,

Accountability Integrity Reliability

CORE VALUES

GAO Strategic Plan 2004-2009

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-Being and Address Current and Emerging Challenges to the Well-Being and 

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

Emerging threats

Military capabilities and readiness

Advancement of U.S. interests

Global market forces

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

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

Roles in achieving federal 

objectives

Government transformation

Key management challenges

and program risks

Fiscal position and financing of the 

government

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

Strategic leadership

Institutional knowledge and experience

Process improvement

Employer of choice

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

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 . . . 

THEMES GOALS & OBJECTIVES

Demographics

National

Security

Long-Term

Fiscal Imbalance

Global

Interdependence

Changing 

Economy

Science 

and Technology

Quality 

of Life

Governance

SERVING THE CONGRESS AND THE NATION 

GAO S STRATEGIC PLAN FRAMEWORK

MISSION

GAO exists to support the Congress in meeting its constitutional 

responsibilities and to help improve the performance and ensure the accountability 

of the federal government for the benefit of the American people.
GAO STRATEGIC PLAN 2004–2009 i

Table of Contents

Letter from the Comptroller General . . . . . . . . . . . . . . . . . . . . . . . . . . 1

GAO’s Mission, Responsibilities, Strategies, and Means . . . . . . . . . . . .4

Mission Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Statutory Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Strategies and Means . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

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

the World. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Large and Growing Long-term Fiscal Imbalance. . . . . . . . . . . . . . . . . . . . . . . 8

Evolving National and Homeland Security Policies. . . . . . . . . . . . . . . . . . . . 10

Global Interdependence: Trends and Challenges . . . . . . . . . . . . . . . . . . . . . 14

The Changing Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

An Aging and More Diverse Population. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Advances in Science and Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Measuring the Quality of Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Diverse Governance Structures and Tools . . . . . . . . . . . . . . . . . . . . . . . . . . 27

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31

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

the Federal Government to Respond to Changing Security Threats 

and the Challenges of Global Interdependence. . . . . . . . . . . . . . . . . .50

Goal 3: Help Transform the Federal Government’s Role and 

How It Does Business to Meet 21st Century Challenges. . . . . . . . . . . .58

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

Agency and a World-class Professional Services Organization. . . . . .69

Performance Measures and Evaluations . . . . . . . . . . . . . . . . . . . . . . .73

Consultations and Relationships with Others . . . . . . . . . . . . . . . . . . .76

Subject Area Supplements to the Strategic Plan . . . . . . . . . . . . . . . . . 77

The Health Needs of an Aging and Diverse Population. . . . . . . . . . . . . . . . 78

The Education and Protection of the Nation’s Children . . . . . . . . . . . . . . . . 89
ii GAO STRATEGIC PLAN 2004–2009

TABLE OF CONTENTS

The Promotion of Work Opportunities and the Protection of Workers . . . . . 99

A Secure Retirement for Older Americans. . . . . . . . . . . . . . . . . . . . . . . . . 108

An Effective System of Justice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116

The Promotion of Viable Communities. . . . . . . . . . . . . . . . . . . . . . . . . . . 122

Responsible Stewardship of Natural Resources and the Environment. . . . . 132

A Safe, Secure, and Effective National Physical Infrastructure . . . . . . . . . . 143

Respond to Emerging Threats to Security . . . . . . . . . . . . . . . . . . . . . . . . . 154

Ensure Military Capabilities and Readiness . . . . . . . . . . . . . . . . . . . . . . . . 165

Advance and Protect U.S. International Interests. . . . . . . . . . . . . . . . . . . . 177

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

Security Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185

Reexamine the Federal Government’s Role in Achieving Evolving 

National Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194

Support the Transformation to a Results-Oriented, High-Performing 

Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200

Support Congressional Oversight of Key Management Challenges and 

Program Risks to Improving Federal Operations and Ensuring 

Accountability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214

Analyze the Government’s Fiscal Position and Strengthen Approaches for 

Addressing the Current and Projected Fiscal Gap . . . . . . . . . . . . . . . . . . . 221

Continuously Improve Client and Customer Satisfaction and Stakeholder 

Relationships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229

Lead Strategically to Achieve Enhanced Results . . . . . . . . . . . . . . . . . . . . 233

Leverage GAO’s Institutional Knowledge and Experience . . . . . . . . . . . . . 238

Continuously Enhance GAO’s Business and Management Processes . . . . . 242

Become a Professional Services Employer of Choice. . . . . . . . . . . . . . . . . 245

Cover and inside cover source: GAO.

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately.

On 3/15/2004, we replaced incorrect data in Figure 7: World Exports of Goods and 

Services as a Percentage of World GDP, 1970--2002.
GAO STRATEGIC PLAN 2004–2009 iii

List of Acronyms

CACFP Children and Adult Care Food 

Program

CBO Congressional Budget Office

CCDF Child Care and Development Fund

CMS Centers for Medicare & Medicaid 

Services

CMSO Chief Mission Support Office

CR1SR command, control, communications, 

computers, intelligence, 

surveillance, reconnaissance

EA enterprise architectures

DHS Department of Homeland Security

DOD Department of Defense

DOE Department of Energy

FBI Federal Bureau of Investigations

FDA Food and Drug Administration

FEMA Federal Emergency Management 

Agency

GDP gross domestic product

GPRA Government Performance and 

Results Act of 1993

GSE government-sponsored enterprises

HHS Department of Health and Human 

Services

HPO high-performing organizations

HUD Department of Housing and Urban 

Development

IDEA Individuals with Disabilities 

Education Act

IMF International Monetary Fund

INS Immigration and Naturalization 

Service

IRS Internal Revenue Service

IT information technology

NASA National Aeronautics and Space 

Administration

NATO North Atlantic Treaty Organization

NNSA National Nuclear Security 

Administration

OASDI Old-Age and Survivors Insurance 

and Disability Insurance

OECD Organization of Economic 

Cooperation and Development

OMB Office of Management and Budget

PART Program Assessment Rating Tool

PBGC Pension Benefit Guarantee 

Corporation

PDP Professional Development Program

PPBS Planning, Programming, and 

Budgeting System

R&D research and development

RHS Rural Housing Service

SARS severe acute respiratory syndrome

SBA Small Business Administration

SCHIP State Children’s Health Insurance 

Program

SES Senior Executive Service

SSA Social Security Administration

SSN Social Security number

TANF Temporary Assistance for Needy 

Families

UNAIDS Joint United Nations Programme on 

HIV/AIDS

USDA United States Department of 

Agriculture

VA Department of Veterans Affairs

WIC Special Supplemental Nutrition 

Program for Women, Infants, and 

Children

WMD weapons of mass destruction

WTO World Trade Organization
iv GAO STRATEGIC PLAN 2004–2009
GAO STRATEGIC PLAN 2004–2009 1

Letter from the Comptroller General

March 2004

I am pleased to present GAO’s strategic plan for serving the Congress for fiscal years 

2004 through 2009. In keeping with our commitment to update our plan every 

2 years, with each new Congress, this plan describes our proposed goals and strategies for supporting the Congress and the nation in facing the challenges of a rapidly 

changing world while addressing the nation’s large and growing long-term fiscal 

imbalance. 

Indeed, even since our last plan, much has changed. The war against terrorism led 

the nation to a war in Iraq and an ensuing reconstruction effort that is still unfolding. 

Efforts to ensure homeland security also resulted in the creation of the Department of 

Homeland Security—the largest government reorganization in over 50 years, 

involving 170,000 employees and a $40 billion budget. Legislation was enacted to 

modernize the Medicare program to include a prescription drug benefit, at a potential 

cost of more than $500 billion over the next 10 years alone. Given these important 

national priorities and relatively weak economic performance, historic budget deficits 

have returned and are projected to continue for the next decade. But, perhaps more 

disturbing, the long-range fiscal outlook appears to be unsustainable, given existing 

federal commitments and the challenges of caring for a growing elderly population. 

Policymakers are therefore increasingly being called on to distinguish wants from 

needs and to judge what the nation can afford, both now and in the longer term.

Policymakers also face a world in which national boundaries are becoming less relevant when addressing a range of economic, security, social, and environmental 

issues. The shift to a knowledge-based economy and additional productivity gains are 

having significant impacts on the job market. Scientific research and technological 

developments are improving and even extending life but are also raising profound 

ethical questions for society. Accompanying these changes are new expectations 

about the quality of life for Americans and how we should measure the nation’s position and progress. Governance structures are evolving in order to contend with these 

new forces and an accelerating pace of change. These broad themes—security, the 

changing economy, global interconnectedness, an aging and more diverse population, scientific and technological change, concern for quality of life, and evolving 

governance structures—provide the context for our plan. 

The broad goals and objectives of our plan have not altered dramatically since our 

last plan, but recent events account for some modifications in emphasis:

■ Because of the large and growing long-term fiscal imbalance facing the nation, we 

have identified this as a separate theme for our plan. Therefore, we will continue 

to increase our emphasis on work related to the transformation of the federal 

government, as it addresses fiscal challenges, new priorities and world conditions, 

as well as a substantial turnover in its workforce. GAO’s High-Risk Series, which 

began more than a decade ago with an emphasis on fraud, waste, and abuse, has 
2 GAO STRATEGIC PLAN 2004–2009

most recently expanded to include challenges in broad-based transformation, and 

we will continue to use the high-risk designation to highlight additional areas 

facing major transformation challenges.

■ Given the continued national focus on homeland security, the creation of the 

Department of Homeland Security, and the ongoing war on terrorism, we expect 

to pay continuing attention to monitoring the progress of the department and 

other critical parts of the federal government in becoming effective structures for 

meeting national needs. 

■ Because the pressures to meet the health care and retirement needs of a growing 

elderly population continue to mount, we expect that health care cost and quality, 

along with public and private pension issues, will come under increasing scrutiny 

and require additional effort and attention. 

■ As the reconstruction of Iraq and Afghanistan continues and other global events 

unfold, we expect to provide additional support to the Congress in overseeing the 

pace and cost of related federal efforts. Additionally, as the Department of Defense 

embarks on a major transformation effort following the enactment of sweeping 

new authorities, we expect to report on the department’s progress and 

effectiveness.

To help support our efforts on behalf of the Congress and the American people, we 

have set ourselves the goal of becoming a model agency and world-class professional 

services organization—a goal that remains as vital to us as ever. We will continue to 

work toward making best use of the key elements that enable GAO to accomplish its 

goals—our people, processes, technology, environment, and partnerships. We will 

continue to “lead by example” in transforming how the government should do business in the 21st century. 

To make sure that our plan is an accurate reflection of congressional and national 

needs, we invited comments on a draft of this plan from Members of the Congress 

and their staffs; our sister congressional agencies—the Congressional Budget Office 

and the Congressional Research Service; the inspectors general; state and local government audit organizations; and other key accountability organizations. We have 

incorporated many of these comments in this final version of the plan.

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

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

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

objectives. Links on that Web page will also take you to our agency's performance 
GAO STRATEGIC PLAN 2004–2009 3

and accountability reports. If you have questions, please contact me at (202) 512-

5500 or walkerd@gao.gov or Gene L. Dodaro, Chief Operating Officer, at (202) 512-

5600 or dodarog@gao.gov.

Sincerely yours,

David M. Walker

Comptroller General 

of the United States
4 GAO STRATEGIC PLAN 2004–2009

GAO’s Mission, Responsibilities, Strategies, and Means

Mission Statement

GAO exists to support the Congress in meeting its constitutional 

responsibilities and to help 

improve the performance and 

ensure the accountability of the 

federal government for the benefit 

of the American people. 

GAO examines the use of public 

funds; evaluates federal programs 

and activities; and provides analyses, options, 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 a 

variety of oversight-, insight-, and 

foresight-related activities. GAO’s 

work includes financial audits, 

program reviews and evaluations, 

policy analyses, legal opinions 

and analyses, and investigations. 

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 established GAO with the broad role of investigating “all matters relating to 

the receipt, disbursement, and application of public funds” and to 

“make recommendations looking to greater economy or efficiency in 

public expenditures.” Since World War II, the Congress has clarified 

and expanded that original charter: 

■ The Government Corporation Control Act of 1945 provides GAO 

the authority to audit the financial transactions of government 

corporations. 

■ The Budget and Accounting Procedures Act of 1950 assigns GAO 

responsibility for establishing accounting standards for the federal 

government and carrying out audits of internal controls and 

financial management. 

■ The Legislative Reorganization Act of 1970 authorizes GAO to 

conduct program evaluations and analyses of a broad range of 

federal activities. 

■ The Chief Financial Officers Act of 1990 and the Government 

Management Reform Act of 1994 authorize GAO to audit agencies’ 

financial statements and annually audit the consolidated financial 

statements of the United States. 

■ Numerous other laws complement GAO’s basic audit and 

evaluation authorities, including the Congressional Budget and 

Impoundment Control Act of 1974, providing for GAO review of 

reported or unreported impoundments; the Inspector General Act 

of 1978, providing for GAO-established standards for the audit of 

federal programs and activities; and the Competition in Contracting 

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

contracting actions. 

Today, GAO engages in a range of oversight, insight, and foresight 

activities, spanning the full breadth and scope of federal activities and 

programs. GAO publishes thousands of reports and other documents 

annually and provides a number of other related services. The agency 

also looks at national and international trends and challenges to antic-
GAO STRATEGIC PLAN 2004–2009 5

GAO’S MISSION

ipate their implications for public policy. By making 

recommendations to improve the practices and 

operations of government agencies, GAO contributes not only to the increased effectiveness of and 

accountability for federal spending, but also to the 

enhancement of the taxpayers’ trust and confidence 

in their federal government. When considering 

GAO’s strategic goals and objectives or weighing 

the potential outcomes of GAO’s work, it is important to remember that GAO achieves its results 

mainly through the actions taken by the Congress 

and federal agencies in response to the information 

and recommendations that GAO provides. 

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 to the Congress and 

other stakeholders. 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 certain 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; 

■ legal opinions to determine whether agencies 

are in compliance with applicable laws and 

regulations; 

■ policy analyses to assess needed actions and the 

implications of proposed actions; and 

■ additional assistance to the Congress in support 

of its oversight, appropriations, legislative, and 

other responsibilities. 

GAO combines those general strategies with strategies specific to individual strategic objectives. These 

specific strategies take the form of performance 

goals, each of which has a set of key efforts that 

connect with GAO’s day-to-day work. We also use 

an integrated strategy to focus attention on important issues across the government and within specific program areas and operations. For example, 

our High-Risk Series focuses on both major challenges in addressing broad-based transformation or 

areas where legislative solutions may be called for, 

and on federal programs and operations that are 

vulnerable to fraud, waste, abuse, and mismanagement. GAO has made hundreds of recommendations to improve these high-risk operations. 

Moreover, GAO’s focus on high-risk problems contributed to the Congress enacting a series of governmentwide reforms to address critical human capital 

challenges, strengthen financial management, 

improve information technology practices, and 

establish a more results-oriented government. The 

administration has also looked to GAO’s high-risk 

program in shaping governmentwide initiatives, 

such as the President’s Management Agenda. GAO’s 

high-risk status reports are provided at the start of 

each new Congress.

In addition, GAO has built strategic working relationships with other national and international government accountability and professional 

organizations including the inspectors general, state 

and local audit organizations, and other national 

audit offices. These relationships are meant to 

broaden and leverage its institutional knowledge 

and experience and, in turn, to improve its service 

to the Congress and the American public. 

Unlike large executive branch departments that 

manage federal lands or maintain extensive facilities 

and systems across the country and, in some 

instances, around the world, GAO is a relatively 

small agency that depends almost totally on one 

type of resource to achieve its strategic goals and 

objectives: its people. GAO's staff, numbering about 

3,300, are arranged in 13 research, audit, and evaluation teams and staff offices and mission support 

units. (See fig. 1.)
6 GAO STRATEGIC PLAN 2004–2009

GAO’S MISSION

Figure 1: GAO’s Organizational Structure 

Note: Several teams perform work in support of multiple strategic goals. These teams are Acquisition and Sourcing 

Management (ASM); Applied Research and Methods (ARM); Defense Capabilities and Management (DCM); Education, 

Workforce, and Income Security (EWIS); Financial Management and Assurance (FMA); Financial Markets and Community 

Investment (FMCI); Health Care (HC); Homeland Security and Justice (HSJ); Information Technology (IT); International Affairs 

and Trade (IAT); Natural Resources and Environment (NRE); Physical Infrastructure (PI); and Strategic Issues (SI). Units 

supporting strategic goal 4 are the Controller/Administrative Services Office (CASO); the Human Capital Office (HCO); 

Information Systems and Technology Services (ISTS); Knowledge Services (KS); and the Professional Development Program 

(PDP).

Approximately three quarters of GAO’s staff are 

based in its main office in Washington, D.C. The 

rest are deployed in 11 field offices across the 

country. (See fig. 2.) Staff in these offices provide a 

“frontline” presence and broad-based coverage 

throughout the United States, gathering information 

and firsthand insight and perspective on government programs and operations in different regions 

and cities. Through its field office structure, GAO 

has been able to attract and retain top talent from 

across the country.

Chief Mission Support and

Chief Financial Officer

Teams Field Offices

Comptroller General

Chief Operating Officer

Quality and

Continuous

Improvement

General

Counsel

Office of

Special

Investigations

Opportunity and Inspector General

Inclusiveness

Congressional

Relations

Strategic Planning 

and External Liaison

Public Affairs

Goal 1

Goal 2

ASM 

DCM

IAT

EWIS

FMCI

HC

HSJ

NRE

PI

ARM

FMA

IT

SI

Goal 3

Goal 4

CASO

HCO

ISTS

KS

PDP Goal

2

Goal

3

Goal

1

Source: GAO.
GAO STRATEGIC PLAN 2004–2009 7

GAO’S MISSION

Figure 2: GAO’s Offices 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). 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, IT, and other resources are well managed and secure are covered under the fourth strategic goal of this plan. 

Source: GAO.

Seattle

San 

Francisco

Los 

Angeles

Denver

Dallas

Chicago Dayton

Huntsville

Atlanta

Norfolk

Boston

Washington, D.C.
8 GAO STRATEGIC PLAN 2004–2009

Themes for the Plan:

Forces Shaping the United States and Its 

Place in the World

In charting GAO’s work over the next several years, 

the agency’s 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 eight 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.

This update to the plan includes a new theme, 

related to the nation’s growing long-term fiscal 

imbalance. Given the magnitude of the problem 

and its potential consequences, it will form a critical 

backdrop to GAO’s work over the next several 

years. The other major themes for this update to 

GAO’s plan remain similar to those in the prior 

plan, but with some additional emphases. National 

security continues to remain a prominent concern 

for the United States, for example, but with new 

dimensions of homeland security and global economic security now linked to military power and 

international relationships. After a period of containment, health care costs have again been on the 

rise, foreshadowing significant economic and fiscal 

consequences when considered with the overall 

aging of the population. The higher retirement and 

health care costs associated with an aging population will further constrain the federal government’s 

ability to address important national resource needs. 

Finally, while concerns about quality of life issues 

remain, the discussion of this theme now takes into 

account the growing efforts of nations and communities to adopt key social, economic, and environmental indicators to measure their progress and 

position systematically. 

The eight themes address

■ the nation’s large 

and growing longterm fiscal imbalance;

■ evolving national and homeland security 

policies;

■ the increasing global interdependence of 

enterprises, economies, civil society, and 

national governments;

■ the global shift to market-oriented, knowledgebased economies;

■ an aging and more diverse population;

■ advances in science and technology and the 

opportunities and challenges created by these 

changes;

■ measuring the quality of life for the nation, 

communities, families, and individuals; and

■ diverse governance structures and tools. 

Any significant changes in these areas over the next 

6 years, the period covered by this plan, will affect 

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

will therefore continue to track developments in 

these areas to make sure that its plan continues to 

respond to the needs of the Congress, the federal 

government, and the American people. 

Large and Growing Long-term 

Fiscal Imbalance

The U.S. government’s long-term financial condition and fiscal outlook present enormous challenges to the nation’s ability to respond to forces 

that shape American society, the United States’ 

place in the world, and the role of the federal government. The near-term deficits are daunting—a 

$375 billion deficit in fiscal year 2003 and a 

$477 billion deficit forecast in fiscal year 2004, 

according to the Congressional Budget Office. If the 
GAO STRATEGIC PLAN 2004–2009 9

THEMES FOR THE PLAN

near-term deficits represented a short-term phenomenon, there would be less cause for concern. 

Unfortunately, these short-term deficits are but a 

prelude to a projected worsening long-term budget 

outlook.

The United States faces a long-term structural deficit. The Congressional Budget Office has projected 

that on the basis of current rules for benefits, federal 

spending, excluding interest payments, will rise 

considerably as a share of national income. 

According to GAO’s long-term budget simulations, 

demographic trends and rising health care spending 

will drive escalating federal deficits and debt. 

Assuming, as in figure 3, that discretionary 

spending grows with inflation over the next decade 

and that current tax cuts expire when scheduled, 

spending for Social Security, Medicare, and Medicaid would consume over three-quarters of federal 

revenue in 2040. If all expiring tax provisions are 

extended and discretionary spending keeps pace 

with the economy, by 2040, federal revenues may 

not even be adequate to pay Social Security and 

interest on the federal debt. (See fig. 4.)

Figure 3: Composition of Spending as a Share of 

Gross Domestic Product (GDP) under Baseline 

Extended

Note: In addition to the expiration of tax cuts, revenue as a 

share of GDP increases through 2014 due primarily to 

(1) real bracket creep, (2) more taxpayers becoming subject 

to the AMT, and (3) increased revenue from tax-deferred 

revenue accounts. After 2014, revenue as a share of GDP is 

held constant.

Figure 4: Composition of Spending as a Share of 

GDP Assuming Discretionary Spending Grows with 

GDP after 2004 and All Expiring Tax Provisions Are 

Extended

Notes: Although all expiring tax cuts are extended, revenue 

as a share of GDP increases through 2014 due primarily to 

(1) real bracket creep, (2) more taxpayers subject to the 

alternative minimum tax, and (3) increased revenue from taxdeferred retirement accounts. After 2014, revenue as a share 

of GDP is held constant. 

To balance the budget would require massive 

spending cuts, massive tax increases, or some combination of the two. Neither slowing the growth of 

discretionary spending nor allowing tax cuts to 

sunset—nor both together—will eliminate the longterm imbalance. While additional economic growth 

will help ease any burden, the potential fiscal gap is 

too great to grow our way out of the problem.

Further, neither 10-year budget projections nor 

financial statements recognize the longer-term 

implications of present day policies and historical 

commitments. As figure 5 shows, the federal government takes on a wide range of fiscal exposures—from explicit liabilities to those implied by 

current policies. Although the long-term budget 

simulations shown in figures 3 and 4 assume currently promised Social Security and Medicare benefits, the federal government’s financial statements 

do not record as liabilities the difference between 

future promised and funded benefits of Social Security, nor do they adequately account for future 

health care benefit costs for veterans. Regardless of 

whether these items are ultimately considered liabilPercentage of GDP

Social Security

Medicare & Medicaid

Net Interest

All Other Spending

Source: GAO’s January 2004 analysis.

0

10

20

30

50

40

Revenue

2003 2015 2030 2040

Fiscal Year

100

0

10

20

30

40

100

50

Fiscal Year

Percentage of GDP

Net Interest

Social Security

Medicare & Medicaid

All Other Spending

Source: GAO’s January 2004 analysis.

Revenue

2003 2015 2030 2040
10 GAO STRATEGIC PLAN 2004–2009

THEMES FOR THE PLAN

ities from an accounting perspective, they represent 

significant commitments that will have to be 

addressed by future generations. 

Figure 5: Selected Fiscal Exposures: Sources and Examples, End of Fiscal Year 2003

a

This amount includes $774 billion in securities held by military and civilian pension funds that would offset the explicit 

liabilities reported by those funds.

b

Figures for Social Security and Medicare are as of January 1, 2003, and are estimated over a 75-year period. These amounts 

represent NPV and are net of debt held by the Trust Funds ($1,387 billion of Social Security and $235 billion for Medicare Part

A and $34 billion for Medicare Part B). The estimate for Social Security over an infinite horizon would be $10.5 trillion according 

to the Social Security Trustees’ 2003 annual report. There is no infinite horizon estimate for Medicare included in the Medicare 

Trustees’ 2003 annual report. Medicare Part D was enacted after the end of fiscal year 2003.

To facilitate consideration of the long-term impacts 

of budget and policy decisions, current budget process and measurements need to be reviewed and 

reconsidered. A way should be found to permit the 

long-term cost of selected major spending and tax 

proposals to be quantified and presented before 

legislation is enacted. This is especially important in 

connection with proposals for which the related 

costs significantly escalate after the current 10-year 

projection period. Financial accounting and 

reporting practices should also be reviewed. 

Finally, policymakers will need to recognize and 

anticipate the effects of the long-term fiscal imbalance on governance at all levels of government—

federal, state, and local—and on the nation’s ability 

to thrive in the world that we face in the 21st century. As discussed at length in the rest of this section, national and homeland security needs, the 

requirements to support a knowledge-based and 

global economy, the opportunities and challenges 

resulting from scientific and technological advances, 

public expectations for improved quality of life, and 

the governance structures and tools needed to provide for all of these will increasingly become the 

focus of public policy. To effectively address these 

needs, policymakers will have to begin today to 

reconsider the constraints that current fiscal policies 

place on their ability to act. 

Evolving National and Homeland 

Security Policies

National security in the 21st century is a complex 

interaction of military power, international relationships and foreign policy, homeland security, and 

international economics. Understanding the dimensions of these issues, and their mutual impacts and 

Explicit financial 

contingencies

Explicit financial 

commitments

Explicit liabilities

Example (dollars in billions)

Publicly held debt ($3,913)

Military and civilian pension and post-retirement health ($2,857)

Veterans benefits payable ($955)

Environmental and disposal liabilities ($250)

Loan guarantees ($35)

Undelivered orders ($596)

Long-term leases ($47)

Unadjudicatedclaims ($9)

Pension Benefit Guaranty Corporation ($86)

Other national insurance programs ($7)

Government corporations e.g., Ginnie Mae

Debt held by government accounts ($2,859)a

Future Social Security benefit payments ($3,550)b

Future Medicare Part A benefit payments ($5,931)b

Future Medicare Part B benefit payments ($9,619)b

Life cycle cost including deferred and future maintenance and operating costs (amount unknown)

Government Sponsored Enterprises e.g., Fannie Mae and Freddie Mac

Type

Source: GAO analysis.

Implicit exposures implied by 

current policies or the public's 

expectations about the role of 

government
GAO STRATEGIC PLAN 2004–2009 11

THEMES FOR THE PLAN

relationships, is key for decision makers in deciding 

on roles and responsibilities of key federal entities, 

levels of investment, and expected outcomes.

Militarily, the United States is unchallenged and 

probably will be for the foreseeable future. Some 

call it the “world’s sole superpower”; some call it a 

“hyperpower.” Whatever the terminology, since the 

demise of the Soviet Union and the end of the Cold 

War, the United States has emerged as the dominant 

military, political, and economic power in the 

world. In fact, according to some analysts, no 

nation in the history of the world has attained such 

military preeminence. The United States spends several times more on its military than any conceivable 

adversary, and together with its allies accounts for 

more than two-thirds of total worldwide defense 

spending. U.S. conventional forces include the 12 

largest aircraft carriers in the world, the only stealth 

aircraft in the world, a long-range bomber and air 

cargo force able to reach worldwide with the help 

of a huge aerial refueling fleet, and prepositioned 

military equipment around the world equaling the 

size of the total military inventory of many countries. U.S. nuclear weapons, while reduced over 

time through agreement with Russia, still provide a 

formidable triad of incredible destructive power. 

And, in recent years, the United States has demonstrated its ability to project and use its military forces 

with great effectiveness. U.S. forces quickly 

defeated the Taliban regime in Afghanistan—a 

trained and experienced guerrilla force—and the 

Saddam Hussein regime in Iraq—which had the 

world’s sixth largest army. Defense spending 

increased significantly after the terrorist attacks of 

September 11, 2001, not only to conduct those military operations and improve homeland security, but 

also to upgrade military forces even more. (See 

fig. 6.)

Figure 6: Growth in Defense Budget Authority, 

Fiscal Years 2000–2004, as of October 2003

U.S. technological advantage on the battlefield, 

already considerable, is being further enhanced 

through breakthroughs in such areas as precisionguided munitions, unmanned aerial vehicles, and 

battlefield awareness and communications. Future 

developments in nanotechnology, sensors, and 

space-based and nonkinetic weapons will further 

increase this advantage. The United States spends 

more on defense research and development than all 

but a small number of countries spend on their 

entire defense budgets.

New military missions are also changing, evolving 

from countering state adversaries to countering less 

structured terrorist groups, and employing greater 

use of special operations forces, peacekeepers, and 

engineers for reconstructions following conflicts. 

Prolonged, if lower-intensity engagements influence 

world views of the U.S. military, ranging from “protector” to “occupier.” And unlike conflicts prior to 

the 21st century, the war on terrorism is unlikely to 

have a discrete end point.

International relationships and foreign policy is 

another dimension of national security. Since the 

end of World War II, this U.S. military might has 

generally been employed through a series of alliances and partnerships from Europe to Southeast 

Asia, originally aimed at containing the Soviet 

Union and its communist allies. For example, the 

United Nations arose out of the ashes of the war as 

0

100

200

300

400

500

Dollars in Billions

465.7

295.0

329.9

360.2

454.6

FY 2000 FY 2001 FY 2002 FY 2003 FY 2004

Source: Congressional Research Service.
12 GAO STRATEGIC PLAN 2004–2009

THEMES FOR THE PLAN

a way to resolve international disputes diplomatically before they escalated into armed conflict. 

While these institutions have been evolving since 

the end of the Cold War, recent events indicate that 

this overall system of multilateral organizations and 

alliances may be starting to break down. For 

example:

■ The United Nations itself has come under 

question by those who believe it is good at 

debating and passing resolutions but lacks 

credibility in enforcing them. An action-oriented 

United States finds itself in conflict with the 

United Nations’ status-quo-oriented Security 

Council. As a result, the United States has 

become more assertive in the United Nations 

and other institutions, as it believes events such 

as the September 11 terrorist attacks create the 

need for more active use of military options to 

prevent the further spread of terrorism and 

possible use of weapons of mass destruction.

■ The North Atlantic Treaty Organization (NATO), 

having “won” the Cold War, now must reinvent 

itself to be relevant in the 21st century. Expansion 

eastward is bringing new members—the “New 

Europe”—that are very different from the 

alliance’s original members. Serious 

disagreement with France and Germany over 

Iraq policy exposed some gaping holes in 

alliance cohesion.

■ U.S. solidarity with South Korea against North 

Korea has been a given since the 1950 invasion 

across the 38th parallel. This relationship seems 

to be fraying somewhat, with talk of 

repositioning U.S. forces in response to South 

Korean public outcries.

■ Support for both the State of Israel and the 

Palestinians in the Middle East has dominated 

U.S. relations in that part of the world since 

Israel’s founding and the 1967 war. A solution to 

the Arab-Israeli peace process has been elusive, 

but its resolution is criticial to improving U.S. 

relations with Muslim countries throughout the 

region.

■ In the Persian Gulf, Saudi Arabia has long been 

the key U.S. relationship, especially since the fall 

of the Shah of Iran in 1979. The 1991 Gulf War 

was fought largely from Saudi territory. In 

Operation Iraqi Freedom, however, the Central 

Command headquarters was very visibly in 

Qatar, not Riyadh. Kuwait, Qatar, Oman, and 

Bahrain—and in time, maybe even Iraq—are 

becoming more important partners and will 

likely affect the U.S. relationship with Saudi 

Arabia. Nonetheless, Saudi Arabia remains an 

important partner in the United States’ global 

efforts to combat terrorism.

In addition to these changing relationships, U.S. foreign policy seems to be turning away from multilateral arrangements and toward more unilateral and 

bilateral interactions. In challenging such previously 

negotiated international agreements as the missile 

defense treaty, an international war crimes court, 

the ban on landmines, and the Kyoto agreements 

on greenhouse gases, the United States has charted 

a different course with yet unknown consequences 

for its international relations and relationships. U.S. 

handling of Afghan combatants at Guantanamo Bay 

or reconstruction efforts in Iraq may be driving 

additional wedges between the United States and its 

traditional allies. The policy of preemption—striking 

at terrorists or regimes before they attack the United 

States—may prove to be effective, but it has been 

controversial around the world and even within the 

United States. 

In this new era, homeland security is a major 

dimension of national security. Despite America’s 

unrivaled military advantage, Americans are feeling 

more vulnerable. The hijackings and successful 

attacks on the World Trade Center and Pentagon 

shook citizens’ confidence about their safety at 

home and in their workplaces. The anthrax attacks 

and persistent threats from terrorist spokesmen continued to raise anxiety levels. With the war in Iraq 

and religious and social unrest in many countries, 

experts worry about more terrorism against U.S. 

interests. 

Since the September 11 attacks, legislation such as 

the USA Patriot Act and the Homeland Security Act, 

which created the Department of Homeland Security, responded to terrorism and other threats to personal, financial, and national security. The new 

Northern Command has provided additional 

resources and authority for homeland defense. The 

administration published a series of national strategies, such as the National Strategy for Homeland 

Security, setting initiatives in homeland security 

areas. Periodic adjustments to the department’s 

color-coded homeland security threat levels corre-
GAO STRATEGIC PLAN 2004–2009 13

THEMES FOR THE PLAN

spond to threats. However, some commentators 

believe the nation is still not as prepared to prevent 

and respond to a terrorist attack within the United 

States as it should be, and have recommended that 

the pace of preparation to prevent, respond to, and 

contain an attack accelerate. 

While diplomatic and military efforts have focused 

on fighting the war against terrorism abroad, risks 

have been exposed in many aspects of normal life 

at home. Terrorist weapons need not kill or injure 

large numbers to have the terrorists’ desired impact; 

the psychological impact alone can disrupt the 

economy and undermine people’s confidence in 

the government. Bioterrorism poses risks of unprecedented magnitude, potentially affecting air and 

water supplies and food production chains using 

instruments of normal life, such as the mail or air 

conditioning systems. Many elements of everyday 

life that are critical to the American economy, such 

as airports and power stations, have become potential targets. 

The administration has asked for significant homeland security funding in normal budget and supplemental funding requests. For example, the 

President’s fiscal year 2004 budget request for 

homeland security is $41.3 billion, including 

funding for the Department of Defense. This more 

than doubles 2002 funding and will cover priorities 

in mission areas such as intelligence and warning, 

border security, and protection of critical infrastructure. However, these federal funding changes and 

new organizational structures alone will not significantly improve the security of the homeland. 

Homeland security can only be accomplished 

through recognizing the interdependencies of federal, state, local, and private sector partners and the 

careful planning and integration of the roles and 

responsibilities of federal and nonfederal partners. 

For example, emergency response to a terrorist 

attack involving chemical or biological weapons 

will require effective coordination between federal, 

state, and local law enforcement agencies; other 

first responders; as well as public health agencies, 

affected hospitals, and laboratories. The challenge 

for the federal government is to design, select, and 

manage the various tools to prompt effective integration and leverage scarce resources. Critical information must be shared, analyzed, integrated, and 

disseminated to help prevent or minimize terrorist 

activities. These efforts require the involvement of 

the Central Intelligence Agency, the Federal Bureau 

of Investigation, the National Security Council, the 

National Security Agency, the Department of 

Defense, the Department of Homeland Security, 

and a myriad of other agencies. 

The Congress faces the difficult task of integrating 

and balancing fighting terrorism and meeting the 

requirements for homeland security with efforts to 

maintain economic vitality and innovation; create 

jobs; and improve education, housing, health care, 

and the quality of life in general while protecting 

core American values. Rapidly rising costs for 

homeland security also are a concern. In the long 

term, homeland security measures should be undertaken with a deliberate and informed analysis of the 

choices and balances that must be struck, for 

example, balancing the cost and benefit of security 

measures, including the collateral or unintended 

consequences on missions not related to homeland 

security and American values.

Traditional threat, risk, and criticality assessments 

remain valuable tools in the fight against terrorism. 

However, the use of such assessments should be 

viewed in a broader national preparedness context 

in which decision makers consider how homeland 

security can be viewed as integral to everyday life—

in which measures are consistently expected, 

applied, and integrated into the underlying business 

process or programs from the very beginning, not 

separate and apart from other strategic and operational decisions. Weaving homeland security into 

the everyday life of the American people will be 

complex and time consuming. However, it will be 

critical to fashioning a sustainable homeland security strategy that balances the need for increased 

protection against other national priorities. 

A final dimension is international economics. 

National security in this new era is more intertwined 

than ever with economic security in a world that 

increasingly recognizes the opportunities a robust 

economy can bring. Many see reducing poverty and 

enlarging the middle class, especially in countries 

troubled by terrorism, as a key to attacking the root 

causes of unrest. According to this argument, young 

people around the world, regardless of their cultural 

or religious upbringing, must have some prospects 

for economic prosperity to give them a reason to 

strive to better themselves and their countries. The 

nascent reconstruction of the Iraqi economy could 
14 GAO STRATEGIC PLAN 2004–2009

THEMES FOR THE PLAN

be a crucial test of whether a functioning freemarket economy can emerge from a country damaged by years of dictatorship and war in a troubled 

part of the world. And because access to natural 

resources is vital to worldwide economic health, 

priority will be given to restoring Iraqi oil production to help power the local economy and to restore 

order to energy markets. 

Broader economic question are also arising as 

strains with some traditional allies could affect 

trading patterns. Changes in NATO membership 

could lead to changes in economic ties between 

Europe and the United States, as Eastern European 

countries attract more attention. The Pacific Rim 

countries are increasingly a focus of U.S. security 

and economic policy. The biggest issue of all, in the 

view of many analysts, is the U.S. relationship with 

China: Will it be a relationship of trade and economic ties or a tense one focused on military 

rivalry? Domestically, the recent sluggishness in the 

economy has been exacerbated by factors at least 

partially related to terrorism: high energy prices, disruptions in the travel and tourism industry—especially commercial airlines, and low consumer 

confidence. Large budget deficits not just in the 

United States but also in governments around the 

world make economic prosperity even more important and more elusive. Moreover, the U.S. lead in 

military equipment and technology depends on a 

robust industrial base that can provide the knowhow to stay ahead of potential competitors. The 

challenge for the United States is to avoid the pitfalls of the “military-industrial complex” that was a 

concern as far back as President Eisenhower—how 

to promote a strong private sector capability that 

will not “capture” security policy. 

Military power, international relationships and foreign policy, homeland security, and international 

economics must all be considered in defining the 

parameters of national security. While the Cold War 

stressed a containment and deterrence strategy—

defined by the balance of power—the new war on 

terrorism, some suggest, is defined by the “power of 

balance”—balancing implementation of powerful 

national security strategies against their societal and 

economic impact. In the midst of World War II, 

President Roosevelt noted that the supreme objective for the future, and for the United Nations, was 

one word: security. He emphasized that security 

meant not only physical security, but also economic 

security, social security, and moral security. Contemporary national security still meets that definition.

Global Interdependence: Trends 

and Challenges

Recent decades have witnessed a rapid increase in 

international trade and in the movement of investment, people, and information across borders. As a 

result of these trends, nations’ economies, cultures, 

and governments have become increasingly interdependent—that is, globalized. These movements 

have brought many changes and many benefits to 

people around the world, but this high level of 

interdependence also creates challenges. Some of 

these challenges have long been known, such as 

the need to extend the benefits of globalization to 

the poorest parts of the world. Other challenges are 

more recent, such as the outbreak of severe acute 

respiratory syndrome (SARS) and containing its 

spread. In both examples, increased interdependence means that governments have to be involved 

in events outside their borders to resolve these new 

global problems. 

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

that is traded. As shown in figure 7, from 1970 

through 2002, world exports increased from about 

12 percent to about 24 percent of world GDP. 

Hence, all over the world, people are depending 

more and more on other nations to consume the 

goods they produce and to produce the goods they 

in turn consume. 
GAO STRATEGIC PLAN 2004–2009 15

THEMES FOR THE PLAN

Figure 7: World Exports of Goods and Services as 

a Percentage of World GDP, 1970–2002

In the United States, where the economy was relatively self-contained in the decades following World 

War II, the importance of international trade, investment, and financial flows has grown noticeably in 

recent decades. U.S. exports as a share of U.S. GDP 

grew from about 5 percent to about 9 percent from 

1970 through 2002. (See fig. 8.) The rise in U.S. 

imports was even greater, increasing from about 5 

percent to about 13 percent of GDP. These 

increases came during a period when overall U.S. 

output, adjusted for inflation, more than doubled. 

Figure 8: U.S. Exports and Imports as a Percentage 

of U.S. GDP, 1970–2002

A companion to growing international trade is an 

overall increase in international financial flows and 

net financial inflows as an important source of U.S. 

capital. The internationalization and liberalization of 

financial markets worldwide, along with growing 

wealth in many countries, have fueled huge 

increases in cross-border investments. Gross capital 

flows relative to GDP have grown almost tenfold for 

industrial countries since 1970. For the United 

States, net financial inflows—comprising foreign 

holdings of U.S. stocks and bonds as well as foreign 

direct investment in the United States—generally 

increased from under 1 percent to about 7 percent 

of U.S. GDP from 1970 through 2002, as shown in 

figure 9. Net financial outflows, which reflect similar U.S. investments abroad, have fluctuated over 

this period, and fell noticeably over the past 2 

years. The difference between financial inflows and 

outflows, the net financial inflows into the United 

States, is a measure of U.S. reliance on foreign capital to finance domestic investment and federal debt. 

Figure 9: U.S. Financial Flows as a Percentage of 

U.S. GDP, 1970–2002

A second important aspect of globalization is the 

movement of people around the globe. These 

movements occur for a variety of reasons, such as 

permanent migration, temporary relocation for business or educational reasons, or travel and tourism. 

The movement of people represents both a cause 

and a consequence of globalization in that people 

who migrate tend to create stronger links between 

nations, while some people visit other nations 

Source: Calculated from International Monetary Fund data.

0

5

10

15

20

25

30

1970 1975 1980 1985 1990 1995 2000 2002

Percentage of GDP

0

5

10

15

20

1970 1975 1980 1985 1990 1995 2000 2002

Percentage of GDP

Exports

Imports

Source: Department of Commerce, Bureau of Economic Analysis. 

0

2

4

6

8

10

12

1970 1975 1980 1985 1990 1995 2000 2002

Percentage of GDP

Net U.S. financial outflows

Net foreign financial inflows

Source: Department of Commerce, Bureau of Economic Analysis.
16 GAO STRATEGIC PLAN 2004–2009

THEMES FOR THE PLAN

because of established business relationships or to 

learn about different cultures. During the 20th century, permanent migration to the United States fluctuated, beginning with a high of 8.8 million 

immigrants admitted from 1901 through 1910; dropping significantly, in response to the Depression 

and the Second World War, to a low of half a million admissions from 1931 through 1940; and gradually rising again, reaching record admissions of over 

9 million immigrants from 1991 through 2000. 

Relocation for educational reasons has also reached 

high levels in the last few decades. As shown in 

figure 10, from 1986 through 2002, the number of 

foreign students enrolled in U.S. colleges and universities increased by 70 percent to nearly 600,000. 

During the same period, the number of U.S. college 

and university students studying abroad more than 

tripled from 48,000 to 154,000 students each year. 

Figure 10: Foreign Students in the United States, 

1986–2002

Finally, admissions of international tourists to the 

United States increased nearly fourfold from 1985 

through 2001. Overall, the number of tourist visas 

issued during this period increased from 9.5 million 

to 33 million, with the largest increase, a 45 percent 

increase, occurring from 1995 through 2001.

The third area that helps illustrate the rapid pace of 

globalization is the movement of information across 

borders, a development that is directly related to the 

advances in IT. While there is no single indicator of 

the rapid growth in information crossing borders, 

telephone and Internet communications both provide some insight. The number of main telephone 

lines in use throughout the world doubled from 

1991 through 2001, from 550 million to 1.1 billion, 

while cellular phone subscribers increased from 

16 million to 955 million. During the same period, 

the number of Internet users increased from 

4.4 million to 502 million, with concentrations of 

Internet users reaching over 20 percent of the populations of a number of advanced industrial countries.

This increase in international communication is met 

with ambivalence in many countries. The 2003 Pew 

Foundation Global Attitudes Project reports that 

“large majorities in most countries” dislike the 

United States’ growing influence in their countries, 

but equally large majorities support the technologies that promote increased international interaction. The Global Attitudes Project reports that 

“majorities in almost all nations” feel positively 

about the Internet, and “overwhelming majorities” 

in nearly all countries surveyed feel positively about 

cellular telephones.

While many countries have benefited greatly from 

the increased movement across borders, this movement also creates some daunting challenges. One of 

those is ensuring that globalization creates benefits 

that are not overly concentrated in countries around 

the world. As shown in figure 11, some less-developed countries experienced strong income growth 

as world trade flows increased while others experienced only slow growth. Overall, differences in per 

capita income across countries have largely continued over the past 25 years, although China and 

India stand out as countries that have shown significant gains. Even when differences in cost of living 

across countries are taken into account, average 

incomes in 1999 were about 13 times higher for 

countries in the high-income group than in the lowincome group, compared with incomes about 14 

times higher in 1975. 

Number of Foreign Students 

0

200,000

400,000

600,000

800,000

1986 1989 1992 1995 1998 2001 2002

Source: Institute for International Education.
GAO STRATEGIC PLAN 2004–2009 17

THEMES FOR THE PLAN

Figure 11: Trends in Per Capita Income Across 

Country Groupings, 1975, 1987, and 1999

Note: These country groupings contain 28 low-income, 45 

middle-income, 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. 

A second challenge is ensuring that the measures 

taken to assure the security of trade and investment 

and the movement of people do not choke off the 

benefits of those movements. For example, some of 

the security measures designed to protect against 

risks related to container trade could affect the efficiency of the trade flows. In addition, measures 

taken to control the threat of terrorists entering 

other countries could reduce the number of 

migrants or visitors who might provide benefits to 

the originating and the host nations. 

A related challenge is the need to ensure that health 

problems—and particularly contagious diseases—

do not spread uncontrolled around the world. The 

recent outbreak of SARS rapidly had an impact on 

movement to and from some of the most highly 

globalized parts of the world, such as Hong Kong, 

Singapore, and China. While AIDS has had devastating impacts on certain nations such as those in 

Africa, the speed and critical role of communications and cooperation among nations has been particularly important in trying to limit the spread of 

this highly communicable disease. 

All of these challenges make it clear that some of 

the most difficult issues that policymakers will continue to address cannot be resolved within the borders of any nation. Because of the interdependence, 

nations will have to rely in part on the institutions 

that have been in place to address international 

concerns and are constantly evolving as they 

attempt to meet the current challenges. Part of this 

evolution is related to the increasing efforts of 

nations to ensure that these institutions achieve 

their particular goals. This is not surprising as interdependence grows, since the decisions made in 

these forums have important consequences for the 

nations involved. 

The last decade has witnessed a sharp debate about 

the ability of the international trade and financial 

institutions to address problems such as worldwide 

income disparities and the continuing debt problems of the poorest countries. For example, while 

the World Trade Organization has emphasized the 

importance of efforts to bring more advantages of 

trade to the less-developed world, disagreements 

between developed and developing countries and 

among diverse interest groups on how to accomplish this have made reaching new agreements very 

difficult. Concerns have also been raised regarding 

the ability of the International Monetary Fund, 

World Bank, and other multilateral development 

banks to successfully promote economic development in the world's poorest countries. The United 

States and other participants in these institutions 

have advocated a greater allocation of resources to 

those countries that successfully adopt best practices such as participatory decision making and 

privatization. In addition, the United States has 

been a leader in promoting the greater use of grant 

financing to help avoid future debt problems for the 

poorest countries.

The Changing Economy

Many of the issues facing the Congress and the 

nation stem from complex and evolving domestic 

and global economies. The last few years of the 

1990s saw a dramatic surge of productivity and economic growth that was reduced but not eliminated 

by the economic slowdown associated with the 

decline in financial markets, capital spending, corporate scandals, and issues related to international 

terrorism in the early 21st century. The growth was 

Constant 1999 Dollars

30,000

25,000

20,000

15,000

10,000

5,000

0

China/India

Low-Income Countries

Middle-Income Countries

High-Income Countries

Source: GAO analysis of data from the World Bank, World Development Indicators 2001.

1975 1987 1999
18 GAO STRATEGIC PLAN 2004–2009

THEMES FOR THE PLAN

fueled in part by the nation’s shift to a knowledgebased economy, the adoption of new technology, 

and a greater emphasis on public policies that rely 

on market forces and competition. In the coming 

years, the United States faces the challenge of 

returning to strong economic growth while meeting 

increased demands for spending to counter terrorism and improve security. Over the longer term, 

declining personal saving, coupled with the overall 

aging of the population, presents significant challenges to meeting the commitments to Social Security, Medicare, Medicaid, and other national 

priorities.

After two decades of diminished expectations and 

reduced economic performance, the GDP grew dramatically in the late 1990s, only to slow due to the 

bursting of the technology bubble, corporate scandals, and challenges in addressing international terrorism, all of which added to uncertainty about the 

economy. As shown in figure 12, labor productivity 

growth accelerated from 1.6 percent per year in the 

early 1990s to 2.9 percent per year from 1996 

through 2003. This growth can be attributed, in part, 

to the move away from the nation’s traditional, 

manufacturing-based economy toward one characterized by the production of information and services. In fact, for most of the past two decades, 

high-technology manufacturing and knowledgebased services have grown at roughly double the 

rate of other manufacturing industries. In light of 

forecasts for a shift downward in labor productivity 

growth for the remainder of this decade, the challenge for the future will be to sustain GDP growth.

Figure 12: Labor Productivity Growth, 1961–2013

Due to the changing composition of the economy, 

states appear to be facing a long-term erosion of 

their sources of revenue that is causing challenges 

in the provision of government services. That revenue base is estimated to have declined from 

51.4 percent of personal income in 1979 to 

41.5 percent in 2001. Four factors are cited as contributing to the decline: technological changes, legislated exemptions, cross-border shopping, and 

changing purchasing patterns. Technological 

advances such as digitized books and music have 

changed some taxable, tangible goods into nontangible products that are not taxed in some states. 

Although still small, cross-border shopping via mail 

order and electronic commerce has been growing 

rapidly, much of which escapes taxation. Finally, 

the rise in services’ share of personal consumption 

from about 47 percent in 1979 to 59 percent in 2002 

has reduced the sales tax base because most services, particularly professional services, are exempt 

from the sales tax on which states rely heavily. At 

the same time, there is evidence that the types of 

purchases subject to sales tax declined from the 

early 1970s to the 1990s but have remained relatively stable as a percentage of consumption since 

then.

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 and research and development is fundamental to continued growth. For policymakers, this 

Source: GAO analysis of data from the Bureau of Labor Statistics through 2003; 

Global Insight’s January 2004 forecast thereafter.

Average Annual Growth Rate

3.4

2.1

2.3

1.1

1.8

1.5 1.6

2.9 2.8

2.2

0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

1961-65

1966-70

1971-75

1976-80

1981-851986-90

1991-95

1996-03

2004-08

2009-13
GAO STRATEGIC PLAN 2004–2009 19

THEMES FOR THE PLAN

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 should be adapted for new needs. 

New importance should 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 importance of research 

and development, particularly in the private sector 

but augmented by basic work in the public sector, 

requires strategic management and attention to 

incentives.

The shift to new technologies and knowledgebased services has had a significant impact on the 

delivery of health care in the country and on the 

percentage of the nation’s resources devoted to this 

industry. For instance, laser surgery has made it 

possible for people to see clearly without the need 

for glasses or contacts; brain disorders that cannot 

be treated by conventional surgery are now treated 

by using precisely targeted beams of radiation. 

Recent medical discoveries, such as mapping the 

human genome, provide new knowledge that may 

lead to unheard of medical advances. However, 

advances in medical technology, along with demographic trends and other factors, have contributed 

to health care consuming a continually increasing 

proportion of the nation’s GDP, as shown in 

figure 13.

Figure 13: National Health Expenditures as a 

Percentage of GDP

Note: The figure for 2010 is projected.

The shift to a knowledge-based economy also has 

implications for immigration policy. The emergence 

of technology-oriented industries has tended to 

create both high-paying jobs in computing and IT 

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, working either in the 

United States or in their home countries. In light of 

heightened concern for homeland security, the relatively easy flow of workers into the country may be 

reassessed. Moreover, the demand for both highand low-skilled workers may contribute to a longterm trend of inequality in income in which those in 

the richest segments of society see their incomes 

increase more than do those in the poorest segments.

Consumer and investor protection policies are also 

affected by the growth in knowledge-based industries. With human capital and technological capabilities as the principal assets of these companies, 

valuation of corporate assets has become particularly difficult. Moreover, many of these companies—in the financial services sector, for example—

are in the business of selling a range of new and 

complex services, the value of which is difficult to 

calculate. Questions of market power in a knowl0

2

4

6

8

10

12

14

16

18

Percentage of GDP 

Sources: Centers for Medicare and Medicaid Services, Office of the Actuary, National 

Health Statistics Group, and Department of Commerce, Bureau of Economic Analysis.

1980 1990 2000 2010
20 GAO STRATEGIC PLAN 2004–2009

THEMES FOR THE PLAN

edge-based economy also make determining consumer and investor protection policies more 

difficult. 

The shift in the U.S. economy to knowledge-based 

industries calls into question whether GDP, the traditional indicator of economic performance, should 

take into account investment in human capital and 

in other intangible assets, such as research and 

development, or include supplemental accounts for 

broader measures of production. As a result, the 

public policy issues of the future are likely to 

demand new metrics that can measure the longterm strategic impact of government choices.

Other changes in the U.S. and world economies 

have occurred because of government policies to 

improve the economic performance of both the private and public sectors through measures such as 

liberalizing trade and drawing on greater market 

competition. The U.S. government and, increasingly, foreign countries have moved away from 

heavily regulated or state-owned enterprises to 

more competitive markets. In the United States, the 

federal government has moved to deregulate industries such as trucking, electricity, and telecommunications. In Europe and elsewhere, governments 

have privatized formerly publicly owned industries, 

and many formerly planned economies have reorganized to be more market oriented. Consequently, 

formerly regulated industries have been forced to 

become more efficient as new competitors enter 

previously protected markets.

According to a study conducted by the Organization 

of Economic Cooperation and Development 

(OECD), the U.S. economy benefits from an 

industry structure, with comparable entry but more 

active exit, and from less restrictive labor and 

product market regulation compared to many other 

members of OECD. Nevertheless, as the electricity 

market woes in California and the problems besetting the airline industry illustrate, markets work 

within a boundary of oversight institutions and regulations that are provided by government.

Although the economy was still growing in the early 

years of the 21st century, the sustainability of this 

growth was becoming more of a concern because 

of a serious decline in the personal saving that is 

used to fuel capital investment and research and 

development. Saving and investment drive the productivity growth that allows personal incomes to 

rise without accelerating inflation. Since the early 

1990s, personal saving declined from about 

5 percent of GDP to about 1.5 percent in 2003. (See 

fig. 14.) In recent years, low personal saving was 

offset by government budget surpluses and sustained by foreign investment in the United States. 

To the extent that these offsetting trends change, 

personal saving must rise if growth in investment 

and productivity is to continue at the levels of the 

1990s.

Figure 14: Declines in U.S. Personal Saving, 1990–

2003

OECD has determined that several of the sources of 

economic growth are related to key factors in the 

changing economy. Among key factors that OECD 

determined will affect growth are research and 

development expenditures, reduced variability in 

inflation, increased human capital formation (as 

measured by education), inflation, trade openness, 

and physical capital investment. The ability of a 

society to change these factors also varies; for 

instance, it may be more difficult or expensive to 

change business research and development by 

1 percent than it is to change the variability in inflation. The impact of research and development and 

that of human capital highlight the importance of 

the knowledge base of the changing economy. 

0

1

2

3

4

5

6

7

Percentage of GDP

Personal Saving

Net National Saving

Source: GAO analysis of NIPA data from the Bureau of Economic Analysis, 

Department of Commerce. 

1990

1991

1992

19931994

1995

1996

1997

1998

1999

20002001

2002

2003
GAO STRATEGIC PLAN 2004–2009 21

THEMES FOR THE PLAN

Increases in spending on national defense and 

homeland security add to 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, Medicare, and Medicaid. As previously 

noted, 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 while leaving few 

resources for investment in new technology. This 

budget outlook reinforces the importance of longterm growth—fueled by efficiency, saving, and 

investment—that will allow the nation to support its 

commitments to future generations.

An Aging and More Diverse 

Population 

Profound changes in the characteristics of the U.S. 

population will continue in the coming decades as 

the population becomes increasingly older and 

more diverse. According to the 2000 census, the 

median age of the U.S. population is now the 

highest it has ever been, and the most rapidly 

increasing age group is the 45- to 54-year-olds—the 

baby boomers. As the baby boomers age, the share 

of the population aged 65 or older is projected to 

grow from 12 percent in 2000, to about 19 percent 

in 2030, and to 23 percent in 2075. (See fig. 15.) 

Figure 15: Growth in Elderly Population

Note: Projections based on intermediate assumptions of 

The 2003 Annual Report of the Board of Trustees of the 

Federal Old-Age and Survivors Insurance and the Federal 

Disability Insurance Trust Funds.

As noted earlier, the baby boomers’ aging and 

retiring will have severe effects on the Social Security and Medicare program trust funds, with both 

programs projected to begin running cash deficits in 

the next decade that will continue to grow for 

decades into the future. By 2040, their combined 

cash deficits are estimated to be $670 billion. (See 

fig. 16.)

0

5

10

15

20

25

2000 2025 2050 2075

Percentage of Total Population Aged 65 and Over

Source: Social Security Administration, Office of the Chief Actuary. 
22 GAO STRATEGIC PLAN 2004–2009

THEMES FOR THE PLAN

Figure 16: Cash Deficits Social Security and Medicare’s Hospital Insurance Trust Funds Will Face as Baby 

Boomers Begin to Retire

Note: Projections based on the intermediate assumptions of the 2003 Trustees’ report.

Furthermore, public spending on the elderly 

through the Medicare and Medicaid programs will 

consume a drastically increasing share of GDP, 

rising from about 3.4 percent in 2000 to approximately 9 percent in 2040 and to about 14 percent in 

2075. (See fig. 17.)

Figure 17: Medicare and Medicaid as a Share of 

GDP

Notes: Projections based on the intermediate assumptions 

of the 2003 Trustees’ Reports, the Congressional Budget 

Office’s (CBO) August 2003 short-term Medicaid estimates, 

and CBO’s March 2003 Medicaid long-term projections 

under midrange assumptions.

At the same time that the baby boomers are 

exerting such major pressures on federal expenditures, the growth of the labor force is expected to 

slow considerably, becoming negligible by 2050. 

(See fig. 18.) 

Figure 18: Labor Force Growth, 1970–2080

Note: Percent change is calculated as a centered 5-year 

moving average.

2003 Dollars in Billions

-750

-500

-250

0

250

2000 2005 2010 2015 2020 2025 2030 2035 2040

Medicare HI Cash Flow

Social Security Cash Flow

Social Security

Cash Deficit

2018 

Medicare HI

Cash Deficit

2013

Source: GAO analysis of data from the Social Security Administration.

0

2

4

6

8

10

12

14

16

2000 2010 2020 2030 2040 2050 2060 2070

Percentage of GDP

Medicaid

Medicare

Sources: Centers for Medicare & Medicaid Services’ Office of the Actuary and 

Congressional Budget Office.

0

1

2

3

1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080

Source: GAO analysis based on the intermediate assumptions of The 2003 

Annual Report of the Board of Trustees of the Federal Old-Age and Survivors 

Insurance and the Federal Disability InsuranceTrust Funds.

Percent Change (5-Year Moving Average)
GAO STRATEGIC PLAN 2004–2009 23

THEMES FOR THE PLAN

This decline in the number of working-age people 

compared with the rise in the number of elderly has 

obvious implications for the Social Security and 

Medicare trust funds. Today, about 3.3 people pay 

into Social Security for every person receiving benefits. (See fig. 19.) By 2030, this ratio is projected to 

decline to 2.2 and by 2080 fall to 1.8. 

Figure 19: Social Security Workers per Beneficiary, 

1960–2080 

Medicare faces a similar scenario. When this year’s 

high school seniors turn 65 in 2051, the ratio of 

workers to Medicare beneficiaries will have 

dropped from 4:1 to approximately 2:1. 

Unless there are improvements in the underlying 

sources of productivity—such as education, technology, and research and development—low labor 

force growth will lead to slower growth in the 

economy—and to slower growth in federal revenues at a time when the expenditure demands on 

federal programs for the elderly are increasing. This 

slowing labor force growth is likely to raise questions about current retirement policies in both the 

public and private sectors and whether people 

ought to be encouraged to stay in the workforce 

longer and be given opportunities to continue their 

education and training. As with demand for scarce 

technical skills and low-cost labor, the slowing 

growth in the labor force increases pressures to 

import workers, thereby raising questions about 

immigration policies. 

The implications of a growing elderly population 

are likely to extend far beyond the financial status 

of the Social Security, Medicare, and Medicaid programs. Services provided by state and local governments for housing, transportation, and programs for 

the elderly also are likely to change in response to 

the needs of this population. Privately provided services, including communications and financial services, also are likely to change in response to the 

needs of the elderly population. These changes are 

likely to have their largest impact on areas in which 

the elderly population is increasing the most. From 

1990 through 2000, the elderly populations in 8 

states increased by more than 25 percent, while 22 

states had increases of just under 10 percent.

This demographic shift will affect other industrialized nations as well. For example, in some European countries, social program costs are projected 

to consume a greater share of total GDP than in the 

United States. As the health and retirement costs of 

these nations burgeon, their budgets may become 

more constrained, which in turn could affect U.S. 

interests. For example, while U.S. assets today represent a significant share of foreign portfolios, European lending to the United States is likely to be 

scaled back as the continent has to finance the consumption needs of its elderly populations. The 

United States’ international interests could also be 

affected if Europe and other major donors are 

forced to curtail their contributions to international 

lending institutions and peacekeeping missions and 

their aid 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. From 1990 through 

2000, the number of foreign-born people in the 

United States grew by 57 percent to total more than 

31 million—the largest number of foreign-born residents in U.S. history. While these foreign-born residents make up about 11 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 is 

foreign born—over three-quarters of whom came 

from Mexico and Asia. Also, in 18 other states, at 

least one-half of foreign-born residents came to the 

United States since 1990. Although over one-fourth 

of these immigrants are college educated, foreignborn residents are more likely to be less educated 

and more likely to live in poverty and lack health 

0

1

3

2

4

5

6

1960

1970

1980

1990

2000

2010

2020

2030

2040

2050

2060

2070

2080

Covered workers per OASDI beneficiary

Source: Projections based on the intermediate assumptions of the 2003 

Trustees’ Reports.
24 GAO STRATEGIC PLAN 2004–2009

THEMES FOR THE PLAN

insurance than residents who were born in the 

United States, placing special demands on education, health, and other social service systems. These 

changes also have implications for how the federal 

government targets subsidies and grants to mitigate 

regional disparities.

