www. gao.gov/cgi-bin/getrpt?rptno=gao-06-1sp
CORE VALUES

GAO exists to support the Congress in 

meeting its constitutional responsibilities

and to help improve the performance 

and ensure the accountability of the 

federal government for the benefit of the 

American people.

GAO performs a range of oversight-, 

insight-, and foresight-related 

engagements, a vast majority of which 

are conducted in response to 

congressional mandates or requests. 

GAO’s engagements include evaluations 

of federal programs; performance, 

financial, and management audits; policy 

analyses; legal opinions; bid protest 

adjudications; and investigations.

We help the Congress oversee federal programs and operations to ensure accountability 

to the American people. GAO’s analysts, auditors, lawyers, economists, information 

technology specialists, investigators, and other multidisciplinary professionals seek to 

enhance the economy, efficiency, effectiveness, and credibility of the federal 

government both in fact and in the eyes of the American people.

We set high standards for ourselves in the conduct of GAO’s work. Our agency takes a 

professional, objective, fact-based, nonpartisan, nonideological, fair, and balanced 

approach to all activities. Integrity is the foundation of reputation, and the GAO 

approach to work ensures both.

We at GAO want our work to be viewed by the Congress and the American public as 

reliable. We produce high-quality reports, testimonies, briefings, legal opinions, and 

other products and services that are timely, accurate, useful, clear, and candid.

ACCOUNTABILITY

INTEGRITY

RELIABILITY

Source: GAO.

SCOPE OF WORK

GAO’S MISSION
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 i

Contents

Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

How to Use This Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv

 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

From the Comptroller General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Financial Reporting Assurance Statements . . . . . . . . . . . . . . . . . . . . . . . .7

About GAO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Strategic Planning and Management Process. . . . . . . . . . . . . . . . . . . . . . 10

Organizational Structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

How We Measure Our Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Part I: Management’s Discussion and Analysis . . . . . . . . . . . . . . . . . . . 21

Providing Information That Improves Federal Programs Now 

and in the Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Focusing on Results. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Focusing on Our Clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Focusing on Our People . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Focusing on Our Internal Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

21st Century Challenges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

GAO’s High-Risk Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Building Partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Managing Our Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Strategies for Achieving Our Goals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Addressing Management Challenges That Could Affect Our 

Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Mitigating External Factors That Could Affect Our Performance. . . . . . . . 58

Part II: Performance Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Performance Information by Strategic Goal . . . . . . . . . . . . . . . . . . . . . . 62

Goal 1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Financial Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Other Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Testimonies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Multiyear Performance Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Goal 2 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Financial Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Other Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Testimonies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Multiyear Performance Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
ii GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

Goal 3 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

Financial Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

Other Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

Testimonies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

Multiyear Performance Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

Goal 4 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Multiyear Performance Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

Data Quality and Program Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

Verifying and Validating Performance Data . . . . . . . . . . . . . . . . . . . . . . . 82

Program Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

Part III: Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

From the Chief Financial Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

Overview of Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

Financial Systems and Internal Controls . . . . . . . . . . . . . . . . . . . . . . . . . 99

Audit Advisory Committee’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

Purpose of Each Financial Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 106

Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

Statements of Net Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

Statements of Changes in Net Position . . . . . . . . . . . . . . . . . . . . . . . . . 109

Statements of Budgetary Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

Statements of Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

Part IV: Appendixes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123

1. Accomplishments and Other Contributions . . . . . . . . . . . . . . . . . . 124

2. From the Inspector General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194

3. GAO’s Report on Personnel Flexibilities . . . . . . . . . . . . . . . . . . . . . 195

4. GAO’s Federal Information Security Management Act Efforts . . . . 197

Image Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200

Providing Comments on This Report . . . . . . . . . . . . . . . . . . . . . . . . . . 201

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately.
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 iii

Abbreviations

BPA Bonneville Power Administration

CAO Chief Administrative Office 

CMS Centers for Medicare & Medicaid 

Services 

CSRS Civil Service Retirement System 

DHS Department of Homeland Security 

DISA Defense Information Systems Agency

DOD Department of Defense 

DOE Department of Energy 

DOL Department of Labor 

EPA Environmental Protection Agency 

FAA Federal Aviation Administration

FECA Federal Employees’ Compensation Act

FEGLIP Federal Employees’ Group Life 

Insurance Program 

FEHBP Federal Employees Health Benefits 

Program 

FEMA Federal Emergency Management 

Agency

FERS Federal Employees Retirement System

FFMIA Federal Financial Management 

Improvement Act 

FHA Federal Housing Administration

FICA Federal Insurance Contributions Act 

FISMA Federal Information Security 

Management Act 

FTE full-time equivalent 

GAO Government Accountability Office 

GSA General Services Administration

HCTC Health Coverage Tax Credit

HHS Department of Health and Human 

Services 

HIPAA Health Insurance Portability and 

Accountability Act

HUD Department of Housing and Urban 

Development 

IG Office of Inspector General 

INTOSAI International Organization of Supreme 

Audit Institutions 

IRS Internal Revenue Service 

IT information technology 

MFO multinational force observer

NASA National Aeronautics and Space 

Administration

NFC National Finance Center 

NHTSA National Highway Transportation Safety 

Administration

NIH National Institutes of Health

OMB Office of Management and Budget 

OOI Office of Opportunity and Inclusiveness

OPM Office of Personnel Management 

PART Program Assessment Rating Tool

QCI Quality and Continuous Improvement

SBA Small Business Administration

SEC Securities and Exchange Commission

SSA Social Security Administration

TSA Transportation Security Administration

UNHCR United Nations High Commissioner for 

Refugees

USACE U.S. Army Corps of Engineers 

USAID U.S. Agency for International 

Development

USCIS U.S. Citizenship and Immigration 

Services

USDA U.S. Department of Agriculture 

US-VISIT United States Visitor and Immigrant 

Status Indicator Technology 

VA Department of Veterans Affairs
iv GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

How to Use This Report

This report describes the U.S. Government Accountability Office’s (GAO) performance measures, 

results, and accountability processes for fiscal year 

2005. In assessing our performance, we compared 

actual results against targets and goals that were set 

in our annual performance plan and were developed to help carry out our strategic plan. Our complete set of strategic planning and performance and 

accountability reports is available on our Web site at 

http://www.gao.gov/sp.html. 

This report has an introduction, four major parts, 

and supplementary appendixes as follows: 

■ Introduction 

Look here for the letter from the Comptroller General and a statement attesting to the completeness 

and accuracy of the data in this report. Also, look 

here for a discussion of our mission, organizational 

structure, strategic planning process, and process 

for assessing our performance. 

■ Management's Discussion and Analysis

Look here for our agencywide performance results 

and use of resources in fiscal year 2005. Look here 

also for information on the strategies we use to 

achieve our goals and the management challenges 

and external factors that affect our performance. 

■ Performance Information 

Look here for details on our performance results by 

strategic goal in fiscal year 2005 and the targets we 

are aiming for in fiscal year 2006. Look here also for 

an explanation of how we ensure the completeness 

and reliability of the performance data used in this 

report. 

■ Financial Information 

Look here for details on our finances in fiscal year 

2005, including a letter from our Chief Financial 

Officer, audited financial statements and notes, and 

the reports from our external auditor and audit 

advisory committee. Look here also for information 

on our internal controls and for an explanation of 

the kind of information each of our financial statements conveys. 

