U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

33–876 PDF 2008

S. Hrg. 110–318

IMPROVING FEDERAL FINANCIAL MANAGEMENT:

PROGRESS MADE AND THE CHALLENGES AHEAD

HEARING

BEFORE THE

FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT 

INFORMATION, FEDERAL SERVICES, AND 

INTERNATIONAL SECURITY SUBCOMMITTEE

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

MARCH 1, 2007

Available via http://www.access.gpo.gov/congress/senate

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs

(

(II)

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

BARACK OBAMA, Illinois 

CLAIRE McCASKILL, Missouri 

JON TESTER, Montana 

SUSAN M. COLLINS, Maine 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

NORM COLEMAN, Minnesota 

TOM COBURN, Oklahoma 

PETE V. DOMENICI, New Mexico 

JOHN WARNER, Virginia 

JOHN E. SUNUNU, New Hampshire

MICHAEL L. ALEXANDER, Staff Director 

BRANDON L. MILHORN, Minority Staff Director and Chief Counsel 

TRINA DRIESSNACK TYRER, Chief Clerk 

FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, 

FEDERAL SERVICES, AND INTERNATIONAL SECURITY SUBCOMMITTEE 

THOMAS CARPER, Delaware, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

BARACK OBAMA, Illinois 

CLAIRE McCASKILL, Missouri 

JON TESTER, Montana 

TOM COBURN, Oklahoma 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

PETE V. DOMENICI, New Mexico 

JOHN E. SUNUNU, New Hampshire

JOHN KILVINGTON, Staff Director 

KATY FRENCH, Minority Staff Director 

LIZ SCRANTON, Chief Clerk 

(III)

C O N T E N T S 

Opening statements: Page 

Senator Carper ................................................................................................. 1

Senator McCaskill ............................................................................................ 4

WITNESSES 

THURSDAY, MARCH 1, 2007

Hon. David M. Walker, Comptroller General, U.S. Government Accountability 

Office ..................................................................................................................... 5

Hon. Linda Combs, Comptroller, Office of Federal Financial Management, 

Office of Management and Budget ..................................................................... 8

ALPHABETICAL LIST OF WITNESSES

Combs, Hon. Linda: 

Testimony .......................................................................................................... 8

Prepared statement .......................................................................................... 74

Walker, Hon. David M.: 

Testimony .......................................................................................................... 5

Prepared statement .......................................................................................... 31

APPENDIX 

Staff Memorandum .................................................................................................. 79

Letter from David M. Walker, Comptroller General of the United States ......... 82

‘‘Defense Aquisitions, Assessments of Selected Weapon Programs,’’ (GAO–

07–406SP), March 2007 ....................................................................................... 84

(1)

IMPROVING FEDERAL FINANCIAL 

MANAGEMENT: PROGRESS MADE AND THE 

CHALLENGES AHEAD 

THURSDAY, MARCH 1, 2007

U.S. SENATE,

SUBCOMMITTEE ON FEDERAL FINANCIAL MANAGEMENT,

GOVERNMENT INFORMATION, FEDERAL SERVICES,

AND INTERNATIONAL SECURITY, 

OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 3 p.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Thomas R. Carper, 

Chairman of the Subcommittee, presiding. 

Present: Senators Carper and McCaskill. 

OPENING STATEMENT OF CHAIRMAN CARPER 

Chairman CARPER. The Subcommittee will come to order. I want 

to again welcome our two witnesses, General Walker and Ms. 

Combs. Is it Dr. Combs? I thought so. Dr. Combs. It is not Dr. 

Walker, is it? 

Mr. WALKER. Dr. Dave. 

Chairman CARPER. Dr. Dave. [Laughter.] 

Mr. WALKER. I have a number of honorary degrees, which means 

it is Dr. Dave instead of Dr. Walker. 

Chairman CARPER. Well, fair enough. We are delighted, whatever 

titles you bear, that you are here. Thank you for joining us. 

Senator Coburn has been in and out. He will be coming back. As 

I mentioned to our witnesses this afternoon, there has simultaneously been scheduled for this afternoon from 3 o’clock until 4:30 

a classified briefing, usually a top-secret briefing, in this case by 

Secretary of Defense Gates, and the head of the Joint Chiefs of 

Staff, Peter Pace, over in a classified briefing room that we have 

in the Capitol. And so a number of our colleagues are there. 

In addition, others are on the floor as we debate and prepare 

amendments to offer to the legislation attempting to carry out the 

rest of our 9/11 Commission recommendations that have been 

unfulfilled to date. Our colleagues, will be drifting in and out as 

their other obligations allow them to do that. In the meantime, we 

will just proceed. 

While he is not here—Joe Lieberman likes to say one of the truest compliments that can be paid to somebody here in this body is 

if you are praised while you are outside of the room. So while SenVerDate 0ct 09 2002 07:49 Mar 20, 2008 Jkt 033876 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 P:\DOCS\33876.TXT SAFFAIRS PsN: PAT
2

ator Coburn is outside of the room, I will say some nice things 

about him. Under his leadership over the last couple of years when 

I was privileged to serve as the Ranking Member of this Subcommittee, the Subcommittee has been very active. We have had 

some 50 hearings over that period of time. I just joked with General Walker the other day about him if he got paid by the number 

of hearings that he testifies before, he would be well paid. But he 

suggested that maybe a better approach was——

Mr. WALKER. I suggested, Mr. Chairman, if we received 1 percent 

of our financial benefits, I would rather that go to GAO, and I 

think we would be rolling in dough. 

Chairman CARPER. You probably would. 

I am grateful for the leadership that Senator Coburn has provided, and I want to thank his staff, and, frankly, my own small 

staff, represented today by John Kilvington, for their work and for 

bringing to light a number of serious financial management challenges that, for whatever reason, many of us here in Congress have 

not been inclined to spend much time thinking about in the past. 

I also want to pledge here today that I will use whatever time 

I have as Chairman to continue much of the work that we took up 

in the last Congress. I doubt that we will have as many hearings 

as we did before, but all of the agencies that are out there thinking 

that now that Senator Coburn is no longer Chairman they can get 

off the hot seat for their financial performance should not be thinking that we are going to simply let them off the hook just because 

Senator Coburn and I have traded places. We are going to continue 

to be vigilant, and I know he is going to be here sitting next to me 

to make sure that is the case. 

Let me now turn today to the topic that we are going to be examining, that is, the improvements that have been made in Federal 

financial management in recent years and the challenges that 

agencies still face in taking better care of the taxpayers’ dollars 

that we entrust to them. 

It was not that long ago that observers, including GAO, were 

telling Congress that financial management was something that 

just was not a priority in many agencies. Some might say that is 

still the case, but it is clear, at least to me, that progress has been 

made. 

In 1990, you may recall that Congress passed the CFO Act. That 

bill for the first time was aimed to set up a qualified, professional, 

more businesslike financial management leadership structure 

across our Federal Government. It created the office that Dr. 

Combs now leads and put a Chief Financial Officer in each of the 

major Federal agencies. I might add that the lead Republican sponsor of that bill was my predecessor, Senator William Roth. 

We have built on the CFO Act significantly since 1990. Today 

there are CFOs in some 24 agencies under the CFO Act. They file 

annual audited financial statements, and they are responsible for 

applying sound financial management and accounting procedures 

throughout their agencies. More recently, they have also been 

asked to review their agencies’ programs to determine their susceptibility to improper payments and to report each year on any improper payments made and what they plan to do to prevent those 

improper payments in the future. 

3

The work our predecessors put into the CFO Act and all of the 

other legislation that followed it has produced results, as has the 

leadership shown by past Administrations and by the current Administration. OMB reported in its updated Federal Financial Report for 2007 that agencies are now getting their audited financial 

statements in on time. That is good. Most of them are also getting 

clean opinions on their financial statements and are cleaning up financial weaknesses identified by auditors, and that we applaud. 

However, the work we did in this Subcommittee last year and 

the testimony before us today tells us that we still have a significant amount of work ahead of us. I like to say everything that I 

do, I can do better, and that is probably true for all of us. 

Financial management in Federal agencies has certainly improved markedly over the years, particularly since 1990. Agencies 

do look at financial management in a more professional and businesslike manner than they had previously. I would venture to say, 

however, that the financial management practices in place in some 

Federal agencies today, even in some of our better ones, might get 

some of our CFOs fired at a private corporation if they were serving there. 

As General Walker will point out in his testimony today, most 

agencies do not have the ability to present their leadership with 

the timely and accurate financial information that they need for 

day-to-day decisionmaking and for performance measurement. 

Weak internal controls lead to tens of billions of dollars in improper payments each year governmentwide. These and other problems have made it impossible for GAO to even issue an opinion at 

all on the Federal Government’s consolidated financial statements 

for 10 years running. 

Now, the good news is that these problems are all out in the 

open, and everyone agrees that they exist. And that is no small 

feat. I suspect that there is also some agreement on how to tackle 

them, and Senator Coburn and I look forward to continuing to 

work certainly with our two witnesses today—from OMB and 

GAO—and other agencies over the next 2 years to find solutions. 

Let me just close with something that I think I might have said 

at a number of our hearings in the last Congress, and I think it 

probably bears repeating here today. As all of us here know, every 

taxpayer dollar a Federal agency wastes is a dollar that cannot be 

used to reduce our Federal budget deficit or a dollar that is not 

available to spend somewhere else on a worthwhile program. We 

all have our own ideas about which programs are most worthy of 

all of our scarce resources. But I believe we can agree that poor financial management, whether it manifests itself through sloppy financial reporting or improper payments, is waste. And in such a 

fiscally challenging time in our Nation’s history, waste is not something we can afford to tolerate. 

Before I introduce our witnesses, let me just say we have been 

bantering back and forth just a little bit. I just finished an opening 

statement, Senator McCaskill. 

