United States General Accounting Office

GAO Testimony

Before the Subcommittee on Government Management,

Information and Technology

Committee on Government Reform and Oversight

House of Representatives

For Release on Delivery

Expected at

10:00 a.m., EDT

Tuesday

April 30, 1996

CONGRESSIONAL

OVERSIGHT

The General Accounting

Office

Statement of Charles A. Bowsher

Comptroller General of the United States

G O A

years

1921 - 1996

GAO/T-OCG-96-2

Mr. Chairman and Members of the Subcommittee

I am pleased to appear before you today to discuss the work of the

General Accounting Office (GAO). We welcome this opportunity to discuss

the important role that GAO plays as the nation’s watchdog—the agency

responsible for providing the Congress with objective and credible audits

and evaluations of executive branch programs and management.

GAO is justifiably proud of its long tradition of service to the Congress, its

contribution to improving government operations, and the billions of

dollars that taxpayers have saved as a result of its work. This year marks a

milestone for GAO and a personal milestone for me as Comptroller General.

In July 1996, GAO will celebrate 75 years of service to the Congress, and in

September 1996 I will be completing my 15-year term of office. The GAO

that I will leave to my successor will be a leaner organization. Since 1992,

our downsizing efforts will have reduced GAO’s workforce by one-third. At

3,500, the agency’s workforce will be at its lowest level since before World

War II. Still, GAO will remain an organization of highly skilled professionals

that has successfully managed this substantial reduction while remaining a

highly productive and effective source of information for the Congress.

Creation of the General Accounting Office was the culmination of a

national debate over who had authority—Congress or the President—to

set the federal budget. In the end, a deal was struck and a compromise

made: The President was given authority to propose the national budget

with the help of a new Bureau of the Budget. In return, Congress reserved

the right, through GAO, to set federal accounting rules and to audit

executive spending.

Over 75 years, GAO has evolved from an agency of bookkeepers to an

agency of experts in far-ranging disciplines. Where GAO once employed an

army of voucher clerks, we are today an agency of highly-trained

specialists: auditors and lawyers, health experts and economists,

statisticians and methodologists, computer specialists, and engineers.

Let me highlight for you GAO’s success in meeting its mission

responsibilities in the midst of downsizing, as well as actions we have

recently completed or have underway to continue to improve GAO’s ability

to serve the Congress.

Page 1 GAO/T-OCG-96-2
Impact of GAO’S Work In today’s challenging times, we must find ways of doing a good job even

better—and doing it faster, at less cost, and with fewer people. During the

10 years beginning in 1983, GAO virtually doubled its productivity. And

although budget constraints since fiscal year 1992 have required us to

significantly reduce our workforce, we have maintained both our

productivity and the uncompromising quality of our products and services.

To amplify on how GAO has been able to provide information to help the

Congress and the executive branch make decisions that have improved

government operations, I will use several charts to review our service to

the Congress and our contributions to the taxpayer since our last House

oversight hearing in 1993. In essence, these charts, in keeping with the

Government Performance and Results Act, highlight the major results and

outcomes of GAO’s work.

Achieving Financial

Benefits

Year after year, our work has led to legislative and executive

actions—budget reductions, cost avoidance, appropriations deferrals, and

revenue collections—that have provided financial savings and other

benefits in the billions of dollars. Let me direct your attention to the first

set of charts that shows that in fiscal year 1995 alone, these financial

benefits totaled nearly $16 billion—a return of more than $35 for every

dollar appropriated for GAO. The companion chart documents a steady

upward trend in our measurable benefits in the preceding three 5-year

periods. Between 1991 and 1995, financial benefits that either were

directly attributable to or significantly influenced by our work totaled

nearly $120 billion, or about $55 for every dollar appropriated for GAO.

Given the importance of reducing the budget deficit, we keep financial

benefits at the forefront of our work.

Illustrative examples of important financial accomplishments achieved by

the Congress and the executive branch as a result of our work include

efforts ranging from studies of the health care system’s vulnerability to

fraud and abuse which yielded billions of dollars in budget reductions and

significant administrative reforms, to reports on the Department of

Energy’s nuclear programs that led to decisions that saved billions of

dollars, including terminating construction of an uranium enrichment

plant and the Clinch River Breeder Reactor; from work on inefficient and

Page 2 GAO/T-OCG-96-2
Financial Benefits for the


American Taxpayer

wasteful inventory management practices at the Department of Defense,

which resulted in use of more efficient business practices and savings of

billions, to suggested tax code changes, which resulted in billions in tax

savings; and from oversight of multi-billion dollar information system

modernization efforts at the Internal Revenue Service and the Federal

Aviation Administration crucial to congressional funding decisions on

these programs, to reorganization and streamlining of federal departments,

such as the Agriculture Department, which yielded billions more in savings

and improved customer service. Our goal is to continue this trend. Work

underway since the beginning of the new Congress is designed to achieve

similar results.