■ Appendixes 

Look here for detailed write-ups about our most significant accomplishments and contributions 

recorded in fiscal year 2005, for our Inspector General’s assessment of our agency’s management challenges, and for information on certain human 

capital management flexibilities and on information 

security reform efforts. 
Source: See Image Sources.

Introduction

Introduction
2 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

Source: See Image Sources.

From the

Comptroller General

of the United States

GnraCelFomhrletorlpt

November 15, 2005

By nearly every measure, GAO has once again produced excellent results in serving 

the Congress and the American people and, through this performance and accountability report, I am proud to share with you our assessment of how well we performed during fiscal year 2005. Our business involves helping to improve 

performance and ensure accountability in connection with a broad range of federal 

programs, policies, and activities. Simply put, we try to help improve the way the federal government works for the benefit of all of our nation’s citizens both now and in 

the future. To determine our success, we set performance targets and follow financial 

management and quality control practices that help ensure that we are making the 

best use of the federal funds invested in us. In addition, I am very pleased to report 

that we received clean opinions from external, independent auditors on our financial 

statements and on our performance audit and financial audit quality assurance systems. We also identified a broad range of issues that could seriously affect the stability 

and prosperity of the nation in the years to come. The following paragraphs highlight 

our performance in each of these areas.

With respect to our performance measures, I am especially pleased to report that we 

met or exceeded targets for 10 of our 14 performance measures, while setting or 

matching all-time records for 3 measures. We documented $39.6 billion in financial 

benefits—a return of $83 for every dollar we spent—and over 1,400 nonfinancial benefits—a record for us. The work we did to produce these benefits helped to shape 

important legislation, such as the Intelligence Reform and Terrorism Prevention Act of 

2004 (Pub. L. No. 108-458), and increase the efficiency of various federal programs, 

thus improving the lives of millions of Americans. In addition, the rate at which our 

recommendations were implemented by the Congress or federal agencies rose to 85 

percent in fiscal year 2005, and the percentage of our fiscal year 2005 products con-
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 3

taining recommendations increased to 63 percent—exceeding the targets we set for 

both of these measures this year. Our performance in these two areas also set an alltime record for recommendations implemented and matched the record we set in fiscal year 2004 for the percentage of new products with recommendations. We delivered 179 testimonies, slightly missing our target of 185. We also just missed our target 

of providing 98 percent of our products to the Congress when promised. In addition, 

in the first year that we are reporting our progress on our 8 new measures related to 

our people, we met or exceeded the targets for 6 of them related to retention and 

employee satisfaction. We came close to, but did not achieve, the targeted performance related to our new hire rate—the ratio of the number of people hired to the 

number of people we planned to hire—and the percentage of people that accepted 

our employment offers.

As in past years, during fiscal year 2005, our work covered a number of major topics 

of concern to the nation and, in some cases, the world. For example, we reported on 

the nation’s long-term fiscal challenges, the financial condition of the airline industry, 

spending and reconstruction activities related to Iraq and Afghanistan, and strengthening the visa process as an antiterrorism tool. As the war in Iraq continued, we 

examined how the Department of Defense supplied vehicles, body armor, and other 

materiel to the troops in the field. We also examined the Department of Defense’s 

transformation challenges, base realignment and closure issues, increasing the strategic focus of federal acquisitions, protecting against identity theft, the oversight of electricity markets, zero down payment mortgages, and immigration enforcement. We 

testified many times before the Congress, contributing to the public debate on a variety of topics that included Social Security reform, wildland fire management, gasoline 

prices, the flu vaccine, veterans’ health care, benefits for members of the Reserves 

and National Guard, digital broadcast television, long-term health care financing, 

passport fraud detection, reducing the tax gap, information security, and a range of 

financial management and accountability issues. These and other topics on which we 

testified are listed on page 36 of this report.

The American people benefited this year as federal agencies took a wide range of 

actions based on our analyses and recommendations, while our efforts also heightened the visibility of issues needing attention. For example, adoption of our recommendations helped improve home health care performance standards, increase the 

collection of delinquent taxes, and improve the efficiency of federal acquisitions. It is 

important for our nation and citizens not only that these issues are made visible, but 

also that the nation’s leaders address them. We feel fortunate and honored that in a 

significant majority of cases, our clients and federal agencies listen to what we have 

to say and act on our recommendations. Furthermore, virtually all of our reports are 

published and available on our Web site (http://www.gao.gov), keeping us accountable to the American people. 
4 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

Once again we have received a clean audit opinion on our financial statements, and 

in part III of this report we have included the external auditor’s report stating that we 

presented our financial statements fairly and maintained effective internal control processes. The auditors also reported no instances of noncompliance with applicable 

laws and regulations. Additionally, I am most pleased to report the results of the first 

ever review of our quality assurance system used to conduct our performance audits, 

which involves work performed in virtually all parts of GAO. This review—which 

was performed by an international team of auditors from seven countries led by the 

Office of the Auditor General of Canada—assessed whether our quality assurance 

policies and procedures were suitably designed and operating effectively; the review 

resulted in a clean opinion. Their April 2005 audit report also cited a number of 

exemplary practices at GAO, such as our strategic planning process, proactive working relationship with the Congress, quality assurance framework, and audit risk 

assessment process, and offered us some suggestions for improvement, including 

streamlining certain requirements for low-risk assignments, a suggestion that we are 

already working to implement. Similarly, we received a clean opinion resulting from 

a separate audit of our quality assurance system for our financial audits. This opinion 

was in line with previous such audits that have been conducted every 3 years. The 

auditors concluded that our system of quality control for the accounting and auditing 

practice was designed to meet applicable quality control standards and was complied 

with for the period reviewed, providing us reasonable assurance of conforming to 

applicable professional standards. 

In fiscal year 2005, we issued two products that will assist the Congress as it 

addresses a broad range of future challenges. Our report entitled 21st Century Challenges: Reexamining the Base of the Federal Government provides a series of illustrative questions related to 12 areas of federal activity as well as our perspective on 

various strategies and approaches that should be considered as a possible means to 

address the issues and questions raised in the report. Drawing on our institutional 

knowledge and extensive program evaluation and performance assessment work for 

the Congress, we presented over 200 specific 21st century questions illustrating the 

types of hard choices our nation needs to face as it reexamines what the federal government should do, how it should do it, and how it should be financed. (see p. 42 for 

more information about our 21st century challenges report.) We also issued our HighRisk Series: An Update, which identifies federal areas and programs at risk of fraud, 

waste, abuse, and mismanagement and those in need of broad-based transformations. The issues affecting many of these areas and programs may take years to 

address, and the report will serve as a useful guide for the Congress’s future programmatic deliberations and oversight activities. The current administration has looked to 

our high-risk program in shaping governmentwide initiatives such as the President's 

Management Agenda, which has at its base many of the areas we had previously 

identified as high risk. The Office of Management and Budget, in consultation with 
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 5

us, is currently working to ensure that agencies develop detailed action plans to 

address high-risk areas, with the ultimate objective, over time, of seeing these items 

removed from our high-risk list.

