GAO’S 2013 HIGH-RISK 

SERIES

An Update

Statement of Gene L. Dodaro

Comptroller General of the United States

Testimony

Before the Committee on Oversight and 

Government Reform, House of 

Representatives

For Release on Delivery 

Expected at 10:30 a.m. EST

Thursday, February 14, 2013

GAO-13-359T

United States Government Accountability Office

GAO

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United States Government Accountability Office

Highlights of GAO-13-359T, a statement 

before the Committee on Oversight and 

Government Reform, House of 

Representatives 

February 14, 2013 

HIGH-RISK SERIES

An Update

Why GAO Did This Study

The federal government is the world’s 

largest and most complex entity, with 

about $3.5 trillion in outlays in fiscal 

year 2012 funding a broad array of 

programs and operations. GAO 

maintains a program to focus attention 

on government operations that it 

identifies as high risk due to their 

greater vulnerabilities to fraud, waste, 

abuse, and mismanagement or the 

need for transformation to address 

economy, efficiency, or effectiveness 

challenges. Since 1990, more than 

one-third of the areas previously 

designated as high risk have been 

removed from the list because 

sufficient progress was made to

address the problems identified.

This biennial update describes the 

status of high-risk areas listed in 2011 

and identifies any new high-risk area 

needing attention by Congress and the 

executive branch. Solutions to high-risk 

problems offer the potential to save 

billions of dollars, improve service to 

the public, and strengthen the 

performance and accountability of the 

U.S. government.

What GAO Recommends

This report contains GAO’s views on 

progress made and what remains to be 

done to bring about lasting solutions 

for each high-risk area. Perseverance 

by the executive branch in 

implementing GAO’s recommended 

solutions and continued oversight and 

action by Congress are essential to 

achieving progress. GAO is dedicated 

to continue working with Congress and 

the executive branch to help ensure 

additional progress is made.

What GAO Found

In February 2011, GAO detailed 30 high-risk areas. Sufficient progress has been 

made to remove the high-risk designation from two areas. 

• Management of Interagency Contracting. Improvements include (1) 

continued progress made by agencies in addressing identified 

deficiencies, (2) establishment of additional management controls, (3) 

creation of a policy framework for establishing new interagency 

contracts, and (4) steps taken to address the need for better data on 

these contracts.

• Internal Revenue Service Business Systems Modernization. We are 

removing this area because progress has been made in addressing 

significant weaknesses in information technology and financial 

management capabilities. IRS delivered the initial phase of its 

cornerstone tax processing project and began the daily processing and 

posting of individual taxpayer accounts in January 2012. This enhanced

tax administration and improved service by enabling faster refunds for 

more taxpayers, allowing more timely account updates, and faster 

issuance of taxpayer notices. IRS has put in place close to 80 percent of 

the practices needed for an effective investment management process, 

including all of the processes needed for effective project oversight.

While these two areas have been removed from the High Risk List, GAO will 

continue to monitor them.

This year, GAO has added two areas.

• Limiting the Federal Government’s Fiscal Exposure by Better Managing 

Climate Change Risks. Climate change creates significant financial risks 

for the federal government, which owns extensive infrastructure, such as 

defense installations; insures property through the National Flood 

Insurance Program; and provides emergency aid in response to natural 

disasters. The federal government is not well positioned to address the 

fiscal exposure presented by climate change, and needs a government 

wide strategic approach with strong leadership to manage related risks.

• Mitigating Gaps in Weather Satellite Data. Potential gaps in 

environmental satellite data beginning as early as 2014 and lasting as 

long as 53 months have led to concerns that future weather forecasts 

and warnings—including warnings of extreme events such as hurricanes, 

storm surges, and floods—will be less accurate and timely. A number of 

decisions are needed to ensure contingency and continuity plans can be 

implemented effectively. 

In the past 2 years notable progress has been made in the vast majority of areas 

that remain on GAO’s High Risk List. This progress is due to the combined 

efforts of the Congress through oversight and legislation, the Office of 

Management and Budget through its leadership and coordination, and the 

agencies through their efforts to take corrective actions to address longstanding 

problems and implement related GAO recommendations. 

View GAO-13-359T. For more information, 

contact J. Christopher Mihm at (202) 512-6806 

or mihmj@gao.gov
GAO’s 2013 High Risk List

Strengthening the Foundation for Efficiency and Effectiveness

• Limiting the Federal Government’s Fiscal Exposure by Better Managing Climate Change Risks (new)

• Management of Federal Oil and Gas Resources

• Modernizing the U.S. Financial Regulatory System and Federal Role in Housing Finance

• Restructuring the U.S. Postal Service to Achieve Sustainable Financial Viability

• Funding the Nation’s Surface Transportation System

• Strategic Human Capital Management

• Managing Federal Real Property

Transforming DOD Program Management

• DOD Approach to Business Transformation

• DOD Business Systems Modernization

• DOD Support Infrastructure Management

• DOD Financial Management

• DOD Supply Chain Management

• DOD Weapon Systems Acquisition

Ensuring Public Safety and Security

• Mitigating Gaps in Weather Satellite Data (new)

• Strengthening Department of Homeland Security Management Functions

• Establishing Effective Mechanisms for Sharing and Managing Terrorism-Related Information to Protect the Homeland

• Protecting the Federal Government’s Information Systems and the Nation’s Cyber Critical Infrastructures

• Ensuring the Effective Protection of Technologies Critical to U.S. National Security Interests

• Revamping Federal Oversight of Food Safety

• Protecting Public Health through Enhanced Oversight of Medical Products

• Transforming EPA’s Processes for Assessing and Controlling Toxic Chemicals

Managing Federal Contracting More Effectively

• DOD Contract Management

• DOE’s Contract Management for the National Nuclear Security Administration and Office of Environmental Management

• NASA Acquisition Management

Assessing the Efficiency and Effectiveness of Tax Law Administration

• Enforcement of Tax Laws

Modernizing and Safeguarding Insurance and Benefit Programs

• Improving and Modernizing Federal Disability Programs

• Pension Benefit Guaranty Corporation Insurance Programs

• Medicare Program

• Medicaid Program

• National Flood Insurance Program

Source: GAO. 
Page 1 GAO-13-359T 

United States Government Accountability Office 

Washington, DC 20548

Mr. Chairman, Ranking Member Cummings, and Members of the 

Committee:

Thank you for the opportunity to discuss our 2013 high-risk update.1

Since our last high-risk update in 2011, many notable positive 

developments have occurred and progress has been made in the vast 

majority of areas that remain on the list. Congressional oversight and 

legislative action have been critical to this progress. Congress passed 

numerous laws—eight of which are discussed in our report—targeting 

both specific problems and the high-risk areas overall. In addition, top 

administration officials have continued to show their commitment to 

ensuring that high-risk areas receive attention and oversight. The Office 

of Management and Budget (OMB) regularly convenes meetings for 

agencies to provide progress updates on high-risk issues. When a highrisk issue area ranges across agencies, OMB coordinates with 

representatives from multiple agencies to participate. These meetings 

typically include OMB’s Deputy Director for Management, participating 

agencies’ representatives to the President’s Management Council, other 

administration and agency staff members responsible for addressing the 

high-risk issue, as well as myself and others from GAO.

Since 1990, GAO has regularly reported on government operations that 

we have identified as high risk due to their greater vulnerability to fraud, 

waste, abuse, and mismanagement or the need for transformation to 

address economy, efficiency, or effectiveness challenges. Our high-risk 

program, supported by this committee and the Senate Committee on 

Homeland Security and Governmental Affairs, has brought much-needed 

focus to problems impeding effective government and costing billions of 

dollars each year.

This year, due to significant progress made, we removed the high-risk 

designation from two areas—Management of Interagency Contracting 

and the Internal Revenue Service (IRS) Business Systems 

Modernization. These areas demonstrate how sustained congressional 

oversight and action, high-level administration attention, efforts of the 

responsible agencies, and support from GAO through its many 

 

1

GAO, High-Risk Series: An Update, GAO-13-283 (Washington, D.C.: February 2013).

 
 

Page 2 GAO-13-359T 

recommendations and consistent follow-up on the implementation of 

recommended actions lead to success in addressing risks.

