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79–740 PDF 2013

EXPLORING GAO’S HIGH–RISK LIST AND 

OPPORTUNITIES FOR REFORM 

HEARING 

BEFORE THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

FEBRUARY 14, 2013 

Serial No. 113–3 

Printed for the use of the Committee on Oversight and Government Reform 

( 

Available via the World Wide Web: http://www.fdsys.gov 

http://www.house.gov/reform 

(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

DARRELL E. ISSA, California, Chairman 

JOHN L. MICA, Florida 

MICHAEL R. TURNER, Ohio 

JOHN J. DUNCAN, JR., Tennessee 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

TIM WALBERG, Michigan 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

PAUL A. GOSAR, Arizona 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

TREY GOWDY, South Carolina 

BLAKE FARENTHOLD, Texas 

DOC HASTINGS, Washington 

CYNTHIA M. LUMMIS, Wyoming 

ROB WOODALL, Georgia 

THOMAS MASSIE, Kentucky 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

KERRY L. BENTIVOLIO, Michigan 

RON DESANTIS, Florida 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

JACKIE SPEIER, California 

MATTHEW A. CARTWRIGHT, Pennsylvania 

MARK POCAN, Wisconsin 

TAMMY DUCKWORTH, Illinois 

DANNY K. DAVIS, Illinois 

PETER WELCH, Vermont 

TONY CARDENAS, California 

STEVEN A. HORSFORD, Nevada 

MICHELLE LUJAN GRISHAM, New Mexico 

VACANCY 

LAWRENCE J. BRADY, Staff Director 

JOHN D. CUADERES, Deputy Staff Director 

ROBERT BORDEN, General Counsel 

LINDA A. GOOD, Chief Clerk 

DAVID RAPALLO, Minority Staff Director 

(III) 

C O N T E N T S 

Page 

Hearing held on February 14, 2013 ....................................................................... 1 

WITNESSES 

Mr. Gene L. Dodaro, Comptroller General of the United States, U.S. Government Accountability Office, 

Oral Statement ................................................................................................. 5 

Written Statement ............................................................................................ 8 

APPENDIX 

The Honorable Elijah E. Cummings, a Member of Congress from the State 

of Maryland, Opening Statement ....................................................................... 67 

The Honorable Gerald E. Connolly, a Member of Congress from the State 

of Virginia, Opening Statement .......................................................................... 69 

The Honorable Matthew Cartwright, a Member of Congress from the State 

of Pennsylvania, Opening Statement ................................................................. 71 

SAS RX ALERT: Propofol and Brevital Information ............................................ 72 

GAO Responses to Questions for the Record from The Honorable Paul A. 

Gosar, a Member of Congress from the State of Arizona ................................. 75 

GAO Responses to Questions for the Record from The Honorable Trey Gowdy, 

a Member of Congress from the State of South Carolina ................................. 78 

(1) 

EXPLORING GAO’S HIGH–RISK LIST AND 

OPPORTUNITIES FOR REFORM 

Thursday, February 14, 2013 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, 

WASHINGTON, D.C. 

The committee met, pursuant to call, at 10:53 a.m., in Room 

2154, Rayburn House Office Building, Hon. Darrell E. Issa [chairman of the committee] presiding. 

Present: Representatives Issa, Mica, Turner, Duncan, Jordan, 

Chaffetz, Walberg, Gosar, DesJarlais, Gowdy, Farenthold, Woodall, 

Massie, Meadows, Bentivolio, Cummings, Norton, Connolly, Speier, 

Cartwright, Pocan, Duckworth, Cardenas, Horsford and Lujan 

Grisham. 

Staff Present: Alexia Ardolina, Assistant Clerk; Robert Borden, 

General Counsel; Molly Boyl, Parliamentarian; Katelyn E. Christ, 

Professional Staff Member; John Cuaderes, Deputy Staff Director; 

Gwen D’Luzansky, Research Analyst; Adam P. Fromm, Director of 

Member Services and Committee Operations; Linda Good, Chief 

Clerk; Tyler Grimm, Professional Staff Member; Frederick Hill, Director of Communications and Senior Policy Advisor; Christopher 

Hixon, Deputy Chief Counsel, Oversight; Mitchell S. Kominsky, 

Counsel; Mark D. Marin, Director of Oversight; Tegan Millspaw, 

Professional Staff Member; Mary Pritschau, Professional Staff 

Member; Laura L. Rush, Deputy Chief Clerk; Scott Schmidt, Deputy Director of Digital Strategy; Matthew Tallmer, Investigator; 

Peter Warren, Legislative Policy Director; Rebecca Watkins, Deputy Director of Communications; Meghan Berroya, Minority Counsel; Jaron Bourke, Minority Director of Administration; Krista 

Boyd, Minority Deputy Director of Legislation; Counsel; Carla 

Hultberg, Minority Chief Clerk; Elisa LaNier, Minority Deputy 

Clerk; Una Lee, Minority Counsel; and Dave Rapallo, Minority 

Staff Director. 

Chairman ISSA. The hearing will come to order on, ‘‘Exploring 

GAO’s High-Risk List and Opportunities for Reform.’’ 

We on the Oversight and Government Reform Committee exist to 

secure two fundamental principles. First, Americans have a right 

to know that the money Washington takes from them is well spent. 

And second, Americans deserve an efficient, effective government 

that works for them. 

Our duty on the Government Oversight and Reform Committee 

is to protect these rights. Our solemn responsibility is to hold government accountable to taxpayers, because taxpayers have a right 

to know what they get from their government. 

2 

Our obligation is to work tirelessly, in partnership with citizen 

watchdogs and the GAO, to deliver the facts to the American people and bring genuine reform to the Federal bureaucracy. 

Today we are having our broadest oversight hearing that we 

have in any one Congress. That is because the GAO’s report is, in 

fact, on all spending of government and all risk to government and, 

in fact, is the most important report published. Each 2 years, General Dodaro and his staff assess all the risks to the government, 

in size of the risk in dollars but also in the likelihood of success 

or failure. This risk produces the top, if you will, highest threats. 

It also recognizes the success that sometimes occurs because of 

both GAO and this committee’s efforts to work with government to 

reduce waste and risk to government. This year, by one account, we lost $261 billion, or 7 percent of 

our total spending, in fraud and waste. I might note that when you 

annualize that, or if you will decade-ize it, that represents $2.6 trillion, about twice what we are looking at for the sequestration. 

The 30 areas that this year are on the high-risk list represent 

tremendous opportunities to save those billions of dollars. And I 

might repeat, if we were able to save just half of what we waste, 

we would need no sequestration at all. 

As we are going to hear today, those areas extend from the Department of Defense to our weather system, from elements related 

to great storms, such as Superstorm Sandy, to in fact the simple 

mundane Medicaid-Medicare programs that every day touch our 

lives in important ways. 

The truth is, identifying high-risk areas isn’t enough anymore. It 

is clear that many of the areas on high risk are perennial high 

risk. Seventeen areas on this year’s high-risk list have been on that 

list for more than a decade; six have been on that list since inception. I don’t expect overnight to fix DOD procurement. I don’t expect overnight to take Medicare, now becoming our largest total expense and eclipsing, if you include the dual-eligible Medicare and 

Medicaid recipients, eclipsing both Social Security and our Department of Defense individual spending, I don’t expect to fix it overnight. 

But with the help of the GAO on a nonpartisan basis, our committee and other committees of Congress have an opportunity to attack each of these areas and make real improvements. Our commitment is to make those real improvements. I am pleased to see a 

particular emphasis on the program of Medicare and Medicaid, 

which are permanent fixtures, that in fact this is an area of particular opportunity for reduction in waste and, consistent with the 

Affordable Health Care Act, an area of growth in number of recipients. 

The committee has just voted on a bipartisan basis on a report 

related specifically to New York State. During the dialogue, we 

mentioned an equally outlandish problem that existed in the State 

of Texas. These billions of dollars can no longer be tolerated. We 

must find them, not after decades of waste and abuse but in fact 

in real time. 

This committee will have before it today, or have before it during 

this Congress, an updated version of the bipartisan DATA Act. It 

will have an updated version or a version of our IT reform on a biVerDate Aug 31 2005 10:14 Apr 12, 2013 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 C:\DOCS\79740.TXT APRIL
3 

partisan basis. These and other systems that this committee is responsible for changing will create the opportunity to save money in 

IT procurement and deliver better information to decision makers. 

It also will create greater transparency for the GAO in their work 

for Congress and its work and for all the watchdogs of waste and 

abuse. 

So, as we begin this hearing today with our esteemed comptroller 

general, we also realize there is legislative work for us to do if this 

list is to be successfully attacked and reduced. I look forward to 

working on both the legislative issues and the oversight issues with 

my partner, the ranking member, Mr. Cummings, who I now recognize for his opening statement. 

Mr. CUMMINGS. I want to thank you, Mr. Chairman, for holding 

this hearing. 

I believe this will be one of the most important hearings this 

committee will hold this Congress. 

Mr. Dodaro, I also thank you for testifying before us today. And 

I thank you for the work GAO put into creating this high-risk report. 

I also ask that you extend the gratitude of this entire committee 

for the hard work of the folks at GAO. As I said earlier in a press 

conference, they have earned the reputation for outstanding and 

accurate work and work that helps our government function better. 

And so we publicly say thank you to them. 

Every one of GAO’s high-risk reports has been important. However, this year’s report is especially significant because the comptroller general and the nonpartisan experts at GAO have made a 

landmark decision to add the issue of climate change to their biennial high-risk report, which details the most pressing challenges 

facing our Nation and the Federal Government. In its report, GAO 

identifies a serious risk facing our Nation, one that we cannot continue to ignore. GAO finds that climate change poses significant financial risk to our Nation’s economy, including agriculture, infrastructure, ecosystems, and human health. GAO warns that our government is not well positioned to address this fiscal exposure. And 

GAO recommends a government-wide strategic approach, with 

strong leadership, and the authority to manage climate change 

risk. GAO finds that the government has already spent tens of billions of dollars on damage from severe weather events related to 

climate change. According to the National Oceanic and Atmospheric Administration, over the past 2 years the United States has 

experienced 25 weather disasters that cost over a billion dollars 

each. GAO’s historic decision to add climate change to the list of 

high-risk challenges facing our Nation is a wake-up call for Congress to finally start addressing this very, very critical issue. 

Unfortunately, in the last Congress the House Republicans voted 

37 times to block action to address the threat of climate change. 

For example, they slashed climate change research funding by 

more than a hundred million dollars. They voted to prevent the 

State Department from using funds to send a special envoy for climate change to international climate negotiations. They voted to 

zero out the United States contribution to the Intergovernmental 

Panel on Climate Change, the world’s leading authority on climate 

change science. They voted to prohibit the Department of HomeVerDate Aug 31 2005 10:14 Apr 12, 2013 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 C:\DOCS\79740.TXT APRIL
4 

land Security from using any funds to participate in the Interagency Climate Change Adaptation Task Force. And they voted to 

prohibit the Department of Agriculture from using any funds to implement its climate change adaptation program. 