This year we also continued to take steps internally to be a model federal agency and 

a world-class professional services organization. These steps helped us to address our 

three major management challenges—human capital, physical security, and information security. Through the GAO Human Capital Reform Act of 2004, the Congress 

granted GAO several additional human capital flexibilities that will allow us, among 

other things, to move to an even more performance-oriented and market-based compensation system. Our most valuable asset continues to be our people, and the flexibilities granted in this act will help us to continue to modernize our people-related 

policies and strategies, which, in turn, will help to ensure that we are well equipped 

to serve the Congress and the American people in the years to come. As a result, we 

are continuing to take a range of actions designed to modernize our human capital 

policies and practices. In fiscal year 2005, we adopted a broad pay band approach 

and a more performance-oriented pay system for our administrative staff. We also 

made considerable progress in moving to a more market-based and skills-, knowledge-, and performance-oriented classification and pay system for all of our employees.

In today's world, we should partner for progress with other key players. We believe 

strongly in doing so in order to maximize our value and mitigate risk within current 

and expected resource levels. Fiscal year 2005 included several major milestones in 

GAO's outreach efforts. Most notably, we led the adoption of the first-ever strategic 

plans for the International Organizational of Supreme Audit Institutions (INTOSAI) 

and the National Intergovernmental Audit Forum.
6 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

In short, fiscal year 2005 was a very successful year for us. This report describes our 

many contributions toward improving the government, and I am confident that the 

performance data and financial information in this report are complete and reliable, 

as noted in the statement of assurance that appears just after this letter. I believe that 

GAO remained true to its core values of accountability, integrity, and reliability 

throughout the year and that those who read this report will agree that the taxpayers 

received an excellent return on their investment in us. 

David M. Walker

Comptroller General

of the United States 
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 7

Financial Reporting Assurance 

Statements

November 15, 2005

We, as GAO’s executive committee, are responsible for preparing and presenting the 

financial statements and other information included in this performance and accountability report. The financial statements included herein are presented in conformity 

with U.S. generally accepted accounting principles; incorporate management’s reasonable estimates and judgments, where applicable; and contain appropriate and 

adequate disclosures. Based on our knowledge, the financial statements are presented fairly in all material respects, and other financial information included in this 

report is consistent with the financial statements. 

On the basis of GAO’s comprehensive management control program, we are pleased 

to certify, with reasonable assurance, that 

■ Our financial reporting is reliable—transactions are properly recorded, processed, 

and summarized to permit the preparation of financial statements in accordance 

with U.S. generally accepted accounting principles, and assets are safeguarded 

against loss from unauthorized acquisition, use, or disposition. 

■ GAO is in compliance with all applicable laws and regulations—transactions are 

executed in accordance with (1) laws governing the use of budget authority and 

other laws and regulations that could have a direct and material effect on the 

financial statements and (2) any other laws, regulations, and governmentwide 

policies applicable to GAO. 

■ Our performance reporting is reliable—transactions and other data that support 

reported performance measures are properly recorded, processed, and 

summarized to permit the preparation of performance information in accordance 

with the criteria stated by GAO’s management. 
8 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

We also believe these same systems of accounting 

and internal controls provide reasonable assurance 

that GAO is in compliance with the spirit of 31 

U.S.C. 3512 (commonly referred to as the Federal 

Managers’ Financial Integrity Act). This is an objective that we set for ourselves even though, as part of 

the legislative branch of the federal government, we 

are not technically required to do so.

David M. Walker

Comptroller General

of the United States

Gene L. Dodaro

Chief Operating Officer

Sallyanne Harper

Chief Financial Officer

Anthony H. Gamboa

General Counsel
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 9

Source: See Image Sources.

GAO is an independent, nonpartisan, professional 

services agency in the legislative branch of the federal government. Commonly known as the “audit 

and investigative arm of the Congress” or the “congressional watchdog,” we examine how taxpayer 

dollars are spent and advise lawmakers and agency 

heads on ways to make government work better. As 

a legislative branch agency, we are exempt from 

many laws that apply to the executive branch agencies. However, we generally hold ourselves to the 

spirit of many of the laws, including 31 U.S.C. 3512 

(commonly referred to as the Federal Managers’ 

Financial Integrity Act), the Government Performance and Results Act of 1993, and the Federal 

Financial Management Improvement Act of 1996.1

Accordingly, this performance and accountability 

report for fiscal year 2005 supplies what we consider to be information that is at least equivalent to 

that supplied by executive branch agencies in their 

annual performance and accountability reports. 

Mission

Our mission is to support the Congress in meeting 

its constitutional responsibilities and to help 

improve the performance and ensure the accountability of the federal government for the benefit of 

the American people. The strategies and means that 

we use to accomplish this mission are described in 

the following pages. In short, we accomplish our 

mission by providing reliable information and 

informed analysis to the Congress, to federal agencies, and to the public; and we recommend 

improvements, when appropriate, on a wide variety 

of issues. Three core values—accountability, integrity, and reliability—form the basis for all of our 

work, regardless of its origin. These are described 

on the inside front cover of this report.

1The Federal Managers’ Financial Integrity Act requires ongoing evaluations and annual reports on the adequacy of the 

systems of internal accounting and administrative control of each agency. The Government Performance and Results 

Act seeks to improve public confidence in federal agency performance by requiring that federally funded agencies 

develop and implement an accountability system based on performance measurement, including setting goals and 

objectives and measuring progress toward achieving them. The Federal Financial Management Improvement Act 

emphasizes the need to improve federal financial management by requiring that federal agencies implement and maintain financial management systems that comply with federal financial management systems requirements, applicable 

federal accounting standards, and the U.S. Government Standard General Ledger at the transaction level. 

About GAO

We exist to support the Congress in meeting its constitutional 

responsibilities and to help improve the performance and ensure 

the accountability of the federal government for the benefit of the 

American people

GAO’s History 

The Budget and Accounting Act of 1921 required the 

President to issue an annual federal budget and established GAO as an independent agency to investigate 

how federal dollars are spent. In the early years, we 

mainly audited vouchers, but after World War II we 

started to perform more comprehensive financial 

audits that examined the economy and efficiency of 

government operations. By the 1960s, GAO, which is 

in the legislative branch of the federal government, 

had begun to perform the type of work we are noted 

for today—program evaluation—which examines 

whether government programs are meeting their 

objectives. Our name—the U.S. Government Accountability Office—reflects our people, our work, and our 

reputation.
10 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

Strategic Planning and 

Management Process

To accomplish our mission, we use a strategic planning and management process that is based on a 

hierarchy of four elements (see fig. 1), beginning at 

the highest level with the following four strategic 

goals:

■ Strategic Goal 1: Provide Timely, Quality Service 

to the Congress and the Federal Government to 

Address Current and Emerging Challenges to the 

Well-Being and Financial Security of the 

American People

■ Strategic Goal 2: Provide Timely, Quality Service 

to the Congress and the Federal Government to 

Respond to Changing Security Threats and the 

Challenges of Global Interdependence

■ Strategic Goal 3: Help Transform the Federal 

Government’s Role and How It Does Business to 

Meet 21st Century Challenges

■ Strategic Goal 4: Maximize the Value of GAO by 

Being a Model Federal Agency and a World-Class 

Professional Services Organization

Figure 1: GAO’s Strategic Planning Hierarchy 

Our work is primarily aligned under the first three 

strategic goals, which span issues that are both 

domestic and international, affect the lives of all 

Americans, and influence the extent to which the 

federal government serves the nation’s current and 

future interests. The fourth goal is our only internal 

one and is aimed at maximizing our productivity 

through such efforts as investing steadily in information technology (IT) to support our work; ensuring the safety and security of our people, 

information, and assets; pursuing human capital 

transformation; and leveraging our knowledge and 

experience. Figure 2 lists by goal some examples of 

our work during fiscal year 2005; this work relates 

to a variety of specific strategic objectives. We revisit 

the focus and appropriateness of these four strategic 

goals each time that we update our strategic plan. 