We have been joined by our new Senator from Missouri, who is 

not just a good addition to the U.S. Senate but really a terrific addition to this Committee, and especially to this Subcommittee. In 

her most recent job working for the people of Missouri, she was 

4

their State auditor and, by reputation, quite a good one. And I encouraged her to seek a position on this Subcommittee. I am delighted that she has done that. She is a real auditor and brings a 

whole lot of expertise, good, and wise counsel to this Subcommittee. 

Before I introduce our witnesses, Senator McCaskill, if you would 

care to make a statement, you are more than welcome to do that. 

Welcome. 

OPENING STATEMENT OF SENATOR McCASKILL 

Senator MCCASKILL. Well, thank you, Senator Carper. It is great 

to be here, and I know that there are probably not a huge number 

of Senators that are clamoring to get on this particular Subcommittee, but I am thrilled to be here. This is the stuff, I think, 

that is most interesting and probably in the long run, if we can do 

better, maybe it is the most important work that can be done in 

the U.S. Senate. 

So I am thrilled to be here and look forward to the testimony and 

look forward to contributing in any way I can under your important 

leadership. 

Chairman CARPER. Thanks so much, and we are thrilled that you 

are here. It is not a cheap thrill, either. It is a real thrill. We are 

delighted that you are doing this. 

Let me introduce, if I can, Linda Combs first. Dr. Combs was 

confirmed in June 2005—I remember your confirmation hearing to 

this day—to serve as the Controller at the Office of Management 

and Budget and the head of the Office of Federal Financial Management. She has previously served in this Administration as Assistant Secretary for Budget and Programs and Chief Financial Officer at the Department of the Transportation and as Chief Financial Officer in the Environmental Protection Agency. 

In previous Administrations, Dr. Combs has served in high-level 

positions at the Department of Education, the Department of Veterans Affairs, and the Department of the Treasury. She has also 

had significant experience in the private sector and a number of 

public service positions in her home State of North Carolina. She 

is a graduate of Appalachian State University where her mathematics professor was Starr Stacy, my father-in-law. It is a small 

world. 

David Walker is the seventh Comptroller General of the United 

States and began his 15-year term in October 1998. As Comptroller 

General, Mr. Walker serves as head of the Government Accountability Office. David Walker is a certified public accountant, has 

over 20 years of private sector experience and over 13 years of public service experience. I have no idea where he went to college or 

whether Starr Stacy was also his math professor. But wherever he 

went or whoever taught him, he learned a lot because he has 

brought a whole lot to the table and to the leadership of GAO. We 

are delighted that he is doing that, and I am going to call on him 

to offer his statement, and then we will call on Dr. Combs to give 

her statement, and then we will open it up for some questions. 

Thank you. 

General Walker. 

5

1The prepared statement of Mr. Walker appears in the Appendix on page 31. 

TESTIMONY OF DAVID M. WALKER,1 COMPTROLLER GENERAL 

OF THE UNITED STATES, GOVERNMENT ACCOUNTABILITY 

OFFICE 

Mr. WALKER. Chairman Carper, Senator McCaskill, it is a pleasure to be here before the Subcommittee to be able to speak on the 

progress that has been made towards achieving a more results-oriented and accountable Federal Government that exercises proper 

stewardship over taxpayer resources. I presume, Mr. Chairman, my 

entire statement will be included in the record, and I will just move 

to summarize. 

Chairman CARPER. Without objection. 

Mr. WALKER. Thank you. 

Chairman CARPER. You bet. 

Mr. WALKER. Since the enactment of key financial management 

reforms, the Federal Government has made substantial progress in 

strengthening financial management. Since passage of the CFO 

Act, as you referred to, every Administration has made financial 

management reform a top priority. Improving financial management has been one of the cornerstones of President Bush’s President’s Management Agenda from the outset of the current Administration, and it is a key component of the Executive Branch management scorecard, which tracks the status and progress of agencies. It has also been an effective tool for driving improvement in 

performance. 

For fiscal year 2006, 19 of 24 CFO Act agencies received clean 

audit opinions on their financial statements, up from just six in 

1996. Also importantly, all of these agencies reported within 11⁄2

months after the end of the fiscal year as opposed to 5 months after 

the end of the fiscal year just a few years ago. 

There are six principal challenges remaining to fully realize the 

Congress’ intent through enactment of financial management reform legislation. 

First, there is a need to transform financial management and 

business practices at the Department of Defense. Of the 27 areas 

on GAO’s high-risk list, 15 of 27 relate wholly or partially to DOD, 

and financial management is one of them. 

Second, improvements in financial and performance reporting 

practices are also needed for the remaining 23 CFO Act agencies 

so that unqualified opinions on financial statements become routine. 

Third, financial management systems must be modernized to 

provide a complete range of information needed for accountability, 

performance reporting, and effective decisionmaking. 

Fourth, the Federal Government continues to face a myriad of 

material weaknesses and reportable conditions and internal control 

which need to be addressed. 

Fifth, the Federal financial workforce that supports the business 

needs of today is not well positioned to support the business needs 

of tomorrow. 

Finally, there are three major impediments that have existed for 

the entire 10-year period that GAO has been required to perform 

this annual audit that continue to prevent us from rendering an 

6

opinion on the consolidated financial statements of the U.S. Government. They are: First, the deeply rooted, longstanding, and pervasive financial management problems at the Department of Defense; second, the Federal Government’s inability to adequately account for and reconcile significant amounts of intragovernmental 

activity and balances between Federal agencies; and, finally, the 

Federal Government’s ineffective process for preparing the consolidated financial statements. 

I am confident that the last two of these three can be addressed 

in a reasonably timely manner. The first one, dealing with the Department of Defense, will take a number of years. Overcoming 

these six principal challenges will be difficult, but they are all 

achievable over time. 

I think it is important to keep in mind that, in addition to addressing these six challenges, we have made great progress in this 

area during the past decade, the time has come to step back and 

to consider the need for further revisions to the current financial 

reporting model for the Federal Government. There are a number 

of key questions that I include on page 31 of my testimony that I 

think need to be asked and answered. All too frequently, people try 

to force private sector accounting and reporting standards onto our 

sovereign Nation. In some cases, that makes sense when you are 

dealing with employer-sponsored benefits like pensions and retiree 

health care. In some cases, it does not make sense where you are 

dealing with items like social insurance obligations, which only sovereign nations have and which no employer in their right mind 

would ever seek to have responsibility for. 

Successfully addressing the six primary challenges will undoubtedly help to strengthen the Federal Government’s financial and 

performance reporting, and it will help to resolve many accountability and stewardship challenges that we have. This will become 

increasingly important because, as I have noted in our latest audit 

report on the financial statements of the U.S. Government, and 

given numerous speeches and been involved in a number of town 

hall meetings in 18 states around the country, our Nation’s financial condition is worse than advertised. We face large and growing 

structural deficits over the longer-term and there is no way we are 

going to grow out of them. We need to start making tough choices 

sooner rather than later, because the clock is ticking and time is 

working against us. 

In addition to considering the Federal Government’s current financial condition, it is critical to look at other measures of our 

long-term outlook, and those are noted in the financial report that 

I recently sent up to every Member of Congress dealing with fiscal 

sustainability and also noted in our audit report that we issued on 

our last year’s financial statements. I think it is important to keep 

in mind that we need to engage in a number of actions to improve 

transparency, to reimpose meaningful budget controls, to re-engineer the base of government, and to engage in certain other activities to put us on a more prudent and sustainable path. 

In closing, given the Federal Government’s current financial condition and large and growing long-term fiscal imbalance, the need 

for the Congress and the President to have timely, reliable, and 

useful financial and performance information is greater than ever. 

7

1The prepared statement of Ms. Combs appears in the Appendix on page 74. 

Sound decisions on the current results and future direction of vital 

government programs and policies are more difficult, if not impossible in some circumstances, without such information. Until the 

problems discussed in my testimony are effectively addressed, they 

will continue to have adverse implications on the Federal Government and the taxpayers. Billions will continue to be wasted. 

By the end of my term as Comptroller General, I would like to 

see the civilian CFO Act agencies routinely produce not only annual audited financial statements that can pass scrutiny, but also 

quarterly financial statements and meaningful financial and other 

performance data to help guide decisionmakers make informed decisions on a day-to-day basis. For the Department of Defense, my 

expectations are not quite as high given their current status. Yet 

it is realistic for at least major portions of the Department of Defense’s financial information to become auditable by the end of my 

term. Moreover, progress on developing meaningful financial and 

performance reporting in the Federal Government will be a key 

area that I will continue to champion. We need key national indicators for the United States—economic, safety, security, social, environmental—in order to be able to make more informed decisions 

with regard to spending and tax policy and in order to hold people 

accountable and link resources to results. 

I am determined to do whatever I can to try to help make this 

a reality, to continue to improve in the area of financial management and accountability, and I am dedicated to doing whatever I 

can to make sure that the baby-boom generation, which is my generation and I imagine yours as well, will not be the first generation 

in the history of this country to leave it not better positioned for 

the future, which is where we are headed right now. 

Last, and certainly not least, I want to thank this Subcommittee 

for its past, present, and future efforts. It is vitally important to 

maintain attention and congressional oversight with regard to this 

area. This Subcommittee has been committed to doing so in the 

past, and I am confident, Mr. Chairman, that under your leadership it will remain committed to doing so in the future. 

Thank you. 

Chairman CARPER. General Walker, thank you for your testimony. Thank you for that last comment especially. And like most 

things that are successful, there are partnerships that are involved. 

And certainly Senator Coburn and I have been partners, along with 

our staff and our colleagues on this Subcommittee. And we regard 

you very much as a partner in this endeavor. But thank you for 

your statement. 

Dr. Combs. 

TESTIMONY OF LINDA COMBS,1 CONTROLLER, OFFICE OF 

FEDERAL FINANCIAL MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET 

Ms. Combs. Mr. Chairman, Members of the Subcommittee, I 

thank you very much for the opportunity today to participate here. 

I thank you also for your continuing support for our important 

work, and it is indeed a pleasure to be able to work with people 

8

like David Walker and know of the commitment that we all share. 

I think that the important responsibility that government has to be 

effective stewards of the taxpayers’ money is probably the most important responsibility that any of us could ever undertake, and I 

am honored to be a part of that. 