What GAO is telling us today is that Congress simply cannot afford to block or delay action any longer. We must act now to implement GAO’s recommendations and mitigate the risks from climate 

change. 

For these reasons, I sent a letter to Chairman Issa today requesting that our committee hold a series of hearings to address 

each of the four specific areas that GAO highlights in its report relating to climate change. And in an earlier press conference, Chairman Issa I thought made a very good point, and that is perhaps 

we should look at what responsibilities States are playing with regard to climate change and what responsibility they should have. 

And I am hoping that we, as I said to him earlier, maybe we will 

have some Governors to come in and talk about their responsibility 

and things that they are doing to prepare for weather-type problems that might affect their States. 

Mr. Chairman, when we were here 2 years ago considering the 

GAO’s last high-risk report in 2011, you said, it is our committee’s 

obligation to conduct vigorous oversight over the issues raised by 

GAO, and to insist on plans to change by each of the agencies listed here today. I agreed then, and I agree now. With our committee’s extremely wide jurisdiction across multiple Federal agencies 

and departments, we have a very unique opportunity to conduct 

hearings that will lead to vigorous oversight, responsible funding 

decisions, and legislation to address the growing threats to public 

health and our economy. 

As the President noted the other night in his State of the Union, 

we have seen in the last 10 or 15 years just an onslaught of weather-related problems. And I am hoping that we all will work together closely to prepare for the fiscal impact of those problems. 

With that, I stand ready, willing, and able to work with the 

chairman. 

And with that, I yield back. 

Chairman ISSA. I thank the gentleman. 

And as we did discuss, I believe we need to kick off the first 

hearing related to that risk, and I look forward to scheduling that 

hearing, and also suggesting that other committees of jurisdiction 

do their oversight related specifically to those areas. 

With that, we now recognize our first witness and the panel behind him. 

I am pleased to welcome the Honorable Gene Dodaro, who is the 

comptroller general of the United States. He also comes with a 

small sampling of his team of experts from the United States Government Accountability Office that is here today. And I will try not 

to mess up your names, but if you would rise just so that the audience can know that he came with a tremendous amount of expertise: 

Chris Mihm is the managing director of strategic issues at the 

GAO. Mark Gaffigan is managing director of natural resources and 

environment at the GAO. Cathleen Berrick is managing director of 

homeland security and justice issues at the GAO. Phillip Herr is 

5 

managing director of fiscal infrastructure issues at the GAO. That 

is physical actually. Orice Williams Brown is managing director of 

financial markets, an area of particular concern, and community 

investment at the GAO. And Mr. David Powner is director of information technology and management systems at the GAO. 

And I am now going to ask you all to stand, because if you are 

going to help the General, you may very well be a witness. Would 

you please raise your right hand? 

Pursuant to the committee rules, please raise your right hands. 

Do you solemnly swear or affirm that the testimony you are about 

to give will be the truth, the whole truth, and nothing but the 

truth? 

Mr. DODARO. I do. 

Chairman ISSA. Let the record reflect that all witnesses answered in the affirmative. 

And normally we have that 5-minute clock. For your reference, 

we will have it. If you run a little over, you are the whole show 

today, so Gene, you are recognized. 

WITNESS STATEMENT 

STATEMENT OF THE HONORABLE GENE L. DODARO 

Mr. DODARO. Thank you very much, Mr. Chairman, Ranking 

Member Cummings, members of the committee. 

I am very pleased to be invited today to talk about GAO’s highrisk list update. We do this update, as noted, every 2 years, with 

the beginning of each new Congress in order to identify areas that 

we believe are at highest risk of waste, fraud, abuse, and mismanagement, or are in need of broad-based reform. I am very 

pleased to report, with this committee’s help, and I appreciate your 

support, Mr. Chairman, Mr. Cummings, and committee members, 

of oversight since our last report in 2011 that notable progress has 

been made in the vast majority of areas on the high-risk list. 

This has been due in part to legislation passed by the Congress. 

For example, the FDA Authorization Act addressed many issues 

that GAO had recommended for improvements to oversight of medical products and devices, for example dealing with drug shortages, 

and also increased inspections, risk-based, in foreign operations. 

Congress also passed important legislation concerning the Flood Insurance Program, which is also on our list. 

Also, OMB and the agencies have been holding regular meetings 

with GAO, which I personally participate in, in order to focus on 

solutions and to identify ways to make the necessary improvements 

to get off of the list. 

This year, enough progress has been made that we are removing 

two items from the list. First is interagency contracts. Interagency 

contracting actually can be a very good and important management 

tool if done properly. We found, back in 2005, they were not done 

very well. They were out of scope in terms of the contracts, lack 

of competition. One of the most notable examples was the hiring 

of interrogators for Iraq using an IT contract. 

Since then, important procedures have been put in place, agencies have fixed the problems. The Congress has required the Federal Acquisition Regulations to be reformed for best procurement 

6 

decisions. And also requiring a business case before new interagency contracts are put in place. And better data now is being collected in those areas. So we believe that there are adequate mechanisms in place in order to help manage this very important tool to 

help the government leverage its buying power. 

Secondly, we are removing the IRS business system modernization from the list. It was originally put on in 1995 due to the IRS 

being mired with management and technical problems with their 

modernization effort. They have made steady progress over the 

years. They have just deployed the first module of the system, 

which allows now daily updating of taxpayer accounts, which will 

improve taxpayer service and also their enforcement activities as 

well. We have reviewed their investment, management practices, 

and found about 80 percent of them meet best practices. And all 

of their project management recommendations do that. Their software development component now has been rated at a computer 

maturity model level three under their Software Engineering Institute standards, which means it is a good level by industry standards. 

Two important points I would make with these areas we are taking off the list. One, we continue to monitor those areas after they 

are off the list. So they may be off the list, but they are not out 

of sight. And so we make sure that the progress that has been 

gained is enduring. Secondly, like the other areas that eventually 

come off the list, they come off because of two major reasons. One 

is sustained congressional oversight. And oversight in the interagency contracting, Congress insisted on important reforms, required the IGs to do continual reviews in this area. In the IRS 

area, Congress required an annual expenditure plan from IRS 

every year, and a GAO review. So continued congressional oversight can play enormous dividends in resolving many of these problems. 

The two new areas we are adding this year, one is limiting the 

Federal Government’s fiscal exposure by better managing climate 

change risk. It is clear the number of disasters have gone from, in 

2004, the Federal Government intervening in 65 to 98 in 2012, 

which is a record number of years. There is indications that the severe weather events, both by the National Academy of Sciences and 

by the government’s Global Change Management Research Program, that there will be more events occurring and more costly 

events. 

The Federal Government has enormous exposure to these risks. 

First, it is one of the largest property holders in the government— 

in the Nation. There are hundreds of thousands of buildings that 

the Federal Government owns and also defense installations along 

our coast lines. Also, the Federal Government holds 29 percent of 

the property in the United States and manages that property. It 

also manages the Flood and Crop Insurance Programs, which we 

have recommended take into account climate science issues in revamping those programs. We found—and the government is also 

the provider of disaster aid, over $80 billion over the past year and 

before the assistance for Hurricane Sandy. 

We found that the criteria for the Federal Government intervening in a disaster is an artificially low level. It is based on $1.36 

7 

per person per State. So any disaster that exceeds that threshold 

gets Federal assistance. And it had not been adjusted for inflation 

for a 13-year period of time. Had it been adjusted for inflation, the 

Federal Government would have intervened in 25 percent less situations in terms of the Federal Government deciding to get involved. 

We recommended that the Federal Government needs a better 

strategic plan for this area that sets priorities to guide investment 

decisions. Individual agencies have plans, but there is no overall 

central direction and priorities that are set for that area and coordinated at the Federal level or with the State and local governments. 

I know, Mr. Chairman, you made that point this morning. That 

is in our report. It is very important that the Federal Government 

provide technical information on weather-related issues to State 

and local governments to guide their investment decisions in huge 

amounts of infrastructure. The Federal Flood Insurance Programs 

and the Crop Insurance Programs need to be reformed. And we 

need to set better criteria that takes into account the Federal Government’s fiscal condition right now. 

The last area we added on the list is gaps in weather satellite 

information due to management problems and acquisition problems 

over the years. 

Right now, the gaps in the polar-orbiting satellites that provide 

early, mid-day and afternoon warnings to feed computer weather 

prediction models and to provide the 3, 4, and 7-day forecasts has 

the potential for a gap to occur as early as 2014 and could last up 

to 53 months. This is very important. Without that information, 

you know, one credible organization has said that the information 

from the polar-orbiting satellites, the prediction of the path for 

Superstorm Sandy would have shown it going out to sea and not 

hitting New Jersey at all. And so, without this critical information, 

there are property, lives, economic consequences. 

And so we are adding this area to our high-risk list. At our recommendation, contingency plans have been developed, but they 

need to be executed, monitored properly. And I think congressional 

oversight could be very beneficial and necessary in this area. 

So, Mr. Chairman, that concludes my broad overview of the 

major changes on the list. There are 30 items now remaining on 

the list. I would be happy to answer questions. 

[Prepared statement of Mr. Dodaro follows:] 

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Chairman ISSA. Thank you. And I will now recognize myself for 

a few quick questions. 

First of all, my understanding from your report is that the FDA 

has not really solved its problem of meeting its responsibility for 

drug availability, that that continues to be an area in which the 

American people cannot count on both generic antibiotics or chemotherapy drugs being in proper supply based on this failure. Is that 

correct? 

Mr. DODARO. They still have to step up and make some changes 

in order to do that. 

Congress now has given them the authority to have drug manufacturers notify them in advance of shortages, which is a very important step consistent with a prior GAO recommendation. But 

they must follow through. And once they have that information 

they must then take action. So we’re going to carefully continue to 

monitor that situation, Mr. Chairman. 

There are also areas that we’ve pointed out where they need to 

make sure they do postmarket studies to make sure their recalls 

are done properly as well. So both those areas are on our radar 

screen. 

Chairman ISSA. Thank you. And I appreciate that. 

Your concern on FHA, if I understand correctly, is that because 

they issue, effectively, zero-down loans, very similar to the loans 

that got us in trouble with Freddie and Fannie, they are technically 4 percent, but after you look at sort of closing costs, they 

are really zero down, that any reduction in home values, even short 

term, could put FHA in a similar situation to Freddie and Fannie. 

Is that correct? 

Mr. DODARO. Their financial situation is precarious. They are— 

there is high risk. There are capital reserve ratios below the levels 

that it needs to be. So we’ve added it to the list to highlight that. 

And also the fact that in resolving the Freddie Mac and Fannie 

Mae situation and taking them out conservatorship, which Congress still has to do—we have modernizing the financial regulatory 

system on the list—that FHA situation needs to be taken into account. There be an integrated set of activities there so that we 

don’t increase the risk even further for FHA. 

