs for the elderly are increasin

slowing labor force growth is likely to raise 

tions about current retirement policies and w

people ought to be encouraged to stay in th

force longer and to be given opportunities to 

tinue their education and training. As with d

for scarce technical skills and low-cost labor

slowing growth in the labor force increases p

sures to import workers, thereby raising que

about immigration policies. 

The implications of a growing elderly popul

are likely to extend far beyond the financial 

of Social Security, Medicare, Medicaid, and r

ment programs. The number of people serve

housing, transportation, and other governme

grams for the elderly will grow. Both publicl

privately provided services, including comm

tions and financial services, are likely to cha

response to the needs of this population. 

This demographic shift will affect other indu

ized nations as well. For example, in some E

pean countries, social program costs are pro

to consume a greater share of total GDP than 
GAO STRATEGIC PLAN 2002-2007 

to developing countries.

While the U.S. population is growing older, it is also 

growing more diverse, in large part because of 

record numbers of immigrants. Between 1990 and 

2000, the number of foreign-born people in the 

United States grew by 43 percent to total more than 

28 million—the largest number of foreign-born residents in U.S. history. While these foreign-born residents make up about 10 percent of the U.S. 

population overall, in some parts of the United 

States, the numbers are especially high. For 

example, 26 percent of California’s population 

comes from Mexico and Asia. Although over onefourth of these immigrants are college educated, 

foreign-born residents are more likely to be less 

educated and more likely to live in poverty than 

residents who were born in the United States, 

placing special demands on education and social 

service systems. 

This more diverse population means that minorities, 

as well as women, will continue to represent a continuously increasing share of the workforce. Currently, women constitute 47 percent of the 

American workforce, up from about 42 percent in 

1978, a proportion expected to increase further (see 

fig. 13). African Americans, Hispanics, Asians, and 

other minorities are projected to account for about 

18 percent of the total labor force by 2008, but will 

account for almost 60 percent of all new workers 

between 1998 and 2008. These trends of slow labor 

force growth and increased diversity have implications for federal policies and programs in education, 

training, child care, and immigration, among others. 

Notes: “Women” refers to all women, regardless of minority 

“Minorities” includes women and men.

Source: Bureau of Labor Statistics, “Labor Force Projection

2008: Steady Growth and Changing Composition,” Monthly 

Review, Nov. 1999.

Science and Technology

Technology influences every aspect of Ameri

and touches the lives of Americans in thousa

ways. While information technology is a maj

nological force of this era—linking individua

organizations, and economies around the wo

other kinds of scientific and technological ad

also are creating significant changes. For ex

the rapidly increasing understanding of the h

genome is leading to new developments in g

engineering. For society and government, th

developments in science and technology pre

vast opportunities to improve the quality of l

performance of the economy and the govern

and the relationship of government to its citiz

the same time, the increased development a

of new technologies challenge the governme

and the Congress’s ability to evaluate their po

and assess their effect on security, safety, pri

and equity. Within this context, the Senate L

tive Branch Appropriations bill for fiscal yea

directed GAO to conduct a pilot program in 

nology assessment and to evaluate the future 

tial of such a program.

12.3 13.9

0

5

10

15

1978 1988 1998 2008

Women

Minorities
14 GAO STRATEGIC PLAN 2

and assistance, identify and obtain services, file 

applications and taxes, and conduct other transactions with government. Information technology has 

also begun to transform the way that government is 

organized and operates by reducing levels of 

bureaucracy and “middlemen” to better serve citizens and to communicate with the businesses that 

government regulates. Multiagency portals—Web 

sites providing a single point of access to information and services from multiple government departments and agencies—are based on the needs of 

citizens rather than on the structure of the government providing the resources. 

Figure 14: Worldwide E-Commerce Growth, 2000 

through 2004

Notes: Worldwide total equals United States plus rest of world.

Source: Forrester Research, Inc.

Developments in biotechnology are also bringing 

forth many benefits. The improved understanding 

of diseases and how the human body operates has 

led to new therapies and treatments and may lead 

to the elimination or significant control of some dis

greater efficiencies, but can also lead to inap

priate access to medical records, credit histo

and other personal and confidential data. An

damental access to technology will continue 

prompt debate over the digital divide—the d

in the ability of different socioeconomic grou

access and use technology. 

The widespread interconnectivity of comput

tems with the critical operations and infrastru

they support has also created new vulnerabi

The nation’s telecommunications, power dis

tion, public health, national defense (includi

military’s warfighting capability), law enforce

financial, government, and emergency servic

depend on computer operations. Because fin

markets and other critical infrastructure are a

reliant on information technology, the U.S. a

world markets can be attacked even without 

actual physical assault. To maintain informat

superiority, the United States must depend o

interconnected global network of sensors, co

nications technology, command and control 

and highly lethal weapons possessing precis

strike capabilities. At the same time, the nati

security increasingly depends on intelligence 

ering through electronic as well as more trad

means, supported by knowledge-manageme

tems enabling the analysis of data.

Many of biotechnology’s advances raise conc

well. Although they hold great promise for 

improving health care, the affordability of ne

nostic and treatment methods is becoming a 

growing issue for federal and state governm

health care programs. Newer treatments may 

reach poorer countries, where even treatmen

rently available in the United States are out o

because of their costs. Many advances in bio

nology also raise a number of difficult ethica

0

1000

2000

3000

4000

5000

6000

7000

2000 2001 2002 2003 2004

United 

States

Total Dollar Value in Billions of Goods Traded Online

Rest of World
GAO STRATEGIC PLAN 2002-2007 

In many respects, the quality of life for Americans 

has dramatically improved. Large segments of the 

population enjoy greater economic prosperity than 

ever before. In 2000, over 94 percent of the workforce was employed and the median annual household income was over $42,000. Two-thirds of 

American households own their own homes, and 

children are graduating from high school and going 

on to college at record rates. The quality of the 

physical environment has also improved, with air 

and water pollution declining over the last couple 

of decades and larger numbers of hazardous waste 

sites cleaned up.

Americans are also living longer, with the average 

life expectancy now up to 77 years, a trend likely to 

continue with advances in genetics and biotechnology. In the last decade, the availability of new 

drug therapies has increased dramatically. By the 

end of the decade, roughly 50 percent more drugs 

were coming on the market each year than in the 

early part of the 1990s.

These improvements have not been without cost, 

however, and can be jeopardized by a prolonged 

economic downturn. Spending on prescription 

drugs, for instance, has grown much faster than 

health care spending and GDP (see fig. 15). Beyond 

the costs of treating and preventing illness, the costs 

of providing long-term care facilities for the 

growing elderly population can be expected to burgeon. For the federal government, these trends are 

of enormous consequence to the future scope and 

coverage of the Medicare and Medicaid programs, 

as well as the defense and veterans’ health care 

programs.

Source: Health Care Financing Administration, Office of the 

and Bureau of Economic Analysis.

Regardless of the costs of achieving and main

these improvements in the quality of life, the

not been evenly distributed across the popu

In 2000, about 39 million Americans still lack

access to health care because they did not h

health insurance. Unemployment rates for A

Americans and Hispanics were nearly twice t

for whites. These groups also include proport

fewer college graduates, their average income 

are considerably lower, and their poverty rat

more than double those of white Americans

lent crime rates remain high in certain geogr

areas and for certain parts of the population

although they have fallen considerably acros

nation as a whole. Affordable housing remai

of reach for many.

Moreover, prosperity itself has placed greate

stresses on the quality of life. Greater econo

activity, for example, is producing more air a

highway traffic and heightening concerns ab

safety and environmental quality. Families ar

gling to balance the demands of work and h

and to find and pay for good day care. Parts 

country that have seen rapid development—

larly the Southeast and Southwest—are facin

increased competition for water, land, and o

natural resources. Population and economic 

also create demand for new transportation a

0

2

4

6

Prescription Drug Expenditures

Health Care Expenditures

Gross Domestic Product

1993 1994 1995 1996 1997 1998 1999 
16 GAO STRATEGIC PLAN 2

As the pace of change accelerates in every aspect of 

American life, government is faced with new and 

more complex challenges resulting from the 

public’s growing expectations, demographic pressures, technological opportunities, and the 

emerging fiscal challenges ahead. The attacks of 

September 11 reminded the nation that the effectiveness of government programs and agencies is 

critical to day-to-day security. These events have 

placed new fiscal demands on federal, state and 

local governments, underscoring the government’s 

obligation to enhance its fiscal flexibility and 

capacity to address a rapidly evolving set of challenges facing the nation both today and over the 

longer term. 

As America takes on a new set of commitments necessary to protect the nation from the threat of terrorism, it must also be mindful of the fiscal 

challenges facing future generations in addressing 

the retirement and health care costs of the baby 

boomers’ retirement. To help safeguard the capacity 

of future generations to finance an aging society 

and respond to their own unforeseen challenges, 

government must begin to reexamine and update 

its priorities, processes and portfolio of federal programs and policies. Emerging needs and effective 

programs can be addressed, while outdated programs can be either eliminated or improved. Coping 

effectively with these challenges ultimately calls for 

a fundamental rethinking of the federal role and 

commitments.

The foundation for much of this effort has already 

been laid through the implementation of critical 

strategic planning, performance, and information 

management reforms during the 1990s. Because of 

these reforms, information on the performance of 

existing programs and operations is now generated 

systematically. Likewise, the legislative foundation 

the management of people and technologies

metrics developed to track results, and the fr

works articulated for governmentwide leade

necessary to achieve important objectives cu

across agencies and governmental boundarie

people working for government are the mos

important asset in addressing the emerging c

lenges facing the nation. The aging of the fe

workforce as well as the growing competitio

bright new entrants makes it imperative that 

federal government equip itself with new to

essary to recruit, retain, and reward talented 

workers. Moreover, the competencies that a

sought and rewarded should be aligned with 

broader strategic objectives and performance 

The strategic deployment of technology is al

becoming more essential to realize the kinds 

major improvements in efficiency necessary 

respond to the nation’s expectations for serv

delivery. The Web and other major advances 

working provide unprecedented opportuniti

use technology as a driver for change in the 

that government agencies are structured to d

ness internally and across boundaries with sta

local governments, private businesses, and w

individual citizens. 

