HIGH-RISK SERIES

Government-wide 2013 

Update and Progress Made 

by the Department of 

Homeland Security

Statement of Gene L. Dodaro 

Comptroller General of the United States 

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Testimony

Before the Committee on Homeland 

Security and Governmental Affairs, 

U.S. Senate 

For Release on Delivery 

Expected at 10 a.m. EDT

Thursday, March 21, 2013

GAO-13-444T 

United States Government Accountability Office

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 United States Government Accountability Office 

Highlights of GAO-13-444T, a testimony 

before the Committee on Homeland Security 

and Governmental Affairs, U.S. Senate 

March 21, 2013 

HIGH-RISK SERIES

Government-wide 2013 Update and Progress Made 

by the Department of Homeland Security 

Why GAO Did This Study 

The federal government is a large and 

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. 

The biennial high risk 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 

The high risk 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 the past 2 years, notable progress has been made in the vast majority of areas 

that were on GAO’s 2011 High Risk List. Congress passed several laws and took 

oversight actions to help address high-risk areas. Top administration officials at the 

Office of Management and Budget and the individual agencies have continued to 

show their commitment to ensuring that high-risk areas receive attention and 

action. Additional progress is both possible and needed in all the high-risk areas on 

GAO’s 2013 list. 

Sufficient progress has been made to remove the high-risk designation from two 

high-risk areas on the 2011 list, Management of Interagency Contracting and 

Internal Revenue Service Business Systems Modernization. While these two areas 

have been removed from the list, GAO will continue to monitor them. 

This year, GAO also has added two areas, Limiting the Federal Government’s 

Fiscal Exposure by Better Managing Climate Change Risks, and Mitigating Gaps in 

Weather Satellite Data. 

In 2003, GAO 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, and 

failure to address associated risks could have serious consequences. While 

challenges remain across its missions, DHS has made considerable progress in 

transforming its original component agencies into a single department. As a result, 

GAO narrowed the scope of the high-risk area and changed the name from 

Implementing and Transforming the Department of Homeland Security to 

Strengthening the Department of Homeland Security Management Functions. 

To more fully address this high-risk area, DHS needs to further strengthen its 

acquisition, information technology, and financial and human capital management 

functions. Of the 31 actions and outcomes GAO identified as important to 

addressing this area, DHS has fully or mostly addressed 8, partially addressed 16, 

and initiated 7. Moving forward, DHS needs to, for example, do the following: 

 Acquisition management. Validate required acquisition documents in a timely 

manner, and demonstrate measurable progress in meeting cost, schedule, and 

performance metrics for its major programs. GAO reported in September 2012, 

for example, that 42 major programs experienced cost growth, schedule slips, 

or both, and most programs lacked foundational documents needed to 

manage risk and measure performance. 

 Information technology management. Demonstrate for at least two consecutive 

investment increments that actual cost and schedule performance is within 

established baselines, and that associated mission benefits have been 

achieved. DHS has begun to implement a governance structure to improve 

program management consistent with best practices, but the structure covers 

less than 20 percent of DHS’s major information technology investments. 

 Financial management. Achieve clean opinions for at least two consecutive 

years on departmentwide financial statements, and implement new or upgrade 

existing components’ financial systems. DHS received a qualified opinion on its 

fiscal year 2012 financial statements, and is in the early planning stages of its 

financial systems modernization efforts. 

View GAO-13-444T. For more information, 

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

or mihmj@gao.gov, and 

Cathleen A. Berrick, (202) 512-3404 or 

berrickc@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-13-444T 

Mr. Chairman, Ranking Member Coburn, and Members of the Committee: 

Thank you for the opportunity to discuss our 2013 government-wide high 

risk update1

 and to focus especially on the progress made in one high-risk 

area—Strengthening Department of Homeland Security Management 

Functions. Since 1990, we have regularly reported on government 

operations that we 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 

House Committee on Oversight and Government Reform, has brought 

much-needed focus to problems impeding effective government and 

costing billions of dollars each year. 

In November 2000, we published our criteria and process of determining 

those areas across government deemed to be high risk.2

 That document, 

based on input we received from Congress and the executive branch, 

including heads of major agencies and the Chief Financial Officers 

Council, specified that to determine which federal government programs 

and functions should be added to GAO’s 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 significantly 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 

 

1

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

2

GAO, Determining Performance and Accountability Challenges and High Risks, 

GAO-01-159SP (Washington, D.C.: November 2000). 

 
 

Page 2 GAO-13-444T 

resolve a material control weakness and the status and effectiveness of 

these actions.

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. As 

detailed in our November 2000 guidance, the five criteria for determining 

if a high-risk designation can be removed are:

• A demonstrated strong commitment and top leadership support to 

address the risk(s). 

• The capacity (i.e., the people and other resources) to resolve the 

risk(s). 

• A corrective action plan(s) that defines the root causes, identifies 

effective solutions, and provides for substantially completing 

corrective measures near term, including but not limited to steps 

necessary to implement solutions we recommended. 

• A program instituted to monitor and independently validate the 

effectiveness and sustainability of corrective measures. 

• The ability to demonstrate progress in having implemented corrective 

measures. 

In recent years, Congress has passed several laws—which are discussed 

in our 2013 high risk update—targeting high-risk areas. 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, top leadership 

from the agencies, other administration and agency staff members 

responsible for addressing the high-risk issue, as well as myself and 

others from GAO.

This congressional and agency commitment is critical to resolving highrisk issues. For example, the Department of Homeland Security (DHS) 

has made considerable progress in transforming its original component 

agencies into a single cabinet-level department and positioning itself to 
 

Page 3 GAO-13-444T 

ultimately achieve its full potential. As a result, we narrowed the scope of 

the high-risk area as reflected in the changed name from Implementing 

and Transforming the Department of Homeland Security to Strengthening 

the Department of Homeland Security Management Functions. 

While there has been notable progress addressing the 30 high-risk issues 

that are currently on GAO’s High Risk List, much remains to be done. Our 

2013 high risk update report and website3 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.

For our 2013 high risk update, we determined that two areas warranted 

removal from the High Risk List due to the progress that had been 

made—Management of Interagency Contracting and IRS Business 

Systems Modernization. Additional details for both areas can be found in 

Appendix I. A brief summary follows.

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 

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 

 

3

GAO’s High Risk website, http://www.gao.gov/highrisk/. 

Government-wide 

2013 High Risk 

Update

High-Risk Designation 

Removed

Management of Interagency 

Contracting
 

Page 4 GAO-13-444T 

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 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:

(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.