While there has been notable progress, much remains to be done to 

address the 30 high-risk issues that are currently on GAO’s High Risk 

List. Our high risk update report and website2

This year we designated two new high-risk areas—Limiting the Federal 

Government’s Fiscal Exposure by Better Managing Climate Change 

Risks and Mitigating Gaps in Weather Satellite Data. Lasting solutions to 

these and the other 28 high-risk areas offer the potential to save billions 

of dollars, dramatically improve service to the American public, and 

strengthen public confidence and trust in the performance and 

accountability of our national government.

provide details for each of 

these issues, describing the nature of the risks, what actions have been 

taken to address them, and what remains to be done to make further 

progress. The details in our report, along with successful implementation 

by agencies and continued oversight by Congress, can form a solid 

foundation for progress to address risks and improve programs and 

operations.

When legislative, administration, and agency actions, including those in 

response to our recommendations, result in significant progress toward 

resolving a high-risk problem, we remove the high-risk designation. The 

five criteria for determining if the high-risk designation can be removed 

are (1) a demonstrated strong commitment to, and top leadership support 

for, addressing problems; (2) the capacity to address problems; (3) a 

corrective action plan; (4) a program to monitor corrective measures; and 

(5) demonstrated progress in implementing corrective measures.

For our 2013 high-risk update, we determined that the following two areas 

warranted removal from the High Risk List.

Interagency contracting—where one agency either places an order using 

another agency’s contract or obtains contracting support services from 

another agency—can help streamline the procurement process, take 

 

2

GAO’s high risk website, http://www.gao.gov/highrisk/. 

High-Risk Designation 

Removed

Management of 

Interagency Contracting
 

Page 3 GAO-13-359T 

advantage of unique expertise in a particular type of procurement, and 

achieve savings. While this method of contracting can save the 

government money and effort when properly managed, it also poses a 

variety of risks.

In 2005, we designated the management of interagency contracting as 

high risk due in part to unclear lines of accountability between customer 

and assisting agencies and the potential for improper use, including outof-scope work and noncompliance with competition requirements. We 

identified the continuing need for additional management controls and 

guidance and clearer definitions of roles and responsibilities as keys to 

addressing these issues. We have also highlighted challenges agencies 

faced in fully realizing the benefits of interagency contracts, including the 

lack of data and the risk of potential duplication when new contracting 

vehicles are created. To address these issues, we identified the need for 

a policy framework and business case analysis requirements to support 

the creation of certain new contracts and improved data on existing 

interagency contracts.

As detailed in our 2013 high risk update report, we are removing the 

management of interagency contracting from the High Risk List based on 

the following:

• Continued progress in addressing previously identified deficiencies. In 

our 2009 and 2011 high-risk updates we noted improvements in 

procedures used in making purchases on behalf of the Department of 

Defense (DOD)—the largest user of interagency contracts. The DOD 

Inspector General has also reported a significant decrease in 

problems with DOD procurements through other federal agencies in 

congressionally mandated reviews of interagency acquisitions. More 

recently, we reported earlier this year that DOD substantially complied 

with new requirements for interagency contract orders.3

• Strengthened management controls. In response to congressional 

direction, Federal Acquisition Regulation (FAR) provisions on 

interagency acquisitions were revised in 2010 to require that agencies 

make a best procurement approach determination to justify the use of 

 

3

GAO, Interagency Contracting: Agency Actions Address Key Management Challenges, 

but Additional Steps Needed to Ensure Consistent Implementation of Policy Changes, 

GAO-13-133R (Washington, D.C.: Jan. 29, 2013).
 

Page 4 GAO-13-359T 

an interagency contract and prepare written interagency agreements 

outlining the roles and responsibilities of customer and assisting 

organizations. OMB’s October 2012 analysis of reports from the 24 

agencies that account for almost all contract spending 

governmentwide, found that most had implemented management 

controls to reinforce the new FAR requirements and strengthen the 

management of interagency acquisitions.

• New controls over the creation of new interagency contract vehicles. 

In response to congressional direction and our prior recommendation, 

OMB established a policy framework in September 2011 to govern the 

creation of new interagency contract vehicles. The framework 

addresses concerns about potential duplication by requiring agencies 

to develop a thorough business case prior to establishing certain 

contract vehicles.

• Improved data on interagency contracts. OMB and the General 

Services Administration have taken a number of steps to address the 

need for better data on interagency contract vehicles. These efforts 

should enhance both governmentwide efforts to manage interagency 

contracts and agency efforts to conduct market research and 

negotiate better prices.

Importantly, congressional oversight sustained over several years, has 

been vital in addressing the issues that led this area to be designated 

high risk.

Removing the management of interagency contracting from the High Risk 

List does not mean that the federal government’s use of these contracts 

is without challenges. But, we believe there are mechanisms in place that 

OMB and federal agencies can use to identify and address interagency 

contracting issues before they put the government at significant risk for 

waste, fraud, or abuse. We also will continue to monitor developments in 

this area.

The Internal Revenue Service’s (IRS) Business Systems Modernization is 

a multi-billion dollar, highly-complex effort that involves the development 

and delivery of a number of modernized tax administration and internal 

management systems as well as core infrastructure projects that are 

intended to replace the agency’s aging business and tax processing 

systems.

IRS Business Systems 

Modernization
 

Page 5 GAO-13-359T 

In 1995, we identified serious management and technical weaknesses in 

IRS’s modernization program that jeopardized its successful completion. 

We recommended many actions to fix the problems, and added IRS’s 

modernization to our High Risk List. In 1995, we also added the agency’s 

financial management to our High Risk List due to long-standing and 

pervasive problems which hampered the effective collection of revenues 

and precluded the preparation of auditable financial statements.4

We are removing IRS’s Business Systems Modernization program from 

the High Risk List because of:

We 

combined the two issues into one high-risk area in 2005 since resolution 

of the most serious financial management problems depended largely on 

the success of the business systems modernization program.

• Progress in addressing weaknesses. In our 2007, 2009, and 2011 

high risk updates, we reported that IRS continued to make progress in 

addressing our recommendations. In January 2012, the agency 

delivered the initial phase of its cornerstone tax processing project 

and began the daily processing and posting of individual taxpayer 

accounts. This enhanced tax administration and improved service by 

enabling faster refunds for more taxpayers, allowing more timely 

account updates, and faster issuance of taxpayer notices. Other 

improvements made led us to conclude that IRS’s remaining 

deficiencies in internal controls over information security no longer 

constitute a material weakness for financial reporting as of September 

30, 2012.

• Commitment to sustaining progress in the future. In July 2011, we 

reported that IRS had put in place close to 80 percent of the practices 

needed for an effective investment management process, including all 

of the processes needed for effective project oversight.5

 

4

GAO, High-Risk Series: An Overview, HR-95-1 (Washington, D.C.: Feb. 1, 1995).

We also 

reported that IRS had embarked on an effort to improve its software 

development practices using the Carnegie Mellon University Software 

Engineering Institute’s Capability Maturity Model Integration (CMMI), 

which calls for disciplined software development and acquisition 

practices which are considered industry best practices. In September 

5

GAO, Investment Management: IRS Has a Strong Oversight Process But Needs to 

Improve How It Continues Funding Ongoing Investments, GAO-11-587 (Washington, 

D.C.: July 20, 2011).
 

Page 6 GAO-13-359T 

2012, IRS’s application development organization reached CMMI 

maturity level 3, a high achievement by industry standards.

Throughout the years, Congress conducted oversight of the Business 

Systems Modernization program by, among other things, requiring that 

IRS submit annual expenditure plans that needed to meet certain 

conditions, including a review by GAO. Because of the significant 

progress made in addressing the high-risk area, starting in fiscal year 

2012, Congress did not require the submission of an annual expenditure 

plan.

As with all areas removed from the High Risk List, we will continue to 

monitor how future events unfold.

To determine which federal government programs and functions should 

be added to the High Risk List, we consider whether the program or 

function is of national significance or is key to government performance 

and accountability. Further, we consider qualitative factors, such as 

whether the risk

• involves public health or safety, service delivery, national security, 

national defense, economic growth, or privacy or citizens’ rights, or

• could result in significant impaired service, program failure, injury or 

loss of life, or significantly reduced economy, efficiency, or 

effectiveness.