Page 3 GAO/T-OCG-96-2
GAO’s Productivity Rises

Significantly

The next set of charts shows how we have been able to maintain or

increase our productivity levels despite budgetary reductions. In fiscal

year 1995, GAO produced 1,322 audit and evaluation products that cut

across the full range of government programs and activities. These

consisted of 910 reports to the Congress and agency officials, 166 formal

congressional briefings, and 246 congressional testimonies. The

productivity level for fiscal year 1995 represents a 6-percent increase over

that for fiscal year 1994. Moreover, when GAO’s downsizing efforts are

considered and its productivity calculated on the basis of output per 100

staff years spent, the product volume for fiscal year 1995 represents a

12-percent increase over that for fiscal year 1994.

 

GAO Maintains Productivity


Despite Staff Reduction

Page 4 GAO/T-OCG-96-2
Responding to congressional requests for testimony is one of GAO’s most

important services, and this has continued with the 104th Congress. The

chart shows a steady upward trend in the number of testimony

appearances between fiscal years 1993 and 1995. In fact, during the first

100 days of the new Congress, GAO officials were called upon to testify a

record 109 times. In total, in the first year of the new Congress, 72 GAO

witnesses testified 246 times before 112 congressional committees and

subcommittees on issues that ranged from budget savings, to fraud, waste,

and abuse, to proposals for reengineering the federal government. By

comparison, 42 GAO witnesses testified 117 times in fiscal year 1985. This

demonstrates the extent to which congressional committees are

increasingly finding GAO’s work relevant to and useful in addressing issues

of concern to Congress. It also illustrates the increased level of expertise

in our senior executive ranks.

Improvements in

Government Operations

Many of GAO’s recommendations and audit findings result in or contribute

to improvements in the effectiveness and the efficiency of government

operations and services and have provided information and analyses on

some of the most pressing and controversial matters faced by the

Congress. As shown in the next chart, GAO documented nearly 200 of these

accomplishments in each of the past several years and more than 200 in

1995.

For example, the Chief Financial Officers (CFO) Act of 1990 was passed

after GAO audits found that federal agencies cannot account for tens of

billions of dollars, that books cannot be balanced, and that lack of

accountability had led to billions of dollars in waste, fraud, abuse, and

mismanagement. The law now requires major federal agencies for the first

time to prepare financial statements and undergo annual financial audits.

Page 5 GAO/T-OCG-96-2
GAO Improves Responsiveness


and Lowers Cost of Jobs

GAO was also among the first organizations, public or private, to warn that

the nation’s savings and loan industry faced collapse and the Federal

Deposit Insurance Corporation was rapidly approaching

insolvency—developments that ultimately led to the most expensive

federal bailout in American history and the rebuilding of the bank

insurance fund. Also, months before Orange County, California, declared

bankruptcy after officials invested public funds in risky financial

instruments known as derivatives, GAO had issued a major report alerting

the Congress to weaknesses in the regulation of these products. GAO’s

work has also led to improvements in major departments and agencies,

such as the Social Security Administration, the Internal Revenue Service,

and the Postal Service, that dramatically influence the public’s perception

of the efficiency and effectiveness of the federal government.

Page 6 GAO/T-OCG-96-2
Improved Services to the

Congress

GAO’s record of accomplishment notwithstanding, we recognize that

success requires continuous improvement in quality while reducing the

duration of jobs and their cost. GAO’s workload has become larger and

more technically and analytically complex, even as budget and staff

resources have become more constrained. Nevertheless, the chart below

illustrates that in the key dimensions of job length and job cost, GAO’s

performance improved in 1995, thus providing better service to the

Congress.

 

GAO Recommendations Lead


to More Effective Government

The chart shows reductions in both the average and the median duration

and cost of GAO’s jobs between fiscal years 1993 and 1995. The median is

Page 7 GAO/T-OCG-96-2
the more important indicator since it is more representative of the time

and the cost of a typical assignment. As the chart shows, GAO’s median

assignment duration dropped from 8.7 months in fiscal year 1994 to 6.3

months in fiscal year 1995, or over 27 percent. Similarly, the cost of a

typical assignment during this period dropped 29 percent, providing the

Congress with more cost-effective products and services.