Promoting a more strategic focus on the broa

for government programs is essential to bring 

a more results-oriented debate about what g

ment should be doing. But reassessing the fe

role and measuring performance and accoun

has also grown more complex. In most fede

sion areas—from low-income housing to foo

safety to higher education assistance—nation

goals are achieved through the use of a varie

policy tools and, increasingly, through the pa

tion of many organizations that are beyond t

direct control of the federal government. The 

tools—direct spending, tax preferences, loan
GAO STRATEGIC PLAN 2002-2007 

Such an integrated perspective must address the 

fundamental role played by third parties involved in 

achieving national goals—state and local governments, nonprofit institutions, private corporations, 

and even international institutions and governing 

bodies all play vital roles in formulating and implementing federal initiatives. Figure 16 suggests one 

indicator of the growing involvement of third parties. Since at least the 1960s, the number of federal 

employees has dropped even as federal outlays 

have risen partly because the dollars that fund federal programs are increasingly flowing to nonfederal entities. Promoting effective partnerships with 

third parties in the formulation and design of complex national initiatives will prove increasingly vital 

to achieving successful policy outcomes in the years 

ahead. Protecting the nation from the threat of terrorism, for instance, will require a concerted effort 

by all three levels of government as well as key private sector leaders responsible for critical infrastructure and resources.

Note: Figures for executive branch civilian employees exclu

U.S. Postal Service. Legislative and judicial branch person

constitute less than 2 percent of total federal personnel.

Source: Office of Management and Budget.

This growing interdependence has importan

cations for governance and accountability. T

public rightly expects to hold the federal gov

ment accountable for achieving important na

outcomes. Certainly, involving state and loc

ernments and other types of organizations in 

federal mission can add new capacities and e

cies and can promote responsiveness to a w

range of local interests. However, unique ac

ability challenges arise as well, both from th

involvement of independent interests operat

under their own sovereignty and from the re

on ever more complex networks to deliver f

services. The challenge for the federal gover

will be to design, select, and manage the var

tools of governance—regulations, grants, tax 

ences, or loans—to prompt these independe

interests to work together in pursuit of comm

national goals. Metrics defining and tracking 

progress against broader national objectives 

an important leadership tool to focus the atte

of these different interests on common goals 

challenges. The existing reforms developed 

improve the management of federal agencie

have to be applied to also improve the way 

federal agencies manage across government

institutional boundaries.

Federal Civilian Employment

Total Federal Outlays
18 GAO STRATEGIC PL

aspirations of the American people that were 

defined by the Founding Fathers: to “establish justice, insure domestic tranquility, ... promote the 

general welfare, and secure the blessings of liberty 

to ourselves and our posterity....” The nation’s 

aging and more diverse population, rapid technological change, and Americans’ desire to improve 

the quality of life have major policy and budgetary 

implications for the federal government. In particular, growing commitments to the elderly will 

crowd out the capacity of a smaller generation of 

workers to finance the competing needs and wants 

brought to the federal doorstep. 

The first goal in this updated plan, therefore, continues to be to help the Congress and the federal 

government address the challenges that affect the 

well-being and financial security of the American 

people. As the tragic events of September 11 

revealed, domestic policies and programs have 

become integral to national security. Accordingly, 

each major objective in this plan has been shaped 

to accommodate the implications of the terrorism 

threat to GAO’s work in those areas.

GAO also recast its objectives under this goal in 

response to changes in the federal policy agenda to 

emphasize the need to better educate the population and prepare people for work. GAO’s new 

objectives—one on the education and protection of 

children and one on the promotion of work opportunities and worker safety—expand on an objective 

in GAO’s previous strategic plan that combined 

education and workforce issues and replace an 

objective on the social safety net. The objective on 

promoting investment in viable communities 

focuses greater attention on the federal role in 

helping various communities promote their own 

economic and housing goals.

■ the health needs of an aging and dive

population,

■ the education and protection of the na

children,

■ the promotion of work opportunities a

protection of workers,

■ a secure retirement for older American

■ an effective system of justice,

■ the promotion of viable communities,

■ responsible stewardship of natural 

resources and the environment, and

■ a secure and effective national physica

infrastructure.
GAO STRATEGIC PLAN 2002-2007 

fig. 1.1). Expenditures on health-related programs 

are now one of the largest components of federal 

spending, totaling an estimated $433 billion in fiscal 

year 2001, or about 23 percent of all federal 

spending that year. Health care also accounts for 

significant federal tax expenditures, with $92 billion 

in forgone revenues projected for 2002 because of 

employer contributions to medical care and medical 

insurance. The cost pressures of serving a growing 

population are compounded by scientific advances 

in medical treatments, which can blur the lines 

between needs and wants and make it difficult to 

reasonably assess what society can afford.

Figure 1.1: Growth of Federal Health Expenditures, 

1980 through 2001

Note: The 2001 number is an estimate.

Source: Office of Management and Budget.

by 2030, crowding out other spending and e

nomic activity of value. Indeed, one part of 

care, the Medicare Hospital Insurance Trust F

projected to begin running a deficit in 2016 

be depleted by 2029. Also of concern are is

(1) modernizing Medicare’s management stru

payment policies and methodologies, and be

package, and (2) reducing Medicare’s admini

burden on providers. Moreover, because of 

and complexity, Medicare is inherently diffic

manage. About 50 insurance companies pro

and pay approximately 900 million claims an

to nearly 1 million health care providers. Co

quently, the program is a target for fraud, wa

and abuse, and effective oversight is critical 

tecting program dollars and promoting efficie

gram operations.

A strong private insurance market that provi

access to affordable employer-based or indiv

purchased health coverage can reduce the d

for government-funded insurance programs. 

ever, despite a strong economy for much of 

decade, the number of Americans without h

insurance remains high. Although the introd

of competitive principles to health care help

contain medical care cost increases for many 

costs are increasing significantly once again. 

cost increases, in concert with a recent down

the economy, have important implications fo

availability of employer-sponsored health ins

ance and for federal health care programs an

lays. Moreover, the public is concerned abo

quality of care, consumer protection mechan

and the availability of information to allow p

chasers to make informed insurance choices

The government also must address pressing is

its own system of hospitals and clinics. The D

ment of Veterans Affairs (VA)—one of the natio

0

100

200

300

400

500

600

Percentage Increases since 1980

Health Outlays

All Other Federal Outlays

1980 1985 1990 1995 2000
20 GAO STRATEGIC PLAN 2

The efficiency and effectiveness of the government’s 

public health programs are other areas of concern, 

including those administered by the National Institutes 

of Health, the Food and Drug Administration, the Centers for Disease Control and Prevention, and the 

Health Resources and Services Administration. These 

programs support and conduct research; provide 

grants to states for public health programs, such as 

maternal and child health services and AIDS prevention and treatment; and conduct regulatory oversight 

of the United States’ new drug and medical device 

research. Questions have been raised about the government’s ability to ensure the necessary protection of 

patients in research as well as to safeguard the public 

in the review of new pharmaceuticals, medical 

devices, and new food products. Additionally, the 

changing nature of public health threats domestically 

and internationally, such as antimicrobial resistance, 

HIV infection, and other emerging infectious diseases, 

poses significant challenges for the government. As 

diseases such as HIV and tuberculosis have become 

pandemics, the effectiveness of international health 

programs to prevent and adequately treat populations 

in developing countries is a growing concern. Government’s ability to help surmount shortages of certain 

prescription drugs and vaccines is a worldwide concern as well.

Since September 11 and the first reports of anthrax in 

Florida, New York, and Washington, D.C., the public 

health infrastructure has experienced additional strain 

in responding to community demand for public health 

services. This has heightened concern about the adequacy of trained personnel, laboratory capacity, disease surveillance systems, and coordinated 

communication systems among state and local emergency responders. Greater attention has since been 

given to state and local communities’ capacity to 

develop coordinated plans for dealing with a potential 

biological attack and to develop emergency response 

state. At the other end of the population spectr

millions of uninsured children whose families h

health insurance. Medicaid and the State Child

Health Insurance Program help cover the healt

ance costs of these low-income Americans and 

often viewed as established programs that may 

expanded to help reduce the number of the u

sured. However, the recent flux in the manag

market, which states increasing rely on to deliv

vices, may hamper states in their ability to attra

retain managed care plans and providers and t

ensure beneficiary access to needed, cost-effec

vices. Moreover, accounting for and overseein

two programs represents a formidable challeng

the federal government because of the variatio

state policies, procedures, and delivery system

Performance Goals: To support efforts by 

Congress and the federal government to a

these issues, GAO will

■ evaluate Medicare reform, financing, and 

operations;

■ assess trends and issues in private health ins

coverage;

■ assess actions and options for improving VA

DOD’s health care services;

■ evaluate the effectiveness of federal program

promote and protect the public health;

■ evaluate the effectiveness of federal program

improve the nation’s preparedness for the p

health and medical consequences of bioterr

■ evaluate federal and state program strategies 

financing and overseeing chronic and long-t

health care; and

■ assess states’ experiences in providing health 

insurance coverage for low-income populati
GAO STRATEGIC PLAN 2002-2007 

government invests more than $90 billion per year 

in programs that foster the development, education, 

and protection of children from childbirth through 

elementary and secondary school and postsecondary education. Although federal spending is 

only about 7 percent of total spending on education, the federal government’s efforts are especially 

important in ensuring that all children have the 

opportunity to meet high academic standards from 

kindergarten through high school. The government’s postsecondary efforts provide access to 

higher education for all through the use of loans, 

grants, and other financial tools, while protecting 

the financial interests of taxpayers. 

According to the most recently available data, the 

federal government spent more than $9 billion in 

fiscal year 1999 on 29 programs that have early 

childhood education or care as an objective. These 

programs, including Head Start, are geared principally toward disadvantaged children from infancy to 

age 5—a developmental period during which early 

investment may lead to better performance in 

school years. Beyond inherent concerns about fragmentation and overlap among these programs, 

there is also concern about their effectiveness. 

Although the Department of Health and Human 

Services (HHS) and the Department of Education 

are sponsoring research on some of these programs, little is known about their ultimate effect, 

especially on school-readiness and early literacy 

skills—two areas at the center of the federal education focus. Federal investment in child care has 

been growing, in part to support low-income 

mothers who have entered the workforce due to 

welfare reform (see fig. 1.2). Policymakers at the 

federal and state levels are concerned about the 

cost, quality, and availability of child care.

Note: Child Care and Development Fund (CCDF) amounts 

dollars states transferred from their Temporary Assistance f

Families (TANF) programs to CCDF as allowed under the P

Responsibility and Work Opportunity Reconciliation Act of 

The amounts shown for TANF include only those TANF fun

expended for child care.

Source: Administration for Children and Families, HHS.

Federal elementary and secondary school pro

are especially designed to ensure that childre

poor families and children who are disadvan

are given the opportunity to meet challengin

demic standards, which will give them the sk

succeed. The United States places a high pr

on educating its children at the elementary a

ondary levels and has increased the federal i

ment from over $20 billion in fiscal year 200

nearly $30 billion in fiscal year 2002. Howev

increased investment is accompanied by an 

increased emphasis on accountability for sch

raise all students to proficient levels in math 

reading. With the reauthorization of the Elem

and Secondary Education Act, the Congress 

placed additional requirements on states, be

those in the 1994 act. For example, the Con

0

1000

2000

3000

4000

5000

6000

7000

1997 1998 1999 

TANF

CCDF
22 GAO STRATEGIC PLAN 2

reform initiatives and strategies to improve school 

performance, improve teaching, reduce student 

dropout rates, and enhance educational options for 

the nation’s children.