It is certainly no surprise that this President came in and made 

financial performance improvement one of his top management priorities. With the launch of the President’s Management Agenda in 

2001, the President issued a call to action for Federal managers to 

achieve a series of critical financial management goals that, if attained, would help American citizens gauge whether their money, 

the people’s money, is being properly accounted for and wisely 

spent, increased transparency into the fiscal health of the Federal 

Government, and provide reliable financial information to be used 

by Federal leaders to manage the day-to-day operations of the government more efficiently. 

With the rising cost of entitlement programs expected to create 

an unprecedented and enormous fiscal imbalance in the Federal 

Government in the coming decades, achieving our financial management goals is more critical than ever today, as Mr. Walker just 

indicated, is more critical than at any other time in our Nation’s 

history, I believe. The fiscal management community is not only responsible for reporting on the extent and nature of our fiscal challenges, it also plays a very critical role in developing and implementing strategies to control Federal spending and otherwise ensure that the fiscal health of the Federal Government remains 

sound. 

I am pleased to report that the Federal financial community is 

indeed positioned at this point to meet these challenges, having 

achieved significant forward progress on the key indicators of the 

President’s Management Agenda initiatives related to financial 

management. And we heard a few minutes ago that 19 of our 

major agencies representing more than 75 percent of all Federal 

outlays achieved a clean audit opinion. The number of auditor-reported material weaknesses was reduced by approximately 15 percent, from 48 down to 41, just in 1 year. And for the second consecutive year, every major Federal agency issued their audited financial statements within 45 days of the close of the fiscal year. 

And as we heard, prior to 2001, some of these major Federal agencies were taking as long as 5 months to complete their financial reports. Improper payments have declined to $36.3 billion for programs that originally reported the $45.1 billion. So that over a couple years represents a $9 billion improvement in over 2 years. 

The Federal Government has disposed of more than $4.2 billion 

in excess real property since 2004. But we indeed have a lot remaining to be done. It is truly now incumbent upon the Federal 

community to build upon the foundation of progress that we already have built upon, and we need to be prepared and even more 

prepared to address the challenges that lie ahead of us. 

As we set out to achieve new and better levels of financial performance and do so in a cost-effective manner, it is critical that the 

Federal financial community orient itself around a common set of 

priorities and agreed-upon plan of action, a clear, consistent road 

map for improvement. Therefore, pursuant to the Chief Financial 

9

Officers Act of 1990, our office published the 2007 Federal Financial Management Report, ‘‘A Framework for Improving Financial 

Performance,’’ and released it in January of this year, and it indeed 

is intended to provide the public with a simple report on what we 

have done with the PMA, what we have done with certain reform 

activities, and with our core activities as well. 

When the CFO Act was signed into law more than 15 years ago, 

I was here at that time in the Treasury Department——

Chairman CARPER. As an intern? 

Ms. COMBS. No. Thank you very much. I wish. [Laughter.] 

I am afraid I am one of those baby boomers, too. I responded to 

numerous financial management challenges at that time, and having been out for over 10 years and then coming back, I remember 

there was one agency at that time in 1990, probably in 1991, actually, that got a clean opinion on that first year of implementation. 

By 1996 we had 6, and now we have 19. So while this has not been 

a revolution, it has been an evolution, and we are headed in the 

right direction. 

But the reform environment that was created by the law and 

other administrative actions and executive orders provides indeed 

a solid foundation for continual improvement in the Federal Government’s stewardship of taxpayer dollars. 

One of the things that we are responsible for and take very seriously is that every single CFO understands their primary goal of 

meeting certain standards in order to get to the clean audit and resolving the material weaknesses in a timely manner, and implementing and maintaining their strong financial systems that meet 

these Federal standards. And the President’s Management Agenda 

is a great vehicle that we have used. It is a great tool, and I think 

Mr. Walker indicated that as well. 

We have had a number of agencies that have moved to green in 

financial management, and they all know that it is very important 

steps for them to take to get from red to yellow to green. And having been one of those that did it when I was at EPA, it really is 

very helpful to know that it is certainly a doable activity. 

So, in addition to improving financial performance on the Financial Performance Initiative, we have put into the written testimony, 

which I have submitted for the record, not only some goals that we 

have right now and what our 2006 results have been, but we have 

put some targets out there for 2011 as well, because we think it 

is important to keep striving for good financial management—not 

now but also in the future. We talk about those reforms and those 

core activities in this report, and they are, of course, submitted for 

the record as well. 

One of the things that I think is very important is that we move 

forward toward what I call smarter, stronger, and sustainable accountability. While we have made significant progress since the enactment of the CFO Act in 1990 and we are executing a sound and 

transparent strategic plan, much still remains to be done before the 

government can truly say that it has achieved a level of financial 

management for which we are all striving. As we move forward on 

our plan, we will increase the reliability and transparency of the 

government’s financial information while placing special emphasis 

10

on the principle that our improvement activities must have a positive return on investment for the taxpayer. 

To this end, the CFO Council and the President’s Council on Integrity and Efficiency are currently joining forces to improve the 

cost-effectiveness of how we go about producing audited financial 

statements. The presentation of our financial data should be understandable, it should be useful, without becoming an excessive cost 

or drain on agency resources. The CFOC and PCIE will work together with the larger financial community and the Congress to determine if we are sharing the right information with government 

stakeholders and if the data are timely and in the right format for 

decisionmaking. 

Every tax dollar is far too precious, Mr. Chairman, for us and for 

the American taxpayers to take anything for granted on. We must 

use information to make well-informed decisions, and this Administration looks forward to continuing our partnership with Congress, 

with the General Accountability Office, and with others to pursue 

fiscal health by holding agencies accountable, improving financial 

management through the President’s Management Agenda, addressing our long-term fiscal challenges, and striving for stronger, 

smarter, and sustainable accountability. 

We are going to build on our current successes. We are going to 

maintain and enhance our day-to-day core activities and incorporate a number of reform initiatives that move every agency to financial management excellence. 

We believe that we have set certain management priorities that 

are consistent, that the financial management community agrees 

upon, and we believe that we are indeed accountable for the wise 

spending of the people’s money. We look forward to your continuing 

work with us through the initiatives and through the oversight, 

and we look forward to working with you. 

Thank you very much. 

Chairman CARPER. Dr. Combs, thank you very much. Thank you 

both for excellent testimony and for the terrific leadership that you 

have provided in your current responsibilities, and to the work of 

those who serve with you in your respective agencies. 

I think we will set aside 7 minutes on this first round of questions, and I will take close to that, and then pass it off to Senator 

McCaskill if Senator Coburn has not returned by that point in 

time. 

When you look at the last 15, 16, or 17 years, in terms of compliance with the 1990 CFO Act, what do you feel especially good 

about and what do you not feel so good about at this point in time? 

If you want to start off, General Walker, go ahead, and then Dr. 

Combs. 

Mr. WALKER. First, I think it is clear that across the Federal 

Government, agencies and the individuals who comprise those 

agencies are taking financial management much more seriously 

than was the case in 1990. Nineteen of 24 CFO Act agencies have 

achieved clean opinions on their financial statements. Annual financial reports are coming out 45 days after the end of the year 

rather than five or more months after the end of the year. That acceleration has not allowed agencies to engage in heroic measures 

where they basically re-created the books in order to try to achieve 

11

a Pyrrhic victory via a clean opinion on their financial statements 

5 or more months after the end of the year, which was obviously 

not meaningful. So there are a number of positive things. 

The biggest concern that I have remains the Department of Defense. The Department of Defense is No. 1 in the world in fighting 

and winning armed conflicts. Nobody is even close. But they are 

poor on financial management and in many other business areas. 

Now, there are good people there that are taking it seriously. 

They have a much better plan of action today than they did 2 years 

ago. They did not have a plan of action when the CFO Act was enacted. They did not want to have a plan of action and, frankly, 

Congress did not hold them accountable for not having a plan of 

action. So they are taking it much more seriously, but it is going 

to take a number of years for them to get to where they need to 

be. They are a very challenged entity when it comes to financial 

management. 

Chairman CARPER. Alright. Thank you. 

Dr. Combs, the same question. Looking back over the last 16, 17 

years, what do you feel especially good or proud about with respect 

to our compliance with and adherence to the law? And where are 

you especially disappointed? 

Ms. COMBS. I could not agree more with General Walker. The 

thing I am most proud of is to see the caliber of the CFOs that are 

in the departments and agencies now and how much they have to 

deal with and how appropriately they deal with it. 

I think we have come a very long way in terms of reengineering 

a lot of our financial processes in order to be able to report within 

the 45-day period. I think the 45-day period is something I am especially proud of because it drove good management practices 

throughout the year. As General Walker likes to talk about, it put 

the CFOs in a position—the CFO Act of 1990 did—from the back 

room to the board room. This is his term, not mine, but I like to 

use it because I think it depicts the difference in where we have 

come over the last 17 years. 

But I am especially proud that there is additional oversight. I am 

especially proud that the internal controls are now in place. The 

CFOS particularly have done an excellent job. But the biggest concern I have as well is in the Department of Defense. I think their 

plan is a whole lot better than any we have ever seen. There are 

some very good people working diligently to make that plan happen. We and General Walker and a lot of other people are continuing to provide oversight as they move forward on that. And I 

think the transparency that is available today to Congress, to all 

of us, to the American people, about what is going on in the Federal departments and agencies is good. And it is also something we 

can continue to work on. 

Chairman CARPER. General Walker. 

Mr. WALKER. If I can mention one more thing, Mr. Chairman, I 

think the other thing you have to keep in mind is the Financial Accounting Standards Advisory Board (FASAB), which is the promulgating body for generally accepted accounting principles. The Federal Accounting Standards Board has been in existence for many 

decades. The Financial Accounting Standards Board has been in 

existence for quite a while, but not as long as the FASB. The 

12

FASAB has done a great job, I think, in promulgating a lot of authoritative standards in a relatively short period of time. 