Specifically, most agencies have taken steps to implement and reinforce 

interagency contracting policies to address prior concerns about the 

improper use of these contracts. For example, we have noted 

improvements in procedures used in making purchases on behalf of the 

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

These included better defined roles and responsibilities and enhanced 

controls over funding procedures. Additionally, the DOD Inspector 

General has reported a significant decrease in problems with DOD 

procurements through other federal agencies in congressionally 

mandated reviews of interagency acquisitions. With respect to 

management controls, Federal Acquisition Regulation (FAR) provisions 

on interagency acquisitions were revised to require that agencies make a 

best procurement approach determination to justify the use of an 

interagency contract and prepare written interagency agreements 

outlining the roles and responsibilities of customer and assisting 

organizations.4

 

4

FAR § 17.502-1. The interim FAR rule was issued in December 2010; the final rule was 

issued in February 2012.

As we recently reported, OMB analyzed reports from the 

24 agencies that account for almost all contract spending government-
 

Page 5 GAO-13-444T 

wide and found that most had implemented management controls to 

reinforce the new FAR requirements and strengthen the management of 

interagency acquisitions. All 24 agencies also reported having oversight 

mechanisms to ensure their internal controls were operating properly.5 In 

response to congressional direction6 and our prior recommendation, OMB 

established a policy framework in September 2011 to govern the creation 

of new interagency contract vehicles.7

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 framework addresses 

concerns about potential duplication by requiring agencies to develop a 

thorough business case prior to establishing certain contract vehicles.

Finally, in response to our recommendations, 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 government-wide efforts to manage interagency 

contracts and agency efforts to conduct market research and negotiate 

better prices.

Internal Revenue Service (IRS) Business Systems Modernization (BSM) 

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 

 

5

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.: January 2013). We also reported on DOD’s 

implementation of the new FAR requirements and found that for almost all of the selected 

orders, DOD effectively delineated roles and responsibilities by completing interagency 

agreements as required.

6

Pub. L. No. 110-417, § 865 (2008).

7

OMB, Office of Federal Procurement Policy, Development, Review, and Approval of 

Business Cases for Certain Interagency and Agency-Specific Acquisitions (Washington, 

D.C.: Sept. 29, 2011).

IRS Business Systems 

Modernization
 

Page 6 GAO-13-444T 

that are intended to replace the agency’s aging business and tax 

processing systems.

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 GAO’s High Risk List. In 1995, we also added IRS’s 

financial management to GAO’s High Risk List, due to long-standing and 

pervasive problems that hampered the effective collection of revenues 

and precluded the preparation of auditable financial statements.8

We are removing the BSM program from the High Risk List because of 

progress 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 improved its investment 

management and project oversight processes. IRS also took additional 

steps to strengthen its IT management capabilities. For example, in July 

2011, we noted that IRS had in place close to 80 percent of the practices 

needed for an effective investment management process, including all of 

the practices needed for effective project oversight.

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. Throughout 

the years, Congress conducted oversight of the BSM 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.

9

 

8

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

In October 2011, we 

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

development practices using the Carnegie Mellon University Software 

9

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 7 GAO-13-444T 

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 2012, IRS’s 

application development organization reached CMMI maturity level 3, a 

high achievement by industry standards.10

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

monitor how future events unfold both with the IRS modernization efforts 

and in the Enforcement of Tax Laws, which remains on the High Risk List.

This year, we added two new areas to the High Risk List—Limiting the 

Federal Government’s Fiscal Exposure by Better Managing Climate 

Change Risks and Mitigating Gaps in Weather Satellite Data. Additional 

details for both areas can be found in Appendix II. A brief summary 

follows.

Climate change is a complex, crosscutting issue that 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. 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. As observed by the United States Global Change 

Research Program, the impacts and costliness of weather disasters—

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

cyclones—are expected to increase in significance as what are 

considered “rare” events become more common and intense due to 

anticipated changes in the global climate system. Moreover, according to 

the National Oceanic and Atmospheric Administration’s National Climatic 

Data Center (NCDC), the United States has sustained 144 weather and 

climate-related disasters since 1980, in which overall damages reached 

 

10The CMMI ranks organizational maturity according to five levels. Maturity levels 2 

through 5 require verifiable existence and use of certain key process areas. At maturity 

level 3, known as the “defined” level, processes are well characterized and understood, 

and are described in standards, procedures, tools, and methods. The organization’s set of 

standard processes, which is the basis for maturity level 3, is established and improved 

over time. A defined process clearly states the purpose, inputs, entry criteria, activities, 

roles, measures, verification steps, outputs, and exit criteria. In addition, processes are 

managed more proactively using an understanding of the interrelationships of process 

activities and detailed measures of the process, its work products, and its services. 

New High-Risk Areas

Limiting the Federal 

Government’s Fiscal Exposure 

by Better Managing Climate 

Change Risks
 

Page 8 GAO-13-444T 

or exceeded $1 billion each, with 14 events in 2011 and 11 events in 

2012. NCDC estimates that 2012 will surpass 2011 in terms of aggregate 

costs for annual billion-dollar disasters, even with fewer disasters.

The federal government owns extensive infrastructure, such as defense 

installations, and manages 29 percent of the land in the United States; 

and insures property through the National Flood Insurance Program and 

crops through the Federal Crop Insurance Corporation. As of November 

2012, FEMA owes the Treasury approximately $20 billion—up from $17.8 

billion pre-Superstorm Sandy—and had not repaid any principal on the 

loan since 2010. Further, the federal government’s crop insurance costs 

have increased in recent years—rising from an average of $3.1 billion per 

year from fiscal years 2000 through 2006, to an average of $7.6 billion 

per year from fiscal years 2007 through 2012—and ,according to the 

Congressional Budget Office, are projected to increase further.

The federal government also provides emergency aid in response to 

natural disasters. For example, we reported in September 2012 that 

major disaster declarations have increased over recent decades to a 

record of 98 in fiscal year 2011 compared with 65 in 2004. Had FEMA 

adjusted the indicator on which it principally relies to determine whether to 

recommend that a jurisdiction receive public assistance funding, to reflect 

changes in personal income and inflation, 44 percent and 25 percent 

fewer disaster declarations, respectively, would have met the threshold 

for public assistance during fiscal years 2004 through 2011. Over that 

period, the Federal Emergency Management Agency (FEMA) obligated 

more than $80 billion in federal assistance for major disasters.11 The 

federal government’s exposure to major disasters continues to pose risks. 

Most recently, Congress provided more than $60 billion in budget 

authority for disaster assistance in the wake of Superstorm Sandy.12

We have found that 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 

 

11GAO, Federal Disaster Assistance: Improved Criteria Needed to Assess a Jurisdiction’s 

Capability to Respond and Recover on Its Own, GAO-12-838 (Washington, D.C.: Sept. 