Chairman ISSA. And I’ll summarize, if you will, from the way I 

heard it, you don’t fix Freddie and Fannie, unless you fix FHA at 

the same time, that they are all, if you will, subsidized or opportunities that could lead to the Federal Government putting up billions of dollars again if anything goes wrong. 

Mr. DODARO. That’s exactly right. It’s all about solving what the 

Federal Government’s proper role should be in the housing market. 

Chairman ISSA. If I understand correctly when you said that by 

not indexing this $1.36 per capita that 25 percent would not even 

have made the list, effectively what you’re saying is we have shifted 25 percent more things which are in constant dollars State responsibility, we’ve shifted them onto the Federal back, and that’s 

a substantial amount of billions of dollars. Is that correct? 

Mr. DODARO. That’s correct, Mr. Chairman. 

And we’ve recommended that if FEMA revised the criteria to 

take into account State’s capability to be able to pay there as well. 

42 

And they’ve agreed with the recommendation, but I think Congressional follow up would be helpful. 

Chairman ISSA. Appreciate that. 

And I guess, lastly, along the same line, if, in fact, we continue 

to see water levels rise around our coastlines, which represent 

about half of our States, effectively you’ve looked at Federal installations as one of the risk areas; in other words, we need to build 

and plan both Naval and other military installations and Federal 

property based on the assumption that, if you will, things change 

and where you built 100, 200, 300 years ago—because some of our 

forts are just that, they are Revolutionary-period forts, need to be 

planned in a way, and essentially, you’re calling for internal zoning 

that the Federal Government begins making decisions that abate 

likely changes in water levels and storms and so on. 

Mr. DODARO. Yes. Yes. Definitely. Defense Department’s already 

recognized this risk and beginning to act on that. In fact, the Congress also recognized this risk when it passed the Bigger Waters 

Act this past year. And, in fact, that FEMA before was prohibited 

from taking into account erosion over time. And now Congress has 

required that climate science be included in FEMA’s further efforts 

on the flood insurance program. Please. 

Chairman ISSA. Back to the flood insurance portion. My understanding is that both of our major insurance programs are not run 

in a way in which the private sector would run their insurance. 

Meaning, we don’t adjust our rates to meet the likely payout; instead, they are fixed in time. And so they can, year after year after 

year, come up short, ultimately shifting to the taxpayer the responsibility for paying out what should be insurance by the insured. 

Mr. DODARO. Yes. That’s correct. I mean, we’ve recommended 

they use better practices. They’ve agreed to do that, they’ve contracted for studies. But the results haven’t yet been provided to the 

Congress. And this is very important. And the flood insurance program, even before Superstorm Sandy, flood insurance program 

owed the Federal Government back over $20 billion. The likelihood 

of that getting repaid is not high. 

Chairman ISSA. I certainly, in closing, would say that if I could 

be insured for the less than the risk, I would always buy that insurance. 

I recognize the gentleman from Maryland for his opening—for his 

questions. 

Mr. CUMMINGS. Thank you very much, Mr. Chairman. 

Mr. Dodaro, let me go to page 202 of your report, where you talk 

about the drug shortages. Just want to pick up on some of the 

things that the chairman was asking you about. 

You know, we did some preliminary research and looked into this 

area of drug shortages. And drugs that were lifesaving drugs, 

chemotherapy drugs. And one of the things that we found in our 

research was that we had a gray market going on out there where 

a drug might start out from the manufacturer costing $7 a bottle, 

and by the end of the week, because of the gray market, may be 

selling for $700 a bottle. We also had the opportunity to talk to 

doctors from all over the country, as a matter of fact, one doctor 

from South Carolina, I’ll never forget it. She came in, and she is 

at a major medical facility, and she said, sadly, we are performing 

43 

medicine like we’re in a third-world country because of the shortages. So it is a major, major area. 

And I noticed your comments. But I’m just wondering, did you 

go—did you all look into at all the gray-market situation where 

people are improperly ratcheting up and hoarding drugs and then 

jacking up the costs so that we’ve got hospitals and the American 

Hospital Association now saying that 99 percent of their hospitals 

have drug shortages? I mean, did you all look at that at all, or you 

just looked at it from an FDA monitoring standpoint? 

Mr. DODARO. We primarily looked at it from a FDA monitoring 

standpoint. I can go back and double-check, Mr. Chairman. If we 

have looked into the gray-market issue, I’ll provide something for 

the record. 

Mr. CUMMINGS. You may want to look at that. Because you’ve 

made some—you know, you’ve made some very good comments 

here on page 202. But we also, I think, to just look at it from a 

FDA-monitoring standpoint, it is, you know, perhaps—I mean, it’s 

good. But if we have an underlying cause of greedy people on a 

daily basis literally taking drugs out of the hands of Hopkins—of 

a hospital ranked number 1 in the world, in my district, Johns 

Hopkins, they told me this. And they can’t have the best drugs possible to treat our constituents because people are hoarding them 

and then putting them on the gray market and jacking them up 

a hundred times, that’s a major problem that goes to so many 

things, to our economy, of course. It jacks up the costs of medicine. 

It is a detriment to many of our constituents with regard to health 

care. So I just want—and would you get me something back on 

that to let me know how deep you went into it? 

One of the things I think the chairman was saying, making it a 

part of our scope of inquiry this session, the next 2 years, is looking, not only at the FDA piece of this, but looking at the—this 

whole thing of the gray market. 

And so I’d really like to sit down with you, if you haven’t delved 

into it and see where—you know, what we might be able to do together to try to get to the bottom of that. Because it is a very, very 

serious problem. A lot of Americans do not even know about it. But 

it’s very serious. 

I want to briefly go to this whole issue of climate change. GAO 

recognized that the Federal Government has a number of efforts 

underway to decrease domestic greenhouse gas emissions. The success of greenhouse gas emission reduction efforts depends in large 

part on cooperative international efforts. 

However, limiting the Federal Government’s physical exposure to 

climate change risks present a challenge no matter the outcome of 

the domestic and international efforts to reduce the emissions, in 

part because greenhouse gases already in the atmosphere will continue altering the climate system for many decades. 

So if I understand this correctly, the carbon emissions that are 

in our atmosphere are already altering the climate system and will 

continue to do so for the foreseeable future. Is that correct? 

Mr. DODARO. Based on the information from the Government 

Global Climate Change Research Program and National Academy 

of Sciences, that’s correct. 

44 

Mr. CUMMINGS. Is it GAO’s opinion that regardless of the outcome of global negotiations to reduce carbon emissions, the United 

States Government should take immediate action to mitigate the 

risks posed by the climate change? 

Mr. DODARO. Yes. 

Mr. CUMMINGS. Now, you heard the President’s testimony the 

other night, his State of the Union, where he talked about these 

catastrophic weather-related incidents seeming to come at a greater pace and costing us billions upon billions of dollars. 

What do you—just as I—as you close with my questioning, tell 

us what you are recommending again for us to do with regard to 

these catastrophic types of things, storms like Sandy, that is costing us so much and costing so much inconvenience to our citizens. 

Mr. DODARO. There are several things. One, we think Federal 

Government needs to be better organized. There needs to be a better coordinated effort among Federal departments and agencies 

with a strategic plan and a focus on priorities. We looked at all the 

Federal spending. The Federal Government is already spending a 

lot of money on these areas, but it’s not well coordinated and it’s 

not targeted and prioritized. So that’s number one. Particularly important in our budget environment right now where we have to 

make every dollar count and we have to make the best investments 

possible. 

Second, we need to partner with the State and local governments. We need to provide them better weather-related information. They are already making huge investments with their own 

money and with the Federal Government’s money in infrastructure. 

So, in terms of figuring out how to deal with roads, bridges, tunnels, et cetera, and provide adequate, proper interpretation or—of 

the science data and make those decisions, that is very important. 

We need to get our act together on our Flood Insurance Program 

and our Crop Insurance Program and make sure that that’s developed properly. And we need to look at how we provide and what 

the criteria is for when we intervene in disaster assistance or 

whether it should be a State and local responsibility. 

Mr. CUMMINGS. Thank you, Mr. Chairman. 

Mr. DESJARLAIS. [Presiding.] I thank the ranking remember. 

The chair now recognizes the gentleman from Florida, Mr. Mica, 

for 5 minutes. 

Mr. MICA. Thank you. And I am pleased that our committee is 

looking at GAO’s 2013 High-Risk List. 

This list is probably a good template for looking at ways in which 

we could have dramatic savings. Right now we’re practically bankrupt, approaching $16.5 trillion in debt. 

I was wondering, sir, if you could tell me, this list is pretty extensive. It’s a lot of bad news. There’s a little bit of good news you 

shared and a couple coming off the list. But wouldn’t you estimate 

there could be tens of billions in savings from the recommendations 

in these high-risk areas that you’ve provided? 

Mr. DODARO. That’s true. 

Mr. MICA. And I think that’s why it’s so important our work continue. 

While they’re focusing some on this one report that our committee has produced, it’s billions of dollars in Medicare misspent on 

45 

New York. Everyone should read that, see it’s tens of billions of 

dollars of wasteful spending, programs out of control; a program, 

Medicare, which is so important to provide those that need health 

care, in New York alone, tens of billions of dollars outlined here 

wasted. 

Have you seen this report, sir? 

Mr. DODARO. No, I have not. 

Mr. MICA. I hope you do and would confirm that. 

Now, I don’t have—I chair a small government operation subcommittee particularly interested in the managing Federal real 

property. We’ve heard you testify and others that we own thousands—tens of thousands of buildings, structures, the biggest property owner in the world, probably; 29 percent of all the Federal— 

of all the property in the United States is either owned or managed 

by the United States, according to your report. Is that correct? 

Mr. DODARO. That’s correct. 

Mr. MICA. Well, we’re going to do some hearings that will probably start with the risk of—high-risk list that you provide us, in 

managing Federal property and look at it. I’ve been at it a week 

or two. I went out—well, what’s stunning is—and we did a little 

bit of this in the Transportation Committee. Nobody has control. I 

was in real estate. I think the last folks I’d ever give anything to 

manage would be the Federal Government, including assets. Would 

you give your real estate or assets to the Federal Government to 

manage? 

Mr. DODARO. Only with great many conditions. 

Mr. MICA. Well, we went out last week and looked at a million 

square feet of space in Springfield. And I just looked at it from a 

management standpoint, you’ve got a million square feet and a lot 

of acreage in Springfield, Virginia. Not well utilized. Does anyone 

look at the specific properties with a management plan or the best 

utilization of that asset for realization of taxpayer dollars? Is 

there—— 

Mr. DODARO. There—we’ve been encouraging Federal oversight 

over that issue. 

Mr. MICA. I don’t see it. I mean, I could go through that, and as 

a property manager, to have that valuable asset there, it might 

have made sense 20 years ago, but not today. 