I am also proud that we are working a lot more effectively together—OMB, Treasury, GAO, and as appropriate, OPM—in looking at Federal financial management on a more strategic, coordinated, and integrated basis, and we are also doing the same thing 

with the Public Company Accounting Oversight Board (PCAOB), 

and the Auditing Standards Board, with regard to the auditing 

standard setting—GAO and those two bodies. 

So it is a whole new ball game, and I think there is a lot that 

we can be proud of. But as you said at the beginning, there is much 

that remains to be done. It is like a typical GAO report: Progress 

made, but much remains to be done. 

Chairman CARPER. When you look at the agencies that are still 

struggling to meet their requirements under the 1990 law, the Department of Defense is first and foremost among them. But there 

are some others as well, and one of them is a fairly new Department, Homeland Security, but just mention for us, if you will, the 

agencies that still struggle to comply with the law. 

Mr. WALKER. Well, as far as the ones that have not achieved a 

clean audit opinion, which is only one element of the legal requirement, the Department of Defense is by far No. 1; No. 2, the Department of Homeland Security; others include the Department of Energy; the Department of Transportation, primarily because of the 

challenges associated with the FAA, it is my understanding; and 

then the National Aeronautics and Space Administration (NASA). 

Chairman CARPER. Dr. Combs, does that sound like the right 

list? 

Ms. COMBS. Yes. Those are——

Chairman CARPER. The usual suspects? 

Ms. COMBS. Those are the five that I would point to as well. I 

think one of the things that—if you would like me to elaborate a 

little bit on some of the things that we are doing with what I consider to be—I call these our ‘‘high-risk agencies.’’ We use that term 

for a lot of things, and it helps with the general accountability, I 

think, and sensitizes a lot of people with that. And they are high 

risk for different reasons than some of the other things that we 

look at. But this is the time when I would like to also especially 

compliment the staff work that is done by OMB. It is my staff that 

goes out and meets with them on a very frequent basis and looks 

at their corrective action plans, demands that they have corrective 

action plans in place. And a collective effort goes on in OMB, both 

from the budget side as well as the management side, to make sure 

that these corrective action plans are taken seriously and that the 

agencies are making progress. 

So using the PMA framework to help hold these agencies accountable for making progress is very good, and the oversight from 

Congress helps as well. 

Chairman CARPER. I am going to ask you to go ahead and finish 

that thought, and then I need to say something and then yield to 

Senator McCaskill. 

Ms. COMBS. OK. Go ahead. 

Chairman CARPER. When I come back for my next round of questions, I am going to return to this point. 

13

You both have used the word ‘‘oversight’’ in terms of the oversight that you exercise, whether at OMB or GAO, with respect to 

those agencies that still struggle to comply with the 1990 law. I do 

not know that we have done as much as we can, within this Committee and within this Subcommittee, to exercise our own oversight, particularly on the agencies that we have just mentioned. I 

am thinking about whether or not we may want to structure a 

hearing where we invite representatives to come from several, 

maybe all of these agencies, but also to invite people to come from 

agencies like the one that you help to lead, Dr. Combs, where you 

have gone red to yellow to green as you move toward compliance 

with the law. 

I like the idea of putting a spotlight on those that are doing an 

especially good job in terms of compliance and to sort of contrast 

it with those who can do better. Thank you. 

Senator McCaskill. 

Senator MCCASKILL. Thank you, Mr. Chairman. 

You know, there is a certain irony that this Committee is also 

home to Homeland Security and the fact that it is one of the high 

risk, and what I would like to do is talk a little bit about this accountability piece. It is my understanding—and I have not looked 

at the law specifically yet, but the Improper Payment Information 

Act of 2002 does not have penalties in it for the people who violate 

it, civil penalties or criminal penalties. I have begun to ask questions about the Anti-Deficiency Act and what kind of penalties 

have been extracted from government employees who have violated 

the Anti-Deficiency Act. And at some point in time, the Department 

of Defense—and, General Walker, we have had a conversation 

about this, but when I read my first report, the IG report from 

DOD on acquisition, and then looked at the GAO report on acquisition at DOD, I was like shocked. I was startled at how bad it is. 

The idea that there is a culture where it is acceptable that you pay 

a contract in total before you have signed a contract, the culture 

where you are parking funds, and the culture where the IG tells 

you you are violating the Anti-Deficiency Act and then you do it 

100 times, clearly something is wrong with the accountability piece. 

We are failing on accountability, because no one is getting fired, no 

one is being fined. 

In fact, I was told that at DOD that when they go back and look, 

if they can make the accounting entry to correct it, no harm, no 

foul. 

So if you step back from that, if you are a taxpayer and someone 

is violating the Anti-Deficiency Act, and then merely once they get 

caught, if they can go back and correct it with an accounting entry 

and it is OK, it seems to me we have not deterred much. And I 

would like, General Walker, for you to talk a little bit about consequences that are ultimately—since we do not have the incredible 

discipline of a bottom line as it relates to profit in government, the 

only way that we make government accountable is through your 

work but, more importantly, if your work—if the next step is taken 

and people who serve in this body and people who are in charge 

of these agencies do something to the people that embrace bad 

business practices. And this kind of throwing up our hands that we 

14

cannot do anything about DOD, I mean, I am frustrated. Is this 

structural or is it cultural? 

Mr. WALKER. Thank you for your question, Senator McCaskill. 

First, my understanding is there are criminal and civil sanctions 

for violation of the Anti-Deficiency Act. The question is whether or 

not they are ever invoked. 

Senator MCCASKILL. If you find any, let me know. 

Mr. WALKER. I understand. 

Senator MCCASKILL. Because I am trying to find one. 

Mr. WALKER. You are raising an excellent point. A couple of comments. 

For any system to work—a governance system, a tax system, a 

health care system, whatever—you need to have three things: 

First, incentives for people to do the right thing, and that does not 

necessarily mean tax incentives or financial incentives; second, 

transparency to provide reasonable assurance they will; and, most 

importantly, what you just said, accountability if they do not do the 

right thing. 

I am sad to say that all too frequently that last one is not there, 

that when something goes wrong, the persons that are responsible 

are not held accountable, on a whole range of things, not just with 

regard to financial matters. Another example that comes to mind 

is when Congress passed the prescription drug bill and did not consider the long-term cost, the Chief Actuary of the Center for Medicare and Medicaid Services wanted to tell Congress that the cost 

of the bill was going to be a lot more than they thought. And that 

person was told they could not for fear of losing their job. That was 

not only unethical, it was illegal, and nothing was done about it. 

So my view is we have got to change the culture. There is a serious cultural problem, and there have to be rewards when people 

do a good job, and there have to be consequences when they do not. 

And whether that be contractors or whether that be civil servants 

or whether that be uniformed personnel, we need to do a better job 

at that. 

Senator MCCASKILL. Mr. Chairman, maybe this is something we 

ought to think about doing, too. I know you have some best practices, and do not get me wrong, I do get that the vast majority of 

people—in fact, probably everybody working in government is not 

in it for the money. People are not working for the government because they are trying to get rich. But the culture of getting around 

the rules and the immediate need of what you think is important 

is more important than the long-term fiscal discipline is really the 

enemy here. My sense is that is kind of what goes on at DOD, that 

we can dance around these rules because our cause is noble and 

what we are doing is so important that these regulations are nothing but a pain in our you know what, and we can figure out ways 

to get around them because those people do not know what we are 

doing and we have a noble cause. 

Is there someplace that we can take a look at the best practices 

and who has done it and maybe reach out and hold the hearing 

that would be very effective to have one panel of the people from 

the agencies with the best practices, and in the next panel make 

the other guys listen while we have a panel of the people from 

15

DOD and Homeland Security to listen to and then talk to them 

about their very bad practices. 

Mr. WALKER. If I can, first, picking up on what you said, and 

Chairman Carper earlier, I sent up 36 items of suggested oversight 

in November, and one of the things that I included in there was 

the idea of constructive oversight, which is exactly what the two of 

you are talking about. It is important to be able to conduct oversight hearings where you take a topic and you highlight people who 

are doing well. 

Senator MCCASKILL. Right. 

Mr. WALKER. So that you recognize and reward them and figure 

out what the best practices are and share them, and then bring up 

the ones who are not doing as well and to hold them accountable. 

Candidly, one of the reasons that DOD has the problems that it 

has in the area that you talked about with acquisitions is because 

Congress has not held them accountable either. 

Senator MCCASKILL. Right. 

Mr. WALKER. They get pretty much whatever money they want, 

especially in a time of war. So I think Congress has to change some 

of its behavior as well in this regard. 

Senator MCCASKILL. The last thing I would like to ask real 

quickly, if I could, Mr. Chairman, is about the single audit. Having 

been responsible for a single audit in my State and knowing the 

role that the Chairman played in making sure that that legislation 

came to pass, I understand the efficiencies that are gained by this 

single audit. But I was thinking about it the other day, how helpful 

it would be to me now in my capacity to see some kind of compilation of single audits from around the country. I know where we 

found weaknesses. I know in Missouri the programs that we found 

where Federal monies were at risk and there was improper conduct 

in the way that was done. But I do know this: That people who do 

what I do, it is important to force feed us the information. And I 

think it would be important—I would like to see results of single 

audits from across the country, because I think the resonance that 

would have for members if they saw that in their own State—and 

I bet most of the members of the Missouri delegation do not even 

know what the single audit is, to tell you the truth. 

Mr. WALKER. Sure. First, it is my understanding there is a database, and this is something that I think would provide a basis to 

do that analysis. My personal view is the Executive Branch ought 

to do that. As you know, these single audit reports go to the Executive Branch. But I think it is a great idea. I think it is something 

that is desirable to be done. 

I chair the Intergovernmental Audit Forum, as you know, which 

is Federal, State, and local auditors, as well as the IGs. We also 

have a domestic working group of some thought leaders in the accountability community nationally and globally. So if that was 

done, we could use those mechanisms to try to help share that information through the community. 