This more diverse population means that minorities, 

as well as women, will continue to represent a continuously increasing share of the workforce. In 

2000, women constituted 47 percent of the American workforce, up from about 45 percent in 1990, 

and this proportion is expected to increase further 

in the future. (See fig. 20.) African Americans, Hispanic Americans, Asian Americans, and other 

minorities are projected to account for about 

30 percent of the total labor force by 2010, but will 

account for about 60 percent of all new workers 

from 2000 through 2010. These trends, along with 

slow labor force growth, have implications for federal policies and programs in education, training, 

child care, and immigration, among other things. 

Figure 20: Women and Minorities in the Labor 

Force, 1980–2010

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

status. “Minorities” includes women and men. 

Advances in Science and 

Technology 

Science and technology influence every aspect of 

American life. While IT is a major technological 

force of this era—linking individuals, organizations, 

and economies around the world—other kinds of 

scientific and technological advances also are creating significant changes. For example, the rapidly 

increasing understanding of the human genome is 

leading to new developments in genetic engineering. For society and government, these developments in science and technology present great 

opportunities to improve the quality of life, the performance of the economy and the government, and 

the relationship of government to its citizens. At the 

same time, the increased development and use of 

new technologies challenge the government’s and 

the Congress’s ability to evaluate their potential and 

assess their effect on security, safety, privacy, and 

equity.

Advances in science and technology have been 

fueled by increases in research and development 

(R&D) funding by the public and private sectors. As 

shown in figure 21, R&D funding has increased dramatically over the past 30 years, although the relative federal share of total funding has declined over 

this period. 

Figure 21: Growth in R&D Spending (in Constant 

2002 Dollars)

47.5 46.3 45.0

41.7

12.3 13.9

16.2

18.1

0

5

10

15

20

25

30

35

40

45

50

Women

Minorities

Source: Bureau of Labor Statistics, “Labor Force Projections to 2010: Steady Growth 

and Changing Composition,” Monthly Labor Review, November 2001. 

1980 1990 2000 2010

Percentage

0

50,000

100,000

150,000

200,000

250,000

Dollars in Millions

Federal

Industry

Other

Source: National Science Foundation, Division of Science Resources Statistics.

1970 1990 2002

(Preliminary)

1980
GAO STRATEGIC PLAN 2004–2009 25

THEMES FOR THE PLAN

The positive outcomes from technological developments are well illustrated by IT, which contributed 

to the substantial gains in productivity that fueled 

the U.S. economy in the 1990s. Electronic commerce in the United States far outpaces the rest of 

the world and is expected to grow exponentially 

over the next few years. IT has begun to alter the 

way citizens interact with government, making it 

easier for them to get information and assistance, 

identify and obtain services, file applications and 

taxes, and conduct other transactions with government. 

Although such advances have opened the workforce to people who were previously barred by 

physical handicaps or geographic distance, fundamental access to technology will continue to 

prompt debate over the digital divide—the disparity 

in the ability of different socioeconomic groups to 

access and use technology. Other advances in IT 

raise additional challenges for the nation. The 

growth of electronic commerce, for example, has 

made it more difficult to determine the source and 

character of taxable income and sales, thereby complicating division of the tax base across national, 

state, and local jurisdictions. Moreover, as organizations become more interconnected, the ability to 

share data among systems can lead to inappropriate 

access to medical records, credit histories, and other 

personal and confidential data. As shown in 

figure 22, the number of reported hacker attempts, 

viruses, and other computer bugs exploded in 

recent years.

Figure 22: Number of Incidents Reported

Furthermore, the widespread interconnectivity of 

computer systems with the critical operations and 

infrastructures they support has also created new 

vulnerabilities. The nation’s telecommunications, 

power distribution, public health, national defense 

(including the military’s war-fighting capability), law 

enforcement, financial, government, and emergency 

services all depend on computer operations. 

Because financial markets and other critical infrastructure also rely on IT, the United States and 

world markets can be attacked even without an 

actual physical assault. 

Despite these vulnerabilities, the nation’s ability to 

detect and counter bioterrorism greatly depends on 

information generated by biomedical research on 

dangerous, disease-causing microbes and on 

growing understanding of the immune system’s 

response to these pathogens. This research is critical 

to the accelerated development of diagnostic tests, 

vaccines, antivirals, and antimicrobials. Efforts to 

accelerate biomedical science related to homeland 

security, in turn, allow for a more rapid response to 

naturally occurring disease outbreaks. 

Furthermore, 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 diseases. 

Advances in the biological sciences, such as the 

mapping of the human genome, are furthering the 

nation’s understanding of disease mechanisms and 

creating significant opportunities for new 

0

20,000

40,000

60,000

80,000

100,000

Number of Incidents Reported

Number of Reported Hacker Attacks, Viruses, and 

Other Computer Bugs

Source: Carnegie Mellon University, CERT.

1988 2002 1990 1992 1994 1996 1998 2000
26 GAO STRATEGIC PLAN 2004–2009

THEMES FOR THE PLAN

approaches to medical care. Advances in cell 

biology have accelerated diagnostics and treatments. Rapid developments in the field, including 

promising research on potential uses for stem cells, 

have opened the possibility of treatments for a host 

of disorders that have proved difficult to counter. In 

addition, genetically modified crops have the potential to dramatically improve the health and nutrition 

of many of the world’s poorest people.

When used in conjunction with medical advances, 

nanotechnology, which involves manipulating 

matter at the level of individual atoms, could provide further breakthroughs. For example, advances 

made by a multiagency nanotechnology research 

group and others may lead to far-reaching innovations such as drugs able to target specific parts of 

the body at a given time. However, the effects of 

nano-sized materials on human tissues are 

unknown and the technology’s unforeseen economic consequences could lead to widespread 

employment disruptions. 

Other biomedical advances raise concerns as well. 

Although they hold great promise for improving 

health care, the affordability of new diagnostic and 

treatment methods is becoming a growing issue for 

federal and state health care programs. Newer treatments may not reach poorer countries, where even 

treatments currently available in the United States 

are out of reach because of their costs. Additionally, 

advances in biotechnology raise a number of difficult ethical and legal questions that society has not 

had to address before. For example, the rapid 

progress of the Human Genome Project opens the 

possibility of identifying a genetic predisposition for 

diseases in individuals and, thereby, the opportunity 

for preventive interventions. At the same time, this 

information may make people more vulnerable to 

discrimination by employers and insurance companies.

Measuring the Quality of Life

A variety of economic, environmental, and social 

indicators suggest that in some respects, the quality 

of life for Americans has improved over the past 

several decades. Large segments of the population 

continue to enjoy greater economic prosperity than 

ever before. In 2002, over 94 percent of the labor 

force was employed and the median annual household income was over $42,000. More than twothirds 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 at birth now up to 77 years, a trend 

likely to continue with advances in medicine. Further, mortality rates have continued to decline in 

recent years, both in general and for some of the 

nation’s leading causes of death, such as heart disease and stroke. In the last decade, the well-being 

of many Americans has been enhanced through the 

dramatic increase in the availability of new drug 

therapies, such as those for treatment of high cholesterol. In fact, since the mid-1990s, an average of 

100 new drugs have been approved annually. 

Recent medical advances, such as mapping the 

human genome and researching the use of vaccines 

for certain types of cancer, may lead to continued 

improvements in the quality of life for the nation’s 

population.

However, improvements have not been without 

cost, and rates of improvement can be slowed and 

certain resource trade-offs sharpened by a prolonged economic downturn. The nation’s spending 

on health care, for instance, doubled from 1990 

through 2000, and this growth is expected to continue through 2010. 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 systems—two of the largest health 

care systems in the world. 

Despite the effort and expense of achieving and 

maintaining these improvements in quality of life, 

the improvements have not been evenly distributed 

across the population. In 2002, more than 

43 million Americans did not have health insurance, 

and since then additional numbers have lost Medicaid benefits as states, faced with significant budget 

deficits, discontinued coverage for certain individuals. Unemployment rates for African Americans 

and Hispanic Americans were nearly twice the rate 

for white Americans. These groups also include 

proportionally fewer college graduates, their 
GAO STRATEGIC PLAN 2004–2009 27

THEMES FOR THE PLAN

average income levels are considerably lower, they 

are less likely to have health insurance, and their 

poverty rates are more than double those of white 

Americans. Evidence also points to regional disparities. For example, a lack of adequate infrastructure, 

housing, and safe water contribute to a myriad of 

health and economic problems to many living along 

the U.S.-Mexico border. Violent crime rates remain 

high in certain geographic areas and for certain 

parts of the population, although they have fallen 

considerably across the nation as a whole. Affordable housing remains out of reach for many in the 

Northeast, northern California, and Hawaii. 

Moreover, prosperity itself has placed greater 

stresses on the quality of life. Greater economic 

activity, for example, is producing more air and 

highway traffic and heightening concerns about 

safety and environmental quality. Families are struggling to balance the demands of work and home 

and to find and pay for good day care. Parts of the 

country that have seen rapid development—particularly the Southeast and Southwest—are facing 

increased competition for water, land, and other 

natural resources. Population and economic growth 

also create demand for new transportation and 

other physical infrastructure and place strains on 

existing capacity. 

In the future, the need for new investments will 

increasingly come into competition with other 

national priorities, including spending on Social 

Security, Medicare, and Medicaid as well as on 

national preparedness to confront security threats, 

thus creating difficult budgetary choices for the federal government. To assist in making these difficult 

trade-offs, decision makers would benefit from tools 

that indicate where the nation stands in improving 

the quality of life for all citizens. These indicators 

would help decision makers identify areas that warrant relatively greater or lesser attention and 

resources and help ensure that all citizens are beneficiaries of gains made in the nation’s quality of life. 

A number of efforts are under way around the 

world to develop comprehensive national indicators 

systems that help leaders, professionals, educators, 

and the public reflect on key quality of life issues. 

For example, Germany, France, Australia, Canada, 

and a number of other countries have developed 

detailed sets of national indicators. In fact, an international group of measurement practitioners and 

researchers maintain that while indicator systems 

should be comprehensive, they should also be 

designed to provide easily digestible, user-friendly, 

and timely information. 

The United States also has established a wide 

variety of comprehensive and specialized national, 

regional, and local indicator systems. The most 

developed of these systems focus on the economy, 

the environment, and key social areas, such as 

health care. There is a growing consensus, however, that the establishment of a comprehensive 

portfolio of key national performance indicators is 

needed to support informed public debate and 

decisions within and between different levels of 

government and society. 

To that end, the Comptroller General—in cooperation with the National Academies—held a forum in 

February 2003 with national leaders and experts to 

explore whether and how to establish a portfolio of 

national indicators for the United States. The participants generally agreed that developing a key 

national indicator system is important and complex. 

Such an effort will require applying “lessons 

learned” from past efforts and building upon many 

of the efforts currently under way. In this regard, 

GAO will continue to work with the Congress and a 

number of public and private sector institutions to 

facilitate continuing dialogue and work on how to 

improve the amount of information that can be 

brought to bear on determining Americans’ overall 

quality of life.

Diverse Governance Structures 

and Tools

As the pace of change accelerates in every aspect of 

American life, government is faced with new and 

more complex challenges. The demographic pressures, emerging scientific and technological 

changes, and emergent diverse security threats are 

among the forces that will test the relevance and 

effectiveness of current governmental programs and 

tools. As the federal role has grown in addressing a 

wide range of needs and wants, the public has 

come to expect effective performance from the 

public sector. 
28 GAO STRATEGIC PLAN 2004–2009

THEMES FOR THE PLAN

To deliver on these expectations, the nation’s 

system will be pressed to adapt policy-making processes and management systems to address the 

implications of the previously noted themes for 

public policy outputs and outcomes. First, the 

capacity of the system to address these emerging 

issues will be based on a policy process that has 

sufficient foresight to address the longer-term forces 

shaping the nation’s policies and choices. As discussed earlier, GAO’s long-term budget model 

shows that absent reforms on the spending or revenue sides of the budget, higher retirement and 

health care costs associated with baby boomers’ 

retirement will crowd out flexibility within the 

budget to address important national needs and 

eventually lead to unsustainable levels of deficits 

and public debt. (See figs. 3 and 4.) Waiting to 

address these forces could require precipitous 

policy actions that would have disruptive consequences on the lives of retirees and workers alike. 

Rather, addressing these pressures earlier through 

timely actions to reform Social Security and health 

care programs and policies that boost long-term 

savings and growth can provide time for social 

adjustments to policy change while helping future 

generations stave off economic decline and reclaim 

a larger measure of fiscal flexibility. 

Second, these long-term fiscal pressures and other 

emerging forces will test the capacity of the policy 

process to reexamine and update priorities and 

portfolios of federal programs and policies. A process that only considers incremental changes to 

existing policies will constrain the nation’s capacity 

to both respond to the fiscal challenges and to 

make government more relevant for the 21st century. The base of existing fiscal commitments and 

programs will need to be addressed periodically so 

that emerging needs can be addressed while outdated and unsustainable programs can be either 

reformed or eliminated. 

Third, the reexamination of existing commitments 

calls for the development of systematic indicators 

on the performance and costs of federal programs. 

A performance-based process can help the nation 

reprioritize by identifying those programs for which 

performance falls below expectations and costs 

perennially exceed projections, giving the nation 

the opportunity to improve program delivery or 

reallocate scarce funds to higher priority programs 

with better performance prospects. The foundation 

for performance-based policy making has already 

been established through 1990s reforms in performance, financial, and information management. 

Agencies are now developing performance goals 

and plans and more systematic and reliable information is available on costs and performance. However, much remains to be done in developing 

performance information that is useful to policymakers in evaluating the efficacy of existing programs. For instance, using the Program Assessment 

Rating Tool (PART), the Office of Management and 

Budget (OMB) concluded that performance measures and data were insufficient for making a judgment about the effectiveness of about 40 percent of 

approximately 400 programs rated in the fiscal year 

2004 and 2005 budgets, cumulatively. (See fig. 23.) 

Figure 23: Cumulative PART Results from the 

President’s Fiscal Year 2004 and 2005 Budgets

Fourth, promoting a more strategic focus on the 

broad goals achieved by portfolios of government 

programs is essential to bringing about a results-oriented debate reexamining government roles and 

responsibilities. Numerous federal programs and 

tools are involved in addressing the important 

policy goals in mission areas that are the focus of 

most policy debates. For example, as figure 24 illustrates, for the education and labor budget function, 

a wide range of discretionary, mandatory, credit, 

and tax expenditure programs are involved in 

addressing federal policy goals. The policy process 

Effective

11%

Moderately 

Effective

26%

Adequate

21%

Ineffective

5%

Results Not

Demonstrated

37%

Source: GAO analysis of data from the Office of Management and Budget.
GAO STRATEGIC PLAN 2004–2009 29

THEMES FOR THE PLAN

itself must have the capacity to transcend the 

narrow focus on specific programs and agencies to 

address how portfolios of programs and tools contribute to policy goals. Assessing the coherence of 

all related policy tools to ascertain whether they are 

aligned and relevant for a changing society will be a 

critical task in rethinking and updating the federal 

government’s role. 

Figure 24: Relative Reliance on Policy Tools for the 

Education and Labor Budget Function, Fiscal Year 

2000

The nation’s capacity to address broad mission 

areas can be enhanced by the development of key 

national indicators focused on the broadest levels of 

policy aspirations in its system, for example, 

improving national health outcomes, reducing 

crime, or improving national educational progress. 

The development of such indicators can prompt a 

healthy national dialogue among key stakeholders 

to establish consensus on goals and to reach agreement on a set of indicators to measure current performance and track progress. 

Fifth, redefining performance goals and indicators 

must be a national, not a strictly federal, initiative, 

because important national performance goals 

involve a broad range of federal, state, and local 

governmental, nonprofit, and for-profit organizations and even international organizations. 

Figure 25 indicates the growing involvement of 

third parties in federal programs. 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 call for a concerted effort by all three 

levels of government as well as key private sector 

leaders responsible for critical infrastructure and 

resources. 

Figure 25: Federal Civilian Employment and 

Outlays, Fiscal Years 1950–2003

Note: Executive branch civilian employees, excluding those 

in the U.S. Postal Service.

This growing interdependence has important ramifications for governance and accountability. The 

public rightly expects to hold the federal government accountable for achieving important national 

outcomes. Certainly, involving state and local governments and other types of organizations in the 

federal mission can add new capacities and efficiencies and can promote responsiveness to a wider 

range of local interests. However, unique accountability challenges arise as well, both from the 

involvement of independent interests operating 

under their own sovereignty and from the reliance 

on ever more complex networks to deliver federal 

services. The challenge for the federal government 

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

Discretionary

Budget

Authority

33%

Mandatory

Direct 8%

Loans

12%

Guaranteed

Loans 

20%

Tax

Expenditures

27%

Source: Office of Management and Budget.

Thousands of

Civilian Employees 

Federal Civilian Employment

Total Federal Outlays

1950195519601965197019751980

1985

1990199520002003

0

500

1,000

1,500

2,000

2,500

0

500

1,000

1,500

2,000

2,500

Billions of

FY2000 Dollars
30 GAO STRATEGIC PLAN 2004–2009

THEMES FOR THE PLAN

will be to design, select, and manage the various 

tools of governance—regulations, grants, tax preferences, or loans—to prompt these independent 

interests to work together in defining and pursuing 

common national goals. More broadly, as the nation 

manages through partnerships across boundaries, 

the fiscal and management challenges faced by 

each level of government have become increasingly 

intertwined. Going forward, the performance and 

fiscal capacity of the public sector as a whole will 

become more relevant in determining how successful the nation will be in addressing important 

national policy goals. Successful partnerships will 

entail refocusing accountability and metrics to capture a more integrated perspective on the efforts 

and accomplishments achieved by all actors 

working in partnerships across conventional government or private sector boundaries. 

Finally, the management systems and processes in 

federal agencies will have to undergo fundamental 

changes to respond effectively to the daunting challenges facing the nation. Nothing less than a transformation in the people, processes, and technology 

used to address public goals will be necessary to 

address the demanding policy goals facing the 

nation in a time of rapid change. Ultimately, the 

federal government needs to create a culture that 

moves from 

■ outputs to results, 

■ stovepipes to matrixes,

■ hierarchical to flatter and more horizontal 

organizations,

■ an inward to an external focus on citizens and 

customers,

■ reactive to proactive approaches,

■ avoiding risk to managing risk, and

■ protecting “turf” to forming partnerships.

This transformation will require fundamental 

changes in culture within the federal government. 

Top leadership involvement and clear lines of 

accountability for making improvements will be 

necessary governmentwide. Organizational frameworks will have to be redefined to accommodate 

the adaptability needed to address emerging public 

policy challenges and leverage the partners and 

stakeholders who will prove to be essential to 

implementing needed reforms. Building on the 

evolving agenda of reforms in financial, performance, and information management will be necessary to establish the accountability mechanisms to 

track results. However, strategic human capital management will be the centerpiece of any serious 

change management initiative. The people working 

for government are the most important asset in 

addressing the emerging challenges facing the 

nation. The aging of the federal workforce as well 

as the growing competition for bright new entrants 

makes it imperative that the federal government 

equip itself with new tools necessary to recruit, 

retain, and reward talented workers. A consistent 

strategic approach to marshaling, managing, and 

maintaining the human capital needed to maximize 

government performance is essential. Effective 

changes can only be made and sustained through 

the cooperation of leaders, union representatives, 

and employees throughout an organization. 
GAO STRATEGIC PLAN 2004–2009 31

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

In keeping with GAO’s mission to support 

the Congress in carrying out its constitutional 

responsibilities, GAO’s first strategic goal 

focuses on several 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 and rapid 

technological change and Americans’ desire to 

improve quality of life have major policy and 

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

elderly will crowd 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. The stakes involved with the federal policies and programs covered under Goal 1 are high, 

as the benefits have become critical to the wellbeing of families, businesses, state and local governments, and other key sectors of the nation’s 

economy and society. Moreover, as the nation 

moves to address the challenges of homeland security, it is becoming apparent that a wide range of 

domestic policies and programs are relevant to protecting the nation against terrorist threats. At the 

same time, the reemergence of deficits should 

prompt greater scrutiny of the performance and 

costs of many of these programs, and GAO expects 

to be a major contributor to these debates through 

its audit and evaluation work. 

GAO’s objectives for this goal are to support congressional and federal efforts on 

■ 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; and 

■ a safe, secure, and effective national physical 

infrastructure. 
32 GAO STRATEGIC PLAN 2004–2009

GOAL 1

Issue: Total health care spending in the United 

States from all sources—public and private—continues to increase at a breathtaking pace. From 1990 

through 2000, spending nearly doubled from 

$696 billion to $1.3 trillion and by 2010 is estimated 

to more than double again to $2.7 trillion. (See 

fig. 1.1.) This unrelenting growth is producing a 

health care sector that continues to claim an 

increasing share of the nation’s GDP—about 

12 percent in 1990 versus an estimated 17 percent 

in 2010. 

Figure 1.1: Total National Health Care Spending, 

1990–2010

Note: The figure for 2010 is projected. All dollars are 

nominal.

Not surprisingly, health care spending has been one 

of the most rapidly rising elements of federal 

spending, growing three times faster than the rest of 

the federal budget over the last 20-plus years. (See 

fig. 1.2.) Expenditures on health-related programs 

are one of the largest components of federal 

spending, totaling an estimated $468 billion in fiscal 

year 2002, or about 23 percent of all federal 

spending that year. Health care also accounts for 

significant federal tax expenditures, with 

$108.5 billion in forgone revenues projected for 

2003 because of employer contributions to medical 

care and medical insurance. The cost pressures of 

serving a growing population—particularly those 65 

and older—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 1.2: Growth of Federal Health Expenditures, 

1980–2003

Note: The 2003 number is an estimate.

Of particular concern is the growth in Medicare 

expenditures, which are estimated to total about 

$269 billion for fiscal year 2003. Even without considering the financial effects of its new prescription 

drug benefit, Medicare is expected to nearly double 

its share of the economy by 2030, competing with 

other spending and economic activity of value. 

Indeed, one part of Medicare, the Medicare Hospital 

Insurance trust fund, is projected to begin running a 

deficit in 2013 and to be depleted by 2026. Also of 

concern are issues of (1) modernizing Medicare’s 

management structure, payment policies and methStrategic Objective:

The Health Needs of an Aging and Diverse 

Population

0

500

1,000

1,500

2,000

2,500

3,000

Dollars in Billions

Source: Department of Health and Human Services, Centers for Medicare & Medicaid 

Services, Office of the Actuary, National Health Statistics Group.

1990 2000 2010

Percentage Increase Since 1980

Health Expenditures

All Other Federal Expenditures

1995 2000 2003

Source: Office of Management and Budget. 

0

100

200

300

400

500

600

700

1985 1990
GAO STRATEGIC PLAN 2004–2009 33

GOAL 1

odologies, and benefits package and (2) reducing 

Medicare’s administrative burden on providers. 

Moreover, because of its size and complexity, Medicare is inherently difficult to manage. About 50 

insurance companies process and pay approximately 1 billion claims annually to over 1 million 

health care providers. Consequently, the program is 

a target for fraud, waste, and abuse, and effective 

oversight is critical to protecting program dollars 

and promoting efficient program operations. 

Although the introduction of competitive principles 

to health care helped to contain medical care cost 

increases for several years, costs are increasing significantly once again as is the number of Americans 

without health insurance. These cost increases, in 

concert with the weak economy the past several 

years, have important implications for federal health 

care programs and outlays and for the availability of 

employer-sponsored health insurance. Many 

employers have reportedly been considering or 

have actually made changes in the generosity of 

their health insurance benefits. Moreover, the public 

is concerned about the quality of care, consumer 

protection mechanisms, and the availability of information to allow purchasers to make informed insurance choices. 

The government also must address pressing issues 

in its own system of hospitals and clinics. The 

Department of Veterans Affairs (VA)—one of the 

nation’s largest health care systems—spends about 

$23 billion a year to provide health care to approximately 4.2 million veteran patients. Yet, much of 

VA’s physical infrastructure is obsolete and burdened with excess capacity. The Department of 

Defense’s (DOD) health care system spends about 

$24 billion annually to support both direct and 

civilian health care to about 8.7 million eligible beneficiaries. Pressure is mounting to integrate aspects 

of the two systems to increase their efficiency and 

effectiveness. 

Other areas of concern are the efficiency and effectiveness of the government’s public health programs, 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 food products. Additionally, the changing 

nature of public health threats domestically and 

internationally, such as HIV infection, SARS, 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. Governments’ ability to help surmount shortages of certain 

prescription drugs and vaccines is a worldwide concern as well. 

The threat of terrorists using biological weapons of 

mass destruction, such as anthrax and smallpox, has 

raised concerns about the nation’s ability to adequately respond to bioterrorist attacks. 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 been given to state and local 

communities’ capacity to develop coordinated plans 

for dealing with a potential biological attack and to 

develop emergency response systems linking hospitals, emergency rooms, health personnel, and fire 

and police efforts to respond to any form of terrorism. 

Finally, the baby boom generation will undoubtedly 

place increasing pressure on the Medicaid program 

for which the joint federal/state expenditures in 

fiscal year 2003 are estimated at $275 billion—more 

than those of Medicare. Medicaid helps to pay for 

nursing home and other community-based forms of 

long-term care services. Yet meeting an increasing 

demand for such services at a time when many 

states are in severe financial difficulty and the federal government is once again operating at a deficit 

will pose significant challenges for federal and state 

decision makers, with important implications for the 

services offered by each state. At the other end of 

the population spectrum are millions of uninsured 

children whose families have no health insurance. 

Medicaid and the State Children’s Health Insurance 
34 GAO STRATEGIC PLAN 2004–2009

GOAL 1

Program help cover the health insurance costs of 

these low-income Americans. However, the recent 

economic downturn has led to declining state revenues and to states taking, or considering taking, 

actions to reduce access to care for this vulnerable 

population, thereby contributing to an increase in 

the number of uninsured. Accounting for and overseeing these two programs represents a formidable 

challenge for the federal government because of the 

variation in state policies, procedures, and delivery 

systems. In particular, Medicaid’s size and complexity make it vulnerable to fraud, waste, and 

abuse, making effective federal oversight critical.

Performance Goals: To support efforts by the 

Congress and the federal government to address 

these issues, GAO will 

■ evaluate medicare reform, financing, and 

operations; 

■ assess trends and issues in private health 

insurance coverage; 

■ assess actions and options for improving VA’s 

and DOD’s health care services; 

■ evaluate the effectiveness of federal programs to 

promote and protect the public health; 

■ evaluate the effectiveness of federal programs to 

improve the nation’s preparedness for the public 

health and medical consequences of 

bioterrorism; 

■ evaluate federal and state program strategies for 

financing and overseeing long-term health care; 

and 

■ assess state experiences in providing health 

insurance coverage for low-income populations. 

Issue: Educating and protecting children are important to the continued vitality of this democratic 

society and to its long-term ability to compete in a 

global marketplace. To this end, the federal government invests more than $110 billion per year in programs that foster the development, education, and 

protection of children from infancy through elementary and secondary school and postsecondary education. Although federal spending is only about 

7 percent of total spending on elementary and secondary education, requirements in recent legislation 

have increased the federal government’s role 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. 

The federal government invests over $11 billion in 

early education and care programs for children 

under age 5, primarily through six major Department of Health and Human Services (HHS) and 

Department of Education programs. 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 HHS and 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 after welfare reform. (See fig. 1.3.) 

Policymakers at the federal and state levels are concerned about the cost, quality, and availability of 

child care. Major early childhood programs—Head 

Start, the Child Care and Development Fund 

(CCDF), and the Individuals with Disabilities Education Act (IDEA)—are being reauthorized. Two addiStrategic Objective:

The Education and Protection of the Nation’s 

Children
GAO STRATEGIC PLAN 2004–2009 35

GOAL 1

tional programs, the Child and Adult Care Food 

Program and the Special Supplemental Nutrition 

Program for Women, Infants, and Children, provide 

nutritious meals or support good nutrition for children in day care facilities and for certain groups of 

low-income, nutritionally at-risk women, infants, 

and children. Both programs face challenges in 

delivering high-quality nutrition services and 

meeting program requirements.

Figure 1.3: Growth of Federal Investment in Child 

Care, Fiscal Years 1997–2002

Note: CCDF amounts include dollars states transferred from 

Temporary Assistance for Needy Families (TANF) programs 

to CCDF as allowed under the Personal Responsibility and 

Work Opportunity Reconciliation Act of 1996. The amounts 

shown for TANF include only those TANF funds expended 

for child care. 

Federal elementary and secondary school programs 

have traditionally provided opportunities for children from disadvantaged families. However, recent 

legislation, the No Child Left Behind Act, has 

increased the federal role through requirements that 

apply to all public schools and students. The United 

States places a high priority on educating children at 

the elementary and secondary levels and has 

increased the federal investment from over 

$20 billion in fiscal year 2000 to about $35 billion in 

fiscal year 2003. This increased investment in recent 

years has been accompanied by an increased 

emphasis on accountability for schools to raise all 

students to proficient levels in math, reading, and 

science and has placed additional requirements on 

states for student testing and teacher qualifications. 

It also mandated actions for schools at which students’ performance does not sufficiently improve. 

All students—including those from poor families, 

with limited English proficiency, and with disabilities—are expected to meet challenging academic 

standards. However, an achievement gap exists 

between different groups of students, for example 

between white and African American students and 

between white and Hispanic American students. 

(See figs. 1.4 and 1.5.) 

Figure 1.4: Achievement Gaps in Reading, Grade 

12 

Note: Scores for 1992 through 1998 reflect testing situations 

in which accommodations were not permitted. Scores for 

2002 reflect a testing situation in which accommodations 

were permitted.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

1997 1998 1999 2000 2001 2002

Dollars in Millions

TANF

CCDF

Source: Department of Health and Human Services, Administration for Children and 

Families.

0

5

10

15

20

25

30

Score Differences between White and Black Students’ 

Average Scores

Score Differences between White and Hispanic Students’ 

Average Scores

Source: National Center for Education Statistics, National Assessment of 

Educational Progress, The Nation’s Report Card: Reading 2002. 

Score Differences

1992 1994 1998 2002
36 GAO STRATEGIC PLAN 2004–2009

GOAL 1

Figure 1.5: Achievement Gaps in Math, Grade 12

Dissatisfied with this continued achievement gap, 

policymakers are exploring a variety of school 

reform initiatives and strategies to improve school 

performance, improve teaching, reduce student 

dropout rates, and enhance educational options for 

the nation’s children. Helping states to meet these 

requirements requires a larger role for the Department of Education in providing support and oversight. For special education students, the 

reauthorization of IDEA has focused on several 

major issues—the federal funding contribution, 

paperwork burden, teacher shortages, identification of children for special education services, and 

alignment of the No Child Left Behind Act requirements with the needs of children with disabilities. In 

addition, the National School Lunch and School 

Breakfast Programs are school-based efforts to provide students with nutritionally balanced meals, 

often at low or no cost. Recent data on the increase 

in the percentage of children who are overweight 

and the attendant health problems has highlighted 

the importance of providing students with nutritious 

foods and creating a healthy eating environment in 

schools. 

The nation also needs to be concerned about protecting its children and ensuring that families have 

the financial means to provide for their children’s 

needs. Each year, an estimated 900,000 children are 

found to be the victims of abuse and neglect by 

their parents, relatives, or other caregivers. Tragically, approximately 1,300 children die each year 

from abuse and neglect. While responsibility for 

investigating reports of abuse and neglect and providing services to families falls primarily to state 

child protective service agencies, the federal government invests almost $8 billion annually to provide care for children who need placement outside 

their homes, services to help keep families together 

or to reunite them, and training and research activities to improve child welfare services nationwide. In 

1997, the Congress enacted the Adoption and Safe 

Families Act with two primary goals: (1) to ensure 

that consideration of children’s safety is paramount 

in child welfare decisions, so that children are not 

returned to unsafe homes, and (2) to ensure that 

necessary legal procedures occur expeditiously, so 

that children who cannot return home may be 

placed for adoption or another permanent arrangement quickly. HHS has also established a new 

review system—known as Child and Family Services Reviews—to monitor state compliance with 

federal child welfare laws. Moreover, nearly 20 million children live with only one of their parents. To 

help obtain the financial support noncustodial parents owe their children and to help single-parent 

families achieve or maintain economic self-sufficiency, the Congress established a joint federal/state 

child support enforcement program in 1975. The 

program helps locate noncustodial parents, establish paternity, establish child support obligations, 

and collect child support. Provisions in the 1996 

welfare reform legislation strengthened and 

improved child support enforcement. For example, 

to improve efforts to track delinquent parents across 

state lines, the law established the National Directory of New Hires—a national system that includes 

personal and employment information on all newly 

hired employees—and the Federal Case Registry—a 

system that contains data from child support cases.

Beyond providing for basic educational needs, a 

competitive national economy depends, in part, on 

effectively preparing workers to compete in the 

labor force. To this end, the federal government 

currently provides approximately $63 billion annually to enhance the quality of and access to postsecondary, vocational, and adult education. In 

particular, federal grant and loan programs provide 

financial aid to make college more affordable and 

accessible for millions of Americans. At over 

$11 billion, the Pell Grant helps to ensure access to 

higher education for low-income undergraduate 

students. In addition, the government’s investment 

in supporting college students with direct loans and 

Score Differences between White and Black Students’ Average 

Scores

Score Differences between White and Hispanic Students’ Average 

Scores

Source: National Center for Education Statistics, National Assessment of Educational 

Progress, The Nation’s Report Card: Reading 2002. 

0

5

10

15

20

25

30

35

40

1990 1992 1996 2000

Score Differences
GAO STRATEGIC PLAN 2004–2009 37

GOAL 1

loan guarantees results in over $44 billion of new 

loans annually. Of growing significance, the federal 

government also provides over $12 billion in higher 

education subsidies for students or their families 

through several tax benefits, such as the Hope and 

Lifetime Learning tax credits and the deferral of tax 

on the earnings of contributions to qualified state 

tuition programs. 

A major concern about the federal government’s 

investment in postsecondary education is the government’s 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. 1.6.) Due in part to concerns 

about Education’s ability to efficiently manage the 

student loan and grant programs and their vulnerability to fraud, waste, abuse, and mismanagement, 

GAO has added the student loan programs to the 

high-risk list. Reducing fraud and error in and 

improving the management of these programs is 

also part of the President’s Management Agenda. 

Figure 1.6: A Growing Balance of Defaulted Loans 

Is Subject to Collection, 1993–2003

Note: Balances include defaulted loans under both the 

Federal Family Education Loan and Federal Direct Loan 

Programs.

Furthermore, legislation key to higher education 

issues is scheduled for reauthorization. The Higher 

Education Act, the Adult Education and Family Literacy Act, and the Carl D. Perkins Vocational and 

Technical Education Act are all due to be reauthorized in the near future. The Congress will be 

debating several key issues, including the rising 

costs of college, how to help students and families 

finance these costs, institutional accountability for 

educational costs and quality, how best to provide 

for a skilled workforce, and Education’s management of the federal investment in postsecondary 

education. 

Performance Goals: To support efforts by the 

Congress and the federal government to address 

these issues, GAO will 

■ analyze the effectiveness and efficiency of early 

childhood education, care, and nutrition 

programs in serving their target populations; 

■ assess options for federal programs to effectively 

address the educational and nutritional needs of 

elementary and secondary students; 

■ determine the effectiveness and efficiency of 

child support enforcement and child welfare 

programs in serving their target populations; and 

Source: Department of Education, Budget Service.

0

5

10

15

20

25

30

1993 1995 1997 1999 2001 2003

17.06

22.60

Dollars in Billions

Fiscal Year
38 GAO STRATEGIC PLAN 2004–2009

GOAL 1

■ identify opportunities to better manage 

postsecondary, vocational, and adult education 

programs and deliver more effective services.

Issue: A strong national economy depends, in part, 

on a productive workforce. Developing that workforce includes effectively preparing youth and new 

workers to compete in the labor force, efficiently 

helping employers locate qualified job candidates, 

providing a work environment that safely promotes 

productivity, finding ways to help workers when 

they become unemployed, and providing assistance 

to workers with disabilities. To this end, the federal 

government currently invests more than $150 billion 

annually to help new entrants to the workforce, 

support those who have been laid off from their 

jobs and assist them in becoming reemployed, assist 

and rehabilitate workers with injuries or disabilities, 

help employers hire enough highly skilled workers, 

and protect employees’ rights to fair and safe workplaces without unduly burdening employers. In 

addition, federal policies for providing income support for the low-income population have increasingly focused on promoting work in exchange for 

government assistance, but changes in the economy 

have created significant challenges to supporting 

low-skilled, low-income families as people leave 

welfare and enter the workforce.

A struggling economy and a large projected decline 

in the growth rate of the workforce present critical 

challenges for maintaining the nation’s productivity. 

While economic recovery is under way, a slower 

rate of labor force growth will present challenges to 

the continued growth of the nation’s economy. As 

the demand for skilled labor increases with the 

expansion of the economy, researchers warn that, 

unlike in the past when economic growth was 

fueled in part by increases in the size and skill of 

America’s workforce, over the next two decades the 

potential for shortages of skilled workers could 

present mounting challenges for productivity and 

economic growth. At the same time the baby boom 

generation begins to retire, there will be fewer 

native-born workers entering the labor force to take 

their place. Tapping into all possible labor sources 

will be important, and policymakers may need to 

look for more ways to support employing workers 

with disabilities, to encourage seasoned workers to 

remain in the workforce longer, to help welfare 

recipients leave welfare for work, and to assist lowwage workers in retaining and advancing in their 

jobs. Additionally, the nation may need to consider 

how well current immigration policies work in 

addressing demands for workers. 

Technology, changes in the organization of work, 

and increasing global interdependence—in which 

not only production but also some portions of the 

service sector are being outsourced overseas—are 

redefining the labor market for workers and 

employers. Federal employment, worker protection, 

and disability programs must deal with these new 

challenges, in addition to encouraging a commitment to lifelong learning. Because of technological 

changes and global competition, employers will 

need workers with greater skills. In the past, 

employers were able to take advantage of new 

technologies, in part, because new workers were 

more educated than the retiring workers. However, 

over the next 20 years, the growth in the labor force 

is expected to slow dramatically, as are the proportions of the labor force with education beyond high 

school and with college degrees. For example, as 

shown in figure 1.7, some experts project that the 

labor force will grow only 16.4 percent from 2000 

through 2020—barely a third of the nearly 

50 percent rate of expansion from 1980 through 

2000. These changes raise numerous issues 

regarding the adequacy of efforts to ensure that 

employers will have the workers they need. Various 

changes in the workforce and workplace also raise 

issues about the adequacy of efforts to ensure that 

workers have safe, healthy, and productive workStrategic Objective:

The Promotion of Work Opportunities and the 

Protection of Workers
GAO STRATEGIC PLAN 2004–2009 39

GOAL 1

places. Regulations and activities designed to ensure 

workplace safety and health must be revised to 

accurately reflect the technological changes of the 

recent past. At the same time, changes in technology and the labor force have created new 

opportunities for some people with disabilities to 

remain at or return to work, yet the labor force participation rate of people with disabilities has 

remained quite low. Moreover, federal disability 

programs remain mired in concepts from the past 

and are poorly positioned to provide meaningful 

and timely support for Americans with disabilities. 

The Congress and the administration face challenges as they redefine the role of public policies to 

help employers and workers enhance productivity 

and increase earnings while also protecting 

workers’ rights.

Figure 1.7: Changes in the Actual and Projected 

Growth Rates for the Labor Force, 1980–2020

Performance Goals: To support efforts by the 

Congress and the federal government to address 

these issues, GAO will

■ assess the effectiveness of federal efforts to help 

adults leave welfare for work and to assist other 

low-income individuals;

■ analyze the impact of programs designed to 

maintain a skilled workforce and ensure that 

employers have the workers they need;

■ assess the success of various enforcement 

strategies to protect workers while minimizing 

employers’ burden in the changing work 

environment; and 

■ identify ways to improve federal support for 

people with disabilities.

Issue: For the last 60 years, the retirement security 

of older Americans has been a central concern of 

American society. The Congress enacted Social 

Security and the post-World War era saw the development and expansion of a private-employer-provided pension system. Later, new tax-preferred 

vehicles were created to encourage individuals to 

increase their personal retirement savings. 

The nation has also changed dramatically in other 

ways. For example, women, especially married 

women, have entered the labor force in growing 

0

25

50

75

100

125

Actual Change in the Rate of Growth—1980 to 2000 

Projected Change in the Rate of Growth—2000 to 2020

Percentage

Total 

Workforce

College Degree 

or More

Source: The Aspen Institute.

Strategic Objective:

A Secure Retirement for Older Americans 
40 GAO STRATEGIC PLAN 2004–2009

GOAL 1

numbers, with their 2000 labor force participation 

rate almost doubling to over 60 percent since 1960. 

As the growth in the number of single parent 

households illustrates, there has been a substantial 

increase in the diversity of structure of American 

households. Finally, as the baby boomers approach 

retirement and as life expectancy continues to 

increase, the American population has aged. The 

percentage of the population age 65 and older is 

projected to reach 20 percent by 2025, up from less 

than 12 percent in 2000. 

All of these developments have important consequences for the retirement security of American 

workers and their families. For example, the aging 

of the population poses important challenges for 

the future of Social Security, the program that continues to serve as the foundation of the nation’s 

retirement income system. Because of these 

changes in workforce participation and longevity, 

people—particularly women—on average, will be 

spending an increasing number of years in retirement and thus will receive benefits longer. In addition, it means that the ratio of workers to retirees is 

expected to decline, with fundamental implications 

for Social Security, the federal budget, and the 

national economy. Although Social Security payroll 

tax revenues exceed benefit expenditures today, 

projections suggest that beginning in 2018, 

spending will exceed revenues by growing proportions and that in 2042 the Social Security trust funds 

will be depleted. (See fig. 1.8.) 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. 

Although there is an emerging consensus about the 

need to address the long-term fiscal problems of the 

Social Security program, there remains considerable 

debate on both the timing and the nature of such 

reform. The Congress has discussed many of these 

issues and is continuing these policy deliberations. 

Such reform would have major consequences for 

the federal budget, for the long-term economic 

growth of the country, and particularly for retirement income adequacy, given that Social Security is 

the sole source of income for one-fifth of the elderly. 

Figure 1.8: Social Security Trust Fund Faces Insolvency in 2042

Note: Data taken from the Office of the Actuary’s 2003 intermediate assumptions from the 2003 Annual Report of the Board of 

Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds. 

Besides reforming Social Security in ways to ensure 

its financial viability and enhance its contribution to 

retirement income, it will also be necessary to foster 

the growth of other sources of retirement income. 

For example, pensions are another key element in 

the nation’s approach to ensuring adequate retirement income, constituting 18 percent of retirement 

income in the United States. (See fig. 1.9.) Nonethe-

-1,000

-500

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2000 2005 2010 2015 2020 2025 2030 2035 2040

Dollars in Billions (2003)

Cash Surplus

Cash Deficit

Trust Fund Balance

Source: GAO analysis of Social Security Administration data.
GAO STRATEGIC PLAN 2004–2009 41

GOAL 1

less, tens of millions of U.S. workers have no individual pension coverage, placing them at risk 

during their retirement years. Only about half of the 

nation’s workers are covered by employer pensions, and 48 percent of retirees do not receive any 

pension income. Determining the best way to 

increase pension coverage represents a continuing 

policy concern.

Figure 1.9: Sources of Income in the United States 

for Those Age 65 and Over, 2001

Note: “Pensions” includes private pensions and annuities; 

government employee pensions; Railroad Retirement; and 

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

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. Furthermore, some employers are shifting from traditional 

defined benefit plans to “hybrid” systems that retain 

the defined benefit structure while adopting certain 

features of defined contribution plans. These plans 

place greater responsibility on workers themselves 

to make prudent investment decisions about their 

retirement savings, but do not always provide 

workers access to the accurate and reliable information necessary for such decisions. Such changes will 

pose new challenges to workers, government regulators, and policymakers. 

A still significant number of workers continue to be 

covered by defined benefit plans offered by individual employers. Benefits provided by these plans 

are partially insured by the Pension Benefit Guaranty Corporation (PBGC). After fluctuating over the 

last decade, the single employer insurance program 

now has a large and growing accumulated deficit. 

The program has moved from a $9.7 billion accumulated surplus in 2000 to a $3.6 billion accumulated deficit in fiscal year 2002. 

The termination of large underfunded pension 

plans of bankrupt firms in troubled industries like 

steel or airlines was the major cause of the deficit. 

Declines in the stock market and interest rates and 

certain weaknesses in the current funding rules contributed to the severity of the plans’ underfunded 

condition. Furthermore, the degree of underfunding 

in the private pension system has increased dramatically and additional severe losses may be on the 

horizon. Continued problems in volatile or 

declining industrial sectors could lead to additional 

corporate bankruptcies and consequent plan terminations, increasing PBGC’s financial liabilities. 

PBGC currently estimates that it faces $35 billion in 

unfunded vested benefits exposure, which ultimately might become program losses.

However, these factors mask broader trends that 

pose serious program risks. For example, the program’s insured participant base continues to shift 

away from active workers, falling from 78 percent 

of all participants in 1980 to 53 percent in 2000. In 

addition, the program’s risk pool has become concentrated in industries affected by global competition and the movement from an industrial to a 

knowledge-based economy. In 2001, almost half of 

all program-insured participants were in plans 

sponsored by firms in manufacturing industries, a 

sector that has had virtually no employment growth 

in the last half century. The result is a potentially 

escalating agency vulnerability as PBGC struggles to 

insure what is at best a moribund and increasingly 

risky segment of the pension universe. In response 

to the cumulative effect of these trends on the financial vulnerability of this agency and the potentially 

severe adverse consequences for workers’ benefits 

and the federal government, GAO placed PBGC’s 

single-employer insurance program on its high-risk 

list in July 2003.

Other

3%

Pensions

18%

Social Security

38%

Earnings

23%

Asset Income

18%

Source: Social Security Administration, Annual Statistical Supplement, 2002. 
42 GAO STRATEGIC PLAN 2004–2009

GOAL 1

Long-term weaknesses in the solvency of the Social 

Security program and the sustained lack of pension 

coverage for half of the labor force necessitate that 

workers depend on their own retirement savings to 

cover these gaps. Yet, despite these potential shortfalls, personal savings rates continue to hover at historically low levels. Current economic uncertainties 

may exacerbate this trend, threatening the prospects 

for individuals’ future retirement income as well as 

the nation’s future economic growth. 

Finally, earnings from employment are already a 

key component of retirement income, accounting 

for 24 percent of aggregate retiree income in 2002. 

Employment-related earnings, particularly when 

generated by extending the labor force of seasoned 

workers, could potentially play a more prominent 

role in future retirement security. Current workers 

are healthier than past generations and are more 

willing to work in retirement. Increased labor force 

participation can reduce the fiscal pressures on 

Social Security, contribute to economic growth by 

mitigating potential occupational bottlenecks, and 

bolster labor force growth. However, most 

employers have not yet met this challenge by establishing alternative work and schedule arrangements, 

nor has the government developed the complementary policies to encourage employers and workers 

to move in this direction.

The health needs of an aging population and 

society’s ability and willingness to fund those needs 

are other key issues in national retirement policy. 

The availability of health insurance is a major consideration in seasoned workers’ employment and 

retirement decisions as well as in employers’ decisions to hire such workers. In particular, the longterm erosion of employer-provided health benefits 

for retired workers age 55 to 64 who are ineligible 

for Medicare is a disturbing trend. In addition, some 

of these workers, especially low-wage workers, 

may have to look to Medicaid, the health insurance 

program for the poor, for assistance. Yet a serious 

related concern is the projected rapid rise in Medicaid expenditures. The Congressional Budget 

Office (CBO) estimates that total national expenditures for Medicaid will increase from $158 billion in 

fiscal year 2003 to $360 billion in 2013, a 128 percent increase. GAO is taking a comprehensive view 

of the issues facing older Americans and their financial security, including not only their retirement 

income but also health insurance access and affordability and the interaction of all of these concerns 

with the general retirement decision.

The demographic, economic, and social developments affecting the nation also have important consequences for how the Social Security 

Administration conducts its business. In particular, 

the Social Security number (SSN), once an internal 

marker for the agency to record contributions and 

pay benefits, is now virtually a universal identifier, 

used by public agencies at all levels of government 

and private business entities of all sizes and from 

many different economic sectors. The SSN’s wide 

use, besides raising many serious privacy issues, has 

also put citizens throughout the nation at risk of 

identity theft, fraud, and other types of illegal 

activity. How to use the SSN in a way that ensures 

effective agency operations, prevents its illegal use, 

and protects the privacy of U.S. citizenry is one of 

the greatest 21st century challenges facing the Social 

Security Administration.

Performance Goals: To support efforts by the 

Congress and the federal government to address 

these issues, GAO will 

■ assess the policy challenges facing the future of 

the Social Security system and the need for 

reform; 

■ bolster retirement security by identifying 

opportunities to foster greater pension coverage, 

raise personal saving, and increase the 

employment earnings of seasoned workers;

■ identify opportunities to improve the ability of 

government agencies to administer and protect 

workers’ retirement benefits; and 

■ assess the role of the Social Security number in 

improving government operations, minimizing 

fraud and abuse, and protecting citizens from 

identity theft and other illegal activity.
GAO STRATEGIC PLAN 2004–2009 43

GOAL 1

Issue: Spending on the administration of justice 

continues to grow. In constant 2001 dollars, federal 

spending will be about $38 billion in fiscal year 

2004, up from about $15 billion in 1991. (See 

fig. 1.10.) Most of the increase has been to accommodate a shift in focus at the federal level from 

helping local governments control crime to emphasizing more distinct federal responsibilities, such as 

controlling illegal immigration and, more recently, 

preventing terrorist attacks. 

Figure 1.10: Federal Outlays for the Administration 

of Justice, 1991–2004

Note: The 2003 and 2004 numbers are estimates. These 

data reflect OMB budget data for the “administration of 

justice” budget function.

During the past several years, overall crime levels 

have been reduced. For example, preliminary data 

for 2002 from the Federal Bureau of Investigation’s 

(FBI) Uniform Crime Reporting Program indicate a 

0.2 percent decrease in the nation’s Crime Index 

from the 2001 figure. 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, while protecting civil liberties; to reduce 

illegal drug use; to protect the nation’s borders; and 

to control prison costs. The USA Patriot Act, passed 

in October 2001, significantly expanded federal law 

enforcement and investigative authority and, with 

billions of dollars in additional funding, greatly 

increased the federal counterterrorism role. In addition, the newly created Department of Homeland 

Security (DHS) 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 is in the process of redefining its 

mission and priorities in light of the increased focus 

on antiterrorism. 

Passage of the Homeland Security Act of 2002 

moved several major federal law enforcement agencies around—the Secret Service, the Immigration 

and Naturalization Service (INS), the U.S. Customs 

Service, the Coast Guard, the Federal Protective Service, and the Federal Law Enforcement Training 

Center all moved to the new DHS. In addition, the 

Bureau of Alcohol, Tobacco, and Firearms moved 

from the Department of the Treasury to Justice, 

leaving Treasury virtually no law enforcement functions. While the movement of these agencies into 

their new units presents management challenges, it 

also raises concerns about the impact the transfers 

will have on agencies’ ability to perform their missions. These concerns, as well as the sheer size of 

the undertaking, the fact that DHS’s proposed components already faced a wide array of existing challenges, and the prospect of serious consequences 

for the nation should DHS fail to address its management challenges and program risks adequately, 

led GAO to add the implementation and transformation of the new department to the list of highrisk areas in 2003.

Strategic Objective:

An Effective System of Justice

0

5

10

15

20

25

30

35

40

Fiscal Year 2002 Dollars in Billions

Source: Office of Management and Budget, Budget of the United States 

Government, Fiscal Year 2004.

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004
44 GAO STRATEGIC PLAN 2004–2009

GOAL 1

After several years of mandatory minimum sentencing, “three strikes and you’re out” laws, and 

truth-in-sentencing grants, federal and state prisons 

are overcrowded. The size of the prison population 

will be the subject of increasing public debate as 

these policies’ cost to the public escalates. Moreover, in constant 2002 dollars, the federal judiciary’s 

fiscal year 2004 spending, estimated at about 

$5.5 billion, will be more than double its fiscal year 

1991 spending of about $2.5 billion. In addition, the 

judiciary has faced an imbalance in its workload in 

recent years, particularly its criminal caseload, with 

some courts facing much higher workloads than 

others. Thus, the judiciary faces a major challenge 

in determining how to use its resources efficiently 

and effectively to address such workload imbalances and to coordinate its strategy with other 

affected agencies, particularly along the southwest 

border. Also, the number of prisoners being 

released from federal prisons is growing rapidly, 

making successful reintegration an increasingly 

important issue.

Performance Goals: To support efforts by the 

Congress and the federal government to address 

these issues, GAO will 

■ identify ways to improve federal agencies’ ability 

to prevent and respond to terrorism and other 

major crimes, 

■ assess the effectiveness of federal programs to 

control illegal drug use, 

■ assess federal efforts to enforce immigration and 

customs laws, and 

■ assess the administrative efficiency and 

effectiveness of the federal court and prison 

systems.

Issue: The economic and social well-being of communities is key to the nation’s overall growth and 

prosperity. Yet the viability of many of America’s 

communities is threatened by a variety of ills, 

including high levels of long-term unemployment, 

inadequate retail activity, a deteriorating housing 

stock, and other economic and social problems. For 

decades, federal, state, and local governments and 

the private and nonprofit sectors have sought ways 

to revitalize distressed communities. The federal 

government alone operates well over 100 programs 

that offer communities grants, loans, loan guarantees, and special tax incentives designed to assist 

distressed areas—for example, Community Development Block Grants that communities can use for 

a variety of infrastructure and capacity-building 

needs and Empowerment Zones that are intended 

to encourage investment in targeted areas. 

Despite these efforts, no simple answer has been 

found to the question of how best to revitalize 

America’s distressed communities, in part because 

of the difficulty of measuring the factors that actually cause communities to improve. Also, the issue 

of how best to deliver aid is complicated by the 

need to strike a balance between the goals of the 

federal government and those of state and local 

governments and nonprofit organizations, which 

administer a large share of federal dollars for community and economic development.

Small businesses, which employ more than half the 

nation’s workforce, are key to economic growth in 

many communities. The Small Business Administration (SBA), with a portfolio of loans worth more 

than $50 billion, is the nation’s single largest financial backer of small businesses and provides management and technical assistance to about 1 million 

small business owners annually. SBA also has oversight responsibility for federal contracting goals for 

small and minority-owned businesses. Because SBA 

has undertaken numerous initiatives to address 

management issues that affect the agency’s performance, the Congress needs up-to-date assessments 

of its performance.

Strategic Objective:

The Promotion of Viable Communities
GAO STRATEGIC PLAN 2004–2009 45

GOAL 1

To promote home ownership, a key element of a 

vibrant community, the federal government provides mortgage assistance through mortgage guarantees provided by the Federal Housing 

Administration and VA and guarantees of mortgage 

securities by the Government National Mortgage 

Association. It also provides a federal charter and 

other direct and indirect benefits to three government-sponsored enterprises (GSE)—Fannie Mae, 

Freddie Mac, and the Federal Home Loan Banks—

that support the mortgage market. Recently, the 

effectiveness of the regulatory structure for GSEs 

has been called into question. The federal government also promotes home ownership through tax 

incentives and requirements placed on mortgage 

market participants. It must balance the benefits of 

increasing home ownership, especially among the 

underserved, against the financial risk taken on 

directly (through mortgage guarantees) or indirectly 

(through GSEs).

Since the late 1970s, the federal government has 

provided over $100 billion to help prepare for 

disasters and to assist disaster victims and their communities. In response to the recent terrorist attacks, 

billions of dollars have already been appropriated 

for recovery and relief efforts. Establishing an efficient and cost-effective approach to disaster assistance is difficult in the face of pressures to provide 

relief for disaster victims. However, approaches that 

provide incentives for preventive activities and 

foster private insurance coverage are two avenues 

that both the Federal Emergency Management 

Agency (FEMA) and the Congress are interested in 

exploring.

The Department of Housing and Urban Development (HUD) administers rental housing assistance 

programs to help families with lower incomes 

reside in safe, decent, and affordable housing. 

HUD’s rental assistance programs remain at high 

risk of waste and abuse, in part because HUD faces 

numerous management challenges in human capital, contract management, and IT. Also, HUD and 

the Department of Agriculture’s Rural Housing Service, which oversees rural rental 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 

low-income households. 

Performance Goals: To support the Congress and 

the federal government in their efforts to address 

these issues, GAO will assess

■ federal community and economic development 

assistance and its impact on communities;

■ the effectiveness of federal initiatives to assist 

small and minority-owned businesses;

■ how the federal government can balance the 

promotion of home ownership with financial 

risk;

■ federal efforts to enhance national preparedness 

and capacity to respond to and recover from 

natural and man-made disasters; and

■ how well federal programs that support 

affordable rental housing meet objectives, 

manage financial risk, and improve recipients’ 

well-being.

Issue: The nation’s natural resources and the systems associated with their use are under widespread and increasing stress, generating intense 

debate and posing daunting challenges to policymakers at all levels of government. In large part, 

this is the consequence of the country’s growing 

population and economy and attendant increased 

demands on a finite resource base. Accommodating 

these demands runs headlong into long-standing 

legislation aimed at protecting the country’s 

resources in a healthy state for the good of current 

and future generations. Likewise, how policymakers 

resolve this balance has global consequences 

because the United States is the world’s single 

largest consumer of energy and other resources and 

Strategic Objective:

Responsible Stewardship of Natural Resources 

and the Environment
46 GAO STRATEGIC PLAN 2004–2009

GOAL 1

is increasingly seen as out of step with international 

efforts to limit resource use and associated pollution. 

The body of work set forth in this strategic objective 

is designed to address these and other issues in several natural resource areas, as well as related terrorist threat matters. On the latter point, it is noted 

that the 14 critical infrastructure sectors listed in 

President’s Decision Document, “National Strategy 

for Homeland Security,” include 6 in the natural 

resource areas addressed in this strategic objective—food (except meat and poultry), energy, 

water, chemical industry and hazardous materials, 

agriculture, and meat and poultry. 

In recent decades, the United States has experienced multiple energy crises—the 2003 electricity 

blackout affecting much of the country was a 

notable example—and remains perpetually on the 

cusp of critical supply/demand imbalances. Without 

applying prudence and foresight in crafting the 

nation’s strategic energy plan, electricity, natural 

gas, heating oil, and gasoline markets can be 

thrown into turmoil at any time. The challenge is 

further complicated by the global nature of many 

energy markets and growing doubts about the longterm sustainability of policies that demand 

increased production from the existing energy mix. 

Furthermore, strategies must now incorporate 

greater attention to the means of protecting a massive energy infrastructure that encompasses 5,000 

power plants, 204,000 miles of high voltage transmission lines, and nearly 3 million miles of oil and 

gas pipelines. Finally, energy strategies must consider the environmental consequences of energy 

choices, as illustrated by issues surrounding the 

potential reemergence of the nuclear power 

industry. While increased nuclear power capacity 

would obviously buttress electricity supplies and 

help reduce harmful emissions, continuing questions 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. 

More than ever, the country’s lands and waters are 

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 its elected leaders. The heated debate on 

possible future oil development in the Arctic 

National Wildlife Refuge in Alaska presents this 

issue in microcosm. 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 presents equally sobering challenges, as pollutants and overfishing rapidly deplete 

coral reefs and offshore fisheries, while competition 

over rights to fresh water supplies grows among 

various interests, such as agriculture, communities, 

utilities, wildlife, and recreational users. Even under 

normal conditions, water managers in 36 states 

expect water shortages to occur within the next 10 

years. If such shortages actually occur, they could 

have severe economic, environmental, and social 

impacts.

The increasing globalization of natural resource 

issues also affects environmental protection matters, 

as seen in the federal government’s discussions with 

other governments about global warming and what 

should be done about it. Such discussions add a 

new layer of complexity to the already difficult 

question of how to sustain economic growth when 

the engines of that growth—factories, cars and 

trucks, fertilizers, and electricity-generating plants—

often adversely affect air and water quality and can 

change climates in potentially catastrophic ways. 

Another factor in attaining federal air and water 

quality goals is that land use practices, often 

resulting in “urban sprawl,” are controlled mainly 

by local governments and private owners. Moreover, the federal government relies upon state and 

local governments for inspection and enforcement 

actions. 

Also, significant challenges remain in cleaning up 

the country’s hazardous and radioactive waste sites. 

Today, an estimated 60 million Americans live 

within 4 miles of a hazardous site, and radioactive 

waste from weapons production still needs to be 

cleaned up at Department of Energy (DOE) sites in 

13 states. These sites’ continued existence poses not 

only potential health and safety problems, but also 

fiscal and economic problems as well. Delayed 
GAO STRATEGIC PLAN 2004–2009 47

GOAL 1

cleanup results in higher price tags for eventual 

cleanup and in stunted economic development in 

the affected communities. Potential terrorist attacks 

underline the need for steps to ensure the security 

of hazardous and radioactive materials during 

storage, transportation, and disposal. 

Finally, with the recent passage of the 2002 Farm 

Bill, the Congress continues to debate the direction 

of U.S. farm policy in areas such as the role of agriculture in land conservation, wildlife habitat protection, and energy production efforts. Food safety and 

security lie at the forefront of concerns about the 

country’s agricultural resources, an urgent matter 

given the potential for, and the consequences of, 

agricultural bioterrorism. Besides this troubling 

matter, a whole range of other food safety issues, 

while less ominous, nevertheless pose serious questions. These include questions about the adequacy 

of the government’s devolution of food inspection 

authority and its efforts to implement a “farm-totable” food safety approach. At the same time, a 

number of countries have raised concerns about the 

safety of U.S. genetically modified crops and 

foods—a matter of growing importance given the 

significant role that food exports play in the U.S. 

economy. 

Performance Goals: To support efforts by the 

Congress and the federal government to address 

these issues, GAO will assess

■ the nation’s ability to ensure reliable and 

environmentally sound energy for current and 

future generations;

■ federal strategies for managing land and water 

resources in a sustainable fashion for multiple 

uses;

■ environmental protection strategies and 

programs; 

■ efforts to reduce the threats posed by hazardous 

and nuclear wastes; and

■ federal programs’ ability to ensure a plentiful 

and safe food supply, provide economic security 

for farmers, and minimize agricultural 

environmental damage.

Issue: The nation’s economic vitality and the quality 

of life of its citizens depend significantly on the 

soundness, security, 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 information. 

The nation faces major challenges in improving 

both efficiency and safety in the movement of 

people and goods. The nation relies heavily on its 

postal system for efficient mail delivery service. And 

thousands of federal facilities house and support 

staff and the other assets needed to provide services 

to the American people.

In both the short and long term, the nation faces 

important infrastructure challenges as federal, state, 

and local governments confront new demands 

brought on by changes in national security, demographics, technology, and lifestyles. The challenges 

are complex, cutting across many interrelated 

issues, and require coordinated intergovernmental 

responses. 