In addition, we also review the exposure to loss in quantitative terms such 

as the value of major assets being impaired, revenue sources not being 

realized, or major agency assets being lost, stolen, damaged, or wasted. 

We also consider corrective measures planned or under way to resolve a 

material control weakness and the status and effectiveness of these 

actions.

This year, we added two new areas, delineated below, to the High Risk 

List based on those criteria.

New High-Risk Areas
 

Page 7 GAO-13-359T 

Climate change poses risks to many environmental and economic 

systems—including agriculture, infrastructure, ecosystems, and human 

health—and presents a significant financial risk to the federal 

government. The United States Global Change Research Program 

(USGCRP) has observed that the impacts and costliness of weather 

disasters will increase in significance as what are considered “rare” 

events become more common and intense due to climate change.6

Weather-related events have cost the nation tens of billions of dollars in 

damages over the past decade. For example, in 2012, the administration 

requested $60.4 billion for Superstorm Sandy recovery efforts. These 

impacts pose significant financial risks for the federal government, which 

owns extensive infrastructure, insures property through federal flood and 

crop insurance programs, provides technical assistance to state and local 

governments, and provides emergency aid in response to natural 

disasters. However, the federal government is not well positioned to 

address this fiscal exposure, partly because of the complex, cross-cutting 

nature of the issue. Given these challenges and the nation’s precarious 

fiscal condition, we have added limiting the federal government’s fiscal 

exposure to climate change to our 2013 list of high-risk areas.

Among other impacts, climate change could threaten coastal areas with 

rising sea levels, alter agricultural productivity, and increase the intensity 

and frequency of severe weather events such as floods, drought, and 

hurricanes.

7

Climate change adaptation—defined as adjustments to natural or human 

systems in response to actual or expected climate change—is a riskmanagement strategy to help protect vulnerable sectors and communities 

that might be affected by changes in the climate. For example, adaptation 

 

6

Thomas R. Karl, Jerry M. Melillo, and Thomas C. Peterson, eds. Global Climate Change 

Impacts in the United States (Cambridge University Press: 2009). USGCRP coordinates 

and integrates the activities of 13 federal agencies that conduct research on changes in 

the global environment and their implications for society. USGCRP began as a 

presidential initiative in 1989 and was codified in the Global Change Research Act of 1990 

[Pub. L. No. 101-606, § 103 (1990)]. USGCRP-participating agencies are the Departments 

of Agriculture, Commerce, Defense, Energy, Interior, Health and Human Services, State, 

and Transportation; U.S. Agency for International Development; Environmental Protection 

Agency; National Aeronautics and Space Administration; the National Science 

Foundation; and the Smithsonian Institution. 

7

The focus of this high-risk area may evolve over time to the extent that federal climate 

change programs and policies change. 

Limiting the Federal 

Government’s Fiscal 

Exposure by Better 

Managing Climate Change 

Risks
 

Page 8 GAO-13-359T 

measures may include raising river or coastal dikes to protect

infrastructure from sea level rise, building higher bridges, and increasing 

the capacity of storm water systems. Policymakers increasingly view 

climate change adaptation as a risk-management strategy to protect 

vulnerable sectors and communities that might be affected by changes in 

the climate, but, as we reported in 2009, the federal government’s 

emerging adaptation activities were carried out in an ad hoc manner and 

were not well coordinated across federal agencies, let alone with state 

and local governments.8

The federal government has a number of efforts underway to decrease 

domestic greenhouse gas emissions, but decreasing global emissions 

depends in large part on cooperative international efforts. Further, 

according to the National Research Council and USGCRP, greenhouse 

gases already in the atmosphere will continue altering the climate system 

for many decades. As such, the impacts of climate change can be 

expected to increase fiscal exposure for the federal government in many 

areas:

• Federal government as property owner. The federal government owns 

and operates hundreds of thousands of buildings and facilities, such 

as defense installations, that could be affected by a changing climate. 

In addition, the federal government manages about 650 million acres–

–29 percent of the 2.27 billion acres of U.S. land––for a wide variety 

of purposes, such as recreation, grazing, timber, and fish and wildlife. 

In 2007, we recommended that that the Secretaries of Agriculture, 

Commerce, and the Interior develop guidance for resource managers 

that explains how they are expected to address the effects of climate 

changes, and the three departments generally agreed with the 

recommendation. We have ongoing work related to adapting 

infrastructure and the management of federal lands to a changing 

climate.

Federal insurance programs. Two important federal insurance 

efforts—the National Flood Insurance Program (NFIP) and the 

Federal Crop Insurance Corporation—are based on conditions, 

priorities, and approaches that were established decades ago and do 

not account for climate change. NFIP has been on our High Risk List 

 

8

GAO, Climate Change Adaptation: Strategic Federal Planning Could Help Government 

Officials Make More Informed Decisions, GAO-10-113 (Washington, D.C.: Oct. 7, 2009). 
 

Page 9 GAO-13-359T 

since March 2006 because of concerns about its long-term financial 

solvency and related operational issues.9 In March 2007, we reported 

that both of these insurance programs’ exposure to weather-related 

losses had grown substantially, and that the agencies responsible for 

them had done little to develop the information necessary to 

understand their long-term exposure to climate change.10 We 

recommended that the responsible agencies analyze the potential 

long-term fiscal implications of climate change and report their 

findings to the Congress. The agencies agreed with the 

recommendation and contracted with experts to study their programs’ 

long-term exposure to climate change, but the results of the work 

have not yet been reported to Congress.

In addition, in June 2011, we reported that external factors continue to 

complicate the administration of the NFIP and affect its financial 

stability.11 In particular, the Federal Emergency Management Agency 

(FEMA), which administers the NFIP, was not been authorized to 

account for long-term erosion when updating flood maps used to set 

premium rates for the NFIP, increasing the likelihood that premiums 

would not cover future losses. We suggested that Congress consider 

authorizing the NFIP to account for long-term flood erosion in its flood 

maps, and the Biggert-Waters Flood Insurance Reform Act of 2012 

requires FEMA to use information on topography, coastal erosion 

areas, changing lake levels, future changes in sea levels, and 

intensity of hurricanes in updating its flood maps. While these 

provisions respond to our suggestion to Congress, their ultimate 

effectiveness will depend on their implementation by FEMA. It is too 

early to evaluate such efforts, but we plan to examine the NFIP in the 

near future.

 

9

The potential losses generated by NFIP have created substantial financial exposure for 

the federal government and U.S. taxpayers. While Congress and FEMA intended that 

NFIP be funded with premiums collected from policyholders and not with tax dollars, the 

program was, by design, not actuarially sound. As of November 2012, FEMA owes the 

Treasury approximately $20 billion—up from $17.8 billion pre-Sandy—and had not repaid 

any principal on the loan since 2010.

10GAO, Climate Change: Financial Risks to Federal and Private Insurers in Coming 

Decades Are Potentially Significant, GAO-07-285 (Washington, D.C.: Mar. 16, 2007).

11GAO, FEMA: Action Needed to Improve Administration of the National Flood Insurance 

Program, GAO-11-297 (Washington, D.C.: June 9, 2011).
 

Page 10 GAO-13-359T 

• Technical assistance to state and local governments. The federal 

government invests billions of dollars annually in infrastructure 

projects that state and local governments prioritize and supervise. 

These projects have large up front capital investments and long lead 

times that require decisions about how to address climate change to 

be made well before its potential effects are discernable. We reported 

in October 2009 that insufficient site-specific data—such as local 

temperature and precipitation projections—make it hard for state and 

local officials to justify the current costs of adaptation efforts for 

potentially less certain future benefits.12 We recommended that the 

appropriate entities within the Executive Office of the President 

develop a strategic plan for adaptation that, among other things, 

identifies mechanisms to increase the capacity of federal, state, and 

local agencies to incorporate information about current and potential 

climate change impacts into government decision making.