The last thing, on the issues of acquisitions and contracting, 

there are two angles. One is best practices, which I agree ought to 

be pursued. The other is I have identified—my very capable staff 

at GAO have identified 15 systemic acquisition and contracting 

16

problems at the Defense Department. We know what the problems 

are. 

Senator MCCASKILL. Right. 

Mr. WALKER. We know what needs to be done. And there needs 

to be much more focus on addressing those because we are talking 

billions and billions of dollars every year. 

Senator MCCASKILL. People think that $12 billion in cash missing in Iraq is the problem. They have no idea how big the problem 

is. 

Mr. WALKER. Right, and that, as you know, was Iraqi money, 

which we had a fiduciary responsibility over, so we should still be 

concerned about it. It was not U.S. taxpayer money, but we should 

be concerned about it. 

Chairman CARPER. Thank you. 

Senator MCCASKILL. Thank you. 

Chairman CARPER. Thank you very much. 

A question for Dr. Combs, and then I am going to ask, General 

Walker, if you care to comment, please do. While agencies are getting their audited financials submitted in a more timely manner, 

I understand there has been a problem at least with some agencies 

needing to restate their statements later on down the line to address problems that they uncover after submission. And that is 

probably not entirely surprising, but I think some of these restatements involve fairly significant amounts of money. 

I would just ask any thoughts that you might have on these restatements. 

Ms. COMBS. Mr. Chairman, may I take a privilege for just one 

moment before I talk about restatements——

Chairman CARPER. Sure. 

Ms. COMBS [continuing]. To let Senator McCaskill know that I 

chair the CFO Council, the Chief Financial Officers Council, and 

there is right now a joint project going on between the CFO Council and the PCIE, which are all of the Inspector Generals, on the 

single audit. And I welcome your involvement. You will be a great 

person for us to reach out to on that. But I did want to just take 

the privilege, if you did not mind, of letting you know that. 

Senator MCCASKILL. Thank you. 

Ms. COMBS. Thank you. 

Chairman CARPER. We talked earlier, when I introduced Dr. 

Combs, about how she is a graduate of Appalachian State University, where my father-in-law was a math professor, physics professor, for 40 years and happened to be one of her professors. A 

small world. 

And another small world, I think the House sponsor of the Single 

Audit Act was me. 

Ms. COMBS. Right. 

Chairman CARPER. And the person who probably knows the most 

about it in the Senate, certainly in the Congress today, is Senator 

McCaskill. 

Ms. COMBS. Well, between your father-in-law and me and Senator McCaskill and you, we have just got the world wrapped right 

here today, don’t we? 

Senator MCCASKILL. Just don’t make me talk about physics. 

[Laughter.] 

17

Ms. COMBS. Back to restatements, OK. One of the things that I 

am proud of is that the number of restatements is continuing to decrease. I think we had something like 11 restatements in 2003, and 

I think we have gone from maybe seven in 2004 down to three in 

2005 that were restated in 2006. And you are exactly right that 

there are—some of these sometimes the magnitude is great, and it 

is definitely——

Chairman CARPER. Give us some idea when you say ‘‘great.’’ Just 

a rough idea. 

Ms. COMBS. The State Department, for example, I think, had a restatement of something like $160 million. 

Chairman CARPER. That is ‘‘great.’’

Ms. COMBS. And that is ‘‘great,’’ and so it is a concern. The General and I have talked about this on occasion before. It is definitely 

a concern. And I think the more we work on our internal controls, 

the more we root out those internal deficiencies in our financial 

processes, the less serious these are going to become. But it is troublesome. It is a concern to us as well. 

Chairman CARPER. Alright. General Walker, any comment? 

Mr. WALKER. If I can, Mr. Chairman, first, we issued a Kaplan 

report in October 2006 dealing with restatements. We made a number of recommendations to OMB, which I know they are looking at, 

among other things, as to how guidance might be able to be improved in this area. 

The other thing that we have done recently, which I know Senator McCaskill will be familiar with, is that we have updated the 

Yellow Book, which is generally accepted governmental auditing 

standards, and one of the things that we have done is we have 

made it clear that when there is a restatement of a prior-year financial statement, the auditor has a responsibility to note in their 

audit report that because of that restatement, that had they been 

aware of that in the prior year, they would not have received a 

clean opinion. 

I think one of the things that I would respectfully suggest that 

OMB needs to think about in connection with the President’s Management Agenda is if somebody has a restatement of their prioryear financial statements, by definition that means it is material, 

it is significant, or else you would not do a restatement. You should 

not be able to be green. 

One of the concerns that I have is that sometimes people want 

to present, well, gee, I got a clean opinion last year, I got a clean 

opinion this year, but I had to restate last year’s financial statements. Well, it means you should not have gotten a clean opinion 

last year. And we have made that clear, that the auditors now have 

that affirmative responsibility to make that clear in their audit report. And I would ask that OMB think whether and to what extent 

that should affect how people are rated on the President’s Management Agenda for transparency and accountability purposes. 

Chairman CARPER. Yes. Dr. Combs, do you want to respond to 

that thought? 

Ms. COMBS. Obviously, it is a concern, and one of the things that 

we have to continue to look at is agencies and their audit on their 

balance sheet and their overall audit. And as we have talked about 

this movement that we have made from 1990 to now, we are still 

18

evolving over the course of how we do business. I think it is really 

important that we hold those green standards up there, and it is 

obvious that we are being very strict because we do not have but 

nine agencies right now that are green in financial management. 

I think it is more important for us to encourage these departments and agencies to root out these deficiencies rather than slapping them on the hand if they do something wrong. Some of these 

restatements would be material. Some of them would not. And I 

think we have to handle that on a case-by-case basis. But we are 

looking at the report. 

Mr. WALKER. I would just say, if it is not material, you do not 

necessarily have to restate, by definition. You may choose to restate, but you are not required to restate. 

Chairman CARPER. Good. I am going to yield again to Senator 

McCaskill, but I want to telegraph my next pitch—a year or two 

ago, Senator Coburn and I held a field hearing. I am trying to 

think, was it Chicago? Where was it? Yes, it was in Chicago. We 

visited a Postal Service facility, right across the street from a very 

large, long-abandoned postal processing plant that the Postal Service was spending a whole lot of money to maintain. And we learned 

at that hearing that there were a number of similar situations in 

other agencies where that kind of thing happens. In fact, in some 

agencies, they do not even know what property they own, let alone 

know what they are paying to keep them up. 

I want to come back in my next round and explore that. I think, 

Dr. Combs, you mentioned how much money that agencies had recovered collectively in the last several years on the sale or disposal 

of surplus property. I want to just talk about how we do better. 

Alright. Senator McCaskill. 

Senator MCCASKILL. This may be a little bit touchy because the 

subject is a little touchy, but one of the things that I have tried 

to focus in on is the way that the budget is put together and the 

way that appropriations actually come to pass in Congress. I would 

welcome either one of your comments about the whole earmarking 

process and the lack of accountability that there is, and from a financial management standpoint what kind of example we should 

be setting in the Senate. It is kind of hard for me to get too righteously indignant and pound my fist on the table about DOD and 

some of their practices if we—and it is my understanding—and correct me if I am wrong, but by virtue of the way these are done, 

there has to be basically sign-off by the agency for the earmarks, 

that the agency does not have to honor the earmarks. 

And so from the Executive Branch’s perspective, if the earmarks 

do not have to be honored, why is the Executive Branch honoring 

them? Why isn’t the Executive Branch saying to the agency heads, 

don’t do it, don’t fund these projects that are being put in the bills 

without appropriate authority through either the authorization or 

appropriation process? And, certainly, do you all have a sense of 

where all these earmarks are and what they are? And is there a 

reason why we are having to work so hard with S. 1 to make them 

transparent? Why can’t they be made transparent from the agency? 

Mr. WALKER. First, not all earmarks are good, and not all earmarks are bad. 

Senator MCCASKILL. Right. 

19

Mr. WALKER. Transparency is a powerful force, and I believe that 

clearly there needs to be more transparency with regard to earmarks. And I would respectfully suggest you probably want more 

transparency with regard to earmarks before they are enacted into 

law, because once they are enacted into law, the decision is already 

made. 

Second, merely because you have an earmark does not mean that 

you have increased spending, and merely because you eliminate an 

earmark does not mean you have decreased spending, because 

what an earmark does is it says that for the amount of money that 

has been appropriated, you must spend X amount for Y purpose. 

And sometimes those earmarks can be waste because you are directing an agency to spend part of their appropriation for a purpose 

that might not stand the light of the day, might not pass a cost/

benefit test from the standpoint of value and risk. 

My understanding is that if it is in the statutory language, then 

agencies are supposed to follow it. But many times they are not in 

the statutory language. They are in the conference reports or whatever else. And as you mentioned before, Senator McCaskill, a lot 

of times people do things because of culture and because of longstanding practice rather than because they have to do it by law. 

My understanding is that many earmarks are not statutory. 

They are in the conference report or other instruction language. 

But there has been a longstanding practice on behalf of many agencies to follow it as an accommodation to the Congress. At the same 

point in time, they are also concerned that if they do not follow it, 

what might happen to the appropriation the next year. 

We believe more transparency is needed here up front, and one 

of the things that people talk about from time to time is line item 

vetoes. The Supreme Court has struck that down as unconstitutional. But I think one of the things that Congress ought to be considering in the area of fiscal responsibility is allowing for a line 

item rescission, an expedited line item rescission that would be 

subject to an up or down majority vote by the Congress, a simple 

majority, so it is not a veto, simple majority as a supplement to 

this. 

The last thing, one of the concerns about earmarks is—and, 

again, they are not all bad, they are not all good—is that when you 

are talking about a time of constrained resources, if the top line is 

getting more constrained with regard to what your budget is, the 

worst of all worlds is where you get more earmarks telling you 

what to do with a limited amount of money, where those earmarks 

may not be based upon value and risk. That is a very high-risk 

strategy. 

Senator MCCASKILL. Let me make sure I understand, though. So 

the earmarks that are—the ones that I kind of affectionately say 

the ones that get there through the secret knock, like if you know 

the knock—it is not written in the bill. It is in the conference report. There is nothing in the law that keeps the President from directing agencies not to fund those, correct? 