Figure 1.3: Achievement Gaps in Reading at 

Age 17

Source: National Center for Education Statistics, National 

Assessment of Educational Progress, 1999 Long-Term Trend 

Assessment.

Source: National Center for Education Statistics, National 

Assessment of Educational Progress, 1999 Long-Term Tre

Assessment.

The nation also needs to be concerned abou

tecting its children and ensuring that families 

the financial means to provide for their child

needs. Each year, over 800,000 children are 

to be the victims of abuse and neglect by th

ents, relatives, or other caregivers. Tragically

1,000 children die each year from abuse and 

neglect. While responsibility for investigatin

reports of abuse and neglect and providing s

to families falls primarily to state child protec

service agencies, the federal government inv

approximately $6 billion annually to provide 

for children who need placement outside th

homes, services to help keep families togethe

reunite them, and training and research activ

improve child welfare services nationwide. 

over, nearly 23 million children live with onl

of their parents. To help obtain the financia

port noncustodial parents owe their children 

help single-parent families achieve or mainta

nomic self-sufficiency, the Congress establish

joint federal/state child support enforcement 

gram in 1975 to help locate noncustodial pa

establish paternity and child support obligati

and enforce child support.

31

29 30

24

30

33

0

5

10

15

20

25

30

35

40

1994 1996 1999

Score Difference between White and Black Students’ 

Average Scores

Score Difference between White and Hispanic Students’ 

Average Scores

Score Differences

Calendar Year

1994 1996 1999

Score Difference between White and Black Stud

Average Scores

Score Difference between White and Hispanic S

Average Scores

Calendar Year

0

5
GAO STRATEGIC PLAN 2002-2007 

federal government also provides higher education 

subsidies for students or their families through such 

benefits as the Hope and lifetime learning tax 

credits and the deferral of tax on the earnings of 

contributions to qualified state tuition programs. 

These tax expenditures are just over $12 billion 

annually. A major concern with the nation’s investment in postsecondary education is its exposure to 

significant losses. While student loan default rates 

have decreased in recent years, student loan 

defaults still cost the federal government billions of 

dollars each year. For example, in fiscal year 2000, 

default costs for the Federal Family Education Loan 

Program were about $1.4 billion, while defaults 

under the Federal Direct Loan Program exceeded 

$600 million. The cumulative principal amount outstanding from defaulted student loans stood at 

about $22 billion in fiscal year 2001 (see fig. 1.5).

Note: Balances include defaulted loans under both the Fe

Family Education Loan and Federal Direct Loan Programs

year 2000 and 2001 data are from draft financial statemen

Source: Department of Education, Budget Service.

Performance Goals: To support efforts b

Congress and the federal government to 

address these issues, GAO will

■ analyze the effectiveness and efficiency of 

childhood education and care programs in 

serving their target populations;

■ assess options for federal programs to effe

address the educational needs of elementa

secondary students and their schools; 

■ determine the effectiveness and efficiency 

child support enforcement and child welfa

programs in serving their target population

■ identify opportunities to better manage 

postsecondary, vocational, and adult educ

programs and deliver more effective servic

I

ssue: A strong national economy depends, in 

part, on effectively preparing workers to compete in the labor force, efficiently helping 

employers locate qualified job candidates, providing 

a work environment that promotes productiv

and finding ways to help workers when they 

become unemployed. To this end, the feder

ernment currently invests more than $50 bill

0

5

1993 1994 1995 1996 1997 1998 1999 2000 

Fiscal Year

Strategic Objective:

The Promotion of Work Opportunities and t

Protection of Workers
24 GAO STRATEGIC PLAN 2

The last half of the 1990s saw welfare use decline 

and work efforts increase among single mothers 

(see fig. 1.6), a population targeted under the 1996 

welfare reform legislation. But the dramatic 

declines in welfare rolls nationwide slowed beginning in 2000; as the economy slowed in 2001, many 

states have begun to see their caseloads increase. 

As the nation emerges from an economic recession, 

the strength of these programs will be critical in 

maintaining a ready workforce and preserving economic stability. Furthermore, two key support programs—the Temporary Assistance for Needy 

Families block grant and the Food Stamp Program—are slated to be reauthorized in 2002. As the 

Congress faces reauthorization in a less favorable 

economy, it will need to consider the appropriate 

funding levels and structures, as well as experiences 

from implementation of the 1996 reforms.

Source: U.S. Census Current Population Survey data.

Technology is redefining the labor market fo

workers and employers, and federal employ

support and worker protection programs mu

with these new challenges, in addition to en

aging a commitment to lifelong learning. Ne

nologies, increased marketplace competition

very tight labor markets have prompted emp

to downsize, change employment patterns, m

abroad, or seek qualified foreign workers to 

their needs. More than ever, today’s econom

rewards skilled workers more than their uns

counterparts. College graduates have experi

growth in real earnings from 1979 to 2000, w

real earnings for those without a high schoo

diploma have declined. In addition, medica

technological advances, as well as changes i

nature of work, have combined to offer wor

age people with disabilities more opportunit

work than were available a generation ago. 

these new developments in technology and 

labor market are challenging the Congress a

administration as they redefine the role of pu

policies in enhancing productivity, protectin

workers’ rights, and facilitating labor-manage

cooperation, even as unemployment edges u

Performance Goals: To support efforts b

Congress and the federal government to 

address these issues, GAO will 

0

10

20

1987 1989 1991 1993 1995 1997 

Percentage Who Worked at Any Time 

during the Year

Percentage Who Received Aid to Families with 

Dependent Children or Temporary Assistance f

Needy Families during the Year
GAO STRATEGIC PLAN 2002-2007 

I

ssue: Social Security has long served as the 

foundation of the nation’s retirement income 

system. About 39 million people receive Social 

Security retirement and survivor benefits and, for 

one-fifth of the elderly, Social Security is the sole 

source of income. Yet because of demographic 

changes under way in the nation, the ratio of 

workers to retirees is declining. This change will 

have fundamental implications for Social Security 

and the economy. Although Social Security payroll 

tax revenues exceed benefit expenditures today, 

projections suggest that beginning in 2017, 

spending will exceed revenues by growing proportions and that in 2041, the Social Security Trust 

Funds will be depleted (see fig. 1.7). However, 

depending on the strength of the economy, the trust 

fund may be depleted more quickly. Action must 

be taken in the near term to restore solvency and 

sustainability to the Social Security system, particularly as other, even more urgent priorities present 

claims on public funding and legislative agendas. A 

variety of proposals for such actions have been 

made, including some that would create individual 

retirement accounts for workers. The Congress has 

considered a number of these proposals, and is 

continuing these policy deliberations. Most of the 

proposals would have major consequences for 

retirees’ benefits, the federal budget, and the longterm economic growth of the country.

Figure 1.7: Social Security Trust Fund Faces 

Insolvency in 2041

Source: GAO analysis of data from the Social Security 

Administration’s Office of the Actuary (2002 intermediate 

assumptions of the 2002 Annual Report of the Board of Tru

the Federal Old-Age and Survivors Insurance and Disabilit

Insurance Trust Funds).

Pensions are also an important element in th

nation’s approach to ensuring adequate retir

income, comprising 19 percent of retirement 

income in the United States (see fig. 1.8). N

less, tens of millions of U.S. workers have no 

vidual pension coverage, placing them at ris

f

1000

-500

0

500

1000

1500

2000

2500

3000

3500

4000

2000 2005 2010 2015 2020 2025 2030 2035 

FY 2002 Dollars in Billions

Cash Surplus

Cash Deficit

Trust Fund Balance

Social Security

cash deficit

2017
26 GAO STRATEGIC PLAN 2

Note: “Pensions” includes private pensions and annuities; 

government employee pensions; Railroad Retirement; and individual 

retirement account (IRA), Keogh, and 401(k) payments.

Source: Social Security Administration, Annual Statistical 

Supplement, 2001, p. 19.

Some workers with pensions are experiencing a 

new kind of coverage as a growing number of 

employers move away from traditional defined benefit plans to defined contribution plans. Further

Security program and the sustained lack of p

coverage to half of the labor force necessitat

workers place a greater reliance on their own 

ment savings to cover these gaps. Yet despit

potential shortfalls, personal savings rates co

to hover at historically low levels. Current eco

uncertainties may exacerbate this trend, threa

the prospects for individuals’ future retireme

income as well as the nation’s future econom

growth. 

Performance Goals: To support efforts b

Congress and the federal government to 

address these issues, GAO will 

■ assess the implications of various Social Se

reform proposals; 

■ identify opportunities to foster greater pen

coverage, increase personal saving, and en

adequate and secure retirement income; a

■ identify opportunities to improve the abili

federal agencies to administer and protect 

workers’ retirement benefits.

I

ssue: Spending on law enforcement continues to 

grow at the federal, state, and local levels. In 

constant 2001 dollars, federal spending will be 

about $34 billion in fiscal year 2002, up from about 

$15 billion in 1991 (see fig. 1.9). Most of the 

increase has been to accommodate a shift in 

at the federal level from helping local govern

control crime to emphasizing more distinct f

responsibilities, such as controlling illegal im

tion and, more recently, preventing terrorist 

3%

Pensions 

18%

Asset Income 

18%

Earnings 

23%

Social Security 

38%

Strategic Objective:

An Effective System of Justice
GAO STRATEGIC PLAN 2002-2007 

Note: The 2002 and 2003 numbers are estimates.

Source: Budget of the U.S. Government, Fiscal Year 2003.

During the past several years, overall crime levels 

have been reduced. Nevertheless, the Congress 

and the public remain concerned and look to the 

federal government for leadership on how to control domestic and transnational crime, including terrorism, to prevent illegal drug use, to provide 

effective treatment for drug users, to deter illegal 

immigration, and to control prison costs. The USA 

Patriot Act, passed in October 2001, significantly 

expands federal law enforcement authority and, 

with billions of dollars in emergency supplemental 

funding, will greatly increase the federal counterterrorism role. In addition, the newly created Office of 

Homeland Security in the Executive Office of the 

President is expected to coordinate the executive 

branch’s efforts to detect, prepare for, prevent, 

respond to, and recover from terrorist attacks within 

the United States. Many of these functions are the 

primary roles of law enforcement at the federal, 

state, and local levels—which heightens the importance of effective coordination and cooperation. 