For example, the nation’s commercial passenger airlines, which were experiencing financial difficulties 

even before the terrorist attacks of September 11, 

2001, now face unprecedented financial losses 

stemming from reduced air travel, raising debate 

over the appropriate federal response. Also, longterm trends indicate that increasing numbers of 

motorists are encountering increasingly congested 

highways, while bottlenecks have escalated for 

freight transportation at intermodal connection 

points. 

Strategic Objective:

A Safe, Secure, and Effective National Physical 

Infrastructure
48 GAO STRATEGIC PLAN 2004–2009

GOAL 1

Suburban growth has raised demands for new 

roads, water and sewer systems, and access to telecommunications. At the same time, existing communities are demanding that the environment and 

their citizens’ quality of life not be harmed by this 

growth. 

The cost of maintaining and modernizing its infrastructure is only one concern of a U.S. Postal Service that faces growing financial, operational, and 

human capital challenges. In addition, the deregulated transportation and telecommunications industries require continuous oversight to help ensure 

that firms have a level playing field on which to 

compete and that consumers receive the intended 

benefits of deregulation.

The responses of the federal government and other 

levels of government to these infrastructure challenges will have important consequences for the 

nation’s future because of their effects on the 

quality of life and their significant costs. Since 1990, 

nondefense spending on infrastructure has nearly 

doubled and, as figure 1.11 shows, has become a 

significantly larger portion of total spending—

largely the result of the previous two surface transportation reauthorizations. 

Figure 1.11: Nondefense Federal Spending on 

Infrastructure as a Percentage of Total 

Expenditures, 1981–2002 (in Constant 2002 Dollars)

During the latter years of this period, the federal 

government enjoyed budget surpluses. With the 

return to large federal deficits forecast in the 

upcoming years, decision makers will be faced with 

difficult choices on how to allocate funding among 

infrastructure needs and other demands in an 

increasingly tight budget environment. Given limited resources, decision makers must choose 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.

 It is therefore essential for government at all levels 

to have the information needed to make wellinformed decisions about how to allocate funds 

among competing priorities, evaluate the challenges 

to determine which solutions are most cost-effective, and implement these solutions as efficiently 

and effectively as possible.

Performance Goals: To support efforts by the 

Congress and the federal government to address 

these efforts, GAO will assess

■ strategies for identifying, evaluating, prioritizing, 

financing, and implementing integrated solutions 

to the nation’s transportation infrastructure 

challenges;

■ the impact of transportation and 

telecommunications policies and practices on 

competition and consumers;

■ the federal government’s role in fostering and 

overseeing telecommunications in the public 

interest;

■ efforts to improve safety in moving people and 

goods across the nation’s transportation system;

■ efforts to improve security in all transportation 

modes;

■ the U.S. Postal Service’s transformation efforts to 

ensure its viability and accomplish its mission; 

and 

■ federal efforts to plan for, acquire, manage, 

maintain, secure, and dispose of the 

government’s real property assets.

1.5

2.0

2.5

3.0

3.5

4.0

1981 1984 1987 1990 1993 1996 1999 2002

3.0 % 1981

3.8% 2002

Fiscal Year

Percentage of Total Expenditures

Source: Office of Management and Budget, Budgets of the United States 

Government for fiscal years 1981 through 2004.
GAO STRATEGIC PLAN 2004–2009 49

GOAL 1

External Factors That May Affect Achievement of Goal 1

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 terrorist attacks of September 11, 2001, 

have brought about major changes in the nation’s 

public policy agenda. 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 to 

GAO’s work of the terrorism threat 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 respects, 

federal, state, and local governments are just beginning the process of defining the most vulnerable 

facilities, areas, and services and designing effective 

strategies to both mitigate known threats and prepare the nation to respond. As this process unfolds, 

GAO will be called upon to help define effective 

counterterrorism strategies as well as to identify 

other programs and activities that are candidates for 

de-emphasis or reductions based on long-standing 

problems with their performance. 

The fiscal underpinnings for domestic policies and 

programs are also shifting in ways that are still 

unclear. Deficits have once again emerged and will 

become a major factor influencing budget debates 

as well as deliberations over program reauthorizations and reform. The short-term deterioration of 

the fiscal outlook will serve to further weaken the 

long-term fiscal outlook, which is already unsustainable because of the aging of the population. In fact, 

the baby boom retirement is now reflected in the 

10-year budget outlook, as manifested by reduced 

Social Security surpluses and a slowing of the 

growth of the labor force. Ultimately, renewed fiscal 

discipline will be increasingly discussed as a way to 

restore the budget to balance and better promote 

the level of savings necessary to prepare the nation 

for the longer-term challenges of an aging society. 

Unlike the 1990s, when the budget was balanced in 

large part with cuts to defense, this time, fiscal balance will have to be achieved by addressing other 

parts of the budget, possibly including many of the 

areas covered in goal 1. Recent fiscal pressures in 

state governments may also prompt a consideration 

of the fiscal partnerships for major federal programs 

that depend on states for program delivery and 

financing. 
50 GAO STRATEGIC PLAN 2004–2009

Goal 2:

Provide Timely, Quality Service to the Congress and the 

Federal Government to Respond to Changing Security Threats 

and the Challenges of Global Interdependence

The nature of the threats to national and 

international security and the means of attack 

have changed significantly in the post-Cold 

War era, and even more so since the terrorist 

attacks of September 11, 2001. The nation 

must assess and defend against a wide range 

of means and methods of attack against U.S. 

interests both at home and abroad. Adversaries are more likely to strike vulnerable 

civilian or military targets at home and overseas in nontraditional ways to avoid direct confrontation with U.S. military forces or their 

allies on the battlefield. Nonetheless, the 

United States faces the challenge of transforming its 

military capabilities to maintain its technological 

edge and capabilities while executing a global war 

on terrorism, recognizing that military power alone 

cannot respond to today’s new threats. Responding 

to today’s threats requires new rules and new roles 

for all levels of government, best represented by the 

federal government’s structural changes associated 

with creation of DHS.

As the world grows increasingly interconnected 

through more open markets and rapidly developing 

technology, the globalization of markets has created 

new opportunities for the nation as a whole and for 

American producers and consumers. At the same 

time, the United States is facing increasing challenges and threats to its security and economy from 

sources that range from terrorism to regional conflicts to instability sparked by adverse economic 

conditions, corruption, ethnic hatred, nationalism, 

and disease. In today’s environment, advancing and 

protecting U.S. international interests has required 

interventions abroad to address terrorism at its roots 

or other interventions to make or keep the peace. 

While seeking to anticipate and address emerging 

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.

GAO’s specific objectives are to support congressional and federal efforts to

■ respond to emerging threats to security,

■ ensure military capabilities and readiness,

■ advance and protect U.S. international interests, 

and

■ respond to the impact of global market 

forces on U.S. economic and security 

interests.
GAO STRATEGIC PLAN 2004–2009 51

GOAL 2

Issue: The nature of the threats to national and 

international security and the means of attack have 

changed significantly in the post-Cold War era. 

Threats stem from differences in national or state 

ideologies and geopolitical, economic, and strategic 

considerations and now, increasingly, from religious 

conflicts and the aims of non-state-sponsored 

groups. Adversaries are more likely to strike vulnerable civilian or military targets at home and overseas in nontraditional ways to avoid direct 

confrontation with U.S. military forces or their allies 

on the battlefield.

The nation must assess and defend against a wide 

range of means and methods of attack, ranging 

from unconventional means to conventional 

weapons to weapons of mass destruction. International access, global interdependencies, interconnected and less diverse systems, and rapid 

technological change make such threats more 

viable and decrease the effectiveness of physical 

borders in ensuring security. The continuing proliferation of weapons of mass destruction increases 

concerns that terrorists or a rogue regime could 

threaten the United States or its allies with nuclear, 

chemical, or biological attack.

These threats put at risk the nation’s values, economic interests, way of life, and the personal security of its citizens at home and abroad. National 

strategies propose homeland security and combating terrorism initiatives to address these threats, 

yet their implementation and their associated costs, 

both direct and indirect, remain unclear. Decisionmaking approaches based on risk analysis and costbenefit effectiveness and the alignment of federal 

funding with state, local, and private sector investments are still works in progress. In the international arena, U.S. efforts to prevent the proliferation 

of weapons of mass destruction directly support 

domestic homeland security missions, yet much 

remains to be done.

Preparing and responding to emerging security 

threats will entail a national effort involving defense 

and domestic federal agencies and programs; state, 

local, and regional governments and organizations; 

the private sector; and the international community. 

At the federal level, the effectiveness of major structural changes to provide leadership will be important. The primary mission of DHS is to prevent, 

reduce vulnerability to, and aid in recovery from 

domestic terrorist attacks. Homeland security will 

require an effective DHS implementation and the 

efforts of other federal agencies, such as the FBI 

and the intelligence community. Responsibility for 

oversight and coordination across the executive 

branch, for example, with the Executive Office of 

the President, is still evolving.

Moreover, homeland security is, in large part, 

dependent on the efforts of state and local governments and the private sector. Internationally, the 

cooperation of the United States and its allies is 

needed to prevent terrorists and others from using 

dangerous weapons to carry out threats to the 

nation’s security. In addition, long-term success in 

homeland security will mean seamlessly integrating 

homeland security concepts into normal business 

decisions and practices across government and 

within the areas of the private sector responsible for 

critical infrastructures and key assets, so that efforts 

are sustainable over the long term and balanced 

with important non-homeland-security objectives.

Performance Goals: To support congressional and 

federal decision making on national preparation for 

and response to emerging threats to security, GAO 

will

■ assess federal homeland security management, 

responsibility, effectiveness, and achievement of 

mission goals;

■ identify ways to strengthen strategies related to 

homeland security and their implementation;

Strategic Objective:

Respond to Emerging Threats to Security
52 GAO STRATEGIC PLAN 2004–2009

GOAL 2

■ evaluate homeland security resource priorities, 

costs, and approaches to stimulate desired 

investments;

■ identify opportunities to embed homeland 

security concepts in ongoing national initiatives;

■ evaluate ways to strengthen government 

information security and protect computer and 

telecommunications systems that support the 

nation’s critical infrastructures; and

■ assess the effectiveness of U.S. and international 

efforts to prevent the proliferation of nuclear, 

biological, chemical, and conventional weapons 

and sensitive technologies.

Issue: In contrast to the downward trend in defense 

spending during the last decade, this first decade of 

the new century has already seen a significant 

upward trend in authorized defense spending. After 

dropping below $300 billion in prior years, total 

defense budget authority increased to about 

$360 billion in fiscal year 2002 and will exceed 

$400 billion in fiscal years 2003 and 2004, including 

substantial supplemental funding to support 

ongoing military operations. (See fig. 2.1.) As the 

new decade began, some increases in funding 

authority were approved to enhance operational 

maintenance, quality-of-life programs, pay raises, 

and improvements to crumbling facilities. Since 

September 2001, more significant increases in 

annual budget authority and supplemental appropriations have been approved to respond to the war 

on terrorism, including funding for Defense operations in Afghanistan and Iraq. Major increases have 

also been approved for weapon systems acquisition 

and modernization.

Figure 2.1: Total Defense Appropriations and 

Supplemental Funding for Fiscal Years 2000 

through 2004, as of January 2004

Notwithstanding the ongoing war on terrorism, 

DOD has continued to focus on implementing the 

results of the 2001 Quadrennial Defense Review, 

which charted a new defense strategy that emphasized homeland security, military transformation, 

joint operations, and advanced war-fighting capabilities related to IT, intelligence, and space operations. Follow-on studies were begun to more 

precisely define how existing DOD programs and 

priorities would change in light of the changing 

security environment and increased emphasis on 

homeland security. 

Strategic Objective:

Ensure Military Capabilities and Readiness

8.5

19.9

17.2

72.6 65.2

0

50

100

150

200

250

300

350

400

450

500

Supplementals

Appropriations

Dollars in Billions

Source: Congressional Research Service.

Fiscal Year

286.5 310 343

382 400.5

2000 2001 2002 2003 2004
GAO STRATEGIC PLAN 2004–2009 53

GOAL 2

Perhaps the most significant of the follow-on 

studies are those involving the ongoing reassessment of U.S. force structure and capabilities and of 

overseas presence and basing. The former has the 

potential for significant change in organization of 

forces and deployment planning. The latter has the 

potential for significant changes in the numbers and 

locations for U.S. bases overseas in keeping with 

the revised global military posture called for in the 

report of the Quadrennial Defense Review. That 

report called for developing a basing system that 

provides greater flexibility for U.S. forces in critical 

areas of the world, placing emphasis on additional 

bases and stations beyond western Europe and 

northeast Asia, and providing temporary access to 

facilities in foreign countries that enable U.S. forces 

to conduct training and exercises in the absence of 

permanent ranges and bases. The new defense 

strategy also highlights the criticality of reforming 

the department’s business practices and human capital management, streamlining organizational structures, and eliminating excess infrastructure that 

unnecessarily diverts resources from other defense 

priorities. In that light, DOD also recently directed 

acquisition programs to tailor their strategies so that 

weapons can be fielded in a timelier manner at a 

fair and reasonable cost.

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 ties many of these issues 

together. (See fig. 2.2.)

Figure 2.2: Key Topical Issues Framing the Defense 

Debate

There also are pressing issues concerning the 

defense establishment’s program to maintain a safe 

and reliable nuclear weapons stockpile. This program is administered by the National Nuclear Security Administration (NNSA), a semiautonomous 

agency established in 2000 within DOE. NNSA faces 

numerous planning, organizational, procurement, 

personnel, and security challenges as it administers 

this $8 billion-a-year program, and questions remain 

about the impact of its 2002 reorganization plan on 

its capacity to address these challenges efficiently 

and effectively. 

Performance Goals: To support efforts by the 

Congress and the federal government to address 

these issues, GAO will

■ assess DOD’s ability to maintain adequate 

readiness levels while addressing the force 

structure changes needed in the 21st century; 

■ assess overall human capital management 

practices to ensure a high-quality total force;

■ assess the ability of weapon system acquisition 

programs and processes to achieve desired 

outcomes; 

■ identify ways to improve the economy, 

efficiency, and effectiveness of DOD’s support 

infrastructure and business systems and 

processes; 

• Jointness and interoperability

• Capabilities-based strategy versus two major-theater wars

• Force transformation, advanced warfighting capabilities, and 

training

• Changes in global military presence

• Antiterrorism and force protection

• Chemical and biological defense

• Human capital challenges

• Quality of life and facilities infrastructure

• Weapon systems modernization

• Homeland security

• Guard and reserve roles

• Nuclear stockpile

• Improved business practices

Source: GAO analysis.
54 GAO STRATEGIC PLAN 2004–2009

GOAL 2

■ assess the National Nuclear Security 

Administration’s efforts to maintain a safe and 

reliable nuclear weapons stockpile; 

■ assess whether DOD and the services have 

developed integrated systems, procedures, and 

doctrines to support joint and coalition forces on 

the battlefield safely and effectively; and

■ analyze and support DOD’s efforts to improve 

planning, programming, budgeting, execution, 

and program performance.

Issue: Although U.S. leaders agree on the ultimate 

goal of promoting global peace, prosperity, and stability, and have spent over $27 billion on international affairs (See fig. 2.3), intense debate is 

occurring over how to achieve that goal.

Figure 2.3: Spending Type for the $27 Billion in 

Fiscal Year 2002 International Affairs Funds

Conflict interventions to make or keep the peace, 

stabilize failed states, and end terrorist regimes have 

dominated recent U.S. foreign policy actions. These 

interventions are sometimes controversial, both 

domestically and internationally. They also are often 

costly: The United States has spent more than 

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

the costs of military intervention in Afghanistan and 

Iraq are predicted to be even greater. Such interventions are likely to continue to play a prominent role 

in stabilizing regions used as staging areas for 

efforts to undermine or threaten U.S. interests.

U.S. foreign aid to developing countries is critical 

for advancing U.S. economic and security interests. 

For example, the United States supports countries 

trying to adopt democratic and free market structures after conflicts through developmental and 

humanitarian programs as well as rule-of-law assistance and measures to combat corruption. These 

countries and regions in transition have combined 

populations in excess of 2 billion, and they face 

complex development problems. Ensuring the 

effectiveness and efficiency of these programs is 

important because the extent to which countries 

can successfully make the transition to and maintain 

democratic governments and market economies 

will significantly affect U.S. security and economic 

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

Protecting U.S. strategic interests in the face of new 

tests has presented challenges for alliances established decades ago and raised questions about how 

the United States should respond to shifting needs 

and priorities. Terrorist attacks against the United 

States and interventions in Afghanistan and Iraq 

have given rise to new U.S.-led coalitions to pursue 

military, political, and economic efforts to erode terrorists’ networks and their sources of support. Traditional alliances continue to evolve. For example, 

NATO’s focus is changing from defending the territory of Western Europe to promoting peace and stability outside of its member countries as it expands 

its membership eastward. The United States continues to provide bilateral security assistance and 

Strategic Objective:

Advance and Protect U.S. International 

Interests

Foreign 

Affairs

Administration 

and

Broadcasting

30%

Other

6%

Military 

Assistance

17%

Multilateral

Assistance

5% 

Bilateral 

Assistance

42%

Source: Department of State.
GAO STRATEGIC PLAN 2004–2009 55

GOAL 2

pursue programs that counter transnational threats, 

like drug trafficking and infectious diseases, in order 

to foster international security. 

Conducting foreign affairs is becoming more complicated as the lines between domestic and international issues blur and the threat of terrorist attacks 

on U.S. facilities and personnel overseas changes 

how America does business. About 35 federal agencies have around 19,000 U.S. staff assigned to overseas embassies, and most federal policies have 

international aspects. The State Department plays a 

key role in coordinating U.S. policy and programs 

for regions, countries, or multilateral organizations. 

To carry out its responsibilities, the State Department operates more than 250 embassies and consulates in over 160 countries. The size and 

composition of the department’s overseas infrastructure and human capital are being questioned, particularly in light of security concerns. Similarly, U.S. 

participation in multilateral organizations, such as 

the United Nations, is sometimes debated when 

questions arise about these organizations’ effectiveness and their ability to advance U.S. interests. Also 

being questioned are the practices for granting 

entry into the United States and the need to block 

the entry of terrorists and criminals while at the 

same time facilitating entry for legitimate travel key 

to the nation’s prosperity. Moreover, attacks on the 

United States prompted a rethinking of U.S. public 

diplomacy and public affairs activities and ways to 

better understand, inform, and influence foreign 

publics and policymakers.

Performance Goals: To support efforts by the 

Congress and the federal government to address 

these issues, GAO will

■ analyze the plans, strategies, roles, costs, and 

results of the United States and its allies in 

conflict interventions;

■ analyze the effectiveness and management of 

U.S. foreign aid and developmental and 

humanitarian programs and the tools used to 

implement them;

■ analyze the plans, costs, and outcomes of 

responding to challenges to U.S. strategic 

interests;

■ evaluate the extent to which U.S. interests are 

effectively served by U.S. participation in 

multilateral organizations; and

■ assess the strategies and management practices 

for U.S. foreign affairs functions and activities.

Issue: The increasing interdependence of the 

world’s economies has a significant impact on the 

national security and the economic well-being of 

the American people. U.S. exports have grown 

much faster than the economy. (See fig. 2.4.) 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 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 more 

difficult for the United States to maintain control 

over critical technologies and the industrial base on 

which U.S. economic and military security depends. 

Also, the United States has faced terrorist threats 

emanating from some of the least integrated countries in the world as well as health threats from 

some of the most integrated regions of the world. 

For policymakers, several aspects of these trends 

require particular attention.

Strategic Objective:

Respond to the Impact of Global Market Forces 

on U.S. Economic and Security Interests
56 GAO STRATEGIC PLAN 2004–2009

GOAL 2

Figure 2.4: Growth in U.S. Exports Compared to 

Overall Output (GDP) since 1970

Note: The decline in exports that began in 2000 can be 

attributed to the recent global economic downturn; it is not 

clear whether this downward trend will continue.

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 2001 admission to the World 

Trade Organization (WTO). In addition, the United 

States is currently involved in a major regional trade 

negotiation (the Free Trade Area of the Americas), 

multilateral negotiations in the WTO, as well as 

numerous free trade agreements with other partners. 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 industrial base is driving 

changes in the way the United States obtains technologies and capabilities to protect its national security interests. As companies increasingly engage in a 

wide variety of business arrangements across 

national borders, DOD is seeking new ways to benefit from the competitive sources and innovative 

technologies that a diverse industrial base may provide. For example, the department is partnering 

with foreign countries to develop major weapon 

systems, such as the Joint Strike Fighter aircraft program. 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 new approaches 

to protect national security interests.

Global financial health and the maintenance of the 

world financial system are critical to long-term U.S. 

objectives and cornerstones of U.S. foreign policy. 

Financial crises in Argentina, Mexico, Asia, Russia, 

and elsewhere have raised questions about what 

can be done to prevent, solve, or contain the spread 

of regional financial crises and what can be done to 

reduce the debt burden on poor countries. International financial institutions, such as the International 

Monetary Fund (IMF) and the World Bank, are at 

the center of efforts to address financial crises. The 

United States is the major contributor to the IMF and 

relies heavily on it and the World Bank to promote 

world economic health. The operations and transparency of these institutions have come under 

increased scrutiny. 

Overseeing financial institutions and markets in the 

21st century is a growing challenge. Trillions of dollars flow through the nation’s financial institutions 

and markets, including the investments and retirement savings of working households. The globalization of financial firms and markets, coupled with 

continuing advances in technology, have created 

opportunities to improve the speed and efficiency 

of market operations. But these advances also provide new opportunities for illegal market activities 

and may broaden the scope of financial crises or 

cause them to spread more rapidly. The creation of 

new products and the increasing importance of new 

market participants continue to pose challenges to 

existing regulatory frameworks and oversight programs. Innovations such as the increasing use of 

Internet-based financial activities also present new 

regulatory challenges. While these innovations can 

benefit U.S. markets and investors, they also expose 

individuals to increased risks and potential fraud. 

Performance Goals: To support efforts by the 

Congress and the federal government to address 

these issues, GAO will 

■ analyze how U.S. interests are served through 

trade agreements and U.S. programs, 

0

100

200

300

400

500

600

Index, 1970=100

Exports

GDP

1970

1972

197419761978

1980

1982

1984

19861988

1990

1992

1994

199619982000

2002

Source: International Monetary Fund data.
GAO STRATEGIC PLAN 2004–2009 57

GOAL 2

■ improve understanding of the effects of a global 

industrial base on U.S. national security interests,

■ assess how the United States can influence 

improvements in the world financial system, 

■ assess the ability of the financial services 

industry and its regulators to maintain a stable 

and efficient financial system in the face of 

market change and innovation, and 

■ assess the effectiveness of regulatory programs 

and policies in ensuring access to financial 

services and deterring fraud and abuse in 

financial markets.

External Factors That May Affect Achievement of Goal 2

Other factors, in addition to those discussed earlier, 

could affect GAO’s ability to achieve this goal. First, 

as the United States plans and executes its shortand 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 information related to operations and readiness. Moreover, continuing instability 

in Afghanistan and Iraq may hamper our ability to 

evaluate U.S. activities in those countries. GAO 

reports dealing with these areas may be more subject to national security classification than in the 

past, which could limit the release of information. 

Further, 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 and national 

security issues.

Second, GAO has not historically had authority to 

access or inspect records, documents, or other 

materials held by other countries and at multilateral 

institutions that the United States works with to protect and advance its interests. Accordingly, GAO’s 

ability to conduct thorough analyses of some issues 

is affected by the level of openness and voluntary 

cooperation. Continued cooperation from the executive branch in obtaining access to international 

organizations and foreign governments is important; 

in this light, GAO is developing a set of protocols to 

facilitate its access. Nonetheless, other changes in 

the international environment and unanticipated 

geopolitical crises could affect GAO’s strategy and 

objectives. GAO will monitor international events, 

work closely with its congressional clients, and 

maintain broad-based staff expertise so that it can 

quickly adjust its work focus to meet emerging 

needs.
58 GAO STRATEGIC PLAN 2004–2009

Goal 3:

Help Transform the Federal Government’s Role and How It 

Does Business to Meet 21st Century Challenges

The federal government is in a period of profound transition and faces an array of challenges and opportunities to enhance 

performance, ensure accountability, and 

position the nation for the 21st century. 

Major trends—such as diffuse security 

threats, increasing interconnectedness of 

global markets and economies, and rapid 

technological advances—drive the need for 

federal agencies to transform their cultures and 

operations. In view of the broad trends and 

growing fiscal pressures, the federal government needs to engage in a fundamental reexamination of what government does, how it does 

business, and in some instances who does the government’s business.

The federal government will need to work more 

closely with other governments, nongovernmental 

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

reassessing federal missions and strategies, the federal government must examine the entire mix of 

policy tools available to address national objectives. 

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. 

This third strategic goal guides GAO in its efforts to 

help transform the federal government’s role and 

how it does business to meet 21st century challenges. The accompanying strategic objectives focus 

on the comprehensive reassessment necessary to 

position the government to take advantage of 

emerging opportunities and meet strategic challenges. Specifically, GAO focuses on the government’s role in achieving national goals in an 

increasingly networked environment and its ability 

to deliver, and account for, high performance.

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

■ reexamine the federal government’s role in 

achieving evolving national objectives;

■ support the transformation to results-oriented, 

high-performing government;

■ support congressional oversight of key 

management challenges and program 

risks to improving federal operations 

and ensuring accountability; and 

■ analyze the government’s fiscal 

position and strengthen approaches 

for addressing the current and 

projected fiscal gap.
GAO STRATEGIC PLAN 2004–2009 59

GOAL 3

Issue: Within the context of the major trends and 

long-term fiscal imbalance, evaluating the role of 

the government and the programs it delivers is key 

to determining how to best position the federal government for the 21st century. With the government 

facing an array of complex challenges and opportunities, a strategic long-term view is critical in considering how best to design programs to manage 

effectively across boundaries and meet the nation’s 

needs and priorities today and in the future. Policymakers will need forward-looking information to set 

the stage for early warnings about emerging threats 

and make informed choices about effective government responses.

As the pace of change accelerates in every aspect of 

American life, policymakers and the public need 

more and better information to assess where the 

nation is and where it is going. In this regard, developing key national indicators for the United States 

can help policymakers assess the overall position 

and progress of the nation in key areas, frame strategic issues, and support informed public debate 

and decisions within and between levels of government and the United States as a whole.

Addressing the nation’s strategic challenges increasingly depends on the joint efforts of all levels of 

government and the interactions and interdependencies between the various actors, policy tools, 

and management functions. (See fig. 3.1.) In most 

federal mission areas—from low-income housing to 

food safety to higher education assistance—national 

goals are achieved through the use of various policy 

tools, such as direct spending, grants, loans and 

loan guarantees, insurance, tax preferences, and 

regulations. For example, as figure 3.2 shows, in 

fiscal year 2003, the federal government relied on a 

mix of entitlement and discretionary spending, tax 

preferences, and loan guarantees in delivering 

Medicare and federal health care. Any assessment of 

federal missions and strategies must look at the 

tools that the federal government uses and the participation of other organizations in achieving 

national objectives.

Figure 3.1: Policy Tools, Actors, and Management 

Functions That Influence Successful Government 

Performance

Strategic Objective:

Reexamine the Federal Government’s Role in 

Achieving Evolving National Objectives

Tools Actors Management

Executive 

agencies

State and locals

Foreign 

government

GSEs

Nonprofits

Contractors

Faith-based for 

profits

Direct services

Grant-in-aid

Contracting

Credit and 

insurance

Tax 

expenditures

User fees

Regulation

Strategic planning

Performance 

management

Human capital

Budgeting

Financial 

management

IT management

Acquisitions

and sourcing

Source: GAO analysis.
60 GAO STRATEGIC PLAN 2004–2009

GOAL 3

Figure 3.2: Relative Reliance on Policy Tools in 

Health Care, Fiscal Year 2003

Note: Loan guarantees accounted for about $104 million, or 

about 0.02 percent, of the approximately $591 billion in total 

federal health care resources.

Although policy tools have proliferated in recent 

decades, knowledge of how to design and manage 

the federal policy tool set has not kept pace. Policymakers need a better understanding of how individual policy tools operate, how to measure their 

performance and effectiveness, which actors participate in implementing various tools, and what features are necessary to ensure accountability and 

oversight.

The effectiveness of federal programs has increasingly become dependent on state and local management and resources as well as constructive 

interactions between federal, state, and local actors, 

including private and nonprofit entities. The intergovernmental system is being tested by a complex 

array of specific short- and long-term challenges. 

Federal, state, and local governments are facing 

daunting problems in managing programs involving 

numerous actors inside and outside of government 

in areas ranging from homeland security to education to health care. Moreover, the unique advantages of a federal system—the flexibility and 

capacity to respond to local needs—are challenged 

by long-term trends such as advances in technology 

and communications that span state and national 

boundaries and inspire calls for consistent national 

regulatory and tax policies.

Performance Goals: To support the Congress in 

reexamining the federal government’s role in 

achieving evolving national objectives, GAO will

■ examine emerging challenges and opportunities 

to position the federal government for the 21st

century,

■ develop new resources and approaches that can 

be used to assess the nation’s position and 

progress,

■ explore ways to evaluate the effectiveness of the 

entire set of policy tools that the federal 

government uses to achieve national objectives, 

and 

■ assess how involvement of state and local 

governments and nongovernmental 

organizations affects federal program 

implementation and achievement of national 

goals.

Issue: The overarching trends and long-term fiscal 

challenges facing the nation drive the need to 

change how the government does business in the 

21st century. To become high-performing organizations (HPO), agencies must transform their cultures 

to respond to the transition that is taking place in 

the federal government’s role. By building fundamental management capacity, the federal government can improve its performance and deliver 

economical, efficient, and effective programs and 

services that the American people need in a costeffective and fiscally sustainable manner. Focusing 

Tax 

Expenditures

20%

Discretionary 

Budget 

Authority

Mandatory

Outlays

71%

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

9%

Strategic Objective:

Support the Transformation to ResultsOriented, High-Performing Government
GAO STRATEGIC PLAN 2004–2009 61

GOAL 3

on accountable, results-oriented management can 

help the federal government operate effectively 

within a broad network that includes other governmental organizations, nongovernmental organizations, and the private sector. 

As part of its transformation efforts, the federal government needs to create a culture that moves from 

outputs to results, stovepipes to matrixes, hierarchical to flatter and more horizontal structures, an 

inward to an external focus, micromanagement to 

employee empowerment, reactive behavior to proactive approaches, avoiding new technologies to 

embracing and leveraging them, hoarding knowledge to sharing knowledge, avoiding risk to managing risk, and protecting “turf” to forming 

partnerships. (See fig. 3.3.) People are an organization’s most important asset, and strategic human 

capital management should be the centerpiece of 

any effort to transform the cultures of government 

agencies. A focus on results, not just of the organization but of its contribution to national goals, is 

essential. In establishing a results-oriented culture 

that can reach its full potential, the organization and 

its leaders need to carefully select the best solution 

for the organization in terms of structure, systems, 

and processes. Information is an important asset 

that needs to be appropriately and effectively managed. Vital to successful transformation will be 

building the management capacity of federal agencies to support new ways of doing business—

including financial, IT, and acquisition management. 

Though progress is being made on many fronts, 

much remains to be done.

Figure 3.3: Cultural Changes and Key Practices Necessary for Successful Transformation

Today’s federal human capital strategies are not 

suited to meet current and emerging challenges or 

to drive needed transformation across the federal 

government. GAO has designated strategic human 

capital management as a governmentwide high-risk 

area, and this is also one of the President’s governmentwide management reform initiatives. The federal personnel system is clearly broken in critical 

respects—designed for a time and workforce of an 

earlier era and not able to meet the needs and challenges of a rapidly changing and knowledge-based 

environment. In the past 2 years, significant 

progress has been made, particularly on agencyspecific human capital reforms and the provision of 

certain flexibilities. However, much remains to be 

done to build an effective human capital infrastructure. As new authorities and flexibilities are provided, it will be vital to have the institutional 

infrastructure in place to use new authorities effectively. This institutional infrastructure includes, at a 

minimum, a human capital planning process that 

integrates the agency’s human capital policies, strategies, and programs with its program goals and 

mission and desired outcomes; the capabilities to 

develop and implement a new human capital 

system effectively; and a modern, effective, and 

credible performance management system that 

includes adequate safeguards, including reasonable 

transparency and appropriate accountability mechanisms, to ensure the fair, effective, and nondiscriminatory implementation of the system.

HPO

• Results-oriented

• Matrixes

• Flatter and more horizontal

• Externally focused

• Employee empowerment

• Proactive approaches

• Leveraging technology

• Sharing knowledge

• Managing risk

• Forming partnerships

Current State

• Output-oriented

• Stovepipes

• Hierarchical

• Inwardly focused

• Micro-managing

• Reactive behavior

• Avoiding technology

• Hoarding knowledge

• Avoiding risk

• Protecting turf

Transformation

9 Key Practices

• Leadership

• Integrated mission and goals

• Clear principles and priorities

• Goals and timeline

• Implementation team

• Line of sight

• Communication strategy

• Employee involvement

• World-class organization

Source: GAO analysis. 
62 GAO STRATEGIC PLAN 2004–2009

GOAL 3

Agencies are confronted with long-standing and 

substantial challenges to becoming more resultsoriented. 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 

of 1993 (GPRA) as its centerpiece. GAO’s work has 

shown significant growth in the number and types 

of results-oriented performance measures called for 

in GPRA. Managers’ perceptions of being held 

accountable for results also have grown. (See 

fig. 3.4.) On the other hand, weaknesses persist in a 

number of areas. Progress in building organizational 

cultures to create and sustain a focus on results has 

been uneven. For example, the extent to which top 

leadership is perceived as demonstrating a strong 

commitment to achieving results is a persistent 

weakness. (See fig. 3.5.) Further, performance information is not being used to its fullest extent in key 

management activities. To help agencies effectively 

manage their resources and link resource decisions 

to results, agencies and the Congress need credible, 

rigorous evaluations to assess whether current programs and policies remain relevant, appropriate, 

and effective. Top leadership commitment is crucial 

to instilling a results-oriented culture. Although the 

President’s Management Agenda—with its emphasis 

on results-oriented practices—is an important step, 

more needs to be done to imbed these practices 

into government operations.

Figure 3.4: Extent to Which Managers Believe They 

Have Needed Decision-Making Authority and Are 

Held Accountable for Results, 1997 and 2000

Note: “Needed” decision-making authority refers to the 

authority Senior Executive Service (SES) and non-SES 

managers responding to the survey believe managers at 

their level need to help their agencies accomplish their 

strategic goals.

Figure 3.5: Extent to Which Top Leadership Is 

Perceived as Demonstrating a Strong 

Commitment to Achieving Results, 1997 and 2000

Notes: Survey respondents were both SES members and 

non-SES members. “Top leadership” refers to the leadership 

of the agencies in which the respondents serve. 

Source: GAO survey data. 

0

20

40

60

80

100

Had Decision-Making Authority

Held Accountable for Results

Percentage

29

54 51

62

34

62

56

66

Non-SES SES Non-SES SES

1997 2000

Source: GAO survey data.

0

20

40

60

80

100

Percentage

Non-SES

SES

56

76

52

72

1997 2000
GAO STRATEGIC PLAN 2004–2009 63

GOAL 3

Evaluating the role of government and the programs it delivers must be done within the context of 

the major trends and long-term fiscal challenges it 

faces. This is an opportune time for the Congress to 

carefully consider how to make needed changes in 

the short term to help agencies effectively manage 

their resources and link resource decisions to 

results, as well as to work toward a comprehensive 

and fundamental reassessment of what the government does, how it does business, and who does the 

government’s business. Agencies and the Congress 

need credible evaluative, analytical, and financial 

information to assess whether current programs and 

policies remain relevant, appropriate, and effective.

Successfully transforming how the government does 

business depends on building high-performing 

organizations that network with key partners both 

across and outside the government. Improved performance has been a primary goal of several recent 

restructurings—formation of DHS, reorganization of 

the FBI, and modernization of the Internal Revenue 

Service. DOD is in the process of transforming its 

business operations, and the U.S. Postal Service 

faces the challenge of transforming its business 

model for the 21st century. However, past government experience in reorganization has yielded 

mixed results. Future success will depend on identifying and implementing best practices of high-performing organizations operating in a complex, 

networked environment. Critical organization elements—structure, systems, and practices—must 

support achieving high performance.

Information is a vital resource that needs to be 

properly managed. The growth in electronic information, as well as new security threats facing the 

nation, highlight challenges to the effective collection and dissemination of information that agencies 

need to take into account in developing new programs. While it is important to enhance the government’s use of new technologies to improve the 

collection and dissemination of government information, it is also important that this information—

especially that collected for statistical purposes—

meets the current needs of federal programs and 

policymakers. In areas in which 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.

Timely, accurate, and useful financial information is 

essential for making operating decisions day to day; 

supporting results-oriented management 

approaches; and managing the government’s operations more efficiently, effectively, and economically. 

Yet, the federal government’s financial management 

has suffered from neglect, and financial systems 

have serious shortcomings.

IT is a key element of management reform efforts 

that can dramatically reshape government to 

improve performance and reduce costs. However, 

numerous poorly managed IT systems have produced multimillion-dollar cost overruns, schedule 

slippages, and poor results. Further, poor information security remains a high-risk area across the federal government with potentially devastating 

consequences. Electronic government offers many 

opportunities to better serve the public and reduce 

costs, but the federal government has not reached 

its full potential in this area.

Effective acquisition management plays a key role 

in creating and sustaining high-performing organizations. Despite 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 anticipated. Encouragement of 

strategic contracting approaches that seek greater 

efficiencies as well as improvements in management and accountability are needed to produce 

better outcomes. Agencies are considering other 

approaches for achieving greater efficiency and 

effectiveness in their operations, including appropriate use of contracts with the private sector. After 

a yearlong study, the Commercial Activities Panel 

developed a set of principles to be used in 

addressing sourcing decisions and recommended 

the public and private sectors compete for the 

opportunity to perform commercial functions. Competitions can be based on the established framework of the Federal Acquisition Regulation. OMB 

published changes to Circular A-76 that are generally consistent with the panel’s recommendations. 

However, this competitive sourcing initiative is a 

major change in the way government agencies 

operate, and successful implementation of the circular’s provisions will require that adequate support 

be available to federal agencies and employees. 

GAO will follow developments in this area closely.
64 GAO STRATEGIC PLAN 2004–2009

GOAL 3

Performance Goals: To support the transformation to a results-oriented, high-performing government, GAO will

■ analyze and support efforts to improve the 

human capital infrastructure key to the 

successful transformation of the government;

■ assess efforts to improve results-oriented 

management across the government;

■ analyze and support efforts to build highperforming organizations;

■ identify ways to improve the collection, 

dissemination, and quality of federal 

information;

■ identify ways to improve financial management 

infrastructure capacity to provide useful 

information for managing results and costs day 

to day;

■ assess the government’s planning, 

implementation, and use of IT to improve 

performance and modernize federal programs 

and operations; and

■ identify ways to improve how federal agencies 

acquire goods and services.

Issue: Strong, visionary, and persistent leadership 

will be needed to address today’s challenges and 

prepare the nation for the future. Congressional 

leadership will play a vital role in achieving a broad 

transformation of the government. Congressional 

oversight is needed to ensure that agencies continue to build their fundamental management capabilities, resolve high-risk areas, and address major 

management challenges to effectively address the 

nation’s most pressing priorities and to take advantage of emerging opportunities. 

The 2003 Performance and Accountability and 

High-Risk Series reports designate high-risk areas 

and describe over 100 major management challenges. GAO’s 2003 high-risk list identifies 26 highrisk areas, as shown in figure 3.6. Continued persistence and perseverance in addressing these highrisk areas and agencies’ major management challenges will ultimately yield significant benefits. 

Although effectively addressing some of these 

issues will require time, finding lasting solutions 

could potentially save billions of dollars, improve 

service to the American public, strengthen public 

trust in the national government, and ensure the 

ability of government to deliver on its promises. 

More remains to be done to ensure that the government has the capacity to deliver on its promises and 

meet current and emerging needs.

Strategic Objective:

Support Congressional Oversight of Key 

Management Challenges and Program Risks to 

Improving Federal Operations and Ensuring 

Accountability
GAO STRATEGIC PLAN 2004–2009 65

GOAL 3

Figure 3.6: GAO’s 2003 High-Risk List

Source: GAO.

a

Additional authorizing legislation is likely to be required as one element of addressing this high-risk area.

As part of the drive to improve performance, agencies are increasingly being called on to demonstrate 

that their programs are conducting research that is 

relevant, of high quality, and producing results. As 

part of the President’s Management Agenda, for 

example, OMB is focusing on developing objective 

criteria that agencies can use to select, fund, and 

manage their R&D programs. According to the fiscal 

year 2004 budget, 12 of the top 13 agencies conducting R&D are using OMB’s PART, which contains 

criteria for R&D investments. Science and technology investments are critically important in 

improving the quality of life and the performance of 

the economy in areas that include health care, 

defense, energy, and the environment.

However, the increased development and use of 

new technologies presents challenges to the Congress in evaluating their potential and assessing the 

effects on security, safety, privacy, and equity. For 

example, despite many successes in the exploration 

of space, the loss of life, unsuccessful missions, and 

2003 high-risk areas

Year designated high 

risk

Addressing Challenges in Broad-based Transformations

Strategic Human Capital Management a 2001

U.S. Postal Service Transformation Efforts and Long-Term Outlook a 2001

Protecting Information Systems Supporting the Federal Government and the Nation’s Critical 

Infrastructures

1997

Implementing and Transforming the New Department of Homeland Security 2003

Modernizing Federal Disability Programsa 2003

Federal Real Propertya 2003

Ensuring Major Technology Investments Improve Services

FAA Air Traffic Control Modernization 1995

IRS Business Systems Modernization 1995

DOD Systems Modernization 1995

Providing Basic Financial Accountability

DOD Financial Management 1995

Forest Service Financial Management 1999

FAA Financial Management 1999

IRS Financial Management 1995

Reducing Inordinate Program Management Risks

Medicare Programa 1990

Medicaid Programa 2003

Earned Income Credit Noncompliance 1995

Collection of Unpaid Taxes 1990

DOD Inventory Management 1990

DOD Support Infrastructure Management 1997

HUD Single-Family Mortgage Insurance and Rental Assistance Programs 1994

Student Financial Aid Programs 1990

Pension Benefit Guaranty Corporation Single-Employer Insurance Programa 2003

Managing Large Procurement Operations More Efficiently

DOD Weapon Systems Acquisition 1990

DOD Contract Management 1992

Department of Energy Contract Management 1990

NASA Contract Management 1990
66 GAO STRATEGIC PLAN 2004–2009

GOAL 3

unforeseen cost overruns have recently increased 

the level of concern over the benefits of space 

exploration, particularly with regard to manned 

activities. Congressional oversight is critical in 

ensuring that the substantial federal investment in 

science and technology is allocated effectively and 

that intellectual property rights are protected here 

and abroad.

The federal government has a stewardship obligation to safeguard the use of taxpayer funds; prevent 

fraud, waste, and abuse; and ensure financial 

accountability. While there has been important 

progress, agencies are still working toward the 

goals established in financial management reform 

legislation, such as the Chief Financial Officers Act 

of 1990 and the Government Management Reform 

Act of 1994. Widespread financial management 

system weaknesses, poor record keeping and documentation, weak internal controls, and a lack of 

information have prevented the government from 

having the information needed to effectively and 

efficiently manage operations or accurately report a 

large portion of its assets, liabilities, and costs. Continued oversight is needed to ensure that agencies 

take steps to continuously improve internal controls 

and underlying financial and management information systems to ensure that executive branch managers and congressional decision makers have 

reliable, timely, and useful information to ensure 

accountability; measure, control, and manage costs; 

manage for results; and make timely and fully 

informed decisions about allocating limited 

resources.

Performance Goals: To support congressional 

oversight of key management challenges and risks 

to federal operations and accountability, GAO will

■ highlight the federal programs and operations at 

highest risk and the major performance and 

management challenges confronting agencies,

■ assess the management and results of the federal 

investment in science and technology and the 

effectiveness of efforts to protect intellectual 

property, and

■ identify ways to strengthen accountability for the 

federal government’s assets and operations.

Issue: 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 4 years of budget surpluses, the nation again is facing large and growing 

budget deficits. This comes as the squeeze on the 

federal budget from the impending retirement of 

the baby boom generation is becoming more 

apparent.

GAO’s long-term budget model has consistently 

suggested that without changes to the major retirement and health care programs, the nation will ultimately have to choose between escalating federal 

deficits and debt, significant tax increases, and dramatic budget cuts in other areas. Under CBO’s current 10-year budget and economic outlook, 

economic growth is projected to be half a percentage point lower on average after 2008 when the 

leading edge of the baby boom generation becomes 

eligible for early retirement, while growth in entitlement spending is projected to accelerate. As such, it 

will be increasingly difficult to address today’s 

urgent needs without unduly exacerbating the 

nation’s long-term fiscal challenges.

While Social Security and Medicare dominate the 

long-term outlook, they are not the only federal 

programs or activities that bind the future. Indeed, 

the federal government undertakes a wide range of 

programs, responsibilities, and activities that obligate it to future spending or create expectations for 

spending. Making government fit the challenges of 

Strategic Objective:

Analyze the Government’s Fiscal Position and 

Strengthen Approaches for Addressing the 

Current and Projected Fiscal Gap
GAO STRATEGIC PLAN 2004–2009 67

GOAL 3

the future will require not only dealing with the 

drivers—entitlements for the elderly—but also 

looking at the range of other federal activities. However, the budget controls instituted to achieve balance in the past have expired, and no agreement 

has been reached on the appropriate structure or 

process for focusing on the fiscal challenges that 

now move to center stage.

To understand the context for near-term budget 

decisions more fully, it is important to look at trends 

in revenue sources and the distribution of expenditures. These trends show (among other things) 

growth in the relative share of revenues derived 

from employment taxes, such as those for Social 

Security (Old-Age Survivors and Disability Insurance), and a dramatic change over time in composition of spending, with a growing share devoted to 

health and interest on the debt, as shown in 

figures 3.7 and 3.8.

Figure 3.7: Composition of Federal Receipts by 

Source, Fiscal Years 1964, 1984, and 2004

Note: Numbers do not add to 100 percent due to rounding.

a

Current services estimate.

Figure 3.8: Composition of Federal Spending by 

Budget Function, Fiscal Years 1964, 1984, and 2004

a

Current services estimate.

In rethinking federal fiscal policy and preparing for 

the long-term budgetary challenges, policymakers 

have the opportunity to reexamine what the federal 

government does and how it finances those activities. American taxpayers annually pay about 

$2 trillion in taxes to fund the federal government. 

The federal tax system includes numerous tax provisions intended to influence taxpayers’ behavior 

throughout the economy, but little is known about 

the effects of many of these provisions. Given the 

size and complexity of the federal tax code, the 

Congress remains interested in tax reform, particularly its simplification.

As the nation’s chief tax collector, the Internal Revenue Service (IRS) interacts with more Americans 

than any other government agency, and compliance 

with tax laws is a significant burden imposed on 

businesses and individuals. IRS is in the midst of 

implementing major legislatively mandated reforms 

in how the nation’s tax system is administered, and 

congressional interest remains focused on IRS’s 

progress.

In light of the long-term fiscal challenges, policymakers need to reexamine, reassess, and reprioritize the federal government’s programs, policies, 

and activities. One key to making resource decisions is having reliable, useful, and timely information routinely available. Such information is also 

necessary to ensure accountability and to improve 

1964

Individual Income

Corporate Income

Social Insurance

Excise and Other

1984 2004a

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

16%

20% 43%

21%

11%

9%

36% 45%

9%

42%

8%

40%

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

1964 1984 2004a

Defense

Social Security

Medicare and Medicaid

Net Interest

All Other Spending

46%

14%

7%

33% 26%

13% 21%

30%

9%

19%

21%

7%

33%

19%
68 GAO STRATEGIC PLAN 2004–2009

GOAL 3

the economy, efficiency, and effectiveness of government actions that have a direct effect on 

achieving a more results-oriented government. 

Performance Goals: To analyze the government’s 

fiscal position and identify ways to strengthen 

approaches for financing the government, GAO will

■ analyze the long-term fiscal position of the 

federal government,

■ analyze the structure and information for 

budgetary choices and explore alternatives for 

improvement,

■ contribute to congressional deliberations on tax 

policy, 

■ support congressional oversight of federal tax 

administration, and 

■ assess the reliability of financial information on 

the government’s fiscal position and financing 

sources.

External Factors That May Affect Achievement of Goal 3

Significant changes in the major forces shaping the 

United States discussed earlier in this plan will affect 

GAO’s ability to meets its goals and objectives. 

Efforts to improve the government’s performance 

and accountability could be affected by (1) the 

heightened priorities assigned by the administration 

and agency management to national defense and 

homeland security, (2) the capacity within agencies 

to develop and use performance and cost information effectively to make improvements, (3) the level 

and management of resources provided for needed 

investments in agencies’ management systems, and 

(4) the worsening fiscal position of the government 

as it is affected by both the economy and policy 

decisions. GAO will emphasize the importance of 

improved business practices and useful performance and cost information to better ensure the 

cost-effective use of federal resources.
GAO STRATEGIC PLAN 2004–2009 69

Goal 4:

Maximize the Value of GAO by Being a Model Federal Agency 

and a World-class Professional Services Organization

To successfully carry out its responsibilities to 

the Congress for the benefit of the American 

people, GAO in its work must be professional, objective, fact-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, 

has strategic leadership focused on achieving 

results, leverages its institutional knowledge 

and experience, continuously enhances the 

services that support its engagements, and is 

regarded as an employer of choice. Strategic 

human capital management is key to these transformation efforts.

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

2004 through 2009 is largely unchanged from the 

previous plan. GAO has, however, made some 

refinements. Most significantly, GAO has refined its 

strategic objectives and supporting performance 

goals to make them more results-oriented and measurable. 

To accomplish its goal of being a model federal 

agency and a world-class professional services organization, GAO has established strategic objectives to

■ continuously improve client and customer 

satisfaction and stakeholder relationships,

■ lead strategically to achieve enhanced results,

■ leverage GAO’s institutional knowledge and 

experience,

■ continuously enhance GAO’s business and 

management processes, and

■ become a professional services employer 

of choice.
70 GAO STRATEGIC PLAN 2004–2009

GOAL 4

Issue: GAO interacts and works with a diverse set 

of external clients and internal customers. GAO’s 

principal client is the Congress, but its work is also 

important to other stakeholders, including federal 

and nonfederal agencies and organizations, and 

international institutions. GAO’s internal customers 

are its staff who deliver quality service to its clients. 

Therefore, being a model agency depends on both 

determining and meeting the requirements of 

GAO’s clients and internal customers.

For congressional clients, GAO will update its 

understanding of their needs and expectations, 

measure their satisfaction with GAO’s work, and act 

on the resulting feedback. GAO will also refine its 

protocols for working with its congressional clients 

to better address their needs and expectations. In 

addition, GAO plans to use enhanced technology to 

provide its congressional clients with better access 

to GAO information and products and to improve 

the quality and timeliness of GAO products and services.

For internal customers, GAO will survey staff satisfaction with engagement support and other business processes, identify the services most requiring 

improvement, implement best practices to effect 

these needed improvements, and measure the 

impact of improvement efforts. GAO also plans to 

improve communication with GAO managers and 

staff on changes to engagement services.

For external stakeholders, GAO plans several efforts 

to strengthen relationships with major stakeholder 

groups. GAO will refine its protocols for conducting 

agency reviews to better manage stakeholder 

expectations. GAO also plans to develop and implement clear, consistent, and transparent protocols to 

govern interactions with international organizations. 

GAO will also strengthen its relationship with the 

press and the public by increasing the accessibility 

of GAO’s products.

Performance Goals: To support the objective to 

improve client and customer satisfaction and stakeholder relationships, GAO will

■ strengthen communication with congressional 

clients and more broadly measure their 

satisfaction with GAO’s work;

■ assess internal customer satisfaction with GAO 

services and processes and implement and 

measure improvement efforts; and 

■ strengthen relationships with GAO’s 

stakeholders and increase the accessibility of 

GAO’s products.

Issue: GAO will strengthen its strategic leadership 

to better integrate the agency’s financial, human 

capital, and information resources for achieving 

enhanced results. To accomplish this objective, 

GAO will build on its established base of strategic 

planning, sound financial management, performance management, IT best practices, and leadership initiatives. GAO will also need to refine certain 

functions to ensure their strategic alignment. GAO 

will work to better align succession planning, workforce planning, staff utilization, and appraisal and 

compensation systems with its strategic objectives.

Strategic Objective:

Continuously Improve Client and Customer 

Satisfaction and Stakeholder Relationships

Strategic Objective:

Lead Strategically to Achieve Enhanced Results
GAO STRATEGIC PLAN 2004–2009 71

GOAL 4

Performance Goals: To support the objective to 

lead strategically to achieve enhanced results, GAO 

will

■ integrate planning, budgeting, and performance 

measurement to achieve enhanced results;

■ strengthen GAO’s strategic human capital 

management to achieve enhanced results;

■ ensure exemplary practices and systems in 

GAO’s fiscal operations; and

■ strengthen IT governance practices and 

processes to achieve strategic results.

Issue: GAO is a knowledge-based professional services organization. As a large number of GAO’s 

more senior employees reach eligibility for retirement, GAO needs to identify and implement strategies for retaining this knowledge and expertise and 

increasing organizational knowledge sharing. GAO 

plans to develop an integrated approach for identifying, managing, and sharing the organization’s 

information and intellectual assets. GAO plans to 

use its greatly enhanced electronic and Web-based 

technologies to support this objective. Further, GAO 

intends to identify ways to enhance knowledge 

sharing with other national and international 

accountability and professional organizations.

Performance Goals: To support the objective to 

leverage GAO’s institutional knowledge and experience, GAO will

■ maximize the collection, use, and retention of 

essential organizational knowledge;

■ increase GAO’s knowledge-sharing capability; 

and

■ enhance knowledge sharing with other national 

and international accountability and professional 

organizations.

Issue: GAO, as the federal government’s accountability organization, undertakes engagements to 

evaluate the economy, efficiency, and effectiveness 

of a wide range of federal policies and programs to 

assist the Congress and benefit the American taxpayer. By continuously assessing and enhancing the 

processes and services that support its own engagements, GAO can maximize its value to the Congress 

and the public.

Performance Goals: To support the objective to 

continuously enhance GAO’s business and 

management processes, GAO will

■ improve engagement support services and

■ use enabling technology to improve GAO’s 

crosscutting business processes.

Strategic Objective:

Leverage GAO’s Institutional Knowledge and 

Experience

Strategic Objective:

Continuously Enhance GAO’s Business and 

Management Processes
72 GAO STRATEGIC PLAN 2004–2009

GOAL 4

Issue: To be a model organization, GAO must 

become an employer of choice—one that attracts, 

retains, motivates, and rewards excellent employees 

and is considered one of the best places to work. 

GAO intends to build and maintain a work environment that is fair, unbiased, and inclusive and that 

offers the opportunity for all employees to realize 

their full potential. The agency is committed to providing its employees with the tools, technologies, 

and systems that promote collaboration and productivity and a safe and secure workplace. The 

agency will also continue to enhance its offerings of 

family-friendly and work/life programs and provide 

superior training for its new hires to improve 

employee satisfaction with working at GAO.

Performance Goals: To become a professional 

services employer of choice, GAO will

■ promote an environment that is fair and 

unbiased and that values opportunity and 

inclusiveness;

■ provide GAO staff with tools, technology, and a 

world-class working environment;

■ provide a safe and secure workplace; 

■ enhance employee views about GAO; and 

■ improve the development and experiences of 

newly hired staff.

External Factors That May Affect Achievement of Goal 4

The availability of resources could 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 changes 

identified with each of the five strategic objectives. 

This approach will require GAO to apply the 

knowledge, skills, and abilities of its current staff to 

the diversity of strategic needs identified in the plan. 

However, in-house expertise alone will not be 

enough to fully accomplish GAO’s objectives. This 

is especially true with regard to GAO’s human capital, business process, knowledge management, and 

enabling technology initiatives. To bring a fresh perspective, subject matter expertise, and knowledge 

of best practices to these issues, GAO will need to 

rely on assistance from external consultants and 

contractors. In the event that its planned resources 

need to be diverted to respond to changing national 

priorities or cannot be made available because of 

changing budget priorities, GAO’s ability to achieve 

its stated objectives could, at a minimum, be 

delayed.

GAO will work closely with its oversight and appropriations committees to help ensure that it remains 

responsive to its clients’ needs and changing 

national priorities and that needed resources are 

available to address emerging contingencies.

Strategic Objective:

Become a Professional Services Employer of 

Choice
GAO STRATEGIC PLAN 2004–2009 73

Performance Measures and Evaluations

In updating this plan, GAO relied on a variety of 

information sources about past performance to 

determine priorities for the future. GAO will continue to rely on these sources and other evaluations 

to judge its progress on its strategic goals and objectives over the period of this plan. GAO intends to 

continue refining its performance indicators as part 

of a balanced scorecard approach to performance 

measurement that focuses on the agency’s clients, 

results achieved, and 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 achieving 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 

hearings at which GAO experts have testified before 

the Congress, and the timeliness of its products. 

Second, GAO goes beyond these measures of services it provided to assess the results or outcomes 

of the services it has provided. GAO does this by 

tabulating both the financial benefits and other 

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

information and recommendations from GAO. 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 measures, the agency sets multiyear qualitative performance goals for each of its strategic objectives that 

help it assess whether it has done the work it 

planned to do for its congressional clients. These 

performance goals reflect the breadth and depth of 

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

to be undertaken during the first 2 years of this 

plan: fiscal years 2004 and 2005. Potential outcomes 

are also listed for each performance goal to highlight the improvements that may result if the Congress and the federal government use the 

Quantitative Measures for GAO’s External Strategic Goals (Goals 1, 2, and 3) 

Financial benefits that are documented as either directly attributable to, or significantly influenced by, GAO’s work. These 

include reductions in annual operating costs of federal programs or activities; reductions in the costs of multiyear projects 

or entitlements; and increased revenues from debt collection, asset sales, and changes in tax laws or user fees. 

Other benefits that flow from GAO’s work but cannot be measured in dollar terms. These include instances in which GAO 

provided information to the Congress that resulted in statutory or regulatory changes, instances in which GAO 

recommended actions that caused federal agencies to improve services to the public, and instances in which GAO’s work 

led to improved core business processes throughout the government.

Testimonies delivered, or the number of hearings at which GAO experts testified. This serves as a measure of direct 

support to the Congress. 

Recommendations made and those subsequently implemented to correct the underlying causes of problems that 

impede government efficiency and effectiveness. These are measured in terms of (1) the number 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. This is measured by the extent to which products are delivered to clients by agreed-upon 

dates. 
74 GAO STRATEGIC PLAN 2004–2009

PERFORMANCE MEASURES

information and recommendations GAO provides. 

Annual reports on GAO’s progress toward its goals 

and objectives and updates to its plan are also 

posted at http://www.gao.gov/sp.html.

GAO will measure its success in meeting its qualitative performance goals by having senior managers 

assess the extent to which GAO does the work the 

key efforts describe for each goal. As part of their 

assessment, senior managers consider all of the 

information provided and recommendations made 

for each key effort and then determine whether the 

overall body of work produced adequately achieves 

or addresses the related performance goal. 

For its fourth strategic goal—which calls for GAO to 

become a model federal agency and a world-class 

professional services organization—the agency also 

relies on qualitative measures to assess its progress 

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 qualitative 

performance goals with key efforts that will be 

assessed after 2 years. Senior managers responsible 

for this strategic goal also judge whether the performance goals have been met based on the work 

done on the goals’ key efforts. 

GAO is continuing to refine its measures, working 

toward a balanced scorecard that evaluates performance based on 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 or congressional committees or to undertake additional work. 

Another major evaluation GAO used to inform the 

update of the strategic objectives under goals 1, 2, 

and 3 was the January 2003 edition of GAO’s biennial Performance and Accountability Series: Major 

Management Challenges and Program Risks. This 

series addresses a range of challenges and opportunities to enhance performance and accountability 

governmentwide and at 21 agencies. A companion 

volume provides a status report on those major government operations considered high risk because of 

their greater vulnerabilities to waste, fraud, abuse, 

and mismanagement. The series is, among other 

things, a valuable planning tool for GAO, helping it 

identify those areas in which its continued efforts 

are needed to maintain the focus on important 

policy and management issues facing the nation. 

GAO also used a number of studies and evaluations 

to help review and update the strategic objectives 

on improving its internal operations under strategic 

goal 4. These studies and evaluations include

■ an assessment of its administrative processes and 

ways to determine internal customers’ 

satisfaction;

■ a survey of employees’ views about their work 

environment;

■ a survey of employees’ skills and work 

preferences;

■ an ongoing review of GAO’s workforce and the 

agency’s future needs for skilled mission and 

support staff as well as for senior managers;

■ an evaluation of the practices and procedures 

analysts use to develop core products and 

whether these practices adhere to policies that 

ensure the quality of GAO’s engagements and 

products; 

■ an extensive study of GAO’s training and 

curriculum strategies;

■ a comprehensive assessment of GAO’s building 

security and safety, especially in the event of a 

major disaster or national security incident; and

■ a security evaluation of GAO’s IT systems.
GAO STRATEGIC PLAN 2004–2009 75

PERFORMANCE MEASURES

Finally, GAO’s Office of the Inspector General evaluates the administration of the agency, including an 

assessment of key performance measurements. The 

Inspector General’s evaluations are useful for 

ensuring that GAO’s operations are efficient and 

economical and serve as additional input for 

updating the objectives under strategic goal 4.

A number of planned evaluations should benefit 

GAO’s future strategic planning efforts. In fiscal year 

2003, GAO again reported—as it will do every 2 

years—on federal agencies’ major management 

challenges and high-risk areas, publishing analyses 

that, among other things, serve to identify areas for 

continued GAO efforts. As outlined in the discussion of strategic goal 4, GAO also plans to evaluate 

in fiscal years 2004 and 2005 the (1) agency’s readiness for an assessment of its engagement policies 

and quality control practices by a team of external 

peer reviewers and (2) effectiveness of a number of 

its core and support processes to enhance their usefulness and improve efficiency. 
76 GAO STRATEGIC PLAN 2004–2009

Consultations and Relationships with Others

Because achieving its strategic goals and objectives 

also requires strategies for coordinating with other 

organizations with similar or complementary missions, GAO 

■ uses advisory panels and other bodies to inform 

its strategic and annual work planning and 

■ initiates and supports collaborative national and 

international audit, technical assistance, and 

other knowledge-sharing efforts. 

These two types of strategic working relationships 

allow GAO to extend its institutional knowledge 

and experience and, in turn, to improve its service 

to the Congress and the American people. 

Through newly established forums and a number of 

ongoing advisory boards and panels, GAO gathers 

information and perspectives for its strategic and 

annual performance planning efforts. Ongoing advisory boards and panels also support strategic and 

annual work planning by alerting the agency to 

issues, trends, and lessons learned across the 

national and international audit community that 

should factor into GAO’s work. These groups 

include the Comptroller General’s Advisory Board, 

the 40 members of which represent both the public 

and private sectors and have broad expertise in 

areas related to GAO’s strategic objectives. The 

board meets with GAO leadership annually to share 

its views on GAO’s strategic direction and specific 

initiatives. Through the National Intergovernmental 

Audit Forum, chaired by the Comptroller General, 

and 10 regional intergovernmental audit forums, 

GAO consults regularly with federal inspectors general and state and local auditors. In addition, 

through the Domestic Working Group, the Comptroller General and the heads of 18 federal, state, 

and local audit organizations exchange information 

and seek opportunities to collaborate. 