Setting Priorities To optimize our usefulness to the Congress, we have taken a number of

actions in recent years to better focus our efforts. For example, we have

refocused the annual planning process for GAO’s 32 issue areas to obtain a

more complete understanding of the issues the Congress is likely to

address in the next several years. We consult broadly with congressional

Members and staff on both sides of the aisle, as well as with a wide

spectrum of government and private experts. The resulting plans define

the major issues about which we believe the Congress will need

information and advice and describe the overall strategy and likely jobs

that we will undertake as resources become available.

In setting priorities for our work, we give preference to committee

requests made by chairs and ranking minority members, as well as to

legislative mandates. We also attempt to preserve some level of resources

for important self-initiated work that may not as yet have a congressional

sponsor, but we believe could have important impacts on the effectiveness

of government or could help avoid economic losses to the taxpayer. Over

the past several years, the proportion of our staff years spent at the

specific request of the Congress has ranged from 70 to 80 percent of our

available audit resources.

Resource constraints have required us to continue to constantly look for

ways to refine and improve upon how we set our work priorities. In this

regard, we published, in March 1995, a GAO-wide strategic plan entitled

Following the Federal Dollar that identified the following five broad areas

of work to which we have assigned the highest priority:

• Promoting a More Efficient and Cost-Effective Government;

• Exposing Waste, Fraud, Abuse, and Mismanagement;

• Targeting Spending Reductions to Reduce the Deficit;

• Improving Accountability Through Financial and Information

Management; and

• Identifying Trends With Fiscal, Budgetary, or Oversight Consequences for

the Government.

Page 8 GAO/T-OCG-96-2
Some of the benefits for the Congress from GAO’s work as a result of this

mission and structure are illustrated below.

GAO Audits Help Assure a

More Efficient and

Cost-Effective Government

GAO is in a unique position to help the Congress as it strives to reexamine

the objectives and structures of federal programs and initiatives to cut the

deficit. Committees in both houses have requested that GAO do work vital

to their legislative agendas. Moreover, new and continuing statutory

requirements necessitate that GAO continue to play a key role in improving

government accountability and management.

We believe that it is possible not only to create a government that costs

less, but one that at the same time operates more efficiently and

effectively. Downsizing is one way to move toward this goal, but

downsizing must be carefully planned and carried out—a process that

demands the kind of objective and comprehensive information GAO is

uniquely equipped to gather. We have, for example, studied defense force

structure in light of decisions to reduce the size of the U.S. armed forces,

tracked the results of previous downsizing efforts at the Social Security

Administration and other agencies, and studied downsizing approaches

taken by private sector organizations.

We have a number of audits and evaluations either underway or

contemplated for the coming months that could yield significant savings

for the government, for example, identifying “best practices” to help

streamline defense acquisition, procurement, finance, inventory

management, maintenance and repair, and transportation; identifying

more cost-effective ways to clean up the nation’s nuclear weapons

complex; evaluating major reorganization proposals facing the Federal

Aviation Administration and Amtrak; and identifying alternative

return-to-work strategies to reduce the costs of the Social Security

Administration’s disability programs.

GAO Audits Expose Waste,

Fraud, Abuse, and

Mismanagement

After the scandal at the Department of Housing and Urban Development in

the late 1980s, as well as the “Ill Wind” scandal at the Department of

Defense, we began a widely publicized effort to identify and monitor

programs at risk for waste, fraud, abuse, or mismanagement. Through

scores of studies and two special series of reports on “high risk”

programs—the most recent of which appeared in February 1995—we have

highlighted areas in which major improvements are needed to protect the

Page 9 GAO/T-OCG-96-2
taxpayers’ interests. Priority work includes assessing payment practices

under Medicare, where losses run into the billions annually; minimizing

defaults in federal loan programs, such as student assistance and the

Farmers Home Administration, where loss exposure runs into the billions

of dollars; and monitoring defense programs in which billions of dollars

have been spent on unneeded inventory and millions of dollars have been

incorrectly paid to defense contractors.