12, 2012). 

12Congress provided $9.7 billion in borrowing authority for the National Flood Insurance 

Program and about $50.6 billion in appropriated funds. Pub. L. No. 113-1 (2013); Pub. L. 

No. 113-2 (2013).
 

Page 9 GAO-13-444T 

related risks. We reported in 2009 that while policymakers increasingly 

viewed climate change adaptation—defined as adjustments to natural or 

human systems in response to actual or expected climate change—as a 

risk-management strategy to protect vulnerable sectors and communities 

that might be affected by changes in the climate, 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.13 Subsequently, in May 2011, we 

reported that there was 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.14

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. Federal agencies recently released draft climate 

change adaptation plans. While individual agency actions are 

necessary, a centralized strategy driven by a government-wide plan is 

also needed to reduce the federal fiscal exposure to climate change, 

maximize investments, achieve efficiencies, and better position the 

government for success.

 

13GAO, Climate Change Adaptation: Strategic Federal Planning Could Help Government 

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

14GAO, 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 10 GAO-13-444T 

• 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 to

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

apply lessons from past experience when developing disaster cost 

estimates.

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. 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. Polar-orbiting satellites 

provide the data that go into numerical weather prediction models, which 

Mitigating Gaps in Weather 

Satellite Data
 

Page 11 GAO-13-444T 

are a primary tool for forecasting weather days 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.

In regards to polar satellites, the National Oceanic and Atmospheric 

Administration (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 NOAA’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.

For the geostationary satellites, NOAA must demonstrate its progress in 

conducting training and simulations for contingency scenarios, evaluating 

the status of viable foreign satellites, and working with the user 

community to account for differences in product coverage under 

contingency 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 

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.

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 to Modernizing 

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

Finance. 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 under way to implement oversight by new regulatory bodies 

Modified High-Risk Area
 

Page 12 GAO-13-444T 

and new requirements for market participants, although many 

rulemakings remain unfinished. Among the additional actions needed are 

resolving the role of the two housing-related government-sponsored 

enterprises—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 

acknowledging 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 the governmentsponsored enterprises and to implement mortgage market reforms in the 

Dodd-Frank Act will need to consider the potential impacts on FHA’s risk 

exposure.

Additional information on this area is provided on page 81 of our 2013 

high risk update.15

 

15GAO-13-283. 
 

Page 13 GAO-13-444T 

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

scope of three areas, including Strengthening Department of Homeland 

Security Management Functions.

16

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 reported that DHS had 

made more progress in implementing its range of missions rather than its 

management functions, and that continued work was needed to address an 

array of programmatic and management challenges.

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 department as large and 

complex as DHS, our initial high-risk designation addressed the 

department’s initial transformation and subsequent implementation 

efforts, to include associated management and programmatic challenges. 

At that time, we reported that the creation of DHS was an enormous 

undertaking that would take time to achieve, and that the successful 

transformation of large organizations, even those undertaking less 

strenuous reorganizations, could take years to implement.

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 

 

16Federal Oil and Gas Resources and Department of Energy’s Contract Management for 

the National Nuclear Security Administration and Office of Environmental Management

were the other high-risk areas that were narrowed. Appendix III has information on these 

issues. 

Strengthening 

Department of 

Homeland Security 

Management 

Functions
 

Page 14 GAO-13-444T 

and strengthen a foundation to reach its potential.17

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. As a result, we narrowed the 

scope of the high-risk area and changed the name from Implementing 

and Transforming the Department of Homeland Security to Strengthening 

the Department of Homeland Security Management Functions.

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.

Since our last high risk update in January 2011, we have regularly met 

with senior DHS officials to discuss the department’s progress in 

addressing this high-risk area and written letters summarizing our 

feedback on DHS’s progress and work remaining to address the high-risk 

designation, most recently in December 2012. Our ongoing dialogue with 

DHS at the most senior levels has enabled us to understand DHS’s 

perspectives and provided an opportunity for us to consistently 

communicate our views on DHS’s progress and work remaining. DHS has 

made important progress in implementing, transforming, strengthening, 

and integrating its management functions, including taking numerous 

 

17GAO, 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 more than 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 15 GAO-13-444T 

actions specifically designed to address our criteria for removing areas 

from the High Risk List; however, this area remains high risk because the 

department has significant work ahead.

Leadership commitment. The Secretary, Deputy Secretary, and Under 

Secretary for Management of Homeland Security and other senior 

officials have continued to demonstrate commitment and top leadership 

support for addressing the department’s management challenges. They 

have also taken actions to institutionalize this commitment to help ensure 

the long-term success of the department’s efforts. For example, in May 

2012, the Secretary of Homeland Security modified the delegations of 

authority between the Management Directorate and its counterparts at the 

component level to clarify and strengthen the authorities of the Under 

Secretary for Management across the department. Senior DHS officials 

have also periodically met with us over the past 4 years to discuss the 

department’s plans and progress in addressing this high-risk area, during 

which we provided feedback on the department’s efforts. According to 

these officials, and as demonstrated through their progress, the 

department is committed to demonstrating measurable, sustained 

progress in addressing this high-risk area.

Corrective action plan. DHS has established a plan for addressing this 

high-risk area. Specifically, in a September 2010 letter to DHS, we 

identified and DHS agreed to achieve 31 actions and outcomes that are 

critical to addressing the challenges within the department’s management 

areas and in integrating those functions across the department. These 

key actions and outcomes include, among others, validating required 

acquisition documents in accordance with a department-approved, 

knowledge-based acquisition process, and obtaining and then sustaining 

unqualified audit opinions for at least 2 consecutive years on the 

department-wide financial statements. In January 2011, DHS issued its 

initial Integrated Strategy for High Risk Management, which included key 

management initiatives and related corrective action plans for addressing 

its management challenges and the outcomes we identified. DHS 

provided updates of its progress in implementing these initiatives and 

corrective actions in its later versions of the strategy—June 2011, 

December 2011, June 2012, and September 2012. The comprehensive 

strategy, if implemented and sustained, provides a path for DHS to be 

removed from GAO’s High Risk List.

Framework to monitor progress. DHS has established a framework for 

monitoring its progress in implementing its corrective actions and 

addressing the 31 actions and outcomes. In the June 2012 update to the 
 

Page 16 GAO-13-444T 

Integrated Strategy for High Risk Management, DHS included, for the first 

time, performance measures to track its progress in implementing all of its 

key management initiatives. Additionally, the Under Secretary for 

Management holds quarterly internal progress review meetings with 

senior officials from each management function to discuss progress 

toward achieving milestones and meeting performance goals. It will be 

important for DHS to continue to track progress toward achieving its goals 

and monitor and refine its measures and corrective actions, as needed.