Then the other day, we went out and looked at 7,000 acres, nearly 7,000 acres in Maryland, Mr. Cummings. And we have an Agricultural Research Center there dating back from maybe the turn 

of the century. They have 500 buildings, of which, there are 200 

that either need to be demolished or are unusable. What stunned 

me is there was no plan for either utilization of either the acreage 

or the facilities. Do you know of a plan or—or do we have any 

mechanism to even require an agency to have a plan to deal with 

those assets? 

Mr. DODARO. We’ve made recommendations along those lines. 

One of the things that we found is that when we went out and did 

the type of inspections that you’re talking about doing, the data 

didn’t match what was in the database. 

Mr. MICA. They said I was the first Member of Congress, I think, 

since Mr. Hoyer, to go out there. But it’s Beltsville. It’s right in the 

Capital circle. 

46 

Mr. DODARO. I know where, right. 

Mr. MICA. And nobody has a clue. I mean, there is an incredible 

asset sitting there. In fact, I think some prohibitions have been put 

on doing anything, which just is mind-boggling, again, from somebody who’s dealt with real estate in the private sector. 

So I think we’re going to work with you all to see if can’t get 

some of these agencies to have plans to maximize those—those assets and utilize them. 

The lease—you point out in your report here, lost $200 million 

in leases since 2005. Again, it’s only a quarter of a billion here and 

a quarter billion there. 

But we’re bankrupting the nation through policies and practices 

and lack of attention to maximizing our assets. So we’ll be back. 

I think we’re going to try to do this on February 27th. Work with 

the minority to set a date and launch a little bit more in depth on 

this report. And we thank you and others for working with us. 

Yield back. 

Mr. DESJARLAIS. I thank the gentleman. 

The chair now recognizes the gentlelady from District of Columbia, Ms. Norton. 

Ms. NORTON. Thank you, Mr. Chairman. 

And Mr. Dodaro, I want to thank you for what is always an illuminating report but particularly for adding climate change for the 

first time as a risk for the Federal Government. 

This has come at a time when it could not be more needed. We 

needed the imprimatur of an objective government agency. Climate 

change is not political, and we make it political at our own risk. 

I recall in the past two Congresses, we’ve been dealing with a 100- 

year flood. That’s kind of a silly thing to even think about calling 

it now. And even as we did label it 100-year flood and force States 

to update how—how they go about preparing for flooding, we recognize that a hundred year was not—was a term of—to simply to 

make people understand what was regarded as a rare event, at 

least in terms of floods. Well, we’ve gone from rare to routine and 

to unheard of. 

Sadly, during the—after Sandy, there was a very contentious debate in here about what to do. And I think part of that comes from 

the unpredictability of budgeting for such events. 

Now, nothing of the kind in memory had been seen by New York 

State. So there was no way to play for that. And there was certainly no way to budget for that. It was so unusual. Or to take another example, shortly after that, was it last week that we had the 

snowstorm that went all the way up into New England? And then 

it had a wind current that resembled a hurricane. You know, try 

preparing for that. 

And yet you name ways in a which we are highly vulnerable, not 

only what we own, but the assistance we give, the dependence of 

the States on us, emergency aid and the rest, this is very, very 

troubling. And what my question goes to, and we—we—it’s easier 

to predict a recession or a downturn in the economy than it is to 

predict one of these events. We see flowers growing in the wintertime, and we don’t know whether tomorrow is going to bring 

springtime weather or a snowstorm. 

47 

And so finally the country, which when climate change was first 

discussed majority of the American people said, yes, we think 

there’s climate change, and something has to be done about it. 

The last 12 or 18 months has produced a come-back in the public 

on an understanding of climate change. You can understand during 

a recession that people didn’t want—said they no longer, quote, 

‘‘believed’’ it. I don’t understand the nomenclature of ‘‘believing in’’ 

when it comes to science. 

I need to know from you. You know how our budgets, of course, 

are developed. It’s one—and I accept what you say about the coordination of the Federal agencies and the rest. 

But I have to ask you, Mr. Dodaro, how do you budget for the 

unfathomable and avoid partisan debate when they come up? I 

mean, I heard some Members from New York, who had never seen 

a disaster, say, you just wait—somebody from Mississippi got up 

and opposed it. Well, that’s one of the parts of the country that 

does not need to get up on its hind legs on this issue because we 

have readily come forward time and time again. I said, I hope 

that’s not the way you look at it. I hope the way you look at it is 

to use it as an example by voting for what happens in Mississippi, 

Louisiana, or some tornado someplace where it’s unheard of. 

But I don’t accept that the present budget process is at all responsive to this new world of climate change. And I wonder if you 

could give us some help. 

Mr. DODARO. Right. 

Ms. NORTON. On how to go about, in a budgeted world in which 

we live, making these funds available wherever they occur rather 

quickly without the kind of contentious debate we had here over 

Sandy. 

Mr. DODARO. Yes. There are two things I would say. 

First, we should not pretend that disasters do not occur in our 

budgeting process, which right now we do not budget for anything 

that might occur. Now, there’s a historical record here that shows 

over time how much we’ve always, you know, provided over a period of time. So you have historical data that could be used to provide, you know, in anybody’s budget, a household budget or wherever, you’d have a contingency plan; we don’t have contingency 

plans in our budgeting process. 

Ms. NORTON. You mean for even the kind of disasters that could 

be expected. 

Mr. DODARO. Right. That’s correct. 

Ms. NORTON. Let’s begin there. 

Mr. DODARO. That’s a starting point. 

Secondly, we can revisit this criteria for what we decided the 

Federal Government to pay for and what not to pay for and what 

should be absorbed at the State and local level. It’s badly in need 

of modernization and upgrading. So that could give you a better indication for budgeting purposes as well. 

Third, we need better data on weather-related potential changes, 

good science data that could be objectively collected and provided 

to State and local governments and the Federal Government to 

make investment decisions to justify budgetary investments that 

will then yield proper information in the future. 

48 

And then we’ll have to, you know, there’s going to be, obviously, 

things always that are going to come up that you don’t expect. But 

right now, we’re pretending we don’t expect anything. And that’s 

not reality. 

Ms. NORTON. Well, we do budget in expectation that there will 

be hurricanes and the rest. And that fund—and then we’re told 

that that fund has been used up by the most recent hurricane. 

Mr. DODARO. Right. And there’s revisions that are made after 

disasters take place about the additional money that’s needed during that period of time. The budgeting system is in need of reform 

for these type of efforts. I agree completely with your view. 

Ms. NORTON. Thank you, Mr. Chairman. 

Mr. DESJARLAIS. Thank the gentlelady. 

The chair now recognizes the gentleman from Utah, Mr. 

Chaffetz, for 5 minutes. 

Mr. CHAFFETZ. Thank you, Mr. Chairman. And thank you for 

being here and the great work that so many people do within the 

agency. It’s a critical role to have the oversight and the understanding and the audits that go on. 

I want to try to touch on three topics, if I can. I want to start 

with the Federal real property. 

I have introduced a bill with Mr. Quigley, H.R. 328, to try to dispose of these properties. But could you give me some further insight? The number has greatly fluctuated on the number of underutilized buildings, not too recent—fairly recently, GAO had estimated the 45,000 properties that are underutilized, that number is 

now 71,000 that are underutilized, yet the annual operating costs 

remain at about a billion five. Why the fluctuation? 

Mr. DODARO. I’m going to ask Mr. Herr to answer that question. 

Mr. CHAFFETZ. Okay. 

Mr. HERR. Congressman Chaffetz, one of the areas we’ve done 

work in recently was looking at the Federal real property database 

that GSA and OMB maintain. We found that, as the Comptroller 

General mentioned, there’s a lot of inaccuracies in that. And we’ve 

been pushing and working with them to really update. 

Mr. CHAFFETZ. When you say ‘‘a lot,’’ are we talking by the tens 

of thousands or are we—— 

Mr. HERR. One of the challenges is because of the nature of the 

sample we took last year and looking at it, there’s about 400,000 

properties and there’s another 400,000 structures, not including the 

Postal Service. So getting a comprehensive view of that, our suggestion and recommendation is GSA and the agencies do a better 

job of looking at their inventories to give a better sense—— 

Mr. CHAFFETZ. I’m looking for more specifics on. I mean, it just 

seems to me that we ought to be able to pull up a list at any given 

time and be able to see all the real property that this country has. 

We can’t do it, even within my State of Utah, the real property just 

in the State. So why? We don’t even know what we own. 

Mr. HERR. That’s—there is a—that’s part of the challenge. In 

fact, Mr. Mica mentioned the facility out at USDA in Beltsville. We 

had a team visit there last year to highlight some of the problems 

that he was mentioning. This is part of challenge is getting your 

hands—— 

49 

Mr. CHAFFETZ. How inaccurate is it? Are we missing 1 percent? 

Based on your sample, how inaccurate was it? 

Mr. DODARO. Talk about the ones we looked at. 

Mr. HERR. Well, the ones we looked at, we found errors, for example, in terms of the valuation of the properties. But in terms of 

doing a sample that we could generalize statistically across the 

country, we weren’t able to do that, given the sheer numbers involved and what it would take to do a generalizable sample. 

Mr. DODARO. But in the sample we did look at, we found a significant number of errors. I’ll provide the specifics to you—— 

Mr. CHAFFETZ. That would be great. 

Mr. DODARO. I was concerned enough with the level of errors 

that we found in the small sample to be concerned enough to make 

the recommendations. I would have like to had a projectable one, 

but we just don’t have the resources to do that. GSA is taking a 

broader sample and looking. We have not seen their results yet. So 

we will follow up and provide those to you as well. 

Mr. CHAFFETZ. That would be great. Clearly, it’s on the high-risk 

list. This is why you’re highlighting it. You talk about the inaccuracy of the data. What I’m concerned about is, in a 24-month period 

or so, you went from 45,000 properties for 71,000 properties. That’s 

not a small jump—we’re talking about real property here, this is— 

these are big assets and lots of—but the dollars didn’t change. You 

still projected $1.5 billion and it’s—and yet the number jumped by 

about 50-plus percent. So that’s just a concern that I would like to 

continue to follow up on. 

And I just physically don’t understand how the GSA lost $200 

million on leases since 2005, including $75 million in 2011 alone. 

I mean, that’s why these departments use the GSA, is to make sure 

we don’t make these kinds of mistakes. How does that happen? 

Mr. HERR. One of the areas we’ve identified is the agencies do 

not do a good job of sharing resources. For example, there may be 

Federal agencies located in one area that are not really looking and 

being encouraged to share space or minimize their space use and 

bring in other agencies to work with them. 

Mr. CHAFFETZ. Well, and one of the—I don’t have a Federal 

building in my Congressional district. But I know that as we looked 

at just our own office space, it was unbelievable how much more 

expensive going with the Federal building in Salt Lake City would 

be. I mean, it was ridiculous. So much so that I believe our Senator 

said, ‘‘I’m not paying that rate. I can’t afford it.’’ And if they just 

simply go across the street, they would save significant dollars in 

doing so. 

So I appreciate looking at that. 