USGCRP’s 2012-2021 strategic plan for climate change science, 

released in April 2012, recognizes this need by identifying enhanced 

information management and sharing as a key objective, and 

USGCRP is undertaking several actions designed to better coordinate 

use and application of federal climate science. We have ongoing work 

related to these issues. In addition, gaps in satellite coverage, which 

could occur as soon as 2014, are expected to affect the continuity of 

climate and space weather measurements important to developing 

the information needed by state and local officials.13 According to 

National Oceanic and Atmospheric Administration program officials, a 

satellite data gap would result in less accurate and timely weather 

forecasts and warnings of extreme events—such as hurricanes, storm 

surges and floods. We have concluded that the potential gap in 

weather satellite data is a high-risk area and added it to the High Risk 

List this year as well.

• Disaster aid. In the event of a major disaster, federal funding for 

response and recovery comes from the Disaster Relief Fund 

managed by FEMA and disaster aid programs of other participating 

 

12GAO-10-113. 

13See, for example, GAO, Environmental Satellites: Focused Attention Needed to Mitigate 

Program Risks, GAO-12-841T (Washington, D.C.: June 27, 2012), and Environmental 

Satellites: Strategy Needed to Sustain Critical Climate and Space Weather 

Measurements, GAO-10-456 (Washington, D.C.: Apr. 27, 2010).
 

Page 11 GAO-13-359T 

federal agencies. The federal government does not budget for these 

costs and runs the risk of facing a large fiscal exposure at any time. 

We reported in September 2012 that disaster declarations have 

increased over recent decades to a record of 98 in fiscal year 2011 

compared with 65 in 2004. Over that period, FEMA obligated more 

than $80 billion in federal assistance for disasters.14 We found that 

FEMA has had difficulty implementing longstanding plans to assess 

national preparedness capabilities and that FEMA’s indicator for 

determining whether to recommend that a jurisdiction receive disaster 

assistance does not accurately reflect the ability of state and local 

governments to respond to disasters.15

The federal government would be better positioned to respond to the risks 

posed by climate change if federal efforts were more coordinated and 

directed toward common goals. In 2009, we 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, 

including the establishment of clear roles, responsibilities, and working 

relationships among federal, state, and local governments.

In September 2012, we 

recommended, among other things, that FEMA develop a 

methodology to more accurately assess a jurisdiction’s capability to 

respond to and recover from a disaster without federal assistance. 

FEMA concurred with this recommendation.

16,17

 

14GAO, Federal Disaster Assistance: Improved Criteria Needed to Assess a Jurisdiction’s 

Capability to Respond and Recover on Its Own, 

Some 

actions have subsequently been taken, including the development of an 

GAO-12-838 (Washington, D.C.: Sept. 

12, 2012). 

15GAO, Managing Preparedness Grants and Assessing National Capabilities, 

GAO-12-526T (Washington, D.C.: Mar. 20, 2012). See also GAO, Disaster Response: 

Criteria for Developing and Validating Effective Response Plans, GAO-10-969T 

(Washington, D.C.: Sept. 22, 2010).

16The Council on Environmental Quality coordinates federal environmental efforts and the 

development of environmental policies and initiatives. The Office of Science and 

Technology Policy was established by statute in 1976 to serve as a source of scientific 

and technological analysis and judgment for the President with respect to major policies, 

plans, and programs of the federal government, among other things.

17GAO-10-113. 
 

Page 12 GAO-13-359T 

interagency climate change adaptation task force.18 However, a 2012 

National Research Council report states that while the task force has 

convened representatives of relevant agencies and programs, it has no 

mechanisms for making or enforcing important decisions and priorities.19

In May 2011, we found no coherent strategic government-wide approach 

to climate change funding and that federal officials do not have a shared 

understanding of strategic government-wide priorities.20

Federal agencies have made some progress toward better organizing 

across agencies, within agencies, and among different levels of 

government; however, the increasing fiscal exposure for the federal 

government calls for more comprehensive and systematic strategic 

planning including, but not limited to, the following:

At that time, we 

recommended 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 within the 

federal government. The relevant federal entities have not directly 

addressed this recommendation.

• A government-wide strategic approach with strong leadership and the 

authority to manage climate change risks that encompasses the entire 

range of related federal activities and addresses all key elements of 

strategic planning.

 

18Executive Order 13514 on Federal Leadership in Environmental, Energy, and Economic 

Performance calls for federal agencies to participate actively in the already existing 

Interagency Climate Change Adaptation Task Force. The task force, which began meeting 

in Spring 2009, is co-chaired by the Council on Environmental Quality, the National

Oceanic and Atmospheric Administration, and the Office of Science and Technology 

Policy, and includes representatives from more than 20 federal agencies and executive 

branch offices. The task force was formed to assess key steps needed to help the federal

government understand and adapt to climate change.

19National Research Council, Committee on a National Strategy for Advancing Climate 

Modeling, Board on Atmospheric Studies and Climate, Division on Earth and Life 

Sciences, A National Strategy for Advancing Climate Modeling (Washington, D.C.: 2012). 

20GAO, Climate Change: Improvements Needed to Clarify National Priorities and Better 

Align Them with Federal Funding Decisions, GAO-11-317 (Washington, D.C.: May 20, 

2011).
 

Page 13 GAO-13-359T 

• More information to understand and manage federal insurance 

programs’ long-term exposure to climate change and analyze the 

potential impacts of an increase in the frequency or severity of 

weather-related events on their operations.

• A government-wide approach for providing (1) the best available 

climate-related data for making decisions at the state and local level 

and (2) assistance for translating available climate-related data into 

information that officials need to make decisions.

• Potential gaps in satellite data need to be effectively addressed.

• Improved criteria for assessing a jurisdiction’s capability to respond 

and recover from a disaster without federal assistance, and to better 

apply lessons from past experience when developing disaster cost 

estimates.

Additional information on Limiting the Federal Government’s Fiscal 

Exposure by Better Managing Climate Change Risks is provided in the 

2013 high risk update report.

For 2013, we are designating a new high-risk area—Mitigating Gaps in 

Weather Satellite Data. We and others—including an independent review 

team reporting to the Department of Commerce and the department’s 

Inspector General—have raised concerns that problems and delays on 

environmental satellite acquisition programs will result in gaps in the 

continuity of critical satellite data used in weather forecasts and warnings. 

The importance of such data was recently highlighted by the advance 

warnings of the path, timing, and intensity of Superstorm Sandy.

Since the 1960s, the United States has used both polar-orbiting and 

geostationary satellites to observe the earth and its land, oceans, 

atmosphere, and space environments. Polar-orbiting satellites constantly

circle the earth in an almost north-south orbit providing global coverage of 

environmental conditions that affect the weather and climate. As the earth 

rotates beneath it, each polar-orbiting satellite views the entire earth’s 

surface twice a day. In contrast, geostationary satellites maintain a fixed 

position relative to the earth from a high-level orbit of about 22,300 miles 

in space. Used in combination with ground, sea, and airborne observing 

systems, both types of satellites have become an indispensable part of 

monitoring and forecasting weather and climate. For example, polarorbiting satellites provide the data that go into numerical weather 

prediction models, which are a primary tool for forecasting weather days 

Mitigating Gaps in Weather 

Satellite Data
 

Page 14 GAO-13-359T 

in advance—including forecasting the path and intensity of hurricanes 

and tropical storms. Geostationary satellites provide frequently-updated 

graphical images that are used to identify current weather patterns and 

provide short-term warnings.

For more than 40 years, the United States has operated two separate 

operational polar-orbiting meteorological satellites systems: the Polarorbiting Operational Environmental Satellite series, which is managed by 

National Oceanic and Atmospheric Administration (NOAA)—a component 

of the Department of Commerce; and the Defense Meteorological 

Satellite Program (DMSP), which is managed by the Air Force. The 

government also relies on data from a European satellite program, called 

the Meteorological Operational (MetOp) satellite series. These satellites 

are positioned so that they cross the equator in the early morning, 

midmorning, and early afternoon in order to obtain regular updates 

throughout the day.

With the expectation that combining the two separate U.S. polar satellite 

programs would result in sizable cost savings, a May 1994 Presidential 

Decision Directive required NOAA and DOD to converge the two 

programs into a single new satellite acquisition, which became the 

National Polar-orbiting Operational Environmental Satellite System 

(NPOESS). However, in the years that followed, NPOESS encountered 

significant technical challenges in sensor development and experienced 

program cost growth and schedule delays, in part due to problems in the 

program’s management structure. After several restructurings and 

recurring challenges, in February 2010, the Executive Office of the 

President’s Office of Science and Technology Policy announced that 

NOAA and DOD would no longer jointly procure NPOESS; instead, each 

agency would plan and acquire its own satellite system. Specifically, 

NOAA, with support from the National Aeronautics and Space 

Administration (NASA), would be responsible for the afternoon orbit, and 

DOD would be responsible for the early morning orbit. The U.S. 

partnership with the European satellite agency for data from the 

midmorning orbit would continue as planned.