Source: GAO.
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 11

Figure 2: Examples of How GAO Assisted the Nation

Source: GAO.

GAO strategic 

goal Description In fiscal year 2005, GAO provided information that helped to...

1 Provide timely, 

quality service to the 

Congress and the 

federal government 

to address current 

and emerging 

challenges to the 

well-being and 

financial security of 

the American 

people.

■ Improve the transition from active duty to civilian status for veterans with serious war-related 

injuries 

■ Address long-term health care financing pressures on state and local government budgets 

■ Identify challenges with transferring the Medicare appeals process from the Social Security 

Administration (SSA) and the Department of Health and Human Services (HHS)

■ Improve patient safety at Department of Veterans Affairs hospitals 

■ Improve the security of Social Security numbers 

■ Address the challenges of pension reform 

■ Strengthen the security screening process for passengers and checked baggage at the 

nation’s airports

■ Improve the oversight of Federal Housing Administration single-family and multifamily 

lenders

■ Improve the oversight of electricity markets by the Federal Energy Regulatory Commission 

■ Identify challenges associated with the Department of Energy’s (DOE) nuclear facility 

designs 

■ Monitor the growth in the digital television market 

■ Analyze issues contributing to the declining financial condition of the airline industry 

2 Provide timely, 

quality service to the 

Congress and the 

federal government 

to respond to 

changing security 

threats and the 

challenges of global 

interdependence.

■ Improve the management of funds for the Global War on Terrorism

■ Increase the security of cargo containers to prevent terrorist activity

■ Alert the Congress to issues affecting the Department of Defense's (DOD) major weapon 

systems

■ Analyze funding options for a new federal foreign assistance program—the Millennium 

Challenge Account 

■ Promote government efforts to address threats to the security of the nation’s information 

systems

■ Strengthen the visa process as an antiterrorism tool 

■ Improve management of the U.S. Coast Guard's Deepwater program 

■ Shape the debate on improving military pay and benefits 

■ Strengthen the U.S. strategic export control system

■ Identify improvements needed to secure the telecommunications and information systems 

used by U.S. financial markets 

3 Help transform the 

federal government’s 

role and how it does 

business to meet 

21st century 

challenges.

■ Increase the public’s understanding of the federal government’s long-term fiscal challenges 

■ Implement governmentwide civil service reforms 

■ Oversee federal tax policy

■ Increase debts collected from criminals 

■ Decrease improper payments made by the U.S. Department of Agriculture’s (USDA) Food 

Stamp Program and other federal agencies 

■ Manage multibillion-dollar IT modernizations and investments at the Department of 

Homeland Security (DHS) and Office of Personnel Management 

■ Improve agencies’ strategic purchasing practices 

■ Examine changes in key areas of federal activity that could affect the federal government’s 

fiscal future 

■ Enhance the knowledge base on comprehensive national indicators 

4 Maximize the value 

of GAO by being a 

model federal 

agency and a worldclass professional 

services 

organization.

■ Foster among other federal agencies GAO's innovative human capital practices, such as 

broad pay bands; performance-based compensation; and workforce planning and staffing 

strategies, policies, and processes

■ Share GAO’s model business and management processes with counterpart organizations 

in the United States and abroad
12 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

The four strategic goals are supported by strategic 

objectives that are in turn supported by and 

achieved through numerous performance goals and 

key efforts. Our strategic planning framework for 

serving the Congress, which lists the strategic objectives under each goal, is depicted on the next page. 

This framework not only shows the relationship 

between our strategic goals and strategic objectives, 

but also shows major themes that could potentially 

affect our work.

Complete descriptions of the steps in our strategic 

planning and management process are included in 

our strategic plan for fiscal years 2004 through 2009, 

which is available on our Web site at 

http://www.gao.gov. This site also provides access 

to our annual performance plans since fiscal year 

1999 and our performance and accountability 

reports since fiscal year 2001. 

To ensure that we are well positioned to meet the 

Congress’s current and future needs, we update our 

6-year strategic plan every 3 years, consulting extensively during the update with our clients on Capitol 

Hill and with other experts (see our complete strategic plan on http://www.gao.gov/sp/d04534sp.pdf). 

Using the plan as a blueprint, we lay out the areas 

in which we expect to conduct research, audits, 

analyses, and evaluations to meet our clients’ needs, 

and we allocate the resources we receive from the 

Congress accordingly. Given the increasingly fast 

pace with which crucial issues emerge and evolve, 

we design a certain amount of flexibility into our 

plans and staffing structure so that we can respond 

readily to the Congress’s changing priorities. When 

we revise our plans or our allocation of resources, 

we disclose those changes in annual performance 

plans, which are posted—like our strategic plan—

on the Web for public inspection 

(http://www.gao.gov/sp.html). For example, we 

issued our performance plan for fiscal year 2006 in 

June 2005. 

Each year, we hold ourselves accountable to the 

Congress and to the American people for our performance, primarily through the annual performance and accountability report. However, we have 

included some information about future plans in 

this report to provide as cohesive a view as possible 

of what we have done, what we are doing, and 

what we expect to do to support the Congress and 

to serve the nation. Last year, the Association of 

Government Accountants awarded us for the fourth 

consecutive year its Certificate of Excellence in 

Accountability Reporting for our fiscal year 2004 

performance and accountability report. According 

to the association, this certificate means that we 

produced an interesting and informative report that 

achieved the goal of complete and fair reporting. 

(See p. 14.)

An Example of Our Strategic Planning Elements 

Strategic Goal 1: Provide Timely, Quality Service to 

the Congress and the Federal Government to Address 

Current and Emerging Challenges to the Well-Being 

and Financial Security of the American People 

Strategic Objective: A Secure Retirement for Older 

Americans 

Performance Goal: Identify Opportunities to 

Improve the Ability of Government Agencies to 

Administer and Protect Workers’ Retirement Benefits 

Key Efforts: 

■ Evaluate pension, pension insurance, and tax 

oversight programs to determine whether workers’ 

private pension retirement benefits are effectively 

protected

■ Evaluate SSA’s service-delivery systems and 

program operations to determine whether they are 

being implemented fairly, effectively, efficiently, 

and securely 

■ Assess the adequacy and management of public 

service retirement systems, including the federal, 

state, and local government employee systems, in 

serving participants and in protecting and providing 

benefits
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 13

CORE VALUES

Fiscal years 2004-2009 Source: GAO.

. . . Address Current and Emerging Challenges to the Well-Being Address Current and Emerging Challenges to the Well-Being

 and Financial Security of the American People nd Financial Security of the American People related to . . . related to . . .

. . . Respond to Changing Security Threats and the Challenges of Respond to Changing Security Threats and the Challenges of 

 Global Interdependence lobal Interdependence involving . . . involving . . .

Help Transform the Federal Government Help Transform the Federal Government’s Role and How It Role and How It 

Does Business to Meet 21st Century Challenges Does Business to Meet 21st Century Challenges by assessing . . . by assessing . . .

Maximize the Value of GAO by Being a Model Federal Agency and Maximize the Value of GAO by Being a Model Federal Agency and 

a World-Class Professional Services Organization a World-Class Professional Services Organization in the areas of . . . in the areas of . . .