Our highlighting of high risk programs is paying off. The most recent high

risk reports confirmed that progress had been made in attacking the root

causes of problems at 15 of the 18 programs we had identified through

fiscal year 1994. Five of the 18—the Bank Insurance Fund, the Resolution

Trust Corporation, the Pension Benefit Guaranty Corporation, the State

Department’s management of overseas property, and the Federal Transit

Administration’s grant management program—are now on sound enough

footing that we have removed their high-risk designations. In fiscal year

1995, we designated seven new high risk areas, in hopes that the greater

focus afforded these areas will yield progress among them as well. The

areas included monitoring multi-billion dollar information technology

initiatives at the Internal Revenue Service and the Federal Aviation

Administration as well as assessing improvements needed in the Defense

Department’s financial management.

GAO Expertise Can Help

Target Spending

Reductions to Reduce the

Deficit

As the Congress works to balance the federal budget, one of its major

challenges will be to cut federal spending over the next 6 years by a total

of $1 trillion or more. Every year, we work with the congressional

appropriations committees to find potential savings in the administration’s

proposed budget, generally identifying savings in the billions of dollars.

We also work with the budget and authorizing committees to find

opportunities to save money by modifying, limiting, or abolishing entire

programs. We have underway, or soon will begin, efforts such as reviewing

the need for such Department of Energy programs as the clean coal

technology program, the civilian nuclear waste program, the power

marketing administrations, and the Strategic Petroleum Reserve;

identifying agricultural commodity programs in which savings could be

achieved; assessing discretionary programs at the Department of Health

and Human Services to identify those that are ineffective or whose

overhead expenses run too high; and analyzing military budget requests to

identify funds Congress may want to rescind or reallocate to higher

priority needs in research and development, procurement, and in

operation and maintenance accounts. To help the Congress address the

Page 10 GAO/T-OCG-96-2
deficit, GAO has also recently reported over 120 options for budgetary

savings based on its audit and evaluation work and many of these options

were included in the House report on the fiscal year 1996 budget

resolution.

GAO Audits Improve

Accountability Through

Financial and Information

Management

For more than a decade, GAO has reported to the Congress that federal

agencies were lacking even minimally acceptable accounting and financial

management systems. Recognizing the need for better financial

management in the federal government, the Congress passed, on a

bipartisan basis, the Chief Financial Officers (CFO) Act of 1990. In 1994,

the Government Management Reform Act expanded the CFO Act to

require major federal departments and agencies to prepare financial

statements and to undergo annual financial audits.

We have a major responsibility to monitor agencies’ progress under the

expanded CFO act. Starting this year, the 24 largest federal departments

and agencies will be required to produce auditable financial statements.

Beginning in 1997, we will also have the job of auditing the annual U.S.

government consolidated financial reports, which are intended to show

the Congress and the American taxpayers the status of federal finances. It

is crucial that CFO act implementation stays on schedule and equally

important that we at GAO maintain our capacity to assist. The

comprehensive, reliable data developed under the CFO act will give

congressional leaders invaluable information to use in reducing federal

spending and ensuring accountability among the departments and

agencies. Further, the data will contribute to the effective implementation

of the Government Performance and Results Act of 1993, which makes

performance measurement a key element of federal program management.

We have also put considerable emphasis on the need for better

information resource management (IRM). The federal government spends

about $25 billion each year on computers and information technology. It

ought to be getting far greater value than it has been for so large an

investment. In 1994, we produced a widely recognized report on how 11

basic principles drawn from leading public and private sector

organizations could be used in the federal government’s IRM programs.

The Congress has already endorsed many of these “best practices” in its

1995 reauthorization of the Paperwork Reduction Act. GAO has also

worked with the Congress in passing the Information Technology

Management Reform Act of 1996 to strengthen the government’s

Page 11 GAO/T-OCG-96-2
information resources management programs and improve accountability

for information technology investments and results.

GAO Evaluators Identify

Trends With Fiscal,

Budgetary, or Oversight

Consequences for the

Government

Numerous GAO reports have alerted the Congress and other policymakers

to crises in the making—from an outdated federal food inspection system

to the crumbling financial condition of the District of Columbia, from cost

overruns in major weapon systems to the deterioration of nuclear weapon

facilities. GAO will continue to play an important role in identifying trends

that could lead to major problems for the government. Four examples: The

financial services industry is growing larger and more complex, but the

regulatory structure in place to protect investors and depositors has many

gaps. Health care costs continue to grow at a rate faster than inflation, and

major changes are under way in the delivery of health care services—most

notably the emergence of “managed care”—yet the implications of these

structural changes for the financially pressed Medicare and Medicaid

systems are unclear. The Department of Energy’s program to store and

dispose of spent radioactive fuel from civilian nuclear power plants may

be reaching the crisis stage; it will be the Congress’s challenge to decide

how to deal with this growing problem. And, while the 1993 amendments

to the Social Security Act reestablished the fiscal soundness of the Social

Security retirement program, workforce and retirement trends over the

coming decades will put new pressures on the program. Projections show

the program beginning to run annual deficits about the year 2013. Options

for addressing this problem need to be acted upon in the near term in

order to assure a stable retirement future for millions of Americans.