Subsequently, NOAA initiated its replacement program, the Joint Polar 

Satellite System (JPSS). JPSS consists of a demonstration satellite—

called the Suomi National Polar-orbiting Partnership (NPP)—launched in 

October 2011; two satellites, with at least five instruments planned for 

each, to be launched by March 2017 and December 2022, respectively; 

two stand-alone satellites to accommodate three additional instruments; 

and ground systems for the entire program. The program is currently 

Polar-orbiting Satellites
 

Page 15 GAO-13-359T 

estimated to cost $12.9 billion. In June 2012, we reported that NOAA and 

NASA made progress in establishing the JPSS program and in launching 

and operating the demonstration satellite, but noted that program officials 

expect there to be a gap in satellite observations before the first JPSS 

satellite is launched.

Specifically, NOAA officials anticipate a gap in the afternoon orbit from 18 

to 24 months between the time that NPP reaches the end of its lifespan 

and when the first JPSS satellite is fully ready for operational use. We 

identified other scenarios where the gap could last from 17 to 53 months. 

For example, the gap would be 17 months if NPP lasts 5 years until 

October 2016 and JPSS is launched as planned in March 2017 and 

undergoes a 12-month on-orbit checkout before it is fully operational. 

Alternatively, if NPP lasts only 3 years—which NASA engineers consider 

possible due to poor workmanship in the fabrication of the instruments—

and JPSS launches 1 year later than currently planned, the gap in 

satellite observations could reach 53 months.

After NPOESS was disbanded, DOD also began planning its own followon polar satellite program. However, it halted work in early 2012, since it 

still has two legacy DMSP satellites in storage that will be launched as 

needed to maintain observations in the early morning orbit. The agency 

currently plans to launch its two remaining satellites in 2014 and 2020. 

Moreover, DOD is working to identify alternatives to meet its future 

environmental satellite requirements. However, in June 2012, we reported 

that there is a possibility of satellite data gaps in DOD’s early morning 

orbit. The two remaining DMSP satellites may not work as intended 

because they were built in the late 1990s and will be quite old by the time 

they are launched. If the satellites do not perform as expected, a data gap 

in the early morning orbit could occur as early as 2014.

Satellite data gaps in the morning or afternoon polar orbits would lead to 

less accurate and timely weather forecasting; as a result, advanced 

warning of extreme events would be affected. Such extreme events could 

include hurricanes, storm surges, and floods. For example, the National 

Weather Service performed case studies to demonstrate how its 

forecasts would have been affected if there were no polar satellite data in 

the afternoon orbit, and noted that its forecasts for the “Snowmaggedon” 

winter storm that hit the Mid-Atlantic coast in February 2010 would have 

predicted a less intense storm further east, with about half of the 
 

Page 16 GAO-13-359T 

precipitation at 3, 4, and 5 days before the event. Specifically, the models 

would have under-forecasted the amount of snow by at least 10 inches. 

Similarly, a European weather organization21

In June 2012, we reported that while NOAA officials communicated 

publicly and often about the risk of a polar satellite data gap, the agency 

had not established plans to mitigate the gap. At the time, NOAA officials 

stated that the agency would continue to use existing satellites as long as 

they provide data and that there were no viable alternatives to the JPSS 

program. However, our report noted that a more comprehensive 

mitigation plan was essential since it is possible that other governmental, 

commercial, or foreign satellites could supplement the polar satellite data. 

For example, other nations continue to launch polar-orbiting weather 

satellites to acquire data such as sea surface temperatures, sea surface 

winds, and water vapor. Also, over the next few years, NASA plans to 

launch satellites that will collect information on precipitation and soil 

moisture. Because it could take time to adapt ground systems to receive, 

process, and disseminate an alternative satellite’s data, we noted that any 

delays in establishing mitigation plans could leave the agency little time to 

leverage its alternatives. We recommended that NOAA establish 

mitigation plans for pending satellite gaps in the afternoon orbit as well as 

potential gaps in the early morning orbit.

recently reported that 

NOAA’s forecasts of Superstorm Sandy’s track could have been 

hundreds of miles off without polar-orbiting satellites: rather than 

identifying the New Jersey landfall within 30 miles 4 days before landfall, 

the models would have shown the storm remaining at sea.

In September 2012, the Under Secretary of Commerce for Oceans and 

Atmosphere (who is also the NOAA Administrator) reported that NOAA 

had several actions under way to address polar satellite data gaps, 

including (1) an investigation on how to maximize the life of the 

demonstration satellite, (2) an investigation on how to accelerate the 

development of the second JPSS satellite, and (3) the development of a 

mitigation plan to address potential data gaps until the first JPSS satellite 

becomes operational. The Under Secretary also directed NOAA’s 

Assistant Secretary to, by mid-October 2012, establish a contract to 

conduct an enterprise-wide examination of contingency options and to 

 

21The European Centre for Medium Range Weather Forecasts is an independent, 

intergovernmental organization supported by 34 European nations, providing global 

medium-to-extended range forecasts.
 

Page 17 GAO-13-359T 

develop a written, descriptive, end-to-end plan that considers the entire 

flow of data from possible alternative sensors through data assimilation 

and on to forecast model performance. In October 2012, NOAA issued a 

mitigation plan for a potential gap in the afternoon orbit, between the 

current polar satellite and the first JPSS satellite. The plan identifies and 

prioritizes options for obtaining critical observations, including alternative 

satellite data sources and improvements to data assimilation in models. It 

also lists technical, programmatic, and management steps needed to 

implement these options.

However, these plans are only the beginning. The agency must make 

difficult decisions on which steps it will implement to ensure that its 

mitigation plans are viable when needed. For example, NOAA must make 

decisions about (1) whether and how to extend support for legacy satellite 

systems so that their data might be available if needed, (2) how much 

time and resources to invest in improving satellite models so that they 

assimilate data from alternative sources, (3) whether to pursue 

international agreements for access to additional satellite systems and 

how best to resolve any security issues with the foreign data, (4) when 

and how to test the value and integration of alternative data sources, and 

(5) how these preliminary mitigation plans will be integrated with the 

agency’s broader end-to-end plans for sustaining weather forecasting 

capabilities. NOAA must also identify time frames for when these 

decisions will be made. We have ongoing work assessing NOAA’s efforts 

to limit and mitigate potential polar satellite data gaps.

Geostationary environmental satellites transmit frequently updated 

images of the weather currently affecting the United States to every 

national weather forecast office in the country. These are the satellite 

images that the public often sees on television news programs. NOAA 

plans to have its $10.9 billion Geostationary Operational Environmental 

Satellite-R (GOES-R) series replace the current fleet of geostationary 

satellites, which will begin to reach the end of their useful lives in 2015. 

The GOES-R program has undergone a series of changes since 2006 

and now consists of four geostationary satellites and a ground system. 

However, problems with instrument and ground system development 

caused a 19-month delay in completing the program’s preliminary design 

review, which occurred in February 2012. In June 2012, we reported that 

GOES-R schedules were not fully reliable and that they could contribute 

to delays in satellite launch dates. Program officials acknowledged that 

the likelihood of meeting the October 2015 launch date was 48 percent.

Geostationary Satellites 
 

Page 18 GAO-13-359T 

While NOAA’s policy is to have two operational satellites and one backup 

satellite in orbit at all times, continued delays in the launch of the first 

GOES-R satellite could lead to a gap in satellite coverage. This policy 

proved useful in December 2008 and again in September 2012 when the 

agency experienced problems with one of its operational satellites, but 

was able to move its backup satellite into place until the problems were 

resolved. However, beginning in April 2015, NOAA expects to have only 

two operational satellites and no backup satellite in orbit until GOES-R is 

launched and completes an estimated 6-month post-launch test period. 