Also, the Justice Department has begun to restructure the FBI and expects to redefine its mission and 

priorities in light of the increased focus on 

antiterrorism.

In the wake of the September 11 terrorist attacks in 

New York, Virginia, and Pennsylvania, the Congress 

authorized a Victim Compensation Fund through 

which the federal government will compensate any 

the largest federal law enforcement agency, 

undergone dramatic growth in recent years. 

stant 2001 dollars, its fiscal year 2002 budget 

billion represents an increase of over 200 pe

from its fiscal year 1993 budget and was sub

quently increased further by the emergency 

mental funding to deal with the events of 

September 11. Ensuring that aliens entering 

United States and staying here are authorized 

so has been a challenge for INS, one that too

new sense of urgency as part of the nation’s 

counterterrorism strategy. The 2000 census r

indicated that there were about 8 million ille

aliens residing in the United States, and that 

the 1990s their numbers had been increasing 

matically. Recently, the Congress has addres

such issues as whether INS is properly structu

effectively carry out its enforcement and serv

missions. On the enforcement side, INS grap

with how illegal entry into the United States 

deterred and how the removal of illegal alien

be expedited. On the service side, INS must 

mine how processes can be reformed for nat

tion, immigrants’ entitlements to welfare ben

and admitting temporary agricultural and hig

workers.

After several years of mandatory minimum s

tencing, “three strikes and you’re out” laws, 

truth-in-sentencing grants, federal and state p

are overcrowded. The size of the prison pop

will be the subject of increasing public deba

these policies’ cost to the public escalates. M

over, in constant 2001 dollars, the federal jud

fiscal year 2002 spending, estimated at abou

billion, was up nearly 100 percent from its fi

year 1991 spending of about $2.4 billion. In 

tion, the judiciary has faced an imbalance in 

workload in recent years, particularly its crim

caseload, with some courts facing much high

0

5

10

1991 1993 1995 1997 1999 2001 2003
28 GAO STRATEGIC PLAN 2

to prevent and respond to major crimes, 

including terrorism;

I

ssue: The economic and social well-being of 

the nation’s communities has a great bearing on 

the nation’s overall growth and prosperity. Vibrant 

communities are integral to the quality of life of 

America’s citizens. Community and economic 

growth is a multifaceted challenge involving state 

and local governments, nonprofits, and private entities covering a range of issues, including regional 

growth planning and management, local business 

development, home ownership, and disaster preparedness. As underscored by the events of September 11, where the critical role played by local 

governments in preparing and responding to terrorism attacks was highlighted for the entire nation, 

successful implementation of the many federal programs addressing these objectives depends on 

effective local governance and management.

The federal government operates more than 100 

programs through multiple federal agencies and 

spends billions of dollars annually on grants, loans, 

loan guarantees, and other types of assistance for 

community and economic development. The sheer 

number of programs raises questions about the federal role in economic development—whether it 

should be focused on communities with special 

needs or more broadly directed toward all communities. In addition, a large share of the federal commitment is administered through state and local 

governments and nonprofit organizations. T

ance on multiple layers of government and n

profits presents coordination issues for the lo

communities and oversight challenges for th

eral government. 

Small businesses play an important role in th

nation’s economy, employing more than half 

nation’s workforce. The Small Business Adm

tion (SBA), with a portfolio of loans worth m

than $50 billion, is the nation’s single largest 

cial backer of small businesses and provides 

agement and technical assistance to about 1 

small business owners annually. SBA also ha

sight responsibility for federal contracting go

small businesses. SBA has undertaken nume

initiatives to address management issues. As 

result, the Congress needs up-to-date assessm

of SBA’s performance.

To promote affordable home ownership, a k

ment of a vibrant community, the federal go

ment provides mortgage assistance through 

mortgage guarantees provided by the Federa

Housing Administration and the VA and guar

of mortgage securities by the Government N

Mortgage Association (GNMA). It also provi

federal charter and other direct and indirect b

to government sponsored enterprises—Fann

Strategic Objective:

The Promotion of Viable Communities
GAO STRATEGIC PLAN 2002-2007 

tance programs remain at high risk of waste and 

abuse, and HUD faces numerous management challenges in human capital, contract management and 

information technology. Also, HUD and the U.S. 

Department of Agriculture’s Rural Housing Service, 

which oversees rural housing programs, face challenges in ensuring that federally assisted properties 

are physically and financially sound and administered in a way that best serves the needs of lowincome households. All of these challenges point 

to the need to better understand the relationship 

between federally supported housing programs and 

community stability.

Since the late 1970s, the federal government provided over $100 billion to help prepare for disaster 

and to assist disaster victims and their communities. 

In response to the recent terrorist attacks, billions of 

dollars have already been appropriated for recovery 

■ assess federal economic development assi

and its impact on communities,

■ assess how the federal government can ba

the promotion of home ownership with fin

risk,

■ assess the effectiveness of federal initiative

assist small and minority-owned businesse

■ determine how federal disaster assistance 

enhance national preparedness and capac

respond to and recover from natural and m

made disasters, and

■ assess how well federally supported housi

programs meet their objectives and affect 

well-being of recipient households and 

communities.

I

ssue: The nation’s natural resources and the systems associated with their use are under unprecedented stress, generating intense debate and posing 

daunting challenges to policymakers at all levels of 

government. In part, this is the consequence of the 

country’s growing population and economy, but 

other stress factors exist as well, such as the globalization of the world’s economy and political tensions. Most glaringly, the tragic events of September 

11 revealed the nation’s vulnerability to hostile acts, 

mandating heightened protection of its critical natural resources, including the air we breathe, the 

water we drink, the food we consume, and 

energy supplies that keep the economy goin

Even before the tragic events of September 1

however, part of the country faced an energy 

The chaos in California’s electricity market u

scored the difficulties of crafting energy polic

regulatory approaches that adequately prote

against price volatility and supply disruption

Without the application of prudence and for

in crafting the nation’s strategic energy plan, 

crises could affect other areas of the country 

Strategic Objective:

Responsible Stewardship of Natural Resourc

and the Environment
30 GAO STRATEGIC PLAN 2

quences of energy choices, as illustrated by issues 

surrounding the potential reemergence of the 

nuclear power industry. While increased nuclear 

power capacity would provide needed electricity, 

vexing questions would remain about where and 

how to store the byproduct radioactive waste in an 

environmentally sound manner as well as how to 

secure the plants and waste sites against possible 

future attacks. 

The country’s lands and waters are more than ever 

under increasing stress. This is evidenced by rapidly dwindling open spaces, declining biodiversity, 

depleted aquifers, and collapsing fisheries—the 

unintended consequences of economic growth and 

the need to sustain the lifestyle of a growing population. Reconciling and balancing the demands of 

often competing objectives—economic growth for 

today versus natural resource protection for the 

future—is a major challenge facing the American 

public and their elected leaders. The difficulties 

experienced in trying to reach agreement on 

whether, and how, the Arctic National Wildlife 

Refuge in Alaska should be used for oil and gas 

drilling is a prime example of this challenge. In this 

case, the issue pertains to the use of federal lands, 

which constitute about 30 percent of the country’s 

total land surface, but similar controversies exist 

over privately held lands affected by federal law 

and regulations. The use of the nation’s waters 

present equally sobering challenges, as pollutants 

and over fishing rapidly deplete coral reefs and offshore fisheries, while competition over rights to 

fresh water supplies grows among various interests, 

such as ranchers, communities, utilities, and recreational users. Conflicts over water are especially 

pronounced in arid areas of the West that have 

experienced a high population growth in recent 

years. 

that food exports play in the health of the U

cultural economy. The Congress also faces 

important issues as it debates the future direc

U.S. farm policy. Questions over the role of 

ture in land conservation, wildlife habitat pro

tion, and energy production efforts are likely 

figure prominently in the deliberations. 

The increasing globalization of natural resou

issues also affects pollution control matters, a

in the federal government’s discussions with 

governments about global warming and wha

should be done about it. Such discussions a

new layer of complexity to the already diffic

question of how to sustain economic growth 

the engines of that growth—factories, cars a

trucks, fertilizers, electricity generating plants

adversely affect air and water quality. Anoth

factor in attaining federal air and water qualit

is that land use practices, often resulting in “

sprawl,” are controlled mainly by local govern

and private owners. Moreover, the federal g

ment relies upon state and local government

inspection and enforcement actions. 

Finally, significant challenges remain in clean

the country’s hazardous and radioactive wast

Today, an estimated 60 million Americans liv

within 4 miles of a hazardous site, and radio

waste from weapons production still needs t

cleaned up at Department of Energy sites in 

states. These sites’ continued existence pose

only potential health and safety problems, bu

and economic problems as well. Delayed cl

results in higher price tags for eventual clean

and in stunted economic development in the 

affected communities. Also, the terrorist atta

September 11 underlined the need for steps 
GAO STRATEGIC PLAN 2002-2007 

hazardous and nuclear wastes.

I

ssue: The nation’s economic vitality and the 

quality of life of its citizens depend to an important degree on the soundness and availability of its 

physical infrastructure. Transportation and telecommunications systems, for instance, provide the 

superstructure for the nation’s economic engine, 

facilitating the movement of people, goods, and 

ideas. Adequate drinking water and waste treatment facilities are also essential to the well-being of 

all Americans. The nation relies heavily on its 

postal system for efficient mail delivery service. 

And thousands of federal facilities house and support human capital and the other assets needed to 

provide services to the American people.

In both the short and the long term, the nation faces 

important infrastructure challenges as federal, state, 

and local governments confront new demands 

brought on by changes in demographics, technology, and lifestyles. The challenges are complex, 

cutting across many interrelated issues, and require 

coordinated intergovernmental responses. For 

example, the vulnerability of infrastructure systems 

to terrorism requires effective efforts to identify, 

prevent, and respond to threats. In addition, longterm trends indicate that increasing numbers of 

motorists and air travelers are encountering increasingly congested highways and airport runwa

Suburban growth has raised demands for ne

roads, water and sewer systems, and access 

communications. At the same time, existing 

munities are demanding that the environmen

their citizens’ quality of life not be harmed b

growth. The cost of maintaining and moder

its infrastructure is only one concern of a U.S

Service that faces growing financial, operatio

and human capital challenges. In addition, t

deregulated transportation and telecommuni

industries require continuous oversight to he

ensure that firms have a level playing field o

which to compete and that consumers receiv

intended benefits of deregulation.

The responses of the federal government and 

levels of government to these infrastructure 

lenges will have important consequences for 

nation’s future because of their effects on th

quality of life and their significant costs. Fur

more, infrastructure needs must compete wi

infrastructure demands such as health care a

war on terrorism. As shown in figure 1.10, f

spending for nondefense infrastructure has 

increased only slightly since 1981.