Initiatives to Improve

Our Productivity

I’d like to briefly discuss some of the investments we have made over the

years to improve our productivity and better serve the needs of the

Congress. Specifically, I would like to focus on steps we have taken to

streamline our headquarters and field organization; improve our processes

for conducting and reporting the results of our work; capitalize on

advances in information resources technology; and enhance our

methodological and technical skills. Changes such as these have allowed

us to keep pace with the growth and complexity of government while

reducing the size of our staff.

Streamlining GAO

Operations

GAO understands the financial crises our nation faces and is committed to

being a model government agency of the future—smaller and at the same

time achieving greater efficiencies through effectively using technology

Page 12 GAO/T-OCG-96-2
and modern management principles. We have worked in close cooperation

with this committee, its counterpart in the Senate, and our appropriations

committees to develop strategies for reducing the size of GAO. By the end

of fiscal year 1996, GAO ’s staff level will be at 3,500 full time equivalent

positions. This level is down one-third from 5,325 employees in 1992 and

puts GAO at its lowest staffing level since before World War II.

To manage this downsizing efficiently, we are maintaining a hiring freeze

imposed in February 1992. Also, we sought and obtained the authority to

manage an early retirement program as well as two separation incentive

programs designed to offer incentive payments to staff that volunteered to

retire from or leave GAO. Furthermore, we have consolidated some of our

issue areas at headquarters and have reduced the size of our field structure

by consolidating or closing eleven field offices. In fact, since the mid

1980’s we have reduced our field structure from 40 to 16 locations. We are

also in the process of implementing a reduction-in-force of our

administrative and support staff and privatizing our supply function, and

are looking for other opportunities to use contract assistance. These

actions will reduce the agency by over 30 percent from our 1992 level.

While we continue to be committed to managing this reduction so that the

quality and impact of our work are not compromised, significant

reductions in GAO’s workforce carry with it some risks. If our ability to

adequately audit, investigate, and evaluate federal programs is diminished

too greatly, the risk exists that we will no longer be able to effectively do

our job as auditors and meet our obligation to alert the Congress to

emerging and recurring problems. As I testified before the Senate

Committee on Governmental Affairs in last year’s oversight hearing, I am

concerned that reducing GAO below the level of 4,000 staff may lead to the

possibility that GAO, as an independent auditor, will be unable to provide

the Congress assurances that proper accountability exists over the

expenditure of federal dollars as well as adequate audit coverage of

government operations.

Thus far, our downsizing efforts have resulted in some imbalances in our

technical expertise, particularly in financial accounting and information

systems management, which are essential to carrying out responsibilities

levied on us by the Chief Financial Officers Act and to support

congressional efforts to reform the federal government’s financial

management systems. We are also carefully assessing losses in key

expertise suffered in our program audit areas which will require attention.

Page 13 GAO/T-OCG-96-2
Critical to our ability to accomplish this downsizing is our continuous

improvement effort that has enabled us to focus on reengineering our job

management processes and use enhanced technology to improve the way

we do the work. We are tracking these efforts and implementing ways to

measure progress in terms of time and cost reductions and productivity

improvements.

Investments to Improve

Our Work Processes

GAO knows that it must be able to produce high quality products on time,

every time, and have high quality processes in place to make that possible.

To achieve this, we are implementing a new standardized work process,

which we developed, that is to be used uniformly throughout GAO. The

process incorporates new technology and automated tools to ensure

timely responses and enhanced quality in every job.

For our congressional customers, the new process means greater focus on

them and a more businesslike working relationship. The result is a prompt

response, early information on the proposed methodology, a delivery date,

and a written commitment.