As a result, there could be a year or more gap during which time a 

backup satellite would not be available. If NOAA were to experience a 

problem with either of its operational satellites before GOES-R is in orbit 

and operational, it would need to rely on older satellites that are beyond 

their expected operational lives and may not be fully functional. Any 

further delays in the launch of the first satellite in the GOES-R program 

would likely increase the risk of a gap in satellite coverage.

In September 2010, we reported that NOAA had not established 

adequate continuity plans for its geostationary satellites. Specifically, in 

the event of a satellite failure, with no backup available, NOAA planned to 

reduce its operations to a single satellite and if available, rely on a 

satellite from a foreign nation. However, the agency did not have plans 

that included processes, procedures, and resources needed to transition 

to a single or a foreign satellite. Without such plans, there would be an 

increased risk that users would lose access to critical data. We 

recommended that NOAA develop and document continuity plans for the 

operation of geostationary satellites that included implementation 

procedures, resources, staff roles, and timetables needed to transition to 

a single satellite, a foreign satellite, or other solution. In September 2011, 

NOAA developed an initial continuity plan that generally includes these 

elements. Specifically, NOAA’s plan identified steps it would take in 

transitioning to a single or foreign satellite; the amount of time this 

transition would take; roles of product area leads; and resources such as 

imaging product schedules, disk imagery frequency, and staff to execute 

the changes. In December 2012, NOAA issued an updated plan that 

provides additional contingency scenarios.

• However, it is not evident that critical steps have been implemented, 

including simulating continuity situations and working with the user 

community to account for differences in products under different 

continuity scenarios. These steps are critical for NOAA to move 

forward in documenting the processes it will take to implement its 

contingency plans. Once these activities are completed, NOAA should 
 

Page 19 GAO-13-359T 

update its contingency plan to provide more details on its contingency 

scenarios, associated time frames, and any preventative actions it is 

taking to minimize the possibility of a gap. We have ongoing work 

assessing NOAA’s actions to ensure that its plans are viable and that 

continuity procedures are in place and have been tested. Additional 

information on Mitigating Gaps in Weather Satellite Data is provided in 

our high-risk update report.

Since our 2011 update, sufficient progress has been made to narrow the 

scope of the following three areas.

In 2011, we added the Department of the Interior’s (Interior) management 

of oil and gas on leased federal lands and waters to GAO’s High Risk List 

for three reasons; (1) Interior did not have reasonable assurance that it 

was collecting its share of revenue from oil and gas produced on federal 

lands; (2) Interior was unable to hire, train, and retain sufficient staff to 

provide oversight and management of oil and gas operations on federal 

lands and waters; and (3) Interior was reorganizing its oversight of 

offshore oil and gas activities in the immediate aftermath of the 

Deepwater Horizon incident. Since 2011, sufficient progress has been 

made in one of these three areas—Interior’s reorganization of its 

oversight of offshore oil and gas activities—but Interior’s revenue 

collection and human capital challenges remain a concern.

The explosion onboard the Deepwater Horizon and oil spill in the Gulf of 

Mexico in April 2010 emphasized the importance of Interior’s 

management of permitting and inspections to ensure operational and 

environmental safety. In 2011, Interior undertook a substantial 

reorganization of its oversight of offshore oil and gas activities that 

included establishing three new bureaus and separating revenue 

collection and oversight functions. At that time, we raised concerns about 

Interior’s ability to continue to perform these functions while undertaking 

this reorganization. In July 2012, we concluded that Interior had 

fundamentally completed its reorganization. However, Interior continues 

to face challenges in collecting the appropriate amount of royalties from 

oil and gas produced on federal lands and waters. We have 

recommended that Interior reassess its revenue collection policies and 

processes and correct problems with its data on oil and gas production, 

and Interior is working to implement a number of these recommendations.

High Risk Areas 

Narrowing Due to 

Progress 

Management of Federal Oil 

and Gas Resources
 

Page 20 GAO-13-359T 

We are reviewing Interior’s revenue collection practices and will evaluate, 

among other things, Interior’s progress in implementing these 

recommendations. Interior also continues to face problems in hiring, 

training, and retaining staff at the bureaus responsible for managing 

federal oil and gas resources, potentially placing both the environment 

and royalties at risk. We are reviewing Interior’s human capital 

challenges, focusing on the causes of these challenges and the actions 

Interior is taking to address them.

To recognize progress at the Department of Energy (DOE) on the 

National Nuclear Security Administration’s (NNSA) and Office of 

Environmental Management’s (EM) execution of nonmajor projects—

projects with values of less than $750 million—we are shifting the focus of 

its high-risk designation more to major contracts and projects executed by 

NNSA and EM, those contracts and projects with values of $750 million or 

greater. These contracts include those for management and operating 

contracts for national laboratories and nuclear production plants—such as 

Los Alamos National Laboratory—that are government owned and 

contractor operated, as well as for capital asset projects—such as the 

Hanford Tank Waste Treatment and Immobilization Plant under 

construction in Hanford, Washington, and the Mixed Oxide Fuel 

Fabrication Facility under construction near Aiken, South Carolina—

projects that are currently estimated to cost $13.4 billion and $4.9 billion 

respectively with cost increases anticipated.

Two of our reviews completed in 2012 focused on nonmajor projects 

found that these projects were being completed in large part, although 

additional and sustained attention by DOE is needed to adequately set 

and document performance baselines and further demonstrate that these 

actions result in improved performance. These reports included 

recommendations to DOE to clearly define, document, and track the 

scope, cost, and completion date targets for each of its projects, as 

required by DOE’s project management order. DOE agreed with these 

recommendations. With further monitoring of this area to ensure that 

progress is sustained, coupled with continued efforts and commitment by 

top leadership to address contract and project management weaknesses, 

nonmajor project performance issues will have been sufficiently 

addressed.

Significant challenges remain for the successful execution of major 

projects. NNSA is tasked with modernizing the nation’s aging nuclear 

weapons production facilities, a difficult effort that will take years and cost 

Department of Energy’s 

Contract Management for 

the National Nuclear 

Security Administration 

and Office of 

Environmental 

Management
 

Page 21 GAO-13-359T 

billions of dollars. EM faces ongoing complex and long-term challenges in 

removing radioactive and hazardous chemical contaminants—left over 

from decades of weapons production—from soil, groundwater, and 

facilities. Billions of dollars have already been spent, and will continue to 

be spent over the coming decades to treat and dispose of this waste. 

NNSA and EM are currently managing 10 major projects with combined 

estimated costs totaling as much as $65.7 billion.

As part of this high-risk update, we examined these 10 projects but were 

only able to analyze changes in schedule estimates for 5 projects and 

cost estimates for 7 projects because of limitations in the data. For these 

projects, we determined that DOE has added as much as 38.5 years to 

their initial schedules and $16.5 billion to original cost estimates with 

further delays and cost increases anticipated. For example, since we 

reported in February 2011 that NNSA’s project to design and construct a 

new Uranium Processing Facility at the Y-12 National Security Complex 

had experienced nearly seven-fold cost growth from its 2004 estimate to 

the current estimate of between $4.2 billion and $6.5 billion, the facility 

will be redesigned to correct issues concerning processing equipment 

with the potential for significant additional cost and schedule delay. NNSA 

and EM will remain on the High Risk List until DOE can consistently 

demonstrate that recent changes to policies and processes are resulting 

in improved performance on major projects.

In 2003, we designated implementing and transforming the Department of 

Homeland Security (DHS) as high risk because DHS had to transform 22 

agencies—several with major management challenges—into one 

department. Further, failure to effectively address DHS’s management 

and mission risks could have serious consequences for U.S. national and 

economic security. Given the significant effort required to build and 

integrate a new department as large and complex as DHS, our initial high 

risk designation focused on the department’s initial transformation and 

subsequent implementation efforts, to include associated management 

and programmatic challenges. 

Over the past 10 years, the focus of this high-risk area has evolved in 

tandem with DHS’s maturation and evolution. The overriding tenet has 

consistently remained the department’s ability to build a single, cohesive 

and effective department that is greater than the sum of its parts—a goal 

that requires effective collaboration and integration of its various 

components and management functions. In 2007, in reporting on DHS’s 

progress since its creation, as well as in our 2009 high risk update, we 

Strengthening Department 

of Homeland Security 

Management Functions
 

Page 22 GAO-13-359T 

noted that DHS had made more progress in implementing its range of 

missions than in its management functions, and that continued work was 

needed to address an array of programmatic and management 

challenges.