Strategic Objective:

A Secure and Effective National Physical 

Infrastructure
32 GAO STRATEGIC PLAN 2

Source: GAO’s analysis of Office of Management and Budget data.

Given limited resources, decision makers must 

choose the investments that promise to be most 

cost-effective and targeted to address national 

infrastructure needs. These choices must be 

supported by credible data on needs and costs, 

performance information and measures highlighting 

outcomes from existing programs, and a budget 

process prompting a more explicit focus on 

investment spending across agencies.

■ assess strategies for identifying, evaluating

prioritizing, financing, and implementing 

integrated solutions to the nation’s infrastr

needs;

■ assess the impact of transportation and 

telecommunications policies and practices 

competition and consumers;

■ assess efforts to improve safety and securit

transportation modes;

■ assess the U.S. Postal Service’s transformat

efforts to ensure its viability and accompli

mission; and

■ assess federal efforts to plan for, acquire, m

maintain, secure, and dispose of the 

government’s real property assets.

Any significant changes in the major forces shaping 

the United States discussed earlier in this plan will 

affect GAO’s ability to meet its goals and objectives. 

Already, the tragic events since September 11 have 

wrought major changes in the agenda of public 

policy issues facing the nation. Domestic policy and 

programs have become more intertwined with the 

nation’s security challenges, as the threats penetrate 

the nation’s borders. Each major objective in this 

plan has been changed to reflect the implications of 

the terrorism threat for GAO’s work in those areas. 

However, much uncertainty remains. The scope of 

the threat itself could shift in unforeseen ways. As 

the specific nature of the threats continues to be 

defined, the consequences for domestic programs 

and priorities are still unfolding. In some re

federal, state, and local governments are just 

ning the process of defining the most vulner

facilities, areas, and services and designing ef

strategies to both mitigate known threats and 

pare the nation to respond. The consequen

these initiatives will extend beyond the confi

counterterrorism programs themselves—the 

gress and the agencies will be challenged to 

fine their budgetary and program priorities a

the entire range of programs and activities to 

focus limited resources on the major threats 

facing the nation. As this process unfolds, GA

be called upon to help define effective coun

rorism strategies as well as to identify other 

0

20

40

1981 1985 1990 1995 1998

Fiscal Year

Total Spending

Defense

Nondefense

External Factors that May Affect Achievement of Goal 
GAO STRATEGIC PLAN 2002-2007 

ther weaken the long-term fiscal outlook, which is 

already unsustainable because of the aging of the 

population. Should deficits continue beyond the 

immediate downturn, renewed fiscal discipline will 

be necessary to restore the budget to balance and 

then a surplus, to better promote the level of savings necessary to prepare the nation for the longerterm challenges of an aging society. Unlike the 

income.

Any of these developments would reshape c

sional needs for information and analyses. GA

be prepared to respond to such a change by 

taining its expertise and the models needed fo

analyses.
34 GAO STRATEGIC PL

new opportunities for the nation as a whole and for 

American producers and consumers. At the same 

time, the United States is facing threats to its security 

and economy from sources that range from terrorism to regional conflicts to instability sparked by 

adverse economic conditions, corruption, ethnic 

hatreds, nationalism, and disease. Consequently, 

while seeking to anticipate and address diffuse 

threats to the nation’s security and economy, the 

federal government also tries to promote foreign 

policy goals, sound trade policies, and other strategies to advance the interests of the United States 

and those of U.S. trading partners and allies in every 

corner of the world. In light of the globalization, 

technology, and security trends, the second goal of 

GAO’s strategic plan is to help the Congress and the 

federal government respond to changing security 

threats and the challenges of global interdependence. 

■ respond to diffuse threats to national a

security,

■ ensure military capabilities and readin

■ advance and protect U.S. international 

and

■ respond to the impact of global marke

U.S. economic and security interests.
GAO STRATEGIC PLAN 2002-2007 

in nontraditional ways to avoid direct confrontation 

with U.S. military forces on the battlefield. Porous 

borders and rapid technological change make such 

threats more viable. At risk are the nation’s values, 

way of life, and the personal security of its citizens.

In response to the most recent attacks, the President, on October 8, 2001, established the Office of 

Homeland Security to develop and coordinate a 

national strategy. The office will coordinate the 

nation’s efforts to prevent, respond, and recover 

from the aftermath of terrorist attacks and to plan 

and budget for its homeland security mission. To 

support this new strategy, there also will have to be 

a concerted effort to improve the threat information 

the United States receives from foreign and 

domestic sources; to understand the nature of the 

threats to vulnerable assets and processes; and to 

protect the nation’s military forces, critical infrastructures and computer and telecommunications systems, and population. As discussed earlier, 

ster their efforts to prevent the proliferation 

dangerous weapons that can be used to carr

threats to the nation’s security.

Performance Goals: To support congre

and federal decision making on governm

wide preparation for and response to diffuse 

to national and global security, GAO will

■ analyze the effectiveness of the federal 

government’s approach to providing for 

homeland security;

■ assess U.S. efforts to protect computer and 

telecommunications systems supporting cr

infrastructures in business and governmen

■ assess the effectiveness of U.S. and interna

efforts to prevent the proliferation of nucle

biological, chemical, and conventional we

and sensitive technologies.

I

ssue: After a decade of decline in defense 

spending, DOD has seen a gradual increase in 

recent years. The fiscal year 2002 budget of about 

$331 billion represented the largest increase in 

defense spending in recent years and came amidst 

growing concerns over the readiness of U.S. forces. 

The budget included additional resources for operational maintenance, quality-of-life programs, pay 

raises, and improvements to crumbling facilities. 

The most recent Quadrennial Defense Review 

charts a new defense strategy emphasizing h

land security, military transformation, joint o

tions, and advanced capabilities related to 

information technology, intelligence, and sp

operations. Follow-on studies will more pre

define how existing defense programs and pr

will change. The new defense strategy also 

lights the criticality of reforming the departm

business practices, streamlining organization

Strategic Objective:

Ensure Military Capabilities and Readiness
36 GAO STRATEGIC PLAN 2

for increased defense spending. Requests for significant additional increases in defense spending are 

planned for fiscal year 2003 and beyond. The debate 

about what capabilities DOD must maintain and 

develop, where they should exist, and to what extent 

additional defense spending is required will be significantly shaped by the debate over the military’s role in 

homeland security and the augmentation of the 

civilian agencies’ roles in the fight against terrorism. 

Nonetheless, the Quadrennial Defense Review is the 

linchpin tying many of these issues together (see fig. 

2.1).

Figure 2.1: Key Topical Issues Framing the 

Defense Debate

and business systems and processes;

■ assess the National Nuclear Security Administ

efforts to maintain a safe and reliable nuclea

weapons stockpile;

■ analyze and support DOD’s efforts to impro

budget analyses and performance managem

■ assess whether DOD and the services have 

developed integrated procedures and system

operate effectively together on the battlefield

■ assess the ability of weapon system acquisiti

programs and processes to achieve desired 

outcomes.

Weapon

Systems

Modernization

Quality of Life

and Facilities

Infrastructure

Homeland

Security

Defense

Challenges

Human

Capital

Challenges

Guard

and Reserve

Roles

Force

Transformation

Nuclear

Stockpile

Capabilities

Based Strategy

vs. 2 MajorTheater Wars

Improved

Business

Practices

Jointness

and

Interoperability
GAO STRATEGIC PLAN 2002-2007 

■ Military and humanitarian interventions to make 

or keep the peace, stabilize and rebuild failed 

states, and deal with humanitarian emergencies 

have become major activities for the United 

States. These interventions are controversial, 

both domestically and internationally. They also 

are costly: the United States has spent more than 

$23 billion in the Balkans since the early 1990s. 

Many billions more are likely to be spent fighting 

terrorism. Such interventions are likely to 

continue to play a prominent role in addressing 

the forces giving rise to terrorism.

■ Countries in transition to democracies and 

private market structures are critical to U.S. 

economic and security interests. The countries 

and regions in transition are large, having 

combined populations in excess of two billion, 

and some are of strategic importance to the 

United States. The United States supports and 

encourages these transitions to democracies 

through several means. These include rule-oflaw assistance, measures to combat corruption, 

military support and training, and development 

assistance and humanitarian aid. The extent to 

which countries can successfully make the 

transition to and maintain democratic 

governments and market economies will 

significantly influence U.S. economic and security 

objectives and, ultimately, the U.S. budget. 

Countries failing to make the transition are more 

likely to embrace destructive nationalistic 

policies. The application and effectiveness of the 

tools available to the United States may affect the 

outcomes. 

■ Strategic alliances established decades ago are 

undergoing changes to better reflect current and 

future needs and priorities. For example, the 

terrorist attacks in New York and Washington 

Organization (NATO) expands its member

eastward, its focus is changing from defen

the territory of Western Europe to promoti

peace and stability outside member count

NATO enlargement has important implicati

U.S. relations with Russia, too. In addition

NATO’s expansion in the Balkans has high

the significant gaps that exist between the m

capabilities of the United States and those 

other NATO members. These gaps are lik

grow, further complicating the ability of th

alliance to conduct joint operations and 

exacerbating concerns over how roles and 

will be shared by NATO members. 

■ Conducting foreign affairs is becoming m

complicated as the lines between domesti

international issues blur and the threat of t

attacks on U.S. facilities and personnel ove

changes how America does business. Abo

federal agencies have around 19,000 U.S. 

assigned to overseas embassies (see fig. 2.

most federal policies have international as

The State Department plays a key role in 

coordinating U.S. policy and programs for 

region or country. To carry out its 

responsibilities, the State Department oper

more than 250 embassies and consulates l

in over 160 countries. It either owns or le

about 12,000 properties at these locations. 

reasonableness of the size and composition 

State Department’s overseas infrastructure 

being questioned, particularly in light of s

concerns. Also being questioned are the 

practices for granting entry into the United 

and the need to block the entry of terroris

criminals while at the same time facilitatin

for legitimate travel key to the nation’s pros

Moreover, recent attacks on the United Sta

prompted a rethinking of U.S. public diplo
38 GAO STRATEGIC PLAN 2

Note: USAID stands for the U.S. Agency for International 

Development.

Source: State Department.