Internationally, GAO participates in the International Organization of Supreme Audit Institutions, 

the professional organization of the national audit 

offices of 184 countries. The Comptroller General 

also leads the Global Working Group, in which the 

heads of GAO’s counterparts from 15 countries 

meet annually to discuss mutual challenges, share 

experiences, and identify opportunities for collaboration.
GAO STRATEGIC PLAN 2004–2009 77

Subject Area Supplements to the 

Strategic Plan

The supplements to GAO’s strategic plan provide greater detail on how the

agency intends to fulfill its strategic objectives. For each strategic objective, a supplement provides a brief discussion of the significance of each related qualitative performance goal and its potential outcomes and also lists each performance goal’s key efforts. The key efforts lay

out the work GAO plans to do in fiscal years 2004 and 2005 to help achieve GAO’s strategic goals and objectives. GAO will assess whether it achieved the qualitative performance goals at the end of fiscal year 2005.
78 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.1

The Health Needs of an Aging and Diverse Population

Issue: Total health care spending in the United 

States from all sources—public and private—continues to increase at a breathtaking pace. From 1990 

through 2000, spending nearly doubled from 

$696 billion to $1.3 trillion and by 2010 is estimated 

to more than double again to $2.7 trillion. (See 

fig. 1.1.) This unrelenting growth is producing a 

health care sector that continues to claim an 

increasing share of the nation’s GDP—about 

12 percent in 1990 versus an estimated 17 percent 

in 2010. 

Figure 1.1: Total National Health Care Spending, 

1990–2010

Note: The figure for 2010 is projected. All dollars are 

nominal.

Not surprisingly, health care spending has been one 

of the most rapidly rising elements of federal 

spending, growing three times faster than the rest of 

the federal budget over the last 20-plus years. (See 

fig. 1.2.) Expenditures on health-related programs 

are one of the largest components of federal 

spending, totaling an estimated $468 billion in fiscal 

year 2002, or about 23 percent of all federal 

spending that year. Health care also accounts for 

significant federal tax expenditures, with 

$108.5 billion in forgone revenues projected for 

2003 because of employer contributions to medical 

care and medical insurance. The cost pressures of 

serving a growing population—particularly those 65 

and older—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 1.2: Growth of Federal Health Expenditures, 

1980–2003

Note: The 2003 number is an estimate.

Of particular concern is the growth in Medicare 

expenditures, which are estimated to total about 

$269 billion for fiscal year 2003. Even without considering the financial effects of its new prescription 

drug benefit, Medicare is expected to nearly double 

its share of the economy by 2030, competing with 

other spending and economic activity of value. 

Indeed, one part of Medicare, the Medicare Hospital 

Insurance trust fund, is projected to begin running a 

deficit in 2013 and to be depleted by 2026. Also of 

concern are issues of (1) modernizing Medicare’s 

management structure, payment policies and methodologies, and benefits package and (2) reducing 

Medicare’s administrative burden on providers. 

Moreover, because of its size and complexity, Medicare is inherently difficult to manage. About 50 

insurance companies process and pay approximately 1 billion claims annually to over 1 million 

health care providers. Consequently, the program is 

a target for fraud, waste, and abuse, and effective 

oversight is critical to protecting program dollars 

and promoting efficient program operations. 

0

500

1,000

1,500

2,000

2,500

3,000

Dollars in Billions

Source: Department of Health and Human Services, Centers for Medicare & Medicaid 

Services, Office of the Actuary, National Health Statistics Group.

1990 2000 2010

Percentage Increase Since 1980

Health Expenditures

All Other Federal Expenditures

1995 2000 2003

Source: Office of Management and Budget. 

0

100

200

300

400

500

600

700

1985 1990
GAO STRATEGIC PLAN 2004–2009 79

STRATEGIC OBJECTIVE 1.1

Although the introduction of competitive principles 

to health care helped to contain medical care cost 

increases for several years, costs are increasing significantly once again as is the number of Americans 

without health insurance. These cost increases, in 

concert with the weak economy the past several 

years, have important implications for federal health 

care programs and outlays and for the availability of 

employer-sponsored health insurance. Many 

employers have reportedly been considering or 

have actually made changes in the generosity of 

their health insurance benefits. Moreover, the public 

is concerned about the quality of care, consumer 

protection mechanisms, and the availability of information to allow purchasers to make informed insurance choices. 

The government also must address pressing issues 

in its own system of hospitals and clinics. The 

Department of Veterans Affairs (VA)—one of the 

nation’s largest health care systems—spends about 

$23 billion a year to provide health care to approximately 4.2 million veteran patients. Yet, much of 

VA’s physical infrastructure is obsolete and burdened with excess capacity. The Department of 

Defense’s (DOD) health care system spends about 

$24 billion annually to support both direct and 

civilian health care to about 8.7 million eligible beneficiaries. Pressure is mounting to integrate aspects 

of the two systems to increase their efficiency and 

effectiveness. 

Other areas of concern are the efficiency and effectiveness of the government’s public health programs, 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 food products. Additionally, the changing 

nature of public health threats domestically and 

internationally, such as HIV infection, SARS, 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. Governments’ ability to help surmount shortages of certain 

prescription drugs and vaccines is a worldwide concern as well. 

The threat of terrorists using biological weapons of 

mass destruction, such as anthrax and smallpox, has 

raised concerns about the nation’s ability to adequately respond to bioterrorist attacks. 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 been given to state and local 

communities’ capacity to develop coordinated plans 

for dealing with a potential biological attack and to 

develop emergency response systems linking hospitals, emergency rooms, health personnel, and fire 

and police efforts to respond to any form of terrorism. 

Finally, the baby boom generation will undoubtedly 

place increasing pressure on the Medicaid program 

for which the joint federal/state expenditures in 

fiscal year 2003 are estimated at $275 billion—more 

than those of Medicare. Medicaid helps to pay for 

nursing home and other community-based forms of 

long-term care services. Yet meeting an increasing 

demand for such services at a time when many 

states are in severe financial difficulty and the federal government is once again operating at a deficit 

will pose significant challenges for federal and state 

decision makers, with important implications for the 

services offered by each state. At the other end of 

the population spectrum are millions of uninsured 

children whose families have no health insurance. 

Medicaid and the State Children’s Health Insurance 

Program help cover the health insurance costs of 

these low-income Americans. However, the recent 

economic downturn has led to declining state revenues and to states taking, or considering taking, 

actions to reduce access to care for this vulnerable 

population, thereby contributing to an increase in 

the number of uninsured. Accounting for and overseeing these two programs represents a formidable 

challenge for the federal government because of the 

variation in state policies, procedures, and delivery 
80 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.1

systems. In particular, Medicaid’s size and complexity make it vulnerable to fraud, waste, and 

abuse, making effective federal oversight critical.

Performance Goals: To support efforts by the 

Congress and the federal government to address 

these issues, GAO will 

■ evaluate medicare reform, financing, and 

operations; 

■ assess trends and issues in private health 

insurance coverage; 

■ assess actions and options for improving VA’s 

and DOD’s health care services; 

■ evaluate the effectiveness of federal programs to 

promote and protect the public health; 

■ evaluate the effectiveness of federal programs to 

improve the nation’s preparedness for the public 

health and medical consequences of 

bioterrorism; 

■ evaluate federal and state program strategies for 

financing and overseeing long-term health care; 

and 

■ assess state experiences in providing health 

insurance coverage for low-income populations. 
GAO STRATEGIC PLAN 2004–2009 81

STRATEGIC OBJECTIVE 1.1

Performance Goal 1.1.1: Evaluate Medicare Reform, 

Financing, and Operations

Key Efforts

■ Analyze Medicare’s financial condition and the 

potential consequences of program structural 

reforms 

■ Evaluate the Centers for Medicare & Medicaid 

Services’ (CMS) management of Medicare, 

including its implementation of legislative 

reforms and its service to providers and beneficiaries 

■ Evaluate Medicare payment methods for health 

care providers

■ Assess the effects of Medicare’s payment methods on access to, and quality of, health care services 

■ Evaluate CMS’s safeguards and program controls 

over provider payments and beneficiary access 

and quality 

Significance

Medicare now finances health care for over 40 million Americans, accounting for almost one-eighth of all

federal expenditures. Even without considering the financial effects of the new prescription drug benefit,

Medicare is expected to nearly double its share of the nation’s economy by 2030, crowding out other government spending and economic activity. Medicare’s Hospital Insurance trust fund is projected to begin running

a cash deficit in 2013 and to become insolvent by 2026. While structural changes, such as managed care,

were intended to introduce market competition to Medicare, with the goal of containing health care use and

costs, their implementation and acceptance have been somewhat problematic. In addition to the changes

incorporated in the 2003 Medicare legislation, other options to fundamentally reform Medicare have been

proposed, such as modernizing the benefits package, restructuring beneficiary cost sharing, and providing

incentives for beneficiaries to make cost-effective choices among health plans. 

Any structural changes will take time to fully implement. For example, Medicare’s new prescription drug

benefit for beneficiaries is not effective until 2006. Therefore, it is imperative to continue to concentrate on

improving the existing program and refining Medicare’s payment methods in ways that reward fiscal discipline while preserving access to care. Effectively managing the Medicare program, including safeguarding its

integrity, remains a continuing challenge, in part, because of the program’s size and complexity. Since 1990,

GAO has designated Medicare as a high-risk program, vulnerable to waste, fraud, abuse, and mismanagement. Because Medicare currently pays out approximately $269 billion annually and is responsible for

financing health services delivered by over 1 million providers, it is an especially attractive target for fraud,

waste, and abuse, and therefore, good management is critical. 

Potential Outcomes 

■ Better congressional understanding of Medicare’s 

financial condition and program reform proposals, including implications for the budget and for 

health care 

■ Improvements in CMS’s program management 

and implementation of legislated Medicare program changes 

■ Development of more comprehensive, accurate, 

and timely data for evaluating program performance and services to beneficiaries

■ Medicare payment methods that minimize federal costs and promote access to quality medical 

care 

■ Reductions in improper payments to health care 

providers and in unnecessary program expenditures
82 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.1

Performance Goal 1.1.2: Assess Trends and Issues in Private 

Health Insurance Coverage

Key Efforts

■ Analyze potential modifications to federal tax 

policies and new insurance purchasing arrangements for their impact on the numbers of uninsured, costs of health care services, and 

implementation challenges for federal and state 

agencies 

■ Evaluate trends in, and distribution of, health 

insurance coverage, including long-term care 

insurance and employer sponsorship of private 

health insurance for employees and retirees

■ Assess the impact of public and private efforts to 

achieve compliance with federal and state health 

insurance standards 

Significance

Private health insurance provides coverage for more than 175 million Americans; however, in 2002 more

than 43 million individuals did not have health insurance. The federal government has an increasing role in

overseeing employer-sponsored health benefits and private insurance coverage both through its traditional

roles established by the Employee Retirement Income Security Act of 1974 and the tax code and through

more recent federal insurance standards, such as the Health Insurance Portability and Accountability Act of

1996, and tax incentives, such as the Trade Adjustment Assistance Reform Act of 2002. 

The Congress continues to consider additional approaches to increase private health insurance coverage,

such as new tax incentives for unemployed individuals or purchasing arrangements for small employers.

Such new approaches may increase access to health insurance for some individuals or employers but need

to be carefully assessed for their budget implications, effects on those already purchasing coverage, and need

for effective regulatory oversight. 

Strong interactions exist between the private health insurance market and public health insurance programs,

including Medicare and Medicaid, with financing innovations in the private or public sector often being

adopted by the other sector. The Federal Employees Health Benefits Program, which provides health insurance to more than 8 million federal employees, retirees, and dependents, has sometimes been considered a

model for other large employers or public programs, but has also had to address issues of increasing costs.

Recent expansion of the Medicare benefit to include outpatient prescription drug coverage may affect

employers’ continued coverage for their retirees. In addition, the federal government has recently begun

offering long-term care insurance to employees, retirees, and their families, which may provide an impetus

for the further development of the private long-term care insurance market that has played a relatively small

part in financing long-term care services compared to public programs. 

The impact of public and private efforts to contain costs or improve access in one sector may lead to unintended consequences for the other. These complex interrelations between federal policy and the private

health insurance markets greatly affect the affordability, availability, and quality of insurance coverage that

most Americans receive. 
GAO STRATEGIC PLAN 2004–2009 83

STRATEGIC OBJECTIVE 1.1

Potential Outcomes 

■ Better congressional understanding of proposals 

to alter tax treatment of health care insurance 

costs and to establish new health insurance purchasing arrangements

■ More complete congressional understanding of 

trends in health and long-term care insurance, 

including changes in private health insurance 

coverage and the evolving health and long-term 

care insurance markets

■ Better congressional understanding of the impact 

of public and private efforts to achieve compliance with federal health insurance standards 
84 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.1

Performance Goal 1.1.3: Assess Actions and Options for 

Improving VA’s and DOD’s Health Care Services

Key Efforts

■ Evaluate proposals to restructure or consolidate 

the Department of Veterans Affairs’ (VA) health 

care system, including proposals on capital asset 

realignment and resource sharing 

■ Assess implications of changes to VA and 

Department of Defense (DOD) health benefits 

and health care delivery systems 

■ Assess vulnerability of VA’s system to fraud, 

waste, and abuse 

■ Examine access to and quality and cost of care 

provided to VA and DOD beneficiaries 

■ Review implementation of VA resource allocation and revenue collection systems and budget 

formulation and execution practices 

Significance 

VA and DOD operate two of the largest health care systems in the world, together spending about $47 billion

a year for health care. Both systems face great challenges. For instance, VA operates and maintains a large

portfolio of aged health care assets, primarily buildings that are not effectively aligned with VA’s new delivery

model, which emphasizes outpatient care delivered closer to where veterans live. VA has opened hundreds

of community-based outpatient clinics to increase the number of veterans who have reasonable geographic

access to VA-provided outpatient care. As a result of this new delivery model and the influx of new veteran

enrollees because of relaxed eligibility standards, VA faces difficult realignment decisions involving resource

allocation, capital investments, consolidations, closures, and contracting with local health care providers.

These may have significant ramifications for stakeholders, such as medical schools and unions, and for the

use of VA’s existing resources, primarily because realignments involve a shifting of workload among delivery

locations. 

Similarly, DOD faces pressures to adapt its health care structure because of changing military threats, a

decreased force size, and an evolving health care marketplace, characterized by rising costs and increasing

beneficiary concerns about access. In response to these long-standing issues, DOD established its nationwide

managed care program, TRICARE, in the mid-1990s. However, beneficiary concerns have continued under

TRICARE, as have concerns about the efficiency of the program. Further, concerns have been raised about

rising program costs, and beneficiaries continue to complain about poor access to care. These concerns have

focused attention on the need for DOD to identify cost reduction measures and alternative approaches for

delivering health care.

Potential Outcomes 

■ More effective and efficient organizational structures and service delivery for both VA and DOD

■ Improved understanding of how potential 

changes affect costs, utilization of services, and 

retention 

■ Reductions in unnecessary health care expenditures 

■ Better understanding of factors that explain VA 

and DOD variations in access, quality, timeliness 

of care, and patient safety 

■ Improved VA budgeting and resource allocation 

systems that more adequately reflect workload 

and costs and promote efficiency and optimization 
GAO STRATEGIC PLAN 2004–2009 85

STRATEGIC OBJECTIVE 1.1

Performance Goal 1.1.4: Evaluate the Effectiveness of 

Federal Programs to Promote and Protect the Public Health 

Key Efforts 

■ Evaluate the ability of federal public health agencies to detect and counter emerging threats to 

the nation’s health 

■ Evaluate impediments and barriers to the adequate supply of, and access to, prescription 

drugs and vaccines 

■ Assess the regulatory structure for ensuring the 

safety and efficacy of medical devices, drugs, 

blood products, and alternative medical therapies 

■ Evaluate programs targeted at improving the 

health status of the population 

■ Evaluate the effectiveness of programs to reduce 

substance abuse and other high-risk behaviors

Significance 

To promote and protect the health of the nation, public health agencies pursue a broad range of activities

that tangibly affect the well-being of every American. These include conducting public health surveillance on

new and emerging infectious diseases, nationally and internationally; sponsoring and conducting biomedical

research; evaluating the effectiveness and safety of pharmaceutical and medical devices; and funding medical

treatment for substance abuse. About 90 percent of the National Institutes of Health’s annual budget of over

$20 billion funds biomedical research, contributing to a dramatic increase in the number of new medical

treatments. New technologies and therapies will further test the ability of the Food and Drug Administration

(FDA) to ensure the safety and efficacy of foods and dietary supplements as well as new medical products

while not unduly delaying the availability of new products to consumers. An additional component is consumer concern about access to affordable prescription drugs. The changing nature of public health threats—

including instances of shortages of prescription drugs and vaccines and emerging infectious diseases like

severe acute respiratory syndrome (SARS)—requires effective surveillance and prompt action by the Centers

for Disease Control and Prevention and other public health agencies at international, federal, state, and local

levels. The AIDS epidemic persists in this country and around the world and poses continuing prevention

and treatment challenges to public health agencies. Agencies are also funding research to understand the

basis for persistent health disparities for minorities, developing effective approaches to preventing disease,

and promoting healthy behaviors. 

Potential Outcomes 

■ Increased federal public health agency efforts to 

counter emerging public health threats 

■ Improved adequacy of the supplies of essential 

medications and vaccines and understanding of 

the impediments to access

■ More effective and efficient determination of the 

safety and efficacy of medical products by FDA 

■ More effective programs for prevention and 

treatment of substance abuse and other high-risk 

behaviors
86 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.1

Performance Goal 1.1.5: Evaluate the Effectiveness of 

Federal Programs to Improve the Nation’s Preparedness for 

the Public Health and Medical Consequences of Bioterrorism 

Key Efforts 

■ Evaluate the effectiveness of federal programs in 

ensuring the preparedness of state and local governments for the public health and medical consequences of a bioterrorist attack 

■ Evaluate identified needs and associated cost 

projections for federally funded efforts at state 

and local government levels to improve public 

health surveillance, training, communication systems, and laboratories for bioterrorism preparedness 

■ Evaluate the development and acquisition of 

vaccines and other treatments for biodefense 

Significance 

The use of anthrax as a weapon of terrorism heightened concern over the public health threats posed by biological terrorism and raised worries that the nation is not adequately prepared to respond to bioterrorist

attacks. To improve the nation’s preparedness, federal agencies engage in a number of activities aimed at

improving detection, treatment, and response, and the Congress has substantially increased funding for these

programs. These activities include public health surveillance systems to identify disease outbreaks, development of technologies to more rapidly detect and diagnose infectious agents, and improved communication

systems to facilitate sharing information on disease outbreaks. 

Federal funding, primarily through the National Institutes of Health, has recently been increased for the

development of vaccines, antibiotics, and antivirals to treat diseases that could result from bioterrorism. The

Department of Health and Human Services is also expanding the Strategic National Stockpile of essential

drugs and equipment that could be deployed to the scene of an outbreak. The department has promoted

smallpox vaccination of teams of public health and health care workers who could be deployed in the event

of an outbreak and has contracted for a stockpile of smallpox vaccine that could be used to vaccinate the

general public. Several federal agencies provide funding to state and local governments for response planning, offer training for emergency response, fund equipment purchases, and maintain response teams that

can be deployed in the event of an attack. However, concerns remain that funding may not be directed to

the areas of greatest need. 

Potential Outcomes 

■ More effective programs to assist state and local 

government preparedness efforts 

■ More effective and efficient allocation of 

resources for addressing state and local government needs 

■ Improved access to essential vaccines and other 

treatments
GAO STRATEGIC PLAN 2004–2009 87

STRATEGIC OBJECTIVE 1.1

Performance Goal 1.1.6: Evaluate Federal and State 

Program Strategies for Financing and Overseeing Long-term 

Health Care 

Key Efforts 

■ Examine nursing homes’ compliance with federal and state quality standards, including the 

adequacy of federal and state oversight and 

resources 

■ Review federal requirements and standards and 

their use to ensure quality care in communitybased, long-term care settings, such as home 

health arrangements, assisted living facilities, and 

adult day care 

■ Analyze public and private payment sources and 

strategies that finance the continuum of longterm care, including integrated programs for elderly or disabled beneficiaries who are dually eligible for Medicare and Medicaid 

Significance 

The aging of the baby boomers, combined with medical advances that are contributing to longer life expectancies, will lead to a tremendous increase in the elderly population over the next three decades. In particular,

there will be a substantial increase in the number of individuals 85 and older, many of whom will require

long-term care services. Financing these services—within the context of evolving service needs and alternative settings for receiving long-term care services—will be a challenge for the baby boomers, their families,

and federal and state governments. 

After private expenditures (including out-of-pocket spending and long-term care insurance), Medicaid contributes the most for long-term care, covering at least some of the costs for two-thirds of nursing home residents. Many individuals become impoverished, and thus eligible for Medicaid, by “spending down” their

assets. Taken together, Medicaid, Medicare, and other public programs contributed more than three-fifths of

the $146.2 billion spent on nursing home and home health care in 2001. Private insurance (including longterm care insurance as well as services paid by traditional health insurance) accounted for about 10 percent,

with the remainder paid by the elderly, the disabled, or their families. 

The long-term care expenditures for the elderly are disproportionately used to purchase nursing home care.

There is growing emphasis, however, on delivering services in the community rather than in nursing homes

and other institutional settings—not only to the younger disabled but also to elderly individuals. The highly

vulnerable nature of the long-term care population underscores the importance of oversight to ensure that

providers comply with federal and state quality standards. 

Potential Outcomes 

■ Improved quality of care in nursing homes 

■ Improved public and private awareness of alternatives to traditional long-term care settings and 

the federal role in ensuring quality care 

■ Better congressional understanding of options 

for financing the increasing costs of long-term 

care 
88 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.1

Performance Goal 1.1.7: Assess State Experiences in 

Providing Health Insurance Coverage for Low-Income 

Populations 

Key Efforts 

■ Assess Medicaid and State Children’s Health 

Insurance Program (SCHIP) coverage for vulnerable populations, including children with special 

health care needs 

■ Evaluate Medicaid and SCHIP access to and use 

of services under different service-delivery systems, payment methodologies, and cost-sharing 

practices 

■ Evaluate federal oversight of states’ implementation of Medicaid and SCHIP, including the use of 

authority to waive certain statutory provisions

Significance 

Two jointly funded federal-state programs that provide health insurance to low-income Americans are vulnerable to the cyclical nature of the economy and to the problems of exploitation endemic to large government programs. Enrollment in Medicaid, a means-tested entitlement program that provides health care

coverage to over 40 million low-income individuals, expanded at a rate of about 3 percent per year from

1997 through 2000. States also implemented SCHIP, which was created in 1997 to provide health insurance to

uninsured children whose families’ incomes were too high to qualify for Medicaid. 

However, during the recent economic downturn, states have been faced with declining revenues and, with

respect to their Medicaid programs, increased enrollment of nearly 9 percent per year from 2000 through

2003. As a result, states have taken or have considered taking actions that could affect access to care, including curtailing enrollment, reducing benefits, and raising beneficiary cost-sharing requirements. 

Federal oversight continues to be essential to ensuring the programs’ financial and program integrity. The

challenges inherent in overseeing a program of Medicaid’s size, growth, and diversity, combined with the

open-ended nature of the program’s federal funding, puts the program at high risk for waste and exploitation. Accordingly, GAO added Medicaid to its 2003 list of high-risk programs and has focused its work on

strengthening the program’s operations. GAO work shows, for example, that the federal government has

been vulnerable to questionable state Medicaid financing practices, through which some states have generated excessive federal payments without paying their fair share or without assurances that the payments are

for covered Medicaid services. 

In addition, vigilance must be maintained regarding the appropriateness of allowing states to enhance their

flexibility in identifying eligible populations and increasing cost sharing for beneficiaries eligible for Medicaid

and SCHIP. GAO’s work further shows that some of the federally approved waivers are inconsistent with statutory authority or long-standing administration policy. Federal oversight must balance support of state flexibility in designing and implementing states’ programs—which can vary greatly in terms of eligibility rules,

benefits offered, and delivery systems—with the need to ensure the appropriate use of federal funds to meet

the statutory and regulatory requirements of both programs.

Potential Outcomes 

■ Greater access to services for eligible beneficiaries 

■ More efficient and effective delivery of services 

■ Improved accountability and oversight of federal-state health financing programs serving lowincome populations 
GAO STRATEGIC PLAN 2004–2009 89

STRATEGIC OBJECTIVE 1.2

The Education and Protection of the Nation’s Children

Issue: Educating and protecting children are important to the continued vitality of this democratic 

society and to its long-term ability to compete in a 

global marketplace. To this end, the federal government invests more than $110 billion per year in programs that foster the development, education, and 

protection of children from infancy through elementary and secondary school and postsecondary education. Although federal spending is only about 

7 percent of total spending on elementary and secondary education, requirements in recent legislation 

have increased the federal government’s role 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. 

The federal government invests over $11 billion in 

early education and care programs for children 

under age 5, primarily through six major Department of Health and Human Services (HHS) and 

Department of Education programs. 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 HHS and 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 after welfare reform. (See fig. 1.3.) 

Policymakers at the federal and state levels are concerned about the cost, quality, and availability of 

child care. Major early childhood programs—Head 

Start, the Child Care and Development Fund 

(CCDF), and the Individuals with Disabilities Education Act (IDEA)—are being reauthorized. Two additional programs, the Child and Adult Care Food 

Program and the Special Supplemental Nutrition 

Program for Women, Infants, and Children, provide 

nutritious meals or support good nutrition for children in day care facilities and for certain groups of 

low-income, nutritionally at-risk women, infants, 

and children. Both programs face challenges in 

delivering high-quality nutrition services and 

meeting program requirements.

Figure 1.3: Growth of Federal Investment in Child 

Care, Fiscal Years 1997–2002

Note: CCDF amounts include dollars states transferred from 

Temporary Assistance for Needy Families (TANF) programs 

to CCDF as allowed under the Personal Responsibility and 

Work Opportunity Reconciliation Act of 1996. The amounts 

shown for TANF include only those TANF funds expended 

for child care. 

Federal elementary and secondary school programs 

have traditionally provided opportunities for children from disadvantaged families. However, recent 

legislation, the No Child Left Behind Act, has 

increased the federal role through requirements that 

apply to all public schools and students. The United 

States places a high priority on educating children at 

the elementary and secondary levels and has 

increased the federal investment from over 

$20 billion in fiscal year 2000 to about $35 billion in 

fiscal year 2003. This increased investment in recent 

years has been accompanied by an increased 

emphasis on accountability for schools to raise all 

students to proficient levels in math, reading, and 

science and has placed additional requirements on 

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

1997 1998 1999 2000 2001 2002

Dollars in Millions

TANF

CCDF

Source: Department of Health and Human Services, Administration for Children and 

Families.
90 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.2

states for student testing and teacher qualifications. 

It also mandated actions for schools at which students’ performance does not sufficiently improve. 

All students—including those from poor families, 

with limited English proficiency, and with disabilities—are expected to meet challenging academic 

standards. However, an achievement gap exists 

between different groups of students, for example 

between white and African American students and 

between white and Hispanic American students. 

(See figs. 1.4 and 1.5.) 

Figure 1.4: Achievement Gaps in Reading, 

Grade 12 

Note: Scores for 1992 through 1998 reflect testing situations 

in which accommodations were not permitted. Scores for 

2002 reflect a testing situation in which accommodations 

were permitted.

Figure 1.5: Achievement Gaps in Math, Grade 12

Dissatisfied with this continued achievement gap, 

policymakers are exploring a variety of school 

reform initiatives and strategies to improve school 

performance, improve teaching, reduce student 

dropout rates, and enhance educational options for 

the nation’s children. Helping states to meet these 

requirements requires a larger role for the Department of Education in providing support and oversight. For special education students, the 

reauthorization of IDEA has focused on several 

major issues—the federal funding contribution, 

paperwork burden, teacher shortages, identification of children for special education services, and 

alignment of the No Child Left Behind Act requirements with the needs of children with disabilities. In 

addition, the National School Lunch and School 

Breakfast Programs are school-based efforts to provide students with nutritionally balanced meals, 

often at low or no cost. Recent data on the increase 

in the percentage of children who are overweight 

and the attendant health problems has highlighted 

the importance of providing students with nutritious 

foods and creating a healthy eating environment in 

schools. 

The nation also needs to be concerned about protecting its children and ensuring that families have 

the financial means to provide for their children’s 

needs. Each year, an estimated 900,000 children are 

found to be the victims of abuse and neglect by 

their parents, relatives, or other caregivers. Tragically, approximately 1,300 children die each year 

from abuse and neglect. While responsibility for 

0

5

10

15

20

25

30

Score Differences between White and Black Students’ 

Average Scores

Score Differences between White and Hispanic Students’ 

Average Scores

Source: National Center for Education Statistics, National Assessment of 

Educational Progress, The Nation’s Report Card: Reading 2002. 

Score Differences

1992 1994 1998 2002

Score Differences between White and Black Students’ Average 

Scores

Score Differences between White and Hispanic Students’ Averag

Scores

Source: National Center for Education Statistics, National Assessment of Educational 

Progress, The Nation’s Report Card: Reading 2002. 

0

5

10

15

20

25

30

35

40

1990 1992 1996 2000

Score Differences
GAO STRATEGIC PLAN 2004–2009 91

STRATEGIC OBJECTIVE 1.2

investigating reports of abuse and neglect and providing services to families falls primarily to state 

child protective service agencies, the federal government invests almost $8 billion annually to provide care for children who need placement outside 

their homes, services to help keep families together 

or to reunite them, and training and research activities to improve child welfare services nationwide. In 

1997, the Congress enacted the Adoption and Safe 

Families Act with two primary goals: (1) to ensure 

that consideration of children’s safety is paramount 

in child welfare decisions, so that children are not 

returned to unsafe homes, and (2) to ensure that 

necessary legal procedures occur expeditiously, so 

that children who cannot return home may be 

placed for adoption or another permanent arrangement quickly. HHS has also established a new 

review system—known as Child and Family Services Reviews—to monitor state compliance with 

federal child welfare laws. Moreover, nearly 20 million children live with only one of their parents. To 

help obtain the financial support noncustodial parents owe their children and to help single-parent 

families achieve or maintain economic self-sufficiency, the Congress established a joint federal/state 

child support enforcement program in 1975. The 

program helps locate noncustodial parents, establish paternity, establish child support obligations, 

and collect child support. Provisions in the 1996 

welfare reform legislation strengthened and 

improved child support enforcement. For example, 

to improve efforts to track delinquent parents across 

state lines, the law established the National Directory of New Hires—a national system that includes 

personal and employment information on all newly 

hired employees—and the Federal Case Registry—a 

system that contains data from child support cases.

Beyond providing for basic educational needs, a 

competitive national economy depends, in part, on 

effectively preparing workers to compete in the 

labor force. To this end, the federal government 

currently provides approximately $63 billion annually to enhance the quality of and access to postsecondary, vocational, and adult education. In 

particular, federal grant and loan programs provide 

financial aid to make college more affordable and 

accessible for millions of Americans. At over 

$11 billion, the Pell Grant helps to ensure access to 

higher education for low-income undergraduate 

students. In addition, the government’s investment 

in supporting college students with direct loans and 

loan guarantees results in over $44 billion of new 

loans annually. Of growing significance, the federal 

government also provides over $12 billion in higher 

education subsidies for students or their families 

through several tax benefits, such as the Hope and 

Lifetime Learning tax credits and the deferral of tax 

on the earnings of contributions to qualified state 

tuition programs. 

A major concern about the federal government’s 

investment in postsecondary education is the government’s 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. 1.6.) Due in part to concerns 

about Education’s ability to efficiently manage the 

student loan and grant programs and their vulnerability to fraud, waste, abuse, and mismanagement, 

GAO has added the student loan programs to the 

high-risk list. Reducing fraud and error in and 

improving the management of these programs is 

also part of the President’s Management Agenda. 
92 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.2

Figure 1.6: A Growing Balance of Defaulted Loans 

Is Subject to Collection, 1993–2003

Note: Balances include defaulted loans under both the 

Federal Family Education Loan and Federal Direct Loan 

Programs.

Furthermore, legislation key to higher education 

issues is scheduled for reauthorization. The Higher 

Education Act, the Adult Education and Family Literacy Act, and the Carl D. Perkins Vocational and 

Technical Education Act are all due to be reauthorized in the near future. The Congress will be 

debating several key issues, including the rising 

costs of college, how to help students and families 

finance these costs, institutional accountability for 

educational costs and quality, how best to provide 

for a skilled workforce, and Education’s management of the federal investment in postsecondary 

education. 

Performance Goals: To support efforts by the 

Congress and the federal government to address 

these issues, GAO will 

■ analyze the effectiveness and efficiency of early 

childhood education, care, and nutrition 

programs in serving their target populations; 

■ assess options for federal programs to effectively 

address the educational and nutritional needs of 

elementary and secondary students; 

■ determine the effectiveness and efficiency of 

child support enforcement and child welfare 

programs in serving their target populations; and 

■ identify opportunities to better manage 

postsecondary, vocational, and adult education 

programs and deliver more effective services.

Source: Department of Education, Budget Service.

0

5

10

15

20

25

30

1993 1995 1997 1999 2001 2003

17.06

22.60

Dollars in Billions

Fiscal Year
GAO STRATEGIC PLAN 2004–2009 93

STRATEGIC OBJECTIVE 1.2

Performance Goal 1.2.1: Analyze the Effectiveness and 

Efficiency of Early Childhood Education, Care, and 

Nutrition Programs in Serving Their Target Populations 

Key Efforts 

■ Evaluate the operation and management of 

major federal early childhood education, child 

care, and nutrition programs 

■ Analyze the cost, coordination, and availability 

of child care for low-income families 

■ Evaluate the design and performance outcomes 

of major federal early childhood education, child 

care, and nutrition programs

Significance 

The federal government spends more than $11 billion on early education programs for children under age 5,

primarily for six major programs, including Head Start. New federal initiatives are emphasizing the importance of helping all children develop school readiness skills, including early reading skills. However, the

effect of early childhood programs on helping children prepare to enter school is still being debated. 

GAO’s work led to a mandated study of Head Start, which, with funding of over $6.5 billion in fiscal year

2002, is the largest federal early childhood education program. Early childhood education services are provided through other programs, such as Title I, the primary focus of which traditionally has not been early

childhood. This type of program has not been evaluated for its effect on a child’s readiness for school. 

Child care is viewed as both a vital support to working families for achieving and maintaining self-sufficiency

and a vehicle for helping prepare young children for school. With welfare reform placing greater emphasis

on returning former welfare recipients to work, the cost and availability of child care has become an even

more important issue than in the past. Because states and localities play the primary role in ensuring that a

basic level of quality child care exists and because individual states approach this task differently, concerns

have also arisen about the quality of services being bought with federal money. 

The two child nutrition programs that target low-income or at-risk children—the Child and Adult Care Food

Program (CACFP) and the Special Supplemental Nutrition Program for Women, Infants, and Children

(WIC)—help ensure that children receive nutritious meals to support their overall development and wellbeing. CACFP is vulnerable to fraud and abuse, and state agencies that administer the program are responsible for implementing regulations to promote program integrity. The WIC program faces a number of challenges, including coordinating its nutrition services with health and welfare programs undergoing

considerable change, assessing the effect of nutrition services, and meeting increased program requirements.

Potential Outcomes

■ More effective use of federal funds aimed at 

improving the education, care, and nutrition of 

low-income children 

■ Greater assurance that the federal investment in 

early childhood education, child care, and nutrition programs is achieving positive results 

■ Informed congressional and agency decisions 

about ways to improve the management of key 

early childhood education, child care, and nutrition programs 
94 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.2

Performance Goal 1.2.2: Assess Options for Federal 

Programs to Effectively Address the Educational and 

Nutritional Needs of Elementary and Secondary Students 

Key Efforts

■ Analyze the effectiveness and efficiency of federal reform efforts to improve performance and 

close achievement gaps for different types of students, including special education students 

■ Analyze the contribution of federal programs to 

improving school performance through enhancing the quality and quantity of teachers, upgrading the school environment (including safety and 

nutrition), and assessing options for parents in 

the education of their children 

■ Analyze the contribution of federal education 

programs to improving the self-sufficiency and 

success of teenagers as they make the transition 

to adulthood 

■ Evaluate the adequacy of management structures, processes, and controls for federal elementary and secondary education and nutrition 

programs for ensuring program integrity 

Significance 

Americans have placed a high priority on educating their children and preparing them to become self-sufficient adults and productive workers. For these reasons, the federal government invested about $35 billion in

federal funds in elementary and secondary education in fiscal year 2002. This investment was coupled with

new federal requirements aimed at improving student and school performance and teacher qualifications.

Meeting these requirements will be challenging for schools, in part because of the growing number of disadvantaged students. These students, such as those from poor families, with disabilities, or with limited English

proficiency, generally have not performed as well as other groups of children on tests. With the signing of

the Elementary and Secondary Education Act in 2002, also known as the No Child Left Behind Act, the Congress has instituted requirements to facilitate the elimination of this achievement gap, and policymakers are

exploring ways to improve teaching and enhance educational options. 

The Congress is now expanding these principles to the reauthorization of the Individuals with Disabilities

Education Act. The Congress is also interested in how the Department of Education supports elementary and

secondary education programs. In addition, recent threats to the United States underscore the continuing

concern of parents and policymakers with students’ school environment, including school safety and building quality. 

Finally, the increase in overweight children and concerns about their current and future health and wellbeing have focused attention on the federally supported school meal programs, since schools are well positioned to positively influence what children eat. Concerns have been raised about the nutritional content of

the meals served as well as the types and effectiveness of nutrition education offered and the availability of

non-nutritious foods in schools.

Potential Outcomes

■ More effective services provided to different 

types of at-risk students so that they are more 

likely to improve school performance

■ Better congressional understanding of the 

resources needed for a world-class education 

system
GAO STRATEGIC PLAN 2004–2009 95

STRATEGIC OBJECTIVE 1.2

■ Better congressional understanding of transition 

issues for teenagers and the role the federal government can play in their transition to adulthood

■ Administrative and potential legislative actions to 

improve elementary and secondary education 

programs and a reduction in fraud, waste, and 

abuse in elementary and secondary education 

programs

■ A better understanding of the steps needed to 

promote a nutritionally healthy school environment
96 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.2

Performance Goal 1.2.3: Determine the Effectiveness and 

Efficiency of Child Support Enforcement and Child Welfare 

Programs in Serving Their Target Populations

Key Efforts

■ Determine whether federal, state, and local child 

support enforcement programs are achieving 

program goals efficiently

■ Determine whether federal, state, and local child 

welfare programs are effectively using their 

resources to meet safety, permanency, and wellbeing goals for children

■ Assess federal and state efforts to use information management technology and to safeguard 

sensitive child support enforcement information 

Significance 

The United States has nearly 3 million children at risk of abuse and neglect each year. An increasing number

of these children will be removed from their homes and many will not be able to return safely. Concerns

about children’s safety and long stays in foster care without being placed in permanent homes culminated in

the passage of the Adoption and Safe Families Act of 1997. Policymakers are now concerned about whether

outcomes for children have improved, whether federal oversight ensures that state-reported data are reliable,

and how financial resources can be used more effectively. 

Moreover, about 27 percent of all children in this country live in one-parent households, and many of these

families need child support to help them achieve or maintain economic self-sufficiency. Provisions in the

1996 welfare reform legislation strengthened and improved state child support collection activities. Nonetheless, in fiscal year 2002, there were about 16 million child support cases and more than $92 billion was owed

in unpaid child support. Policymakers continue to have questions about the program’s ability to increase collections; the effectiveness of new enforcement tools; how new databases are used, particularly in light of privacy concerns; and whether federal funds have been used effectively. 

Potential Outcomes

■ More effective use of federal funds for providing 

necessary services and assistance to children at 

risk or who have been the victims of abuse and 

neglect and for increasing child support collections and improving other child support services

■ Enhanced support and coordination among federal, state, and local entities responsible for child 

support enforcement

■ Greater success in using available resources to 

ensure positive outcomes for abused and 

neglected children 

■ Improved support and coordination among federal, state, and local entities responsible for child 

welfare 

■ Informed congressional and agency decisions 

regarding (1) sharing/giving access to sensitive 

and personal information and (2) establishing 

adequate safeguards that minimize the risk of 

improper disclosure of sensitive and personal 

information

■ Greater assurance that the federal investment in 

information systems is achieving positive results 

and providing useful information for congressional decision making 
GAO STRATEGIC PLAN 2004–2009 97

STRATEGIC OBJECTIVE 1.2

Performance Goal 1.2.4: Identify Opportunities to Better 

Manage Postsecondary, Vocational, and Adult Education 

Programs and Deliver More Effective Services

Key Efforts 

■ Assess the efficiency and effectiveness of programs designed to promote access to and affordability of postsecondary education for students 

■ Evaluate the federal role in ensuring quality in 

the management of postsecondary (especially 

student financial aid), vocational, and adult education programs 

■ Assess the extent to which federal postsecondary, vocational, and adult education programs 

address the skills needed in the 21st century’s 

knowledge-based economy 

■ Assess implications of heightened homeland 

security for student visa programs, educational 

institutions, and students 

Significance 

The federal government uses several tools to ensure access to postsecondary education and lifelong learning,

including Pell Grants, student loans, tax benefits, state and local grant programs, funding to improve the

quality of institutions that serve high proportions of minority and disadvantaged students, and funding to

provide services to help disadvantaged students to enter and complete college. While postsecondary education clearly results in a more enlightened citizenry and strengthens the nation’s democracy, it also demonstrably improves the nation’s workforce and the quality of life for the nation’s workers. Recent U.S. Census

Bureau data reveal that over a work life, earnings of a worker with a bachelor’s degree will exceed those of

a worker with a high school diploma by as much as $1 million. In addition to supporting a traditional college

education, the Department of Education and other agencies also administer programs for vocational education, occupational training, and adult basic education that may aid at-risk youth and other vulnerable populations’ transition to the workplace. 

While the federal investment in postsecondary education is significant, several factors confound the nation’s

efforts to support postsecondary goals. Students and their families face escalating educational costs, postsecondary enrollments are projected to increase in the next decade, and fiscal and budgetary pressures will constrain the federal and state governments’ ability to support higher education. In addition, while federal grant

and loan programs have been successful in providing students with money for postsecondary education and

increasing the participation of disadvantaged students, they have been less successful in protecting the financial interests of U.S. taxpayers. As a result, Education’s student loan programs have remained on GAO’s highrisk list for over a decade. 

In recent years, however, Education has implemented reforms that have improved its management of student

financial aid programs. The Higher Education Act, the Adult Education and Family Literacy Act, and the Carl

D. Perkins Vocational Technical Education Act are due to be reauthorized in the near future. The Congress

will be debating several key issues, including the rising costs of college, how to help students and their families finance these costs, institutional accountability for educational costs and quality, how best to provide for

a skilled workforce, and Education’s management of the federal investment in postsecondary education. Key

adult and vocational education issues include the extent to which needed basic reading, mathematics,

English, and workplace skill building are available and schools are staffed with teachers who are qualified to

serve the programs’ clientele and the extent to which these programs are held accountable for achieving

desired results.
98 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.2

Potential Outcomes 

■ Increased participation of disadvantaged students in postsecondary education via better use 

of federal resources 

■ Informed congressional and agency decisions on 

ways to improve the management of student 

financial assistance and other postsecondary, 

vocational, and adult education programs 

■ Increased efficiency and effectiveness of federal 

postsecondary, vocational, and adult education 

programs in addressing current and future skills 

needs 

■ Informed decision making on balancing the 

need to monitor foreign students with the benefits of their enrollment in the nation’s institutions 

of higher education
GAO STRATEGIC PLAN 2004–2009 99

STRATEGIC OBJECTIVE 1.3

The Promotion of Work Opportunities and the Protection of 

Workers

Issue: A strong national economy depends, in part, 

on a productive workforce. Developing that workforce includes effectively preparing youth and new 

workers to compete in the labor force, efficiently 

helping employers locate qualified job candidates, 

providing a work environment that safely promotes 

productivity, finding ways to help workers when 

they become unemployed, and providing assistance 

to workers with disabilities. To this end, the federal 

government currently invests more than $150 billion 

annually to help new entrants to the workforce, 

support those who have been laid off from their 

jobs and assist them in becoming reemployed, assist 

and rehabilitate workers with injuries or disabilities, 

help employers hire enough highly skilled workers, 

and protect employees’ rights to fair and safe workplaces without unduly burdening employers. In 

addition, federal policies for providing income support for the low-income population have increasingly focused on promoting work in exchange for 

government assistance, but changes in the 

economy, have created significant challenges to 

supporting low-skilled, low-income families as 

people leave welfare and enter the workforce.

A struggling economy and a large projected decline 

in the growth rate of the workforce present critical 

challenges for maintaining the nation’s productivity. 

While economic recovery is under way, a slower 

rate of labor force growth will present challenges to 

the continued growth of the nation’s economy. As 

the demand for skilled labor increases with the 

expansion of the economy, researchers warn that, 

unlike in the past when economic growth was 

fueled in part by increases in the size and skill of 

America’s workforce, over the next two decades the 

potential for shortages of skilled workers could 

present mounting challenges for productivity and 

economic growth. At the same time the baby boom 

generation begins to retire, there will be fewer 

native-born workers entering the labor force to take 

their place. Tapping into all possible labor sources 

will be important, and policymakers may need to 

look for more ways to support employing workers 

with disabilities, to encourage seasoned workers to 

remain in the workforce longer, to help welfare 

recipients leave welfare for work, and to assist lowwage workers in retaining and advancing in their 

jobs. Additionally, the nation may need to consider 

how well current immigration policies work in 

addressing demands for workers. 

Technology, changes in the organization of work, 

and increasing global interdependence—in which 

not only production but also some portions of the 

service sector are being outsourced overseas—are 

redefining the labor market for workers and 

employers. Federal employment, worker protection, 

and disability programs must deal with these new 

challenges, in addition to encouraging a commitment to lifelong learning. Because of technological 

changes and global competition, employers will 

need workers with greater skills. In the past, 

employers were able to take advantage of new 

technologies, in part, because new workers were 

more educated than the retiring workers. However, 

over the next 20 years, the growth in the labor force 

is expected to slow dramatically, as are the proportions of the labor force with education beyond high 

school and with college degrees. For example, as 

shown in figure 1.7, some experts project that the 

labor force will grow only 16.4 percent from 2000 

through 2020—barely a third of the nearly 

50 percent rate of expansion from 1980 through 

2000. These changes raise numerous issues 

regarding the adequacy of efforts to ensure that 

employers will have the workers they need. Various 

changes in the workforce and workplace also raise 

issues about the adequacy of efforts to ensure that 

workers have safe, healthy, and productive workplaces. Regulations and activities designed to ensure 

workplace safety and health must be revised to 

accurately reflect the technological changes of the 

recent past. At the same time, changes in technology and the labor force have created new 

opportunities for some people with disabilities to 

remain at or return to work, yet the labor force participation rate of people with disabilities has 

remained quite low. Moreover, federal disability 

programs remain mired in concepts from the past 

and are poorly positioned to provide meaningful 

and timely support for Americans with disabilities. 

The Congress and the administration face challenges as they redefine the role of public policies to 
100 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.3

help employers and workers enhance productivity 

and increase earnings while also protecting 

workers’ rights.

Figure 1.7: Changes in the Actual and Projected 

Growth Rates for the Labor Force, 1980–2020

Performance Goals: To support efforts by the 

Congress and the federal government to address 

these issues, GAO will

■ assess the effectiveness of federal efforts to help 

adults leave welfare for work and to assist other 

low-income individuals;

■ analyze the impact of programs designed to 

maintain a skilled workforce and ensure that 

employers have the workers they need;

■ assess the success of various enforcement strategies to protect workers while minimizing 

employers’ burden in the changing work environment; and 

■ identify ways to improve federal support for 

people with disabilities.

0

25

50

75

100

125

Actual Change in the Rate of Growth—1980 to 2000 

Projected Change in the Rate of Growth—2000 to 2020

Percentage

Total 

Workforce

College Degree 

or More

Source: The Aspen Institute.
GAO STRATEGIC PLAN 2004–2009 101

STRATEGIC OBJECTIVE 1.3

Performance Goal 1.3.1: Assess the Effectiveness of Federal 

Efforts to Help Adults Leave Welfare for Work and to Assist 

Other Low-Income Individuals 

Key Efforts

■ Analyze and highlight key issues associated with 

the changing social services environment under 

welfare reform, including access to services, 

effects on special populations, and interactions 

among programs 

■ Assess state and federal efforts to promote 

employment for welfare recipients and other 

low-income adults while ensuring assistance for 

those in need

■ Assess federal and state oversight and management of welfare reform and federal programs to 

support or serve low-income workers and other 

individuals and ensure program integrity

Significance

The welfare reform legislation of 1996 made sweeping changes to key national policies affecting low-income

individuals, including creating the Temporary Assistance for Needy Families (TANF) block grant and modifying aspects of the Food Stamp program. Key goals of the $16.5 billion TANF block grant include ending welfare dependency by promoting work and marriage, reducing out-of-wedlock pregnancies, and promoting

two-parent families. In addition, it devolved much responsibility for welfare policies to state and local decision makers and provided them added flexibility in designing and administering these programs. Key features of the TANF program, including its increased emphasis on employment and state flexibility, are

expected to remain in place as the Congress considers reauthorization in 2003. 

The 1996 welfare reform legislation also provided options for increased state flexibility for the $19 billion

Food Stamp program, and that program’s 2002 reauthorizing legislation provided states additional flexibility

options. As states initially implemented welfare reform during the strong economic growth of the late 1990s,

TANF and food stamp caseloads fell dramatically, and states increasingly focused on providing TANF-funded

services in ways that supported the work efforts of adults. States now operate these programs in a dramatically different environment—higher unemployment; significant budget shortfalls; and, in many states,

increasing TANF and food stamp caseloads. As a result, states may face significant challenges in sustaining

and building upon recent welfare reforms, which include moving those remaining on the welfare rolls into

jobs, helping former welfare recipients and other low-income workers maintain their jobs and advance, and

helping those who have lost their jobs and once again need income support. Similarly, rising caseloads, budget shortfalls, and recent program changes present states with challenges as they administer the Food Stamp

program, which plays a vital role in both supporting low-income families as they enter and stay in the workforce and providing needed food assistance to those who are not working for a variety of reasons. 

Finally, this current environment heightens the already important need to ensure that programs achieve their

goals and that only eligible individuals and families receive benefits. Federal, state, and local officials will

need to take further steps to reduce waste, fraud, and abuse and increase program effectiveness and efficiency in the TANF and Food Stamp programs.
102 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.3

Potential Outcomes

■ Better congressional understanding of how significant changes to the social services environment have affected the status of families, special 

populations, and program coordination and service delivery 

■ More effective federal and state strategies for 

supporting low-income families and reducing 

their need for welfare 

■ Increased efficiency, effectiveness, and integrity 

of programs such as TANF, federal food assistance, and income support programs
GAO STRATEGIC PLAN 2004–2009 103

STRATEGIC OBJECTIVE 1.3

Performance Goal 1.3.2: Analyze the Impact of Programs 

Designed to Maintain a Skilled Workforce and Ensure That 

Employers Have the Workers They Need

Key Efforts 

■ Assess the effectiveness of federal efforts to support the development of career pathways for 

youth and other workers that link lifelong learning with workforce development activities

■ Assess the effectiveness of efforts to address 

anticipated labor force shortages and maintain 

the size and quality of the labor force to meet 

employers’ changing needs

■ Assess the effectiveness and viability of federally 

supported efforts to assist dislocated workers 

through financial assistance (such as unemployment insurance), job search assistance, and 

opportunities for skill upgrades

■ Assess federal and state oversight and management of employment and training programs, 

including accountability systems in a decentralized and increasingly integrated workforce 

development system

Significance 

While the federal government has long invested in a range of employment and training programs for both

new job seekers and those who have been laid off from their jobs, the Workforce Investment Act of 1998

sought to improve these programs and create a coherent nationwide service-delivery system. Under the act,

the emphasis for federally funded workforce development services has shifted to providing a full range of

programs, and services now include postemployment training and assistance. There has also been a shift in

what workers need, with an emphasis on job search assistance and case management in addition to training.

Despite these efforts, some employers still struggle to find the skilled workers that they need. The availability

of a skilled workforce to meet employers’ needs will be critical to the nation’s prosperity as the economy

struggles to rebound from a recession and shrink unemployment. 

Unemployment insurance—the nation’s support program for newly unemployed workers—may not be well

positioned to provide the financial support needed to sustain many unemployed workers. Low-wage workers may be particularly hard hit—many may find that they are not covered by their state’s unemployment

insurance system and their opportunities for employment and job advancement may be limited. 

Increasingly, the jobs that are available require sophisticated skills, often far more sophisticated skills than

many of these individuals possess. Additionally, emerging long-term challenges are expected based on

slower growth rates projected for the numbers of workers entering the workforce and attaining college

degrees. Given demographic changes in the workforce, new strategies will be needed to address labor shortages, especially of skilled workers. Utilizing the available pool of seasoned workers as well as providing

additional workforce training for youth and other underutilized populations may be considered to address

these shortages. In addition, it would be useful to reexamine the role of immigration policies in supplying

temporary and permanent foreign workers to meet labor market needs while also determining whether these

policies ensure that adequate protections are in place for American workers. In light of these challenges,

opportunities exist for policymakers and employers to work together to upgrade the skills of the workforce

and contribute to the nation’s economic recovery.

Potential Outcomes 

■ Employment and training programs that are 

comprehensive, coordinated, and easily accessible to employers and job seekers
104 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.3

■ Enhanced ability of job training programs to provide training that matches employers’ needs 

while enhancing the job opportunities, wage 

potential, and job retention for America’s workers

■ Increased efficiency and improved financial 

management in the delivery of federal employment and training programs, including improved 

systems for assessing the Workforce Investment 

Act’s performance

■ Improvements in services for workers who have 

lost their jobs, including the provision of unemployment insurance benefits
GAO STRATEGIC PLAN 2004–2009 105

STRATEGIC OBJECTIVE 1.3

Performance Goal 1.3.3: Assess the Success of Various 

Enforcement Strategies to Protect Workers While Minimizing 

Employers’ Burden in the Changing Work Environment

Key Efforts

■ Analyze how technological, economic, and 

national security issues are affecting the workplace, the protections afforded to workers, and 

efforts to regulate these protections

■ Highlight the results and lessons learned from 

efforts to enhance worker safety and health 

through nontraditional methods, such as voluntary compliance and employer incentives

■ Assess federal and state oversight and management of efforts to ensure safer workplaces and 

healthier workers

Significance

Technological advances, unprecedented economic growth, and low unemployment rates created a situation

in the 1990s in which employers were willing to go to great lengths to get and keep qualified workers. For

example, employers paid competitive wages and benefits, allowed alternative work schedules, or provided

employment that was not only free from serious hazards but had numerous amenities for workers, such as

day care centers or health clubs.

More recently, however, the economic downturn, changes in the demographics and skill sets of available

workers, and continued threats to national security are changing how employers and workers view the

workplace. Employers may be less willing to expend the resources necessary to get and keep workers, or

even provide basic workplace protections, if they are faced with financial constraints and qualified workers

are readily available either as a result of higher unemployment or immigration of workers to the United

States. 

In addition, changes in workplace arrangements and conditions—such as the increasing use of independent

contractors who do not qualify for employer-provided pensions or health care benefits—are calling into

question the adequacy of protections for today’s workers and the burdens that employers face in trying to

provide these protections. Workers may be less able to think productively and creatively if they do not feel

safe in the workplace and think their employers are not devoting sufficient resources to protecting their

health and safety. However, the level of protection that employers should provide in response to external

threats to workers’ safety, such as threats to national security, is unclear.

Now more than ever, it is important to maintain the balance between ensuring the safety and health of workers and minimizing burdens for employers. In that respect, federal and state enforcement authorities, which

for years have largely been able to focus their efforts on the most dangerous or exploitative employers, now

may have to rethink what types of workplace safety issues are paramount. It is clear that regulations and

activities designed to ensure workplace safety and health must be revised to accurately reflect not only the

technological changes of the recent past, but also the potential repercussions from recent national events. No

consensus exists, however, on the types of revisions that would result in the most efficient ways of protecting

workers and minimizing employers’ burden in the 21st century.
106 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.3

Potential Outcomes

■ Better informed congressional and agency decisions on the types of changes needed in regulations and enforcement policies to address 

current work arrangements and workplace conditions

■ Enforcement and other strategies, such as voluntary compliance programs, that result in safer 

workplaces and healthier workers while eliminating unnecessary burdens for employers

■ Increased efficiency and financial management 

in the delivery of worker protection programs 

and policies
GAO STRATEGIC PLAN 2004–2009 107

STRATEGIC OBJECTIVE 1.3

Performance Goal 1.3.4: Identify Ways to Improve Federal 

Support for People with Disabilities

Key Efforts 

■ Evaluate the adequacy of actions that federal disability programs have taken to modernize their 

programs so that they are in line with the current 

status of law, science, medicine, technology, and 

labor market conditions

■ Evaluate the adequacy of management processes 

and controls of federal disability programs for 

ensuring program integrity, including those 

related to improving the accuracy, timeliness, 

and consistency of disability decisions

■ Assess the effectiveness and efficiency of federal 

and other efforts, including those in other countries, to improve access to public accommodations, benefits, services, and activities, including 

those that promote movement into the workforce for people with disabilities 

■ Assess the effectiveness and efficiency of benefits and services provided by the federal worker 

compensation program and other worker compensation programs, including those in other 

countries, to improve the rehabilitation and 

return to work of injured workers

Significance

Federal disability programs have experienced significant growth over the past decade and are expected to

grow even more steeply as more baby boomers reach their disability-prone years. In particular, the Social

Security Administration (SSA) and VA oversee five major disability programs that provide cash assistance to

individuals with physical or mental conditions that reduced their earning capacity, collectively paying more

than $100 billion in cash benefits to more than 13 million beneficiaries in 2001. 

Paradoxically, recent scientific advances as well as economic and social changes have redefined the relationship between impairments and work. Advances in medicine and technology have reduced the severity of

some medical conditions and have allowed individuals to live with greater independence and function in

work settings. Moreover, the nature of work has changed in recent decades as the national economy has

moved away from manufacturing-based jobs to service- and knowledge-based employment. 

However, federal disability programs remain mired in concepts from the past and are poorly positioned to

provide meaningful and timely support for workers with disabilities. Indeed, SSA and VA are struggling to

provide accurate, timely, and consistent disability decisions to program applicants. For these reasons, GAO

has added modernizing federal disability programs to its 2003 high-risk list. GAO’s designation of SSA’s disability programs as high risk can serve as a catalyst to bring together the partners needed to resolve these

long-standing problems. As previously stated, as the primary manager of multibillion-dollar programs and as

the entity with fiduciary responsibility for the trust funds, SSA must take the lead in forging the partnerships

and cooperation that will be needed in reorienting federal disability programs.

Potential Outcomes

■ Improvement in current and future service-delivery structures and practices

■ Administrative and legislative actions to improve 

the timeliness, accuracy, and consistency of disability decisions for program applicants

■ Reduced fraud, waste, and overpayments in disability programs
108 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.4

A Secure Retirement for Older Americans

Issue: For the last 60 years, the retirement security 

of older Americans has been a central concern of 

American society. The Congress enacted Social 

Security and the post-World War era saw the development and expansion of a private-employer-provided pension system. Later, new tax-preferred 

vehicles were created to encourage individuals to 

increase their personal retirement savings. 

The nation has also changed dramatically in other 

ways. For example, women, especially married 

women, have entered the labor force in growing 

numbers, with their 2000 labor force participation 

rate almost doubling to over 60 percent since 1960. 

As the growth in the number of single parent 

households illustrates, there has been a substantial 

increase in the diversity of structure of American 

households. Finally, as the baby boomers approach 

retirement and as life expectancy continues to 

increase, the American population has aged. The 

percentage of the population age 65 and older is 

projected to reach 20 percent by 2025, up from less 

than 12 percent in 2000. 

All of these developments have important consequences for the retirement security of American 

workers and their families. For example, the aging 

of the population poses important challenges for 

the future of Social Security, the program that continues to serve as the foundation of the nation’s 

retirement income system. Because of these 

changes in workforce participation and longevity, 

people—particularly women—on average, will be 

spending an increasing number of years in retirement and thus will receive benefits longer. In addition, it means that the ratio of workers to retirees is 

expected to decline, with fundamental implications 

for Social Security, the federal budget, and the 

national economy. Although Social Security payroll 

tax revenues exceed benefit expenditures today, 

projections suggest that beginning in 2018, 

spending will exceed revenues by growing proportions and that in 2042 the Social Security trust funds 

will be depleted. (See fig. 1.8.) 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. 

Although there is an emerging consensus about the 

need to address the long-term fiscal problems of the 

Social Security program, there remains considerable 

debate on both the timing and the nature of such 

reform. The Congress has discussed many of these 

issues and is continuing these policy deliberations. 

Such reform would have major consequences for 

the federal budget, for the long-term economic 

growth of the country, and particularly for retirement income adequacy, given that Social Security is 

the sole source of income for one-fifth of the elderly. 
GAO STRATEGIC PLAN 2004–2009 109

STRATEGIC OBJECTIVE 1.4

Figure 1.8: Social Security Trust Fund Faces Insolvency in 2042

Note: Data taken from the Office of the Actuary’s 2003 intermediate assumptions from the 2003 Annual Report of the Board of 

Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds. 

Besides reforming Social Security in ways to ensure 

its financial viability and enhance its contribution to 

retirement income, it will also be necessary to foster 

the growth of other sources of retirement income. 

For example, pensions are another key element in 

the nation’s approach to ensuring adequate retirement income, constituting 18 percent of retirement 

income in the United States. (See fig. 1.9.) Nonetheless, tens of millions of U.S. workers have no individual pension coverage, placing them at risk 

during their retirement years. Only about half of the 

nation’s workers are covered by employer pensions, and 48 percent of retirees do not receive any 

pension income. Determining the best way to 

increase pension coverage represents a continuing 

policy concern.

Figure 1.9: Sources of Income in the United States 

for Those Age 65 and Over, 2001

Note: “Pensions” includes private pensions and annuities; 

government employee pensions; Railroad Retirement; and 

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

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. Furthermore, some employers are shifting from traditional 

defined benefit plans to “hybrid” systems that retain 

the defined benefit structure while adopting certain 

features of defined contribution plans. These plans 

place greater responsibility on workers themselves 

-1,000

-500

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2000 2005 2010 2015 2020 2025 2030 2035 2040

Dollars in Billions (2003)

Cash Surplus

Cash Deficit

Trust Fund Balance

Source: GAO analysis of Social Security Administration data.