Mr. Chairman, I was going to look at three different topics; we 

barely got through one. But I don’t want to hog the time. I know 

Mr. Gowdy is anxious with 20 minutes worth of questions. So I will 

yield back the balance of my time. 

Mr. DESJARLAIS. Thank the gentleman. 

The chair now recognizes the gentleman from Virginia, Mr. 

Connolly, for 5 minutes. 

Mr. CONNOLLY. Thank you, Mr. Chairman. 

And welcome, General Dodaro. 

50 

Mr. Dodaro, on page 88 of the report, you talk about the high 

risk of the Postal Service. 

Mr. DODARO. Yes. 

Mr. CONNOLLY. Did you at any time consult with the general 

counsel of your organization with respect to the legality of the announced proposed action of the Postmaster General having the 

legal authority to go from 6 to 5 days a week. 

Mr. DODARO. After the decision was announced, I have asked our 

attorneys to look at the information. They have talked to the Postal 

Service and have obtained their legal analysis. They believe the argument to be novel. But we’d have to look at it more carefully in 

order to provide a full legal opinion on the issue. 

Mr. CONNOLLY. I don’t want to box you in. So what I hear you 

saying is that your attorneys, your general counsel and yourself are 

still weighing the legal arguments coming from the Postmaster 

General. Is that correct? 

Mr. DODARO. That’s correct. 

Mr. CONNOLLY. Would it be fair to say, however, that informally 

the general counsel of your organization has expressed, for example, to the committee staff of this committee, some scepticism as to 

the legal reasoning behind Postmaster General’s announcement? 

Mr. DODARO. Well, I don’t want to speculate informally on anything. I mean, one of the reasons—one of the things—— 

Mr. CONNOLLY. I’m not asking you—excuse me. General. I’m not 

asking you to speculate. 

Mr. DODARO. Yeah. 

Mr. CONNOLLY. Did or did not such an informal conversation, in 

fact, take place with the staff of this committee? 

Mr. DODARO. One of the things we do is ask a lot of questions. 

So it might have—I’m sure they had asked questions about the 

issue. 

Mr. CONNOLLY. Well, let me—certainly, we would welcome your 

opinion when you are ready to render it. There are many of us here 

who think it’s an illegal act. And this is a nation of laws, and even 

the Postmaster General of the United States has to follow the law. 

But it’s in your report. I think it’s a relevant question, and we 

would very much welcome your opinion before Congress acts. 

Climate change, General Dodaro. What made you decide to add 

that this year? What about the science and/or the potential consequences of climate change made you decide to—and I applaud 

you for doing it—but made you decide this year it merited inclusion 

in this very thoughtful report? 

Mr. DODARO. Well, there were several things. One, we had issued 

at least three critical reports over the past 2-year period, one on 

the disaster aid limitation, one looking at defining the funding of 

the Federal Government by climate change issues, and finding 

there was no strategic direction in the climate change area. Obviously, we also looked at the number of disasters that have been occurring. The Flood Insurance Program is already on the high-risk 

list. We were concerned about gaps in weather satellite coverages. 

So we decided to take a broader look, you know, at these issues. 

And I felt also, given the Federal Government’s precarious financial situation that it couldn’t afford not to try to limit its fiscal exVerDate Aug 31 2005 10:14 Apr 12, 2013 Jkt 000000 PO 00000 Frm 00054 Fmt 6633 Sfmt 6633 C:\DOCS\79740.TXT APRIL
51 

posure in the future in those areas. Those are the factors that I 

considered. 

Mr. CONNOLLY. But as a sort of a preface to all of that, there is 

a certain operating assumption that the science is fairly compelling. 

Mr. DODARO. We take the information from the National 

Science—Academy of Sciences and the Global Climate Change Research Program at faith. And we’re—an important point here is 

that we’re not questioning what may or may not be causing the situation. We’re saying that science shows there is an issue, and we 

need to do something about it. We’re not getting into the policy 

areas of where there needs to be changes and how we—how we 

mitigate whatever might be causing this or the international issues 

that need to be done. We’re saying we have a problem, we need to 

deal with it and try to limit our exposure. 

Mr. CONNOLLY. I’m sure you’re aware of the fact that there are 

some, even here in the Congress, who don’t even go as far as you 

do, however, who still are denying the science and are denying 

there’s a problem. 

Let me ask, in your analysis, risk analysis, have you also looked 

at the military base, especially Naval base implications? I think of, 

for example, Norfolk. In Virginia, many of us are very worried that 

sea rise could jeopardize the largest and oldest Naval base in the 

United States, as well as facilities in Florida, possibly even South 

Carolina. 

Have you looked at that in terms of dollars and cents, relocation 

costs, you know, reinforcing costs, whatever it may be to try to protect those facilities? 

Mr. DODARO. We note the Defense Department vulnerability in 

the report. We will plan to do more work on those issues going forward in this area. 

Mr. CONNOLLY. Mr. Chairman, thank you. 

I know the Committee would welcome that as well, especially 

dollars-and-cents implications, because I think some people may be 

very surprised at what we’re looking at. 

Thank you, Mr. Chairman. 

Mr. DESJARLAIS. I thank the gentleman. 

The chair now recognizes Dr. Gosar from Arizona for 5 minutes. 

Mr. GOSAR. Thank you, Mr. Chairman. 

General, thank you very much. I’m going to harp again. Being a 

healthcare provider, I want to ask you more about these drug 

shortages. Do you think that your recommendations to the FDA are 

sufficient to mitigate this problem? 

Mr. DODARO. I believe so. We’ve made those recommendations 

just to reiterate that they need to strengthen their program by assessing their resources, systematically tracking data on shortages 

concerning availability of medically necessity drugs, strategic priority, and developing relevant results-oriented performance—— 

Mr. GOSAR. Let me ask you a question. Do you believe that the 

FDA is part of the problem? 

Mr. DODARO. They need to make changes. 

Mr. GOSAR. They need to make some big changes. 

Mr. DODARO. To be part of the solution to the problem. 

52 

Mr. GOSAR. I think part of our problem—I’m looking here at a 

drug recall, or a drug-in-stock affidavit as of yesterday. I mean, 

we’ve got problems with liquid Ibuprofen. We’ve got problem with 

anesthetics. This is critical mass. Because we’re putting patients in 

harm’s way and physicians in harm’s way, making them use protocols and medications that are, many cases, got substantial more 

side effects and problems for patients. 

This is critical mass. It’s not just with pharmaceuticals but also 

our medical devices. We have reached a saturation point where I 

will disagree with you. I do not think that what you have put out 

here in your outlines are suitable for reform. I think we need to 

have thorough FDA reforms in regards to not only drug manufacturing but FDA’s role and oversight. 

You look at—you know, in your report, you cite globalization. 

You know, we don’t even control a vast amount of some of the products that go into manufacturing of these drugs or medical devices. 

And we’re becoming problematic that we’re dependent upon so 

many other countries to do that. 

Do you—would you agree with that? 

Mr. DODARO. Well, it’s one of the reasons they’re on the high-risk 

list is due to the globalization. 

I have Ms.—— 

Mr. GOSAR. Seems to me like what we’re doing here, is we’re— 

we have a disease here, and what we’re doing with this report is 

we’re treating the symptoms but we’re not treating the disease. 

Part of the disease process is the FDA itself. And it seems to me 

that what we need to do here is reform the FDA. Would you agree 

with that? 

Mr. DODARO. I definitely think there needs to be changes? 

Mr. GOSAR. Do you think we need legislation to refer that? 

Mr. DODARO. I’d be happy to provide our recommendations for 

the record. 

Mr. GOSAR. Okay. One of the other things I did want to touch 

about—I mean, and these drug shortages, I got to tell you, this affidavit just came from Tucson and from the Northeast. So it’s not 

specific just to rural or urban areas. These are critical shortages 

that have to be addressed. I don’t think like—I don’t think that 

the—the hypothesis or the conclusions you’ve come to are real. I 

think we’re actually in worse shortages. Because just because we 

put out a report doesn’t mean that we’ve remedied it. We have actually made some of the problems even worse for the gray market. 

Now we understand where we hoard, where we take, where we increase the sales. So we’ve got a huge problem here. 

So go back to my colleagues, Mr. Chaffetz, in Federal properties. 

I want to give you a real clear example of Federal properties that 

have a problem. We just got back from a CODEL in regards to the 

State Department, looking at our embassies. And in particular, I 

want to highlight Morocco. Here we are spending over $150 million 

building a new embassy in Morocco. And we have yet to assay and 

look at what the value and possibility of sale of our current embassy. Right there, to me, it seems to me like in looking at properties—I’m not a real estate expert—but it seems to me that when 

we’re making a transaction like that, we’re looking in the neighborVerDate Aug 31 2005 10:14 Apr 12, 2013 Jkt 000000 PO 00000 Frm 00056 Fmt 6633 Sfmt 6633 C:\DOCS\79740.TXT APRIL
53 

hood of somewhere of $60 million to $80 million in assets that need 

to have some assaying. 

Do you know that they had to beg, and as of—there were about, 

I would say, would you say it’s about 50 percent completed, that 

embassy? Chairman? 

Mr. DESJARLAIS. I would say that’s correct. 

Mr. GOSAR. They have yet to have an assay of the current buildings and inventory of properties that they had in Morocco. I find 

that disdainful. This is an instant turnaround of quickly $80 million. And we shouldn’t be building unless we actually know what 

we have as an inventory and make sure that we’re selling it. That 

is disrespectful for the American taxpayer. I’m just giving you one 

example. 

Extrapolate it to Great Britain. It’s my understanding we’re 

building another embassy for a billion dollars there. What other assets do we have there? I mean, this is critical mass that can turn 

money very, very quickly. And I think that’s what we demand of 

that. 

So I think some of the things we really need to do is start looking 

at the disease process, make sure that we have clear examples, enforce those examples with legislation or retaliatory oversight. And 

then you’re going to get compliance in a lot more of those aspects. 

I would like for the record, Mr. Chairman, an example of the 

drug shortages as of yesterday to be placed in the record. 

Mr. DESJARLAIS. Without objection. 

The gentleman’s time has expired. 

The chair now recognizes the gentleman from South Carolina, 

Mr. Gowdy, for 5 minutes. 

Mr. GOWDY. Thank you, Dr. DesJarlais. 

General, I want to ask you about two areas, first weather satellite. I’m asked from time to time, which is tough for a lawyer to 

understand the science, and so can you help me understand how 

we got to this crisis and what an acceptable remedy would be for 

it? 

Mr. DODARO. Yes. I’m going to ask Dave Powner, our expert in 

this area, to come up. He’ll give you a great explanation. 

Mr. GOWDY. Great. Thanks. 

Mr. POWNER. Congressman, this is an area that kind of grew 

over the years. We had a tri-agency program to put in place polarorbiting satellites. If you go back several years, there’s a long history of cost overruns, technical problems, mismanagement of the 

program. 