■ evaluate the efficiency and accountability 

multilateral organizations and the extent to 

they are serving U.S. interests; and 

■ assess the strategies and management prac

for U.S. foreign affairs functions and activi

I

ssue: Globalization is increasing the interdependence of the world’s economies and affecting 

national security and the economic well-being of 

the American people. U.S. exports have grown 

much faster than the economy (see fig. 2.3). Moreover, the United States has been the principal architect of an open world trading system and, as the 

world’s largest exporter of goods and services, has 

benefited immensely from global trade. But segments of the U.S. and world populations have not 

shared equally in these benefits and may not do so 

in the future. Moreover, global market forces have 

made the United States more vulnerable to overseas 

economic crises. In addition, it has become 

difficult for the United States to maintain con

over critical technologies and the industrial b

that U.S. economic and military security dep

on. With the global reach of the Internet, ele

government and commerce applications mo

more easily across national boundaries. Thes

applications thereby raise legitimate question

about legal responsibility, consumer protecti

jurisdiction over offenses committed online, 

many others. For policymakers, several aspe

these trends require particular attention: 

State 

Department

40%

Defense

Department

38%

Justice

Department

6%

5%

Strategic Objective:

Respond to the Impact of Global Market For

on U.S. Economic and Security Interests
GAO STRATEGIC PLAN 2002-2007 

Source: Calculated from International Monetary Fund data.

■ Trade agreements are increasing in number and 

importance to the U.S. economy. More than 300 

international trade agreements affect hundreds of 

billions of dollars in trade and millions of U.S. 

jobs. The mutual dependence of international 

markets and the U.S. economy is expected to 

increase even further with China’s recent 

admission to the World Trade Organization and 

the launching of new multilateral trade 

negotiations. Over 10 U.S. agencies have 

programs to promote U.S. exports. These 

programs include providing financial assistance 

through loans, loan guarantees, and grants as 

well as providing U.S. businesses with 

information on the export process.

■ The globalization of the defense industry, driven 

by the drop in governments’ military investments 

worldwide, is following patterns similar to those 

found in other commercial sectors. Defense 

companies are engaged in a wide variety of 

business arrangements across national borders. 

For example, U.S. companies enter into offset 

agreements, in many cases developing long-term 

supplier relationships, which will change the 

nature of the market and the composition of the 

DOD supplier base. Although globalization has 

the potential to speed innovation and reduce 

costs, it also carries potential threats to the 

technological superiority of the U.S. military and 

may require even greater investments in weapons 

modernization.

The United States is the major contributor 

IMF and relies heavily on it and the World 

to promote world economic health. The 

operations and transparency of these insti

have come under increased scrutiny.

■ Oversight of financial institutions and ma

has become increasingly challenging. Eac

millions of households collectively have tr

of dollars flowing through the nation’s fin

institutions and markets. The globalization 

financial firms and markets along with con

advancing technology have created opport

for increased efficiencies but also have inc

the speed and potential scope of undesira

results that may occur, such as the flow of 

finances or the spread of financial crises. 

global scope of firms, along with difficulti

valuing knowledge-based assets, also raise 

questions about the accounting and disclo

models that underpin U.S. financial marke

Finally, the globalization of electronic com

increases access but makes it harder to pr

consumers and businesses from fraudulen

abusive marketing as well as adding to au

security, backup, and disaster recovery co

Performance Goals: To support efforts b

Congress and the federal government to 

address these issues, GAO will

■ analyze how trade agreements and progra

serve U.S. interests,

■ improve understanding of the effects of de

industry globalization,

■ assess how the United States can influence 

improvements in the world financial syste

0

100

1970 1975 1980 1985 1990 1995 2000
40 GAO STRATEGIC PLAN 2

p

and long-term responses to recent terrorist attacks 

on the homeland, concerns about operational security are likely to be emphasized both at home and 

abroad. Consequently, it may be more difficult to 

obtain and report on operational and readinessrelated information. GAO reports dealing with 

these areas may be subjected to greater classification reviews than in the past, which could limit their 

public dissemination. Moreover, historically GAO’s 

access to the intelligence community for audit and 

information purposes has been limited. Continuation of this practice could hamper GAO’s ability to 

fully assess progress in addressing the full range of 

homeland security issues. 

y 

institutions that the United States works with 

tect its interests. Accordingly, GAO’s ability 

duct thorough analyses of some issues has b

affected by the level of openness and volunt

cooperation. However, the recent terrorist a

in the United States are producing unparalle

opportunities for international cooperation in 

areas. Likewise, other changes in the intern

environment and unanticipated geopolitical 

could affect GAO’s strategy and objectives. 

will monitor international events, work close

its congressional clients, and maintain broad

staff expertise so that it can quickly adjust its 

focus to meet emerging needs.
GAO STRATEGIC PLAN 2002-2007 

technological advances, and changing demographics. These challenges require a fundamental 

reexamination of the government’s priorities, processes, policies, and programs to effectively address 

shifting public expectations, needs, and fiscal pressures. What has become obvious since September 

11 is that the federal government will need to work 

better with other governments, nongovernmental 

organizations, and the private sector—both domestically and internationally—to achieve results. A 

mixture of critical resources is needed for the federal government to better deliver public services. 

Because the public expects demonstrable results 

from the federal government, government leaders 

need to increase strategic planning, address management challenges and high-risk issues, use integrated approaches, enhance their agencies’ results 

orientation, and ensure accountability. Examining 

existing programs and operations for potential cost 

savings can create much needed fiscal flexibility to 

address emerging needs. Moreover, addressing 

today’s priorities must be balanced against the longterm fiscal pressures of financing existing programs 

and operations.

GAO has refined its third strategic goal and the 

accompanying strategic objectives in light of the 

comprehensive reassessment called for in the current environment. Specifically, GAO now focuses 

on the collaborative and integrated elements 

needed to achieve results, and it highlights the 

intergovernmental relationships that are necessary 

to achieve national goals.

To ensure that GAO helps transform the role of 

government and how it does business to meet 21st

century challenges, it has established strategic 

objectives to

j

■ assess the government’s human capita

and other capacity for serving the 

public;

■ support congressional oversight of the 

federal government’s progress toward 

being more results-oriented, 

accountable, and relevant to 

society’s needs; and

■ analyze the government’s 

fiscal position and 

approaches for financing 

the government.
42 GAO STRATEGIC PLAN 2

between the federal government and other public 

sector institutions have become increasingly 

blurred. In fact, since the 1930s there has been a 

largely overlooked revolution in which the traditional hierarchical federal agency model—that is, a 

federal agency implementing a program through 

annually appropriated funding—has been essentially replaced by an incredibly diverse and blended 

service-delivery model involving many different 

parties and tools of intervention (for example, 

grants, tax expenditures, regulations, loans, guarantees, and insurance). Nowhere does this revolution 

become more evident and more confounding than 

in federal agencies’ efforts to become more resultsoriented. In the 21st century, federal agencies’ performance and accountability will, to an ever greater 

extent, be seen as a function of nonfederal entities 

Performance Goals: To inform the Cong

the implications of the increased role of 

and private parties in achieving federal objec

GAO will

■ analyze the modern service-delivery system 

environment and the complexity and inter

of service-delivery mechanisms,

■ assess how involvement of state and local 

governments and nongovernmental organi

affect federal program implementation and 

achievement of national goals, and

■ assess the effectiveness of regulatory 

administration and reforms in achieving 

government objectives. 

I

ssue: The federal government requires a mixture 

 of critical resources—such as human capital, 

information technology, and financial systems—to 

fulfill its roles and achieve intended results. Unfortunately, over the last decade, the federal government has missed opportunities to make needed 

investments in these resources effectively. For 

example, agencies have only recently started 

analysis necessary to link their human capita

cies and practices to their missions and goals

situation puts the government at risk becaus

increasing number of federal employees will 

become eligible to retire over the next severa

(see fig. 3.1).

Strategic Objective:

Assess the Government’s Human Capital an

Other Capacity for Serving the Public
GAO STRATEGIC PLAN 2002-2007 

Notes: Estimates do not reflect likely attrition before becoming 

eligible to retire. “Employees” are career federal employees at 

agencies that fall under the Chief Financial Officers (CFO) Act, 

which account for about 98 percent of the executive branch’s 

employees. The CFO Act agencies include the cabinet agencies 

and major independent agencies, such as the Environmental 

Protection Agency and the Social Security Administration, but 

exclude the U.S. Postal Service, the Federal Reserve, the 

Tennessee Valley Authority, and the intelligence agencies. 

Source: GAO’s analysis of data from the Office of Personnel 

Management’s Central Personnel Data File as of Sept. 30, 1998.

Accordingly, GAO and the President have identified 

human capital as a critically needed management 

reform. In January 2001, GAO designated strategic 

human capital management as a governmentwide 

high-risk area. GAO’s high-risk report outlined four 

pervasive human capital challenges facing the federal government:

■ strategic human capital planning and 

organizational alignment;

■ leadership continuity and succession planning;

■ acquiring and developing staffs whose size, skills, 

and deployment meet agency needs; and

■ creating results-oriented performance cultures.

Moreover, the President’s Management Agenda for 

Fiscal Year 2002 also identifies human capital as the 

first of five governmentwide areas for management 

reform (see fig. 3.2). It calls for workforce planning 

and restructuring in terms of each agency’s mission, 

goals, and objectives. Both the administration and 

the Congress have proposed legislation intended to 

address human capital issues at the federal level. 

In addition, numerous poorly managed infor

technology systems have produced multimill

dollar cost overruns, schedule slippages, and 

results, and now the government’s informati

technology and management infrastructure f

security threats. Similarly, the federal govern

financial management has suffered from neg

and financial systems with serious shortcomi

One result of this condition is that many age

prepare statutorily required annual financial 

ments, and receive unqualified audit opinion

by using inefficient, time-consuming, and co

processes to remedy inaccurate and untimely 

mation produced by their financial systems. 

approach does not result in significantly imp

financial management and requires resource

could otherwise be used to address underlyi

financial management systems and control p

lems. Moreover, financial management succ

goes beyond an unqualified financial statem

audit opinion—the federal government also 

recognize the importance of success measure

as having financial information that is timely

able, and useful for managing operations da

day; financial systems that meet requirement

material internal control weaknesses; and co

reporting that captures the full cost of progra

projects.

Agencies also are considering other approac

achieving greater efficiency and effectivenes

their operations, including appropriate use o

tracts with the private sector. In response to 

gressional mandate, GAO convened the 

Commercial Activities Panel, chaired by the 

troller General, to review the process and pr

dures agencies use to decide whether to hav

needed services performed by government 

employees or through contracts with the priv

sector. The panel issued its report to the Co

0

10,000

20,000

2000 2002 2004 2006 2008 2010 2012

Fiscal Year
44 GAO STRATEGIC PLAN 2

also important that this information—especially that 

collected for statistical purposes—meets the current 

needs of federal programs and policymakers. In 

areas where the U.S. economic and social structure 

is undergoing major change, statistical agencies 

need to respond to these changes with relevant data 

on a timely basis.