Provide Timely, Quality Service to the Congress and the Provide Timely, Quality Service to the Congress and the 

Federal Federal Government to . . . Government to . . .

Demographics

National

Security

Long-Term

Fiscal Imbalance

Global

Interdependence

Changing 

Economy

Science 

and Technology

Quality 

of Life

Governance

Health care needs and financing

Education and protection of children

Work opportunities and worker 

protection

Retirement income security

Effective system of justice

Viable communities

Natural resources use and 

environmental protection

Physical infrastructure

Emerging threats

Military capabilities and readiness

Advancement of U.S. interests

Global market forces

Roles in achieving federal 

objectives

Government transformation

Key management challenges

and program risks

Fiscal position and financing of the 

government

MISSION

GAO exists to support the Congress in meeting its constitutional 

responsibilities and to help improve the performance and ensure the accountability 

of the federal government for the benefit of the American people.

Client and customer satisfaction

Strategic leadership

Institutional knowledge and experience

Process improvement

Employer of choice

Accountability Integrity Reliability

SERVING THE CONGRESS AND THE NATION 

GAO S STRATEGIC PLAN FRAMEWORK ,
14 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

Organizational Structure 

As the Comptroller General of the United States, 

David M. Walker is the head of GAO and is serving 

a 15-year term that began in November 1998. Three 

other executives join Comptroller General Walker to 

form GAO’s Executive Committee, which is the top 

policymaking body within GAO. These executives 

are Chief Operating Officer Gene L. Dodaro, Chief 

Administrative Officer/Chief Financial Officer Sallyanne Harper, and General Counsel Anthony H. 

Gamboa. 

To achieve our strategic goals, our staff is organized 

as shown in figure 3. For the most part, our 13 

research, audit, and evaluation teams perform the 

work that supports strategic goals 1, 2, and 3—our 

three external strategic goals—with several of the 

teams working in support of more than one strategic goal.

Source: See Image Sources.
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 15

Figure 3: Organizational Structure

Note: General Counsel’s structure largely mirrors the agency’s goal structure, and attorneys who are assigned to goals work 

with the teams on specific engagements. Thus, the dotted lines in this figure indicate General Counsel’s support of or advisory 

relationship with the goals and teams rather than a direct reporting relationship. 

Opportunity and Inspector General

Inclusiveness

Congressional

Relations

Public 

Affairs

Source: GAO.

Teams/ 

Field Operations

Comptroller General 

of the United States

Chief Operating Officer

Quality and

Continuous

Improvement

Strategic Planning 

and External Liaison

General

Counsel

Chief Administrative Officer/

Chief Financial Officer

Goal

4

Goal

2

Goal

3

Goal

1

Goal

4

Goal

3

Goal

2

Goal

1

• Provide audit and 

other legal support 

services for all goals 

and staff offices

• Manage GAO’s bid 

protest and 

appropriations law work

Provide timely, quality

service to the Congress

and the federal

government to respond

to changing security

threats and the

challenges of global

interdependence

• Acquisition and 

Sourcing 

Management

• Defense Capabilities 

and Management

• International Affairs 

and Trade

Provide timely, quality

service to the Congress

and the federal

government to address

current and emerging

challenges to the wellbeing and financial

security of the

American people

• Education, 

Workforce, and 

Income Security

• Financial Markets 

and Community 

Investment

• Health Care

• Homeland Security 

and Justice

• Natural Resources 

and Environment

• Physical 

Infrastructure

Help transform the

federal government’s

role and how it does

business to meet 21st

century challenges

• Applied Research 

and Methods

• Financial 

Management and 

Assurance

 – Forensic Audits 

 and Special

 Investigations

• Information 

Technology

• Strategic Issues

 – Federal Budget

 and

 Intergovernmental

 Relations

Maximize the value of

GAO by being a model

federal agency and a

world-class professional

services organization

• Controller

• Human Capital 

Office 

– Chief Human 

 Capital Officer

• Information Systems 

and Technology 

Services 

– Chief Information 

 Officer

• Knowledge Services

 – Chief Knowledge 

 Services Officer

• Professional 

Development 

Program
16 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

Senior executives in charge of the teams manage a 

mix of engagements to ensure that the Congress’s 

need for information on quickly emerging issues is 

met as we also continue longer term work efforts 

that flow from our strategic plan. To effectively 

serve the Congress with a finite set of resources, 

senior managers consult with our congressional clients and determine the timing and priority of 

engagements for which they are responsible. In fiscal year 2005, we formed a new unit—Forensic 

Audits and Special Investigations—within our 

Financial Management and Assurance team. This 

unit was designed to provide the Congress with 

high-quality forensic audits;2 investigations of fraud, 

waste, and abuse; and evaluations of security vulnerabilities and other appropriate investigative services as part of its own assignments or in support of 

other teams. This unit follows up on engagements 

and referrals from our other teams when its special 

services are required to help determine whether 

legislative or administrative actions are necessary. 

The unit is composed of investigators and staff from 

our former Office of Special Investigations; auditors 

from the Financial Management and Assurance 

team who have experience with forensic audits; and 

staff in General Counsel who worked with FraudNet—our online system designed to facilitate the 

reporting of allegations of fraud, waste, abuse, or 

mismanagement of federal funds.

As described below, General Counsel supports the 

work of all of our teams. In addition, the Applied 

Research and Methods team assists the other teams 

on matters requiring expertise in areas such as economics, research design, and statistical analysis. 

And staff in many offices such as Strategic Planning 

and External Liaison, Congressional Relations, 

Opportunity and Inclusiveness (OOI), Quality and 

Continuous Improvement (QCI), Public Affairs, and 

the Chief Administrative Office (CAO) support the 

efforts of the teams. This collaborative process, 

which we refer to as matrixing, increases our effectiveness, flexibility, and efficiency in using our 

expertise and resources to meet congressional 

needs on complex issues. 

General Counsel is structured organizationally along 

subject matter lines to facilitate the delivery of legal 

services. This structure allows General Counsel to 

(1) provide legal support to GAO and its audit 

teams concerning all matters related to their work 

and (2) produce legal decisions and opinions for 

the Comptroller General. Specifically, the Goal 1, 

Goal 2, and Goal 3 groups in General Counsel are 

organized to provide each of the audit teams with a 

corresponding team of attorneys dedicated to supporting each team’s needs for legal services. In 

addition, these groups prepare advisory opinions to 

committees and members of the Congress on 

agency adherence to laws applicable to their programs and activities. General Counsel’s Legal Services group provides in-house support to GAO’s 

management on a wide array of human capital matters and initiatives and on information management 

and acquisition matters and defends the agency in 

administrative and judicial forums. Finally, attorneys 

in the Procurement Law and the Budget and Appropriations Law groups prepare administrative decisions and opinions adjudicating protests to the 

award of government contracts or opining on the 

availability and use of appropriated funds. 

For strategic goal 4—our fourth and only internal 

strategic goal—staff in CAO take the lead. They are 

assisted on specific key efforts by the Applied 

Research and Methods team and by staff offices 

such as Strategic Planning and External Liaison, 

Congressional Relations, OOI, QCI, and Public 

Affairs. In addition, attorneys in General Counsel, 

primarily in the Legal Services group, provide legal 

support for goal 4 efforts. 