Capacity. In June 2012, DHS identified the resources needed to 

implement most (154 of 173) of its corrective actions, but needs to 

continue to identify resources for the remaining corrective actions; 

determine that sufficient resources and staff are committed to initiatives; 

work to mitigate shortfalls and prioritize initiatives, as needed; and 

communicate to senior leadership critical resource gaps. DHS also 

identified ways in which it is leveraging resources to implement corrective 

actions, which is particularly important in light of constrained budgets. For 

example, in October 2012, DHS reported that it is pooling resources and 

working across functional lines to create cross functional, matrixed teams 

and executive steering committees to ensure timely implementation of the 

strategy. However, it is too soon to determine whether this approach is a 

sustainable way for DHS to address the resource challenges and capacity 

gaps that have affected its implementation efforts at the department and 

component levels.

Demonstrated, sustained progress. DHS has made important progress 

in implementing corrective actions across its management functions, but it 

has not yet demonstrated sustainable, measurable progress in 

addressing key challenges that continue to remain within these functions 

and in the integration of those functions. DHS has implemented a number 

of actions demonstrating the department’s progress in improving its 

management functions. For example, DHS established the Office of 

Program Accountability and Risk Management in October 2011 to be 

responsible for the department’s overall acquisition governance process. 

DHS also established a formal IT Program Management Development 

Track and staffed Centers of Excellence with subject matter experts to 

that as of March 2012, approximately two-thirds of the department’s major 

IT investments we reviewed (47 of 68) were meeting current cost and 

schedule commitments (i.e., goals). Additionally, in the financial 

management area, DHS has reduced the number of material weaknesses 

in internal controls and obtained a qualified audit opinion on its fiscal year 

2012 financial statements. DHS has also implemented common policies, 
 

Page 17 GAO-13-444T 

procedures, and systems, such as those related to human capital, across 

its management functions.

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 18 GAO-13-444T 

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 our high-risk designation, DHS needs to continue 

implementing its Integrated Strategy for High Risk Management and show 

measurable, sustainable progress in implementing its key management 

initiatives and corrective actions and achieving outcomes. In doing so, it 

will be important for DHS to:

• make continued progress in addressing the 31 actions and outcomes 

and demonstrate that systems, personnel, and policies are in place to 

ensure that progress can be sustained over time;

• maintain its current level of top leadership support and sustained 

commitment to ensure continued progress in executing its corrective 

actions through completion;

• continue to implement its plan for addressing this high-risk area and

periodically report its progress to Congress and GAO;

• closely track and independently validate the effectiveness and 

sustainability of its corrective actions and make midcourse 

adjustments, as needed; and

• monitor the effectiveness of its efforts to establish reliable resource 

estimates at the department and component levels, address and work 
 

Page 19 GAO-13-444T 

to mitigate any resource gaps, and prioritize initiatives as needed to 

ensure it has the capacity to implement and sustain its corrective 

actions.

We will continue to monitor DHS’s efforts in this high-risk area to 

determine if the actions and outcomes are achieved and sustained.

Additional information on this area is provided on page 161 of our 2013 

high risk update.18

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. Our 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, we 

continue to review efforts and make recommendations to address highrisk areas problems. Continued perseverance in addressing high-risk 

areas will ultimately yield significant benefits.

In that regard, the Government Performance Results Act (GPRA) 

Modernization Act of 2010 (GPRAMA) provides the Executive Branch and 

Congress with new tools to identify and address management 

weaknesses that are undermining agencies’ capacity to achieve results. 

For example, the act requires agencies, in their annual performance 

plans, to describe the major management challenges they face—which, 

by definition, cover issues we have identified as high risk—as well as the 

actions they plan to address these challenges. In addition, agencies are 

to identify performance goals, performance measures, and milestones to 

gauge progress toward resolving these challenges.

In addition, OMB is required to develop long-term goals to improve 

management functions across the government. The act specifies that 

these goals should include five areas: financial management, human 

capital management, information technology management, procurement 

 

18GAO-13-283. 

Sustaining Attention 

on High-Risk 

Programs 
 

Page 20 GAO-13-444T 

and acquisition management, and real property management. We have 

identified these areas as key management challenges for the 

government. Moreover, some aspects of these areas have warranted our 

designation as high risk, either government-wide or at certain agencies. 

OMB is required to provide clear milestones and periodic status reports 

on progress being made and actions needed for additional progress.

Over the years, the Committee on Homeland Security and Governmental 

Affairs and its predecessors have done commendable work focusing 

attention on improving government management and performance—by 

reporting out legislation, such as the original GPRA and GPRAMA, and 

through hearings, such as this one. Moving forward, congressional 

oversight and sustained attention by top administration officials will be 

essential to ensure further improvement in the management and 

performance of federal programs and operations and addressing high-risk 

areas.

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

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

answer questions.

For further information on GAO’s high risk program, contact J. 

Christopher Mihm at (202) 512-6806 or mihmj@gao.gov. For information 

on DHS, contact Cathleen A. Berrick, 202-512-3404 or 

berrickc@gao.gov. Contact points for the individual high-risk areas are 

listed in GAO-13-283 and on our high-risk website, 

http://www.gao.gov/highrisk. Contact points for our Congressional 

Relations and Public Affairs offices may be found on the last page of this 

statement.
Appendix I: High-Risk Designation Removed 

Page 21 GAO-13-444T 

We are removing the management of interagency contracting from the 

High Risk List based on (1) continued progress made by agencies in 

addressing previously 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. Congressional oversight and 

the leadership of the Office of Management and Budget’s (OMB) Office of 

Federal Procurement Policy (OFPP)—which provides direction on 

government-wide procurement policies—have been vital in addressing 

the issues that led this area to be designated high risk.

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 

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

achieve savings. Interagency contracts are designed to leverage the 

government’s buying power and allow for agencies to meet the demands 

for goods and services at a time when the federal government is focused 

on achieving efficiencies in the acquisition process. 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.1 In our 

2007 high risk update, we identified the continuing need for (1) additional 

management controls and guidance and (2) clearer definitions of roles 

and responsibilities as the keys to addressing these issues.2 In our 2011 

high risk update, we highlighted additional 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.3

 

1

GAO, High-Risk Series: An Update,

Duplication among interagency contracts can result in 

missed opportunities to leverage the government’s buying power and may 

adversely affect the administrative efficiencies and cost savings expected 

GAO-05-207 (Washington, D.C.: January 2005).

2

GAO, High-Risk Series: An Update, GAO-07-310 (Washington, D.C.: January 2007).