Finally, despite recent reforms to transform the federal acquisition process, the government still does 

not have a world-class purchasing system. All too 

often, many of the products and services the government buys cost more than expected, are delivered late, or fail to perform as expected. No 

commercial business would remain viable for very 

long with results like these. Significant improvements—including the skills of the acquisition work

■ identify ways to improve the financial 

management infrastructure capacity to pro

useful information to manage for results an

day to day;

■ assess the government’s capacity to manag

information technology to improve perfor

■ assess efforts to manage the collection, us

dissemination of government information 

era of rapidly changing technology; 

■ assess the effectiveness of the Federal Stat

System in providing relevant, reliable, and 

information that meets federal program ne

and

■ identify more businesslike approaches tha

be used by federal agencies in acquiring g

and services.

I

ssue: During the past decade, the Congress has 

sought to instill a greater focus on results and 

accountability by enacting a statutory framework 

with the Government Performance and Results Act 

(GPRA) as its centerpiece. However, GAO has 

reported that performance improvements do not 

take place merely because a set of management 

requirements has been established and that building 

organizational cultures that help create and sustain 

a focus on results remains a work in progress. 

Linking the GPRA strategic planning process 

institutional and individual performance man

ment and reward systems can serve to signifi

accelerate movement toward a more results-

ented and accountable federal government. 

GAO’s governmentwide surveys, for exampl

eral managers have reported that their top le

still do not show a consistently strong comm

to achieving results (see fig. 3.3).

Strategic Objective:

Support Congressional Oversight of the Federal 

Government’s Progress toward Being More Res

Oriented, Accountable, and Relevant to Society

Needs
GAO STRATEGIC PLAN 2002-2007 

Note: Survey respondents were both Senior Executive Service 

(SES) members and non-SES members. “Top leadership” refers to 

the leadership of the agencies in which the respondents serve.

Source: GAO survey data.

Also, in crafting GPRA, the Congress recognized 

that if federal managers were to be held accountable for program results, they would need the 

authority and flexibility to achieve those results. 

However, managers also reported that while they 

often are held accountable for results, they sometimes do not have the decision-making authority 

they need to accomplish agency goals (see fig. 3.4). 

Notes: “Needed” decision-making authority refers to the au

managers responding to the survey believe managers at th

need to help their agencies accomplish their strategic goal

Source: GAO survey data.

Part of a results-oriented framework is releva

that is, the extent to which programs meet so

priorities. Performance indicators can help d

makers gauge the relevance of programs in m

societal needs.

The President’s Management Agenda for Fisc

2002 also seeks to instill a greater focus on g

mental results, presenting a number of gover

wide initiatives, including the aforesaid hum

capital goals, and program-specific initiatives 

intended to improve federal management an

deliver results. For example, consistent with 

position, the agenda identified improving fin

performance as an important initiative to sto

neous benefit and assistance payments and t

ensure that agencies supply reliable, accurat

timely information to enhance accountability 

American people. Furthermore, among the s

initiatives is the development of better criter

federal investment in science and technology

Although science and technology are major 

in economic growth, there must be accounta

for the investment of the federal money supp

these activities in terms of effectiveness in ach

specific goals.

0

10

20

30

1997 2000

Non-SES

SES Had Decision-Making Authority

Held Accountable for Results

29

0

10

20

30

Non-SES SES Non-SES S

1997 2000
46 GAO STRATEGIC PLAN 2

toward being more results-oriented, accountable, 

and relevant to society’s needs, GAO will

■ analyze and support efforts to instill resultoriented management across the government,

property, and

■ identify ways to improve the quality of eva

information and explore the use of 

governmentwide performance indicators t

gauge progress in meeting societal needs.

I

ssue: The federal budget is the principal annual 

vehicle through which the Congress and the 

President balance competing views about the allocation of federal resources, accountability for those 

resources, and the allocation of responsibility 

between the public and private sectors and among 

levels of government. After many years of 

attempting to balance the federal budget in the face 

of chronic deficits and mounting federal debt, federal fiscal policy in recent years focused on saving 

surpluses and reducing debt. In the past year, however, the near-term budget outlook has worsened 

with deficits projected for the next few years. 

GAO’s long-term budget model has consistently 

suggested that without changes for the major retirement and health care programs, large deficits and 

mounting debt will emerge over the long term. It 

will be difficult to address today’s urgent need to 

deal with terrorism and to increase national preparedness without unduly exacerbating the n

long-term fiscal challenges. The budget con

instituted to achieve balance have recently e

but no agreement has been reached on the a

priate structure or process for focusing on th

challenges that now move to center stage.

To understand the context for near-term bud

decisions more fully, it is important to look at 

in revenue sources and the distribution of ex

tures. These trends show (among other thin

growth in the relative share of revenues deri

from employment taxes, such as those for So

Security (Old-Age Survivors and Disability In

ance), and a dramatic change over time in co

tion of spending, with a growing share devo

health and interest on the debt, as figures 3.

3.6 show.

Strategic Objective:

Analyze the Government’s Fiscal Position a

Approaches for Financing the Government
GAO STRATEGIC PLAN 2002-2007 

Note: Fiscal year 2002 data are the current services estimates of the 

Office of Management and Budget.

Source: Budget of the U.S. Government, fiscal year 2003. 

Figure 3.6: Composition of Federal Spending by 

Budget Function, Fiscal Years 1962, 1982, and 

2002

Note: Fiscal year 2002 data are the current services estimates of the 

Office of Management and Budget.

Source: Budget of the U.S. Government, fiscal year 2003. 

In rethinking federal fiscal policy and preparing for 

the long-term budgetary challenges, policymakers 

have the opportunity to consider what the federal 

government does and how to finance those activi

cant burden imposed on businesses and indiv

IRS is in the midst of implementing major leg

tively mandated reforms in how the nation’s 

system is administered, and congressional in

remains focused on what progress IRS is ma

Congressional attention will also continue to 

on controlling spending. A key to making re

decisions is having reliable, useful, and timel

cial information routinely available. Such in

tion is also necessary to ensure financial 

accountability and to improve the economy, 

ciency, and effectiveness of government actio

have a direct effect on achieving a more resu

ented government.

Performance Goals: To analyze the gov

ment’s fiscal position and identify ways t

strengthen approaches for financing the gov

ment, GAO will

■ analyze the long-term fiscal position of the 

federal government,

■ analyze the structure and information for 

budgetary choices and explore alternative

improvement,

■ contribute to congressional deliberations o

policy,

■ support congressional oversight of IRS’s 

modernization and reform efforts, and

■ assess the reliability of financial informatio

the government’s fiscal position and finan

sources.

Individual Income Taxes

Corporation Income Taxes

Social Insurance

Excise Tax and Other

FY 1962

31%

6%

13%

50%

FY 1982

34%

11%

9%

21%

25%

FY 2002

33%

18%

9%

17%

23%

Defense

Social Security

Medicare and Medicaid

Net Interest

All Other Spending
48 GAO STRATEGIC PLAN 2

(3) the level and management of resources provided for needed investments in agencies’ manage

cost-effective use of federal resources. 
GAO STRATEGIC PLAN 2002-2007 

j

based, nonpartisan, nonideological, fair, and balanced. GAO should also lead by example. The 

focus of goal 4 is to make GAO a model organization—one that is client and customer driven; 

exhibits the characteristics of leadership and management excellence; leverages its institutional 

knowledge and experience; is devoted to ensuring 

quality in its work processes and products through 

continuous improvement; and is regarded as an 

employer of choice. 

In this respect, the focus of goal 4 for the period 

2002 through 2007 is largely unchanged from the 

previous plan. GAO has, however, made some 

refinements. For example, rather than have a separate strategic objective for information technology 

(IT), GAO has integrated technology efforts 

throughout this strategic plan because technology 

significantly contributes to GAO’s performance and 

affects many agencywide efforts. Furthermore, GAO 

has added a strategic objective on knowledge 

sharing to ensure that as a knowledge-based organization, it collects, shares, and leverages its institutional knowledge on emerging issues that shape 

America today and in the future. 

j

■ sharpen GAO’s focus on clients’ and c

requirements,

■ enhance leadership and promote man

excellence,

■ leverage GAO’s institutional knowledg

and experience,

■ continuously improve GAO’s business 

and management processes, and 

■ become the professional services 

employer of choice.
50 GAO STRATEGIC PLAN 2

federal, nonfederal, and international agencies, 

organizations, and institutions. GAO’s internal customers are its own staff. They are the principals 

responsible for delivering quality products and services to GAO’s clients. Therefore, being a model 

agency depends on both determining and meeting 

the requirements of clients and internal customers. 

For external clients, GAO plans to continuously 

update its understanding of their needs and expectations through expanded outreach efforts and strategic planning. GAO also plans to develop and use 

quality measurement systems and feedback mechanisms to obtain external clients’ views on GAO’s 

products and services. In addition, to complement 

congressional protocols implemented during the 

previous planning cycle, GAO will develop 

For internal customers, GAO plans to identif

needs and expectations through expanded ou

and planning efforts. GAO will identify and 

develop high-quality measurements to asses

tomer satisfaction, business processes, and a

plishment of the agency’s strategic direction. 

addition, GAO will develop policies and proc

to guide how its work responds to customer n

Performance Goals: To support the obje

sharpen GAO’s focus on clients’ and cust

requirements, GAO will

■ continuously update client requirements,

■ develop and implement stakeholder proto

and refine client protocols, and

■ identify and assess customer requirements 

measures.

I

ssue: GAO intends to establish results-oriented 

agency management practices that will establish 

the agency as a leader among high-performing professional services organizations. To accomplish this 

objective, GAO will build on its established base of 

strategic planning, performance management, 

sound financial management, IT best practices, and 

leadership initiatives. GAO will also need to institute new ways of doing business to create management and leadership systems that are practical, 

flexible, and that enable managers to efficien

resources to solve problems. GAO will lead 

example.

Performance Goals: To support the obj

to enhance leadership and promote 

management excellence, GAO will

■ foster an attitude of stewardship to ensure 

commitment to GAO’s mission and core v

■ implement an integrated approach to strat

management,

Strategic Objective:

Enhance Leadership and Promote 

Management Excellence 
GAO STRATEGIC PLAN 2002-2007 

I

ssue: GAO is a knowledge-based professional 

services organization. It needs to use a wide and 

expanding variety of media to communicate the 

results of its work to its clients and the public. It 

also needs to preserve information from its work for 

the long-term and to share knowledge among its 

staff and with others so that it can improve service 

to its clients, the executive branch, taxpayers, and 

other governments, both domestic (state and local) 

and international.

Performance Goals: To support the obj

to leverage its institutional knowledge an

experience, GAO will 

■ improve GAO’s Web-based knowledge too

■ develop a framework to manage the colle

use, distribution, and retention of organiza

knowledge; and

■ strengthen relationships with other nation

international accountability and profession

organizations.