2

Forensic audits are reviews that are designed to highlight system vulnerabilities and identify potential instances of 

fraud, waste, and abuse. Such audits often involve data mining of agencies' information systems and developing examples or case studies to illustrate systemic problems. As with our performance and financial audits, we coordinate this 

work, when appropriate, with the agencies’ Offices of Inspectors General (IG).
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 17

Throughout GAO, we 

maintain a workforce of 

highly trained professionals with degrees in 

many academic disciplines, including 

accounting, law, engineering, public and 

business administration, 

economics, and the 

social and physical sciences. About threequarters of our approximately 3,200 employees 

are based at our headquarters in Washington, 

D.C.; the rest are 

deployed in 11 field offices across the country. Staff 

in these field offices are aligned with our research, 

audit, and evaluation teams and perform work in 

tandem with our headquarters staff in support of 

our external strategic goals. 

How We Measure Our 

Performance 

We measure our performance using annual quantitative measures and multiyear qualitative performance goals. Together, these indicators help us to 

determine how well we are meeting the needs of 

the Congress and maximizing our value as a worldclass organization. 

Annual Performance Measures 

For several years, we assessed our performance 

annually using quantitative performance measures 

that are related to our work results and the usefulness of those results to our primary client—the Congress. Recently, we expanded our focus to include a 

more balanced set of performance measures that 

focus on three key areas—results, clients, and people.3

 Fiscal year 2005 is the first year that we report 

how well we performed against the targets we set 

for our people measures. These categories of measures are briefly described below.

■ Results. Focusing on results and the effectiveness of the processes needed to achieve them is 

fundamental to accomplishing our mission. To 

assess our results, we measure financial benefits, 

other (nonfinancial) benefits, recommendations 

implemented, and percentage of new products 

with recommendations.

■ Clients. Our strategy in this area draws upon a 

variety of data sources (e.g., our client feedback 

survey and in-person discussions with congressional staff) to obtain information on the services 

we are providing to our congressional clients. To 

judge how well we are serving our clients, we 

measure the number of times we are asked to 

present expert testimony at congressional hearings as well as our timeliness in delivering products to the Congress. 

■ People. As our most important asset, our people 

define our character and capacity to perform. A 

variety of data sources, including an internal survey, provide information to help us measure how 

well we are attracting and retaining high-quality 

staff and how well we are developing, supporting, using, and leading staff. 

Beginning with fiscal year 2006, we will add internal operations measures to the list of measures on 

which we report. Our mission and people are supported by our internal administrative services, 

including information management, building management, knowledge services, human capital, and 

financial management services. Through an internal 

customer satisfaction survey, we gather information 

on how well our internal operations help employees get their jobs done or improve employees’ quality of work life. Examples of surveyed services 

include providing secure Internet access and voice 

3In addition, we are continuing to explore measures that could help us assess how well we develop mutually beneficial 

relationships with other accountability organizations. Such partnerships are important because they (1) create opportunities for collaboration and cooperation that help all organizations involved address common challenges and enhance 

their ability to improve government operations and serve the public better, (2) allow us and other organizations to make 

meaningful changes in our internal accountability processes and policies, and (3) allow us to better leverage available 

resources. The Building Partnerships and Strategies for Achieving Our Goals sections in this report provide additional 

information on the partnerships we have established. 

GAO Field Locations

Atlanta

Boston

Chicago

Dallas

Dayton

Denver

Huntsville

Los Angeles

Norfolk

San Francisco

Seattle
18 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

communication systems, performance management, 

and benefits information and assistance. (For more 

information about these measures, see p. 41.)

To establish targets for these measures, we examine 

what we have been able to achieve in the past (e.g., 

by looking at our 4-year rolling averages for our client measures and most of our results measures, see 

p. 24) and the external factors that influence our 

work (see p. 58). The teams and offices that are 

directly engaged in the work discuss their views of 

what must be accomplished in the upcoming fiscal 

year with our top executives, who then establish 

targets for the performance measures. Once 

approved by the Comptroller General, the targets 

become final and are presented in our annual performance plan.4

 We may adjust these targets after 

they are initially published when our expected 

future work or level of funding provided warrant 

doing so. If we make changes, we include the 

changed targets in later documents, such as this performance and accountability report, and annotate 

the changes. In part II, we include detailed information on data sources that we use to assess each of 

these measures, as well as the steps we take to verify and validate the data (see p. 82).

Measuring the Results of Our Work

We use four of our annual measures—financial benefits, other benefits, the percentage of past recommendations implemented, and the percentage of 

new products with recommendations—to assess 

our efforts to provide the kind of information and 

recommendations that will lead to benefits for the 

American people. Financial benefits and other benefits provide quantitative and qualitative information, respectively, on the outcomes or results that 

have been achieved from our work. They often represent outcomes that occurred over a period of several years. The remaining measures are intermediate 

outcomes in that they often lead to achieving outcomes that are ultimately captured in our financial 

or other benefits.

For financial benefits and other benefits we first set 

targets for the agency as a whole and then we set 

targets for each of the external goals—that is, goals 

1, 2, and 3—so that the sum of the targets for the 

goals equals the agencywide targets. For past recommendations implemented and percentage of 

products with recommendations, we set targets and 

report performance for the agency as a whole 

because we want our performance on these measures to be consistent across goals. We track our 

performance by strategic goal in order to understand why we meet or do not meet the agencywide 

target. We also use this information to provide feedback to our teams on the extent to which they are 

contributing to the overall target and to help them 

identify areas in which they need to improve. 

Multiyear Performance Goals

We use two elements in our strategic planning hierarchy—performance goals and key efforts—as qualitative indicators of our performance. We ask senior 

managers to determine whether the performance 

goals established in our strategic plan have been 

met over a multiyear period. To do this, these managers examine the amount of work conducted and 

recommendations made for each key effort supporting each performance goal. Senior managers also 

consider any other assistance provided to the client 

or customer that is related to these efforts. These 

managers then judge whether the work completed 

collectively for all key efforts actually achieved the 

performance goal, and we include the results of 

those assessments in our performance and accountability reports. 

For all four strategic goals, the multiyear, qualitative 

performance goals included in our current strategic 

plan describe specific areas of work that we had 

planned to complete by the end of fiscal year 2005. 

We assess our progress toward these multiyear, 

qualitative performance goals in part II of this 

report. However, during fiscal year 2004, we 

decided to revise our strategic plan every 3 years, 

rather than on a 2-year cycle, which means that we 

will not set new multiyear performance goals until 

2007. To accommodate this change, for fiscal year 

2006, we plan to continue to use the current performance goals as a basis for aligning our work with 

our strategic goals, and will describe the work we 

did in support of these multiyear performance goals 

at the end of fiscal year 2006. In preparing our fiscal 

year 2006 budget submission, we made minor revisions that apply to fiscal year 2006 for some of these 

performance goals, mainly in the homeland security 

4

Our most recent performance plan is available on our Web site at http://www.gao.gov/cgi-bin/getrpt?gao-05-776sp.
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 19

and justice areas. These revisions were discussed in 

our fiscal year 2006 performance plan. In our next 

strategic plan update, which will cover fiscal years 

2007 through 2012, we will establish revised performance goals and key efforts that cover fiscal years 

2007 through 2009. 

Measuring Client Service

We use two performance measures—the number of 

testimonies and the timeliness of our products—as 

indicators of how well we are meeting our clients’ 

needs.

We consider requests to present testimony as an 

indicator that our clients believe our work can add 

value to the congressional decision-making process. 