Within GAO, collaboration and teamwork are the cornerstones of our

process. New approaches have been added to ensure that all staff and

managers meet early and continuously on assignments to assure

agreement on a job’s design and messages. The new process also includes

a streamlined product review phase that allows our management to tailor

its involvement according to the complexity or sensitivity of the jobs,

thereby maximizing the efficiency of staff time invested. Emphasis has

also been placed on obtaining agency comments on all products to ensure

the completeness and objectivity of GAO’s reports. The new process will

reduce the time it takes to obtain and address such views in our products.

This new job process will benefit all of us in several ways. First and

foremost, we will be able to consistently provide a high-quality,

cost-effective work product, on time. This result is ensured because the

new process places a premium on communication and collaboration

between GAO and our customers from the outset of a job through

completion. This means not just less time wasted in rework, but more cost

efficiency and reduced staff frustration.

Second, everyone will have a consistent understanding of how our work is

done. Our staff will benefit from standardization and increased

productivity across each of our divisions. And requesters will know how

Page 14 GAO/T-OCG-96-2
the process works from the request for services through delivery of those

services. To remain responsive to new needs and suggestions, feedback

mechanisms have also been incorporated into the process. As we strive to

reach higher levels of performance, we will listen to both customer

requirements and staff suggestions.

Our new process is scheduled to be fully operational by June 1, 1996. Once

implemented, we expect this new process to enable us to achieve our goal

of delivering timely, high quality reports on time, every time, at reduced

cost.

Capitalizing on

Information Resources

Technology

As you know, advances in the information sciences, especially

microcomputer technology, have revolutionized the way modern

organizations function. This is especially true for organizations such as

ours, in which information itself is both a major input and the principal

product. Successful organizations must integrate information and

technology into the very fabric of the organization itself, and we have

undertaken a number of initiatives to do just that.

We have invested substantial resources in modern technology and in

training our staff to use such technology. Computer networks linking all

GAO have been installed, providing easier, faster, and more efficient sharing

of information. We are also in the process of implementing a full-scale

program for computerized data collection and analysis, which will enable

our work groups to complete their assignments more efficiently by

increasing their ability to share information, reuse data, manage

assignments, reduce rework, and review products.

Our communications capability has also been enhanced by initiatives to

upgrade telephone services and to establish videoconferencing capability

in our headquarters and regional offices. The changes in our telephone

services have given us communications compatibility with the legislative

branch, and significantly reduced costs. The new videoconferencing

equipment has allowed staff to become more productive by improving

communications and teamwork and decreasing travel costs.

We also have in place a financial management package that meets the

accounting principles and standards we promulgate for the rest of the

federal government. The system has successfully supported production of

timely auditable financial statements for nearly a decade.

Page 15 GAO/T-OCG-96-2
Investing in the GAO

Workforce

As we strive to continually improve our responsiveness to the Congress

and the efficiency with which we carry out our work, our people are

clearly our most critical resource, and our organizational success depends

on how well we manage that resource.

The broad scope of our work requires that managers and staff be familiar

with a wide range of methodologies and be able to work effectively in

interdisciplinary teams. To support them, we have made a substantial

financial investment in training and education for all employees. Since

establishing our Training Institute in 1988, we have completely revamped

the technical curriculum for evaluators and have developed new curricula

for attorneys and support staff. Major effort also has been devoted to

supporting specialized training in such fields as financial management,

information management, and logistics and we are taking advantage of

standard audit methodologies to help ensure that we consistently produce

timely, high quality results. We also require continuing professional

education for all evaluator and evaluator-related staff, including senior

managers. They must complete 80 hours every 2 years in order to remain

qualified to conduct audit or evaluation work. And we have extended

similar requirements to our attorneys. We believe that these training

efforts have significantly improved the ability of our staff to address

complex questions posed by the Congress as well as the efficiency with

which we conduct this work.

These efforts build on the foundation for effective human resource

management that we laid down over the last decade: a

pay-for-performance system designed to more effectively reward staff for

their contributions, a revised merit promotion process, a broad-banded

system to replace the rigid structure of federal GS pay schedules, and an

enhanced senior executive selection and development process to ensure

that our future leaders are carefully chosen and thoroughly prepared.

All of these efforts are designed to provide us better assurance that we can

carry out work supporting the oversight and legislative needs of the

Congress more effectively.

Actions Taken in

Response to the NAPA

Report

In May 1993, the Senate Committee on Governmental Affairs asked the

National Academy of Public Administration (NAPA) to convene a panel to

conduct an independent assessment of GAO’s roles, mission, and operation.