3

GAO, High-Risk Series: An Update, GAO-11-278 (Washington, D.C.: February 2011).

Appendix I: High-Risk Designation Removed

Management of 

Interagency Contracting
Appendix I: High-Risk Designation Removed 

Page 22 GAO-13-444T 

with their use. To address these issues, our prior work identified the need 

for (1) a policy framework and business case analysis requirements to 

support the creation of certain new contracts and (2) improved data on 

existing interagency contracts.

The federal government has made significant progress in reducing the 

interagency contracting risks that led to our high-risk designation. 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. These included better 

defined roles and responsibilities and enhanced controls over funding 

procedures. Additionally, the DOD Inspector General has reported a 

significant decrease in problems with DOD procurements through other 

federal agencies in congressionally mandated reviews of interagency 

acquisitions. We also noted that the General Services Administration 

(GSA) and OMB have established corrective action plans to implement 

our prior recommendations. Since our last update, as discussed in the 

following sections, federal agencies have continued to address 

weaknesses related to the use, creation, and oversight of interagency 

contracting vehicles.

Strengthened management controls for the use of interagency 

contracts. Most agencies have taken steps to implement and reinforce 

interagency contracting policies to address prior concerns about the 

improper use of these contracts. In response to congressional direction,4

Federal Acquisition Regulation (FAR) provisions on interagency 

acquisitions were revised to require that agencies make a best 

procurement approach determination to justify the use of an interagency 

contract and prepare written interagency agreements outlining the roles 

and responsibilities of customer and assisting organizations.5

 

4

Pub. L. No. 110-417, § 865 (2008).

The best 

procurement approach determination ensures that the requesting agency 

considers factors such as the suitability of the contract vehicle and 

compliance with laws and policies. Congress also strengthened 

requirements for interagency acquisitions performed on behalf of DOD as 

well as the competition rules for placing orders on multiple-award 

5

FAR § 17.502-1. The interim FAR rule was issued in December 2010; the final rule was 

issued in February 2012.
Appendix I: High-Risk Designation Removed 

Page 23 GAO-13-444T 

contracts, which are commonly used in interagency acquisitions.6 As we 

recently reported, OMB’s October 2012 analysis of reports from the 24 

agencies that account for almost all contract spending government-wide 

found that most had implemented management controls to reinforce the 

new FAR requirements and strengthen the management of interagency 

acquisitions. All 24 agencies also reported having oversight mechanisms 

to ensure their internal controls were operating properly.7

New controls over creation of new interagency contract vehicles. In 

response to congressional direction8 and our prior recommendation, OMB 

established a policy framework in September 2011 to govern the creation 

of new interagency contract vehicles.9

Improved data on interagency contracts. In response to our 

recommendations, OMB and GSA have taken a number of steps to 

address the need for better data on interagency contract vehicles. These 

efforts should enhance both government-wide efforts to manage 

interagency contracts and agency efforts to conduct market research and 

negotiate better prices. To promote better and easier access to data on 

The framework addresses 

concerns about potential duplication by requiring agencies to develop a 

thorough business case prior to establishing certain contract vehicles. 

The guidance further requires senior agency officials to approve the 

business cases and post them on an OMB website to provide interested 

federal stakeholders an opportunity to offer feedback. OMB then is able to 

conduct follow-up with sponsoring agencies if significant questions, 

including ones related to duplication, are raised during the vetting 

process. OMB also has established a new strategic sourcing governance 

council, which is expected to examine how to use existing interagency 

contract vehicles to support government-wide strategic sourcing efforts.

 

6

Pub. L. No. 110-181, § 801(b) (2008) and Pub. L. No. 110-417, § 863 (2008).

7

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.: January 2013). We also reported on DOD’s 

implementation of the new FAR requirements and found that for almost all of the selected 

orders, DOD effectively delineated roles and responsibilities by completing interagency 

agreements as required.

8

Pub. L. No. 110-417, § 865 (2008).

9

OMB, OFPP, Development, Review, and Approval of Business Cases for Certain 

Interagency and Agency-Specific Acquisitions (Washington, D.C.: Sept. 29, 2011).
Appendix I: High-Risk Designation Removed 

Page 24 GAO-13-444T 

existing contracts, OMB has made improvements to its Interagency 

Contract Directory, a searchable online database of indefinite-delivery 

vehicles available for interagency use. It has also posted information on 

government-wide acquisition contracts and blanket purchase agreements 

available for use under the Federal Strategic Sourcing Initiative on an 

OMB website, accessible by federal agencies.10

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. For example, we and the DOD Inspector General 

have found instances in which DOD did not complete best procurement 

approach determinations as required.

Improving the availability 

of data is also a key facet of GSA’s Schedules Modernization initiative, 

launched in June 2012. GSA has several pilot projects underway to 

collect and share data on its Multiple Award Schedules program, with the 

goal of improving pricing. GSA also has assembled a data team to 

improve access to comprehensive and reliable data across GSA 

contracting programs.

11 Continued management attention 

is necessary. 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. For example, the revised FAR rules on 

interagency acquisitions require senior procurement executives to submit 

an annual report on interagency acquisitions to OMB, which can use 

these to identify issues and risks at the agency level as well as 

government-wide trends. In addition, many agencies have reported 

building interagency contracting into internal reviews. Finally, we plan to 

continue to monitor the management of interagency contracts in our 

reviews of federal contracting.

 

10The Federal Strategic Sourcing Initiative was established in 2005 to address 

government-wide opportunities to strategically source commonly purchased products and 

services. 

11GAO-13-133R and Department of Defense, Inspector General, Contracting 

Improvements Still Needed in DOD’s FY 2011Purchases Made Through the Department 

of Veterans Affairs, DODIG-2013-028 (Alexandria, VA.: Dec. 7, 2012).
Appendix I: High-Risk Designation Removed 

Page 25 GAO-13-444T 

We are removing the Internal Revenue Service’s (IRS) Business Systems 

Modernization (BSM) program from the High Risk List because of IRS’s 

progress in addressing the significant weaknesses in information 

technology (IT) and financial management capabilities that led to the 

high-risk designation, and its commitment to sustaining progress in the 

future. As we have with other areas we have removed, we will continue to 

monitor this area, as appropriate, to ensure that the improvements we 

have noted are sustained.

BSM 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. It is critical to providing improved and expanded 

service to taxpayers and internal business efficiencies for IRS and 

providing the reliable and timely financial management information 

needed to better enable the agency to justify its resource allocation 

decisions and funding requests. IRS began modernizing its timeworn, 

paper-intensive approach to tax returns processing in the mid-1980s.