We set a target at the agencywide level for the number of testimonies and then assign a portion of the 

testimonies as a target for each of the external 

goals—that is, goals 1, 2, and 3—based on their 

expected contribution to the agencywide total. As in 

measuring the results of our work, we track our 

progress on this measure at the goal level in order 

to understand why we met or did not meet the 

agencywide target.

We also believe that our ability to provide products 

by the agreed-upon date means that we have met 

the clients’ needs for providing information in time 

for it to be of value to them. We set agencywide targets for timeliness because we want our performance on these measures to be consistent across 

goals. However, we track our progress on this measure at the team level so that we can provide feedback to our teams on the extent to which they are 

contributing to the overall target and to help them 

identify areas in which they need to improve. 

Measuring the Management of Our People

Our most important asset is our people, and they 

determine our capacity to perform. Therefore, we 

hold our managers accountable for attracting and 

retaining our human resources and determine how 

well we are performing in these areas through our 

new hire rate, acceptance rate, and retention rate. 

We also hold our managers accountable for investing in and leading our human resources. To assess 

our success in these areas, we track our performance using the following measures: staff development, staff utilization, leadership, and organizational 

development. We set targets for all of these measures at the agencywide level.

 

On the pages that follow, we assess our performance for fiscal year 2005 against our previously 

established performance targets. We also present 

our financial statements, the independent auditor’s 

report, and a statement from GAO’s Inspector General.
20 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005
Management’s Discussion

and Analysis

Part I

Source: See Image Sources.

Part I:

Management’s 

Discussion and 

Analysis
22 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART I: Management’s Discussion and Analysis

Providing Information That Improves Federal 

Programs Now and in the Future 

In fiscal year 2005, the Congress focused its attention on a broad array of challenging issues affecting 

the safety, health, and well-being of Americans here 

and abroad, and we were able to provide the objective, fact-based information these decision makers 

needed to stimulate debate, change laws, and 

improve federal programs for the betterment of the 

nation. For example, as the war in Iraq continued, 

we examined how DOD supplied vehicles, body 

armor, and other materiel to the troops in the field; 

contributed to the debate on military compensation; 

and highlighted the need to improve health, vocational rehabilitation, and employment services for 

seriously injured soldiers transitioning from the battlefield to civilian life. We also kept pace with the 

Congress’s information needs about ways to better 

protect America from terrorism by issuing products 

and delivering testimonies that addressed issues 

such as security gaps in the nation’s passport operations that threaten public safety and federal efforts 

needed to improve the security of checked baggage 

at airports and cargo containers coming through 

U.S. ports. We explored the financial crisis that 

weakened the airline industry and the impact of this 

situation on the traveling public and airline employees’ pensions. 

In addition, we helped to focus the attention of the 

Congress and the public on issues affecting the fiscal security and economic stability of the nation in 

the long term. In the second quarter of fiscal year 

2005, we issued two products that will assist the 

Congress as it addresses future challenges. Our 

report entitled 21st Century Challenges: Reexamining the Base of the Federal Government provides a 

series of illustrative questions related to 12 areas of 

federal activity as well as our perspective on various 

strategies and approaches that should be considered as a possible means to address the issues and 

questions raised in the report. Drawing on our institutional knowledge and extensive program evaluation and performance assessment work for the 

Congress, we presented over 200 specific 21st century questions illustrating the types of hard choices 

our nation needs to face as it reexamines what the 

federal government does and how it does it. We 

also issued our High-Risk Series: An Update, which 

identifies federal areas and programs at risk of 

fraud, waste, abuse, and mismanagement and those 

in need of broad-based transformations. The issues 

affecting many areas and programs discussed in 

these two products may take years to address, and 

these products will serve as a useful guide for the 

Congress’s future programmatic deliberations and 

oversight activities. (see pp. 42 and 43 for more 

information about our 21st century challenges and 

high-risk reports, respectively.) We performed all 

this work and more in accordance with our strategic 

plan, guided by our core values, and consistent 

with our professional standards. 

As we assisted the Congress in fiscal year 2005, we 

monitored our performance using 14 annual performance measures that capture the results of our 

work; the assistance we provided to our client—the 

Congress; and our ability to attract, retain, develop, 

and lead a highly professional workforce (see 

table 1). These measures indicate that we had an 

impressive year—we met or exceeded our performance targets for 10 of our 14 measures. Two of 

our results measures—financial benefits and other 

benefits—illustrate the outcomes of our work and 

our value to the nation because they track federal 

dollars saved or better used and programmatic 

improvements implemented as a result of our work. 

Two additional results measures track recommendations implemented and new products with recommendations that help us to achieve financial and 

other benefits. Our client measures—testimonies 

and timeliness—indicate how well we, as an information provider, serve the Congress, and our people measures reflect how well we manage our staff 

to achieve the results that we do.
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 23

PART I: Management’s Discussion and Analysis

Table 1: Agencywide Summary of Annual Measures and Targets

Source: GAO.

Notes: N/A indicates the information is not available or the target is not applicable. Our fiscal year 2006 target for the percentage 

of products with recommendations differs from the target we reported for this measure in our fiscal year 2006 performance plan 

posted on our Web page in June 2005. On the basis of our performance in fiscal year 2005, we increased this target by 5 

percentage points. 

In fiscal year 2005, we accomplished real results for 

the nation, surpassing our financial benefits target 

for the year and exceeding our annual target and 

all-time record for other (nonfinancial) benefits. Our 

financial benefits of $39.6 billion represents an $83 

return on every dollar invested in us, and the more 

than 1,400 other benefits resulting from our work 

helped to improve the efficiency and effectiveness 

of government programs that serve the public. In 

addition, we exceeded our targets for past recommendations implemented and new products with 

recommendations by 5 percentage points and 8 

percentage points, respectively. 

We did not achieve the targets we set for testimonies and timeliness. Several testimonies we had 

scheduled were postponed or canceled so that the 

Congress could turn its attention to the Supreme 

Court nominations, and during the last months of 

the fiscal year, to Hurricane Katrina and its aftermath. However, we believe we served the Congress 

very well during fiscal year 2005. Based on feedback through an electronic survey completed by a 

sample of our congressional clients who requested 

our testimonies and significant products, 96 percent 

of the responses concerning their overall satisfaction with our products were favorable. These 

2005

Performance measure

2001

actual

2002 

actual

2003 

actual

2004

actual Target Actual

Met/

not met

2006

target

Results

Financial benefits

(dollars in billions) $26.4 $37.7 $35.4 $44.0 $37.5 $39.6 Met $39.0

Other benefits 799 906 1,043 1,197 1,000 1,409 Met 1,050

Past recommendations 

implemented 79% 79% 82% 83% 80% 85% Met 80%

New products with 

recommendations 44% 53% 55% 63% 55% 63% Met 60%

Client

Testimonies 151 216 189 217 185 179 Not met 210

Timeliness 95% 96% 97% 97% 98% 97% Not met 98%

People

New hire rate N/A 96% 98% 98% 97% 94% Not met 97%

Acceptance rate N/A 81% 72% 72% 75% 71% Not met 75%

Retention rate

With retirements 91% 91% 92% 90% 90% 90% Met 90%

Without retirements 95% 97% 96% 95% 94% 94% Met 94%

Staff development N/A 71% 67% 70% 72% 72% Met 74%

Staff utilization N/A 67% 71% 72% 74% 75% Met 75%

Leadership N/A 75% 78% 79% 80% 80% Met 80%

Organizational climate N/A 67% 71% 74% 75% 76% Met 75%
24 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART I: Management’s Discussion and Analysis

respondents were pleased with various aspects of 

our written products and testimony statements, such 

as the professional manner in which we conducted 

our work and responded orally to questions at congressional hearings, respectively. We discuss the client feedback survey in detail on p. 37 of this report.