Ms. COMBS. That is correct, and the Director of the Office of 

Management and Budget, Rob Portman, has recently issued a letter basically saying that. 

20

Senator MCCASKILL. I am a little disappointed that only came 

after November of last year, that directive only came then. It seems 

to me that if these earmarks are not required by law and if the 

President is going to include in his State of the Union speech how 

bad the earmarks are, it seems to me that the Executive Branch 

has an obligation not to fund those projects that have, in fact, not 

been put into the law but that are, in fact, discretionary on the 

part of the Executive Branch. And I do not think the American people even understand how that works. Frankly, I am having trouble 

figuring out how it all works. 

Mr. WALKER. I have asked my staff to prepare a special publication on earmarks to help people understand what they are and 

what they are not, because I think there is a lot of confusion here. 

And, it is something that I think we could help to try to be able 

to help people better understand this area. 

Senator MCCASKILL. I think it would be great, and I think, candidly that if we did that—and as you say, transparency is the key 

here. Certainly the more quickly that we quit using that term for 

projects that are authorized and appropriated, the better, because 

now it has gotten a connotation that it is a bad thing. And it is 

not. I mean, we need to be investing Federal dollars in infrastructure and, I would argue, higher education at public universities—

I have not seen a whole list. I have seen a partial list. There is 

some stuff on there that I think if it was public, they would not 

happen. 

Mr. WALKER. The other thing is that on the issue of earmarks 

with regard to financial reporting, one of the things that I have recently sent a note to the chairman of the Federal Accounting 

Standards Advisory Board is that they ought to rethink the terms 

that they are using for financial reporting, because in financial reporting, there is separate reporting for so-called earmarked revenues. Now, what ‘‘earmarked revenues’’ means, it means things 

like payroll taxes and Social Security, premiums for Medicare. 

Senator MCCASKILL. Right. 

Mr. WALKER. Things where they are designated for a particular 

purpose. Well, the word ‘‘earmark’’ does not have a positive connotation. 

Senator MCCASKILL. People are going to get confused. Right. 

Mr. WALKER. Whereas, in this context, it is really more restricted 

funds, if you will, or at least they are supposed to be restricted. But 

as we know, Congress spends all the Social Security surplus. That 

is a whole different topic we can get to. 

Senator MCCASKILL. Maybe we should call it ‘‘hope they are restricted.’’

Mr. WALKER. Yes. 

Senator MCCASKILL. They ought to be restricted. 

Mr. WALKER. Well, it ought to be restricted, or at a minimum, 

one of the things that does not happen right now dealing with Federal financial management reporting, the bonds that are in the Social Security and Medicare trust funds, which are backed by the 

full faith and credit of the U.S. Government, which are guaranteed 

as to principal and interest, are not considered to be liabilities of 

the U.S. Government. And that is just dead wrong, and that ought 

to change, and we are trying to get that changed. 

21

Senator MCCASKILL. Goodness gracious. 

Ms. COMBS. I was just going to add that we are all working, I 

think, for the right goal here, which is to make Federal spending 

more transparent in every way. Transparency and accountability to 

the public is what we are all about. 

Senator MCCASKILL. Thank you, Mr. Chairman. 

Chairman CARPER. Thank you. 

I do not recall with great specificity how our first bill, S. 1, the 

ethics bill, addresses earmarks. But as I recall, there is some language in there that gets to the issue of transparency, and in a very 

good, positive, and constructive way. 

Ms. COMBS. Right. 

Chairman CARPER. So it is important that what comes out of the 

conference report, the compromise version of the House and Senate 

bill, also is strong in that regard. 

I want to just follow up briefly before we turn to some of this excess Federal property and how to deal with that. General Walker 

mentioned the notion of enhanced rescission powers and something 

that I call ‘‘statutory line item veto powers.’’ In the early 1990s, the 

House of Representatives actually adopted a measure providing for 

enhanced rescission powers to the President. It is kind of interesting. Senator McCaskill said that, as you probably know now, the 

President has the right to propose rescissions to rescind spending 

that has been appropriated, but the budget can and usually chooses 

just to ignore it. 

And the legislation we passed by about a 3:1 margin in the 

House of Representatives in 1991 or 1992 restricted somewhat 

what the President could rescind. If programs were fully authorized, he could rescind no more than, I think, 25 percent. If programs were not authorized, his ability to propose rescissions was 

unlimited. But the Congress had to vote on the rescissions. The 

President had to submit them within a certain amount of time. The 

Congress then had to vote on them, up or down within a certain 

amount of time. And rather than having a two-third required vote 

to override the President’s rescission, it was simple majority, 51 in 

the Senate, 218 in the House. And it passed by a big margin in the 

House of Representatives. It died in the Senate and did not come 

up for a vote here. The House and Senate subsequently passed legislation that was deemed to be unconstitutional. 

The other thing that was different about the House version was 

there was a 2-year test drive, as I recall. The President got the authority for 2 years. If he or she abused the authority and used it 

to intimidate House Members or Senators, the President would 

probably lose that authority. 

So, anyway, I think we are going to revisit that issue. There is 

probably going to be legislation proposed by the author of the 

House bill, proposed by the same person who is now a Senator, and 

might want to work with you to see if it is something you would 

be interested in working with us on. 

Let me come back to the surplus property. It is actually real 

money, and we are not just talking about a couple million dollars 

or tens of millions of dollars or hundreds of millions of dollars. I 

think, Dr. Combs, you indicated that the amount of money that 

had been recovered from disposing of surplus property was several 

22

billion dollars over the last couple of years. And I think one of the 

goals that you may have laid out in your revised financial report 

for fiscal year 2007 is a sell-off of at least $11 billion in Federal 

property between now and, I think, 2011. That is a laudable goal, 

but I am just not sure how we get there. 

Let me just ask, do you think that agencies have the incentives 

that they need to sell, whether it is vacant buildings or other surplus properties? 

Ms. COMBS. I like to use the word ‘‘disposal’’ of the properties, 

because some of them may not result in sales. But we have had a 

terrific effort going on across the Federal agencies through the real 

property community, and agencies have been very eager to participate in the management and planning of how this is best handled. 

And the Executive order that was issued on Federal Real Property 

Asset Management defined pretty clearly some common standards 

for defining specific data elements, including what performance 

measures are being used. And there is an inventory now for the 

first time of performance data that captures more than 1.2 million 

assets governmentwide. And when we use the key data elements 

such as condition and utilization and agencies have identified and 

defined whether or not these properties are no longer necessary to 

meet their agency mission and they are prioritizing those assets for 

condition improvement or whether they are actually needed at all 

or not, we come up with something like a replacement value right 

now of something like $1.2 trillion. 

Chairman Carper. Is that trillion with a ‘‘T’’? 

Ms. COMBS. With a ‘‘T.’’ So you can see that there is a lot of opportunity out there to do the right thing, and our goal for disposing 

of 11 billion of those properties by 2011 could be through sale, 

could be through demolition, could be through a public transfer 

from one entity to another. 

I think the mere fact that we have disposed of more than 4.2 billion over the last couple of years says that surely by 2011 we can 

get to the 11 billion. And I think what it is going to take to get 

us there is this continuing focus that we now have where we actually continue to push agencies and departments who have the asset 

management plans in place now to continue to work toward the 

goals that are set out there. 

We have green standards. The progress that people are making 

on this is monitored through the PMA scorecard. And as you recall, 

the President’s 2008 budget actually includes a real property disposal pilot that would do what Mr. Walker talked about a while 

ago and set up some incentives for these agencies to retain part of 

the proceeds; 20 percent of the proceeds would be retained, and 80 

percent of those proceeds then would go to the Treasury. 

I think there are some things that we can do together as we 

move forward on this. 

Chairman CARPER. Good. General Walker, do you want to talk a 

little bit more about those incentives? I think if you run a Federal 

agency, you have this surplus of unused property, and you know 

if you dispose of it, you do not get any proceeds, it does not help 

you do your jobs any better, meet your mission any better, there 

is not a great incentive to do anything about it. 

23

Mr. WALKER. Well, several things. As you know, Mr. Chairman, 

we have excess Federal real property on our governmentwide highrisk list, and this is something that we have added in recent years. 

It is clearly a major challenge. There are billions of dollars involved. It is not just the issue of saving unnecessary expenses, but 

it is also realizing revenues from these properties, and also in 

many cases facilitating redevelopment and better utilization of this 

property by the local communities, if you will. 

I do believe that, coming back to what we talked about before, 

we need incentives, transparency, and accountability. Now, there 

are two incentives that theoretically they have. If they are expending parts of their appropriation to try to maintain and secure these 

buildings, then to the extent they get rid of it, they will not have 

to use those funds. But it would be nice if they could have another 

financial incentive where they might be able to keep a piece of the 

proceeds as a further incentive for people to be able to do the right 

thing. And in the end, you may have to think of some type of BRAC 

type process because I would imagine that some of these may be 

ones that there might be some controversy associated, although 

there should be less here. There should be less here because in 

many cases, as you mentioned, in Chicago I have seen that facility 

more than once. It is an abandoned, very large facility, almost an 

entire, if not an entire city block in downtown Chicago. I have to 

believe that is probably worth some money. 

Chairman CARPER. A big building, you are right. 

There are a number of references in your testimony, General 

Walker, and I believe in previous GAO work, about agencies with 

troubled financial management systems. Is this a reference to IT 

systems or to basic accounting and management procedures? What 

are agencies doing wrong in this area? 

Mr. WALKER. There are a number of challenges with regard to 

information systems and security associated with information systems. There are a number of agencies that have material weaknesses dealing with such matters. I imagine that is probably what 

that refers to. 

Chairman CARPER. OK. Senator McCaskill, let me yield to you if 

you would like to ask some more questions, and I may have one 

more round, and we will wrap it up. 