Other

3%

Pensions

18%

Social Security

38%

Earnings

23%

Asset Income

18%

Source: Social Security Administration, Annual Statistical Supplement, 2002. 
110 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.4

to make prudent investment decisions about their 

retirement savings, but do not always provide 

workers access to the accurate and reliable information necessary for such decisions. Such changes will 

pose new challenges to workers, government regulators, and policymakers. 

A still significant number of workers continue to be 

covered by defined benefit plans offered by individual employers. Benefits provided by these plans 

are partially insured by the Pension Benefit Guaranty Corporation (PBGC). After fluctuating over the 

last decade, the single employer insurance program 

now has a large and growing accumulated deficit. 

The program has moved from a $9.7 billion accumulated surplus in 2000 to a $3.6 billion accumulated deficit in fiscal year 2002. 

The termination of large underfunded pension 

plans of bankrupt firms in troubled industries like 

steel or airlines was the major cause of the deficit. 

Declines in the stock market and interest rates and 

certain weaknesses in the current funding rules contributed to the severity of the plans’ underfunded 

condition. Furthermore, the degree of underfunding 

in the private pension system has increased dramatically and additional severe losses may be on the 

horizon. Continued problems in volatile or 

declining industrial sectors could lead to additional 

corporate bankruptcies and consequent plan terminations, increasing PBGC’s financial liabilities. 

PBGC currently estimates that it faces $35 billion in 

unfunded vested benefits exposure, which ultimately might become program losses.

However, these factors mask broader trends that 

pose serious program risks. For example, the program’s insured participant base continues to shift 

away from active workers, falling from 78 percent 

of all participants in 1980 to 53 percent in 2000. In 

addition, the program’s risk pool has become concentrated in industries affected by global competition and the movement from an industrial to a 

knowledge-based economy. In 2001, almost half of 

all program-insured participants were in plans 

sponsored by firms in manufacturing industries, a 

sector that has had virtually no employment growth 

in the last half century. The result is a potentially 

escalating agency vulnerability as PBGC struggles to 

insure what is at best a moribund and increasingly 

risky segment of the pension universe. In response 

to the cumulative effect of these trends on the financial vulnerability of this agency and the potentially 

severe adverse consequences for workers’ benefits 

and the federal government, GAO placed PBGC’s 

single-employer insurance program on its high-risk 

list in July 2003.

Long-term weaknesses in the solvency of the Social 

Security program and the sustained lack of pension 

coverage for half of the labor force necessitate that 

workers depend on their own retirement savings to 

cover these gaps. Yet, despite these potential shortfalls, personal savings rates continue to hover at historically low levels. Current economic uncertainties 

may exacerbate this trend, threatening the prospects 

for individuals’ future retirement income as well as 

the nation’s future economic growth. 

Finally, earnings from employment are already a 

key component of retirement income, accounting 

for 24 percent of aggregate retiree income in 2002. 

Employment-related earnings, particularly when 

generated by extending the labor force of seasoned 

workers, could potentially play a more prominent 

role in future retirement security. Current workers 

are healthier than past generations and are more 

willing to work in retirement. Increased labor force 

participation can reduce the fiscal pressures on 

Social Security, contribute to economic growth by 

mitigating potential occupational bottlenecks, and 

bolster labor force growth. However, most 

employers have not yet met this challenge by establishing alternative work and schedule arrangements, 

nor has the government developed the complementary policies to encourage employers and workers 

to move in this direction.

The health needs of an aging population and 

society’s ability and willingness to fund those needs 

are other key issues in national retirement policy. 

The availability of health insurance is a major consideration in seasoned workers’ employment and 

retirement decisions as well as in employers’ decisions to hire such workers. In particular, the longterm erosion of employer-provided health benefits 

for retired workers age 55 to 64 who are ineligible 

for Medicare is a disturbing trend. In addition, some 

of these workers, especially low-wage workers, 

may have to look to Medicaid, the health insurance 

program for the poor, for assistance. Yet a serious 

related concern is the projected rapid rise in Medicaid expenditures. The Congressional Budget 

Office (CBO) estimates that total national expendi-
GAO STRATEGIC PLAN 2004–2009 111

STRATEGIC OBJECTIVE 1.4

tures for Medicaid will increase from $158 billion in 

fiscal year 2003 to $360 billion in 2013, a 128 percent increase. GAO is taking a comprehensive view 

of the issues facing older Americans and their financial security, including not only their retirement 

income but also health insurance access and affordability and the interaction of all of these concerns 

with the general retirement decision.

The demographic, economic, and social developments affecting the nation also have important consequences for how the Social Security 

Administration conducts its business. In particular, 

the Social Security number (SSN), once an internal 

marker for the agency to record contributions and 

pay benefits, is now virtually a universal identifier, 

used by public agencies at all levels of government 

and private business entities of all sizes and from 

many different economic sectors. The SSN’s wide 

use, besides raising many serious privacy issues, has 

also put citizens throughout the nation at risk of 

identity theft, fraud, and other types of illegal 

activity. How to use the SSN in a way that ensures 

effective agency operations, prevents its illegal use, 

and protects the privacy of U.S. citizenry is one of 

the greatest 21st century challenges facing the Social 

Security Administration.

Performance Goals: To support efforts by the 

Congress and the federal government to address 

these issues, GAO will 

■ assess the policy challenges facing the future of 

the Social Security system and the need for 

reform; 

■ bolster retirement security by identifying 

opportunities to foster greater pension coverage, 

raise personal saving, and increase the 

employment earnings of seasoned workers;

■ identify opportunities to improve the ability of 

government agencies to administer and protect 

workers’ retirement benefits; and 

■ assess the role of the Social Security number in 

improving government operations, minimizing 

fraud and abuse, and protecting citizens from 

identity theft and other illegal activity.
112 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.4

Performance Goal 1.4.1: Assess the Policy Challenges Facing 

the Future of the Social Security System and the Need for 

Reform

Key Efforts

■ Analyze Social Security reform proposals for 

their effect on the level and distribution of workers’ benefits, especially for at-risk populations; 

on the budget and the economy; and on agency 

implementation and administration

■ Assess the national retirement system reforms 

other nations have implemented in response to 

adverse fiscal and demographic trends for their 

impact on retiree benefits, budgetary and economic effects, and applicability to the United 

States 

Significance 

Social Security policy continues to be an important issue facing the nation, requiring near-term action in a

context in which safety and security issues necessarily dominate the nation’s policy agenda. The Social Security system faces insolvency within the next 40 years, and projections suggest that benefit costs will begin to

exceed program revenues much sooner. Policymakers thus face difficult choices today to avoid potentially

catastrophic problems later. The main policy choices include increasing program revenues, investing Social

Security trust funds in the private sector, reducing benefits, or some combination of the three. 

Some analysts call for major structural revisions in the program through the creation of individual retirement

accounts for workers, either in addition to the current program or in lieu of some portion of current benefits.

All of these policy choices have consequences for retirees’ benefits, the federal budget, and long-term economic growth. They also would influence the willingness of employers to offer private pension plans to their

employees and the types of plans offered. 

These problems are not unique to the United States—virtually all of the advanced industrialized countries are

now grappling with similar issues. Many of these nations are also experimenting with innovative solutions to

these problems, including ways to encourage workers to retire later, and the success or failure of these initiatives can have important consequences for how the Congress and the President respond to this policy issue

in this country. 

Finally, the powerful demographic and social changes affecting American society pose challenges to existing

Social Security policies and proposed policy changes. For example, long-term trends in longevity and in family and household structure have important equity implications for the structure of Social Security survivor,

spousal, and related benefits.

Potential Outcomes 

■ Greater congressional and public understanding 

of alternative Social Security reforms and their 

implications for retiree benefits, trust fund solvency, program sustainability, the budget, and 

the national economy 

■ Greater understanding and appreciation for the 

practical considerations related to the implementation and administration of Social Security 

reforms as well as the resulting interaction with 

other retirement systems
GAO STRATEGIC PLAN 2004–2009 113

STRATEGIC OBJECTIVE 1.4

Performance Goal 1.4.2: Bolster Retirement Security by 

Identifying Opportunities to Foster Greater Pension 

Coverage, Raise Personal Saving, and Increase the 

Employment Earnings of Seasoned Workers

Key Efforts 

■ Assess information available to participants 

about private pensions in the United States and 

those provided to participants by other national 

occupational pension systems to identify opportunities to foster the accumulation of retirement 

saving and to ensure adequate and secure postretirement income 

■ Analyze current federal pension and associated 

tax policies and those of other nations’ occupational pension systems to determine their effect 

on pension plan formation; employee participation; plan coverage; and the adequacy, distribution, and security of benefits 

■ Assess the effectiveness of current tax and other 

programs and provisions to encourage workers 

to expand their individual retirement savings and 

the interactions of these individual efforts with 

policies encouraging other forms of retirement 

and nonretirement saving 

■ Assess the implications of alternative policies 

geared to extending the labor force participation 

of seasoned workers

Significance 

The private pension system remains one of the policy cornerstones for ensuring that the nation’s workers

have adequate retirement income. Nevertheless, tens of millions of U.S. workers—close to half of the labor

force—continue to have no individual pension coverage, placing them at risk during their retirement years.

The private pension system also continues to evolve: the shift from defined benefit to defined contribution

plans presents both risks and opportunities for American workers that can affect retirement income dramatically. Personal saving, another important source of future retirement income, is at a historically low level and

could be affected by the enhanced uncertainty of the current economic environment. Reforms to the Social

Security system could also affect these other sources of retirement income.

Given the potential for occupational shortages and lower economic growth stemming from a decline in labor

force growth, identifying and implementing effective policies to extend the labor force participation of seasoned workers is a critical area for national retirement policy analysis. GAO’s work is aimed at improving the

linkage between the private pension and Social Security systems, helping to find effective vehicles to encourage personal saving, promoting the voluntary extension of labor force participation of seasoned workers to

facilitate economic growth and support the Social Security system, and ensuring adequate retirement income

for the American people.

Potential Outcomes

■ Greater congressional understanding of proposals for increasing employer and worker participation in the private pension system 

■ More effective federal strategies and policies to 

increase the role of private pensions as a source 

of retirement income for workers 

■ Improved understanding of alternative strategies 

to raise personal saving 

■ Greater awareness of the adequacy of retirement 

saving among various subgroups 

■ Greater congressional understanding of the 

issues facing the implementation of viable alternative employment arrangements that extend the 

labor force participation of older workers, mitigate potential labor bottlenecks, and encourage 

economic growth
114 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.4

Performance Goal 1.4.3: Identify Opportunities to Improve 

the Ability of Government Agencies to Administer and 

Protect Workers’ Retirement Benefits

Key Efforts

■ Evaluate pension, pension insurance, and tax 

oversight programs to determine whether workers’ private pension retirement benefits are effectively protected 

■ Evaluate SSA’s service-delivery systems and program operations to determine whether they are 

being implemented fairly, effectively, efficiently, 

and securely 

■ Assess the adequacy and management of public 

service retirement systems, including the federal, 

state, and local government employee systems, 

in serving participants and in protecting and providing benefits 

Significance 

Social Security, military, federal employee pensions, and private pensions will continue to require effective,

performance-based management and oversight by federal agencies, such as SSA, the Office of Personnel

Management, PBGC, the Employee Benefits Security Administration, VA, and IRS. The challenges facing

PBGC’s single employer insurance program, in particular, pose serious financial risks to the federal government, warranting the program’s placement on GAO’s high-risk list. 

State and local government employees also deserve effective benefit protection and program oversight, particularly of those plans that receive preferential tax treatment from the federal government. GAO’s work is

aimed at enhancing the benefit protections enjoyed by covered workers, improving the quality of service

provided to workers and employers, and assessing the effectiveness of the operations of the relevant federal

agencies. 

Potential Outcomes 

■ Increased agency administrative and enforcement efficiency to provide better protection to 

workers’ benefits at lower taxpayer expense, 

thereby improving the security of participants’ 

retirement income 

■ Greater congressional understanding of factors 

affecting PBGC’s financial condition and regulatory effectiveness 

■ Improved efficiency and effectiveness of SSA’s 

service delivery and operations 

■ Improved operations of federal and other public 

retirement programs 
GAO STRATEGIC PLAN 2004–2009 115

STRATEGIC OBJECTIVE 1.4

Performance Goal 1.4.4: Assess the Role of the Social 

Security Number in Improving Government Operations, 

Minimizing Fraud and Abuse, and Protecting Citizens from 

Identity Theft and Other Illegal Activity

Key Efforts

■ Assess actions to maintain the integrity of the 

Social Security number (SSN) system and strike 

an appropriate balance between the security of 

SSNs and program integrity purposes 

■ Assess actions to improve the use of SSNs for 

identity verification and law enforcement purposes

Significance

Terrorism and the resulting prevention efforts have underscored both the weaknesses and strengths of SSA’s

current SSN identification system. While SSA relies on the number as an essential element of its operations,

the number has also become an integral part of daily life for millions of Americans. Public and private

employers, hospitals, and individuals now use the number to conduct routine business, obtain drivers

licenses and other government documents, and apply for loans and employment as well as for a host of

other activities. This development has raised a wide array of serious policy issues, including the increased

potential for identify theft and other types of fraud or illegal activity, the degree to which foreign nationals

can access federal employment and education programs, and the privacy protection of individuals’ personal

information. GAO’s work on the use of the SSN in American society and agency policies regarding its use

seeks to fill a major gap in the policy debates on all these issues. 

Potential Outcomes 

■ Improved security of SSNs

■ Improved program integrity of public benefit 

programs

■ Improved public safety and homeland security
116 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.5

An Effective System of Justice 

Issue: Spending on the administration of justice 

continues to grow. In constant 2001 dollars, federal 

spending will be about $38 billion in fiscal year 

2004, up from about $15 billion in 1991. (See 

fig. 1.10.) Most of the increase has been to accommodate a shift in focus at the federal level from 

helping local governments control crime to emphasizing more distinct federal responsibilities, such as 

controlling illegal immigration and, more recently, 

preventing terrorist attacks. 

Figure 1.10: Federal Outlays for the Administration 

of Justice, 1991–2004

Note: The 2003 and 2004 numbers are estimates. These 

data reflect OMB budget data for the “administration of 

justice” budget function.

During the past several years, overall crime levels 

have been reduced. For example, preliminary data 

for 2002 from the Federal Bureau of Investigation’s 

(FBI) Uniform Crime Reporting Program indicate a 

0.2 percent decrease in the nation’s Crime Index 

from the 2001 figure. 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, while protecting civil liberties; to reduce 

illegal drug use; to protect the nation’s borders; and 

to control prison costs. The USA Patriot Act, passed 

in October 2001, significantly expanded federal law 

enforcement and investigative authority and, with 

billions of dollars in additional funding, greatly 

increased the federal counterterrorism role. In addition, the newly created Department of Homeland 

Security (DHS) 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 is in the process of redefining its 

mission and priorities in light of the increased focus 

on antiterrorism. 

Passage of the Homeland Security Act of 2002 

moved several major federal law enforcement agencies around—the Secret Service, the Immigration 

and Naturalization Service (INS), the U.S. Customs 

Service, the Coast Guard, the Federal Protective Service, and the Federal Law Enforcement Training 

Center all moved to the new DHS. In addition, the 

Bureau of Alcohol, Tobacco, and Firearms moved 

from the Department of the Treasury to Justice, 

leaving Treasury virtually no law enforcement functions. While the movement of these agencies into 

their new units presents management challenges, it 

also raises concerns about the impact the transfers 

will have on agencies’ ability to perform their missions. These concerns, as well as the sheer size of 

the undertaking, the fact that DHS’s proposed components already faced a wide array of existing challenges, and the prospect of serious consequences 

for the nation should DHS fail to address its management challenges and program risks adequately, 

led GAO to add the implementation and transformation of the new department to the list of highrisk areas in 2003.

After several years of mandatory minimum sentencing, “three strikes and you’re out” laws, and 

truth-in-sentencing grants, federal and state prisons 

are overcrowded. The size of the prison population 

will be the subject of increasing public debate as 

these policies’ cost to the public escalates. Moreover, in constant 2002 dollars, the federal judiciary’s 

fiscal year 2004 spending, estimated at about 

$5.5 billion, will be more than double its fiscal year 

1991 spending of about $2.5 billion. In addition, the 

0

5

10

15

20

25

30

35

40

Fiscal Year 2002 Dollars in Billions

Source: Office of Management and Budget, Budget of the United States 

Government, Fiscal Year 2004.

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

20012002

2003

2004
GAO STRATEGIC PLAN 2004–2009 117

STRATEGIC OBJECTIVE 1.5

judiciary has faced an imbalance in its workload in 

recent years, particularly its criminal caseload, with 

some courts facing much higher workloads than 

others. Thus, the judiciary faces a major challenge 

in determining how to use its resources efficiently 

and effectively to address such workload imbalances and to coordinate its strategy with other 

affected agencies, particularly along the southwest 

border. Also, the number of prisoners being 

released from federal prisons is growing rapidly, 

making successful reintegration an increasingly 

important issue.

Performance Goals: To support efforts by the 

Congress and the federal government to address 

these issues, GAO will 

■ identify ways to improve federal agencies’ ability 

to prevent and respond to terrorism and other 

major crimes, 

■ assess the effectiveness of federal programs to 

control illegal drug use, 

■ assess federal efforts to enforce immigration and 

customs laws, and 

■ assess the administrative efficiency and effectiveness of the federal court and prison systems.
118 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.5

Performance Goal 1.5.1: Identify Ways to Improve Federal 

Agencies’ Ability to Prevent and Respond to Terrorism and 

Other Major Crimes

Key Efforts 

■ Assess the effectiveness of major federal law 

enforcement programs

■ Evaluate the implementation and effectiveness of 

federal gun control laws 

■ Evaluate the management and results of key federal law enforcement grant programs 

■ Assess the equity in the operation of key segments of the criminal justice system

Significance 

Crime, including crime committed by terrorists, is one of the foremost concerns of the American public. To

address this concern, the Congress has, among other initiatives, made many crimes federal offenses and

increased Justice’s budget to investigate and prosecute these offenses. The Congress has also made billions

of dollars available to states and localities through grants and other assistance to help them prevent and combat violent crime, drug trafficking, and juvenile delinquency. Other federal law enforcement initiatives

include enforcing gun control and civil rights laws and maximizing the use of asset seizure and forfeiture

authority. How well federal law enforcement agencies carry out their responsibilities to prevent and respond

to acts of terrorism and other major crimes and work with their state and local counterparts is a continuing

concern, particularly given the substantial budget increases in nearly every facet of law enforcement operations. 

Among the more important issues is how law enforcement agencies carry out these laws. For example, when

the Congress gave Justice additional antiterrorism investigative authorities under the USA Patriot Act, the

Congress included a sunset provision to enable it to conduct oversight into, among other things, how equitably the department was using the new authorities. Similarly, how well federal law enforcement agencies

work with their foreign counterparts is of growing importance, given the increasing opportunities for criminal enterprises to operate transnationally. In addition, because many of the new initiatives assume larger

workforces, including the need to incorporate a variety of new special skills, federal law enforcement agencies may find it increasingly difficult to recruit, train, and retain quality officers and support personnel. 

Potential Outcomes 

■ Agencies better positioned for preventing, 

detecting, and investigating crimes, including terrorism 

■ Improved agency implementation of controls 

over illegal acquisition and ownership of guns 

■ Enhanced agency focus on managing law 

enforcement grant programs 

■ More equitable application of the criminal justice 

system, especially for juveniles, minorities, and 

aliens

■ Agencies better positioned to support multinational responses to transnational crime, including 

terrorism 
GAO STRATEGIC PLAN 2004–2009 119

STRATEGIC OBJECTIVE 1.5

Performance Goal 1.5.2: Assess the Effectiveness of Federal 

Programs to Control Illegal Drug Use

Key Efforts 

■ Assess the coordination, execution, and evaluation of portions of the National Drug Control 

Strategy 

■ Assess the roles, responsibilities, and results of 

agencies involved in specific supply and demand 

reduction programs 

■ Assess the management and effectiveness of U.S. 

assistance in drug-producing countries 

Significance 

During the past few years, the Congress participated actively in the debate over the strategy the nation

should use to reduce the use of illegal drugs, a criminal activity that, according to the Office of National Drug

Control Policy, was estimated to cost the United States socially and economically about $160 billion in fiscal

year 2000. Over 50 federal agencies are involved in carrying out the National Drug Control Strategy at an

annual cost of about $12 billion. Despite this investment, the demand for and supply of illegal drugs have

persisted at very high levels and continued to adversely affect American society in terms of social, economic,

and health costs as well as through drug-related violent crime. For example, one key measure—reported use

of illicit drugs in the past 30 days—showed increases in each age cohort from 2000 through 2001. Reported

use among children aged 12 to 17 increased from 9.7 percent to 10.8 percent. As a result, nearly every appropriations subcommittee and several of the legislative and oversight committees have been involved in various

attempts to provide congressional guidance. One issue GAO has highlighted for the Congress and will continue to address is the changes in federal strategy brought about because the Federal Bureau of Investigation

(FBI) is playing a narrower role in the drug war; the Drug Enforcement Administration is now focusing more

on disrupting and dismantling top-level drug organizations.

Potential Outcomes 

■ Improved congressional and public understanding of the resources being devoted to achieving 

national goals and improved performance measures for and results of national drug control 

efforts 

■ Agencies better positioned to operate efficient 

and effective drug control programs 

■ Better understanding of the obstacles and limitations of drug control efforts

■ More efficient and effective programs to interdict 

illegal drugs before they enter the United States 
120 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.5

Performance Goal 1.5.3: Assess Federal Efforts to Enforce 

Immigration and Customs Laws

Key Efforts 

■ Evaluate the Department of Homeland Security’s 

(DHS) border enforcement efforts 

■ Assess implementation of DHS systems for tracking people and cargo entering the United States

■ Assess DHS efforts to process aliens’ applications 

for benefits more efficiently

■ Assess DHS efforts to enforce immigration laws 

inside U.S. borders

Significance 

In 2003, INS and Customs were merged into DHS. Although their functions have been reorganized into

DHS’s Bureau of Customs and Border Protection and Bureau of Immigration and Customs Enforcement, the

immigration and customs agents and inspectors are still basically enforcing the same laws. 

Since the terrorist attacks of September 11, 2001, the Congress and the administration have given more priority to ensuring that people and cargo admitted to the country are not connected with terrorist groups; DHS is

developing advanced technologies to check all people and cargo that pass through U.S. ports of entry. In

addition, DHS is working with the State Department, foreign governments, and foreign shippers to learn

more about people and cargo headed for the United States before they leave foreign shores. Finally, DHS

and the Justice Department are applying immigration laws more strictly, especially as they relate to aliens

already in the United States. Management of these investments, systems, and processes will continue to challenge DHS as it challenged INS and Customs before the reorganization.

Potential Outcomes 

■ Agencies better positioned to detect, deter, and 

prevent illegal entry 

■ Enhanced options to improve the work site 

enforcement program 

■ Enhanced knowledge of the foreign-born population in the United States 

■ Greater attention to the appropriate use of immigration laws in combating terrorism 

■ Enhanced capability to provide services to aliens 

(such as quicker turnaround times and smaller 

backlogs) 
GAO STRATEGIC PLAN 2004–2009 121

STRATEGIC OBJECTIVE 1.5

Performance Goal 1.5.4: Assess the Administrative 

Efficiency and Effectiveness of the Federal Court and Prison 

Systems

Key Efforts 

■ Evaluate the federal judiciary’s efforts to manage 

workload 

■ Assess the Bureau of Prisons’ progress in minimizing construction and operational costs

Significance 

From fiscal years 1991 through 2004, the cost of federal litigative and judicial activities more than doubled,

from about $2.5 billion to about $5.5 billion in constant 2002 dollars. In recent years, the judiciary has faced

challenges to handling the increasing workload, particularly in its criminal cases, with some courts facing

much higher workloads than others. For example, during the 12-month period ending March 31, 2002, about

27 percent of the 63,515 criminal cases filed in the 94 federal district courts were filed in 5 districts along the

Southwest border, reflecting the additional law enforcement resources devoted to interdicting illegal immigrants and drugs there. 

Changes in criminal workload affect a variety of judicial resources, including magistrate and district court

judges, pretrial and probation officers, defender services, and the clerks of the court, who have recently run

out of funds to pay jurors. It also affects other agencies, such as the U.S. Marshals Service, the Bureau of Prisons, and the DHS’s Bureau of Immigration and Customs Enforcement, which are responsible for the pretrial

detention of those who are not released prior to trial. 

Finally, the impending release of thousands of federal inmates will put an enormous strain on community

supervision resources, including halfway houses, to try to ensure successful reintegration into everyday life.

With respect to the prison system, the federalization of crimes, mandatory minimum sentencing laws, and the

war on drugs have resulted in crowded prisons despite massive construction programs in the 1990s. The cost

to the public of these policies—once assumed to be a fair price to pay for reduced crime—will be under

increased scrutiny as it becomes a more substantial portion of the budget. 

Potential Outcomes 

■ Improved effectiveness of resource management 

within the federal judiciary 

■ Enhanced information that provides the Congress a multiagency perspective for appropriations and oversight decision making

■ The Bureau of Prisons being better positioned to 

control the growth in prison construction and 

operating costs 
122 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.6

The Promotion of Viable Communities

Issue: The economic and social well-being of communities is key to the nation’s overall growth and 

prosperity. Yet the viability of many of America’s 

communities is threatened by a variety of ills, 

including high levels of long-term unemployment, 

inadequate retail activity, a deteriorating housing 

stock, and other economic and social problems. For 

decades, federal, state, and local governments and 

the private and nonprofit sectors have sought ways 

to revitalize distressed communities. The federal 

government alone operates well over 100 programs 

that offer communities grants, loans, loan guarantees, and special tax incentives designed to assist 

distressed areas—for example, Community Development Block Grants that communities can use for 

a variety of infrastructure and capacity-building 

needs and Empowerment Zones that are intended 

to encourage investment in targeted areas. 

Despite these efforts, no simple answer has been 

found to the question of how best to revitalize 

America’s distressed communities, in part because 

of the difficulty of measuring the factors that actually cause communities to improve. Also, the issue 

of how best to deliver aid is complicated by the 

need to strike a balance between the goals of the 

federal government and those of state and local 

governments and nonprofit organizations, which 

administer a large share of federal dollars for community and economic development.

Small businesses, which employ more than half the 

nation’s workforce, are key to economic growth in 

many communities. The Small Business Administration (SBA), with a portfolio of loans worth more 

than $50 billion, is the nation’s single largest financial backer of small businesses and provides management and technical assistance to about 1 million 

small business owners annually. SBA also has oversight responsibility for federal contracting goals for 

small and minority-owned businesses. Because SBA 

has undertaken numerous initiatives to address 

management issues that affect the agency’s performance, the Congress needs up-to-date assessments 

of its performance.

To promote home ownership, a key element of a 

vibrant community, the federal government provides mortgage assistance through mortgage guarantees provided by the Federal Housing 

Administration and VA and guarantees of mortgage 

securities by the Government National Mortgage 

Association. It also provides a federal charter and 

other direct and indirect benefits to three government-sponsored enterprises (GSE)—Fannie Mae, 

Freddie Mac, and the Federal Home Loan Banks—

that support the mortgage market. Recently, the 

effectiveness of the regulatory structure for GSEs 

has been called into question. The federal government also promotes home ownership through tax 

incentives and requirements placed on mortgage 

market participants. It must balance the benefits of 

increasing home ownership, especially among the 

underserved, against the financial risk taken on 

directly (through mortgage guarantees) or indirectly 

(through GSEs).

Since the late 1970s, the federal government has 

provided over $100 billion to help prepare for 

disasters and to assist disaster victims and their communities. In response to the recent terrorist attacks, 

billions of dollars have already been appropriated 

for recovery and relief efforts. Establishing an efficient and cost-effective approach to disaster assistance is difficult in the face of pressures to provide 

relief for disaster victims. However, approaches that 

provide incentives for preventive activities and 

foster private insurance coverage are two avenues 

that both the Federal Emergency Management 

Agency (FEMA) and the Congress are interested in 

exploring.

The Department of Housing and Urban Development (HUD) administers rental housing assistance 

programs to help families with lower incomes 

reside in safe, decent, and affordable housing. 

HUD’s rental assistance programs remain at high 

risk of waste and abuse, in part because HUD faces 

numerous management challenges in human capital, contract management, and IT. Also, HUD and 

the Department of Agriculture’s Rural Housing Service, which oversees rural rental 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 

low-income households. 
GAO STRATEGIC PLAN 2004–2009 123

STRATEGIC OBJECTIVE 1.6

Performance Goals: To support the Congress and 

the federal government in their efforts to address 

these issues, GAO will assess

■ federal community and economic development 

assistance and its impact on communities;

■ the effectiveness of federal initiatives to assist 

small and minority-owned businesses;

■ how the federal government can balance the 

promotion of home ownership with financial 

risk;

■ federal efforts to enhance national preparedness 

and capacity to respond to and recover from 

natural and man-made disasters; and

■ how well federal programs that support 

affordable rental housing meet objectives, 

manage financial risk, and improve recipients’ 

well-being.
124 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.6

Performance Goal 1.6.1: Federal Community and Economic 

Development Assistance and Its Impact on Communities

Key Efforts

■ Identify approaches and best practices for measuring the impact of community and economic 

development programs

■ Assess the impact of program coordination on 

targeted communities and residents

■ Assess the impact of specific economic development initiatives on communities

Significance

One way the federal government demonstrates its commitment to strong and stable communities is through

its numerous and diverse federal economic development assistance programs. More than 100 federal programs provide communities with such assistance in the form of grants, tax incentives, loans, and loan guarantees involving billions of dollars each year. These programs primarily address issues surrounding the living

conditions of low- and moderate-income families and the stability of urban and rural American communities.

A large share of the federal commitment is administered through state and local governments and nonprofit

organizations. As a result, local support and the state of local economies often affect the outcomes of these

programs, and achieving program goals may take years. Furthermore, communities face an increasingly complicated governance challenge in bringing together state, regional, and federal players and resources to

address issues and concerns that cut across governance boundaries. Thus, federal decision makers face the

challenge of finding ways to improve the design and flexibility of federal programs to help communities

maintain their quality of life and deliver key services while working with multiple players to meet crosscutting program goals. At the same time, federal agencies must provide enough oversight to ensure that programs meet their goals and comply with federal requirements. 

Potential Outcomes

■ Improved coordination among federal programs 

and streamlined delivery of development assistance

■ Improved decision making related to the creation or continuation of federal programs

■ Better congressional understanding of federal 

programs’ effect on the growth and development 

of communities 
GAO STRATEGIC PLAN 2004–2009 125

STRATEGIC OBJECTIVE 1.6

Performance Goal 1.6.2: The Effectiveness of Federal 

Initiatives to Assist Small and Minority-Owned Businesses

Key Efforts

■ Assess the Small Business Administration’s (SBA) 

initiatives to make its programs more efficient, 

effective, and helpful to small businesses, especially to those businesses least able to access 

credit markets

■ Assess SBA’s management initiatives in areas 

such as organizational alignment, information 

technology (IT), financial management, and 

human capital and determine how these 

improvements may have helped SBA better meet 

its mission

■ Assess the impact of federal contracting policies 

and practices on small businesses and determine 

what oversight SBA provides to ensure that federal agencies meet small business contracting 

goals

Significance

America’s small businesses play a critical role in the nation’s economy, employing more than half the nation’s

workforce. Since its inception in 1953, SBA has had a clear mission: to serve the small business sector of the

economy by providing financial, technical, and management assistance that helps Americans start, run, and

develop their own businesses. SBA is also charged with making sure that small and minority-owned businesses get a fair share of the approximately $200 billion annual federal procurement market. SBA has undertaken a number of initiatives to address problems that have been identified in both programmatic and

operational areas, including its business loan guarantee programs, minority business development program,

and information systems management. As SBA pursues its mission of maintaining and strengthening the

nation’s economy by aiding, counseling, assisting, and protecting the interests of small businesses and by

helping families and businesses recover from natural disasters, the Congress needs up-to-date assessments of

SBA’s performance.

Potential Outcomes

■ Improved SBA assistance to small businesses and 

better cost-saving measures

■ Improved SBA management practices that lead 

to more results-oriented performance

■ Increased knowledge of the effects of federal 

contracting practices on small businesses and 

enhanced oversight of federal small business 

contracting goals
126 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.6

Performance Goal 1.6.3: How the Federal Government Can 

Balance the Promotion of Home Ownership with Financial 

Risk

Key Efforts

■ Assess the Department of Housing and Urban 

Development’s (HUD) controls to manage risks, 

including its oversight of the lenders, appraisers, 

and contractors that participate in its loan insurance programs and property management functions

■ Assess the financial risks associated with the 

activities of government-sponsored enterprises 

(GSE) and the actions taken by their regulators

■ Assess the impact that market and policy 

changes could have on HUD’s insurance funds 

and the budget

■ Evaluate the effectiveness of efforts to enforce 

fair housing and fair lending laws

■ Evaluate the effectiveness of federal programs, 

tax and other incentives, and requirements that 

support financing for traditionally underserved 

segments of single-family housing markets

Significance

The federal government promotes homeownership through various housing finance programs, incentives,

and requirements. HUD’s Federal Housing Administration, VA’s Loan Guaranty Services, and the Department

of Agriculture’s (USDA) Rural Housing Service (RHS) participate in the primary mortgage market, insuring

home mortgages for homebuyers who may otherwise have difficulty obtaining them. These agencies are

responsible for managing more than $600 billion in insured home mortgages. In addition, HUD’s Government National Mortgage Association, by guaranteeing about $600 billion in mortgage-backed securities, provides liquidity to the housing finance market. The association’s guarantees enable lenders of governmentinsured loans to readily sell their loans, thereby providing additional funds for mortgages for other qualified

borrowers. 

GSEs—Fannie Mae, Freddie Mac, and the Federal Home Loan Banks—are the foundation for home mortgages, providing liquidity to lenders. GSEs are also required to operate in a “safe and sound” manner, but are

encouraged to focus on underserved markets. Recently, the effectiveness of the regulatory structure for GSEs

has been called into question. The housing finance system supported by these federal agencies and GSEs

represents one of the nation’s largest financial markets, with significant commitments, obligations, and risks

to taxpayers and investors. These entities have long-term commitments, the ultimate costs of which depend

on the performance of their underlying mortgages and, in the case of GSEs, the prudence of their management and funding strategies. At the same time, they have a substantial influence on the availability of housing

finance, particularly for traditionally underserved markets. The mortgage market has introduced new technologies that help lenders underwrite loans more efficiently and new products that help families finance their

homes. And despite the rising homeownership rate, sustaining that level of homeownership may be difficult.

For some homebuyers, credit has become more available, but only on terms that might be considered predatory. Also, as lenders move toward financing a higher proportion of home cost, some homeowners have

become vulnerable to losing their homes if their incomes fall because of job loss or other crises. Finally, foreclosure rates for federally insured mortgages have been on the rise, partly due to competition from conventional lenders.

Potential Outcomes

■ Better management of acquired properties that 

helps limit the federal government’s losses

■ Improved administration of HUD’s single-family 

mortgage insurance program
GAO STRATEGIC PLAN 2004–2009 127

STRATEGIC OBJECTIVE 1.6

■ Improved ability of HUD to ensure adequate 

capital reserves and funding for its insurance 

programs

■ Improved supervision of the GSEs, enabling 

them to meet public policy goals while ensuring 

safe and sound operations

■ Improved capital requirements that are more 

commensurate with the risks posed by the GSEs’ 

operations

■ More effective delivery of homeownership 

opportunities to low- and moderate-income 

households

■ Improved protection for homeowners and 

homebuyers from predatory and unfair lending 

practices
128 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.6

Performance Goal 1.6.4: Federal Efforts to Enhance National 

Preparedness and Capacity to Respond to and Recover from 

Natural and Man-made Disasters

Key Efforts

■ Assess the Federal Emergency Management 

Agency’s (FEMA) and other federal agency 

efforts to coordinate federal, state, and local 

disaster preparedness, response, and recovery 

efforts and ensure efficient, effective, and 

accountable services at all levels

■ Assess the structure, coordination, and costeffectiveness of FEMA’s disaster mitigation activities to reduce the likelihood and potential effects 

of both man-made and natural disasters

■ Assess the cost and benefits of implementing 

existing disaster-related insurance programs 

■ Assess the capacity of private insurance markets 

to supply coverage to protect individuals, families, and businesses from catastrophic losses, and 

assess federal efforts to support and supplement 

that protection

Significance

The federal government provided over $100 billion to assist victims of disasters and emergencies during the

1980s and 1990s. To respond to the recent terrorist attacks, FEMA has already been appropriated $40 billion

for recovery and relief efforts in New York City, Virginia, and Pennsylvania. The Federal Response Plan,

coordinated by FEMA, represents the federal blueprint for responding to all disasters, providing a framework

for coordinating the delivery of all federal assistance to state and local governments. The September 11, 2001,

attacks have heightened national interest in and concern about the effectiveness of overall federal support to

state and local governments in enhancing the planning, mitigation, response, and recovery from disasters—

both natural and man-made. Determining how to provide disaster assistance as efficiently and cost effectively

as possible is the subject of many national debates. 

The Congress and FEMA have increasingly emphasized the importance of mitigation—prevention activities

or projects put in place prior to a disaster to reduce losses or to prevent them from occurring—as the most

effective means of reducing long-term losses from disasters. However, the process FEMA has used in the past

to provide mitigation assistance—making a grant after a disaster based on a percentage of the total costs of

the disaster available for discretionary use within a state—may not prepare the nation for disasters in other

geographic areas. Although the National Flood Insurance Program was intended to shift the financial burden

of flood losses from the federal government to policyholders, it has not fully done so, as the program’s

expenses over time have exceeded its revenues. As concerns about controlling future disaster spending

grow, decision makers are facing new issues regarding the availability and affordability of insurance coverage and mitigation assistance for terrorist incidents as well as natural disasters.

Potential Outcomes

■ Improved coordination and more effective federal support of efforts to enhance the capacity of 

state and local first responders to cope with 

large-scale disasters

■ More responsive, better coordinated, and more 

efficient and accountable disaster response and 

recovery efforts

■ More effective and economical mitigation strategies and programs for the full range of federal 

efforts to reduce the likelihood and effect of 

future disasters

■ Increased congressional understanding of the 

National Flood Insurance Program’s coverage of 

properties in flood-prone areas and possible 
GAO STRATEGIC PLAN 2004–2009 129

STRATEGIC OBJECTIVE 1.6

measures to improve the program’s financial 

condition 

■ Increased understanding of the pros and cons of 

increased federal involvement in providing catastrophic insurance or other forms of backup protection to enhance the capacity of private 

insurance markets 
130 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.6

Performance Goal 1.6.5: How Well Federal Programs That 

Support Affordable Rental Housing Meet Objectives, Manage 

Financial Risk, and Improve Recipients’ Well-being 

Key Efforts

■ Assess how current and new rental housing programs can more effectively meet the demand for 

low-income housing and evaluate the effectiveness of various federal policy tools for reaching 

program objectives

■ Assess federal agencies’ efforts to ensure that 

federally assisted rental housing is effectively 

managed and remains in good physical and 

financial condition

■ Assess HUD’s controls for managing risk in its 

multifamily housing insurance and property disposition programs, including its oversight of 

lenders, appraisers, and property management 

contractors

■ Assess how effectively federal programs that 

support rental housing are used in combination 

with other community investment and federal 

assistance programs to promote decent affordable housing and suitable living environments

■ Determine how much progress HUD has made 

in managing high-risk performance and management challenges in its rental housing assistance 

programs, including in its human capital management and acquisitions practices

Significance

The federal government administers numerous programs, at a cost of about $30 billion annually, to help

households with lower incomes secure safe, decent, and affordable rental housing. Some of this assistance is

provided to directly maintain or increase the supply of decent rental housing that is affordable to low-income

households; for example, HUD financially supports public housing and insures mortgages on privately

owned multifamily dwellings, while IRS administers low-income housing credits. Other assistance takes the

form of rental payments; both HUD and USDA’s RHS provide rental assistance for individual households. 

Despite this federal support, less than one-third of the 13 million low-income households eligible for federal

housing assistance currently receive it, and a critical shortage exists in the supply of affordable rental units for

households with extremely low incomes. Further, existing housing assistance and supportive service programs are faced with the growing and changing needs of special populations, including the elderly, the

homeless, and persons with disabilities. Moreover, mechanisms for coordinating housing assistance with

other community investment and federal assistance programs are lacking. Both HUD and RHS face challenges in efficiently serving the needs of their target households. HUD’s rental assistance programs remain at

high risk of waste, abuse, and mismanagement. In fiscal year 2000, for instance, the agency estimates that it

made about $2 billion in excess rental assistance payments. Further, HUD’s large portfolio of federally

insured and HUD-held multifamily housing loans and its inventory of foreclosed multifamily properties carry

financial risks and require proper management and oversight. Programmatic improvements depend in part

on HUD’s successfully meeting its human capital, acquisition, and IT management challenges.

Potential Outcomes

■ Improved design, delivery, and impact of programs that support affordable rental housing

■ Improved efforts by HUD and RHS to assess and 

address the physical and financial needs of federally supported rental housing

■ Improved HUD management of its multifamily 

mortgage insurance program and acquired multifamily properties and loans to limit financial 

losses
GAO STRATEGIC PLAN 2004–2009 131

STRATEGIC OBJECTIVE 1.6

■ Enhanced efforts to address IT, acquisition management, and human capital issues in HUD’s 

multifamily housing programs

■ More and better information for the Congress to 

use in assessing the costs and impacts of HUD’s 

rental housing assistance programs and operations
132 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.7

Responsible Stewardship of Natural Resources and the 

Environment

Issue: The nation’s natural resources and the systems associated with their use are under widespread and increasing stress, generating intense 

debate and posing daunting challenges to policymakers at all levels of government. In large part, 

this is the consequence of the country’s growing 

population and economy and attendant increased 

demands on a finite resource base. Accommodating 

these demands runs headlong into long-standing 

legislation aimed at protecting the country’s 

resources in a healthy state for the good of current 

and future generations. Likewise, how policymakers 

resolve this balance has global consequences 

because the United States is the world’s single 

largest consumer of energy and other resources and 

is increasingly seen as out of step with international 

efforts to limit resource use and associated pollution. 

The body of work set forth in this strategic objective 

is designed to address these and other issues in several natural resource areas, as well as related terrorist threat matters. On the latter point, it is noted 

that the 14 critical infrastructure sectors listed in 

President’s Decision Document, “National Strategy 

for Homeland Security,” include 6 in the natural 

resource areas addressed in this strategic objective—food (except meat and poultry), energy, 

water, chemical industry and hazardous materials, 

agriculture, and meat and poultry. 

In recent decades, the United States has experienced multiple energy crises—the 2003 electricity 

blackout affecting much of the country was a 

notable example—and remains perpetually on the 

cusp of critical supply/demand imbalances. Without 

applying prudence and foresight in crafting the 

nation’s strategic energy plan, electricity, natural 

gas, heating oil, and gasoline markets can be 

thrown into turmoil at any time. The challenge is 

further complicated by the global nature of many 

energy markets and growing doubts about the longterm sustainability of policies that demand 

increased production from the existing energy mix. 

Furthermore, strategies must now incorporate 

greater attention to the means of protecting a massive energy infrastructure that encompasses 5,000 

power plants, 204,000 miles of high voltage transmission lines, and nearly 3 million miles of oil and 

gas pipelines. Finally, energy strategies must consider the environmental consequences of energy 

choices, as illustrated by issues surrounding the 

potential reemergence of the nuclear power 

industry. While increased nuclear power capacity 

would obviously buttress electricity supplies and 

help reduce harmful emissions, continuing questions 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. 

More than ever, the country’s lands and waters are 

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 its elected leaders. The heated debate on 

possible future oil development in the Arctic 

National Wildlife Refuge in Alaska presents this 

issue in microcosm. 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 presents equally sobering challenges, as pollutants and overfishing rapidly deplete 

coral reefs and offshore fisheries, while competition 

over rights to fresh water supplies grows among 

various interests, such as agriculture, communities, 

utilities, wildlife, and recreational users. Even under 

normal conditions, water managers in 36 states 

expect water shortages to occur within the next 10 

years. If such shortages actually occur, they could 

have severe economic, environmental, and social 

impacts.

The increasing globalization of natural resource 

issues also affects environmental protection matters, 

as seen in the federal government’s discussions with 
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STRATEGIC OBJECTIVE 1.7

other governments about global warming and what 

should be done about it. Such discussions add a 

new layer of complexity to the already difficult 

question of how to sustain economic growth when 

the engines of that growth—factories, cars and 

trucks, fertilizers, and electricity-generating plants—

often adversely affect air and water quality and can 

change climates in potentially catastrophic ways. 

Another factor in attaining federal air and water 

quality goals is that land use practices, often 

resulting in “urban sprawl,” are controlled mainly 

by local governments and private owners. Moreover, the federal government relies upon state and 

local governments for inspection and enforcement 

actions. 

Also, significant challenges remain in cleaning up 

the country’s hazardous and radioactive waste sites. 

Today, an estimated 60 million Americans live 

within 4 miles of a hazardous site, and radioactive 

waste from weapons production still needs to be 

cleaned up at Department of Energy (DOE) sites in 

13 states. These sites’ continued existence poses not 

only potential health and safety problems, but also 

fiscal and economic problems as well. Delayed 

cleanup results in higher price tags for eventual 

cleanup and in stunted economic development in 

the affected communities. Potential terrorist attacks 

underline the need for steps to ensure the security 

of hazardous and radioactive materials during 

storage, transportation, and disposal. 

Finally, with the recent passage of the 2002 Farm 

Bill, the Congress continues to debate the direction 

of U.S. farm policy in areas such as the role of agriculture in land conservation, wildlife habitat protection, and energy production efforts. Food safety and 

security lie at the forefront of concerns about the 

country’s agricultural resources, an urgent matter 

given the potential for, and the consequences of, 

agricultural bioterrorism. Besides this troubling 

matter, a whole range of other food safety issues, 

while less ominous, nevertheless pose serious questions. These include questions about the adequacy 

of the government’s devolution of food inspection 

authority and its efforts to implement a “farm-totable” food safety approach. At the same time, a 

number of countries have raised concerns about the 

safety of U.S. genetically modified crops and 

foods—a matter of growing importance given the 

significant role that food exports play in the U.S. 

economy. 

Performance Goals: To support efforts by the 

Congress and the federal government to address 

these issues, GAO will assess

■ the nation’s ability to ensure reliable and environmentally sound energy for current and future 

generations;

■ federal strategies for managing land and water 

resources in a sustainable fashion for multiple 

uses;

■ environmental protection strategies and programs; 

■ efforts to reduce the threats posed by hazardous 

and nuclear wastes; and

■ federal programs’ ability to ensure a plentiful 

and safe food supply, provide economic security 

for farmers, and minimize agricultural environmental damage.
134 GAO STRATEGIC PLAN 2004–2009

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Performance Goal 1.7.1: The Nation’s Ability to Ensure 

Reliable and Environmentally Sound Energy for Current 

and Future Generations

Key Efforts 

■ Assess trade-offs among alternative energy 

choices, principally (1) efforts to increase the 

supply of energy from all energy sources—fossil 

(oil, gas, and coal), nuclear, and renewable 

(wind, solar, biomass, ethanol, photovoltaic, and 

geothermal) and (2) actions to reduce demand 

by using energy more efficiently, and consider 

the effects of emerging energy technologies 

(e.g., hydrogen) and research and development 

partnerships (including nuclear research and 

development) between the federal government 

and the private sector 

■ Examine and assess energy security plans and 

efforts to protect the nation’s energy infrastructure from terrorism and other sources of disruption, and reduce U.S. and consumer 

vulnerabilities to price spikes and supply disruptions

■ Determine the impact of federal incentives 

(including tax credits) on energy supplies, 

demand, and prices 

■ Assess reliability, modernization, and other factors affecting the capacity of the energy infrastructure (e.g., nuclear power plants, refineries, 

oil and gas production platforms, and the electricity transmission grid) to meet likely demand 

■ Determine the implications of embracing competition and free markets as an alternative means to 

structure energy markets (including the impacts 

on federal power marketing administrations, 

such as the Bonneville Power Administration), 

and evaluate changing regulatory approaches to 

ensure that these restructured markets function 

properly 

■ Analyze the adequacy of the Department of 

Energy’s (DOE) (including the power marketing 

administrations and Federal Energy Regulatory 

Commission) and the Nuclear Regulatory Commission’s organization, human capital, and management processes for supporting efficient and 

effective operations 

Significance 

The nation’s energy system is under stress. In energy markets—such as natural gas, electricity, home heating

oil, and gasoline—demand and supply relationships periodically change significantly, resulting in volatile

prices. Most recently, the largest electricity blackout in U.S. history, which put 50 million customers in the

dark, and the threat of terrorism and its potential to disrupt the energy system has brought a heightened

sense of urgency to the task of ensuring the security and reliability of that system. Periodic declines in energy

supplies and price volatility burden consumers and the industry and adversely affect economic activity. At

the same time, the country’s energy choices affect the environment and, in some cases, threaten supplies for

future generations. As such, there is growing acceptance that the United States, if it is to resolve these stresses

on its energy system, cannot exclusively rely on increased production from the existing energy mix to meet

ever-rising levels of consumption. To meet these challenges, the nation may need to consider a more unified

and innovative energy strategy that reevaluates the current policy and identifies the available alternatives.

Such innovation might include greater use of alternative energy sources (e.g., hydrogen or fusion) and new

ways to engage consumers to make informed energy choices (e.g., “smart” meters for electricity consumption), among other possibilities. 

Today’s preferred energy sources and the methods used to acquire them present formidable challenges in

forming a national energy policy because it is important to strike a delicate balance between energy, environmental, and economic needs. Over time, it will also be important to assess worldwide energy practices,

explore new research opportunities, and consider new and alternative energy choices that have fewer envi-
GAO STRATEGIC PLAN 2004–2009 135

STRATEGIC OBJECTIVE 1.7

ronmental impacts and are more sustainable. The nation and consumers can jointly benefit from emphasis on

an energy system in which energy consumption works in tandem with environmental preservation and other

societal goals. Because energy remains vital to the health of the U.S. economy and way of life, the decade

ahead requires critical policy and investment choices to create an energy system that meets the public’s

changing needs. In addition, new approaches are needed to protect the nation’s energy system and ensure

its physical and economic stability. 

Potential Outcomes 

■ Congressional consideration of the full range of 

realistic projections of supply options with information on the benefits and costs to alternative 

actions 

■ Congressional consideration of innovative alternatives to the escalating production and consumption of greater amounts of energy 

■ More informed congressional funding decisions 

resulting in effective research spending, more 

efficient energy use, and budgetary savings 

■ Improved security of the nation’s energy supplies against terrorism and other threats in areas 

such as the Strategic Petroleum Reserve, the 

country’s energy grid, commercial nuclear power 

plants, and other energy and related infrastructure 

■ Greater congressional awareness of how energy 

market concentration affects the consumer market and of the effectiveness of federal incentives, 

such as energy tax credits 

■ Improved federal and private market structures, 

incentives, and standards to encourage necessary 

enhancements and modernization of U.S. energy 

infrastructure 

■ A more informed debate on alternative energy 

paths, including a better understanding of 

related environmental effects 

■ Improved congressional understanding of transitional issues in restructuring energy markets 

(such as electricity), market design and monitoring (including balanced rules and enforcement), 

and implications for the role of federal power 

marketing administrations

■ Improvements in DOE’s and the Nuclear Regulatory Commission’s organization, human capital, 

and management processes
136 GAO STRATEGIC PLAN 2004–2009

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Performance Goal 1.7.2: Federal Strategies for Managing 

Land and Water Resources in a Sustainable Fashion for 

Multiple Uses

Key Efforts

■ Evaluate federal land and water management 

agencies’ progress in coordinating activities, 

addressing resource issues, and protecting critical environmental and natural resource systems 

from misuse, negligence, or intentionally harmful 

acts

■ Review federal land management agencies’ 

efforts to develop and implement a strategy to 

reduce wildfires on federal lands

■ Assess federal land management agencies’ operational and maintenance needs at national parks, 

forests, and other facilities

■ Analyze federal efforts to obtain a fair market 

value for minerals and other resources extracted 

from federal lands, while balancing consumption, conservation, and environmental needs

■ Assess federal efforts to manage the nation’s rivers, oceans, and marine environments in a way 

that is cost-effective and balances resource protection with consumption and conservation 

needs

■ Evaluate the federal government’s efforts to clarify its relationship with, and meet its responsibilities to, Native Americans and Alaskan Natives

■ Analyze federal agencies’ efforts to protect 

threatened and endangered species on federal 

and nonfederal lands and in bodies of water

■ Analyze the adequacy of the land and water 

resource agencies’ organization, human capital, 

and management processes for supporting the 

agencies’ operations

Significance

Federal policies over land and water resources have for many years been the subject of sometimes bitter conflict. While most land in the United States is privately owned, the resources owned and managed by the federal government are vast—over 650 million acres of land, or 30 percent of the nation’s total land surface;

over 700 million acres of mineral estate that underlie both federal and other surface ownerships; about

1.75 billion acres of the Outer Continental Shelf; and fisheries extending up to 200 miles offshore. In 2002,

the estimated market value of production occurring on public lands was nearly $12.5 billion, and the direct

and indirect economic effect of all commercial activities amounted to over $27 billion. Federal laws also

affect activities on some private lands by protecting wetlands or critical habitats of threatened or endangered

species.

The inherent conflict over federal land use policies has been, first, over which of the current competing

needs and uses for resources on federal lands should be addressed and, second, over whether to use

resources today or to preserve and sustain them for future generations. Achieving a balance among these

forces remains a constant struggle. Amidst this conflict, the nation’s land and water resources are showing

increasing signs of stress—more catastrophic wildfires, shrinking aquifers, an accelerating rate of extinction

of plants and wildlife, destruction of wildlife habitats, and the collapse of many fisheries. Moreover, the risk

of terrorist attacks has heightened the need to protect critical natural resource systems not only from natural

disasters or negligence, but also from acts to intentionally damage those resources or use them in assaults

against the nation’s security. In this context of competing demands and security considerations, policymakers

will need objective, nonideological information to make rational policy choices and ensure that federal taxpayers benefit from the use of natural resources. How the nation addresses these challenges today will profoundly affect the viability of its natural resources, and the well-being of the public, for generations to come.
GAO STRATEGIC PLAN 2004–2009 137

STRATEGIC OBJECTIVE 1.7

Potential Outcomes

■ More efficient and effective resource management to better protect the nation’s land and 

water resources and the surrounding environment

■ Congressional action on charges for the use of 

federal resources to facilitate a move toward 

greater self-sufficiency by the parks, forests, and 

other entities and to ensure a fair return for the 

use of public resources

■ Governmental steps to better balance production, revenue generation, and conservation of 

natural resources

■ Clearer understanding of the government-to-government relationship between the federal government and Native Americans and Alaskan 

Natives and of ways to improve programs promoting Indian self-determination and self-sufficiency

■ An improved understanding of the political, 

financial, scientific, and social issues associated 

with species protection efforts to inform the 

debate on reauthorizing the Endangered Species 

Act

■ Improvements in natural resources agencies’ 

organization, human capital, and management
138 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.7

Performance Goal 1.7.3: Environmental Protection 

Strategies and Programs

Key Efforts

■ Evaluate current and alternative strategies to 

improve the quality of the nation’s air 

■ Assess current and alternative approaches for 

improving the quality of the nation’s surface and 

ground waters 

■ Examine strategies for ensuring safe drinking 

water and wastewater treatment for all Americans, including protection from security threats 

and breaches 

■ Assess approaches for controlling the harmful 

effects of pesticides and toxic substances, including protection from security threats and breaches

■ Examine the implications of global and transboundary environmental threats, including climate change

■ Assess the use of indicators, science-based information, and other data to measure environmental performance, and evaluate alternative and 

innovative environmental protection approaches

■ Analyze the organization, human capital, and 

management processes for supporting efficient 

and effective environmental protection 

Significance

Americans have long placed a high value on protecting the environment and human health, especially for

particularly susceptible groups, such as children and the elderly. During the last three decades, the nation

has worked hard to limit the quantities of pollutants that degrade the nation’s air, surface and ground waters,

and land. The Environmental Protection Agency (EPA) has estimated that pollution control expenditures by

all sectors from 1972 through 2000 totaled approximately $2 trillion. Such efforts have yielded impressive

results; for example, aggregate emissions of the six principal air pollutants have declined by 25 percent since

1970, and virtually all discharges to the nation’s waters from point sources are now controlled. 

However, serious problems remain. Urban areas housing millions of Americans still fail to meet air quality

standards, particularly during summertime high-ozone periods, and acid rain continues to degrade forests,

lakes, and streams, with attendant effects on many wildlife species. An estimated 20,000 impaired water bodies, including parts of such national treasures as the Chesapeake Bay and the Great Lakes, still do not meet

quality standards. Improving their status will require addressing heretofore little-regulated nonpoint pollution

sources such as agricultural, suburban, and urban runoff. Furthermore, drinking water systems will be hard

pressed to meet more stringent standards and address heightened security concerns. Many federal facilities

do not fully comply with a number of environmental standards. Moreover, it is difficult to determine when,

and how, to best address emerging environmental threats that could involve considerable or irreparable

damage, but for which there is currently imperfect information.

Several factors add complexity to the resolution of these issues, including (1) decision-making systems that

do not effectively integrate attainment of environmental goals with land use, transportation, energy supply

choices, and economic development; (2) economic and technological changes that affect the mix of pollutants emitted as well as the ability and cost to monitor and control emissions; (3) the difficulty in balancing

consistent application of environmental laws with flexibility for states to exceed or adapt federal standards to

their own needs; (4) escalating concerns about environmental justice and its implications on licensing major

pollution sources and the permitting and site selection of waste disposal facilities; (5) the looming demand

for billions of dollars over the next decade to replace, rehabilitate, and expand the aging sewage treatment

plants necessary for meeting drinking water and surface water quality standards; (6) the transboundary
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STRATEGIC OBJECTIVE 1.7

nature of many pollutants with global effects that require international solutions; and (7) the lack of comprehensive, integrated, quantifiable environmental data with which to measure the success or failure of alternative strategies.

In addition, there is interest in alternatives to traditional regulatory programs, such as those that 

employ pollutant trading or other market-based 

mechanisms or place greater control in the hands of 

state or local authorities. 

During the next few years, the Congress will be 

called upon to address these challenges as it considers reauthorization of major pollution control 

statutes, including the Clean Air, Clean Water, and 

Safe Drinking Water acts. 

Potential Outcomes 

■ Congressional use of information, analyses, and 

recommendations in reauthorizing key statutes, 

including the Clean Air, Clean Water, and Safe 

Drinking Water acts 

■ More efficient administration of existing statutes, 

including alternative regulatory approaches for 

controlling air and water pollution and cleaning 

up waste

■ Congressional action to improve the efficiency 

and effectiveness of environmental programs

■ Improvements in programs to control pollutants 

in drinking water and in wastewater discharges 

■ Enhanced efficiency and effectiveness of environmental protection, organization, human capital, and management processes 
140 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.7

Performance Goal 1.7.4: Efforts to Reduce the Threats Posed 

by Hazardous and Nuclear Wastes

Key Efforts 

■ Assess progress in, and potentially less costly 

alternatives for, identifying, transporting, cleaning up, and disposing of nuclear, ordnance, and 

other hazardous waste resulting from federal 

activities 

■ Evaluate current and alternative strategies for 

cleaning up abandoned Superfund and other private sector hazardous waste sites and responding to emergency contamination releases

■ Assess federal, state, and private sector progress 

and performance in finding and developing 

environmentally acceptable sites on which to 

build essential waste disposal facilities 

■ Analyze the adequacy of waste cleanup agencies’ organization, human capital, and management processes for supporting efficient and 

effective operations 

Significance 

Hazardous and nuclear wastes can cause serious environmental damage lasting decades or even centuries.

The problems associated with the containment and cleanup of these wastes pose major financial and management challenges to the United States that will continue well into the 21st century. Past practices have

allowed health-threatening substances to seep into the land and water at thousands of federally and privately

owned sites. Such seepages threaten public health and quality of life nationwide. The federal government

spends almost $10 billion annually to address health and environmental threats from Superfund and other

private hazardous waste sites, remove and dispose of nuclear wastes from federal nuclear weapons facilities,

and clean up hazardous waste at active and formerly used defense facilities. Such activities could ultimately

cost the federal government over $300 billion and the private sector hundreds of billions more. 

Sound management practices are needed to prioritize and hasten cleanups, control costs, and develop innovative technologies. Cleanup and disposal decisions must also take into account governance issues, such as

the rights of states and local communities to control land uses within their borders, and also fiscal issues,

such as the need to assess the economic trade-offs between completely cleaning up a contaminated property

for reuse or simply restricting future access without complete cleanup. Moreover, terrorist activities have

resulted in states and localities facing a new urgency to protect their citizens from dangers associated with

the transport and storage of hazardous and nuclear wastes. Globally, other countries face similar concerns

and decisions, and Russia has proposed to store nuclear wastes from other countries. Whether deliberating

policy options, reauthorizing key statutes, or annually appropriating funds to the various federal cleanup

activities, the Congress needs accurate information on the scope of the problem, the effectiveness of existing

programs and activities, and the pros and cons of potential alternatives. 

Potential Outcomes 

■ Improved and potentially less costly handling of 

nuclear, ordnance, and other hazardous waste 

related to federal activities

■ More efficient and effective cleanup of abandoned Superfund and other private hazardous 

waste sites and responses to emergency contaminations 

■ A more informed discussion of federal, state, and 

private options for environmentally acceptable 

waste disposal sites

■ More effective and efficient management of 

cleanup activities by responsible federal agencies, including DOD, DOE, and EPA
GAO STRATEGIC PLAN 2004–2009 141

STRATEGIC OBJECTIVE 1.7

Performance Goal 1.7.5: Federal Programs’ Ability to Ensure 

a Plentiful and Safe Food Supply, Provide Economic Security 

for Farmers, and Minimize Agricultural Environmental 

Damage 

Key Efforts 

■ Evaluate the effectiveness and budgetary consequences of federal programs designed to aid 

farmers in times of declining global crop prices 

or domestic production, compensate farmers for 

crop losses, and promote rural development 

■ Evaluate the outcomes and costs of federal programs designed to minimize the adverse land 

use and environmental effects of agricultural 

practices and to promote renewable energy production on agricultural land 

■ Evaluate federal programs’ ability to ensure a 

safe and wholesome food supply across the full 

spectrum of food production from the farm to 

the table, including imported foods, and to 

guard against agroterrorism 

■ Analyze the adequacy of USDA’s organization, 

human capital, and management processes for 

supporting efficient and effective operations

Significance 

USDA farm assistance programs and federal food safety oversight play a critical role in ensuring an abundant,

affordable, and safe food supply. In fiscal year 2002, USDA spent about $24 billion on a variety of farm assistance programs, including farm loan, price support, disaster assistance, land conservation, and environmental

programs. The 2002 Farm Bill continues funding for these programs at more than $20 billion annually

through 2007. Although many argue that federal support of farmers is necessary to ensure a plentiful and

affordable food supply now and in the future, others question the effect, relevance, and costs of these programs given that most farm assistance goes increasingly to a relatively few large entities. In addition, the

recent failure of a major crop insurance company raises concerns about USDA’s oversight of this industry and

how a failed company should be dissolved to minimize the federal government’s financial exposure. The

new Farm Bill also places increased emphasis on conserving the land, reducing agriculture’s impact on water

quality, and promoting renewable energy production on agricultural land. However, questions remain as to

how the United States can continue supporting a viable agricultural sector while still meeting its trade agreement commitments. For example, as a member of the WTO, the United States has committed to eliminating

export subsidies and reducing tariffs and trade-distorting domestic support. In addition, USDA’s ability to

effectively deliver farm program assistance continues to be plagued by inefficiencies in its organizational

structure and management processes and allegations of racial discrimination in serving farmers and sexual

harassment in managing its workforce.