NAPA recognized in its October 1994 report that GAO has been a valuable

part of the federal government for more than 70 years, providing audit,

Page 16 GAO/T-OCG-96-2
research, and evaluation services to the government in general and to the

Congress in particular. In addition, NAPA recognized that our statutory

foundations were sound and recommended no legislative changes. NAPA

also found no evidence of GAO deliberately steering its research toward

satisfying particular policy or partisan interests.

The NAPA report provided a number of useful suggestions on how GAO

could best work with the Congress to improve and enhance the economy

and efficiency of government. GAO has taken a number of actions to better

focus its work and to optimize its usefulness to the Congress that are

consistent with these suggestions. For example, GAO has taken several

steps to increase the transparency with which it conducts its work.

Specifically, GAO formalized and distributed to the Congress its Strategic

Plan. In addition, issue area strategic plans outlining the key issues and

focus of planned work are made publicly available to the Congress and

other cognizant officials. Congressional committees, Members and staff

are also provided with quarterly listings of assignments underway in GAO

issue areas to ensure that they are advised of all ongoing work.

NAPA also provided a number of useful suggestions on how we could

improve our work processes for doing our work and reporting the results.

Their suggestions significantly influenced the development of our new job

management process discussed earlier in this statement.

In addition, an external peer review program has been implemented,

adding another important dimension to GAO’s program for ensuring the

quality and credibility of its work. KPMG Peat Marwick recently

completed an external review of our financial audit work and issued an

unqualified report stating that the system of quality control for this work

met the objectives of applicable quality control standards established by

the American Institute of Certified Public Accountants and Government

Auditing Standards.

Further, GAO has worked successfully with committee and subcommittee

leadership to reduce the number of congressional detailees and to

eliminate details beyond the 1-year statutory limitation. The number of

detailees has continually decreased over the last few fiscal years from 61

detailees at the end of fiscal 1990, to 32 detailees at the end of fiscal 1993,

to 15 detailees as of March 1996. This reduction has been influenced by a

January 1995 House of Representatives decision to reimburse GAO for the

cost of detailees.

Page 17 GAO/T-OCG-96-2
Assuring Institutional

Credibility

Most of my testimony today has focused on the results-oriented

framework suggested by the Government Performance and Results Act for

judging an organization’s performance and various management initiatives

to improve GAO’s ability to serve the Congress. Before closing, let me

spend a few moments describing for you GAO’s unique and historic role in

our American system of government and the important features in GAO’s

legislative authority that have allowed it to evolve over 75 years into an

institution that can be relied on by the Congress as a source of

nonpartisan, credible information.

If our skills and mission responsibilities have changed over the years to

meet the evolving needs of Congress, the core of what GAO is all about

remains the same today as it was in the beginning.

Independence and credibility were the two cornerstones on which the

Congress created GAO. GAO’s founding legislation, the Budget and

Accounting Act of 1921, was drafted to severely limit the extent to which

GAO could be subjected to political partisan pressure. This is apparent not

only in the act’s provisions regarding the Comptroller General but also in

the debate prior to the act’s passage. For example, the debate repeatedly

stressed that GAO and the Office of the Comptroller General were

structured “. . .to make them absolutely independent of the Executive in

their decisions.”

Representative Good, a principal sponsor of GAO’s original authorizing

legislation, voiced a similar theme during floor debate.

“In creating the general accounting office and providing for the comptroller general and the

assistant comptroller general, the committee was guided by a single thought, and that was

that these two officers should be placed upon a plane somewhat comparable to the

position occupied by Federal judges. The positions are semijudicial, and it was the opinion

of the committee that we should remove them as far as possible from political

considerations.”

The authors of the act were concerned with insulating GAO from political

pressures as evidenced by the following exchange:

“Mr. BLAND: Did not the committee contemplate that the comptroller general might not

only be brought into conflict with the executive department and with the executive

branches of the Government, but sometimes with one side or the other of the aisle in

Congress, and possibly both sides, in the impartial discharge of his duties?”

Page 18 GAO/T-OCG-96-2
“Mr. GOOD: Absolutely. That department ought to be independent and fearless to criticize

wrong expenditures of money wherever it finds them. It ought to criticize inefficiency in

every executive department where inefficiency exists, and one of the troubles with our

present system is that the auditors dare not criticize. If they criticize, their political heads

will come off.”

Later debate linked the drafters’ concerns regarding political pressure to

the limitations on the circumstances under which the Comptroller General

can be removed.