What happened was the launch dates kept getting pushed. And 

what we did is we kept buying time with operational satellites. If 

you fast forward now currently, we’re in a situation where in the 

2016 time frame, there’s a satellite that basically is going to reach 

the end of its useful life, and we’re not launching until 2017. That’s 

the best-case situation. That provides about a 17-month gap in satellite coverage. And depending on if that satellite lasts less than 

what’s expected or if there’s any further delays, that gap in satellite coverage could actually be more. So we’re looking anywhere 

from a 17- to 53-month gap in satellite coverage. Our recommendations to NOAA has been to put in place contingency plans to address those gaps. 

54 

Mr. GOWDY. What do you expect those contingency plans to include? 

Mr. POWNER. Couple things. One is you could look at one extending the current life of the existing satellites. There’s things you can 

currently do with that. 

There’s the possibility of moving up the launch of the current 

dates. Those are unrealistic in some ways, but there are possibilities if you look at those various schedules. And then if you look at 

the contingency plans that need to be put in place, various things. 

You can use other government satellites from DOD. Foreign satellites are an option. Other weather observations are an option. 

But all those have certain things that go with it. So, for instance, 

if you use Europeans satellites, there are changes to our ground 

stations. So there are associated costs with all those different contingency plans. 

Mr. GOWDY. Do you think there’s a reasonable possibility of a 

gap, a gap that would have significant consequences to us? 

Mr. POWNER. Right now, there is a high probability of a gap that 

could be 17 months. 

Mr. GOWDY. Wow. All right. Thank you. 

General, last area. My colleague from Maryland very appropriately and commendably remembered a doctor from Charleston, 

South Carolina, Michelle Hudspeth, who came and testified quite 

emotionally about having to choose which of her pediatric cancer 

patients she was going to treat because of a drug shortage. So, 

again, for folks who may not be following this issue, just watching 

from back home, how did we get in this circumstance, and with 

specificity, particularly for those who clammer for bipartisanship, 

because it exists on this issue, because Mr. Issa and Mr. Cummings 

would both move heaven and Earth tomorrow if they could eliminate the shortage. So what legislatively or from an oversight perspective can we do to remedy the drug shortage? 

Mr. DODARO. Well, the first step was taken in the last FDA Modernization Act last year which gave FDA the authority to require 

manufacturers to notify them. That was part of the problem, step 

one. In order for them to do something about it, they need to have 

adequate information to know about those issues. So that aspect 

has taken shape now. But the question is, what are they going to 

do with that authority to turn it into action to try to provide adequate information? 

I’ll go back and for the record, as I mentioned to Congressman 

Gosar, provide additional recommendations on things that could be 

done in this area. We have an expert team; they just don’t happen 

to be here today. But we’ll provide you more specific suggestions. 

Mr. GOWDY. We would be grateful, because, again, I know that 

there is a—there is a desire all across this dais for—for action. And 

for those who desire work across the aisle, which I think includes 

all of us, this would be a very appropriate way. So we would be 

very anxious to see your recommendation. 

With that, I would yield back to Dr. DesJarlais. 

Mr. DESJARLAIS. I thank the gentleman. 

And I will be going to the gentleman from Pennsylvania, Mr. 

Cartwright, for 5 minutes. 

55 

And I want to apologize to the gentleman from Nevada, Mr. 

Horsford. I did not see you there, so we’ll go next to you, right after 

Mr. Cartwright. 

The gentleman from Pennsylvania is recognized. 

Mr. CARTWRIGHT. Thank you, Mr. Chairman. 

Well, Mr. Dodaro, according to the United States Global Change 

Research Program, the impacts and costliness of weather disasters 

resulting from floods, droughts, and other events, such as tropical 

cyclones, will increase in significance as what are considered ‘‘rare 

events,’’ quote-unquote, become more common and intense due to 

climate change. 

Now, the Federal Government’s crop insurance costs have in- creased in recent years, rising from an average of $3.1 billion per 

year from fiscal years 2000 to 2006 to an average of 7.6 billion a 

year from fiscal years 2000 through 2012 and are projected to increase further. 

Do we—do we have a sense of the scale by which climate change 

will increase the Federal fiscal exposure for the National Flood Insurance Program and the Federal Crop Insurance Corporation? 

Mr. DODARO. I don’t have estimates of that regard. But I am concerned about the potential magnitude, given what we’ve spent so 

far to respond to these issues. So we’re going to be looking at the 

quantification issues, if you will, as we delve in this issue in the 

future. 

Mr. CARTWRIGHT. That leads to my next question. I suspected 

you my say that. Is a study needed to look into those issues further, sir? 

Mr. DODARO. I believe so. But it will—as with many of these 

areas, be difficult to come up with some areas. But I think we 

can—we have some work underway in that area right now. We’ll 

be happy to brief you on that and provide the results when they’re 

ready. 

Mr. CARTWRIGHT. Thank you. 

And secondly, GAO recommended in May of 2011 that the appropriate entities within the Executive Office of the President clearly 

establish Federal strategic climate change priorities, including the 

roles and responsibilities of the key Federal entities, taking into 

consideration the full range of climate-related activities. 

In 2009, GAO also recommended that the appropriate entities 

within the Executive Office of the President develop a strategic 

plan to guide the Nation’s efforts to adapt to climate change. 

Furthermore, Federal agencies released draft climate change adaptation plans on February 9 as part of their strategic sustainability performance plans required by Executive Order 13514 on 

Federal Leadership in Environmental, Energy and Economic Performance. The USGCRP also has a strategic plan for climate 

change science research. 

My question is, how are agency adaptation plans being coordinated across the Federal Government? 

Mr. DODARO. That’s our main point. We believe, you know, they 

have the plans, but they’re not being coordinated as well as they 

need to be. 

Mr. CARTWRIGHT. And do these plans amount to a governmentwide strategic plan at this point? 

56 

Mr. DODARO. Not in our view. And that’s one of our main recommendations. And we plan to work with the Executive Office of 

the President and Office of Science, Technology, and Policy to help 

underscore what needs to be done. 

Mr. CARTWRIGHT. I thank you for that answer. And I want to say 

that’s why I will be working with the GAO to address two specific 

concerns they’ve highlighted in this report. First, I’ll be working 

with the GAO to find the best possible way to coordinate the various adaptation reports required by the Executive Order and to 

come up with a national strategic plan to prepare for this grave 

threat. 

So I thank you for your appearance here today. 

Mr. Chairman, I yield back my remaining time. 

Mr. DESJARLAIS. I thank the gentleman. 

And again, thank you for your patience, Mr. Horsford. 

Now recognize the gentleman from Nevada for 5 minutes. 

Mr. HORSFORD. Thank you, Mr. Chairman. 

Thank you, General. I want to commend you and your team for 

what is a very good blueprint for the critical challenges that are 

facing our Federal agencies. And not only that you identify the 

high-risk areas, but you also outlined what needs to be done. And 

I would point out what needs to be done by Congress, in large part, 

to move some of these issues forward. 

My focus I’d like to turn to is transportation. 

The GAO report lists funding for the Nation’s surface transportation system as an area of high risk for the government. And the 

Moving Ahead for Progress in the 21st Century Act, which was enacted last year, provides some certainty for States. But it also reduces overall funding for highways relative to fiscal year 2011. And 

it will not provide the funding that we know that we need to bring 

our infrastructure to a state of good repair overall. 

I’m from Nevada. And our unemployment rate is still stubbornly 

high. Our number two industry has been the construction industry. 

And in large part, my focus is on how we can create jobs and get 

our economy moving while at the same time investing in critical infrastructure needs. 

So the report indicates that the 18.4 cent per gallon tax on gasoline that was enacted in 1993, it’s only worth about 11.5 cents 

today. The report goes on to note that the CBO has estimated that 

it will take $110 billion in additional revenues to maintain current 

levels of spending plus inflation through 2022. 

So, in the short term, are there any realistic alternatives to the 

gas tax to fund transportation that would maintain the user-pays 

principles that have been at the heart of transportation funding in 

the past? 

Mr. DODARO. I’m going to ask—I’ll start, but Phil, come, please. 

Phil Herr is our transportation expert. I’ll let him talk. 

In the mean—unfortunately, the approach that’s been used in 

the last several years is to use general fund appropriations in order 

to supplement the lack of funds from the Highway Trust Fund to 

be able to do that. That’s not a long-term answer to the situation, 

particularly given the Federal Government’s deficit and debt 

issues. So other things need to be looked at. 

57 

But that’s the main reason it’s on the list, is order to try to get 

the Congress to come to grips with the financing structures there. 

But let me have Phil elaborate, Congressman. 

Mr. HERR. We’ve done some additional work. There’s a program 

that expanded under MAP–21 called TIFIA, which is a loan program that helps incentivize private investment in infrastructure. 

We’ve also completed some recent work that talks about other options for collecting revenue that would supplement the gas tax as 

well. But those all obviously involve some policy tradeoffs. But 

there are options there. But you correctly point out what some of 

the limitations of the gas tax are. 

Mr. HORSFORD. So if I could, Mr. Chairman, follow up. 

So with the provision of requires the States to spend a specified 

portion of their allocations, their annual allocations, on the improvements of bridges and interstate pavement, should—what happens if the conditions fall below those standards? And are there 

considerations given to States to use other types of funding sources 

to make up the gap? 

Mr. HERR. It’s an interesting question. This was just enacted 

with MAP–21, so DOT is still working with the States to set some 

of those targets and what some of the process would be. But our 

understanding is with the legislative fix that was put in with 

MAP–21, States would need to dedicate money to some of these national projects that have more national significance? 

Mr. HORSFORD. Can they backfill with any additional funding 

outside? 

Mr. HERR. I would have to get back to you for the record to see 

how they are rolling this out. 

Mr. HORSFORD. Just to close on the Passenger Rail Investment 

Improvement Act of 2008, again, this is a critical opportunity for 

our need to connect Las Vegas and Los Angeles. What risks has 

GAO identified with this program? And what happens if continued 

Federal investment is not available to achieve the goals? 

Mr. HERR. In the high-risk or the high-speed rail, we actually 

have had—we have some work ongoing now, but in a recent testimony one of my colleagues gave we identified some problems with 

some of the cost estimates that are made available seeking Federal 

funding. So we’re looking at ways of some of those could be improved. So decision makers would have better information. 

The other thing, though, is in many cases high-speed rail is quite 

expensive. So, for example, in the California high-speed rail situation, their proposal now is calling for a fairly large Federal investment, about $38 billion. So—and then also some private funds. So 

a real challenge in that area is getting the money to build these 

and then actually implement them and carry them forward. 

Mr. HORSFORD. Thank you, Mr. Chairman. 

Mr. DESJARLAIS. I thank the gentleman. 

The chair now recognizes the gentleman from North Carolina, 

Mr. Meadows, for 5 minutes. 

Mr. MEADOWS. Thank you, Mr. Chairman. 

And thank you for coming to share your perspective today. 