In 1995, we identified serious management and technical weaknesses in 

the 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.12

In 2007 and 2009, we reported that IRS had made progress in 

establishing management capabilities and addressing financial 

management weaknesses.

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.

13

 

12GAO, High-Risk Series: An Overview, HR-95-1 (Washington, D.C.: Feb. 1, 1995).

For example, in 2007, the agency developed 

a high-level modernization vision and strategy to address program 

changes and provide a modernization road map. In addition, it developed 

13GAO, High-Risk Series: An Update, GAO-09-271 (Washington, D.C.: Jan. 22, 2009), 

and GAO-07-310. 

IRS Business Systems 

Modernization
Appendix I: High-Risk Designation Removed 

Page 26 GAO-13-444T 

policies, procedures, and tools for developing and managing project 

requirements. IRS also implemented the initial phase of several key 

automated financial management systems, including a cost accounting 

module that it populated with data; developed a methodology to allocate 

costs to its business units; improved the reliability of its property and 

equipment records; and made significant progress in addressing longstanding deficiencies in controls over tax revenue collections, tax refund 

disbursements, and hard-copy tax receipts and related data. In addition, 

IRS completed several pilot projects to demonstrate its ability to 

determine the full cost of its programs and activities.

However, we kept BSM on the High Risk List because many challenges 

remained, including (1) improving processes for delivering modernized IT 

systems within cost and schedule estimates, (2) developing the cost and 

revenue information needed to support day-to-day decision making, and 

(3) addressing outstanding weaknesses in information security.14

In our 2011 high risk update,

Throughout those years, Congress conducted oversight of the BSM 

program by, among other things, requiring that IRS submit annual 

expenditure plans that needed to meet certain conditions, including a 

review by GAO.

15

 

14

we reported that IRS had continued to 

make progress in addressing weaknesses in response to our 

recommendations but needed to leverage its capabilities to successfully 

deliver its BSM projects. Specifically, we noted that IRS needed to 

successfully deliver the initial phase of the Customer Account Data 

Engine 2 (CADE 2)—its cornerstone tax processing project—by moving 

the processing of individual taxpayer accounts from a weekly processing 

cycle to a daily processing cycle and delivering a modernized individual 

taxpayer account database by 2012. We also noted that IRS needed to 

continue its efforts to achieve expected benefits, including faster refunds, 

improved customer service, and faster resolution of taxpayer account 

issues (phase 2 of CADE 2). For financial management issues, in addition 

to addressing outstanding recommendations, including those associated 

with information security controls affecting the reliability of financial data, 

we noted that IRS needed to (1) ensure corrective action plans address

all issues and define root causes and (2) strengthen its program for 

GAO-09-271. 

15GAO-11-278. 
Appendix I: High-Risk Designation Removed 

Page 27 GAO-13-444T 

monitoring the effectiveness of corrective actions taken in response to our 

information security recommendations.

Since 2011, IRS has worked to address these issues. For example, the 

agency delivered the initial phase of CADE 2 and began the daily 

processing and posting of individual taxpayer accounts in January 2012, 

enhancing tax administration and improving service by enabling faster 

refunds for more taxpayers, allowing more timely account updates, and 

faster issuance of taxpayer notices.16

IRS also made important progress in addressing information systemsrelated internal control deficiencies, particularly those involving its 

networks and systems that had reduced the overall effectiveness of its 

information security controls and therefore the reliability of its financial 

data.

Also, in March 2012, IRS 

established the database housing all individual taxpayer account data and 

has plans underway to gradually increase its use for customer service 

and compliance purposes. Further, in May 2012, IRS initiated plans for 

phase 2 of CADE 2, which is in large part intended to address the unpaid 

assessment financial material weakness we have reported on in the past. 

As IRS progresses with this planning effort, it will be important for the 

agency to identify functionality it can deliver early on so it can begin 

reaping benefits for its employees and taxpayers and making progress 

towards retiring the legacy Individual Master File.

17

 

16According to IRS, during Filing Season 2012, CADE 2 allowed more timely account 

updates (taxpayer account updates are viewable by IRS customer service representatives 

within 48 hours versus an average of 9 days in Filing Season 2011), and faster issuance 

of taxpayer notices (2.7 million notices sent to taxpayers with accounts processed daily 

versus 284,000 in Filing Season 2011). 

Notable among these efforts were the (1) formation of cross 

functional working groups tasked with the identification and remediation of 

specific at-risk control areas, (2) improvement in controls over the 

encryption of data transferred between accounting systems, and (3) 

upgrades to critical network devices on the agency’s internal network 

system. In addition, during fiscal year 2012, IRS continued to devote 

significant attention and resources to addressing information security 

controls, and resolved a significant number of the information systemrelated internal control deficiencies that we previously reported. For 

example, IRS (1) addressed its outdated operating system and 

17GAO, Financial Audit: IRS’s Fiscal Years 2012 and 2011 Financial Statements, 

GAO-13-120 (Washington, D.C.: Nov. 9, 2012). 
Appendix I: High-Risk Designation Removed 

Page 28 GAO-13-444T 

application software so that the versions in use are now supported by 

vendors, (2) improved the auditing and monitoring capabilities of a 

general support system, and (3) tested its general ledger system for tax 

transactions in its current operating environment. Further, IRS funded 

critical software upgrades for some of its key financial reporting systems, 

including its administrative accounting system and its procurement 

system, which was an important step toward addressing its information 

system issues. These improvements 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. However, IRS still needs to strengthen its program 

for monitoring the effectiveness of corrective actions taken in response to 

our information security recommendations.

IRS also took additional steps to strengthen its IT management 

capabilities. For example, in July 2011, we noted that IRS had in place 

close to 80 percent of the practices needed for an effective investment 

management process, including all of the practices needed for effective 

project oversight.18 In October 2011, 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 2012, IRS’s application 

development organization reached CMMI maturity level 3, a high 

achievement by industry standards.19

Finally, in October 2011, we highlighted CADE 2 as one of seven 

successful acquisitions in the federal government because, up to that 

 

18GAO, 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). 