USDA, FDA, and other federal agencies have shared responsibilities for ensuring the safety and security of

the U.S. food supply. Although the food supply is generally considered safe, food-borne illnesses continue to

threaten the nation’s health and tax its medical system. Experts estimate that food-borne pathogens cause 76

million cases of gastrointestinal illnesses, 325,000 hospitalizations, and 5,000 deaths annually. Furthermore,

illnesses from just the five principal food-borne pathogens cost about $7 billion in medical expenses and

productivity losses each year. Additionally, an outbreak of some animal diseases, such as mad cow disease,

can rapidly bring economic havoc to segments of our farm economy.

While the federal government distributes over $1 billion annually to its various agencies to reduce the health

and economic consequences of food-borne illnesses, regulatory agencies, in varying degrees, are transitioning to new science-based regulatory strategies that place increasing responsibility on industry for identifying
142 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.7

and controlling risks in the production processes. Although better than the existing outmoded process of preventing food-borne illnesses, these science-based strategies address only a segment of the food production

and distribution continuum, and their implementation is inconsistent across the food supply. In addition, scientific and technical advances in the production of food, such as the development of genetically modified

foods, place additional responsibilities on the federal food safety agencies. Furthermore, recent events have

heightened the awareness that threats to the food supply are a component of terrorism and present new

challenges to an already burdened system. Consequently, a new “farm-to-table” approach for food safety and

security—one that starts with growers and extends to retailers—is needed to ensure that the full spectrum of

food production is safeguarded.

Potential Outcomes

■ Improvements in the cost-effectiveness of the 

Farm Bill’s safety net for farmers (farm loan, 

price support, and disaster assistance programs) 

and provisions for promoting rural development

■ More effective conservation and agricultural programs designed to conserve the land, enhance 

the environment, and promote renewable 

energy development

■ Better understanding of how to integrate farm 

program assistance with commitments made 

under agricultural trade agreements in order to 

ensure a growing share of global food markets 

for American farmers and food industries

■ Enhanced efforts to address agricultural terrorism 

and threats from invasive pests and diseases, 

such as foot and mouth disease

■ Enhanced effectiveness of federal food safety 

programs in addressing safety issues arising from 

a global food marketplace, changing regulatory 

approaches, and the threat of terrorism

■ Improvements in federal food safety agencies’ 

actions to evaluate and regulate the safety of 

new technologies, such as genetically modified 

foods

■ Improved USDA organization, human capital, 

budgetary, and management processes
GAO STRATEGIC PLAN 2004–2009 143

STRATEGIC OBJECTIVE 1.8

A Safe, Secure, and Effective National Physical Infrastructure

Issue: The nation’s economic vitality and the quality 

of life of its citizens depend significantly on the 

soundness, security, 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 information. 

The nation faces major challenges in improving 

both efficiency and safety in the movement of 

people and goods. The nation relies heavily on its 

postal system for efficient mail delivery service. And 

thousands of federal facilities house and support 

staff and the other assets needed to provide services 

to the American people.

In both the short and long term, the nation faces 

important infrastructure challenges as federal, state, 

and local governments confront new demands 

brought on by changes in national security, demographics, technology, and lifestyles. The challenges 

are complex, cutting across many interrelated 

issues, and require coordinated intergovernmental 

responses. 

For example, the nation’s commercial passenger airlines, which were experiencing financial difficulties 

even before the terrorist attacks of September 11, 

2001, now face unprecedented financial losses 

stemming from reduced air travel, raising debate 

over the appropriate federal response. Also, longterm trends indicate that increasing numbers of 

motorists are encountering increasingly congested 

highways, while bottlenecks have escalated for 

freight transportation at intermodal connection 

points. 

Suburban growth has raised demands for new 

roads, water and sewer systems, and access to telecommunications. At the same time, existing communities are demanding that the environment and 

their citizens’ quality of life not be harmed by this 

growth. 

The cost of maintaining and modernizing its infrastructure is only one concern of a U.S. Postal Service that faces growing financial, operational, and 

human capital challenges. In addition, the deregulated transportation and telecommunications industries require continuous oversight to help ensure 

that firms have a level playing field on which to 

compete and that consumers receive the intended 

benefits of deregulation.

The responses of the federal government and other 

levels of government to these infrastructure challenges will have important consequences for the 

nation’s future because of their effects on the 

quality of life and their significant costs. Since 1990, 

nondefense spending on infrastructure has nearly 

doubled and, as figure 1.11 shows, has become a 

significantly larger portion of total spending—

largely the result of the previous two surface transportation reauthorizations. 

Figure 1.11: Nondefense Federal Spending on 

Infrastructure as a Percentage of Total 

Expenditures, 1981–2002 (in Constant 2002 Dollars)

During the latter years of this period, the federal 

government enjoyed budget surpluses. With the 

return to large federal deficits forecast in the 

upcoming years, decision makers will be faced with 

difficult choices on how to allocate funding among 

infrastructure needs and other demands in an 

increasingly tight budget environment. Given limited resources, decision makers must choose 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 

1.5

2.0

2.5

3.0

3.5

4.0

1981 1984 1987 1990 1993 1996 1999 2002

3.0 % 1981

3.8% 2002

Fiscal Year

Percentage of Total Expenditures

Source: Office of Management and Budget, Budgets of the United States 

Government for fiscal years 1981 through 2004.
144 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.8

measures highlighting outcomes from existing programs, and a budget process prompting a more 

explicit focus on investment spending across agencies.

 It is therefore essential for government at all levels 

to have the information needed to make wellinformed decisions about how to allocate funds 

among competing priorities, evaluate the challenges 

to determine which solutions are most cost-effective, and implement these solutions as efficiently 

and effectively as possible.

Performance Goals: To support efforts by the 

Congress and the federal government to address 

these efforts, GAO will assess

■ strategies for identifying, evaluating, prioritizing, 

financing, and implementing integrated solutions 

to the nation’s transportation infrastructure 

challenges;

■ the impact of transportation and 

telecommunications policies and practices on 

competition and consumers;

■ the federal government’s role in fostering and 

overseeing telecommunications in the public 

interest;

■ efforts to improve safety in moving people and 

goods across the nation’s transportation system;

■ efforts to improve security in all transportation 

modes;

■ the U.S. Postal Service’s transformation efforts to 

ensure its viability and accomplish its mission; 

and 

■ federal efforts to plan for, acquire, manage, 

maintain, secure, and dispose of the 

government’s real property assets.
GAO STRATEGIC PLAN 2004–2009 145

STRATEGIC OBJECTIVE 1.8

Performance Goal 1.8.1: Strategies for Identifying, 

Evaluating, Prioritizing, Financing, and Implementing 

Integrated Solutions to the Nation’s Transportation 

Infrastructure Challenges

Key Efforts

■ Assess national approaches and best practices to 

address challenges to promoting mobility and 

establish a framework for an integrated, multimodal transportation system to sustain economic 

growth

■ Evaluate federal management and oversight of 

infrastructure investments, including efforts to 

control costs and make more effective use of 

existing infrastructure 

■ Identify increased efficiency and equity in 

financing strategies for funding infrastructure 

projects and improvements, including opportunities to optimize state, local, regional, and private 

roles in, and accountability for, efficient investments of public funds

Significance

An integrated and efficient transportation system is critically important to the well-being and financial security

of the American people. The nation’s highways and transit systems move people to and from jobs, shopping

centers, and recreation. Highways and railroads help move raw materials to plants and finished products to

the marketplace. Airports and airlines facilitate rapid movement of people about the nation for business and

pleasure. The federal government already invests heavily in transportation—for example, in 2000, it invested

$27 billion for highways, $5.2 billion for transit, and $9 billion for aviation infrastructure. However, federal,

state, and local decision makers face daunting challenges in meeting the public’s expectations in every

mode—highway, transit, aviation, and rail. The Department of Transportation estimates that nearly

$130 billion per year could be needed over 20 years from federal and nonfederal entities to maintain and

improve the nation’s roads, bridges, and transit systems. Also, highway travel time—an indicator of congestion—increased sharply in the last decade. In aviation, decision makers must determine how capital development funds will be allocated between capacity and security enhancements, while ensuring that air traffic

control modernization progresses cost effectively, efficiently, and expeditiously. The role of intercity passenger rail continues to be questioned. Amtrak reports that nearly $2 billion in federal assistance will be needed

to stabilize and maintain its system, which carries less than 0.1 percent of the nation’s intercity travelers.

Freight railroads are experiencing increasing congestion, particularly at intermodal connection points. 

At present, no national strategy exists to integrate these modes of transportation into a system that is more

than the sum of its parts. Taking steps to break down funding decisions that are currently made within modal

stovepipes could lead to decisions that consider a variety of alternatives when deciding which mode or combination of modes will best achieve a specific transportation objective. As federal, state, and local decision

makers face competing demands for scarce funds, they must understand the costs and benefits of potential

investments, search for and apply best practices, and consider innovative and efficient financing alternatives

to ensure that federal expenditures maximize the nation’s mobility benefits. 

Potential Outcomes

■ Sound management and investment decisions 

regarding improved mobility, infrastructure conditions, and the costs and benefits of diverse 

strategies for investments in infrastructure

■ More informed decisions that consider the 

potential interrelationships of all modes of transportation when planning for an integrated transportation system, and better decisions by federal, 
146 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.8

state, and local governments in planning, prioritizing, and implementing new infrastructure 

investments

■ More effective infrastructure project financing; 

more efficient infrastructure use; and better 

leveraging of federal, state, local, and private 

funds
GAO STRATEGIC PLAN 2004–2009 147

STRATEGIC OBJECTIVE 1.8

Performance Goal 1.8.2: The Impact of Transportation and 

Telecommunications Policies and Practices on Competition 

and Consumers

Key Efforts

■ Determine the effects of government organization, policies, and practices and private market 

forces on the status of competition and the ability to provide affordable and accessible services 

in the transportation and telecommunications 

industries

■ Assess whether federal and state programs and 

regulations adequately protect consumers and 

communities from anticompetitive, abusive, and 

unfair business practices

■ Assess U.S. policies and management 

approaches in supporting the competitiveness, 

financial health, and performance of the transportation and telecommunications industries in 

light of increased globalization and emerging 

technologies

Significance

The various modes of transportation and the telecommunications industry provide networks to move people,

cargo, and information around the country and abroad. These networks directly contributed over

$600 billion to the nation’s GDP in 2000. These industries are subject to varying degrees and types of regulation but generally are free to develop products, establish prices, and otherwise compete for business in the

commercial marketplace. As these industries have changed over time, concerns have arisen as to whether the

existing policies, procedures, and organizational structures are adequate to address certain consumer and

industry needs. For example, the economic slowdown, combined with the terrorist attacks of September 11,

2001, and subsequent upheaval in world affairs, led to reduced air travel that exacerbated the financial woes

of the airline industry. 

The Congress recently provided the airline industry with $2.4 billion in financial aid and asked GAO to

report on the measures that air carriers have taken to reduce costs and to improve their revenues and profits.

In the telecommunications industry, the Congress looks to GAO and others to determine whether competition has developed sufficiently to ensure that new technologies are introduced and lower costs are passed on

to consumers. 

In addition, recent consolidation across the transportation and telecommunications industries has raised concerns in the Congress and elsewhere about the existence of a level playing field and the ability of competition to act as a natural control over prices in the future. Increasingly, the globalization of the economy brings

the practices and policies of foreign entities to bear on U.S. providers of transportation and telecommunications services as well.
148 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.8

Potential Outcomes

■ A more informed congressional assessment of 

U.S. policies affecting the level of competition in 

the transportation and telecommunications 

industries

■ Improvements in consumer protection, enforcement of existing requirements, and prevention of 

abusive and unfair practices

■ More informed congressional decisions on the 

appropriate role and organization of regulatory 

bodies, including their interaction with relevant 

state and international regulatory organizations

■ A more informed congressional assessment of 

technological developments, market factors, and 

resource utilization issues in the telecommunications sector, including efforts to accommodate 

the rapidly growing consumer demand for 

advanced wireless communications services
GAO STRATEGIC PLAN 2004–2009 149

STRATEGIC OBJECTIVE 1.8

Performance Goal 1.8.3: The Federal Government’s Role in 

Fostering and Overseeing Telecommunications in the Public 

Interest

Key Efforts

■ Assess the federal universal service program in 

promoting the availability and affordability of 

basic and advanced telecommunications services 

to all Americans

■ Assess the effectiveness of key federal agencies 

in managing the technical resources needed to 

meet the growing demand by government and 

commercial users

■ Assess the ability of the Federal Communications 

Commission to respond to and resolve legal, regulatory, capacity, and policy issues that affect 

how the commercial telecommunications industry can develop and operate

Significance

Faster than ever before, technology is changing how Americans communicate, conduct business, and educate themselves. The rapid growth of the Internet and mobile phone service is unmatched by any other telecommunications technology—whether telephone, radio, or television. Since 1997, for example, the U.S.

mobile phone industry has grown from 50 million to over 140 million subscribers, with annual revenues

increasing from $27 billion to $76 billion. Broadband technology—which can bring high-speed voice, video,

and data services to businesses, schools, and homes—also has enormous potential to transform Americans’

lives even more fundamentally. However, with such innovations come questions about the adequacy of the

laws, regulations, and practices that have guided federal involvement in fostering and overseeing telecommunications in the public interest since the 1930s. Take, for example, the federal government’s multibilliondollar “universal service” program to support affordable basic telephone service to rural and low-income

Americans. Should this program be expanded to include affordable access to the Internet and broadband services in order to avoid having a nation of “haves and have nots” for advanced telecommunications services?

As wireless communications services continue to grow, how should the government apportion the limited

technical resources available to support their operation, such as orbital slots for communications satellites

and radio frequencies for mobile communications? Can the commission keep pace with the need to reexamine and redefine the regulatory framework as new services emerge that do not easily fit into current policies

and practices? Finding answers to these and other challenging questions has become an intense concern for

both the commission and the Congress as they consider regulatory and legislative options for fostering and

overseeing telecommunications. 

Potential Outcomes

■ Strengthened effectiveness and long-term viability for the federal universal service program

■ Improved legislative and regulatory framework 

for managing the radio frequency spectrum 

■ More informed federal decision making to facilitate the availability and deployment of modern 

telecommunications infrastructure
150 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.8

Performance Goal 1.8.4: Efforts to Improve Safety in Moving 

People and Goods across the Nation’s Transportation System

Key Efforts

■ Assess federal research, development, and demonstration efforts to improve the safety of the 

nation’s transportation system

■ Examine the oversight, guidance, and regulations federal organizations provide to state and 

local governments and private organizations to 

ensure that the American public and its goods 

travel as safely as possible

■ Examine how state, local, and private organizations are using the billions of dollars provided by 

the federal government to address important 

transportation safety issues and determine 

whether efforts have been made to assess the 

effectiveness of these activities

Significance

Ensuring the safe movement of people and goods on the nation’s transportation infrastructure is a top priority for the Department of Transportation, as reflected in the administration’s surface transportation reauthorization proposal, the Safe, Accountable, Flexible, and Efficient Transportation Equity Act of 2003. The

proposal would more than double funding for highway safety and contains many initiatives to improve transportation safety. In addition, the Congress is also considering the Federal Aviation Administration’s reauthorization bill, which proposes to fund about $59 billion over 4 years to address aviation safety, security, and

infrastructure needs. 

Transportation safety continues to be a concern, with over 6 million traffic accidents in 2001 or 1 every 5 seconds; over 40,000 traffic deaths each year, with traffic accidents becoming the leading cause of death for people ages 4 through 33; an annual average of 6 commercial airline and over 350 general aviation fatal crashes

in recent years; and over 2,200 major pipeline accidents over a recent 10-year period, killing over 225 people. Transportation must ensure the safety of people, and the nation’s economy relies on the safe movement

of goods. For example, in 2001 over 27 million freight cars moved over 179,000 miles of track. In 2001, the

railroads transported 83 million tons of hazardous materials. In addition, over 2.2 million miles of pipelines

moved oil, natural gas, and hazardous products. 

Potential Outcomes

■ A better understanding of the root causes of 

transportation-related accidents, injuries, and 

fatalities and their related societal cost to aid the 

Congress and the Department of Transportation 

in implementing potential solutions

■ Improved federal program administration 

directed at finding new technologies and adopting new solutions for increasing the safety of 

people and goods on the transportation system

■ Enhanced federal oversight and regulation of 

actions taken by state, local, and private organizations to improve transportation pipeline safety 

■ Improved information available to the Congress 

when it considers the safety aspects of the next 

multiyear, multibillion-dollar transportation reauthorization bills
GAO STRATEGIC PLAN 2004–2009 151

STRATEGIC OBJECTIVE 1.8

Performance Goal 1.8.5: Efforts to Improve Security in All 

Transportation Modes

Key Efforts

■ Assess federal efforts to identify, prioritize, 

address, and provide oversight of key vulnerabilities in the security of the nation’s transportation 

systems

■ Assess federal efforts to work with state and 

local governments and the private sector to 

enhance transportation security 

■ Evaluate federal efforts to embed security concepts and practices into ongoing federal and federally funded programs and business processes 

■ Assess the direct and indirect costs of transportation security; different financing alternatives for 

federal, state, local, and private sector contributions to meeting these costs; and accountability 

for the proper use of security funding

Significance

Terrorist events around the world have shown that transportation systems are often targets of attack—

roughly one-third of terrorist attacks worldwide target transportation systems. The terrorist attacks of September 11, 2001, demonstrated the vulnerabilities of U.S. transportation systems and the impact these vulnerabilities can have on the nation. While most of the early attention following the September 11, 2001, attacks

focused on aviation security, emphasis on the other modes of transportation has since grown as potential

vulnerabilities are identified, such as the introduction of weapons of mass destruction through ports of entry

or launching chemical attacks on mass transit systems. 

The entire transportation industry has remained on a heightened state of alert since the attacks of September

11, 2001, due in part to numerous terrorist advisories received targeting different segments of the transportation network, which includes 3.9 million miles of roads, almost 600,000 bridges, over 300 ports, 2.2 million

miles of pipelines, and over 5,000 public-use airports. Securing this vast network from terrorism is critically

important to the economy and the American way of life. In addition, because the effectiveness of transportation systems depends on their accessibility, security measures must be considered as transportation systems

are developed or modified and must be incorporated into the overall transportation infrastructure. Adding to

the complexity of securing the nation’s transportation systems is the shared responsibility of federal, state,

and local agencies, as well as private companies, for funding, and maintaining accountability for, transportation security enhancements. 

Potential Outcomes

■ Better focus, prioritization, coordination, and 

management of federal, state, and local efforts to 

improve security measures and reduce vulnerabilities in transportation systems 

■ Improvements in the nation’s ability to act proactively to prevent loss of life and property 

because of security threats and respond to those 

threats as they materialize 

■ Expanded use of a risk management approach to 

focus and target limited resources on transportation security needs

■ Clarification of roles and responsibilities in 

ensuring improved transportation security
152 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 1.8

Performance Goal 1.8.6: The U.S. Postal Service’s 

Transformation Efforts to Ensure Its Viability and 

Accomplish Its Mission

Key Efforts

■ Evaluate the U.S. Postal Service’s financial condition and outlook as well as its efforts to improve 

its financial viability

■ Assess whether postal staff and facilities are 

effectively deployed and used to support postal 

operations and identify where cost savings in 

these areas may be realized

■ Assess the effectiveness and efficiency of the 

regulatory oversight structure and other issues 

affecting the U.S. Postal Service’s ability to meet 

its mission

■ Assess quality of service issues, including the 

U.S. Postal Service’s performance compared to 

its performance measures and how well it protects its customers and employees from potential 

hazards sent through the mail

■ Evaluate the U.S. Postal Service’s plans to 

address persistent labor-management issues, 

including plans to restructure its workforce, 

address future retirements, and improve incentive programs

Significance

The U.S. Postal Service faces major financial, operational, and human capital challenges that collectively call

for a structural transformation if it is to remain viable in the 21st century. The Postal Service has faced

increasing financial challenges as its mail volumes peaked in fiscal year 2000 and have continued to decline

since then. Of particular significance is the decline in First-Class Mail volume, which generates the largest

contribution to covering institutional costs and has an unfavorable projected outlook due to increased competition and electronic alternatives. Consequently, despite multiple rate increases, freezes on capital spending, and significant cost reduction efforts, the service still incurred deficits of $1.7 billion and $676 million in

fiscal years 2001 and 2002, respectively. Reduced mail volume, excess capacity, and the large number of

retirements expected over the next several years will place even more pressure on the Postal Service’s

expenses and its need for cash. Thus, the service’s ability to provide universal postal service as it is known

today will be increasingly threatened unless changes are made, both within current law and to the legal and

regulatory framework that governs the Service. In April 2001, GAO designated the Postal Service’s transformation and long-term outlook as a high-risk area—a designation that was reaffirmed in February 2003 with

GAO’s latest update.

Potential Outcomes

■ A better understanding of the U.S. Postal Service’s financial position and the options available 

to address its long-term financial situation, 

including its outstanding obligations for postretirement health care costs

■ Increased cost savings and more effective mail 

processing and service delivery

■ Improved protections for customers and employees from hazardous materials sent through the 

mail

■ More informed congressional decision making 

on postal policy and structural issues and proposals for reform

■ More effective implementation of human capital 

initiatives and programs
GAO STRATEGIC PLAN 2004–2009 153

STRATEGIC OBJECTIVE 1.8

Performance Goal 1.8.7: Federal Efforts to Plan for, Acquire, 

Manage, Maintain, Secure, and Dispose of the Government’s 

Real Property Assets

Key Efforts

■ Assess the efforts of federal agencies to realign 

and restore federal real property assets to meet 

current and future mission needs and identify 

best practices and innovative asset management 

approaches that federal agencies are using or 

could pursue 

■ Assess the efforts of federal government agencies to acquire or construct new facilities in a 

timely and cost-effective manner

■ Assess efforts of federal agencies to ensure that 

their facilities effectively and efficiently support 

the agencies’ strategic planning, service-delivery, 

and mission accomplishment needs

■ Assess the efforts of federal agencies to prepare 

for, prevent, detect, and respond to the consequences of terrorist attacks and other possible 

security breaches aimed at federal facilities and 

their occupants

Significance

Over 30 federal agencies, including DOD, the General Services Administration, VA, and U.S. Postal Service,

control hundreds of thousands of real property assets in the United States and abroad that are worth hundreds of billions of dollars. Unfortunately, many of these assets are no longer effectively aligned with, or

responsive to, agencies’ changing missions and are therefore no longer needed. Furthermore, many assets

are in an alarming state of deterioration; agencies have estimated restoration and repair needs to be in the

tens of billions of dollars. In addition, new federal facilities, such as courthouses, prisons, and visitor centers,

are planned that need to be constructed in a timely and cost-effective manner.

Compounding these problems are the lack of reliable data for strategic asset management, a heavy reliance

on costly leasing instead of ownership when ownership is more advantageous, and the cost and challenge of

protecting these assets against potential terrorism. These challenges have been exacerbated by competing

stakeholder interests in real property decisions; various legal and budget-related disincentives to businesslike

outcomes; the need for better capital planning among agencies; and the lack of a strategic, governmentwide

focus on federal real property issues. Given the persistence of the problems and related obstacles, GAO

added federal real property to its high-risk list in January 2003 and believes that a comprehensive and integrated transformation needs to take place in this area.

Potential Outcomes

■ Enhanced use of businesslike best practices by 

agencies to acquire, manage, protect, and dispose of real property, such as public-private 

partnerships, sales, and exchanges of property

■ More efficient use of energy consumed by federal facilities

■ Enhanced space quality, safety, and operational 

efficiency and effectiveness of federal facilities

■ Improved efficiency and effectiveness in preparing for, deterring, detecting, and responding to 

terrorist and other threats on federal facilities and 

their occupants
154 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 2.1

Respond to Emerging Threats to Security

Issue: The nature of the threats to national and 

international security and the means of attack have 

changed significantly in the post-Cold War era. 

Threats stem from differences in national or state 

ideologies and geopolitical economic and strategic 

considerations and now, increasingly, from religious 

conflicts and the aims of non-state-sponsored 

groups. Adversaries are more likely to strike vulnerable civilian or military targets at home and overseas in nontraditional ways to avoid direct 

confrontation with U.S. military forces or their allies 

on the battlefield.

The nation must assess and defend against a wide 

range of means and methods of attack, ranging 

from unconventional means to conventional 

weapons to weapons of mass destruction. International access, global interdependencies, interconnected and less diverse systems, and rapid 

technological change make such threats more 

viable and decrease the effectiveness of physical 

borders in ensuring security. The continuing proliferation of weapons of mass destruction increases 

concerns that terrorists or a rogue regime could 

threaten the United States or its allies with nuclear, 

chemical, or biological attack.

These threats put at risk the nation’s values, economic interests, way of life, and the personal security of its citizens at home and abroad. National 

strategies propose homeland security and combating terrorism initiatives to address these threats, 

yet their implementation and their associated costs, 

both direct and indirect, remain unclear. Decisionmaking approaches based on risk analysis and costbenefit effectiveness and the alignment of federal 

funding with state, local, and private sector investments are still works in progress. In the international arena, U.S. efforts to prevent the proliferation 

of weapons of mass destruction directly support 

domestic homeland security missions, yet much 

remains to be done.

Preparing and responding to emerging security 

threats will entail a national effort involving defense 

and domestic federal agencies and programs; state, 

local, and regional governments and organizations; 

the private sector; and the international community. 

At the federal level, the effectiveness of major structural changes to provide leadership will be important. The primary mission of DHS is to prevent, 

reduce vulnerability to, and aid in recovery from 

domestic terrorist attacks. Homeland security will 

require an effective DHS implementation and the 

efforts of other federal agencies, such as the FBI 

and the intelligence community. Responsibility for 

oversight and coordination across the executive 

branch, for example, with the Executive Office of 

the President, is still evolving.

Moreover, homeland security is, in large part, 

dependent on the efforts of state and local governments and the private sector. Internationally, the 

cooperation of the United States and its allies is 

needed to prevent terrorists and others from using 

dangerous weapons to carry out threats to the 

nation’s security. In addition, long-term success in 

homeland security will mean seamlessly integrating 

homeland security concepts into normal business 

decisions and practices across government and 

within the areas of the private sector responsible for 

critical infrastructures and key assets, so that efforts 

are sustainable over the long term and balanced 

with important non-homeland-security objectives.

Performance Goals: To support congressional and 

federal decision making on national preparation for 

and response to emerging threats to security, GAO 

will

■ assess federal homeland security management, 

responsibility, effectiveness, and achievement of 

mission goals;

■ identify ways to strengthen strategies related to 

homeland security and their implementation;

■ evaluate homeland security resource priorities, 

costs, and approaches to stimulate desired 

investments;

■ identify opportunities to embed homeland 

security concepts in ongoing national initiatives;

■ evaluate ways to strengthen government 

information security and protect computer and 

telecommunications systems that support the 

nation’s critical infrastructures; and
GAO STRATEGIC PLAN 2004–2009 155

STRATEGIC OBJECTIVE 2.1

■ assess the effectiveness of U.S. and international 

efforts to prevent the proliferation of nuclear, 

biological, chemical, and conventional weapons 

and sensitive technologies.
156 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 2.1

Performance Goal 2.1.1: Assess Federal Homeland Security 

Management, Responsibility, Effectiveness, and Achievement 

of Mission Goals

Key Efforts

■ Assess Department of Homeland Security (DHS) 

readiness to manage its missions

■ Evaluate DHS efforts to achieve homeland security results

■ Evaluate the effectiveness of other federal agencies responsible for key homeland security mission areas

■ Evaluate central federal oversight to ensure the 

coordination and integration of homeland security efforts across the federal government

■ Evaluate the effectiveness of federal partnerships 

and intergovernmental coordination with state 

and local governments and the private sector for 

homeland security initiatives

Significance

Federal structural changes to provide homeland security leadership will be important. In November 2002, the

President signed the Homeland Security Act, which established DHS. Among other things, the mission of

DHS is to prevent, reduce vulnerability to, and help the nation recover from domestic terrorist attacks. The

new department is to provide a focused leadership structure for national initiatives. It also is intended to

serve as the primary liaison and facilitator for cooperation among federal departments and agencies, state

and local governments, and the private sector.

The creation of DHS represents one of the largest and most complex restructurings in the federal government. The department’s implementation will require ongoing oversight to ensure effectiveness and years to

transform into an efficient, integrated, and smooth-running operation. Components merged into the new

department already face a wide array of existing challenges. DHS also must develop strong partnerships with

other federal, state, local, and private entities. Moreover, critical aspects of DHS’s success will depend on

well-functioning relationships with other federal agencies with homeland security responsibilities, such as the

State Department, the Federal Bureau of Investigation (FBI), the Central Intelligence Agency, the Department

of Defense (DOD), the Department of Health and Human Services (HHS), and the Department of Transportation. Agencies such as these must be part of an overall federal collaboration, coordination, and communication structure to improve homeland security and ensure mission accountability and sustainability over time.

In light of these complexities, in 2003 GAO designated the transformation and implementation of DHS as

high risk. This initial designation recognized the importance and difficulties of forming DHS, and highlighted

certain program areas as continued areas of concern, but acknowledged that it is too early to comprehensively evaluate homeland security program effectiveness during the transitional stages of agency reorganization and in relatively new areas such as information analysis and protection and response to bioterrorism and

emerging threats from other weapons of mass destruction (WMD). However, in future years, and in preparation for GAO’s 2005 High-Risk Series, GAO will continue to assess homeland security programs and missions, such as border or aviation security, with an eye toward making constructive recommendations for

improvement and refining which areas are of greater risk. High-risk consideration will analyze both agencyspecific and governmentwide major management challenges, such as progress in implementation of homeland security national strategies and whether there is successful coordination with state and local governments and the private sector.
GAO STRATEGIC PLAN 2004–2009 157

STRATEGIC OBJECTIVE 2.1

Currently, at least nine major national strategies for 

aspects of homeland security and combating terrorism have been prepared. Prioritization, responsibility, implementation, and funding for these 

strategies remain problematic. At the present time, 

central oversight and coordination of federal efforts 

above the federal departmental level involve many 

entities. The White House Homeland Security 

Council—formerly the Office of Homeland Security—will be involved with efforts such as coordinating interagency initiatives, but the coordinative 

role of it and DHS and other Executive Office of the 

President organizations are still evolving.

Identifying and responding to evolving threats will 

require major federal policy and operational efforts 

and partnership with state and local governments 

and the private sector to coordinate federal strategies with counterpart state, local, and private sector 

strategies, and to craft a national decision-making 

framework and security initiatives. Together, these 

organizations will be challenged to (1) adopt threat 

and risk management to estimate the character, 

probability, and impact of terrorist attacks; (2) identify desirable or attainable levels of risk, prevention, 

vulnerability, and recovery response; (3) sustain 

efforts despite fiscal, legal, jurisdictional, and human 

capital constraints; (4) leverage multiple organizational roles, responsibilities, and relationships; (5) 

set realistic budgets and funding arrangements to 

address implementation and maintenance costs; and 

(6) strengthen intelligence sharing while protecting 

civil liberties and appropriate public information 

access.

Potential Outcomes

■ A better understanding of the effectiveness of 

oversight and coordination across the federal 

government for homeland security and the specific homeland security responsibilities of each 

organization or entity

■ Improved effectiveness of DHS efforts to 

develop, implement, and sustain long-term 

homeland security initiatives

■ Increased congressional understanding of new 

federal structural changes and readiness

■ A better understanding of the homeland security 

responsibilities of other federal agencies and 

their collaboration and coordination with DHS

■ Improved federal partnership with nonfederal 

actors and a better understanding of the roles of 

government and the private sector
158 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 2.1

Performance Goal 2.1.2: Identify Ways to Strengthen 

Strategies Related to Homeland Security and Their 

Implementation

Key Efforts

■ Evaluate requirements and content of the 

national strategies individually and collectively

■ Assess federal implementation and results of the 

National Strategy for Homeland Security and 

directly related, lower-level strategies

■ Assess state and local government and private 

sector involvement in and adoption of homeland 

security initiatives in which they play a major 

role

Significance

Since the September 11, 2001, attacks, the administration has issued numerous national strategies detailing

specific initiatives for homeland security and combating terrorism to address these threats. The strategies are

organized in a hierarchy, with the National Security Strategy of the United States of America and the National

Strategy for Homeland Security as top-level strategies that together address U.S. security both overseas and

domestically. Other strategies, such as the National Strategy for the Physical Protection of Critical Infrastructures and Key Assets, provide further levels of detail on specific functions related to security.

In its national effort, the federal government will need to integrate federal strategies addressing homeland

security and combating terrorism with those of state and local governments and private sector counterparts.

For the longer term, the integrated efforts will need to focus on implementing and sustaining these initiatives,

identifying and correcting inconsistencies and unwanted gaps, assessing and renewing the individual strategies over time, and holding individual agencies and organizations accountable for improving security against

emerging security threats. Federal strategies must also take into consideration the costs of implementation,

the ability to sustain efforts, and the need to balance homeland security and non-homeland-security objectives.

Potential Outcomes

■ Greater congressional understanding of the 

national strategies, their implications, and their 

interdependencies

■ Improved federal attention to national strategy 

implementation and improvement

■ A more integrated approach by federal and nonfederal agencies and organizations in implementing and strengthening the strategies

■ Improved homeland security performance 

expectations and accountability
GAO STRATEGIC PLAN 2004–2009 159

STRATEGIC OBJECTIVE 2.1

Performance Goal 2.1.3: Evaluate Homeland Security 

Resource Priorities, Costs, and Approaches to Stimulate 

Desired Investments

Key Efforts

■ Assess the direct and indirect costs of national 

homeland security in response to changes such 

as threat levels and national strategies’ implementation

■ Evaluate federal risk management approaches 

and support of nonfederal risk management 

efforts

■ Assess federal homeland security priority-setting 

and investment strategies

■ Evaluate the intelligence community’s threat 

analysis challenges in providing intelligence and 

threat information to federal, state, and local 

authorities

Significance

Effective resource management for homeland security involves setting priorities, targeting funds, and assessing their effect. The starting point is risk management, which sets specifics for homeland security plans, cost

analysis, and investments. Threat, risk, and criticality assessments—the general risk management framework—provide decision makers with the information to identify risks, alternative initiatives to address those

risks, their direct and indirect costs, and their impact on other priorities; select initiatives to fund; and evaluate the effectiveness of those initiatives in reducing risk. At present, the national homeland security threat

level provides broad threat levels nationally, with differing levels of action accompanying each level. The

current national threat designation takes into account neither regional or local threats and necessary

responses nor the cost implications of changing designations. Moreover, there should be a concerted effort to

improve the threat information received from foreign and domestic sources; to understand the nature of

threats to vulnerable assets; and to protect the nation’s critical infrastructure, key assets, and population.

Comparing threats, risks, and criticality components is intended to determine how to allocate homeland

security resources. Overall, this approach balances the costs and benefits of security measures, including the

collateral or unintended consequences on other measures. Setting priorities and addressing security threats

have placed new fiscal demands on federal, state, and local governments and the private sector. Improper or

incomplete uses of assessments can result in misinformed decision making and poor targeting of resources to

those areas at highest risk. Moreover, as threat levels change in response to risk management, decision makers face the challenge of changing priorities and redirecting investments. Finally, prudent decision making

calls for better use of resources to address both homeland security and other security needs.

Potential Outcomes

■ Improved ability to identify threats and provide 

advance warning of impending attacks to all 

organizations responsible for homeland security

■ Better information on the relationship between 

costs and priorities established in the national 

strategies

■ Improved budgeting approaches and federal 

homeland security investment targeting in order 

to stimulate desired state, local, and private sector efforts

■ Improved understanding of the state of risk management approaches and decision making
160 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 2.1

■ Enhanced ability of governmental levels and the 

private sector to coordinate their homeland security intelligence collection, analysis, and information sharing

■ A better understanding of the effectiveness of 

proposed federal stimulus programs

■ Increased emphasis on the importance of “dual 

use” investment strategies to address both homeland security and other security priorities
GAO STRATEGIC PLAN 2004–2009 161

STRATEGIC OBJECTIVE 2.1

Performance Goal 2.1.4: Identify Opportunities to Embed 

Homeland Security Concepts in Ongoing National Initiatives

Key Efforts

■ Identify opportunities to embed homeland security in proposed federal legislative and regulatory 

changes

■ Assess the government’s homeland security tools 

and funding strategy alternatives

Significance

An organizing principle for homeland security might be “weaving homeland security into the fabric of American life.” The Congress faces the difficult task of “weaving” by deciding how to sustain homeland security

and integrate efforts with non-homeland-security missions. The Congress must also consider the “fabric” that

is woven—effectively balancing fighting terrorism with efforts to maintain economic vitality and innovation;

create jobs; and improve education, housing, and quality of life in general while protecting core American

values. Homeland security can be viewed as integral to everyday life—in which measures are consistently

expected, applied, and integrated into the underlying business processes or programs from the very beginning, not apart from other strategic and operational decisions. Long-term success in securing the homeland

will mean seamlessly integrating homeland security concepts into normal business decisions and practices.

Designing new programs and redesigning or recapitalizing existing programs provide opportunities to support both homeland security and non-homeland-security needs.

In addition, policy tools—direct spending, tax preferences, loans and guarantees, grants, and regulations—

are available to address homeland security needs within the context of existing programs. The challenge is

for the federal government to design, select, and manage the various tools to prompt federal and nonfederal

actors to work together on homeland security results and effectively leverage scarce resources.

Potential Outcomes

■ Identification of opportunities for the Congress 

or federal decision makers to better integrate 

homeland security concepts into ongoing processes and programs

■ Better targeting of the tools of government to 

provide incentives for addressing homeland 

security and non-homeland-security priorities

■ Greater fiscal discipline in leveraging non-homeland-security efforts to address homeland security priorities and to sustain the efforts
162 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 2.1

Performance Goal 2.1.5: Evaluate Ways to Strengthen 

Government Information Security and Protect Computer 

and Telecommunications Systems That Support the Nation’s 

Critical Infrastructures

Key Efforts

■ Review the effectiveness of computer and network security at federal agencies to better ensure 

the protection of government information

■ Assess efforts to manage and protect the computer/cyber information systems that support the 

nation’s critical infrastructures

Significance

Protection of the nation’s critical infrastructure—including energy, financial services, transportation, vital

human services, and communications systems—is becoming increasingly important largely due to the dependence on complex interconnected computer and telecommunications systems. Criminals, terrorists, and others, working anonymously from remote locations and with relatively limited resources, can use computers

and the open interconnectivity of the Internet to severely disrupt this infrastructure, which is essential to

national defense, economic prosperity, and quality of life. Similar means can be used to commit massive

fraud and gain access to highly sensitive information. In response, new laws, such as the Federal Information

Security Management Act, and presidential initiatives, such as Presidential Decision Directive 63 and Executive Order 13231, have prompted an array of federal efforts aimed at improving critical infrastructure protection, especially information security, in both the public and private sectors. These efforts have also raised a

variety of policy and budgetary issues that will need to be addressed as government works with the private

sector to develop an effective strategy for protecting against computer-based attacks.

Potential Outcomes

■ Reasonable assurance that critical federal operations are protected from disruption, fraud, and 

misuse

■ Enhanced capability of organizations to detect, 

protect against, and respond to computer intrusions

■ Greater coordination among public and private 

sector institutions in protecting U.S. computerbased critical infrastructure systems

■ Improvements to the legislative framework for 

information security

■ Greater public assurance that the Internet, electronic commerce transactions, and the nation’s 

telecommunication infrastructure are secure

■ More secure and efficient electronic government 

operations
GAO STRATEGIC PLAN 2004–2009 163

STRATEGIC OBJECTIVE 2.1

Performance Goal 2.1.6: Assess the Effectiveness of U.S. and 

International Efforts to Prevent the Proliferation of Nuclear, 

Biological, Chemical, and Conventional Weapons and 

Sensitive Technologies

Key Efforts

■ Evaluate the management and effectiveness of 

U.S. programs and safety of facilities designed to 

minimize the proliferation of nuclear, biological, 

chemical, and conventional weapons, technologies, and expertise that pose the greatest risk to 

the United States and its interests

■ Assess the management and effectiveness of U.S. 

and multilateral controls over exports of goods 

and technologies that contribute to the proliferation of weapons of mass destruction (WMDs) or 

conventional weapons to sensitive regions of the 

world

■ Evaluate the United States’ and other countries’ 

use of accords aimed at reducing arsenals of 

WMDs and the impact of their efforts

Significance

The continuing proliferation of WMDs and delivery systems poses serious threats to the security of the

United States and its allies. Increased concern that in the near future, a rogue regime or terrorists will be able

to threaten the United States or its allies with nuclear, biological, or chemical weapons has prompted the

United States to develop a new approach to combating proliferation. The President’s 2002 National Security

Strategy identified the need to bolster counterproliferation efforts to deter and defend against these threats,

manage the consequences of WMD use, and enhance nonproliferation efforts. The United States is placing a

renewed emphasis on strengthening these efforts by encouraging increased political and financial support

for such activities.

Currently, the centerpiece of nonproliferation efforts is the growing multibillion dollar array of efforts by

DOD, DOE, and State to help former Soviet states control and reduce their vast, diverse holdings of Cold

War-era nuclear, biological, and chemical weapons and their related delivery systems and infrastructure.

However, U.S. programs to limit the proliferation of WMDs have begun to move beyond focusing on the

former Soviet Union to also address proliferation risks in other countries such as Iran and North Korea, at

borders, and from terrorist networks. In addition, the United States controls the export of certain sensitive

technologies (such as chemical weapons precursors, missiles, and computers) and weapons systems through

its national export control system and multilateral arrangements with other nations capable of supplying

these technologies or weapons systems. 

Nevertheless, the United States is seeking ways to strengthen multilateral export control regimes because rapidly evolving technologies and growing trade in sensitive items among countries of concern have weakened

these controls. Finally, the United States is reassessing the effect of existing agreements and partnerships to

control or reduce U.S. and foreign arsenals of WMDs in the post-Cold War era, including a multibillion-dollar

program to dispose of Russian weapons-grade plutonium. The United States is also reassessing the ability of

prospective agreements and coalitions to prohibit and detect development of WMDs.
164 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 2.1

Potential Outcomes

■ Improved management of programs and more 

effective use of U.S. assistance that reduces the 

proliferation of WMDs and diminishes the assets 

posing the greatest risks to U.S. national security

■ Enhanced controls over the export and use of 

sensitive technologies that could facilitate the 

proliferation of WMDs or other weapons of concern

■ Improved implementation of accords to achieve 

greater impact in reducing arsenals of WMDs
GAO STRATEGIC PLAN 2004–2009 165

STRATEGIC OBJECTIVE 2.2

Ensure Military Capabilities and Readiness

Issue: In contrast to the downward trend in defense 

spending during the last decade, this first decade of 

the new century has already seen a significant 

upward trend in authorized defense spending. After 

dropping below $300 billion in prior years, total 

defense budget authority increased to about 

$360 billion in fiscal year 2002 and will exceed 

$400 billion in fiscal years 2003 and 2004, including 

substantial supplemental funding to support 

ongoing military operations. (See fig. 2.1.) As the 

new decade began, some increases in funding 

authority were approved to enhance operational 

maintenance, quality-of-life programs, pay raises, 

and improvements to crumbling facilities. Since 

September 2001, more significant increases in 

annual budget authority and supplemental appropriations have been approved to respond to the war 

on terrorism, including funding for Defense operations in Afghanistan and Iraq. Major increases have 

also been approved for weapon systems acquisition 

and modernization.

Figure 2.1: Total Defense Appropriations and 

Supplemental Funding for Fiscal Years 2000 

through 2004, as of January 2004

Notwithstanding the ongoing war on terrorism, 

DOD has continued to focus on implementing the 

results of the 2001 Quadrennial Defense Review, 

which charted a new defense strategy that emphasized homeland security, military transformation, 

joint operations, and advanced war-fighting capabilities related to IT, intelligence, and space operations. Follow-on studies were begun to more 

precisely define how existing DOD programs and 

priorities would change in light of the changing 

security environment and increased emphasis on 

homeland security. 

Perhaps the most significant of the follow-on 

studies are those involving the ongoing reassessment of U.S. force structure and capabilities and of 

overseas presence and basing. The former has the 

potential for significant change in organization of 

forces and deployment planning. The latter has the 

potential for significant changes in the numbers and 

locations for U.S. bases overseas in keeping with 

the revised global military posture called for in the 

report of the Quadrennial Defense Review. That 

report called for developing a basing system that 

provides greater flexibility for U.S. forces in critical 

areas of the world, placing emphasis on additional 

bases and stations beyond western Europe and 

northeast Asia, and providing temporary access to 

facilities in foreign countries that enable U.S. forces 

to conduct training and exercises in the absence of 

permanent ranges and bases. The new defense 

strategy also highlights the criticality of reforming 

the department’s business practices and human capital management, streamlining organizational structures, and eliminating excess infrastructure that 

unnecessarily diverts resources from other defense 

priorities. In that light, DOD also recently directed 

acquisition programs to tailor their strategies so that 

weapons can be fielded in a timelier manner at a 

fair and reasonable cost.

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 ties many of these issues 

together. (See fig. 2.2.)

8.5

19.9

17.2

72.6 65.2

0

50

100

150

200

250

300

350

400

450

500

Supplementals

Appropriations

Dollars in Billions

Source: Congressional Research Service.

Fiscal Year

286.5 310 343

382 400.5

2000 2001 2002 2003 2004
166 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 2.2

Figure 2.2: Key Topical Issues Framing the Defense 

Debate

There also are pressing issues concerning the 

defense establishment’s program to maintain a safe 

and reliable nuclear weapons stockpile. This program is administered by the National Nuclear Security Administration (NNSA), a semiautonomous 

agency established in 2000 within DOE. NNSA faces 

numerous planning, organizational, procurement, 

personnel, and security challenges as it administers 

this $8 billion-a-year program, and questions remain 

about the impact of its 2002 reorganization plan on 

its capacity to address these challenges efficiently 

and effectively. 

Performance Goals: To support efforts by the 

Congress and the federal government to address 

these issues, GAO will

■ assess DOD’s ability to maintain adequate 

readiness levels while addressing the force 

structure changes needed in the 21st century; 

■ assess overall human capital management 

practices to ensure a high-quality total force;

■ assess the ability of weapon system acquisition 

programs and processes to achieve desired 

outcomes; 

■ identify ways to improve the economy, 

efficiency, and effectiveness of DOD’s support 

infrastructure and business systems and 

processes; 

■ assess the National Nuclear Security 

Administration’s efforts to maintain a safe and 

reliable nuclear weapons stockpile; 

■ assess whether DOD and the services have 

developed integrated systems, procedures, and 

doctrines to support joint and coalition forces on 

the battlefield safely and effectively; and

■ analyze and support DOD’s efforts to improve 

planning, programming, budgeting, execution, 

and program performance.

• Jointness and interoperability

• Capabilities-based strategy versus two major-theater wars

• Force transformation, advanced warfighting capabilities, and 

training

• Changes in global military presence

• Antiterrorism and force protection

• Chemical and biological defense

• Human capital challenges

• Quality of life and facilities infrastructure

• Weapon systems modernization

• Homeland security

• Guard and reserve roles

• Nuclear stockpile

• Improved business practices

Source: GAO analysis.
GAO STRATEGIC PLAN 2004–2009 167

STRATEGIC OBJECTIVE 2.2

Performance Goal 2.2.1: Assess DOD’s Ability to Maintain 

Adequate Readiness Levels While Addressing the Force 

Structure Changes Needed in the 21st Century 

Key Efforts

■ Evaluate DOD’s progress in developing and 

implementing its role in homeland security

■ Assess the military services’ training and readiness to accomplish their missions

■ Assess DOD’s worldwide antiterrorism/force 

protection program and implementation to provide adequate security to military forces and 

assets worldwide 

■ Assess DOD’s chemical and biological defense 

program’s and related activities’ ability to meet 

current and future threat-focused requirements

■ Assess the potential for the military services to 

adopt more efficient and effective concepts for 

organizing and deploying forces

■ Assess service efforts to manage and integrate 

force transformation plans effectively

■ Assess the extent to which the development and 

acquisition of weapons systems meet the needs 

of the armed forces, particularly for transformational capabilities

■ Assess the key lessons learned from recent military operations overseas

■ Provide the Congress with objective analysis of 

the costs and funding for military operations and 

follow-on activities

Significance

DOD’s implementation of the 2001 Quadrennial Defense Review and its follow-on studies presents many

opportunities for GAO to assist the Congress in analyzing the basis for and effect of changes to defense strategies and programs and changes in force structure and deployment plans. The Congress will be especially

interested in the DOD strategy for homeland security and how it will affect DOD’s ability to carry out more

traditional missions. GAO’s independent assessments will highlight potential risks associated with proposed

changes and examine how such changes will affect DOD’s ability to address readiness problems. 

New areas of emphasis in the defense strategy—such as homeland security, force transformation, space, and

information warfare—will force tough trade-off decisions and a closer examination of how to achieve

defense goals most cost effectively. Accordingly, analyses of the cost-effectiveness of defense alternatives and

options will be needed. Similarly, the Congress and DOD are likely to focus more attention on how DOD

can best blend the diverse elements of its total force (active, reserve, and civilian forces) to achieve economies and increase effectiveness and how it can better contain costs related to overseas operations.

Potential Outcomes

■ Greater congressional understanding of the basis 

for key changes in defense programs

■ DOD actions to speed progress toward an effective homeland security strategy

■ Improved military readiness to accomplish the 

national military strategy and elimination of barriers to achieving expected levels of readiness

■ More rigorous requirements determination processes, less duplication of forces and capabilities, 

and better data for considering force structure 

alternatives and overseas presence requirements

■ DOD actions to address inconsistencies between 

transformation plans, acquisition and other programs (including affordability), and resources in 

relation to future warfighting needs
168 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 2.2

■ Improvements in strategic airlift capabilities and 

management and better data on costs and implications of overseas training and operations

■ More cost-effective integration of military and 

civilian personnel, contractors, allies, and host 

nations to meet defense needs.
GAO STRATEGIC PLAN 2004–2009 169

STRATEGIC OBJECTIVE 2.2

Performance Goal 2.2.2: Assess Overall Human Capital 

Management Practices to Ensure a High-Quality Total Force

Key Efforts

■ Assess DOD’s human capital management of its 

civilian workforce, including acquisition and 

contracting workforces 

■ Assess DOD’s human capital management of its 

reserve components 

■ Assess DOD’s human capital management of its 

active duty forces

Significance

A key concern for DOD is how it will manage its large investment in human capital today and in the future.

DOD is the largest U.S. employer, with about 700,000 civilian federal employees, 1.2 million reservists, and

1.3 million active duty service members. DOD also increasingly relies on a large but undetermined number

of contractor personnel. DOD’s large and diverse total force requires a large financial investment—for example, over $100 billion—in compensation for the 1.3 million active duty members. Even with substantial financial investment, DOD faces tremendous challenges in managing and sustaining its total force. Its evolving

human capital practices present DOD with an opportunity to break from its tradition-bound policies and procedures for managing its diverse total force of civilian employees, reservists, and active duty members. 

By organizing the work in this performance goal around the three categories of personnel, GAO is positioned to address both emerging and long-standing areas of congressional concern for any component of the

total force. Such concerns include how DOD would implement recently sought legislation to provide it with

much greater flexibility in administering its military and civilian human capital programs; the adequacy of

DOD’s acquisition and contracting workforces, which are critical to developing and providing weapon systems and equipment to the military forces; and the timeliness and adequacy of the personnel security investigation process. They also include various issues associated with mobilizing and demobilizing reservists,

emphasis on joint DOD operations, and efforts to expand the integrated use of the three categories of personnel. Because DOD’s total force is so large and its mission is so critical, even small improvements in

DOD’s human capital management practices can result in large and important gains in national security, total

force quality and performance, and cost savings.

Potential Outcomes

■ A more strategic approach to overall DOD 

human capital planning and overall management 

of the civilian workforce

■ Acquisition and contractor workforces aligned 

with changing roles and responsibilities

■ An enhanced overall strategic approach to DOD 

human capital management of reserve forces

■ An improved, strategic approach to DOD human 

capital management of active duty forces
170 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 2.2

Performance Goal 2.2.3: Assess the Ability of Weapon System 

Acquisition Programs and Processes to Achieve Desired 

Outcomes

Key Efforts

■ Provide annual status and risk updates on a wide 

range of weapon systems, observing trends in 

acquisition performance and opportunities for 

budgetary actions

■ Target reviews of individual weapon systems to 

assess their ability to achieve outcomes early 

enough so that DOD can take action well ahead 

of major decisions

■ Assess barriers that prevent DOD from advancing technology while at the same time developing new weapons more quickly and predictably

Significance

DOD invests well over $100 billion each year in a wide array of weapon systems to equip the U.S. armed

forces. These systems range from upgrades to tanks and fighter aircraft to sophisticated satellites and networks of systems, such as those used for national missile defense. It is not unusual for a single program to

cost over $40 billion. These investments represent the largest discretionary portion of the U.S. budget.

DOD’s acquisition process has produced the best weapons in the world. At the same time, the process routinely yields weapons that exceed cost and schedule estimates by significant amounts. The opportunity costs

of such increases are significant; a mere 3 percent cost growth per year means that $3 billion of scarce discretionary funds are not available for new investments. Given the complexity of modern weapons, some problems can be expected. Many, however, can be predicted and avoided. It is not unusual for a new program to

rely on fledgling technologies for high performance, only to report late in development that insufficient time

and money had been estimated to develop the technologies and incorporate them into an overall design. 

As unplanned cost increases occur, activities such as testing are deferred, giving rise to the late discovery of

problems. Ultimately, it takes more money to buy fewer new weapons, thereby limiting anticipated capabilities. DOD recognizes this pattern and has signaled its intention to improve acquisitions. Recently, DOD has

begun to recognize the potential of using best practices adopted from world-class enterprises to field systems

within predicted estimates and to reduce the time and cost of doing so.

Potential Outcomes

■ More relevant knowledge base for congressional 

decision making

■ Increased use of best practices to achieve 

desired outcomes

■ Better transition of new technologies to weapon 

programs and reduced acquisition cycle times 

and costs
GAO STRATEGIC PLAN 2004–2009 171

STRATEGIC OBJECTIVE 2.2

Performance Goal 2.2.4: Identify Ways to Improve the 

Economy, Efficiency, and Effectiveness of DOD’s Support 

Infrastructure and Business Systems and Processes 

Key Efforts

■ Identify ways to improve the economy, efficiency, and effectiveness of existing logistics 

functions

■ Assess transformation of DOD’s logistics systems 

to meet future needs and reduce the overall 

logistics footprint

■ Assess DOD’s efforts to realign defense organizations and improve its business processes

■ Assess DOD’s efforts to realign and/or reduce 

excess defense facilities in the United States and 

overseas, and improve the management and 

maintenance of its facilities

■ Assess DOD’s and the military services’ efforts to 

develop weapon systems with smaller logistics 

impact and lower operating and support costs

Significance

Although the United States significantly reduced its defense force structure and military spending in the

decade following the end of the Cold War, similar reductions did not occur in the defense support infrastructure, which has historically consumed over 40 percent of the department’s total obligational authority. (This

represents mission-support funding for various program elements, such as central logistics and installation

support.) Operating efficiencies and reductions have resulted from efforts such as base realignment and closure, consolidations, organizational and business process reengineering, privatization, and competitive sourcing. However, DOD is faced with the need to address substantial inefficiencies in support operations; aging

equipment and facilities; and continuing problems in the areas of spare parts, maintenance, and repair. DOD

officials recognize that they must achieve greater efficiencies to manage their support operations more effectively, contain costs, and provide increased funding for weapon system modernization and other priority

needs. Such pressures are likely to continue despite recent growth in the defense budget, and pressures for

significant additional increases are likely in future years.

Potential Outcomes

■ Costs avoided and opportunities identified to 

reprogram funding for other priority needs while 

strengthening efficiency and effectiveness of 

existing support systems

■ Improved logistics support that will enhance the 

readiness and sustainability of U.S. military 

forces

■ Reduced facilities infrastructure, improved facilities maintenance and planning for facility needs 

and recapitalization costs, and improved overall 

cost-effectiveness of facilities management
172 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 2.2

Performance Goal 2.2.5: Assess the National Nuclear 

Security Administration’s Efforts to Maintain a Safe and 

Reliable Nuclear Weapons Stockpile 

Key Efforts 

■ Assess the National Nuclear Security Administration’s (NNSA) efforts to establish effective personnel, procurement, and planning systems to 

address the workforce and infrastructure challenges it faces 

■ Assess NNSA’s research and development and 

production programs to support a safe and reliable stockpile 

■ Assess the extent to which DOE and NNSA have 

developed an effective and efficient security program to protect nuclear weapons material and 

information 

Significance 

In response to repeated management and security problems, the Congress passed legislation in October 1999

that established NNSA. NNSA, a semiautonomous agency within DOE, is responsible for nuclear weapons

production, prevention of the proliferation of weapons of mass destruction, and the production of naval

reactors. Since its establishment in March 2000, NNSA has begun to develop approaches for addressing issues

associated with planning, organization, procurement, personnel, and security. Although NNSA finally issued

its reorganization plan in December 2002, much remains to be done to implement this plan effectively and

concern continues to be expressed in the Congress about the slow pace of NNSA’s reorganization and how

effective its new structure will be. 

New management approaches are vital if NNSA is to effectively address the programmatic challenges before

it. Because it is assumed that the United States will continue its policy of no testing, NNSA must develop firstof-a-kind experimental facilities and advanced supercomputing technology to ensure that the nation’s

nuclear weapons stockpile is safe and reliable without underground testing. It must ensure that there is a

modern and efficient production infrastructure to maintain and refurbish the stockpile as it ages. It must find

effective human capital strategies to respond to an aging contractor and federal workforce. It must continue

to improve its project management and contract administration to ensure effective results from the almost

$8 billion per year appropriated for this effort. Finally, it must improve security operations at all its facilities to

ensure that classified information, nuclear materials, and weapons are adequately protected. 

Potential Outcomes

■ A better understanding of the stockpile stewardship program to help the Congress ensure that 

the annual investment of more than $5.5 billion 

is spent efficiently and supports specific program 

outcomes 

■ Improved DOE process for the safe production 

and storage of nuclear materials and components at the nuclear weapons complex 

■ Improved NNSA and DOE programs for ensuring 

the security of classified information, nuclear 

materials, and weapons 

■ Better information to help decision makers 

gauge the ability of NNSA’s stockpile stewardship program to ensure the safety and reliability 

of existing nuclear weapons
GAO STRATEGIC PLAN 2004–2009 173

STRATEGIC OBJECTIVE 2.2

Performance Goal 2.2.6: Assess Whether DOD and the 

Services Have Developed Integrated Systems, Procedures, 

and Doctrines to Support Joint and Coalition Forces on the 

Battlefield Safely and Effectively 

Key Efforts

■ Evaluate how DOD and the military services are 

establishing joint requirements and developing 

equipment and weapon systems to achieve joint 

capabilities

■ Evaluate DOD’s and the services’ efforts to 

develop and field integrated command, control, 

communications, computers, intelligence, surveillance, and reconnaissance (C4ISR) and space 

and weapons systems and the extent to which 

these systems will lead to information superiority 

and greater battlefield awareness

■ Assess DOD’s efforts to experiment with future 

joint war-fighting concepts and capabilities and 

support the results with investment decisions

■ Assess DOD’s plans and activities related to conducting joint and integrated operations with its 

international partners abroad

■ Assess the effectiveness and timeliness of DOD’s 

development of overarching architectures that 

are needed to guide the acquisition and design 

of a “system of systems”

Significance

As recent experience has shown in military operations in Kosovo, Afghanistan, and Iraq, success greatly

depends on the ability of military forces to work effectively in a joint environment. The ability to conduct

joint and combined operations is key to maintaining a superior force in an era in which the nature and extent

of national security missions have become broader and more varied and the battlefield less segmented. Not

only must the military integrate its own forces, it must also have the capabilities to operate with those of its

allies and coalition partners. Implementing Joint Vision 2020 and its principal concepts of dominant maneuver, precision engagement, focused logistics, and full dimensional protection require that the U.S. military

develop the doctrine, organization, training, systems, and leadership to function as a truly integrated joint

force. Through integration, the military can become faster, more lethal, and more precise.

To make effective decisions, joint commanders must have a complete, accurate, and timely picture of the battlefield and must be confident that C4ISR systems can exchange information quickly and accurately. In addition, appropriate concepts and doctrine must be in place, and forces must be structured and trained to

facilitate joint operations. In the past, DOD and the services have lacked coordinated or common procedures

and interoperable systems to carry out joint military operations. This is largely because the services have traditionally developed separate approaches to war fighting and have built the forces and capabilities needed to

execute their own individual approaches. Consequences of this have been the acquisition of costly overlapping and duplicative systems on the one hand and gaps in capabilities on the other. Current and anticipated

future missions will require more coordinated joint and combined operations that optimize and leverage all

services’ capabilities. In addition, greater emphasis by DOD on the “system of systems” approach to developing and acquiring new capabilities requires greater up-front acquisition and design planning that will allow

these systems to function together. This may require the development of standards or other means to ensure

this interoperability. Examples of systems of systems include the Future Combat System, Missile Defense, and

the Global Information Grid. 
174 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 2.2

Potential Outcomes

■ More cost-effective, integrated acquisition of 

weapons systems and materiel

■ Improved interoperability of systems and 

exchange of information necessary for effective 

command, control, and communications

■ Improved management of battlefield information 

and communications

■ Improved coordination of service and joint warfighting experimentation efforts and funding 

support for the results

■ More effective joint exercises and training

■ Enhanced ability of U.S. forces to operate with 

allies
GAO STRATEGIC PLAN 2004–2009 175

STRATEGIC OBJECTIVE 2.2

Performance Goal 2.2.7: Analyze and Support DOD’s Efforts 

to Improve Planning, Programming, Budgeting, Execution, 

and Program Performance 

Key Efforts

■ Track DOD’s obligations of its annual appropriations and examine how various elements of the 

defense budget are being spent, including special supplemental appropriations

■ Analyze the extent to which key aspects of the 

DOD budget submission are reasonable and justified

■ Assess the DOD future years’ plans for their 

long-term reasonableness and affordability

■ Evaluate how DOD assesses the collective 

investment needed for weapons systems modernization and how it prioritizes this investment 

across systems

■ Assess DOD’s efforts and identify alternative 

approaches to improve planning, programming, 

budgeting, and program performance in support 

of its overall defense strategy

■ Assess the effectiveness of DOD’s efforts to 

improve its overall operations and to address 

major performance and accountability challenges 

and areas identified as high risk

Significance

By law, DOD is required to undertake a comprehensive review of its defense programs every 4 years. This

Quadrennial Defense Review is expected to provide a blueprint for changes to plans, programs, budgets,

goals, and objectives and has been dually designated as DOD’s strategic plan for purposes of meeting the

requirements of the Government Performance and Results Act of 1993. Thus, the Quadrennial Defense

Review provides a view of future management directions and serves as a strategic framework for assessing

results. 