DHS’s initial focus on mission implementation was understandable given 

the critical homeland security needs facing the nation after the 

department’s establishment, and the challenges posed by its creation, 

integration and transformation. As DHS continued to mature, and as we 

reported in our assessment of DHS’s progress and challenges 10 years 

after 9/11, we found that the department implemented key homeland 

security operations and achieved important goals in many areas to create 

and strengthen a foundation to reach its potential.22

While challenges remain for DHS to address across its range of missions, 

the department has made considerable progress in transforming its 

original component agencies into a single cabinet-level department and 

positioning itself to achieve its full potential. Important strides have also

been made in strengthening the department’s management functions and 

in integrating those functions across the department, particularly in recent 

years. For example, DHS has chartered eight Centers of Excellence to 

However, we also 

identified that more work remained for DHS to address weaknesses in its 

operational and implementation efforts, and to strengthen the efficiency 

and effectiveness of those efforts. We further reported that continuing 

weaknesses in DHS’s management functions had been a key theme 

impacting the department’s implementation efforts. Recognizing DHS’s 

progress in transformation and mission implementation, our 2011 high 

risk update focused on the continued need to strengthen DHS’s 

management functions (acquisition, information technology, financial 

management, and human capital) and integrate those functions within 

and across the department, as well as the impact of these challenges on 

the department’s ability to effectively and efficiently carry out its missions. 

 

22GAO, Department of Homeland Security: Progress Made and Work Remaining in 

Implementing Homeland Security Missions 10 Years after 9/11, GAO-11-881 

(Washington, D.C.: Sept. 7, 2011). This report addressed DHS’s progress in implementing 

its homeland security missions since it began operations, work remaining, and issues 

affecting implementation efforts. Drawing from over 1,000 GAO reports and congressional 

testimony issued related to DHS programs and operations, and approximately 1,500 

recommendations made to strengthen mission and management implementation, this 

report addressed progress and remaining challenges in such areas as border security and 

immigration, transportation security, and emergency management, among others. 
 

Page 23 GAO-13-359T 

enhance component acquisition capabilities, defined and begun to 

implement a vision for a tiered governance structure intended to improve 

its information technology program and portfolio management, obtained a 

qualified audit opinion on its fiscal year 2012 financial statements, and 

issued a workforce strategy and a revised Workforce Planning Guide to 

help the department address its human capital challenges and plan for its 

workforce needs.

However, DHS still has considerable work ahead in many areas. For 

example, in September 2012, we reported that most of DHS’s major 

acquisition programs continue to cost more than expected, take longer to 

deploy than planned, or deliver less capability than promised. We 

identified 42 programs that experienced cost growth or schedule slips, or 

both, with 16 of the programs’ costs increasing from a total of $19.7 billion 

in 2008 to $52.2 billion in 2011—an aggregate increase of 166 percent. 

Further, while DHS has defined and begun to implement a vision for a 

tiered governance structure to improve information technology (IT) 

management, we reported in July 2012 that the governance structure 

covers less than 20 percent (about 16 of 80) of DHS’s major IT 

investments and 3 of its 13 portfolios. DHS has also been unable to 

obtain an audit opinion on its internal controls over financial reporting, and 

needs to obtain and sustain unqualified audit opinions for at least two 

consecutive years on the department-wide financial statements. Finally, 

federal surveys have consistently found that DHS employees are less 

satisfied with their jobs than the government-wide average. Key to 

addressing the department’s management challenges is DHS 

demonstrating the ability to achieve sustained progress across the 31 

actions and outcomes we identified as needed to address the high-risk 

designation, to which DHS agreed. As shown in table 1, we believe DHS 

has fully addressed 6, mostly addressed 2, partially addressed 16, and 

initiated 7 of the 31 key actions and outcomes.
 

Page 24 GAO-13-359T 

Table 1: Assessment of DHS’s Progress in Addressing Key Actions and Outcomes

Key outcomes

Fully 

addresseda Mostly 

addressedb Partially addressedc Initiatedd Total

Acquisition 

management

2 3 5

IT management 1 1 4 6 

Financial 

management

2 3 4 9

Human capital 

management

1 6 7 

Management 

integration

3 1 4 

Total 6 2 16 7 31

Source: GAO analysis of DHS documents, interviews, and prior GAO reports.

a

”Fully addressed”: outcome is fully addressed. 

b

”Mostly addressed”: progress is significant and a small amount of work remains. 

c

”Partially addressed”: progress is measurable, but significant work remains. 

d

”Initiated”: activities have been initiated to address outcome, but it is too early to report progress. 

To more fully address GAO’s high-risk designation, continued progress is 

needed in order to mitigate the risks that management weaknesses pose 

to mission accomplishment and the efficient and effective use of the 

department’s resources. In particular, the department needs to 

demonstrate continued progress in implementing and strengthening key 

management initiatives and addressing corrective actions and outcomes. 

Therefore, we are narrowing the scope of the high-risk area and changing 

the name from Implementing and Transforming the Department of 

Homeland Security to Strengthening the Department of Homeland 

Security Management Functions to reflect this focus.

One area—Modernizing the Outdated U.S. Financial Regulatory 

System—has been modified due to changing circumstances to include 

the Federal Housing Administration (FHA). To reflect these changing 

circumstances, the name of the area has been changed as well.

We first designated this area as high risk in 2009 due to the urgent need 

to reform the fragmented and outdated U.S. financial regulatory system. 

As detailed in our 2013 high risk update report, many actions are 

underway to implement oversight by new regulatory bodies and new 

requirements for market participants, although many rulemakings remain 

Modified High-Risk 

Area 

Modernizing the U.S. 

Financial Regulatory 

System and Federal Role 

in Housing Finance
 

Page 25 GAO-13-359T 

unfinished. Among the additional actions needed are resolving the role of 

the two housing-related government-sponsored enterprises (GSE)—

Fannie Mae and Freddie Mac—that continue operating under government 

conservatorships. However, a new challenge for the markets has also 

evolved as the decline in private sector participation in housing finance 

that began with the 2007-2009 financial crisis has resulted in much 

greater activity by FHA, whose single-family loan insurance portfolio has 

grown from about $300 billion in 2007 to more than $1.1 trillion in 2012. 

Although required to maintain capital reserves equal to at least 2 percent 

of its portfolio, FHA’s capital reserves have fallen below this level, due 

partly to increases in projected defaults on the loans it has insured. As a 

result, we are modifying this high-risk area to include FHA and 

acknowledge the need for actions beyond those already taken to help 

restore FHA’s financial soundness and define its future role. One such 

action would be to determine the economic conditions that FHA’s primary 

insurance fund would be expected to withstand without drawing on the 

Treasury. Recent events suggest that the 2-percent capital requirement 

may not be adequate to avoid the need for Treasury support under 

severe stress scenarios. Additionally, actions to reform GSEs and to 

implement mortgage market reforms in the Dodd-Frank Act will need to 

consider the potential impacts on FHA’s risk exposure.

There has been notable progress on the vast majority of the issues that 

remain on the High Risk List. The nation cannot afford to allow problems 

to persist. Addressing high-risk problems can save billions of dollars each 

year. Several areas on the High Risk List illustrate both the challenges of 

addressing difficult and tenacious high-risk problems and the 

opportunities for savings that can accrue if progress is made to address 

high-risk problems.

Congress, the administration, and the Food and Drug Administration 

(FDA) have all taken actions to improve the agency’s oversight of medical 

products—drugs, biologics, and medical devices—marketed in the United 

States. The recently enacted Food and Drug Administration Safety and 

Innovation Act of 2012 (Public Law 112-144) included several provisions 

to enhance FDA’s oversight that reflects recommendations we have 

made. For example, the law directed FDA to take a risk-based approach 

in selecting foreign drug establishments for inspections, as we 

recommended in September 2008. It also required FDA to improve 

oversight of medical device recalls by directing FDA to take actions 

consistent with the recommendations in our June 2011 report. In addition, 

Progress on 

Remaining High-Risk 

Areas

Protecting Public Health 

through Enhanced 

Oversight of Medical 

Products
 

Page 26 GAO-13-359T 

the law addressed the problem of drug shortages by requiring 

manufacturers to advise FDA of any changes that could affect the supply 

of their drugs, as we suggested in November 2011. Further, the President 

issued an Executive Order in October 2011 that instructs FDA to expedite 

review of applications to market drugs that would help to prevent or 

resolve shortages.