I

ssue: GAO, as the federal government’s accountability organization, evaluates the economy, efficiency, and effectiveness of a wide range of federal 

policies and programs to assist the Congress for the 

benefit of the American people. By continuously 

assessing and improving its products, as well as its 

business and managerial processes, GAO can determine whether the organization’s operations are 

aligned with its strategic direction and comply with 

applicable professional standards in the conduct of 

its work.

Performance Goals: To support the obj

to continuously improve its business and 

agement processes, GAO will

■ improve internal business and administrat

processes,

■ improve GAO’s product and service lines 

better meet client needs, and

■ improve GAO’s job management processe

Strategic Objective:

Continuously Improve GAO’s Business and 

Management Processes
52 GAO STRATEGIC PLAN 2

supports personal, professional, and organizational 

growth. GAO wants to be regarded as an employer 

of choice—one that recruits and retains excellent 

employees, and is considered one of the best places 

to work. The agency is committed to treating all 

employees fairly, respecting their diversity, and valuing their contributions. GAO’s human capital initiatives should enable employees to develop and use 

their full potential, as aligned with agency 

objectives. 

family-friendly, and promotes and values 

opportunity and inclusiveness;

■ improve compensation and performance 

management systems; 

■ develop and implement a training and 

professional development strategy targeted 

toward competencies; and

■ provide GAO’s people with tools, technol

and a working environment that is world-

A significant constraint to achieving GAO’s objectives under this goal relates to the security situation 

facing the nation and the Congress since the events 

of September 11. The attacks of September 11 have 

caused GAO to completely rethink many of the 

principles of physical and information security that 

apply to its day-to-day operations. Moreover, the 

Congress’s use of the GAO’s headquarters building 

for contingency operations in the wake of the 

anthrax attacks on the U.S. Capitol caused GAO to 

quickly shift substantial mission support resources 

to respond to its congressional client’s immediate 

needs. The potential for the House and the Senate 

to rely on GAO for similar direct support in the 

future could significantly affect areas of the plan 

related to continuity of operations, physical and 

information infrastructure, and security. It could 

also result in changed priorities and delays in 

achieving some of GAO’s other stated objectives.

The availability of resources could also affect GAO’s 

timely achievement of objectives under this goal. 

Specifically, the agency envisions relying, to a great 

extent, on in-house expertise as it develops the necessary strategies, policies, and process chang

identified with each of the five strategic obje

This approach will require GAO to apply the 

knowledge, skills, and abilities of its current 

the diversity of strategic needs identified in th

However, in-house expertise alone will not b

enough to fully accomplish GAO’s objectives

is especially true with regard to GAO’s huma

ital, business process, and enabling technolo

atives. To bring a fresh perspective, subject 

expertise, and knowledge of best practices to 

issues, GAO will need to rely on assistance f

external consultants and contractors. In the 

that its planned resources need to be diverte

respond to changing national priorities or can

made available because of changing budget 

ties, GAO’s ability to achieve its stated objec

could, at minimum, be delayed. 

GAO will work closely with its oversight and 

priations committees to help ensure that it re

responsive to its clients’ needs and changing 

national priorities and that needed resources 

available to address emerging contingencies

External Factors that May Affect Achievement of Goal 4
GAO STRATEGIC PLAN 2002-2007 

clients, the results achieved, and its employees.

Key Performance Measures

GAO uses both quantitative and qualitative performance measures to assess progress in achieving its 

strategic goals and objectives. Collectively, these 

measures help demonstrate the degree to which 

GAO 

■ provides timely, quality service to the Congress 

and the federal government so that they can 

respond to current and emerging challenges and

■ helps the government meet 21st century 

challenges by transforming its role and its ways of 

doing business.

To assess GAO’s progress toward its external strategic goals (that is, goals 1, 2, and 3) and their 

objectives, the agency uses two types of quantitative 

measures. First, GAO assesses its efforts to provide 

support to the Congress and the federal government 

in terms of the number of recommendations GAO 

has made, the percentage of its products that contain recommendations, the percentage of recommendations implemented, the number of 

testimonies GAO has given before the Congress, 

and the timeliness of its products. Second, GAO 

goes beyond these measures of services provided to 

assess the results or outcomes related to the services 

it has provided. GAO does this by tabulating both 

the financial benefits to the taxpayers and the 

improvements to government programs and services that result when action is taken in response to 

information and recommendations it provided. 

GAO sets performance targets for all of these quantitative measures annually and compares its actual 

performance with the targets.

To complement GAO’s annual quantitative m

sures, the agency sets multiyear qualitative p

mance goals for each of its strategic objectiv

help it assess whether it has done the work 

planned to do for its congressional clients. T

performance goals reflect the breadth and de

GAO’s work, and each includes a set of key 

to be undertaken during the first 2 years of t

plan: fiscal years 2002 and 2003. Potential ou

are also listed for each performance goal to 

light the improvements that may result if the 

gress and the federal government use the 

information and recommendations GAO pro

(To review these key efforts and potential ou

comes, please see the “Strategic Supplement

tion at www.gao.gov/sp.html. Annual report

GAO’s progress toward its goals and objectiv

updates to its plan are also posted on the W

page.) 

Other benefits that take the form of improvements 

government programs to which GAO’s work 

contributed, such as improving programs’ economy

efficiency, and effectiveness and better financial or 

information management systems

Testimonies delivered, an indicator GAO uses as 

measure of direct support to the Congress

Recommendations made and those subsequent

implemented to correct the underlying causes of 

problems that impede government efficiency and 

effectiveness—measured in terms of (1) the numb

of recommendations made, (2) the percentage of 

products containing recommendations, and (3) the 

percentage of recommendations implemented 4 

years after they were made

Timeliness of GAO’s products, as measured by th

extent to which they are delivered to clients by 

agreed-upon dates
54 GAO STRATEGIC PLAN 2

in making the internal improvements necessary to 

achieve that goal and its objectives. As with GAO’s 

external strategic objectives, each objective under 

the internal strategic goal has a set of multiyear 

qualitative performance goals with key efforts that 

will be assessed after 2 years. The assessments of 

whether these performance goals have been met 

are made by senior managers based on the work 

done on the goals’ key efforts. GAO expects that for 

one of these performance goals to have been met, 

75 percent of the key efforts should have been 

completed.

GAO is continuing to refine its measures, working 

toward a “balanced scorecard” that evaluates performance from three key perspectives: GAO’s clients, 

GAO’s results, and GAO’s people. The agency 

plans, for instance, to establish a client feedback 

measure and indicators that assess its efficiency and 

effectiveness in supporting its staff in their efforts to 

serve GAO’s clients and the American people. 

Evaluations

For the purposes of this plan, GAO used several 

periodic evaluations to help review and revise its 

strategic objectives. One of the essential steps in the 

planning process for goals 1, 2, and 3 was an evaluation of actions taken by federal agencies and the 

Congress in response to GAO’s recommendations. 

GAO actively monitors the status of open recommendations and uses the results of its analysis to 

determine the need for further work in an area. If, 

for example, an agency has not undertaken a recommended action that GAO considers still valid and 

worthwhile, GAO may decide to pursue further 

action with agency officials, with congressional 

committees, or to undertake additional work. 

other things, a valuable planning tool for GA

helping it identify those areas where its cont

efforts are needed to maintain the focus on i

tant policy and management issues facing th

nation.

GAO also used a number of studies and evalu

to help review and update the strategic obje

on improving its internal operations under st

goal 4. These studies and evaluations—many 

which were identified in GAO’s initial strateg

(covering fiscal years 2000 through 2005)—i

■ a comprehensive assessment of GAO’s hu

capital policies and practices;

■ a first-ever knowledge and skills inventory 

will identify skill gaps and provide the bas

sound succession planning within the age

■ a comprehensive review of GAO’s IT 

infrastructure to identify opportunities to in

the agency’s efficiency, effectiveness, and 

productivity;

■ a security evaluation of GAO’s IT systems; 

■ a case study of GAO’s initial strategic plan

process.

Finally, GAO’s Office of the Inspector Gener

uates the administration of the agency, includ

assessment of key performance measuremen

Inspector General’s evaluations are useful fo

ensuring that GAO’s operations are efficient 

economical and serve as another input for up

the objectives under strategic goal 4.

A number of planned evaluations should be

GAO’s future strategic planning efforts. GAO 

continue to monitor the status of open recom

dations to determine the need for additional 
GAO STRATEGIC PLAN 2002-2007 

Because GAO’s mission, goals, and objectives are to 

support the Congress in its decision making, GAO 

consulted with Members and their staff in drafting 

this updated strategic plan and continued to seek 

their views as the plan evolved. The feedback from 

those consultations allowed GAO to make adjustments to its planned work so that it better serves the 

Congress’s institutional interests. While GAO will 

continue to respond to congressional requests for 

work much as it always has, it expects that its plan 

will help it to be more efficient and effective in 

meeting those requests because it will be better able 

to anticipate congressional needs and deploy its 

resources accordingly. 

Although GAO is unique in the scope of its activities to support the Congress and to improve the 

performance and accountability of government, it 

works closely with other members of the accountability community. Each member of this community 

has different roles, responsibilities, and expertise, 

but collectively, they advance the principles 

good government through a variety of activit

take advantage of opportunities to work coll

tively, GAO continues to ensure that its work 

plements the efforts of others and that crossc

goals are mutually reinforcing and efficiently 

mented. As part of GAO’s periodic meetings 

other interactions, it consulted with key mem

the accountability community, including the 

tors general, the chief financial officers, the h

state audit agencies, and the executives of o

nations’ audit agencies. GAO also shared a d

this plan with them. In addition, GAO consu

and shared the draft with officials from the O

Management and Budget, the Congressional 

Office, the Congressional Research Service, a

other federal agencies. GAO also consulted 

experts outside of government—including th

the Comptroller General’s Advisory Board an

cators’ Advisory Panel—and sought their view

draft of this plan.

Consultations and Relationships with Other Agencies
56 GAO STRATEGIC PLAN 2
GAO STRATEGIC PLAN 2002-2007 

COREVALUES

cal 2002-2007

eing and 

ests

es of 

ented, 

government

g of the 

 

. . .

cy and 

of . . . f . . .

eliability Accountability Integrity Rel

liability

This strategic plan and our performance and accountability reports 

are available through our Web site at www.gao.gov/sp.html.

Linked to that same page is our full family of strategic planning and 

performance and accountability publications.

Other Web pages of possible interest:

GAO's audit and evaluation reports and testimonies 

www.gao.gov/audit.htm

GAO's legal products www.gao.gov/legal.htm

FraudNet www.gao.gov/fraudnet.htm

For the press www.gao.gov/pressmain.html

Employment opportunities www.gao.gov/jobopp.htm
ii GAO STRATEGIC PLAN 2