Senator MCCASKILL. Do you have any suggestions I would appreciate them to my office. I am also on the Armed Services Committee along with Homeland Security, so I have got a great opportunity to ask questions. And one of the things I have tried to do 

is figure out what percentage of the purchasing that is going on at 

DOD—and I have not had an opportunity to ask this of Homeland 

Security yet—what percentage of it is competitive. And I am having a hard time with DOD because they are—it appears that different people at DOD have a different version of what is and what 

is not competitive. 

Have you, General Walker, ever tried to help Congress and all 

of the Executive Branch in defining what is a competitive purchase 

and what is not? And I certainly would appreciate any, along those 

same lines about competitiveness, requests for proposals as it relates to professional services and the ‘‘very scary world of consultants.’’

24

1The information provided by Mr. Walker appears in the Appendix on page 82. 

Mr. WALKER. First, I do not recall off the top of my head, Senator, as to whether or not we have done work in defining the term 

‘‘competitive.’’ I will go back, find out, provide it to your office. 

I do know that this is an example of something that we were recently asked to do—and maybe we should do it here. I was recently 

asked to come up with a definition of ‘‘waste,’’ and I did, in conjunction with the Inspector General of Defense, the Inspector General 

of State, and the Special Inspector General of Iraq, because it came 

up in the context of a hearing on Iraq contracting. And I did, and 

I will be happy to provide it for the record, because it is interesting 

and it is informative, because it is acts of commission and omission 

by both the Executive Branch, contractors, and the Legislative 

Branch in circumstances where the taxpayers do not get value for 

money, and I give specific examples. By the way, some earmarks 

could fall into the category of waste, but not all earmarks would 

fall into the category of waste. And I will be happy to provide that 

to your office and anything else that I can find out on the other.1

And if I may for the record, while you are both here—because I 

know you are getting short on time—I would like to make a pitch—

and I will send it to both of your offices. We are trying to work 

with a number of interested parties, including members on both 

sides of the aisle and both ends of the Hill, to push potential legislation for transparency and accounting and budgeting. There is a 

clear need for more transparency here, and I would like to be able 

to have permission to send that to your offices and to be able to 

talk to you about it. 

And the second thing is with regard to our Nation’s financial and 

fiscal condition, I was just advised by CBS News that there will be 

a special segment in ‘‘60 Minutes’’ this weekend—the lead segment, 

I believe—on the work that we at GAO and others have been doing 

to try to help educate the public for the need for dramatic and fundamental reforms in order to put our Nation on a more prudent 

and sustainable fiscal path. 

Senator MCCASKILL. That is great because I think the more the 

public understands the train wreck is coming, the more political 

elbow room we will have in Congress to do the right thing. 

On the competitiveness—this is Homeland Security, the Coast 

Guard boat—I forget the name of it. 

Mr. WALKER. It is Deepwater. 

Senator MCCASKILL. Deepwater. 

Mr. WALKER. The Deepwater project, which is a number of different platforms. 

Senator MCCASKILL. Deepwater, but then you look over at DOD 

and some of the weapons systems, and what they are saying to me 

is, well, if you begin the process with competitiveness, then once 

you pick someone to build the system, then we are getting banged 

for it not being competitive when in reality it was competitive at 

the beginning, but it does not make sense fiscally for it to continue 

to be competitive. 

I am trying to figure out how we provide oversight under those 

circumstances, because, first of all, it is hard to say with authority, 

if you either are not an auditor who has a lot of experience in lookVerDate 0ct 09 2002 07:49 Mar 20, 2008 Jkt 033876 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 P:\DOCS\33876.TXT SAFFAIRS PsN: PAT
25

ing at those systems and how that works or unless you actually 

have working knowledge of the weapons systems, and I do not 

think most of us around here do. So that competitiveness, particularly at DOD, I think, aside from the part they do not know what 

is being bought competitively with interagency contracting—which 

they do way too much to avoid the rules as opposed to find efficiencies. That is why I really would like to see some clarification 

from GAO as to what you consider competitive. 

Mr. WALKER. Well, Senator, I think it probably makes sense for 

me to come up to your office and talk to you about a number of 

these issues. I can tell you that based upon the information that 

I have seen, a significant majority of the major contracts are competitive at some point in time. Sometimes, for example, when you 

have a contingency operation—and by that I mean it could be Iraq, 

it could be Hurricane Katrina. You have an unexpected catastrophic event or a contingency operation. You can see circumstances in which initially they may not be competitive, but 

then later on they are competed. 

In most circumstances, for major weapons systems they are competed. The problem is not as much that as it is we are trying to 

buy wants versus needs; we are not nailing down what we are expecting to get. We are trying to push things too quickly, and we 

are paying bonuses in circumstances where we are not—where we 

are over budget, behind schedule, and not getting results. And I 

would love to be able to sit down with you and talk to you because 

I think you are extremely well positioned, being on the Armed 

Services Committee as well as Homeland Security and Governmental Affairs, to be able to address some of these challenges that 

can save the taxpayers a lot of money. 

Senator MCCASKILL. When you all classify improper payments, 

are you including bonuses paid within contracts where any objective analysis would say the contract has not been performed well? 

Mr. WALKER. Well, we are not the ones that classify whether or 

not they are improper payments. In my opinion, that is not appropriate, but I doubt very seriously that it is being classified as improper. 

Senator MCCASKILL. Who is classifying improper payments? 

Mr. WALKER. The Executive Branch is. 

Ms. COMBS. The Executive Branch does that. 

Senator MCCASKILL. And is that included in your classification 

of improper payments when bonuses are paid on a contract where 

any cursory look at the requirements of the contract would see that 

it had not been met? 

Ms. COMBS. Contracting is looked at, and I am not sure that specific example in every case would be looked at. But, one of the 

things that we would offer, too, as well, is the opportunity to work 

with you. Our office is at the Office of Management and Budget. 

Obviously, in addition to the improper payments, we have folks 

there who stress competition in procurement in our policies, and 

our policies do address many of those things. And I am sure those 

specialists would be more than happy to come and work with you 

as well. 

Senator MCCASKILL. That would be great. Thank you. 

26

1The GAO report submitted for the record appears in the Appendix on page 84. 

Mr. WALKER. Of the ones that I am familiar with, for example, 

one of the things that we do that for I know you are going to be 

interested in, we do once a year a quick look report that talks 

about the status of major weapons systems on cost, timing, and 

quality. We have also done reports on the payment of incentive and 

award fees. 

Senator MCCASKILL. Right. 

Mr. WALKER. And we can make that available for your office, and 

we will do that. Of the ones that I am familiar with, they were not 

categorized as improper payments because they were not illegal, 

they were not inconsistent with the contract terms, but in my view, 

they were in many cases inappropriate. 

Senator MCCASKILL. But if they are inconsistent with the contract terms, if the contract says you do A, B, and C, and if you do, 

you get a bonus, and they do not do A, B, and C and they get a 

bonus, it seems to me we ought to be classifying that as improper 

payment. 

Mr. WALKER. But, Senator, the problem is that is not what the 

contract says. The contract all too frequently says ‘‘best efforts,’’ 

and ‘‘cost plus.’’ The government ends up not being very clear to 

the contractor as to what you want by when, and the government 

many times ends up changing the terms or the requirements, 

which that is why I look forward to sitting down with you. 

Senator MCCASKILL. I see. 

Mr. WALKER. It is a shared responsibility. It is not just the contractor. It is also the government. And it is a lot of money. 

Ms. COMBS. And if there are duplicative payments or payments 

for services that were not rendered, those indeed would be classified. 

Senator MCCASKILL. I am going to try to see if we cannot get 

that other kind in there. 

Thank you, Mr. Chairman. 

Chairman CARPER. You bet. 

Senator MCCASKILL. I unfortunately have to leave you now. I 

have to go to the floor. 

Chairman CARPER. Before you walk out, let me just mention one 

thing because it pertains to what you have just been asking in having this discussion. The notion of us paying bonus payments to contractors for weapons systems that did not then meet the terms of 

expected performance seems foolish and anathema to me. 

My colleague from Delaware, Congressman Mike Castle, and I offered language to, I believe, the defense appropriations bill last fall, 

adopted in the House version, adopted in the Senate version—I believe it is now law of the land—that says that bonus payments cannot be paid to weapons contractors for projects that do not meet the 

terms of the mandated level of performance. 

I would just ask for the record if maybe Dr. Combs could just let 

us know how that law is being implemented and made effective. I 

know it was adopted by the House and Senate. I am almost positive it survived the conference, and I would just like to know how 

it is working. If you could submit that, that would be great. 

Ms. COMBS. We will be glad to get back to you on that.1

27

Chairman CARPER. Good. Thank you. 

Senator MCCASKILL. Thank you. 

Chairman CARPER. I can just say, this is your first hearing with 

us here, Senator McCaskill. I think you are going to be a valuable 

Member of this Subcommittee. And you know what? I think you 

are going to enjoy it. 

Senator MCCASKILL. I had fun. 

Chairman CARPER. That is good. Thanks for joining us today. 

Two more questions, and then I am all finished, and any last 

comments you all have would be appreciated. 

Dr. Combs, General Walker, I think, argues in his written testimony that the Financial Management Workforce—in at least some 

agencies—sometimes does not have the skills that are necessary to 

meet future needs. I am sure that many on the Financial Management Workforce are close to retirement as well, just like many of 

our best people in other areas across the Federal Government. In 

the U.S. Senate, they are never close to retirement. We serve here 

seemingly forever. But what steps has OMB taken in partnership 

with the agencies that you oversee to find solutions to this problem? 

Ms. COMBS. I could not agree more with the Comptroller General 

on this important issue, and I know this is something he has spoken out on for many years, and it certainly continues to deserve 

our careful look. 

There are some added advantages for us looking at this issue because when I talked about smarter accountability in my statement 

earlier, if we continue to take more cost-effective approaches and 

continue to work through a number of things that would help our 

workforce, we keep coming back to how can we standardize things 

so that we can use people across agencies and in the entire Federal 

workforce in financial management. 