I want to take a little bit broader brush approach. As we start 

to look at this, you know, your report highlights some of the needs 

for a performance matrix, as you would put it. And so in what way 

58 

can we look at departments and agencies providing information so 

that we as Congress can make a better decision in terms of tying 

that to the budget or appropriations? And what role do you see 

OMB playing in that, if any? 

Mr. DODARO. Well, we have been advocating for a number of 

years a systematic approach, as you mention, to measuring performance against established goals in the Federal Government. 

There was legislation passed in 1993. The Modernization Act, and 

that was passed in 2010. And it is really important to your point, 

because agencies are supposed to consult with the Congress, establish goals and measures for all Federal programs and activities, 

and then to provide regular progress reports against those goals. 

So that process now is in its early stages of getting established. 

We have a role in evaluating whether or not the agencies are 

doing that. OMB has the responsibility for the lead in that area. 

And it is not only goals for individual agencies and departments, 

but it is cross-cutting goals in a number of areas as well where 

multiple agencies provide funding to support an overall government-wide goal. So there is an established mechanism to do it, but 

it has to be done properly and well. I am pleased to see that the 

law now requires more consultation with the Congress. And we are 

going to make sure that that actually is taking place. 

Mr. MEADOWS. How can you make sure that that takes place? 

Because, you know, we are in the land of promises here that says 

we are going to have this plan, and ultimately this is going to lead 

to a more effective and accountable government, and yet here we 

are without that. 

Mr. DODARO. Right. Well, we are going to follow through on the 

facts and see what the agencies have to tell us exactly who they 

have consulted with. And the law requires them to not only say 

that, but what they have done with the advice that they have received from the Congress. Now, we are going to make sure that 

works. We are going to talk to Members of Congress and their 

staffs. And I would ask Chris Mihm, who is our expert in this area, 

if he wants to elaborate a little bit further. But we are doing work 

in that area. I am going to make sure it is done. 

Mr. MEADOWS. All right. 

Mr. MIHM. As the Comptroller General mentioned, sir, is that 

there are requirements, statutory requirements now that there are 

for more robust and continuing consultation on the part of agencies 

with the Congress and other key stakeholders. 

One of the things that we have also been making offers to do, 

working with committee staff here on this committee and over on 

the Senate side, is to work with Members of Congress to help them 

extract that information from agencies. That is to have the—not 

just have it be on the demand or a lot of the agencies to come up, 

but have Congress start saying, we are ready for the consultation; 

we want to start talking to you about where you are in your goals 

and your performance and your strategic goals. So we remain available to work with you and your office and your colleagues on those 

issues. 

Mr. MEADOWS. All right. And while you are still there, let’s look 

at this. So let’s talk about this performance matrix and as it comes 

back to maybe fragmentation, as was highlighted. So you have got 

59 

45 programs across nine different agencies, as you had in your testimony. How do you put together a performance matrix without 

people pointing the finger at this agency or that agency didn’t meet 

our overall goal when we haven’t consolidated under one head? 

Mr. MIHM. Well, the point that you are raising, sir, was exactly 

one of the two major reasons that Congress had in mind when they 

passed the Modernization Act. 

Mr. MEADOWS. Sure. 

Mr. MIHM. We had requirements for many years to do strategic 

planning and annual planning. That was all agency based. And 

what Congress is looking for with the Modernization Act is a more 

integrated and cross-cutting perspective. So it requires OMB on behalf of the President to have some government-wide crosscutting 

goals but also agencies in their goals to identify who else are— 

what other agencies are involved in the delivery of products and 

services that are related to the result that they are trying to 

achieve. One of the things that we have been doing, we will have 

a report coming out on this shortly, is taking a sample of the goals 

that the agencies have established and begin to start looking at 

those and seeing have they identified relevant partners that we 

had otherwise identified as part of our work on overlap and duplication or that the Inspectors General had identified, and then following up and saying, hey, you seem to have missed someone that 

is key to your success. Why is that? And how are you coordinating 

with them to make sure that we don’t have the overlap and duplication that you are talking about? 

Mr. DODARO. You are hitting on a very important point. And 

there really is no systematic way that this has been done in the 

past. And really this needs to work if we are going to deal with this 

in a timely way. 

Mr. MEADOWS. And so is that something that you take the lead 

on? Who takes the lead on that? 

Mr. DODARO. OMB has the responsibility to implement the law. 

We have the responsibility to make sure that they are doing it effectively, providing oversight on behalf of the Congress. 

Mr. MEADOWS. Okay. Thank you very much. Yield back. 

Mr. DESJARLAIS. Thank the gentleman. 

The chair now recognizes the gentlelady from California, Ms. 

Speier. 

Ms. SPEIER. Mr. Chairman, thank you. 

And Mr. General, let me say that I, once again, am deeply grateful for the work that you and your staff does on behalf of the American people. 

Mr. Chairman, this really should be our Bible in this committee. 

We should take every section of this report and, in subcommittees 

and in full committees, go through it and save the taxpayers of this 

country money. 

By your own earlier testimony, you said there is tens of billions 

of dollars. Are you in a position to tell us how much would be saved 

by each of the recommendations that you have made? 

Mr. DODARO. It would be hard to give you a precise estimate. But 

I mean, just for example, in the Medicare program alone, there are 

the latest estimates of $44 billion in improper payments. So driving 

that down will save money. We have made recommendations that 

60 

this pilot program that they have in Medicare Advantage be canceled. That if timely action had been take there, that was $8.3 billion. 

Ms. SPEIER. So if we were to take action this year to cancel that 

program and just do the bonus payments, as you recommend, how 

much would we save? 

Mr. DODARO. I believe—don’t hold me to the estimate—but it is 

about between $2 billion and $3 billion. 

Ms. SPEIER. All right. There is $2 to $3 billion, Mr. Chairman, 

that if this committee gets serious about really taking the recommendations of the auditor general, we would be in a position to 

really say we are saving people money in this country. 

I also noted that under the health care area, you looked at selfreferral. It continues to be a problem where physicians that own 

an interest in a high, advanced imaging center tend to refer more. 

And the figure was hundreds of millions of dollars, if I am not mistaken. 

Mr. DODARO. Yeah. I don’t have it off the top of my head. I can 

provide it for the record. But it was a significant amount of money 

and a high percentage. 

Ms. SPEIER. So do you ever get frustrated that you make all 

these recommendations, and years go by and nothing happens? 

Mr. DODARO. Actually, believe it or not, 80 percent of our recommendations are implemented over a 4-year period of time. That 

has been pretty consistent over time. We keep coming up with new 

recommendations. 

For example, in the past, at FHA, we asked Congress to act to 

prohibit seller financed downpayment assistance. And that saved 

over $10 billion. 

Ms. SPEIER. All right. So there is some good news. Let me move 

onto another topic, the Department of Defense. The Air Force just 

canceled an ECSS contract that was already—that we had already 

spent a billion dollars on. And this is a contract that I have asked 

the committee to explore in kind of a postmortem to find out what 

went wrong. There was an inspector general report that recommended that they should cut it off. We didn’t do it. At some 

point, we in Congress have to take responsibility for not acting. 

Now, there is another report, I believe, Computer Science Corporation is the primary contractor for ECSS project, has also been 

awarded a contract for another enterprise resource planning system called the LMP, just another acronym, but it is for a Logistics 

Modernization Program, and it is intended to streamline the 

Army’s inventory of weapons systems. 

Having said that, the inspector general for auditing within DOD 

has recommended that they not spend any more additional money 

on top of the $1.1 billion already spent on the program back in 

2009. So what did we do? We continued to spend money. It now is 

$4 billion over budget and 12 and a half years behind schedule. 

When do we stop and say, it is enough? When do we stop contracting with the same contractors that are over budget, that don’t 

do the job and, you know, go back to square one? How would you 

address that issue? 

Mr. DODARO. Well, first of all, in the rules, the contractor’s past 

performance is supposed to be considered in making—— 

61 

Ms. SPEIER. Well, obviously, not here. 

Mr. DODARO. —funding decisions. Well, there are timing issues 

in terms of when the different contracts would have been let, who 

knew what where and, importantly, within the Department of Defense, who is sharing information across the department to ensure 

this doesn’t happen. You know, in the past, we have looked at 

whether or not people who were on the debarred list were getting 

contracts. And we found that, in some cases, agencies didn’t check 

that list before they went ahead and made procurement decisions. 

Contracting has been on our high-risk list for a long time. The 

procurement process doesn’t always work effectively. And there are 

high dollar consequences to it. I would welcome congressional oversight and more attention to these areas, particularly in the Department of Defense, where we spend most of this contracting money. 

Ms. SPEIER. If we made a request of you to do a postmortem on 

the ECSS program, would you be able to do that? 

Mr. DODARO. Yes. 

Ms. SPEIER. All right. Thank you. 

Mr. DESJARLAIS. I thank the gentlelady. 

And the chair will now recognize himself for 5 minutes for a line 

of questioning. 

Mr. Dodaro, I would like to focus a little bit on health care. Medicare and Medicaid are both perpetually on the high-risk list, Medicare for two decades, Medicaid for a decade. Together, they are responsible for over 58 percent of all government improper payments 

in fiscal year 2012. What recommendation does GAO make about 

improving their program integrity and stopping improper payments? 

Mr. DODARO. Well, a number of recommendations we have made 

in almost every phase of their process. For example, enrolling providers, we need to keep bad actors out of the system initially. We 

have made recommendations that there be surety bonds put up by 

the providers before they are enrolled in the programs, and yet 

that hasn’t taken place yet. We think that is important so that the 

Federal Government, if there is a problem, can get the money back. 

We have recommended that there be more analytical procedures in 

place, data analytics, to spot trends in fraud in the provider area 

up front. They have moved it forward on that area, but they 

haven’t linked it to the payment system yet so that if they do find 

a potential problem they don’t stop the payments until they sort 

through the problem. 

Then, once you get providers in, making the payments, doing a 

good review before you make the payments in the first place. This 

prevention and detection area before you make the payments really 

needs a lot more attention. So we have made a lot of suggestions 

there on how to improve the prepayment controls, that they are not 

standardizing the edits across the providers, the contractors who 

make the payments. Then there is, after the payments are made, 

making sure that there is post look at this area. We have made recommendations there. And then when we find that there is an improper payment that has been made, having recovery auditing go 

in and recoup the money back. So, at every level in the process, 

there is a need for reform. 

62 

We have made many recommendations. I can provide the details 

for the records. But this is an area that we have a high degree of 

attention on and has a lot of potential payback. 

Mr. DESJARLAIS. As we should. That number is pretty alarming. 

Would you agree there is no future threat to the solvency of our 

country greater than health care? 

Mr. DODARO. Health care is the primary driver of our projected 

deficits. 

Mr. DESJARLAIS. Okay. The Patient Protection Affordable Care 

Act establishes a requirement for Center of Medicare and Medicaid 

Services to improve the integrity. The high-risk list notes that CMS 

should implement some of the requirements under the Patient Protection and Affordable Care Act to improve this integrity. Why 

hasn’t CMS done this? 