FDA has also taken important steps. For example, as we recommended, 

FDA developed an evidence-based estimate of its resource needs and 

improved the quality of some of the data it uses to manage its foreign 

drug inspection program. This is important progress. Nevertheless, we 

believe that FDA must do more to bolster its oversight of medical 

products. FDA needs to fully implement the provisions in the Food and 

Drug Administration Safety and Innovation Act cited above and address 

other outstanding concerns. Specifically, FDA needs to:

• strengthen its Drug Shortage Program by assessing program 

resources, systematically tracking data on shortages, considering the 

availability of medically necessary drugs as a strategic priority, and 

developing relevant results-oriented performance metrics to gauge the 

agency’s response to shortages;

• improve oversight of medical device recalls by routinely assessing 

information on device recalls, clarifying procedures for conducting 

recalls, developing criteria for evaluating the effectiveness of recalls, 

and documenting the agency’s basis for terminating individual recalls;

• implement the Safe Medical Devices Act of 1990;

• conduct more inspections of foreign establishments manufacturing 

medical products for the U.S. market and utilize new authority to take 

a risk-based approach in selecting foreign drug establishments to 

ensure that they are inspected at a frequency comparable to domestic 

establishments with similar characteristics;

• emphasize the importance of timely medical product reviews, 

particularly for medical devices; and

• track applications to market medical products for children.

The Pension Benefit Guaranty Corporation (PBGC) insures the pension 

benefits of 43 million American workers and retirees participating in nearly 

26,000 private sector defined benefit plans through its single-employer 

and multiemployer insurance programs. Because of long-term challenges 

related to PBGC’s governance and funding structure, PBGC’s financial 

future is uncertain. At the end of fiscal year 2012, PBGC’s net 

accumulated financial deficit was $34 billion—an increase of more than 

$23 billion from the end of fiscal year 2008.

Pension Benefit Guaranty 

Corporation Insurance 

Programs
 

Page 27 GAO-13-359T 

Both Congress and PBGC have taken significant steps to address many 

of our concerns with the agency’s overall management and governance 

structure, reflecting increased top-level attention to the challenges facing 

this agency. In July 2012, the Moving Ahead for Progress in the 21st 

Century Act (MAP-21) became law, with several provisions pertaining to 

PBGC.23

PBGC also has taken steps to address several areas of weakness noted 

in our previous reports. For example, to improve its asset management, 

PBGC issued a new investment policy statement in May 2011 and has 

subsequently aligned its portfolio with these new objectives. To enhance 

understanding of potential reforms to its premium structure, PBGC 

modeled various options for adjusting premiums to better reflect the risk 

of future claims. To strengthen the accountability of its contract 

management, PBGC implemented new practices requiring documentation 

of the decision to use contractors instead of federal employees, annual 

reviews of contract files, and evaluation of staff’s performance of contract 

monitoring duties. However, despite these efforts, certain challenges 

related to PBGC’s governance and funding structure remain. To improve 

the stability of PBGC’s insurance programs, we believe further 

congressional action should be considered with respect to: expanding 

and diversifying PBGC’s board, redesigning PBGC’s premium structure, 

strengthening pension plan funding requirements, and developing a 

strategy for PBGC’s long-term financial solvency as the defined benefit 

sector continues to decline.

These measures called for stabilizing sponsors’ pension 

contribution requirements, adjusting premium rates, as well as 

strengthening PBGC’s governance in various ways. For example, the law 

calls for PBGC’s Board of Directors to meet more regularly, four times a 

year; PBGC’s Inspector General to report to the Board; creation of new 

positions for a risk management officer and a participant and plan 

sponsor advocate; an independent peer review of PBGC’s insurance 

modeling system, to be conducted annually; and a study to be conducted 

by the National Academy of Public Administration Association on possible 

changes to PBGC’s governance structure. We have long recommended 

that the composition of PBGC’s board—currently made up of the 

Secretaries of the Treasury, Commerce, and Labor—be expanded to 

include additional members with diverse knowledge and expertise useful 

to PBGC’s mission.

 

23Pub. L. No.112-141, 126 Stat. 405, 846-864.
 

Page 28 GAO-13-359T 

DOD has taken positive steps to address weaknesses in its supply chain, 

particularly in the management of spare parts inventories. Our prior work 

reviewing spare parts management at the military services and the 

Defense Logistics Agency (DLA) identified ineffective and inefficient 

inventory management practices. Problems with accurately forecasting 

demand for spare parts have resulted in DOD purchasing and storing 

billions of dollars worth of excess inventory. For example, DOD’s most 

recent available data shows that in September 2011 it had $9.2 billion 

worth of on-hand excess inventory, categorized for potential reuse or 

disposal, and $523 million worth of on-order excess inventory, already 

purchased but likely to be excess due to changes in requirements. In 

response to a provision of the National Defense Authorization Act for 

fiscal year 2010, DOD submitted a corrective action plan to Congress in 

November 2010 aimed at reducing excess inventory by improving 

inventory management practices. DOD established overarching goals in 

the plan to reduce on-hand excess inventory and on-order excess 

inventory. Additionally, DOD developed actions to improve inventory 

management in nine key areas, including improving demand forecasting 

for spare parts.

We reported in 2012 that DOD had made progress in implementing its 

inventory improvement plan and was tracking reductions to its excess 

inventory. With respect to on-hand excess inventory, DOD has met its 

fiscal year 2012 target of having no more than 10 percent of its inventory 

categorized as on-hand excess. Also, DOD reported that from fiscal years 

2009 to 2011 it had reduced on-order excess inventory by approximately 

$632 million—a reduction that achieved its initial target 4 years early.

However, DOD continues to maintain significant quantities of excess 

inventory and its plan to improve inventory management practices runs 

through 2015. As implementation continues, DOD needs to monitor its 

progress in achieving the targets for on-order and on-hand excess 

inventory and update the targets, as necessary, to ensure the department 

has challenging, yet achievable targets to guide continued improvement.

Moreover, challenges remain in improving demand forecasting; 

accelerating the use of modeling to determine the optimal number and 

types of parts needed at the wholesale and retail levels to achieve 

readiness and cost goals; and implementing revised DOD guidance 

outlining the processes and procedures for retaining inventory. As it 

implements the remainder of its plan, DOD will need to address these 

areas and demonstrate sustained progress in implementing corrective 

measures and achieving results.

DOD Supply Chain 

Management
 

Page 29 GAO-13-359T 

Overall, the government continues to take high-risk problems seriously 

and is making long-needed progress toward correcting them. Congress 

has acted to address several individual high-risk areas through hearings 

and legislation. GAO’s high-risk update and high risk website, 

http://www.gao.gov/highrisk/, can help inform the oversight agenda for the 

113th Congress and guide efforts of the administration and agencies to 

improve government performance and reduce waste and risks. In support 

of Congress and to further progress to address high risk issues, GAO 

continues to review efforts and make recommendations to address high 

risk areas problems. As an example, today we are issuing our review of 

the nation’s overall cybersecurity strategy.24 Continued perseverance in 

addressing high-risk areas will ultimately yield significant benefits.

Thank you, Mr. Chairman, Ranking Member Cummings, and Members of 

the Committee. This concludes my testimony. I would be pleased to 

answer any questions.

For further information on this testimony, please contact J. Christopher 

Mihm at (202) 512-6806 or mihmj@gao.gov. Contact points for the 

individual high-risk areas are listed in the report and on our high-risk web 

site. Contact points for our Congressional Relations and Public Affairs 

offices may be found on the last page of this statement.

 

24GAO, Cybersecurity: National Strategy, Roles, and Responsibilities Need to Be Better 

Defined and More Effectively Implemented, GAO-13-187, (Washington, D.C.: Feb. 14, 

2013).

Sustaining Attention 

on High-Risk 

Programs 

(451032)
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