“Mr. SIMS: I appreciate the attempt to take this matter away from consideration as a

political matter; but does the gentleman think that the President is more likely to act from

partisan considerations than would a partisan Congress, where both Houses are of the

same political party?”

“Mr. GOOD: That is one of the reasons why we provided in the law the causes for removal,

and the only causes are inefficiency, incapacity, neglect of duty, malfeasance in office, or

some offense that involves moral turpitude.”

Representative Good summed up congressional intent with respect to

GAO’s independence this way:

“It was the intention of the committee that the comptroller general should be something

more than a bookkeeper or accountant; that he should be a real critic, and at all times

should come to Congress, no matter what the political complexion of the Congress or the

Executive might be, and point out inefficiency, if he found that money was being

misapplied—which is another term for inefficiency—that he would bring such facts to the

notice of the committees having jurisdiction of appropriations.”

The end result of this concern for independence was a statute that

permanently authorized GAO, provided the Comptroller General with a

15-year nonrenewable term of office, and set stringent requirements for his

removal either by impeachment or by joint resolution of the Congress for

specific cause. Consistent with the drafter’s intentions, the tenure and

related pension provisions for the Comptroller General are similar to those

for federal judges.

Once GAO was established, it was the first Comptroller General, John

McCarl, who set the pattern of independence and integrity that has

marked GAO throughout its 75 years. He clashed repeatedly with executive

branch agencies. Through the 1930’s and 1940’s there were several

Presidential attempts to weaken GAO, but Congress would have none of it.

Page 19 GAO/T-OCG-96-2
Within a decade of its creation, Congress had come to rely on GAO and it

was not about to bow to Presidential pressure to abolish or significantly

modify GAO’s role and powers.

This credibility that was hard-won in the early days of the 1920s and 1930s

continues as GAO’s bedrock value as it prepares to enter the 21st century.

GAO remains today an organization of men and women who jealously guard

a reputation that is based on objectivity, fairness, impartiality, and

independence. GAO’s credibility goes hand in glove with its ability to serve

the Congress. It is precisely because GAO takes care to see that reports

meet the highest standards of credibility that they cannot easily be

dismissed.

Final Observations As the 20th century winds down, GAO has new challenges to meet. We are

charged by the expanded CFO Act with auditing, in 1997, the first

consolidated financial statements of the federal government. For GAO, this

is an unprecedented undertaking. Never before has the federal

government been subject to an independent financial audit — something

routinely demanded of every public corporation in America and which has

been required for state and local governments since the Single Audit Act of

1984. Such an audit promises to provide Congress and the American

people with the first reliable financial data on the operation of the federal

government. GAO also has a major role to play in monitoring the new

Government Performance and Results Act—a law that requires federal

agencies to set strategic plans and performance measures that will track

results. Together, the CFO Act and the Government Performance and

Results Act hold the potential for vast improvement in the management of

federal agencies and programs. GAO is proud of its role in implementing

these laws.

Finally, GAO intends to continue meeting the needs of Congress with work

that is objective and independently derived; accurate, timely and

meaningful; and presented in a way that is most useful to responsible

officials. Wherever our services are required, GAO takes seriously its

mission to seek honest, efficient management and full accountability

throughout government. In areas as diverse as energy and housing, law

enforcement and banking, health care and education, information

technology and financial management, international affairs and defense,

program evaluation and methodology, GAO seeks to serve the public

interest.

Page 20 GAO/T-OCG-96-2
Mr. Chairman, my tenure as Comptroller General will end five months

from today. I cannot begin to describe to you the pride I take in my

association with the men and women who have made GAO the effective

organization it is today.

For 75 years, GAO has served the legislative branch with honor and

commitment. As I prepare to retire, my overriding goal is to leave for my

successors an independent, impartial, nonpartisan GAO capable of

sustaining and continuing this proud tradition for the next 75 years and

beyond. I urge this committee to consider with prudence and care any

proposal to fundamentally alter the very characteristics that make GAO the

credible organization it is today. These characteristics—especially the

15-year nonrenewable term for the Comptroller General and the agency’s

permanent status—have made GAO a success story among government

agencies. I believe it would be a serious mistake to tamper with that

success.

The General Accounting Office is an immense resource for all who believe

that an honest and accountable government is essential to the proper

functioning of our democracy. It has served our nation with commitment

and dedication, pride and honor. GAO has earned the trust and respect of

Congress and the American people.

Page 21 GAO/T-OCG-96-2
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