Mr. DODARO. I could provide some answers for the record. It depends on which area you are talking about. The process over there, 

my opinion, takes longer than it needs to, to implement these 

changes. But I can provide more specifics. 

Mr. DESJARLAIS. Okay. I would appreciate that, considering the 

20 years on the high-risk list. I think that we certainly need to target that. With the health care bill just really 8 months away, the 

implementation, the IRS has a large role in implementing the 

health care bill and the insurance exchanges, which should be in 

place in less than 8 months. What impact will the IRS’s system 

modernization problems have on health care delivery in the United 

States? 

Mr. DODARO. Let me ask Chris to come to the table to talk about 

that. 

Mr. DESJARLAIS. Because we had a hearing on this in the last 

Congress, and we know that the IRS was really frankly not ready 

for all that is going to be required of them. There is going to be 

incredible interaction between future patients and the IRS, lots of 

reporting that has to go on, whether you move, whether you have 

a child, whether there is a divorce, a death, et cetera. Constant 

communication is required. And I think we established the wait 

time for someone to call the IRS to be like 55 minutes. So can you 

comment on where we are going to be in 8 months? 

As a physician and someone who talks to a lot of physicians, we 

are not terribly optimistic that this is shovel ready. 

Mr. MIHM. There are a couple of issues that you are raising there 

of course, sir. One is just on the wait time. I mean, we have seen 

that of course during the filing season, that there was just the IRS 

just in this last year, it didn’t come close to meeting its goals in 

terms of how many people were able to get through and, you know, 

did they get busy signals or dropped calls and all the rest. We have 

made some recommendations to them that just on the filing season 

aspect, that they—which has implications for what you are talking 

about. They need do a much better job in thinking in a broad, strategic sense across the various ways that they interact with the public, being walk-in centers, correspondence, telephone calls, information that individuals that they can get through the Web. And the 

Web is obviously, over the long term, the way to go. 

Mr. DESJARLAIS. Is it realistic to believe they can be even close 

to ready in 8 months? 

63 

Mr. MIHM. What we have seen in, more specifically on the Affordable Care Act, we have done a number of engagements or a 

number of reports that have looked at where they are on that, in 

particular how their infrastructure, that is their governance infrastructure, and risk management is looking. I would agree with your 

point that they have some major risks that they are going to have 

to be able to manage in order to effectively deliver this. Because 

they have, obviously, the implementation, or their responsibilities 

for implementation of Affordable Care Act. They have a very difficult filing season that is, you know, ahead of them. They have 

other challenges that IRS faces. And so it is going to be quite a difficult challenge for them. It is something that we continue to monitor on behalf of the Congress. 

Mr. DESJARLAIS. And as you know, there are still challenges out 

there regarding Federal and State exchanges with the IRS in terms 

of that ruling. That has also been a subject of a hearing that we 

will revisit. I see my time has expired. 

Seeing no other Democratic witnesses, I will now yield 5 minutes 

to my good friend and colleague from Tennessee, Mr. Duncan. 

Mr. DUNCAN. Thank you very much, Mr. Chairman. 

And I don’t have any questions, but I did want to say a couple 

things. 

First of all, I agree with the gentlewoman from California that 

this is a very important subject. And I hope the GAO stays on top 

of this and continues to issue these reports. 

And I appreciate your work, Mr. Dodaro, and that of your staff. 

And I agree with the gentleman from Pennsylvania, and I also 

have concern about the National Flood Insurance Program. Because I read recently that 15 of the largest insurance companies 

are making a real killing off of that program. I think that is something that we need to look into. 

But when I read the committee memo, it mentions as the biggest, 

of course, programs Medicare and Medicaid and the Department of 

Defense. And I was here earlier this morning for the discussion on 

the New York Medicaid program. And they said there were $15 billion in improper payments just in that one program, the New York 

Medicaid program, and that there was one contract paying a $5,000 

daily rate for institutionalized people. I can tell you almost every 

Federal contract with every Federal department and agency has 

some sort of sweetheart insider-type deal. And I would bet that 

that contract certainly was. And we now spend, according to some 

of the information we were given this morning, $990 billion on the 

two programs, Medicare and Medicaid put together. That is more 

money than almost all other countries in the world spend total in 

their complete budgets put together. And these costs are just unbelievable. 

And when people say we can’t cut Medicare and so forth, well, 

I don’t want to cut any poor person out of the Medicare and Medicaid, but I will tell you this, there is a lot of people and companies 

getting ridiculously rich off of Medicare and Medicaid. And some of 

those payments need to be—and some of those contracts need to be 

looked into. 

And then the Department of Defense, all those defense contractors, they hire all the retired admirals and generals. And then they 

64 

come back to the offices that they were in and they get contracts. 

And it seems to me that that is rampant in Medicare, Medicaid, 

the Department of Defense, and throughout the Federal Government that they hire Federal employees, who retire at fairly young 

ages on average, and then they go back and they get these contracts from the departments or agencies that they worked for. And 

it is crooked. It ought to be against the law. And I hope that in 

future reports, you will point to some things like that out too, Mr. 

Dodaro. 

Thank you very much, Mr. Chairman. 

Mr. DESJARLAIS. I thank the gentleman. 

And Mr. Dodaro, thank you very much for taking time out of 

your busy schedule today. 

I am sorry, I yield to the ranking member for a statement. 

Mr. CUMMINGS. I just want to just as we close, again, I want to 

thank you and your staff for your excellent report. 

I want to say to Mr. Duncan, who just spoke, just what he said 

is just so important. You know, we talk about waste, fraud, and 

abuse, and sometimes I think we, you know, we kind of talk about 

it as if it is just a lightweight thing. But as Mr. Duncan pointed 

out, this is serious stuff. 

And when we talk about trying to figure out how we save money 

and all that, you know, I just want you—you all do a great job, but 

I want you to continue to try to show us how we can be more effective and efficient in rooting out some of this waste, fraud, and 

abuse, because it is real. I think we kind of just say it, and you 

know, and a lot of times we are not really digging deep to get to 

it. It may call for us highlighting just very bad actors. It may call 

for us making sure that things get referred to the proper authorities, like Justice or whatever. 

But we have got to get to this because if we have got the kind 

of money that he was talking about just going out the door and 

some folks getting rich, but at the same time, the money not going 

to the very folk that we intend it to go to, it just seems like, you 

know, maybe we need to zero in on, okay, now, how do we go from 

research to truly being effective and efficient in making that research bear some fruit? There is nothing I hate more than research 

that gets placed on a shelf, only to be dusted off and put in a 

microwave 5 years later or 10 years later and reissued, and the 

problem just keeps going on and on and on. 

So I just hope that—I know your staff is very focused, I know 

they want to make sure they do the right thing. And again, I just 

want you all do everything in your power to help us be even more 

effective and efficient even than we are. All right? 

Ms. SPEIER. Would the gentleman yield? 

Mr. CUMMINGS. Of course. 

Ms. SPEIER. I just want to associate my remarks with those of 

yours and those of Mr. Duncan’s. 

You know, there were very few members here today. This should 

be a mandatory meeting for every member of this committee. Because this particular report of high-risk problems in the U.S. Government should be something that every member of this committee 

is familiar with, and it should be the road map for much of the 

work that we do in our subcommittees. 

65 

And I know you are serious about making some in-roads in terms 

of getting rid of the fraud and abuse. I know that the general is, 

and all the staff that works with him. We have got to work together to resolve this because otherwise, it is just all cheap talk. 

I yield back. 

Mr. CUMMINGS. Well, I must say, and I give the credit—Mr. 

Chairman, as I just take 30 more seconds—to Chairman Issa this 

morning in our press conference. He recommitted to making sure 

that we do those things that we are talking about so that we could 

be more effective and efficient. 

And that is why I was just saying to you, Mr. Dodaro, if there 

are things that you can help us with so that we can—I know you 

have got your recommendations and whatever. But again, you 

know, you know what, you know, one of the things I worry about 

is that when I look back on my tenure as a Congressman, I don’t 

want to look back with regret that I failed to do the things that 

I could have done to help my constituents. And so sometimes 

maybe we need help, maybe we need tools, maybe we need advice. 

And if you or your staff—maybe we need a new era of how to really 

take these reports and bring life to them. 

Because, you know, those wonderful people, great government 

servants sitting behind you, many of whom, probably all of whom 

could be making more money doing other things, but they come to 

government service to feed their souls, to feed their souls. And they 

come to make a difference. And I want them, in feeding their souls, 

to be effective, too. I don’t want them to say, well, you know, we 

gave a report, and it got placed on the shelf and, you know, it 

never went anywhere. And so, at some time, at some point, then 

their morale goes down. And it is just logical. So again I want to 

thank you. You were about to say something, and then I am finished, Mr. Chairman. 

Thank you very much. 

Mr. DODARO. I would just like to make a couple points in regard 

to your comments, Mr. Cummings, Congresswoman Speier. Number one is the high-risk program will remain a top priority for GAO 

as long as I am Comptroller General. My term goes to 2025. I made 

a commitment at my confirmation hearing that this would be a 

high priority. It will remain so. 

The second point, I would say one of the things that could be 

done that this committee could talk about is assigning some of the 

high-risk areas to either the subcommittees or individual members 

on the committee so that they can become well versed and deep in 

these issues, and we could work with them. That has been done in 

the past. And there was a high-risk caucus at one point in the Congress when we first started the programs, and it had some good effect. And they could put more pressure on the agencies or understand the issues deeper. So I would say do that. 

Third point and my last point is that you can do some things to 

help us. We are at our lowest staffing level since 1935. Now, obviously, the Federal Government is in a much different position now 

than it was in 1935. We need some help, not a lot. We returned 

$105 for every dollar spent on GAO this past year. We added more 

than $55 billion in documented financial benefits as a result of implementing our recommendations. Over the last decade, that comes 

66 

to about a half a trillion dollars. So we think we are a good investment, but we need some help. 

And so we appreciate whatever this committee could do. So 

thank you very much. It has been a privilege to be here today. And 

you have our commitment that myself and all the dedicated and 

talented people at the GAO are at your disposal to make headway 

in making government more efficient and effective for the benefit 

of the American people. 

Mr. DESJARLAIS. I thank you for that. 

I thank the ranking member, and certainly thank Ms. Speier for 

her comment. 

And in the spirit of summarization, I will add for all those folks 

that are watching this hearing today, I agree this is an incredibly 

important issue. As we look at our out of control debt, deficit, and 

spending problems, we hear calls for revenue increases. And for 

American people watching this hearing and listening to the highrisk list and how long things have been on the high-risk list, I 

think they would be very discouraged, if not disgusted, that we are 

not doing better. And I think it would be a shame to ask the American people for another dime of revenue until we start to solve 

these problems. 

So, in that spirit, I am looking forward to working with my colleagues in addressing these important issues. So again, I will 

thank you for taking time out of your busy schedule, as well as 

your staff, to appear before us today. 

And the committee stands adjourned. 

[Whereupon, at 12:44 p.m., the committee was adjourned.] 

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