DOD operations currently involve over $1 trillion in assets, a budget authority of over $400 billion in 2004,

and about 3 million military and civilian employees. Planning and budgeting for DOD represent one of the

largest management challenges within the federal government. While DOD has the most effective war-fighting organization in the world, the same level of excellence is not evident in many of its planning, budgeting,

and performance tracking processes that are critical to achieving DOD’s mission reasonably economically,

efficiently, and effectively. The Planning, Programming, and Budgeting System (PPBS) is DOD’s key strategic

planning tool for allocating these resources across its overall mission. The planning component of the 2-year

process rests on the annual National Security Strategy, the Quadrennial Defense Review, and several other

annual planning tools such as the Joint Strategy Review and the Defense Planning Guidance. Programming

flows from this process and reflects an analysis of the services’ program objectives. Budgeting is then done

through negotiation between the military services and DOD’s Comptroller. 

GAO’s work has identified a number of DOD operations and programs as “high risk” because of their vulnerability to waste, fraud, abuse, and mismanagement. Many of DOD’s management and budgeting processes

are not linked in a coherent, results-oriented manner. As a result, DOD cannot ensure that its budgets and its

annual and future years’ plans are reasonable or affordable or that they will achieve the results necessary to

ensure national security. DOD’s planning process has been criticized because it fails to articulate a clear

vision and does not consider resource constraints at a broad enough level. In addition, it does not provide

decision makers with alternative options. Finally, it does not provide good output measures, which help to

determine the true cost of providing capability to the war fighter. Recently, the Deputy Secretary of Defense

issued new policy memorandums and a management initiative decision to revamp the PPBS process to

address some of these issues. 
176 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 2.2

Potential Outcomes

■ Increased accountability of the Office of the Secretary of Defense for planning and allocating 

resources and of the military services and 

defense agencies for executing their budgets to 

achieve their objectives

■ Improved accountability through providing of 

information to defense-related appropriations 

and authorization committees for their deliberations on DOD’s budgets

■ Improved budget and program planning to realistically address changing national security needs 

with limited resources

■ Improved performance of DOD programs 

through a greater focus on results and high-risk 

areas
GAO STRATEGIC PLAN 2004–2009 177

STRATEGIC OBJECTIVE 2.3

Advance and Protect U.S. International Interests

Issue: Although U.S. leaders agree on the ultimate 

goal of promoting global peace, prosperity, and stability, and have spent over $27 billion on international affairs (See fig. 2.3), intense debate is 

occurring over how to achieve that goal.

Figure 2.3: Spending Type for the $27 Billion in 

Fiscal Year 2002 International Affairs Funds

Conflict interventions to make or keep the peace, 

stabilize failed states, and end terrorist regimes have 

dominated recent U.S. foreign policy actions. These 

interventions are sometimes controversial, both 

domestically and internationally. They also are often 

costly: The United States has spent more than 

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

the costs of military intervention in Afghanistan and 

Iraq are predicted to be even greater. Such interventions are likely to continue to play a prominent role 

in stabilizing regions used as staging areas for 

efforts to undermine or threaten U.S. interests.

U.S. foreign aid to developing countries is critical 

for advancing U.S. economic and security interests. 

For example, the United States supports countries 

trying to adopt democratic and free market structures after conflicts through developmental and 

humanitarian programs as well as rule-of-law assistance and measures to combat corruption. These 

countries and regions in transition have combined 

populations in excess of 2 billion, and they face 

complex development problems. Ensuring the 

effectiveness and efficiency of these programs is 

important because the extent to which countries 

can successfully make the transition to and maintain 

democratic governments and market economies 

will significantly affect U.S. security and economic 

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

Protecting U.S. strategic interests in the face of new 

tests has presented challenges for alliances established decades ago and raised questions about how 

the United States should respond to shifting needs 

and priorities. Terrorist attacks against the United 

States and interventions in Afghanistan and Iraq 

have given rise to new U.S.-led coalitions to pursue 

military, political, and economic efforts to erode terrorists’ networks and their sources of support. Traditional alliances continue to evolve. For example, 

NATO’s focus is changing from defending the territory of Western Europe to promoting peace and stability outside of its member countries as it expands 

its membership eastward. The United States continues to provide bilateral security assistance and 

pursue programs that counter transnational threats, 

like drug trafficking and infectious diseases, in order 

to foster international security. 

Conducting foreign affairs is becoming more complicated as the lines between domestic and international issues blur and the threat of terrorist attacks 

on U.S. facilities and personnel overseas changes 

how America does business. About 35 federal agencies have around 19,000 U.S. staff assigned to overseas embassies, and most federal policies have 

international aspects. The State Department plays a 

key role in coordinating U.S. policy and programs 

for regions, countries, or multilateral organizations. 

To carry out its responsibilities, the State Department operates more than 250 embassies and consulates in over 160 countries. The size and 

composition of the department’s overseas infrastructure and human capital are being questioned, particularly in light of security concerns. Similarly, U.S. 

participation in multilateral organizations, such as 

the United Nations, is sometimes debated when 

questions arise about these organizations’ effectiveness and their ability to advance U.S. interests. Also 

being questioned are the practices for granting 

entry into the United States and the need to block 

Foreign 

Affairs

Administration 

and

Broadcasting

30%

Other

6%

Military 

Assistance

17%

Multilateral

Assistance

5% 

Bilateral 

Assistance

42%

Source: Department of State.
178 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 2.3

the entry of terrorists and criminals while at the 

same time facilitating entry for legitimate travel key 

to the nation’s prosperity. Moreover, attacks on the 

United States prompted a rethinking of U.S. public 

diplomacy and public affairs activities and ways to 

better understand, inform, and influence foreign 

publics and policymakers.

Performance Goals: To support efforts by the 

Congress and the federal government to address 

these issues, GAO will

■ analyze the plans, strategies, roles, costs, and 

results of the United States and its allies in 

conflict interventions;

■ analyze the effectiveness and management of 

U.S. foreign aid and developmental and 

humanitarian programs and the tools used to 

implement them;

■ analyze the plans, costs, and outcomes of 

responding to challenges to U.S. strategic 

interests;

■ evaluate the extent to which U.S. interests are 

effectively served by U.S. participation in 

multilateral organizations; and

■ assess the strategies and management practices 

for U.S. foreign affairs functions and activities.
GAO STRATEGIC PLAN 2004–2009 179

STRATEGIC OBJECTIVE 2.3

Performance Goal 2.3.1: Analyze the Plans, Strategies, Roles, 

Costs, and Results of the United States and Its Allies in 

Conflict Interventions

Key Efforts

■ Assess the roles and capabilities of the United 

States, coalitions of other nations, and international organizations such as the United Nations 

in peacekeeping and similar military interventions in areas of conflict

■ Evaluate U.S. and multilateral activities intended 

to stabilize Afghanistan and Iraq and manage 

their transition to a secure, sustainable desired 

outcome 

Significance

Military interventions meant to maintain peace between nations, stabilize states, or end terrorist regimes are

major activities for the United States, some of its allies, and regional organizations that address security concerns. The United States has employed its armed forces and civilian agencies, often in conjunction with U.S.

allies and the international community, including the Organization for Security and Cooperation in Europe

and the European Union, to address territorial disputes, armed ethnic and nationalistic conflicts, civil wars,

and terrorist threats that endanger regional and international peace and stability. Successful interventions

often require multidimensional operations involving political and diplomatic efforts and sophisticated intelligence and communications capabilities and security measures. In the 1990s, the United States participated in

such operations in the Balkans, Cambodia, Haiti, and Somalia. In addition, the United States and its allies

continue to maintain a significant military presence in South Korea to deter an outbreak of war and could

possibly play a role in enforcing a future political settlement to what has essentially been a 50-year cease-fire.

These conflict interventions are intended to defend the United States and advance its interests. They are also

costly, particularly when the military role is extensive or prolonged. For example, the United States spent

more than $23 billion in the Balkans during the 1990s. 

More recently, the United States is playing a major role in Afghanistan and Iraq. The United States plans to

spend about $817 million in Afghanistan in fiscal year 2003, and the Congress appropriated $79 billion in fiscal year 2003 emergency supplemental funds for military operations and rebuilding efforts in Iraq. The complexities and high costs of these operations raise concerns about how interventions are planned, executed,

and coordinated and whether resources are being used efficiently. 

Potential Outcomes

■ Improved planning, execution, and coordination 

of U.S. and multilateral operations and more efficient use of military and civilian resources in current and future conflict interventions

■ Improved congressional oversight of U.S. and 

international efforts to bring security to Afghanistan and Iraq
180 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 2.3

Performance Goal 2.3.2: Analyze the Effectiveness and 

Management of U.S. Foreign Aid and Developmental and 

Humanitarian Programs and the Tools Used to Implement 

Them

Key Efforts

■ Monitor and evaluate U.S. efforts to provide 

postconflict developmental and humanitarian 

assistance, including assistance to Iraq and 

Afghanistan 

■ Determine the accountability for and effectiveness of U.S. humanitarian and development 

assistance, including assistance funded through 

the proposed Millennium Challenge Account

■ Assess U.S. efforts to conduct nation-building 

activities, including programs to enhance the 

rule of law, democracy, and governance and to 

combat crime and corruption

■ Evaluate the effectiveness of U.S. programs to 

combat HIV/AIDS and other emerging infectious 

diseases

Significance

U.S. foreign assistance policy has been revised in response to the September 11, 2001, terrorist attacks and

others that followed. The September 2002 National Security Strategy elevated development assistance to the

third pillar of U.S. national security, along with defense and diplomacy. In 2001 and 2003, the United States

took military action against Afghanistan and Iraq, and multibillion-dollar, multiyear efforts to rebuild these

countries have begun. In fiscal year 2003, the Congress appropriated about $2.5 billion in emergency supplemental funds for reconstruction and humanitarian relief for Iraq alone. The United States currently spends

approximately $10 billion annually on humanitarian and developmental assistance programs around the

world. The proposed Millennium Challenge Account would increase assistance levels up to $15 billion annually by fiscal year 2006—representing one of the largest increases in foreign aid in half a century. In an effort

to advance democracy and support good government around the world, the United States implements assistance programs to fight corruption in foreign countries and to combat transnational crime and drug trafficking. 

In addition to causing tremendous human suffering, the HIV/AIDS pandemic is viewed as a threat to global

economic growth and security. The President has signed a 5-year, $15 billion emergency plan for AIDS relief

and established the State Department as the coordinator of the global effort. In light of concerns about the

effectiveness of U.S. assistance, continued attention must be given to evaluating assistance program accountability and management, determining whether foreign assistance efforts are achieving their intended objectives, and assessing whether U.S. foreign aid programs are being managed effectively to advance U.S. policy

goals.

Potential Outcomes

■ Increased accountability for U.S. funds and 

greater focus on achieving results that advance 

U.S. policy objectives

■ Better informed government decisions about the 

best options for delivering foreign assistance

■ Improved effectiveness and efficiency of foreign 

assistance programs

■ More informed congressional evaluations of the 

options for U.S. and multilateral assistance and 

their advantages and disadvantages
GAO STRATEGIC PLAN 2004–2009 181

STRATEGIC OBJECTIVE 2.3

Performance Goal 2.3.3: Analyze the Plans, Costs, and 

Outcomes of Responding to Challenges to U.S. Strategic 

Interests

Key Efforts 

■ Analyze the implications and costs of evolving 

U.S. military alliances and international security 

arrangements, including efforts to transform and 

augment regional and international security 

organizations, such as NATO

■ Assess the management, costs, and benefits of 

U.S. bilateral security assistance programs, such 

as foreign military financing and international 

military education and training

■ Evaluate U.S. programs and initiatives to counter 

transnational threats and global forces affecting 

U.S. interests, such as international terrorism and 

illegal trafficking in drugs and persons

■ Examine efforts of U.S. and international agencies to locate, freeze, and seize illegitimate financial assets of terrorist or criminal groups or 

corrupt regimes

Significance

The terrorist attacks of September 11, 2001, have highlighted serious challenges to U.S. efforts for building a

stable and secure world. Despite the accomplishments of the military campaigns in Afghanistan and Iraq, the

United States has yet to fully disable terrorist networks that threaten U.S. and world security. Furthermore,

other security challenges continue to arise; for example, the United States faces threats from a possibly

nuclear-armed rogue state (North Korea) and competition from China’s emerging economic and military

capabilities. 

In response to these and other challenges to its strategic interests, the United States has sought to achieve

international security, on the one hand, by strengthening standing alliances such as NATO through expansion of its membership and capabilities, and on the other hand, by acting with an ad hoc “coalition of the

willing,” as in Iraq. These approaches leave a variety of options for action open to the United States and its

allies. They also raise questions about the most effective approaches for achieving international security

today and the implications of these approaches for developing effective security arrangements and providing

bilateral security assistance to other countries. 

Less conventional transnational threats, such as terrorism, trafficking in drugs and persons, and water disputes, threaten regional stability in strategically important areas, including the Middle East, Central Asia, and

Latin America. These threats create different challenges for developing effective security alliances; providing

security assistance to other countries; and developing the means to deny terrorists, criminals, and corrupt

regimes the ability to take advantage of the complexity of the world financial system to sustain their activities.

The United States is working with the United Nations, the Financial Action Task Force on Money Laundering,

and other organizations to improve control over assets belonging to illegitimate regimes and criminals.

Potential Outcomes

■ Enhanced coordination among U.S. allies and 

greater support for U.S. national security interests

■ Improved congressional decision making and 

oversight concerning the costs and benefits of 

new security arrangements and changes in existing security institutions
182 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 2.3

■ More effective and coordinated implementation 

of programs to enhance U.S. security interests 

and promote more equitably shared costs 

between the United States and its allies

■ Greater oversight of how U.S. agencies cooperate with international agencies and the financial 

sector in locating and repatriating illegally 

obtained assets and revenues
GAO STRATEGIC PLAN 2004–2009 183

STRATEGIC OBJECTIVE 2.3

Performance Goal 2.3.4: Evaluate the Extent to Which U.S. 

Interests Are Effectively Served by U.S. Participation in 

Multilateral Organizations 

Key Efforts

■ Assess multilateral organizations’ capabilities and 

effectiveness in carrying out their missions

■ Evaluate U.S. efforts to fight global infectious diseases through financing and supporting multilateral organizations’ activities

■ Assess U.S. participation in and oversight of multilateral organizations, including efforts to reform 

United Nations’ management

Significance

The United States seeks to advance its interests by participating in a wide variety of multilateral organizations,

including the United Nations and 11 related agencies (such as the World Intellectual Property Organization),

the International Monetary Fund (IMF), the World Bank, and four regional development banks. These organizations facilitate international cooperation in many areas, including, promoting economic and social development; responding to security challenges; and addressing transnational threats such as terrorism, crime, and

infectious diseases. For example, the United States is working with the World Health Organization; the Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund); and the Joint United Nations Programme on

HIV/AIDS to stem the spread of infectious diseases. These diseases are increasingly viewed as a threat to

economic growth and political stability. Programs to fight these diseases depend on U.S. resources. The

United States has been the largest contributor to the Global Fund, which is an international public-private

partnership contributing over $620 million since 2001, which represents 43 percent of total contributions to

date.

The United States is a strong advocate of action within multilateral institutions to (1) address today’s needs,

threats, and opportunities; (2) become more efficient and effective; and (3) ensure financial and programmatic accountability for funds that member nations provide. For example, the United States has urged the

United Nations and the multilateral development banks to focus on monitoring and evaluating performance,

and to use information on performance when making funding decisions. The United States has also

requested that the United Nations improve its human capital management practices. 

Potential Outcomes

■ Enhanced congressional evaluation of multilateral organizations’ activities and the results that 

they produce and, therefore, the gains to be realized and the limitations implied by working 

through these organizations

■ Improved accountability, increased focus on 

results, and increased transparency at these organizations and more consideration of options to 

strengthen their capabilities and effectiveness

■ More effective use of resources to advance U.S. 

interests through participating in these organizations
184 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 2.3

Performance Goal 2.3.5: Assess the Strategies and 

Management Practices for U.S. Foreign Affairs Functions 

and Activities

Key Efforts 

■ Assess efforts to improve U.S. diplomatic readiness and respond to human capital, technology, 

and other management challenges

■ Assess the effectiveness of visa issuance and border control efforts

■ Evaluate the efficacy of U.S. public diplomacy 

and other key programs 

■ Evaluate U.S. government efforts to protect its 

overseas personnel and facilities and to enhance 

the safety of U.S. citizens abroad

Significance 

The United States spends over $20 billion annually for traditional foreign affairs activities, including operating

the State Department and providing foreign aid. Long-standing questions exist regarding the level of

resources and human capital needed to maintain the network of about 260 U.S. embassies, consulates, and

other facilities. Most federal policies have international aspects, and about 35 agencies have staff assigned

overseas to implement a variety of programs and activities to support U.S. foreign policies and domestic

interests. Agencies such as the Departments of Agriculture, Commerce, Defense, Homeland Security, and Justice and the U.S. Agency for International Development have significant overseas operations that cover a vast

array of programs and functions. These are administered in coordination with State and its overseas embassy

network. It is important that the resources expended to accomplish U.S. foreign policy goals are well managed. Setting priorities and reconciling the many competing interests the United States has in its relationships

with foreign countries is a challenge, but is critical for an effective overall foreign policy.

In recent years, security threats at home and abroad have required the United States to rethink its foreign

affairs functions and activities, and the U.S. government has expanded overseas staffing. In addition, the U.S.

government has placed renewed emphasis on key programs designed to protect U.S. borders and promote

U.S. foreign and domestic interests. The United States annually processes 9 million entry visas to foreign visitors, and several agencies work to prevent the entry of those who are a danger to the United States or who

are likely to remain in the United States illegally. Furthermore, public diplomacy programs promoting U.S.

national interests abroad and U.S. international broadcasting are once again at the forefront of a coordinated

foreign policy. In addition, the United States recently began a $16 billion program to replace about 160 of its

overseas facilities to provide secure, modern facilities for overseas workers. The Congress needs to ensure

that these and other critical programs achieve their intended results and that the U.S. government is adequately addressing potential security threats.

Potential Outcomes

■ More effective and efficient use of federal 

resources and human capital to meet foreign 

policy objectives

■ Greater impact from key U.S. programs that 

directly and indirectly support the safety and 

well-being of U.S. citizens

■ Better coordination and synergy among U.S. foreign affairs agencies that are stakeholders in a 

given region or country
GAO STRATEGIC PLAN 2004–2009 185

STRATEGIC OBJECTIVE 2.4

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

and Security Interests

Issue: The increasing interdependence of the 

world’s economies has a significant impact on the 

national security and the economic well-being of 

the American people. U.S. exports have grown 

much faster than the economy. (See fig. 2.4.) 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 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 more 

difficult for the United States to maintain control 

over critical technologies and the industrial base on 

which U.S. economic and military security depends. 

Also, the United States has faced terrorist threats 

emanating from some of the least integrated countries in the world as well as health threats from 

some of the most integrated regions of the world. 

For policymakers, several aspects of these trends 

require particular attention.

Figure 2.4: Growth in U.S. Exports Compared to 

Overall Output (GDP) since 1970

Note: The decline in exports that began in 2000 can be 

attributed to the recent global economic downturn; it is not 

clear whether this downward trend will continue.

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 2001 admission to the World 

Trade Organization (WTO). In addition, the United 

States is currently involved in a major regional trade 

negotiation (the Free Trade Area of the Americas), 

multilateral negotiations in the WTO, as well as 

numerous free trade agreements with other partners. 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 industrial base is driving 

changes in the way the United States obtains technologies and capabilities to protect its national security interests. As companies increasingly engage in a 

wide variety of business arrangements across 

national borders, DOD is seeking new ways to benefit from the competitive sources and innovative 

technologies that a diverse industrial base may provide. For example, the department is partnering 

with foreign countries to develop major weapon 

systems, such as the Joint Strike Fighter aircraft program. 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 new approaches 

to protect national security interests.

Global financial health and the maintenance of the 

world financial system are critical to long-term U.S. 

objectives and cornerstones of U.S. foreign policy. 

Financial crises in Argentina, Mexico, Asia, Russia, 

and elsewhere have raised questions about what 

can be done to prevent, solve, or contain the spread 

of regional financial crises and what can be done to 

reduce the debt burden on poor countries. International financial institutions, such as the International 

Monetary Fund (IMF) and the World Bank, are at 

the center of efforts to address financial crises. The 

United States is the major contributor to the IMF and 

0

100

200

300

400

500

600

Index, 1970=100

Exports

GDP

1970

1972

197419761978

1980

1982

1984

19861988

1990

1992

1994

199619982000

2002

Source: International Monetary Fund data.
186 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 2.4

relies heavily on it and the World Bank to promote 

world economic health. The operations and transparency of these institutions have come under 

increased scrutiny. 

Overseeing financial institutions and markets in the 

21st century is a growing challenge. Trillions of dollars flow through the nation’s financial institutions 

and markets, including the investments and retirement savings of working households. The globalization of financial firms and markets, coupled with 

continuing advances in technology, have created 

opportunities to improve the speed and efficiency 

of market operations. But these advances also provide new opportunities for illegal market activities 

and may broaden the scope of financial crises or 

cause them to spread more rapidly. The creation of 

new products and the increasing importance of new 

market participants continue to pose challenges to 

existing regulatory frameworks and oversight programs. Innovations such as the increasing use of 

Internet-based financial activities also present new 

regulatory challenges. While these innovations can 

benefit U.S. markets and investors, they also expose 

individuals to increased risks and potential fraud. 

Performance Goals: To support efforts by the 

Congress and the federal government to address 

these issues, GAO will 

■ analyze how U.S. interests are served through 

trade agreements and U.S. programs, 

■ improve understanding of the effects of a global 

industrial base on U.S. national security interests,

■ assess how the United States can influence 

improvements in the world financial system, 

■ assess the ability of the financial services 

industry and its regulators to maintain a stable 

and efficient financial system in the face of 

market change and innovation, and 

■ assess the effectiveness of regulatory programs 

and policies in ensuring access to financial 

services and deterring fraud and abuse in 

financial markets.
GAO STRATEGIC PLAN 2004–2009 187

STRATEGIC OBJECTIVE 2.4

Performance Goal 2.4.1: Analyze How U.S. Interests Are 

Served through Trade Agreements and U.S. Programs 

Key Efforts

■ Assess preparations for, and progress in, trade 

negotiations, including the World Trade Organization’s (WTO) Doha Development Agenda and 

the Free Trade Area of the Americas 

■ Evaluate U.S. and international efforts to ensure 

the implementation of and compliance with 

trade agreements, which include the broad WTO 

agreements and narrow bilateral intellectual 

property rights agreements 

■ Analyze the structure, processes, and resources 

used to develop, implement, and evaluate U.S. 

trade policy and programs, such as export promotion, trade capacity building, and efforts to 

monitor textile transshipments

■ Evaluate the relationship between trade and 

other competing U.S. policy goals and emerging 

domestic and international challenges, such as 

the need to balance security and economic concerns when regulating trade at the border

Significance 

The future direction of U.S. trade policy continues to be debated in the Congress, throughout the nation, and

around the world. Trade proponents maintain that establishing new trade rules, expanding coverage of trade

agreements to new countries, and enforcing existing trade agreements are critical to U.S. commercial and foreign policy interests. For these reasons, the executive branch works to complete trade agreement negotiations on several fronts through its newly obtained trade promotion authority. These include the WTO’s Doha

Development Agenda, Free Trade Area of the Americas, and other regional and bilateral free trade agreements. Developing countries are taking a more active role in negotiating trade agreements, some claiming

they should not be held to the same level of trade liberalization as developed countries. 

Nevertheless, some domestic observers express concern that the United States has not been sufficiently

aggressive in monitoring and enforcing more than 400 existing trade-related agreements. U.S. trade policy

and programs seek to increase exports to ensure that U.S. firms are able to compete globally, while aiming to

contain import surges that cause significant injury to certain domestic industries. For example, U.S. government agencies have a role in promoting exports as well as administering U.S. trade remedy laws. Some critics

of U.S. trade policy and programs doubt that regional and global trade regimes can effectively achieve their

desired outcomes and may compromise U.S. sovereignty. 

Finally, the United States uses its trade policy and programs as tools to support other foreign policy objectives. U.S. trade and investment assist developing countries around the globe in instituting market-based

economies, democratically elected governments, and stability in areas of conflict. Since the September 11,

2001, terrorist attacks, security has become an important issue in trade policy. In such an environment, GAO

can provide the Congress with independent, in-depth analyses of the status of trade negotiations, the extent

to which trade agreements are being implemented, and the effectiveness of the U.S. government apparatus

to develop and implement trade policy and programs. 
188 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 2.4

Potential Outcomes

■ Improved congressional oversight of trade negotiations, key emerging issues, economic implications, and the relationship of these issues to 

achieving U.S. objectives

■ Improved implementation of and compliance 

with trade agreements to ensure that the United 

States obtains anticipated benefits and mitigates 

costs

■ More efficient and effective U.S. trade policy 

making and programs

■ Greater congressional understanding of the linkages and potential trade-offs between trade and 

other U.S. policy goals
GAO STRATEGIC PLAN 2004–2009 189

STRATEGIC OBJECTIVE 2.4

Performance Goal 2.4.2: Improve Understanding of the 

Effects of a Global Industrial Base on U.S. National Security 

Interests

Key Efforts

■ Evaluate the management of U.S. technology 

transfers

■ Assess the U.S. government’s knowledge of and 

ability to manage its commercial and foreign 

supplier base to meet national security needs

■ Evaluate DOD’s management of international 

weapons programs

Significance

The multiple, and often divergent, interests of a global industrial base present challenges to the U.S. government as it obtains technologies and capabilities to protect national security interests. Domestic firms that

develop defense products, produce parts and components for weapon systems, and integrate and maintain

those weapons are forming business relationships with foreign firms. At the same time, DOD is increasingly

relying on commercial products from industries that have already established such international relationships.

These trends are reflected in the department’s new emphasis on partnering with foreign countries to develop

major weapon systems, such as the Joint Strike Fighter aircraft program. Taking advantage of industry globalization has the potential to speed innovation and reduce costs but also carries potential threats to the technological superiority of the U.S. military. GAO’s independent assessments of the effects of increased

globalization on defense acquisitions will provide information needed for the U.S. government to manage

technology transfers, the industrial base, and international weapon systems programs.

Potential Outcomes

■ Improved effectiveness of technology transfer 

processes

■ Greater understanding of the effects of the U.S. 

government’s increased use of commercial and 

foreign suppliers to meet national security needs

■ Improved federal management of international 

weapons programs
190 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 2.4

Performance Goal 2.4.3: Assess How the United States Can 

Influence Improvements in the World Financial System 

Key Efforts

■ Assess U.S. participation in and oversight of multilateral financial institutions, including Treasury 

Department efforts to influence how these institutions address the debt problems of developing 

countries

■ Evaluate U.S. government efforts to influence 

developments in international markets through 

international accords; U.S. financing programs 

that support trade and investment; and other 

government activities that affect the international 

flow of goods, services, and financial assets

Significance

Maintaining the health of the global financial system is critical to long-term U.S. objectives and is a cornerstone of U.S. foreign policy. International efforts to maintain this system are primarily undertaken through

international financial institutions, most notably the World Bank and the IMF, which use various means to

help countries deal with financial problems and development needs. In light of continuing financial crises

and persistent poverty in many developing countries, the Congress and others have raised concerns regarding the effectiveness of the IMF, the World Bank, and related multilateral organizations in maintaining the

health and stability of the world financial system. This includes their efforts to address the increasing debt

burdens of middle- and low-income countries, 42 of which have been classified as heavily indebted. 

The United States seeks to create an environment that supports its foreign policy objectives by influencing

international economic activity and policy. It does this through various activities, which include negotiating

international financial accords, like those sponsored by the Organization of Economic Cooperation and

Development to promote market economies; providing government finance programs like those run by the

Export-Import Bank of the United States and the Overseas Private Investment Corporation to support U.S.

trade and development objectives; and seeking consensus on the use of exchange rate policies, capital controls, and similar measures to promote efficient and sound international trade and investment flows with

other countries.

Potential Outcomes

■ Increased understanding of the funding liabilities 

arising from U.S. participation in international 

debt relief efforts and more effective programs 

for reducing poor countries’ debt burdens

■ More informed congressional oversight of U.S. 

foreign economic policy, including efforts to 

reach accords on economic issues

■ More efficient and effective management of U.S. 

government international finance programs and 

related activities
GAO STRATEGIC PLAN 2004–2009 191

STRATEGIC OBJECTIVE 2.4

Performance Goal 2.4.4: Assess the Ability of the Financial 

Services Industry and Its Regulators to Maintain a Stable 

and Efficient Financial System in the Face of Market Change 

and Innovation

Key Efforts 

■ Assess how regulators oversee financial firms for 

which business functions cross the traditional 

lines of regulation 

■ Evaluate whether the overall regulatory structure 

and the role of existing financial regulatory agencies are appropriate given the ongoing changes 

in market practices and financial institution consolidation

■ Assess how well regulators manage their operations and make effective use of technology

■ Assess how well regulators respond to new 

products and market participants; emerging 

threats; and the impact of these developments 

on safety, soundness, and competition in the 

financial services industry 

Significance 

The financial services industry continues to develop, both in the size of financial institutions and in the range

and impact of services being provided to customers. This growth and the introduction of new products

present regulators with new challenges. Risk management practices are becoming more complex and difficult for regulators to assess. U.S. and foreign bank regulators’ multiyear effort to better align capital standards

with the risks institutions face could improve financial system soundness but could also alter the competitive

landscape. Securities regulators have also been granted new authorities and expanded resources that will

have to be employed effectively. Regulators are also struggling to assess the impact of trading mechanisms

and market participants (such as electronic communications networks that have become a vital part of the

overall functioning of the markets). 

Ensuring that the financial system remains stable but is also efficient and flexible enough to meet the changing demands of its customers is an important part of the government’s role in ensuring the proper functioning of the nation’s economy. The potential for new threats to financial market stability—such as those from

terrorism—challenges financial regulators and the Congress to ensure not only that customers and markets

are protected but also that increased security does not stifle market efficiencies or hinder the introduction of

beneficial new products and services. 

Potential Outcomes

■ Improved efficiency, effectiveness, and consistency of the overall federal regulatory framework 

■ Increased efficiency and competitiveness of the 

nation’s financial markets

■ Greater assurance that markets are resilient in 

the face of damage from physical or other threats 

■ Improved readiness of regulators to oversee new 

products and markets, financial holding company arrangements, and risk management practices 

■ Enhanced efficiency and effectiveness in the way 

regulators manage their operations, staff, and 

technology 

■ Enhanced understanding and oversight by the 

Congress and regulators of the effects of new 

market practices, new participants, and new capital standards on financial market stability, efficiency, and competitiveness
192 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 2.4

Performance Goal 2.4.5: Assess the Effectiveness of 

Regulatory Programs and Policies in Ensuring Access to 

Financial Services and Deterring Fraud and Abuse in 

Financial Markets

Key Efforts

■ Determine whether consumers and businesses, 

particularly low- and moderate-income consumers and small businesses, have appropriate 

access to financial services and assess the effectiveness of regulatory programs in ensuring fair 

and open access to financial markets 

■ Assess the effectiveness of regulatory programs 

and policies, including accounting and auditing 

disclosure and corporate governance requirements, in deterring fraud and abuse in the financial marketplace 

■ Assess whether current regulatory efforts, policies, and requirements are adequate to ensure 

that investors and consumers are sufficiently 

informed of the costs and risks of traditional and 

innovative financial products and services 

■ Assess how well customers and investors understand their rights and responsibilities in the 

financial arena, as well as the risks and rewards 

of various financial products

■ Assess the adequacy of regulatory responses to 

financial crime, including money laundering, 

identity theft, and terrorist financing

Significance

Millions of U.S. households have invested in the financial markets or deposited money at financial institutions. To a greater degree than ever before, the products offered by the financial services industry, such as

mutual funds and insurance, are important to the financial well-being and retirement security of U.S. citizens.

However, as a result of technological advances and globalization, consumers and businesses may also be

more vulnerable to fraudulent and abusive practices in the marketing of financial services. 

Over the years, various regulatory programs and policies have been adopted with elaborate compliance and

enforcement systems to help ensure open and fair access to markets and to protect customers from fraud and

abuse. However, the removal of traditional legislative barriers and changes in the structure of the financial

services industry have raised questions about the regulatory effectiveness of these programs and policies.

Further, the validity of financial accounting and disclosure models and the adequacy of oversight by public

companies or mutual fund boards of directors have also come under scrutiny and many organizations are

working to implement the accounting-related reforms arising from the Sarbanes-Oxley Act. 

With individuals making greater use of financial products and interacting more directly with the markets than

in the past, adequate risk disclosure and assurance of financial privacy have also assumed more importance.

As a result, understanding the extent of financial literacy and evaluating approaches to enhance it have

become increasingly important. Emerging issues such as increased instances of identity theft and the use of

the financial markets and institutions for illegitimate purposes, such as money laundering or terrorist financing, also demand regulatory attention to ensure that customers are protected and that the integrity of the

financial system is preserved. 

 Potential Outcomes

■ Increased assurance of fair and open access to 

financial markets

■ Improved regulatory actions to detect and deter 

fraud and abuse within the financial services 

industry 
GAO STRATEGIC PLAN 2004–2009 193

STRATEGIC OBJECTIVE 2.4

■ Improved disclosure of financial product costs, 

benefits, and risks

■ Better understanding of the state of financial literacy and effectiveness of methods to enhance it

■ Regulatory oversight and financial institution 

compliance programs that better ensure that all 

financial transactions are from legitimate sources

■ Cost-effective improvements in oversight and 

compliance programs that minimize the regulatory burden
194 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 3.1

Reexamine the Federal Government’s Role in Achieving 

Evolving National Objectives

Issue: Within the context of the major trends and 

long-term fiscal imbalance, evaluating the role of 

the government and the programs it delivers is key 

to determining how to best position the federal government for the 21st century. With the government 

facing an array of complex challenges and opportunities, a strategic long-term view is critical in considering how best to design programs to manage 

effectively across boundaries and meet the nation’s 

needs and priorities today and in the future. Policymakers will need forward-looking information to set 

the stage for early warnings about emerging threats 

and make informed choices about effective government responses.

As the pace of change accelerates in every aspect of 

American life, policymakers and the public need 

more and better information to assess where the 

nation is and where it is going. In this regard, developing key national indicators for the United States 

can help policymakers assess the overall position 

and progress of the nation in key areas, frame strategic issues, and support informed public debate 

and decisions within and between levels of government and the United States as a whole.

Addressing the nation’s strategic challenges increasingly depends on the joint efforts of all levels of 

government and the interactions and interdependencies between the various actors, policy tools, 

and management functions. (See fig. 3.1.) In most 

federal mission areas—from low-income housing to 

food safety to higher education assistance—national 

goals are achieved through the use of various policy 

tools, such as direct spending, grants, loans and 

loan guarantees, insurance, tax preferences, and 

regulations. For example, as figure 3.2 shows, in 

fiscal year 2003, the federal government relied on a 

mix of entitlement and discretionary spending, tax 

preferences, and loan guarantees in delivering 

Medicare and federal health care. Any assessment of 

federal missions and strategies must look at the 

tools that the federal government uses and the participation of other organizations in achieving 

national objectives.

Figure 3.1: Policy Tools, Actors, and Management 

Functions That Influence Successful Government 

Performance

Figure 3.2: Relative Reliance on Policy Tools in 

Health Care, Fiscal Year 2003

Note: Loan guarantees accounted for about $104 million, or 

about 0.02 percent, of the approximately $591 billion in total 

federal health care resources.

Tools Actors Management

Executive 

agencies

State and locals

Foreign 

government

GSEs

Nonprofits

Contractors

Faith-based for 

profits

Direct services

Grant-in-aid

Contracting

Credit and 

insurance

Tax 

expenditures

User fees

Regulation

Strategic planning

Performance 

management

Human capital

Budgeting

Financial 

management

IT management

Acquisitions

and sourcing

Source: GAO analysis.

Tax 

Expenditures

20%

Discretionary 

Budget 

Authority

Mandatory

Outlays

71%

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

9%
GAO STRATEGIC PLAN 2004–2009 195

STRATEGIC OBJECTIVE 3.1

Although policy tools have proliferated in recent 

decades, knowledge of how to design and manage 

the federal policy tool set has not kept pace. Policymakers need a better understanding of how individual policy tools operate, how to measure their 

performance and effectiveness, which actors participate in implementing various tools, and what features are necessary to ensure accountability and 

oversight.

The effectiveness of federal programs has increasingly become dependent on state and local management and resources as well as constructive 

interactions between federal, state, and local actors, 

including private and nonprofit entities. The intergovernmental system is being tested by a complex 

array of specific short- and long-term challenges. 

Federal, state, and local governments are facing 

daunting problems in managing programs involving 

numerous actors inside and outside of government 

in areas ranging from homeland security to education to health care. Moreover, the unique advantages of a federal system—the flexibility and 

capacity to respond to local needs—are challenged 

by long-term trends such as advances in technology 

and communications that span state and national 

boundaries and inspire calls for consistent national 

regulatory and tax policies.

Performance Goals: To support the Congress in 

reexamining the federal government’s role in 

achieving evolving national objectives, GAO will

■ examine emerging challenges and opportunities 

to position the federal government for the 21st

century,

■ develop new resources and approaches that can 

be used to assess the nation’s position and 

progress,

■ explore ways to evaluate the effectiveness of the 

entire set of policy tools that the federal 

government uses to achieve national objectives, 

and 

■ assess how involvement of state and local 

governments and nongovernmental 

organizations affects federal program 

implementation and achievement of national 

goals.
196 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 3.1

Performance Goal 3.1.1: Examine Emerging Challenges and 

Opportunities to Position the Federal Government for the 21st

Century

Key Efforts

■ Develop a foresight conceptual framework, evidence-based strategies, and methodological 

approaches for identifying current strategic challenges, longer-term 21st century challenges and 

opportunities, as well as potential government 

responses

■ Examine one or more emerging challenges, such 

as water scarcity, slow labor force growth, or 

rapidly changing science and technology, and 

the implications for current programs

Significance

In charting the government course for the 21st century, policymakers will be accountable for positioning the

federal government to respond to current and future challenges and take advantage of emerging opportunities. A GAO series identifying key 21st century challenges would help educate congressional and other public audiences about specific policy areas warranting a fundamental reexamination and transformation of the

federal role. These publications would be agenda-setting documents and would raise questions and frame

issues for policymakers to consider. For example, while advances in science and technology present vast

opportunities to improve the quality of life and the performance of the economy and the government, they

also create challenges to the government’s and the Congress’s ability to evaluate their potential and assess

their effect on security, safety, privacy, and equity. 

Foresight into the long-term trends and their implications for government programs is key to identifying

potential threats, defining the scope of policy options, and laying out the range of possible outcomes and

implications of alternatives. Developing forward-looking strategies grounded in fact-based trend analyses and

evaluations can help policymakers to better foresee and respond to transformation opportunities for the federal government.

Potential Outcomes

■ Reexamination of current and existing program 

areas to test their relevancy and effectiveness in 

addressing the emerging program issues and 

challenges for the 21st century

■ Identification of emerging challenges and discussion of alternative policy choices facing federal 

leaders in addressing them effectively

■ Enhanced congressional, agency, and GAO 

capability to assess governmentwide implications of crosscutting challenges, anticipate future 

service needs, and identify emerging threats to 

program effectiveness and relevance
GAO STRATEGIC PLAN 2004–2009 197

STRATEGIC OBJECTIVE 3.1

Performance Goal 3.1.2: Develop New Resources and 

Approaches That Can Be Used to Assess the Nation’s Position 

and Progress

Key Efforts

■ Constructively engage in a national effort to 

develop comprehensive indicators for the United 

States by providing information to evaluate the 

position and progress of the nation

■ Establish relationships with communities of practice on key specialized information areas and 

build a body of knowledge that could assist 

GAO in its work on these issues with the Congress and improve the quality of information 

available for public decision making

■ Develop a portfolio of fact-based measures that 

can help enrich the dialogue with the Congress 

on strategic planning and create new electronic 

information resources to make these broad indicators more widely available

Significance

The dramatic changes, challenges, and increasing interdependencies facing the United States demand new

and more cross-sector and cross-border responses. Such responses could benefit from more integrated information resources and a fact-based assessment of what is happening and where the nation is going, both on

an absolute and relative basis. To that end, the Comptroller General, in cooperation with the National Academies, held a forum in February 2003 with national leaders and experts to explore whether and how to

establish a portfolio of national indicators for the United States. The participants generally agreed that developing a key national indicator system is important and complex. Such an effort will require applying “lessons

learned” from past efforts and engaging in the multitude of specialized and comprehensive efforts ongoing in

the United States, at the national, regional, state, and local levels, as well as around the world in other leading democracies. A comprehensive set of national indicators could help improve evaluations of the nation’s

progress and prospects in addressing key issues and support informed public debate and decisions about the

respective roles of the public and governments at all levels in addressing the challenges the nation faces. 

Potential Outcomes

■ Enhanced congressional, agency, state, local, 

and GAO capability to oversee and evaluate the 

performance of government and society

■ Increased insight and foresight available to the 

Congress and the American public on priority 

and emerging national challenges and policy 

decisions

■ Greater awareness of the effects of policies and 

programs on societal needs
198 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 3.1

Performance Goal 3.1.3: Explore Ways to Evaluate the 

Effectiveness of the Entire Set of Policy Tools That the Federal 

Government Uses to Achieve National Objectives

Key Efforts

■ Develop practical primers and workshops for 

congressional staff on the “tools of government” 

concept, including the use of grants, tax incentives, regulations, preemptions, loans, guarantees, and insurance

■ Analyze the portfolio of federal policy tools used 

in specific policy areas, such as affordable housing or neighborhood revitalization, and identify 

ways to improve the design and performance 

oversight across the tool mix

■ Identify grant management issues that affect 

future program performance outcomes, including conducting an assessment of the effectiveness of the Federal Financial Assistance 

Management Improvement Act of 1999

■ Examine how federal agencies achieve their strategic objectives by developing and implementing 

regulations 

■ Determine how agencies are establishing strategic goals, measuring performance, and evaluating the effectiveness of various policy tools in 

achieving program outcomes

Significance

Over the past decade, there has been a gradual but significant change in the way the federal government

does business, relying more on nonfederal actors such as state and local governments, contractors, private

business entities, nonprofits, and individuals to share in the responsibility for implementing federal programs.

Federal programs rely on grants, loans, loan guarantees, tax preferences, vouchers, regulations, and a host of

other indirect policy instruments. These indirect “tools of government” pose their own specific management

challenges. 

Potential Outcomes

■ Enhanced congressional understanding of how 

various tools of government can be most effectively used to achieve national objectives

■ Improved federal management of a wide range 

of programs that employ the various policy tools

■ Effective legislation for regulatory programs that 

involve federal, state, and local responsibilities
GAO STRATEGIC PLAN 2004–2009 199

STRATEGIC OBJECTIVE 3.1

Performance Goal 3.1.4: Assess How Involvement of State 

and Local Governments and Nongovernmental 

Organizations Affects Federal Program Implementation and 

Achievement of National Goals

Key Efforts

■ Determine the extent to which the Unfunded 

Mandates Reform Act has succeeded in deterring, modifying, or eliminating unfunded mandates

■ Determine how state and local jurisdictions 

within the National Capital Region and elsewhere are improving their preparedness and 

examine how the Department of Homeland 

Security’s (DHS) Office of State and Local Government Coordination interacts with state and 

local governments to enhance homeland security

■ Examine how changes in federal policies or economic trends might affect states’ structural budget balances and their capacity to meet their 

fiscal obligations

■ Analyze intergovernmental fiscal partnerships in 

programs of national interest and identify innovative regional approaches to intergovernmental 

coordination in specific policy areas

Significance

Responding to many of the nation’s critical challenges—such as meeting the health care needs of the poor or

countering terrorist threats—is the joint responsibility of all levels of government. The effectiveness of federal

programs has increasingly become dependent on state and local management and resources as well as constructive interactions between federal, state, and local actors, including private and nonprofit entities that are

partnering with government officials to carry out national policies and programs. This increased interdependence among levels of government presents many challenges, including those to managing programs involving numerous actors, providing flexibility, building capacity, and ensuring accountability within the American

intergovernmental system. Fiscal and policy issues facing each level of government are increasingly intertwined, and like the federal government, the states and localities face fiscal pressures from slowing revenue

growth and greatly increased spending demands.

Potential Outcomes

■ Enhanced congressional understanding of American federalism in the debate over whether current intergovernmental fiscal relationships are 

appropriate given emerging and existing needs

■ More efficient and effective use of federal funds 

provided to state and local governments to 

enhance homeland security 

■ Greater congressional insight into the intergovernmental challenges facing all levels of government including the mismatch between current 

revenues and spending demands, financing of 

health care, and the adequacy of current tax 

structures
200 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 3.2

Support the Transformation to a Results-Oriented, HighPerforming Government

Issue: The overarching trends and long-term fiscal 

challenges facing the nation drive the need to 

change how the government does business in the 

21st century. To become high-performing organizations (HPO), agencies must transform their cultures 

to respond to the transition that is taking place in 

the federal government’s role. By building fundamental management capacity, the federal government can improve its performance and deliver 

economical, efficient, and effective programs and 

services that the American people need in a costeffective and fiscally sustainable manner. Focusing 

on accountable, results-oriented management can 

help the federal government operate effectively 

within a broad network that includes other governmental organizations, nongovernmental organizations, and the private sector. 

As part of its transformation efforts, the federal government needs to create a culture that moves from 

outputs to results, stovepipes to matrixes, hierarchical to flatter and more horizontal structures, an 

inward to an external focus, micromanagement to 

employee empowerment, reactive behavior to proactive approaches, avoiding new technologies to 

embracing and leveraging them, hoarding knowledge to sharing knowledge, avoiding risk to managing risk, and protecting “turf” to forming 

partnerships. (See fig. 3.3.) People are an organization’s most important asset, and strategic human 

capital management should be the centerpiece of 

any effort to transform the cultures of government 

agencies. A focus on results, not just of the organization but of its contribution to national goals, is 

essential. In establishing a results-oriented culture 

that can reach its full potential, the organization and 

its leaders need to carefully select the best solution 

for the organization in terms of structure, systems, 

and processes. Information is an important asset 

that needs to be appropriately and effectively managed. Vital to successful transformation will be 

building the management capacity of federal agencies to support new ways of doing business—

including financial, IT, and acquisition management. 

Though progress is being made on many fronts, 

much remains to be done.

Figure 3.3: Cultural Changes and Key Practices Necessary for Successful Transformation

Today’s federal human capital strategies are not 

suited to meet current and emerging challenges or 

to drive needed transformation across the federal 

government. GAO has designated strategic human 

capital management as a governmentwide high-risk 

area, and this is also one of the President’s governmentwide management reform initiatives. The federal personnel system is clearly broken in critical 

respects—designed for a time and workforce of an 

earlier era and not able to meet the needs and challenges of a rapidly changing and knowledge-based 

environment. In the past 2 years, significant 

HPO

• Results-oriented

• Matrixes

• Flatter and more horizontal

• Externally focused

• Employee empowerment

• Proactive approaches

• Leveraging technology

• Sharing knowledge

• Managing risk

• Forming partnerships

Current State

• Output-oriented

• Stovepipes

• Hierarchical

• Inwardly focused

• Micro-managing

• Reactive behavior

• Avoiding technology

• Hoarding knowledge

• Avoiding risk

• Protecting turf

Transformation

9 Key Practices

• Leadership

• Integrated mission and goals

• Clear principles and priorities

• Goals and timeline

• Implementation team

• Line of sight

• Communication strategy

• Employee involvement

• World-class organization

Source: GAO analysis. 
GAO STRATEGIC PLAN 2004–2009 201

STRATEGIC OBJECTIVE 3.2

progress has been made, particularly on agencyspecific human capital reforms and the provision of 

certain flexibilities. However, much remains to be 

done to build an effective human capital infrastructure. As new authorities and flexibilities are provided, it will be vital to have the institutional 

infrastructure in place to use new authorities effectively. This institutional infrastructure includes, at a 

minimum, a human capital planning process that 

integrates the agency’s human capital policies, strategies, and programs with its program goals and 

mission and desired outcomes; the capabilities to 

develop and implement a new human capital 

system effectively; and a modern, effective, and 

credible performance management system that 

includes adequate safeguards, including reasonable 

transparency and appropriate accountability mechanisms, to ensure the fair, effective, and nondiscriminatory implementation of the system.

Agencies are confronted with long-standing and 

substantial challenges to becoming more results-oriented. 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 

of 1993 (GPRA) as its centerpiece. GAO’s work has 

shown significant growth in the number and types 

of results-oriented performance measures called for 

in GPRA. Managers’ perceptions of being held 

accountable for results also have grown. (See 

fig. 3.4.) On the other hand, weaknesses persist in a 

number of areas. Progress in building organizational 

cultures to create and sustain a focus on results has 

been uneven. For example, the extent to which top 

leadership is perceived as demonstrating a strong 

commitment to achieving results is a persistent 

weakness. (See fig. 3.5.) Further, performance information is not being used to its fullest extent in key 

management activities. To help agencies effectively 

manage their resources and link resource decisions 

to results, agencies and the Congress need credible, 

rigorous evaluations to assess whether current programs and policies remain relevant, appropriate, 

and effective. Top leadership commitment is crucial 

to instilling a results-oriented culture. Although the 

President’s Management Agenda—with its emphasis 

on results-oriented practice—is an important step, 

more needs to be done to imbed these practices 

into government operations.

Figure 3.4: Extent to Which Managers Believe They 

Have Needed Decision-Making Authority and Are 

Held Accountable for Results, 1997 and 2000

Note: “Needed” decision-making authority refers to the 

authority Senior Executive Service (SES) and non-SES 

managers responding to the survey believe managers at 

their level need to help their agencies accomplish their 

strategic goals.

Figure 3.5: Extent to Which Top Leadership Is 

Perceived as Demonstrating a Strong 

Commitment to Achieving Results, 1997 and 2000

Notes: Survey respondents were both SES members and 

non-SES members. “Top leadership” refers to the leadership 

of the agencies in which the respondents serve. 

Source: GAO survey data. 

0

20

40

60

80

100

Had Decision-Making Authority

Held Accountable for Results

Percentage

29

54 51

62

34

62

56

66

Non-SES SES Non-SES SES

1997 2000

Source: GAO survey data.

0

20

40

60

80

100

Percentage

Non-SES

SES

56

76

52

72

1997 2000
202 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 3.2

Evaluating the role of government and the programs it delivers must be done within the context of 

the major trends and long-term fiscal challenges it 

faces. This is an opportune time for the Congress to 

carefully consider how to make needed changes in 

the short term to help agencies effectively manage 

their resources and link resource decisions to 

results, as well as to work toward a comprehensive 

and fundamental reassessment of what the government does, how it does business, and who does the 

government’s business. Agencies and the Congress 

need credible evaluative, analytical, and financial 

information to assess whether current programs and 

policies remain relevant, appropriate, and effective.

Successfully transforming how the government does 

business depends on building high-performing 

organizations that network with key partners both 

across and outside the government. Improved performance has been a primary goal of several recent 

restructurings—formation of DHS, reorganization of 

the FBI, and modernization of the Internal Revenue 

Service. DOD is in the process of transforming its 

business operations, and the U.S. Postal Service 

faces the challenge of transforming its business 

model for the 21st century. However, past government experience in reorganization has yielded 

mixed results. Future success will depend on identifying and implementing best practices of high-performing organizations operating in a complex, 

networked environment. Critical organization elements—structure, systems, and practices—must 

support achieving high performance.

Information is a vital resource that needs to be 

properly managed. The growth in electronic information, as well as new security threats facing the 

nation, highlight challenges to the effective collection and dissemination of information that agencies 

need to take into account in developing new programs. While it is important to enhance the government’s use of new technologies to improve the 

collection and dissemination of government information, it is also important that this information—

especially that collected for statistical purposes—

meets the current needs of federal programs and 

policymakers. In areas in which 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.

Timely, accurate, and useful financial information is 

essential for making operating decisions day to day; 

supporting results-oriented management 

approaches; and managing the government’s operations more efficiently, effectively, and economically. 

Yet, the federal government’s financial management 

has suffered from neglect, and financial systems 

have serious shortcomings.

IT is a key element of management reform efforts 

that can dramatically reshape government to 

improve performance and reduce costs. However, 

numerous poorly managed IT systems have produced multimillion-dollar cost overruns, schedule 

slippages, and poor results. Further, poor information security remains a high-risk area across the federal government with potentially devastating 

consequences. Electronic government offers many 

opportunities to better serve the public and reduce 

costs, but the federal government has not reached 

its full potential in this area.

Effective acquisition management plays a key role 

in creating and sustaining high-performing organizations. Despite 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 anticipated. Encouragement of 

strategic contracting approaches that seek greater 

efficiencies as well as improvements in management and accountability are needed to produce 

better outcomes. Agencies are considering other 

approaches for achieving greater efficiency and 

effectiveness in their operations, including appropriate use of contracts with the private sector. After 

a yearlong study, the Commercial Activities Panel 

developed a set of principles to be used in 

addressing sourcing decisions and recommended 

the public and private sectors compete for the 

opportunity to perform commercial functions. Competitions can be based on the established framework of the Federal Acquisition Regulation. OMB 

published changes to Circular A-76 that are generally consistent with the panel’s recommendations. 

However, this competitive sourcing initiative is a 

major change in the way government agencies 

operate, and successful implementation of the circular’s provisions will require that adequate support 

be available to federal agencies and employees. 

GAO will follow developments in this area closely.
GAO STRATEGIC PLAN 2004–2009 203

STRATEGIC OBJECTIVE 3.2

Performance Goals: To support the transformation to a results-oriented, high-performing government, GAO will

■ analyze and support efforts to improve the 

human capital infrastructure key to the 

successful transformation of the government;

■ assess efforts to improve results-oriented 

management across the government;

■ analyze and support efforts to build highperforming organizations;

■ identify ways to improve the collection, 

dissemination, and quality of federal 

information;

■ identify ways to improve financial management 

infrastructure capacity to provide useful 

information for managing results and costs day 

to day;

■ assess the government’s planning, 

implementation, and use of IT to improve 

performance and modernize federal programs 

and operations; and

■ identify ways to improve how federal agencies 

acquire goods and services.
204 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 3.2

Performance Goal 3.2.1: Analyze and Support Efforts to 

Improve the Human Capital Infrastructure Key to the 

Successful Transformation of the Government

Key Efforts

■ Analyze the activities, structure, roles, and 

responsibilities of agency leaders and human 

capital leaders that promote increased effectiveness in developing and implementing human 

capital approaches to achieve program results

■ Develop tools and methodologies and identify 

best practices that enable agencies to integrate 

strategic human capital planning in the key 

agency decision-making processes, resulting in 

improved alignment and integration of human 

capital programs, policies, and practices

■ Identify ways the federal government can better 

ensure that it builds a workforce strategically 

ready to accomplish mission results by acquiring, 

developing, and retaining talent

■ Facilitate developing result-oriented organizational cultures by assessing the effectiveness of 

agencies’ performance management systems, the 

efforts to link pay to individual and organizational results, and the progress in creating cultures that are inclusive and free of discrimination 

and that empower employees

Significance

As other leading public and private organizations in the United States and abroad have found, strategic

human capital management should be the centerpiece of change management initiatives and of transforming

the culture of government agencies. The growing consensus to provide greater flexibility to agencies in

developing and implementing their strategic human capital approaches gives additional urgency to improving agencies’ institutional infrastructure necessary for successful use of such flexibilities. It is clear that today’s

federal human capital strategies are not yet appropriately constituted to meet today’s challenges and drive

the needed transformation across the government. Critical elements of the needed infrastructure, for example, are agencies’ human capital planning capabilities; the ability of their management teams to use flexibilities effectively; and the presence of a modern, effective, and credible performance management system with

appropriate safeguards.

Potential Outcomes

■ Agencies’ improved capability to transform their 

cultures and more effectively manage their 

human capital to accomplish mission goals

■ Greater confidence that the human capital flexibilities available to agencies will be systematically and strategically developed and 

implemented and result in improved strategic 

readiness of a highly motivated federal workforce

■ More flexible agency approaches, built on sound 

business cases, to investing in human capital to 

hire, train, and retain employees, especially 

those with skills critical to accomplishing agency 

missions

■ Results-oriented pay reforms in federal agencies
GAO STRATEGIC PLAN 2004–2009 205

STRATEGIC OBJECTIVE 3.2

Performance Goal 3.2.2: Assess Efforts to Improve ResultsOriented Management across the Government

Key Efforts

■ Support congressional oversight of the quality 

and usefulness of agency planning and performance information

■ Continue to evaluate the capacity of agencies to 

gather and use performance information to 

guide management decision making and to 

achieve agency performance goals and objectives

■ Identify strategies and methodological tools for 

solving analytic challenges to evaluating program and policy results

■ Monitor progress by agencies and the Office of 

Management and Budget (OMB) in integrating 

performance considerations into resource allocation decisions, including agencies’ responses to 

OMB’s Program Assessment and Rating Tool

■ Identify best practices for establishing goals and 

measuring the performance of traditionally difficult to measure areas

■ Examine the government’s efforts to coordinate 

programs that cut across federal agencies and 

avoid unnecessary overlap and duplication

■ Assess the government’s progress in integrating 

national strategies into agency plans and activities and aligning national and agency goals

Significance

With the continuing move toward results-oriented management, the federal government has shifted its focus

from activities to the results of those activities. Many agencies face long-standing and substantial challenges

to becoming results oriented. They need to establish results-oriented goals and measures for programs for

which the federal role is limited or for which results are achieved over long time horizons, align organizational structures within and across agencies, employ management flexibilities and incentives effectively, and

use credible results-oriented performance information systems for decision making and accountability. While

performance indicators are increasingly used to support the federal government’s progress toward being

more results-oriented and accountable, additional rigorous evaluation information is often needed to identify

and understand the effects programs are having on society’s problems. Agencies’ progress in demonstrating

these effects has been hindered by difficulties in identifying the unique federal contribution to results and

agencies’ limited capacity to gather and use performance measures and program evaluations. Both agencies

and the Congress need credible evaluative and analytic information to assess whether programs and policies

remain relevant, appropriate, and effective. 

GAO’s work has shown that agencies can meet these challenges by employing results-oriented approaches,

such as planning better for how mission-critical challenges and risks are to be addressed, coordinating crosscutting programs, considering the performance consequences of budget decisions, integrating human capital

and performance planning, and building the capacity to gather and use performance information. GAO’s

work also helps the Congress use the information provided in the Government Performance and Results Act

of 1993 in carrying out its appropriations and oversight roles. Though much progress has been made, more

remains to be done to fully institute a results-oriented focus at all levels and operations of the government.

Potential Outcomes

■ Agencies providing more objective information 

to congressional decision makers on achieving 

statutory objectives and the relative effectiveness 

and efficiency of federal programs and spending

■ Improved management of federal programs 

through focusing on results, service quality, and 

customer satisfaction
206 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 3.2

■ Enhanced capability to identify ways to improve 

program performance

■ Increased accountability of federal agencies for 

achieving program objectives

■ Improved leadership strategies for crosscutting 

goals and objectives

■ Increased congressional and public confidence 

in the integrity of budgetary data used for 

accountability and decision making
GAO STRATEGIC PLAN 2004–2009 207

STRATEGIC OBJECTIVE 3.2

Performance Goal 3.2.3: Analyze and Support Efforts to 

Build High-Performing Organizations

Key Efforts

■ Analyze the key characteristics and capabilities 

of high-performing organizations in a networked 

public management environment and identify 

steps agencies could take to become high-performing organizations

■ Develop tools and methodologies and identify 

best practices to assess organizational transformation, design, structure, and management

■ Conduct targeted reviews and assessments of 

management practices in select executive and 

legislative branch agencies

■ Support congressional oversight of transformation and reform efforts

Significance

As a part of the transformation of government now under way, federal agencies are beginning to change

their cultures and ways of doing business. This transformation is taking place on two interrelated levels. First,

the transformation is vertical; that is, it seeks fundamental changes and improvements in the internal management and operations of individual government agencies so that they are more results oriented, customer

focused, and collaborative. Second, and equally important, is horizontal transformation, or improving the

government’s understanding of and influence across governmental organizations; between levels of government; and between networks of public, private, and not-for-profit organizations that are instrumental to

achieving results. In other words, agencies and policymakers must recognize and address the interrelationship of government and governance issues as they undertake this crucial horizontal transformation. 

In that regard, a well-established body of theory, experiences, and practices—including a results-oriented

statutory framework at the federal level—exists on what high performance means and how it is achieved in

a government context. A similar body of theory, experiences, and practices needs to be developed on how

to manage partnerships and how to guide federal agencies as they build a networked government to address

the challenges of the 21st century. 

Potential Outcome

■ Higher performance and greater results within 

and across governmental organizations and 

between networks of public, private, and notfor-profit organizations
208 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 3.2

Performance Goal 3.2.4: Identify Ways to Improve the 

Collection, Dissemination, and Quality of Federal 

Information

Key Efforts

■ Examine issues related to the oversight of the 

Paperwork Reduction Act and reauthorization of 

the Office of Management and Budget’s Office of 

Information and Regulatory Affairs

■ Assess the government’s ability to protect the 

privacy of individuals’ personal information in an 

era of rapidly evolving technology

■ Review the government’s progress using electronic technology to store, preserve, and share 

public records

■ Examine the employment of electronic technologies to improve public access to federal records 

and enhance the collection, use, and dissemination of government information

■ Review the planning and implementation of the 

2010 Census and identify opportunities to 

increase its cost-effectiveness

■ Assess the effectiveness of a fully implemented 

American Community Survey to provide reliable 

and timely information to meet the needs of government programs and to replace existing statistical programs

■ Examine the quality and customer focus of federal statistical data

Significance

Information is a critical strategic asset; however, agencies confront unique and sometimes conflicting

demands in collecting and providing this information. Some of the ongoing management challenges that

agencies face include statutory requirements to reduce reporting burdens, protect the privacy of personal

records, provide access to public records, disseminate information, secure information from harm or misuse,

and preserve information of historical value. Meanwhile, the growth of the Internet, electronic government,

and advances in archival and retrieval technologies is creating greater opportunities to provide citizens with

much more efficient and improved public access to government records and information. At the same time,

these trends have raised concerns about the adequacy of the current governmentwide organizational and

policy framework and about agencies’ ability to manage information and knowledge in this evolving environment.