19The CMMI ranks organizational maturity according to five levels. Maturity levels 2 

through 5 require verifiable existence and use of certain key process areas. At maturity 

level 3, known as the “defined” level, processes are well characterized and understood, 

and are described in standards, procedures, tools, and methods. The organization’s set of 

standard processes, which is the basis for maturity level 3, is established and improved 

over time. A defined process clearly states the purpose, inputs, entry criteria, activities, 

roles, measures, verification steps, outputs, and exit criteria. In addition, processes are 

managed more proactively using an understanding of the interrelationships of process 

activities and detailed measures of the process, its work products, and its services. 
Appendix I: High-Risk Designation Removed

Page 29 GAO-13-444T 

point, it had achieved cost, schedule, scope, and performance goals 

through the use of critical success factors, including program staff actively 

engaged with stakeholders, program staff having the right knowledge and 

skills, agency executives engaged in the program, and streamlined and 

targeted governance.20,

21

While we are removing IRS’s BSM program from the High Risk List, we 

will nonetheless continue to closely monitor the agency’s efforts because 

the modernization program is complex and critical to administering and 

enforcing tax laws. In addition, the remaining recurring deficiencies in 

information security, along with new deficiencies we identified during our 

audit of IRS’s fiscal year 2012 financial statements, merit continued and 

consistent commitment and attention from IRS management. Specifically, 

IRS will need to continue to take steps to (1) improve its testing and 

monitoring capabilities, (2) ensure that policies and procedures are 

updated, and (3) address unresolved and newly identified control 

deficiencies, to sustain progress in improving its information system 

controls and have greater assurance that financial and taxpayer data will 

not remain vulnerable to inappropriate use, modification, or disclosure, 

possibly without being detected. We currently have a mandate to perform 

annual reviews of IRS’s major information technology programs and also 

perform the annual audit of IRS’s annual financial statements including 

the effectiveness of internal controls over financial reporting systems. We 

plan to continue to monitor IRS’s BSM program through these reviews.

IRS officials are also applying these critical 

success factors to other programs at IRS. Because of the significant 

progress made in addressing this high-risk area over the years, starting in 

fiscal year 2012, Congress did not require the submission of an annual 

expenditure plan.

 

20GAO, Information Technology: Critical Factors Underlying Successful Major 

Acquisitions, GAO-12-7 (Washington, D.C.: Oct. 21, 2011). 

21In quarterly status briefings to us and the Senate and House of Representatives 

Appropriations Committees, IRS has been reporting that the first phase of the CADE 2 

program is still generally on track. 
Appendix II: New High-Risk Areas

Page 30 GAO-13-444T 

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.1

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. 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.2

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 

measures may include raising river or coastal dikes to protect 

 

1

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. 

2

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

change programs and policies change. 

Appendix II: New High-Risk Areas

Limiting the Federal 

Government’s Fiscal 

Exposure by Better 

Managing Climate Change 

Risks
Appendix II: New High-Risk Areas

Page 31 GAO-13-444T 

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.3

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 (NRC) 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 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 

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

 

3

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

Officials Make More Informed Decisions, GAO-10-113 (Washington, D.C.: Oct. 7, 2009). 
Appendix II: New High-Risk Areas

Page 32 GAO-13-444T 

solvency and related operational issues.4 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.5 We 

recommended that the responsible agencies analyze the potential 

long-term fiscal implications of climate change and report their 

findings to 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 NFIP 

and affect its financial stability.6

• 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 

In particular, the Federal Emergency 

Management Agency (FEMA), which administers NFIP, has not been 

authorized to account for long-term erosion when updating flood maps 

used to set premium rates for NFIP, increasing the likelihood that 

premiums would not cover future losses. We suggested that Congress 

consider authorizing 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 NFIP in the 

near future.

 

4

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

the federal government and U.S. taxpayers. While Congress and Federal Emergency 

Management Agency (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.

5

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

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

6

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

Program, GAO-11-297 (Washington, D.C.: June 9, 2011).
Appendix II: New High-Risk Areas

Page 33 GAO-13-444T 

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.7 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 that 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.8

• 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 

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 over $80 

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.

 

7

GAO-10-113. 

8

See, 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).
Appendix II: New High-Risk Areas

Page 34 GAO-13-444T 

billion in federal assistance for disasters.9 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.10

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.

11 Some 

actions have subsequently been taken, including the development of an 

interagency climate change adaptation task force.12

 

9

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

Capability to Respond and Recover on Its Own, 

However, a 2012 

NRC report states that while the task force has convened representatives 

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

12, 2012). 

10GAO, 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).

11GAO-10-113. 

12Executive 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.
Appendix II: New High-Risk Areas

Page 35 GAO-13-444T 

of relevant agencies and programs, it has no mechanisms for making or 

enforcing important decisions and priorities.13

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.14

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.

• 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.

 

13NRC, 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). 

14GAO, 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). 
Appendix II: New High-Risk Areas

Page 36 GAO-13-444T 

• Actions to address potential gaps in satellite data.

• 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 this area is provided on page 61 of our 2013 

high risk update.15

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 

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.

 

15GAO-13-283. 

Mitigating Gaps in Weather 

Satellite Data
Appendix II: New High-Risk Areas

Page 37 GAO-13-444T 

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 

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.

Polar-orbiting Satellites
Appendix II: New High-Risk Areas

Page 38 GAO-13-444T 

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. Figure 1 depicts a potential 

gap in the afternoon orbit.

Figure 1: A Potential Gap in the Afternoon Orbit

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

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.
Appendix II: New High-Risk Areas

Page 39 GAO-13-444T 

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 

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 organization16

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.

 

16The European Centre for Medium Range Weather Forecasts is an independent, 

intergovernmental organization supported by 34 European nations, providing global 

medium-to-extended range forecasts.
Appendix II: New High-Risk Areas

Page 40 GAO-13-444T 

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 

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 14 to 18 month 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. 

Geostationary Satellites 
Appendix II: New High-Risk Areas

Page 41 GAO-13-444T 

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.

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 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, 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 
Appendix II: New High-Risk Areas

Page 42 GAO-13-444T 

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 various 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 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 this area is provided on page 155 of our 2013 

high risk update.17

 

17GAO-13-283. 
Appendix III: Narrowing High-Risk Areas

Page 43 GAO-13-444T 

Progress has been made in one of the three areas we identified in our 

2011 High Risk List—the Department of the Interior’s (Interior) 

reorganization of its oversight of offshore oil and gas activities.

• Reorganization. In October 2011, following the transfer of the Minerals 

Management Service’s oil and gas revenue collection functions to the 

newly created Office of Natural Resources Revenue, Interior 

established two new bureaus to provide oversight of offshore 

resources and operational compliance with environmental and safety 

requirements. The new Bureau of Ocean Energy Management 

(BOEM) is responsible for leasing and approval of offshore 

development plans while the new Bureau of Safety and Environmental 

Enforcement (BSEE) is responsible for lease operations, safety, and 

enforcement. Because the responsibilities of these two bureaus are 

closely interconnected and depend on effective coordination, Interior 

developed memoranda and standard operating procedures to define 

roles and responsibilities and facilitate and formalize coordination. 