Right now, because things are not as standardized as we would 

like them, one person in a financial management capacity cannot 

necessarily just pick up and move to another financial management 

job. So that would help tremendously to optimize the workforce 

that we currently have. 

We have reached out to various colleges and universities, folks 

like the AGA——

Chairman CARPER. What is AGA? 

Ms. COMBS. Association of Governmental Accounting. 

Chairman CARPER. Are those Aggies? No. [Laughter.] 

Ms. COMBS. And we have looked to have them help us develop 

more effective training and recruitment programs, too, because it 

is not just training the people that are here who are now maybe 

two or three levels below the number of baby boomers that we are 

about to lose. They need to be retrained in various skills. But we 

also need to recruit some MBA type people who need to be able to 

take on these larger roles and responsibilities. 

So we have looked and we talk with the private sector on a 

monthly basis. We have a CFO that comes to the CFO Council 

meeting, which I chair, and these people are from the Fortune 500 

companies. Invariably, they say the same thing that David Walker 

and Linda Combs are saying to you. They have the same serious 

problems of filling their financial management workforce as well. 

28

So it is not just a government problem. It is also an industry 

problem. And because industry has some added advantages that 

they can have relating to other incentives they can offer in terms 

of salary or many other things, we often come up short in the Federal Government. 

Chairman CARPER. Alright. 

Mr. WALKER. Can I add something? 

Chairman CARPER. General, go ahead. 

Mr. WALKER. Mr. Chairman, there are serious workforce challenges in the Federal Government, and those challenges are particularly acute in several areas: Financial management, acquisitions, information technology, human capital strategy, and also certain science and engineering fields. I think that this Committee, 

meaning Senate Homeland Security and Governmental Affairs, as 

well as your House counterpart, really needs to take a look into 

that particular area and what, if anything, needs to be done in 

order to try to address these serious challenges, which are only 

going to get worse with the passage of time, in part because of supply and demand imbalances. 

You are only as good as your people, and we have great people 

that are very dedicated, but we have got a lot of them who are 

going to be leaving, and we do not have enough of them. 

Ms. COMBS. Correct. 

Chairman CARPER. That are going be leaving? 

Mr. WALKER. No, we do not have enough. [Laughter.] 

Mr. WALKER. That is not what I intended but thank you for clarifying. 

Chairman CARPER. I just wanted to clarify that point. 

Final question, and this is for Dr. Combs, and if you want to 

comment on it, General, that would be fine. But I know that OMB 

has been working on an initiative to consolidate certain financial 

management functions into something—I think they are called 

‘‘shared service centers,’’ I assume in agencies or divisions of agencies that do a better job than others in managing their money. 

What do you hope that this initiative will accomplish? How will 

it address some of the remaining challenges in financial management that both you and General Walker agree need to be addressed? 

Ms. COMBS. I think shared service arrangements have been 

around for a while, and they perform a vital function within the 

government itself. I think one of the things that a shared servicing 

arrangement does, it helps us to take something that a government 

entity does especially well and optimize what they are doing already and doing it very well and sharing it, in essence, with other 

government entities. 

We also now have some private sector entities that have taken 

on certain roles and responsibilities that CFO offices are happy to 

shed from them, that they do not have to do these things directly. 

One of the first arrangements in this Administration had to do 

with payroll. As you recall, we went from 19 systems down to three 

payroll systems. That was an example of a shared service arrangement. 

We are trying to further embark into what are the shared services—or what are the services that do not need the immediate atVerDate 0ct 09 2002 07:49 Mar 20, 2008 Jkt 033876 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 P:\DOCS\33876.TXT SAFFAIRS PsN: PAT
29

tention but they need the oversight of the CFO. So the goal is to 

shed some of the responsibilities from the CFO offices directly and 

let somebody else perform those routine duties. And we have come 

a long way with doing that, but we have a long way yet to go. 

Chairman CARPER. OK. General Walker, any concluding comment on that point? 

Mr. WALKER. No. I think that is fine, Mr. Chairman. That is an 

Executive Branch responsibility. I do think it makes sense to try 

to encourage shared service arrangements where possible for economies of scale, consistency, and a variety of other reasons. 

Ms. COMBS. I think the other thing that is important to note here 

is, again, what we have learned from our CFO Council meetings 

and the CFOs that we talk to in the corporate world, is they are 

doing that model themselves, because they realize that with those 

economies of scale, that they can take that footprint that they 

have—that is costing them money and having that work more effectively. 

In fact, my staff just reminded me that one of——

Ms. COMBS. They are very good. They do not want me to miss 

anything. 

One of the things that we were especially pleased to have was 

a CFO from DuPont last week at our CFO Council meeting. He 

was very effective. And so being from Delaware, I thought you 

would appreciate that. 

Chairman CARPER. That is good to hear. And we had the CEO 

of the company here just this past month talking about U.S. Climate Action Partnership that the Dupont Company and a number 

of other big companies, utilities, and environmental groups have 

sort of joined together to try to encourage us to get started on climate change in ways that are cost-effective and will not torpedo 

the economy and will not cost consumers an arm and a leg. It was 

just very constructive, so thanks for mentioning them. 

Let me just close by thanking you on behalf of Dr. Coburn and 

myself and Senator McCaskill and others for being here today. 

Thank you for the testimony that was prepared and presented. 

Thank you for the gravity with which you approach these issues. 

This is not the first time that you have testified before this Subcommittee. It will not be the last time, I hope we will have the opportunity to talk with you both on-line and off-line and to continue 

this work. 

When you are a country as big as ours and you are running a 

huge budget deficit, and as we look ahead and our generation, the 

boomers, prepare to retire, we know that there is going to be enormous stress on our budgets and our ability to pay for things. And 

to the extent that we can identify ways to save some money, a lot 

of money, we will be better off as a country and as a people. 

I would say that the hearing record is going to be open for, I 

think, 2 weeks for submission of additional statements and questions. I would just ask our witnesses and your staffs for your cooperation in making sure that we get prompt responses to any 

questions that are submitted for the record. 

This hearing is adjourned. Again, my thanks to each of you. 

[Whereupon, at 4:40 p.m., the Subcommittee was adjourned.] 

(31)

A P P E N D I X 


33876.001
32


33876.002
33


33876.003
34


33876.004
35


33876.005
36


33876.006
37


33876.007
38


33876.008
39


33876.009
40


33876.010
41


33876.011
42


33876.012
43


33876.013
44


33876.014
45


33876.015
46


33876.016
47


33876.017
48


33876.018
49


33876.019
50


33876.020
51


33876.021
52


33876.022
53


33876.023
54


33876.024
55


33876.025
56


33876.026
57


33876.027
58


33876.028
59


33876.029
60


33876.030
61


33876.031
62


33876.032
63


33876.033
64


33876.034
65


33876.035
66


33876.036
67


33876.037
68


33876.038
69


33876.039
70


33876.040
71


33876.041
72


33876.042
73


33876.043
74


33876.044
75


33876.045
76


33876.046
77


33876.047
78


33876.048
79


33876.049
80


33876.050
81


33876.051
82


33876.052
83


33876.053
84


33876.054
85


33876.055
86


33876.056
87


33876.057
88


33876.058
89


33876.059
90


33876.060
91


33876.061
92


33876.062
93


33876.063
94


33876.064
95


33876.065
96


33876.066
97


33876.067
98


33876.068
99


33876.069
100


33876.070
101


33876.071
102


33876.072
103


33876.073
104


33876.074
105


33876.075
106


33876.076
107


33876.077
108


33876.078
109


33876.079
110


33876.080
111


33876.081
112


33876.082
113


33876.083
114


33876.084
115


33876.085
116


33876.086
117


33876.087
118


33876.088
119


33876.089
120


33876.090
121


33876.091
122


33876.092
123


33876.093
124


33876.094
125


33876.095
126


33876.096
127


33876.097
128


33876.098
129


33876.099
130


33876.100
131


33876.101
132


33876.102
133


33876.103
134


33876.104
135


33876.105
136


33876.106
137


33876.107
138


33876.108
139


33876.109
140


33876.110
141


33876.111
142


33876.112
143


33876.113
144


33876.114
145


33876.115
146


33876.116
147


33876.117
148


33876.118
149


33876.119
150


33876.120
151


33876.121
152


33876.122
153


33876.123
154


33876.124
155


33876.125
156


33876.126
157


33876.127
158


33876.128
159


33876.129
160


33876.130
161


33876.131
162


33876.132
163


33876.133
164


33876.134
165


33876.135
166


33876.136
167


33876.137
168


33876.138
169


33876.139
170


33876.140
171


33876.141
172


33876.142
173


33876.143
174


33876.144
175


33876.145
176


33876.146
177


33876.147
178


33876.148
179


33876.149
180


33876.150
181


33876.151
182


33876.152
183


33876.153
184


33876.154
185


33876.155
186


33876.156
187


33876.157
188


33876.158
189


33876.159
190


33876.160
191


33876.161
192


33876.162
193


33876.163
194


33876.164
195


33876.165
196


33876.166
197


33876.167
198


33876.168
199


33876.169
200


33876.170
201


33876.171
202


33876.172
203


33876.173
204


33876.174
205


33876.175
206


33876.176
207


33876.177
208


33876.178
209


33876.179
210


33876.180
211


33876.181
212


33876.182
213


33876.183
214


33876.184
215


33876.185
216


33876.186
217


33876.187
218


33876.188
219


33876.189
220


33876.190
221


33876.191
222


33876.192
223


33876.193
224


33876.194
225


33876.195
226


33876.196
227


33876.197
228


33876.198
229


33876.199
230


33876.200
231


33876.201
232


33876.202
233


33876.203
234


33876.204
235


33876.205
236


33876.206
237


33876.207
238


33876.208
239


33876.209
240


33876.210
241


33876.211
242


33876.212
243


33876.213
244


33876.214
245


33876.215
246


33876.216
247


33876.217
248


33876.218
249


33876.219
250


33876.220
251


33876.221
252


33876.222
253


33876.223
254


33876.224
255


33876.225
256


33876.226
257


33876.227
258

Æ


33876.228