Better management of the federal information enterprise can yield significant returns. A case in point is the

federal statistical system. Although the amount of money the government spends on federal statistical agencies—roughly $4 billion a year—is a tiny portion of the federal budget, the impact of that spending is felt

throughout society, as the information guides planning and investment decisions of the public and private

sectors. For example, population data are used for congressional apportionment and redistricting, economic

indicators are used by the Federal Reserve Board to set monetary policy, and regional data are used to allocate around $200 billion in federal aid to state and local governments. Businesses use federal data to inform

decisions on where to locate new stores and production facilities. Federal agencies use data to enforce statutory regulatory requirements. Simply put, as the public’s demand for more responsive and cost-effective government has increased, so too has the need for accurate, timely, accessible, and apolitical information.

Potential Outcomes

■ Improved compliance with existing privacy 

requirements and a better understanding of the 

challenges the government faces in ensuring the 

personal privacy of individuals in a rapidly 

expanding electronic age
GAO STRATEGIC PLAN 2004–2009 209

STRATEGIC OBJECTIVE 3.2

■ Expanded, less costly, and more responsive 

ways to provide the public access to government 

information

■ Improved government records management and 

archival programs

■ A more managed transition as the government 

moves away from printing as a primary means 

for disseminating information to the public

■ An updated set of national policies on privacy, 

access, burden, data sharing, and storage in an 

electronic environment

■ A more accurate and cost-effective census in 

2010

■ Improved regional data to more closely meet the 

needs of formulas for the allocation of federal 

funds
210 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 3.2

Performance Goal 3.2.5: Identify Ways to Improve Financial 

Management Infrastructure Capacity to Provide Useful 

Information for Managing Results and Costs Day to Day

Key Efforts

■ Monitor the management of projects to modernize financial management systems and assess 

whether they can provide meaningful, useful 

information

■ Analyze and report on agencies’ progress in 

implementing federal accounting standards and 

other Federal Financial Management Improvement Act requirements

■ Identify financial management best practices and 

suggest ways to improve financial management 

operations, organizations, and human capital 

practices

■ Fulfill accounting, auditing, and internal control 

standards-setting responsibilities and act as a catalyst for reform in these areas

Significance

Today, the government does not have timely, accurate, and useful financial information to measure and control costs, manage for results, and make timely and fully informed decisions. Routinely generating good

financial information will require modern financial management systems that (1) ensure consistent agency

and governmentwide reporting; (2) account for the full cost of programs and projects; (3) integrate program,

budget, and financial information; (4) report performance measures; and (5) implement appropriate accounting standards. The government has not yet met this challenge nor has it addressed the persistent financial

management human capital issues and the high-risk financial management operations GAO identified at several major agencies. 

Potential Outcomes 

■ Reliable, useful, and timely financial and budget 

information routinely available to manage daily 

operations and properly implement a results-oriented government

■ Enhanced congressional oversight of agencies’ 

progress in implementing federal accounting 

standards, improving financial systems, and 

resolving high-risk financial management operations

■ Accounting, auditing, and internal control standards that are tailored to government’s unique 

characteristics and special needs and are generally accepted

■ Effective governmentwide financial management 

reform initiatives
GAO STRATEGIC PLAN 2004–2009 211

STRATEGIC OBJECTIVE 3.2

Performance Goal 3.2.6: Assess the Government’s Planning, 

Implementation, and Use of IT to Improve Performance and 

Modernize Federal Programs and Operations

Key Efforts

■ Evaluate government efforts to make the complex management and technical transformation 

to electronic government

■ Identify opportunities and assess efforts to outsource government information technology (IT) 

operations in support of mission strategies and 

needs

■ Assess and promote the application and use of 

IT investment management best practices across 

the government

■ Promote adoption of sound enterprise architectures (EA) and assess government EA efforts to 

engineer business processes for implementing IT 

systems that optimize mission performance

■ Review federal agencies’ management and effectiveness in carrying out systems acquisition, 

development, and integration efforts—including 

complex, multiyear modernizations

■ Review the management of government telecommunications and interconnected systems and 

federal agencies’ effectiveness in providing 

secure, reliable, and fast Internet and Web connections

■ Review government progress in developing 

effective IT human capital strategies and identify 

how to improve IT workforce training programs

Significance

Today, the government spends over $57 billion annually on IT to support virtually all government operations

and assets. With the rapid pace of technological change and innovation, including the growth of the Internet,

government agencies have unprecedented opportunities to use IT to enhance government service to citizens,

improve performance, and reduce costs. These opportunities, however, create significant challenges, such as

the need to apply and use a wide range of complex new electronic technologies effectively, interconnect

diverse networks and systems securely and reliably, and build improved technical capacity among agency

workforce personnel. 

Addressing these challenges first and foremost requires strong and effective IT management leadership. At

the same time, federal agencies need to continue to reduce the risk of making poor IT investment decisions

and costly mistakes that result in wasteful spending and lost opportunities for improving performance and

delivery of services to the public. Best practices and GAO’s past work demonstrate that essential steps to

avoiding such mistakes are to adopt sound EA; adhere to structured IT investment practices; and implement

disciplined IT systems acquisition, development, and integration management processes.

Potential Outcomes

■ Expanded and improved citizen access to public 

services and information through electronic 

means

■ Improved service delivery and greater economy 

and efficiency of government IT operations

■ Increased return on the federal government’s IT 

investments 

■ Improved agency enterprisewide management 

of IT and engineering capability to develop and 

acquire IT systems that support mission and performance objectives

■ More informed congressional appropriations and 

oversight decisions on major planned and ongoing IT investments
212 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 3.2

■ Greater viability, stability, and security built into 

the Internet and interconnected networks and 

systems used by government to transmit data 

and information

■ More consistent application and use of human 

capital strategies and workforce training programs to address the government’s IT needs
GAO STRATEGIC PLAN 2004–2009 213

STRATEGIC OBJECTIVE 3.2

Performance Goal 3.2.7: Identify Ways to Improve How 

Federal Agencies Acquire Goods and Services

Key Efforts

■ Evaluate agencies’ strategies and use of new policies and procedures for competing commercial 

activities of the public and the private sectors

■ Evaluate the government’s ability to award and 

manage contracts effectively

■ Assess agencies’ efforts to achieve socioeconomic contracting goals

■ Evaluate how agencies are implementing best 

practices to be more cost effective and efficient

■ Determine whether innovative contracting initiatives used to acquire goods and services are 

achieving their intended objectives

■ Determine whether contracting agencies in protested procurements acted lawfully

Significance

The federal government, comprising more than 60 agencies, acquired more than $235 billion in goods and

services during fiscal year 2001. Growth in contract spending is expected, given the President’s request for

additional funds for defense and homeland security, agencies’ plans to update their IT systems, and other

factors. Over the last decade, the federal acquisition environment has faced significant challenges resulting

from procurement reforms, increases in the number of larger contract actions, growth in service contracts,

and reductions in the acquisition workforce. Challenges in the acquisition environment continue as the federal government increases the use of competitive sourcing in achieving agency missions and as the outcomes

of procurement reforms are realized. 

To respond to the dynamic acquisition environment, the federal government needs to (1) improve the efficiency and transparency of its competitive sourcing decisions, (2) improve its management and accountability in acquiring goods and services, (3) enhance socioeconomic contracting initiatives, (4) encourage strategic

contracting approaches that seek greater efficiencies and effectiveness in the contracting process, and (5)

ensure that innovative approaches meet their objectives. Vested with statutory authority to resolve government contract disputes, GAO provides an objective, independent, impartial forum for resolving bid protests

and recommends actions to correct any procurement law violations.

Potential Outcomes

■ Improved governmentwide decision making and 

selection of appropriate providers of commercially available goods and services

■ Improved selection, management, and oversight 

of contractors

■ Enhanced opportunities for small businesses to 

obtain federal contracts and improved tracking 

of socioeconomic initiatives

■ Significant cost savings resulting from strategic 

purchasing approaches and processes

■ Outcome-oriented contract policies and practices

■ Increased consistency of governmentwide interpretations of procurement statutes and regulations and increased public confidence in the 

integrity of the federal procurement system
214 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 3.3

Support Congressional Oversight of Key Management Challenges 

and Program Risks to Improving Federal Operations and 

Ensuring Accountability

Issue: Strong, visionary, and persistent leadership 

will be needed to address today’s challenges and 

prepare the nation for the future. Congressional 

leadership will play a vital role in achieving a broad 

transformation of the government. Congressional 

oversight is needed to ensure that agencies continue to build their fundamental management capabilities, resolve high-risk areas, and address major 

management challenges to effectively address the 

nation’s most pressing priorities and to take advantage of emerging opportunities. 

The 2003 Performance and Accountability and 

High-Risk Series reports designate high-risk areas 

and describe over 100 major management challenges. GAO’s 2003 high-risk list identifies 26 highrisk areas, as shown in figure 3.1. Continued persistence and perseverance in addressing these highrisk areas and agencies’ major management challenges will ultimately yield significant benefits. 

Although effectively addressing some of these 

issues will require time, finding lasting solutions 

could potentially save billions of dollars, improve 

service to the American public, strengthen public 

trust in the national government, and ensure the 

ability of government to deliver on its promises. 

More remains to be done to ensure that the government has the capacity to deliver on its promises and 

meet current and emerging needs.
GAO STRATEGIC PLAN 2004–2009 215

STRATEGIC OBJECTIVE 3.3

Figure 3.1: GAO’s 2003 High-Risk List

Source: GAO.

a

Additional authorizing legislation is likely to be required as one element of addressing this high-risk area.

As part of the drive to improve performance, agencies are increasingly being called on to demonstrate 

that their programs are conducting research that is 

relevant, of high quality, and producing results. As 

part of the President’s Management Agenda, for 

example, OMB is focusing on developing objective 

criteria that agencies can use to select, fund, and 

manage their R&D programs. According to the fiscal 

year 2004 budget, 12 of the top 13 agencies conducting R&D are using OMB’s PART, which contains 

criteria for R&D investments. Science and technology investments are critically important in 

improving the quality of life and the performance of 

the economy in areas that include health care, 

defense, energy, and the environment.

However, the increased development and use of 

new technologies presents challenges to the Congress in evaluating their potential and assessing the 

effects on security, safety, privacy, and equity. For 

example, despite many successes in the exploration 

of space, the loss of life, unsuccessful missions, and 

2003 high-risk areas

Year designated high 

risk

Addressing Challenges in Broad-based Transformations

Strategic Human Capital Management a 2001

U.S. Postal Service Transformation Efforts and Long-Term Outlook a 2001

Protecting Information Systems Supporting the Federal Government and the Nation’s Critical 

Infrastructures

1997

Implementing and Transforming the New Department of Homeland Security 2003

Modernizing Federal Disability Programsa 2003

Federal Real Propertya 2003

Ensuring Major Technology Investments Improve Services

FAA Air Traffic Control Modernization 1995

IRS Business Systems Modernization 1995

DOD Systems Modernization 1995

Providing Basic Financial Accountability

DOD Financial Management 1995

Forest Service Financial Management 1999

FAA Financial Management 1999

IRS Financial Management 1995

Reducing Inordinate Program Management Risks

Medicare Programa 1990

Medicaid Programa 2003

Earned Income Credit Noncompliance 1995

Collection of Unpaid Taxes 1990

DOD Inventory Management 1990

DOD Support Infrastructure Management 1997

HUD Single-Family Mortgage Insurance and Rental Assistance Programs 1994

Student Financial Aid Programs 1990

Pension Benefit Guaranty Corporation Single-Employer Insurance Programa 2003

Managing Large Procurement Operations More Efficiently

DOD Weapon Systems Acquisition 1990

DOD Contract Management 1992

Department of Energy Contract Management 1990

NASA Contract Management 1990
216 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 3.3

unforeseen cost overruns have recently increased 

the level of concern over the benefits of space 

exploration, particularly with regard to manned 

activities. Congressional oversight is critical in 

ensuring that the substantial federal investment in 

science and technology is allocated effectively and 

that intellectual property rights are protected here 

and abroad.

The federal government has a stewardship obligation to safeguard the use of taxpayer funds; prevent 

fraud, waste, and abuse; and ensure financial 

accountability. While there has been important 

progress, agencies are still working toward the 

goals established in financial management reform 

legislation, such as the Chief Financial Officers Act 

of 1990 and the Government Management Reform 

Act of 1994. Widespread financial management 

system weaknesses, poor record keeping and documentation, weak internal controls, and a lack of 

information have prevented the government from 

having the information needed to effectively and 

efficiently manage operations or accurately report a 

large portion of its assets, liabilities, and costs. Continued oversight is needed to ensure that agencies 

take steps to continuously improve internal controls 

and underlying financial and management information systems to ensure that executive branch managers and congressional decision makers have 

reliable, timely, and useful information to ensure 

accountability; measure, control, and manage costs; 

manage for results; and make timely and fully 

informed decisions about allocating limited 

resources.

Performance Goals: To support congressional 

oversight of key management challenges and risks 

to federal operations and accountability, GAO will

■ highlight the federal programs and operations at 

highest risk and the major performance and 

management challenges confronting agencies,

■ assess the management and results of the federal 

investment in science and technology and the 

effectiveness of efforts to protect intellectual 

property, and

■ identify ways to strengthen accountability for the 

federal government’s assets and operations.
GAO STRATEGIC PLAN 2004–2009 217

STRATEGIC OBJECTIVE 3.3

Performance Goal 3.3.1: Highlight the Federal Programs and 

Operations at Highest Risk and the Major Performance and 

Management Challenges Confronting Agencies

Key Efforts

■ For each new Congress, update the status of 

areas identified as high risk—adding new ones 

and removing ones that are no longer applicable

■ For each new Congress, provide a governmentwide perspective highlighting important considerations and actions needed to address the 

challenges the government faces in doing business now and in the future

■ Recognize progress made and identify what 

GAO believes needs to be done to address existing and new major management challenges

■ Provide information in useful formats to assist 

congressional and presidential transition efforts 

by highlighting key issues and solutions needed 

to improve the performance and accountability 

of the federal government

■ Monitor the progress and continuing challenges 

related to governmentwide management reform 

initiatives, such as the President’s Management 

Agenda

Significance

GAO continues to provide the Congress with periodic updates on government programs and operations that

it has identified as high risk and other major management challenges facing individual agencies and the government as a whole. GAO has increasingly used the high-risk designation to draw attention to the challenges

faced by government programs and operations in need of broad-based transformation. The resulting scrutiny

has led to important progress in areas such as strategic human capital management and the U.S. Postal Service’s transformation and fiscal outlook. 

With these positive results in mind, in 2003, GAO designated three additional areas as high risk based on

challenges involving broad-based transformation and the need for legislative solutions: implementing and

transforming the new Department of Homeland Security, modernizing federal disability programs, and

realigning, and transforming the management of, federal real property. A fourth new high-risk area designated in 2003 involves the Medicaid program, in part because of growing concerns about inadequate fiscal

oversight to prevent inappropriate program spending. The fifth new area, designated in July 2003, reflects

concerns related to the long-term vulnerabilities of the PBGC single-employer insurance program. Overall,

GAO’s 2003 high-risk areas highlight the need to address challenges in broad-based transformations, ensure

that major technology investments improve services, provide basic financial accountability, reduce inordinate

program management risks, and manage large procurement operations more efficiently. GAO’s Performance

and Accountability Series, issued concurrently with the High-Risk Series, highlights management challenges

that limit agencies’ effectiveness in carrying out their missions, corrective actions taken or initiated to address

these challenges, and further actions needed. 

The most recent Performance and Accountability Series also provided a governmentwide perspective on

transforming the way the government does business to meet 21st century challenges and to address longterm fiscal needs. A number of the areas in the President’s Management Agenda focus on these high-risk

areas and management challenges, and OMB has initiated a focused effort to track progress toward addressing the areas that GAO has identified as high risk.
218 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 3.3

Potential Outcomes

■ Sustained commitment to complete actions to 

resolve high-risk areas and overcome major 

management challenges

■ Enhanced recognition that to prepare for the 

future, the role of the federal government and 

how it does business must be transformed

■ Consideration of recommendations to get at the 

causes of fraud, waste, abuse, and mismanagement in high-risk government programs and to 

achieve greater economy, efficiency, and effectiveness in government operations, particularly 

government programs and operations in need of 

broad-based transformation

■ Greater awareness of the extent and severity of 

high-risk areas and major management challenges at agencies at the beginning of each new 

Congress
GAO STRATEGIC PLAN 2004–2009 219

STRATEGIC OBJECTIVE 3.3

Performance Goal 3.3.2: Assess the Management and Results 

of the Federal Investment in Science and Technology and the 

Effectiveness of Efforts to Protect Intellectual Property

Key Efforts 

■ Assess the management and results of major federal science and technology programs and identify ways to improve the funding and 

coordination of research activities across government agencies

■ Evaluate the National Aeronautics and Space 

Administration’s (NASA) efforts to safely control 

and manage the nation’s multibillion-dollar 

research investment in the International Space 

Station, Space Shuttle fleet, space exploration, 

and earth science activities

■ Conduct technology assessments to evaluate the 

implications of the technology for public policy 

and congressional decision making

■ Determine the effectiveness of technology transfer and patent and copyright office services

Significance

The federal government’s investment in science and technology is critical to long-term U.S. economic

growth. Over the past 50 years, developments in science and technology have generated at least half of the

nation’s productivity growth and have created millions of high-skill, high-wage jobs. The quality of life in

America has been bolstered by the pursuit of science and technology. NASA’s exploration and development

of space has advanced scientific and technological knowledge while expanding the imagination of the

nation’s young people. Also, intellectual property—patents, trademarks, and copyrights—has been characterized as the fuel that drives the U.S. economic engine and is an important component of the nation’s knowledge-based economy. 

Each year, the federal government spends over $90 billion on research and development activities and grants

or registers nearly 300,000 patents and trademarks and over 500,000 copyrights. The Congress’s challenges

are to ensure that federal resources are allocated to the most promising, highest payoff areas of research and

that in a global economy, the nation’s investment in science and technology—its intellectual property—is

protected here and abroad. Other challenges include ensuring that the government’s and the public’s interests are protected in funding research and promoting the commercialization of resulting technology.

Potential Outcomes 

■ Increased confidence that the federal science 

and technology programs are being well managed, achieving intended results, and contributing to the overall economic well-being of the 

nation 

■ Better understanding of the policy options that 

stimulate technological innovation and encourage partnering and cooperation among research 

institutions while protecting intellectual property 

rights 

■ A more informed congressional review of NASA 

efforts to control International Space Station 

costs and the agency’s responsiveness to the 

Columbia Accident Investigation Board’s findings 

while returning the Space Shuttle to safe flight
220 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 3.3

Performance Goal 3.3.3: Identify Ways to Strengthen 

Accountability for the Federal Government’s Assets and 

Operations

Key Efforts 

■ Perform financial analyses, undertake specifically 

requested financial reviews, and conduct a wide 

range of statutorily mandated financial audit 

work

■ Assess internal control and recommend improvements to ensure that effective internal control is 

in place and operating as intended

■ Conduct forensic audits and investigations to 

highlight vulnerabilities and to identify potential 

instances of waste, fraud, and abuse

■ Identify and suggest improvements in a range of 

financial-related areas affecting program performance and accountability, such as managing 

improper payments, debt collection, cost 

accounting, deferred maintenance, asset control, 

user fees, credit cards, and social insurance

■ Analyze the activities and capacity of the 

accountability community, including the inspectors general, in overseeing federal programs and 

funds

Significance 

The government faces a wide range of financial management issues that affect program performance and

accountability and that result in substantial losses of taxpayers’ funds. For example, the President’s Management Agenda addresses one such area: the government has identified over $35 billion in erroneous benefit

and assistance payments. GAO’s work provides insight and foresight into the extent, causes of, and solutions

to pressing financial management issues such as this one and points out control weaknesses in critical government programs. 

Potential Outcomes 

■ Greater congressional insight on the viability and 

financial status of major government entities 

■ Stronger systems of internal control to help deter 

waste, fraud, abuse, and mismanagement 

■ Enhanced accountability for managing programs 

more efficiently, effectively, and economically 

■ Strengthened accountability community efforts to 

work cooperatively and help ensure that 

resources are used effectively to oversee government programs and funds 
GAO STRATEGIC PLAN 2004–2009 221

STRATEGIC OBJECTIVE 3.4

Analyze the Government’s Fiscal Position and Strengthen 

Approaches for Addressing the Current and Projected 

Fiscal Gap

Issue: 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 4 years of budget surpluses, the nation again is facing large and growing 

budget deficits. This comes as the squeeze on the 

federal budget from the impending retirement of 

the baby boom generation is becoming more 

apparent.

GAO’s long-term budget model has consistently 

suggested that without changes to the major retirement and health care programs, the nation will ultimately have to choose between escalating federal 

deficits and debt, significant tax increases, and dramatic budget cuts in other areas. Under CBO’s current 10-year budget and economic outlook, 

economic growth is projected to be half a percentage point lower on average after 2008 when the 

leading edge of the baby boom generation becomes 

eligible for early retirement, while growth in entitlement spending is projected to accelerate. As such, it 

will be increasingly difficult to address today’s 

urgent needs without unduly exacerbating the 

nation’s long-term fiscal challenges.

While Social Security and Medicare dominate the 

long-term outlook, they are not the only federal 

programs or activities that bind the future. Indeed, 

the federal government undertakes a wide range of 

programs, responsibilities, and activities that obligate it to future spending or create expectations for 

spending. Making government fit the challenges of 

the future will require not only dealing with the 

drivers—entitlements for the elderly—but also 

looking at the range of other federal activities. However, the budget controls instituted to achieve balance in the past have expired, and no agreement 

has been reached on the appropriate structure or 

process for focusing on the fiscal challenges that 

now move to center stage.

To understand the context for near-term budget 

decisions more fully, it is important to look at trends 

in revenue sources and the distribution of expenditures. These trends show (among other things) 

growth in the relative share of revenues derived 

from employment taxes, such as those for Social 

Security (Old-Age Survivors and Disability Insurance), and a dramatic change over time in composition of spending, with a growing share devoted to 

health and interest on the debt, as shown in 

figures 3.7 and 3.8.

Figure 3.7: Composition of Federal Receipts by 

Source, Fiscal Years 1964, 1984, and 2004

Note: Numbers do not add to 100 percent due to rounding.

a

Current services estimate.

1964

Individual Income

Corporate Income

Social Insurance

Excise and Other

1984 2004a

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

16%

20% 43%

21%

11%

9%

36% 45%

9%

42%

8%

40%
222 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 3.4

Figure 3.8: Composition of Federal Spending by 

Budget Function, Fiscal Years 1964, 1984, and 

2004

a

Current services estimate.

Note: Numbers do not add to 100 percent due to rounding.

In rethinking federal fiscal policy and preparing for 

the long-term budgetary challenges, policymakers 

have the opportunity to reexamine what the federal 

government does and how it finances those activities. American taxpayers annually pay about 

$2 trillion in taxes to fund the federal government. 

The federal tax system includes numerous tax provisions intended to influence taxpayers’ behavior 

throughout the economy, but little is known about 

the effects of many of these provisions. Given the 

size and complexity of the federal tax code, the 

Congress remains interested in tax reform, particularly its simplification.

As the nation’s chief tax collector, the Internal Revenue Service (IRS) interacts with more Americans 

than any other government agency, and compliance 

with tax laws is a significant burden imposed on 

businesses and individuals. IRS is in the midst of 

implementing major legislatively mandated reforms 

in how the nation’s tax system is administered, and 

congressional interest remains focused on IRS’s 

progress.

In light of the long-term fiscal challenges, policymakers need to reexamine, reassess, and reprioritize the federal government’s programs, policies, 

and activities. One key to making resource decisions is having reliable, useful, and timely information routinely available. Such information is also 

necessary to ensure accountability and to improve 

the economy, efficiency, and effectiveness of government actions that have a direct effect on 

achieving a more results-oriented government. 

Performance Goals: To analyze the government’s 

fiscal position and identify ways to strengthen 

approaches for financing the government, GAO will

■ analyze the long-term fiscal position of the 

federal government,

■ analyze the structure and information for 

budgetary choices and explore alternatives for 

improvement,

■ contribute to congressional deliberations on tax 

policy, 

■ support congressional oversight of federal tax 

administration, and 

■ assess the reliability of financial information on 

the government’s fiscal position and financing 

sources.

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

1964 1984 2004a

Defense

Social Security

Medicare and Medicaid

Net Interest

All Other Spending

46%

14%

7%

33% 26%

13% 21%

30%

9%

19%

21%

7%

33%

19%
GAO STRATEGIC PLAN 2004–2009 223

STRATEGIC OBJECTIVE 3.4

Performance Goal 3.4.1: Analyze the Long-term Fiscal 

Position of the Federal Government

Key Efforts

■ Update and refine GAO’s long-term budget 

model to highlight future budgetary and economic consequences of current and alternative 

fiscal policy paths and examine the potential relevance of new fiscal policy targets or sustainability measures

■ Monitor the implications of current fiscal policy 

for federal debt management and update the 

Federal Debt Frequently Asked Questions

■ Monitor and analyze the fiscal implications of 

Social Security and Medicare reform proposals 

using GAO’s evaluation frameworks

■ Evaluate the implications of alternative budget 

treatments to better reflect Social Security and 

other long-term commitments

Significance

GAO’s long-term budget model has consistently shown that current fiscal policy is unsustainable over time as

the population ages and workforce growth slows. Social Security and Medicare largely drive this outlook, but

other programmatic and budgetary decisions also have long-term cost implications. GAO’s contribution to

addressing the long-term fiscal health of the federal government recognizes three important elements. First,

major entitlement programs—as currently structured—will greatly constrain future budgetary flexibility. Second, fiscal policies promoting higher national saving and investment can help expand the economic

resources and incomes of future generations, thereby enhancing their capacity to finance long-term commitments. And, third, increased budgetary recognition of the long-term commitments of not only Social Security

and Medicare but also other programs, such as federal insurance and environmental liabilities, could prompt

decision makers to address the difficult choices involved to make it sustainable.

Potential Outcomes 

■ More information for the Congress and the public on the long-term implications of current and 

alternative fiscal policies on budget results, the 

national debt, national saving, and other budgetary and economic measures of fiscal position

■ An informed debate about the consequences of 

demographic change on existing and proposed 

long-term budgetary commitments 

■ More informed congressional decision making 

resulting from the greater transparency of the 

budgetary implications of long-term commitments
224 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 3.4

Performance Goal 3.4.2: Analyze the Structure and 

Information for Budgetary Choices and Explore Alternatives 

for Improvement

Key Efforts 

■ Examine and analyze issues in planning, acquiring, and budgeting for federal capital such as (1) 

financing approaches, including capital acquisition funds, and issues they raise in terms of control, oversight, and disclosure; (2) the capital 

planning process; and (3) international experiences in making capital investment decisions

■ As mandated by law, review and update the 

Glossary of Terms Used in the Federal Budget 

Process

■ Highlight areas for which budget estimates could 

be improved by examining trends in under/overestimating and by exploring ways to improve the 

timeliness of data used in revenue estimation

■ Identify types of fixed or uncontrollable costs 

and how agencies have tried to mitigate the 

effect of these costs on programs during times of 

flat budgets

■ Examine structural and process issues with 

respect to linking performance information and 

the budget through efforts such as (1) mapping 

the various definitions and use of “program” as 

the unit of analysis; (2) developing proposals for 

integrating cost and performance information to 

better support budget decision making; and (3) 

assessing when and under what circumstances 

the return on investment, or “cost of capital,” 

should be recognized and included in budgeting 

for the full costs of government activities

■ Determine how the use of sunsets, delayed 

effective dates, and other legislative practices 

affects the Congress’s long-term budgeting capabilities

■ Help GAO teams develop and report information to the Congress highlighting opportunities 

for savings in appropriations, mandatory, and 

revenue programs, including reporting on budget implications of GAO’s work and analyzing 

congressional and executive budget developments, budget processes, and proposals for 

reform

Significance 

Long-standing rules and budget conventions drive congressional decisions about resource allocation. The

combination of short-term pressures for economic stimulus, greater resources for national preparedness,

pent-up demands from years of deficit reduction, and longer-term fiscal challenges is likely to lead either to

extending the current system or to a major overhaul. For example, the unified budget was created to bring

together all federal spending and taxing activity to both understand fiscal policy and permit a global view of

trade-offs within the budget. Movements to change the budget include proposals to isolate Social Security,

wall off various trust funds, move from cash to accrual, and change the focus from deficit/surplus to debt

burden. Whatever the fiscal goal, the budget structure and process must continue to provide information that

the Congress and the President need to evaluate both overall fiscal policy and the cost implications of individual decisions.
GAO STRATEGIC PLAN 2004–2009 225

STRATEGIC OBJECTIVE 3.4

Potential Outcomes 

■ An informed debate about alternative budgetary 

structures and control mechanisms, both for the 

short term and for the long term, and congressional understanding of the implications of current budget structures for the kinds of trade-offs 

that can be considered in the budget

■ Increased congressional and executive branch 

dialogue about capital investment alternatives to 

facilitate better-informed decisions about such 

investments

■ Informed congressional reviews of agency budget requests that are supported by information 

on emerging cost pressures and funding gaps 

and the identification of more cost-effective 

approaches to meeting current and future needs
226 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 3.4

Performance Goal 3.4.3: Contribute to Congressional 

Deliberations on Tax Policy

Key Efforts

■ Assess the effectiveness of selected tax preferences

■ Contribute to the Congress’s understanding of 

the aggregate effect of tax preferences on 

accomplishing federal goals, on IRS’s ability to 

administer the tax system, and on taxpayers

■ Analyze how the tax code affects business decisions, such as where to locate and how to structure operations

■ Evaluate the consequences of interactions 

between long-term economic/demographic 

trends and the tax code

Significance

The federal tax system includes hundreds of billions of dollars in tax preference programs—such as exclusions for employee benefits and the earned income tax credit—passed by the Congress to influence taxpayers’ behavior throughout the economy. However, little is known about the effects of many of these programs

or their contribution to the complexity of the tax code. The design of the tax system also produces some

incentives that were not necessarily intended; nevertheless, they influence decisions that businesses make

regarding the structure and location of their operations as well as their financial practices. Anticipated economic and demographic changes will amplify the effects of certain provisions in the tax code. For example,

as the nation’s population ages, mandatory withdrawals of income from tax-preferred savings accounts will

boost revenues and subject many taxpayers to unfamiliar compliance responsibilities. Similarly, as nominal

incomes rise, many additional taxpayers will be subjected to the complex rules of the alternative minimum

tax. Growing fiscal pressure will prompt greater interest in increasing tax revenue and in tax reform proposals to improve prospects for economic growth.

Potential Outcomes

■ Improved governance of tax incentive programs 

and better understanding of the effect of these 

programs on taxpayers and the U.S. economy

■ Better understanding of how the tax code affects 

business behavior

■ Better understanding of the consequences of 

economic and demographic trends on tax burdens and tax revenues
GAO STRATEGIC PLAN 2004–2009 227

STRATEGIC OBJECTIVE 3.4

Performance Goal 3.4.4: Support Congressional Oversight of 

Federal Tax Administration

Key Efforts

■ Assess the Internal Revenue Service’s (IRS) 

enforcement programs in light of a changing U.S. 

and world economy, evolving technology, and 

congressional expectations for appropriate treatment of taxpayers

■ Evaluate IRS’s expenditure plans for systems 

modernization

■ Determine what progress IRS has made in 

improving agencywide management, including 

overall modernization, human capital management, and performance management

■ Assess IRS’s service to taxpayers, including submission processing and telephone services

■ Assess IRS’s research and data analysis operations

Significance

In response to legislative mandates enacted in 1998, IRS initiated an agencywide modernization effort that

seeks to balance providing services to taxpayers with ensuring compliance with tax laws. This effort, which

is likely to continue for at least several more years, includes reengineering business practices, establishing

performance-based management, and building appropriate IT to support IRS’s mission. Globalization, as well

as evolving technology and business forms, have increased the challenges that IRS faces in its enforcement

efforts, even as it undergoes the far-reaching organizational transformation mandated by the Congress.

Potential Outcomes

■ Mitigation of the risks inherent in the modernization of IRS’s operations and assurance of its 

potential success

■ Enhanced IRS strategies for improving human 

capital and performance management

■ Improved service to taxpayers and improved 

compliance with tax laws
228 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 3.4

Performance Goal 3.4.5: Assess the Reliability of Financial 

Information on the Government’s Fiscal Position and 

Financing Sources

Key Efforts

■ Annually audit and report on the U.S. government’s financial statements and the adequacy of 

related internal control as well as certain financial information reported for major components 

of the government’s financial operations

■ Provide technical advice to OMB, the Department of the Treasury, and the agencies for 

addressing impediments to forming an opinion 

on the U.S. government’s consolidated financial 

statements

■ Provide technical advice to OMB, Treasury, and 

the agencies to (1) suggest solutions to material 

weaknesses in internal control, (2) improve the 

auditability of agency financial information, and 

(3) reduce the use of extraordinary efforts to prepare financial statements

Significance 

Since fiscal year 1997, GAO has been statutorily required to audit the U.S. government’s annual consolidated

financial statements prepared pursuant to statute. For the past 6 fiscal years, GAO has been unable to give an

opinion on the U.S. government’s consolidated financial statements because of material deficiencies in systems, record keeping, and documentation. However, progress is being made, and GAO anticipates that if sufficient progress continues to be made, there is a chance that it may be able to render a qualified opinion on

the consolidated balance sheet as a first step toward an overall opinion on the government’s consolidated

financial statements in the next few years. Over the next several years, GAO will need to invest more

resources (through use of its own staff or contractors) to ensure reliability of the financial statement work of

the inspectors general and external auditors. This resource investment is necessary if GAO is to be able to

render an opinion on the consolidated financial statements of the U.S. government. In addition, because certain information reported in the consolidated financial statements is significant, for a number of years GAO

has conducted financial statement audits of IRS and Treasury’s Bureau of the Public Debt, which are responsible for most of the government’s revenue and federal debt. Since fiscal year 1996, the Congress has also

required audited annual financial statements for 24 major federal departments and agencies. The number of

these agencies that were able to attain unqualified audit opinions on their financial statements from their

auditors increased to 21 for fiscal year 2002, up from just 6 agencies for fiscal year 1996. Many agencies,

however, only achieved their unqualified opinions through extraordinary efforts that are very costly, timeconsuming, and inefficient. The Congress recently expanded the requirement for annual audited financial

statements to most executive branch agencies, including DHS.

Potential Outcomes 

■ Enhanced assessment of the government’s overall fiscal position and financing sources based on 

information that is timely, accurate, and useful 

■ Improved financial reporting for making budgetary decisions on and effectively managing areas 

significantly affecting the government’s fiscal 

position, such as credit program costs and environmental liabilities 

■ Assurance as to the reliability of financial information covering major government financing 

sources, such as tax revenue and receivables, 

and the effectiveness in managing tax refund 

and collection activities

■ Actions to address agencies’ material control 

weaknesses and to help ensure compliance with 

laws and regulations in key areas
GAO STRATEGIC PLAN 2004–2009 229

STRATEGIC OBJECTIVE 4.1

Continuously Improve Client and Customer Satisfaction and 

Stakeholder Relationships

Issue: GAO interacts and works with a diverse set 

of external clients and internal customers. GAO’s 

principal client is the Congress but its work is also 

important to other stakeholders, including federal 

and nonfederal agencies and organizations, and 

international institutions. GAO’s internal customers 

are its staff who deliver quality service to its clients. 

Therefore, being a model agency depends on both 

determining and meeting the requirements of 

GAO’s clients and internal customers.

For congressional clients, GAO will update its 

understanding of their needs and expectations, 

measure their satisfaction with GAO’s work, and act 

on the resulting feedback. GAO will also refine its 

protocols for working with its congressional clients 

to better address their needs and expectation. In 

addition, GAO plans to use enhanced technology to 

provide its congressional clients with better access 

to GAO information and products and to improve 

the quality and timeliness of GAO products and services.

For internal customers, GAO will survey staff satisfaction with engagement support and other business processes, identify the services most requiring 

improvement, implement best practices to effect 

these needed improvements, and measure the 

impact of improvement efforts. GAO also plans to 

improve communication with GAO managers and 

staff on changes to engagement services.

For external stakeholders, GAO plans several efforts 

to strengthen relationships with major stakeholder 

groups. GAO will refine its protocols for conducting 

agency reviews to better manage stakeholder 

expectations. GAO also plans to develop and implement clear, consistent, and transparent protocols to 

govern interactions with international organizations. 

GAO will also strengthen its relationship with the 

press and the public by increasing the accessibility 

of GAO’s products.

Performance Goals: To support the objective to 

improve client and customer satisfaction and stakeholder relationships, GAO will

■ strengthen communication with congressional 

clients and more broadly measure their satisfaction with GAO’s work;

■ assess internal customer satisfaction with GAO 

services and processes and implement and measure improvement efforts; and 

■ strengthen relationships with GAO’s stakeholders and increase the accessibility of GAO’s products.
230 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 4.1

Performance Goal 4.1.1: Strengthen Communication with 

Congressional Clients and More Broadly Measure Their 

Satisfaction with GAO’s Work

Key Efforts 

■ Refine GAO’s protocols for working with the 

Congress to address client needs

■ Identify and implement enhanced technology 

and media to communicate GAO’s work results 

more effectively and efficiently

■ Explore and implement technology solutions 

that facilitate GAO staff’s ability to meet client 

needs and enhance the quality and timeliness of 

client service

■ Expand the Web-based client feedback survey to 

broaden client representation and increase product coverage, and act on client feedback to 

improve products, processes, and services

■ Meet with key committees to obtain client feedback on GAO’s work and act on the feedback 

provided

■ Fully automate the congressional intake process 

to provide easier access to GAO’s clients

Significance

To respond to its congressional clients’ needs, GAO must foster exemplary communications with its clients.

GAO has always communicated with its clients in planning and performing work done at their request and,

in the last planning cycle, implemented a Web-based feedback survey on a pilot basis to measure client satisfaction with GAO services and work. GAO’s key efforts during this planning cycle are focused on strengthening communications through implementation of technology solutions to assist in better determining the

clients’ requirements, more effectively and efficiently communicating work results, and more broadly measuring how well products and services satisfy clients.

Potential Outcomes

■ Improved quality and timeliness of GAO products and services

■ Improved client accessibility to GAO products 

and services

■ More comprehensive client satisfaction feedback data on which to base future decisions for 

improvements
GAO STRATEGIC PLAN 2004–2009 231

STRATEGIC OBJECTIVE 4.1

Performance Goal 4.1.2: Assess Internal Customer 

Satisfaction with GAO Services and Processes and Implement 

and Measure Improvement Efforts

Key Efforts 

■ Develop and launch a Chief Mission Support 

Office (CMSO) customer satisfaction survey to 

establish baselines for key performance indicators

■ Perform a gap analysis to identify the most 

important areas for CMSO improvement and 

establish targets

■ Identify best practices to achieve improvements

■ Act on customer feedback, incorporating appropriate best practices to improve CMSO products, 

services, and processes

■ Improve communication to GAO staff on status 

of and changes to engagement and infrastructure 

services

■ Measure impact of improvement efforts through 

CMSO balanced scorecard, refine targets, and 

adjust actions

Significance

To be a high-performing organization, it is essential that GAO provide effective engagement and infrastructure support services to its internal customers. In the previous planning cycle, efforts to determine internal

customer satisfaction with services were decentralized among the units. To improve the consistency and efficiency of this effort throughout GAO’s engagement and infrastructure support services, in this planning cycle

GAO will guide the effort centrally to obtain feedback, analyze results, set targets for improvements, implement improvements, and measure the impact of improvement through the use of the balanced scorecard. 

Potential Outcomes

■ Increased customer satisfaction with services

■ Consistency of approach and methodology 

throughout engagement and infrastructure support units

■ Decreased burden on internal customers and 

economies of scale achieved through centralization of efforts 
232 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 4.1

Performance Goal 4.1.3: Strengthen Relationships with 

GAO’s Stakeholders and Increase the Accessibility of GAO’s 

Products

Key Efforts

■ Refine GAO’s protocols for conducting agency 

reviews to address stakeholder concerns

■ Pilot test and implement international protocols 

■ Increase the accessibility of GAO products to the 

press, the public, and other stakeholders

Significance

GAO’s other major stakeholder groups are agencies and international accountability organizations. Communicating clearly and openly about GAO’s work and engagement policies will help strengthen the constructive

relationships needed to perform the agency’s work. Increasing accessibility of GAO products increases

GAO’s value to the public.

Potential Outcomes 

■ Improved communications and working arrangements with GAO’s stakeholders about how GAO 

does its work

■ Increased transparency about how GAO does its 

work

■ Increased access to GAO’s products
GAO STRATEGIC PLAN 2004–2009 233

STRATEGIC OBJECTIVE 4.2

Lead Strategically to Achieve Enhanced Results

Issue: GAO will strengthen its strategic leadership 

to better integrate the agency’s financial, human 

capital, and information resources for achieving 

enhanced results. To accomplish this objective, 

GAO will build on its established base of strategic 

planning, sound financial management, performance management, IT best practices, and leadership initiatives. GAO will also need to refine certain 

functions to ensure their strategic alignment. GAO 

will work to better align succession planning, workforce planning, staff utilization, and appraisal and 

compensation systems with its strategic objectives.

Performance Goals: To support the objective to 

lead strategically to achieve enhanced results, GAO 

will

■ integrate planning, budgeting, and performance 

measurement to achieve enhanced results;

■ strengthen GAO’s strategic human capital 

management to achieve enhanced results;

■ ensure exemplary practices and systems in 

GAO’s fiscal operations; and

■ strengthen IT governance practices and 

processes to achieve strategic results.
234 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 4.2

Performance Goal 4.2.1: Integrate Planning, Budgeting, and 

Performance Measurement to Achieve Enhanced Results

Key Efforts 

■ Align the contents and time frames for the strategic plan, budget, performance plan, workforce 

plan, and performance and accountability 

reporting

■ Assess GAO’s existing planning processes 

against best practice benchmarks to identify and 

make improvements

■ Revise systems and processes to implement 

preparation of a semiannual progress report on 

strategic objectives and goals and implement 

accelerated time frames for performance and 

accountability reporting

■ Refine GAO balanced scorecard measures and 

performance targets to better gauge overall organizational performance and cost-effectiveness

Significance

GAO supports the intent of the Government Performance and Results Act of 1993 (GPRA), the primary legislative framework through which federal agencies are required to set strategic goals, measure performance,

and report on the degree to which goals are met. GAO developed and maintains a rigorous strategic planning process that acts as the catalyst in determining how the agency directs its work and manages its

resources. Because of GAO’s key role in auditing other agencies’ adherence to GPRA, it is important for GAO

to lead by example and use a model strategic management approach. GAO believes that to be a model

agency in this area requires an integrated approach that includes planning, preparing, assessing, adjusting,

and reporting results.

Potential Outcomes

■ Continued ability of GAO to focus on the most 

important global and national issues facing the 

Congress and the American people

■ Improved ability to measure GAO’s performance 

and compare it to established goals and results

■ Continued improvement to GAO’s strategic planning and budgeting

■ Work that meets the needs of the Congress and 

facilitates improvements in government
GAO STRATEGIC PLAN 2004–2009 235

STRATEGIC OBJECTIVE 4.2

Performance Goal 4.2.2: Strengthen GAO’s Strategic Human 

Capital Management to Achieve Enhanced Results

Key Efforts

■ Implement workforce flexibilities, as authorized 

by the Congress, and educate GAO managers 

and staff on the changes to GAO’s policies and 

practices

■ Enhance GAO’s strategic human capital planning 

efforts to more fully integrate them with GAO’s 

strategic goals and objectives

■ Using GAO’s workforce plan, more closely align 

GAO’s human capital assets with its organizational needs and agency goals 

■ Identify and implement optimal human capital 

sourcing strategies for addressing gaps in GAO’s 

workforce 

■ Design and deliver a training and development 

program that focuses on the core competencies 

GAO managers and staff need to achieve strategic results

■ Establish performance-based compensation systems for all staff and make enhancements to 

these systems as needed

■ Establish competency-based appraisal systems 

for all staff and make enhancements to these systems as needed

■ Identify staffing methods and systems to 

enhance the development and effective utilization of mission staff and GAO’s prospects for 

staff retention

■ Continually assess the organization’s need for 

additional workforce flexibilities to enhance 

GAO’s human capital management and seek 

changes where appropriate

Significance

To ensure that GAO has the human resources needed to accomplish its work for the Congress, it is critical

that it align its human capital policies and systems with its strategic goals. Key efforts are focused on integrating workforce planning, succession planning, sourcing strategies, and implementation of workforce flexibilities into the human capital strategic plan to ensure that GAO attracts, retains, motivates, and rewards staff

with the appropriate skills to achieve its strategic plan goals and objectives. 

Potential Outcomes

■ Continued alignment of human capital resources 

with GAO’s strategic goals and objectives

■ Enhanced appraisal systems that are perceived 

as fair, consistently applied, and transparent

■ Compensation systems that are directly linked to 

results

■ Productive employees who are fairly compensated for their work

■ An improved training and development program 

that prepares staff to achieve GAO’s strategic 

goals

■ Enhanced utilization of GAO staff
236 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 4.2

Performance Goal 4.2.3: Ensure Exemplary Practices and 

Systems in GAO’s Fiscal Operations

Key Efforts

■ Assess GAO’s fiscal operations to ensure compliance with federal financial management guidelines through the internal Financial Integrity Act 

review process and the annual independent 

audit of GAO’s financial statements by a certified 

public accounting firm and make changes as 

required

■ Identify improvements to fiscal operations aimed 

at ensuring that GAO’s financial systems produce 

accurate and timely information to support operating, budget, and policy decisions

■ Implement an integrated asset management system to improve control, decrease reconciliation 

requirements, and support the financial statements and property accountability

Significance

Integrity in how GAO manages its fiscal operations is critical. GAO should be a model for other agencies in

both operational and fiscal management by implementing and using systems that comply substantially with

federal financial management guidelines and reviewing, updating, and improving those systems as necessary.

Potential Outcomes

■ Clean opinion on the annual financial audit ■ Management of GAO according to sound financial management principles and best practices
GAO STRATEGIC PLAN 2004–2009 237

STRATEGIC OBJECTIVE 4.2

Performance Goal 4.2.4: Strengthen IT Governance Practices 

and Processes to Achieve Strategic Results

Key Efforts

■ Provide a foundation for technology initiatives 

and ensure a secure information technology (IT) 

environment in support of GAO’s strategic and 

business goals through an updated GAO IT plan

■ Develop and maintain a GAO enterprise information architecture that provides an integrated 

view of the agency’s business processes

■ Develop partnerships between technology staff 

and internal customers to define business 

requirements and determine how technology 

can best support those requirements

Significance

The role of IT has become increasingly vital in organizations, becoming critical to client service, strategic

planning, human capital, and business process goals and objectives. IT adds value to organizations by creating, supporting, and enabling solutions to business requirements. GAO must provide a strong and integrated

IT vision to maximize the benefits of IT and become a model agency.

Potential Outcomes

■ Improved IT planning and decision making and 

flexibility to respond to continual improvements 

in business processes

■ Improved working relationships among internal 

customers and technology staff, ensuring that IT 

more effectively meets the needs defined

■ A more effective IT investment process that more 

directly links IT investments to GAO’s strategic 

and business plans

■ A robust, reliable, flexible, and secure technology architecture
238 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 4.3

Leverage GAO’s Institutional Knowledge and Experience

Issue: GAO is a knowledge-based professional services organization. As a large number of GAO’s 

more senior employees reach eligibility for retirement, GAO needs to identify and implement strategies for retaining this knowledge and expertise and 

increasing organizational knowledge sharing. GAO 

plans to develop an integrated approach for identifying, managing, and sharing the organization’s 

information and intellectual assets. GAO plans to 

use its greatly enhanced electronic and Web-based 

technologies to support this objective. Further, GAO 

intends to identify ways to enhance knowledge 

sharing with other national and international 

accountability and professional organizations.

Performance Goals: To support the objective to 

leverage GAO’s institutional knowledge and experience, GAO will

■ maximize the collection, use, and retention of 

essential organizational knowledge;

■ increase GAO’s knowledge-sharing capability; 

and

■ enhance knowledge sharing with other national 

and international accountability and professional 

organizations.
GAO STRATEGIC PLAN 2004–2009 239

STRATEGIC OBJECTIVE 4.3

Performance Goal 4.3.1: Maximize the Collection, Use, and 

Retention of Essential Organizational Knowledge

Key Efforts

■ Identify and begin implementation of strategies 

for increasing organizational knowledge retention and knowledge transfer 

■ Expand and institutionalize electronic records 

management agencywide and augment the document management system with electronic 

records functions

■ Assess the usefulness of creating and integrating 

taxonomies to allow GAO staff to better access 

organizational knowledge

■ Enhance and implement communications strategies for identifying and sharing information 

across GAO and with clients, external organizations, and the press

■ Develop short- and long-term communications 

standards for various media to guide the presentation of all of GAO’s knowledge products

■ Establish individual Web-based team resource 

pages to enhance team research capabilities

Significance

Managing information and knowledge so that it serves not only GAO’s staff and managers but also the

agency’s congressional clients requires an integrated approach for identifying, managing, and sharing the

organization’s information and intellectual assets. These assets include databases, plans, analyses, documents,

reports, policies, procedures, management information, and staff expertise. Effective information and knowledge management is crucial to the accessibility and preservation of these valuable assets. 

Potential Outcomes

■ Ability to capitalize on the intellectual assets of 

GAO 

■ Enhanced processes for capturing, maintaining, 

and sharing institutional knowledge

■ Improved processes and methods for sharing relevant information among all GAO staff

■ Increased access to GAO’s published products 

by the Congress and the American people

■ Improved capture of and access to the agency’s 

essential information 

■ Improved quality of engagements, which will 

better meet the needs of the clients
240 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 4.3

Performance Goal 4.3.2: Increase GAO’s Knowledge-Sharing 

Capability

Key Efforts

■ Redesign GAO’s external Web site to increase 

access and usability of information and foster 

knowledge sharing

■ Develop and offer training to GAO staff to 

enhance their ability to access GAO library 

resources and services

■ Develop and offer training to GAO staff to 

improve their Web-enabled search capabilities

Significance

The dramatic increase in the use of Web-based technology by GAO staff and the ability to obtain direct

access to information from the desktop has improved the timeliness and cost-effectiveness of GAO’s products and services. GAO seeks to further improve these products and services by strengthening GAO staff’s

ability to access Web-based information.

Potential Outcomes

■ Increased ability of GAO’s staff to use the Web 

as a research tool

■ Better access to information that will contribute 

to meeting client needs

■ Enhanced knowledge and information sharing 

across GAO
GAO STRATEGIC PLAN 2004–2009 241

STRATEGIC OBJECTIVE 4.3

Performance Goal 4.3.3: Enhance Knowledge Sharing with 

Other National and International Accountability and 

Professional Organizations

Key Efforts

■ Convene forums, symposia, and meetings with 

the Comptroller General’s Advisory Board, the 

intergovernmental audit forums and domestic 

working groups, the International Organization 

of Supreme Audit Institutions and global working groups, and other external government 

accountability and professional organizations

■ Develop new forums, such as Comptroller General forums and the GAO speakers’ series “Conversations on 21st Century Challenges”

■ Evaluate and improve GAO’s institutional capacity building efforts, such as the International Fellows Program

■ Identify and support opportunities for collaborative engagements with other accountability and 

professional organizations

■ Foster a program evaluation community of practice to help federal agencies build capacity to 

evaluate the implementation and effects of their 

policies and programs

Significance

GAO works strategically with other accountability and professional organizations to broaden and leverage its

institutional knowledge and experience, and in turn, improve GAO’s overall service to the Congress and the

American people. For example, the Comptroller General’s Advisory Board, forums, and speakers’ series help

inform GAO on how important, emerging themes are likely to influence Americans and on how those

themes might influence GAO’s strategic plan. GAO’s work with other accountability and professional organizations helps it to build capacity and assists GAO and these entities in meeting mutual goals. GAO’s collaborative efforts with the intergovernmental audit community helps it and other accountability organizations in

identifying better ways to develop and share methods, tools, benchmarking results, and best practices for

doing their work.

Potential Outcomes

■ Increased leveraging and sharing of knowledge 

throughout the government accountability profession

■ Improved quality of engagements that better 

meet the needs of the clients
242 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 4.4

Continuously Enhance GAO’s Business and Management 

Processes

Issue: GAO, as the federal government’s accountability organization, undertakes engagements to 

evaluate the economy, efficiency, and effectiveness 

of a wide range of federal policies and programs to 

assist the Congress and benefit the American taxpayer. By continuously assessing and enhancing the 

processes and services that support its own engagements, GAO can maximize its value to the Congress 

and the public.

Performance Goals: To support the objective to 

continuously enhance GAO’s business and 

management processes, GAO will

■ improve engagement support services and

■ use enabling technology to improve GAO’s 

crosscutting business processes.
GAO STRATEGIC PLAN 2004–2009 243

STRATEGIC OBJECTIVE 4.4

Performance Goal 4.4.1: Improve Engagement Support 

Services

Key Efforts

■ Identify and prioritize process improvements 

and reengineering efforts related to the job management process based on staff concerns and 

best practices of other organizations

■ Continuously evaluate GAO’s core support functions to identify improvements and determine 

best delivery methods to enhance efficiency and 

cost-effectiveness

■ Continue to assess and improve the report production process

■ Prepare for an external peer review of GAO’s 

quality assurance policies and procedures related 

to government auditing standards, and GAO’s 

compliance with these standards in conducting 

its work

■ Optimize the efficiency and cost-effectiveness of 

GAO’s product delivery methods

■ Undertake high-priority incremental improvement and business reengineering efforts and 

related technology solutions for CMSO initiatives 

using matrixed teams

■ Develop tools to aid in more effective use of literature search information and develop standards and guidelines for conducting literature 

searches 

■ Improve the consistency and transparency of the 

mission team procurement review and approval 

process and better publicize the process

■ Examine state-of-the-art hiring programs, identify 

best practices, and plan implementation of recommended actions to enhance GAO’s hiring 

programs

Significance

By continuously assessing and enhancing the processes and services that support GAO’s engagements, GAO

can maximize its value to the Congress and the public. GAO intends to streamline and reengineer internal

business and administrative processes where it is possible and desirable. This will enable GAO’s engagement

support services to respond to the mission requirements of the agency’s internal customers to deliver highquality products and services to GAO’s clients.

Potential Outcomes

■ Improved internal engagement, business, and 

administrative processes

■ More efficient and cost-effective delivery of internal services

■ Improved customer and client satisfaction with 

services and products

■ Engagement support services that enable staff to 

perform work that meets the needs of the Congress and facilitates improvements in government
244 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 4.4

Performance Goal 4.4.2: Use Enabling Technology to 

Improve GAO’s Crosscutting Business Processes

Key Efforts

■ Identify, prioritize, and implement enabling technology for the automated delivery of human 

capital services

■ Implement an automated travel manager system 

for travel orders and vouchers to make the process more user friendly and to reduce errors and 

paper file requirements

■ Assess WebTA and identify and implement 

enhancements

■ Design and implement technology solutions 

facilitating engagement management and reporting

■ Upgrade and enhance technology tools and systems to ensure the reliability of systems supporting myriad business processes and to promote 

productivity

■ Pilot appropriate new enabling technologies 

supporting business and management processes

Significance

GAO must maximize the benefits of IT to become a model agency. The identification and implementation of

new and emerging technologies is essential to GAO’s continued efforts to provide efficient and effective services to its internal customers, facilitating the accomplishment of its mission work in support of the Congress. 

Potential Outcomes

■ Better-integrated human capital services that are 

easier for customers to access

■ Enhanced user-friendliness and accuracy in the 

travel management system

■ More efficient operation of property management 

■ A more productive workforce
GAO STRATEGIC PLAN 2004–2009 245

STRATEGIC OBJECTIVE 4.5

Become a Professional Services Employer of Choice

Issue: To be a model organization, GAO must 

become an employer of choice—one that attracts, 

retains, motivates, and rewards excellent employees 

and is considered one of the best places to work. 

GAO intends to build and maintain a work environment that is fair, unbiased, and inclusive and that 

offers the opportunity for all employees to realize 

their full potential. The agency is committed to providing its employees with the tools, technologies, 

and systems that promote collaboration and productivity and a safe and secure workplace. The 

agency will also continue to enhance its offerings of 

family-friendly and work/life programs and provide 

superior training for its new hires to improve 

employee satisfaction with working at GAO.

Performance Goals: To become a professional 

services employer of choice, GAO will

■ promote an environment that is fair and 

unbiased and that values opportunity and 

inclusiveness;

■ provide GAO staff with tools, technology, and a 

world-class working environment;

■ provide a safe and secure workplace; 

■ enhance employee views about GAO; and 

■ improve the development and experiences of 

newly hired staff.
246 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 4.5

Performance Goal 4.5.1: Promote an Environment That Is 

Fair and Unbiased and That Values Opportunity and 

Inclusiveness

Key Efforts

■ Evaluate the effectiveness of GAO’s strategy to 

recruit and retain a broad spectrum of candidates 

for employment and recommend changes as 

appropriate

■ Identify artificial barriers that deter GAO employees from realizing their full potential and work 

with management officials to eliminate such barriers

■ Monitor and recommend changes, as appropriate, to the compensation and performance management systems to ensure that they are fair and 

unbiased and promote workplace excellence

■ Monitor and recommend changes to GAO’s 

human capital policies and practices to ensure 

that they are fair and unbiased and promote 

workplace excellence 

■ Track and assess assignment and training opportunities given to individuals to ensure that all 

staff are given the opportunity to maximize their 

performance, and make recommendations as 

appropriate

Significance

GAO’s goal is to provide a workplace climate in which staff believe they are valued contributors to the organization’s mission. GAO recognizes the importance of creating an environment in which diversity is valued.

GAO’s primary objective is to promote an environment that is fair and unbiased and values opportunity and

inclusiveness for all staff. GAO believes that continuous improvement in this area will enable the agency to

attract, retain, motivate, and reward a highly skilled, diverse, and capable staff.

Potential Outcomes

■ Improved work environment that recognizes and 

appreciates diversity and is free of bias

■ Increased percentage of employees who concur 

that GAO’s work environment is fair and unbiased

■ A more productive workforce

■ Enhanced ability to attract, retain, motivate, and 

reward a highly skilled, diverse, and capable 

staff
GAO STRATEGIC PLAN 2004–2009 247

STRATEGIC OBJECTIVE 4.5

Performance Goal 4.5.2: Provide GAO Staff with Tools, 

Technology, and a World-class Working Environment

Key Efforts

■ Provide reliable, modern, and secure technology, tools, and systems that balance wants, 

needs, and affordability; promote collaboration 

and productivity; and support a mobile workforce

■ Enhance GAO’s physical work environment to 

better address staff needs

Significance

GAO recognizes the importance of providing the best work environment, technology, and tools so that staff

can effectively and efficiently perform their work. These efforts are directed at providing the tools and a

comfortable work environment to help employees more effectively and efficiently accomplish their work,

while maximizing the utilization of available workspace.

Potential Outcomes

■ More efficient operations 

■ Improved technology that supports a mobile 

workforce

■ A more productive workforce
248 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 4.5

Performance Goal 4.5.3: Provide a Safe and Secure 

Workplace

Key Efforts

■ Develop and implement a model security and 

safety organization vision focused on results, service quality, and customer satisfaction and characterized by the confidence of GAO staff in their 

ability to fulfill the mission

■ Periodically monitor threat assessment and 

update as emerging trends trigger the need for 

change

■ Plan for and implement enhanced security processes and procedures to guard against threats, 

embody best practices, and meet changing 

requirements

■ Review and update GAO’s emergency preparedness and response plan

■ Implement a comprehensive IT security program 

that embodies best practices and an IT disaster 

recovery program that ensures timely response, 

resumption, and recovery of services

■ Promote open communication with customers 

regarding new initiatives and provide periodic 

updates with respect to ongoing projects and 

plans

Significance

The safety and security of GAO’s staff, information, and assets against threats must be a top priority. The September 11, 2001, terrorist attacks against the United States highlighted the nation’s vulnerabilities. GAO must

place a high priority on assessing the agency’s current security measures and identifying and adopting practices that will enhance GAO’s overall security program.

Potential Outcomes

■ GAO’s people, buildings, and other key assets 

are protected

■ GAO’s IT assets are protected

■ GAO’s leaders and staff are prepared to respond 

effectively to emergencies

■ A safe, secure, and adaptable work environment 

for all staff
GAO STRATEGIC PLAN 2004–2009 249

STRATEGIC OBJECTIVE 4.5

Performance Goal 4.5.4: Enhance Employee Views about 

GAO

Key Efforts

■ Improve GAO’s tools and measures to assess 

GAO employee feedback 

■ Enhance GAO’s offerings of family-friendly and 

work/life programs

Significance

Enhancing GAO’s family-friendly and work/life programs are ways in which GAO can improve the quality of

life for its employees. GAO believes that continuous improvement in this area, based on periodic feedback

from employees, will enable the agency to attract, retain, motivate, and reward GAO employees.

Potential Outcomes

■ Improved family-friendly policies that help staff 

balance work and family lives

■ A more productive workforce

■ Ability to attract, retain, motivate, and reward a 

highly skilled, diverse, and capable staff 
250 GAO STRATEGIC PLAN 2004–2009

STRATEGIC OBJECTIVE 4.5

Performance Goal 4.5.5: Improve the Development and 

Experiences of Newly Hired Staff

Key Efforts

■ Enhance and modify the Professional Development Program (PDP) in response to changing 

agency and new hire needs

■ Improve PDP oversight and management

Significance

GAO’s goal is to provide its entry-level analysts opportunities to develop to their fullest potential. Ensuring

that PDP provides a superior training experience will help to meet the agency’s workforce needs as well as

provide an incentive for new hires to remain at GAO.

Potential Outcomes

■ Ability to attract, retain, motivate, and reward a 

highly skilled, diverse, and capable staff maintained

■ Enhanced training and development experiences 

for entry-level analysts 
CORE VALUES

We at GAO want our work 

to be viewed by the 

Congress and the American 

public as reliable. We 

produce high-quality 

reports, testimonies, 

briefings, legal opinions, and 

other products and services 

that are timely, accurate, 

useful, clear, and candid.

We set high standards for 

ourselves in the conduct of 

GAO’s work. Our agency 

takes a professional, 

objective, fact-based, 

nonpartisan, nonideological, 

fair, and balanced approach to 

all activities. Integrity is the 

foundation of reputation, and 

GAO’s approach is designed 

to ensure both.

We help the Congress oversee 

federal programs and operations to 

ensure accountability to the 

American people. GAO’s analysts, 

auditors, lawyers, economists, 

information technology specialists, 

investigators, and other 

multidisciplinary professionals 

seek to enhance the economy, 

efficiency, effectiveness, and 

credibility of the federal 

government both in fact and in the 

eyes of the American people. 

Accountability Integrity Reliability

The 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.

www.gao.gov

GAO Strategic Plan 2004-2009 

SERVING THE CONGRESS AND THE NATION 

GAO S STRATEGIC PLAN

2004 2009

,