Interior also enacted numerous policy changes intended to improve its 

oversight of offshore oil and gas activities, such as new requirements 

and policies designed to mitigate the risk of a subsea well blowout or 

spill. In July 2012, we concluded that Interior has fundamentally 

completed its reorganization of its oversight of offshore oil and gas 

activities.

In ongoing and future reviews, our primary focus will be to assess 

Interior’s remaining challenges to managing oil and gas resources—

revenue collection and human capital. In so doing, we will also continue 

to consider Interior’s reorganization and its effect on the agency’s ability 

to oversee federal lands and waters.

• Revenue collection. In 2008, we reported that Interior collected lower 

levels of revenues for oil and gas production than all but 11 of 104 oil 

and gas resource owners whose revenue collection systems were 

evaluated in a comprehensive industry study—these resource owners 

included many other countries as well as some states. We 

recommended that Interior (1) undertake a comprehensive 

reassessment of its revenue collection policies and processes and (2) 

establish a balance between collecting revenues and ensuring that 

public lands and waters remain an attractive option for oil and gas 

development. In response to our recommendation, Interior contracted 

for a study called “Comparative Assessment of the Federal Oil and 

Gas Fiscal System” with the goal to inform decisions about federal 

lease terms, such as royalties, by consistently comparing the federal 

oil and gas fiscal systems with those of other countries and identifying 

Appendix III: Narrowing High-Risk Areas

Management of Federal Oil 

and Gas Resources
Appendix III: Narrowing High-Risk Areas

Page 44 GAO-13-444T 

ways to increase revenues and improve diligent development. Interior 

completed this study in October 2011 but Interior is still in the process 

of deciding if and how to use the results of the study to alter its lease 

terms. In addition, Interior continues to work to implement a number of 

our recommendations directed at improving Interior’s ability to conduct 

oil and gas production verification inspections. Finally, Interior is 

working to implement our recommendations to correct numerous 

problems with it’s efforts to collect data on oil and gas produced on 

federal lands, including missing data, errors in company-reported data 

on oil and gas production, sales data that did not reflect prevailing 

market prices for oil and gas, and a lack of controls over changes to 

the data that companies reported. We are currently engaged in a 

review of Interior’s revenue collection practices that will evaluate, 

among other things, Interior’s progress in addressing our 

recommendations.

• Human capital. We have reported that the bureaus responsible for 

oversight and management of federal oil and gas resources on federal 

lands and in federal waters—Bureau of Land Management (BLM) and 

the Minerals Management Service (the predecessor to BOEM and 

BSEE)—have encountered persistent problems in hiring, training, and 

retaining staff. For example, in 2010, we found that both BLM and the 

Minerals Management Service experienced high turnover rates in key 

oil and gas inspection and engineering positions, potentially affecting 

their oversight of oil and gas development on federal leases. For fiscal 

years 2012 and 2013, Congress provided funds to BOEM and BSEE 

in the Gulf of Mexico to establish higher minimum rates of pay for key 

positions—chiefly geophysicists, geologists, and petroleum 

engineers—for up to 25 percent of the usual minimum rate of pay. 

BOEM and BSEE officials in the Gulf of Mexico told us that the pay 

increase reduced attrition rates for these positions. However, it is 

uncertain how Interior will address staffing shortfalls to oversee 

offshore resources in the long term. In July 2012, we reported that 

Interior was creating a new training program for its inspection staff 

(such as BSEE’s National Offshore Training Program to train 

inspectors and engineers), but that it may take up to 2 years before 

new inspection staff are fully trained. Further, human capital issues 

also exist at BLM and the management of onshore oil and gas. For 

example, BLM faces similar challenges in hiring, training, and 

retaining staff for key positions but Interior has not received 

congressional approval or funds to establish higher minimum rates of 

pay for these positions as did BOEM and BSEE. We are currently 

engaged in a review of Interior’s efforts to meet its human capital 

challenges. As part of this effort, we will focus on the causes of 
Appendix III: Narrowing High-Risk Areas

Page 45 GAO-13-444T 

Interior’s human capital challenges, actions taken, and how Interior 

plans to measure the effectiveness of corrective actions.

Additional information on this area is provided on page 76 of our 2013 

high risk update.

1

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 to major contracts and projects executed by 

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

greater. 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 and plans to apply lessons learned from 

successful EM projects to its broader portfolio of projects and activities. 

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.

DOE continues to demonstrate strong commitment and top leadership 

support for improving contract and project management in EM and NNSA, 

building on its corrective action plan developed in 2008. In December 2010, 

the Deputy Secretary convened a DOE Contract and Project Management 

Summit to discuss strategies for additional improvement in contract and 

project management. The participants identified six barriers to improved 

performance and reported in April 2012 on the status of initiatives to 

address these barriers. In addition, DOE has continued to release guides 

for implementing its revised order for Program and Project Management for 

the Acquisition of Capital Assets (DOE O 413.3B), such as for cost 

 

1

GAO-13-283. 

DOE’s Contract 

Management for the 

National Nuclear Security 

Administration and Office 

of Environmental 

Management.
Appendix III: Narrowing High-Risk Areas

Page 46 GAO-13-444T 

estimating, using earned value management, and for forming project 

teams. Further, DOE has taken steps to enhance project management and 

oversight by requiring peer reviews and independent cost estimates for 

projects with values over $100 million and by improving the accuracy and 

consistency of data in DOE’s central repository for project data.

Challenges remain for the successful execution of major projects. NNSA 

and EM are currently managing 10 major projects with combined 

estimated costs totaling as much as $65.7 billion. We have continued to 

document significant cost increases and schedule delays as well as 

technical challenges impacting project design. NNSA is tasked with 

modernizing the nation’s aging nuclear weapons production facilities, a 

challenging effort that will take years and cost 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. In recognition of the 

significance of these challenges, particularly in a time of fiscal constraint, 

in 2012, multiple committees of the Senate and House of Representatives 

held oversight hearings focused on needed improvements to DOE 

contract management and project performance. Further, the National 

Defense Authorization Act for Fiscal Year 2013 includes provisions 

significant to considerations about NNSA contract and project 

management, such as cost containment provisions for two of NNSA’s 

largest construction projects, both of which have experienced cost and 

schedule delays; a requirement that NNSA submit to Congress reports 

including expected cost savings associated with the award of contracts to 

manage and operate NNSA facilities; and creation of an advisory panel to 

make recommendations on revising the governance of the nuclear 

security enterprise. Until DOE can consistently demonstrate that recent 

changes to policies and processes are resulting in improved performance 

on major projects, NNSA and EM will remain on the High Risk List.

Additional information on this area is provided on page 218 of our 2013 

high risk update.2

 

2

GAO-13-283. 

(451034)
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