Concerning our eight people measures, which we 

began to hold managers accountable for in fiscal 

year 2005, we are happy to report that we met or 

exceeded our annual targets for all but two of 

them—new hire rate and acceptance rate. Our performance in this area indicates that we did a very 

good job developing, productively using, and managing our staff, but need to improve our recruiting 

and hiring processes a little more, which we have 

taken steps to do. We discuss these actions in 

appendix 1 of this report (see p. 185).

To help us examine trends over time, we also look 

at 4-year averages for all of our results and client 

measures except the percentage of past recommendations implemented because it is a composite that 

is drawn from a number of years rather than an 

annual percentage. Calculating 4-year rolling averages for the other measures minimizes the effect of 

an atypical result in any given year. We consider this 

calculation, along with other factors, when we set 

our performance targets. Table 2 shows that from 

fiscal year 2001 through fiscal year 2005 financial 

and other benefits increased steadily along with the 

percentage of new products with recommendations. 

The average number of testimonies, on the other 

hand, declined from fiscal years 2003 through fiscal 

year 2004, but has increased in fiscal year 2005. Our 

ability to provide timely products leveled off after 

fiscal year 2002 and fiscal year 2004 at 96 percent, 

but increased slightly by 1 percentage point in fiscal 

year 2005.

Table 2: Four-Year Rolling Averages for Selected GAO Measures

Source: GAO.

Performance measure 2001 2002 2003 2004 2005

Results

Financial benefits (dollars in billions) $22.4 $26.9 $30.7 $35.9 $39.2

Other benefits 683 775 884 986 1,139

New products with recommendations 37% 42% 48% 54% 58%

Client

Testimonies 225 215 205 193 200

Timeliness 95% 96% 96% 96% 97%
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 25

PART I: Management’s Discussion and Analysis

Regarding our qualitative multiyear performance 

goals, at the close of fiscal year 2005 (the end of our 

multiyear performance cycle) we met 96 of our 99 

performance goals. In part II of this report, we 

present detailed information about the multiyear 

performance goals developed to measure our 

progress toward achieving each of our four strategic 

goals. 

Focusing on Results

Focusing on outcomes and the efficiency of the processes needed to achieve them is fundamental to 

accomplishing our mission. The following five 

annual measures indicate that we have fulfilled our 

mission and delivered results that benefit the nation.

Financial and Other Benefits

We describe many of the benefits produced by our 

work as either financial or other (nonfinancial) benefits. Both types of benefits result from our efforts to 

provide information to the Congress that helped to 

(1) change laws and regulations, (2) improve services to the public, and (3) promote sound agency 

and governmentwide management. In many cases, 

the benefits we claimed in fiscal year 2005 are 

based on work we did in past years because it often 

takes the Congress and agencies time to implement 

our recommendations or to act on our findings.

To claim either type of benefit, our staff must document the connection between the benefits reported 

and the work that we performed.

Financial Benefits

Our findings and recommendations produce measurable financial benefits for the federal government 

when the Congress or agencies act on them and the 

funds are made available to reduce government 

expenditures or are reallocated to other areas. The 

monetary effect realized can be the result of 

changes in

■ business operations and activities;

■ the structure of federal programs; or

■ entitlements, taxes, or user fees.

For example, financial benefits could result if the 

Congress were to reduce the annual cost of operating a federal program or lessen the cost of a multiyear program or entitlement. Financial benefits 

could also result from increases in federal revenues—due to changes in laws, user fees, or asset 

sales—that our work helped to produce.

In fiscal year 2005, our work generated $39.6 billion 

in financial benefits (see fig. 4). Of this amount, $19 

billion (or approximately 48 percent) resulted from 

changes in laws or regulations (see fig. 5).
26 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART I: Management’s Discussion and Analysis

Figure 4: Financial Benefits GAO Recorded in 

Fiscal Year 2005

Figure 5: Types of Financial Benefits Recorded in 

Fiscal Year 2005 from Our Work

Note: Percentages and amounts do not add due to rounding.

Financial benefits included in our performance 

measures are net benefits—that is, estimates of 

financial benefits that have been reduced by the 

costs associated with taking the action that we recommended. We convert all estimates involving past 

and future years to their net present value and use 

actual dollars to represent estimates involving only 

the current year. Financial benefit amounts vary 

depending on the nature of the benefit, and we can 

claim financial benefits over multiple years based 

on a single agency or congressional action. To 

ensure conservative estimates of net financial benefits, reductions in operating cost are typically limited 

to 2 years of accrued reductions. Multiyear reductions in long-term projects, changes in tax laws, 

program terminations, or sales of government assets 

are limited to 5 years. Estimates come from nonGAO sources and are reduced by any identifiable 

offsetting costs. These non-GAO sources are typically the agency that acted on our work, a congressional committee, or the Congressional Budget 

Office.

To document financial benefits, our staff complete 

reports documenting accomplishments that are 

linked to specific products or actions. All accomplishment reports for financial benefits are documented and reviewed by (1) another GAO staff 

member not involved in the work and (2) a senior 

executive in charge of the work. Also, a separate 

unit, QCI, reviews all financial benefits and 

approves benefits of $100 million or more, which 

amounted to 94 percent of the total dollar value of 

benefits recorded in fiscal year 2005. Additionally, 

our IG performs an independent review of all 

accomplishment reports claiming benefits of $500 

million or more, which represented about 78 percent in fiscal year 2005. 

Figure 6 lists several of our major financial benefits 

reported in fiscal year 2005 and briefly describes 

some of our work contributing to financial benefits.

Dollars in billions

Source: GAO.

Actual Target Actual

0

10

20

30

40

50

2001 2002 2003 2004 2005 2005

$39.6 $37.5

$44.0

$35.4 $37.7

$26.4

Agencies acted on GAO information to improve services

to the public

Information GAO provided to the Congress resulted in 

statutory or regulatory changes

Core business processes improved at agencies and 

governmentwide management reforms advanced by 

GAO’s work

Categories

Source: GAO.

Financial Benefits

Total $39.6 billion

$7.7 billion

(19.5%)

$12.8 billion

(32.4%)

$19.0 billion

(48.0%)
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 27

PART I: Management’s Discussion and Analysis

Figure 6: GAO’s Selected Major Financial Benefits Reported in Fiscal Year 2005

Description Amount

Reduced funding for a missile defense system. In an April 2003 report, we stated that to successfully 

develop an effective and suitable missile defense system, the Missile Defense Agency must be willing to adopt 

knowledge-based acquisition practices that have made other developers successful. Our report 

acknowledged that the agency’s development strategy for the Kinetic Energy Interceptor program included 

knowledge-based practices, but concluded that the agency had not implemented two important practices: 

(1) using well-developed technologies during system integration and (2) fully testing a system before fielding 

it. In response, the Missile Defense Agency is scaling back development of the Kinetic Energy Interceptor 

program until technologies are mature. Over a 5-year period—from fiscal year 2005 through fiscal year 

2009—program funding will be reduced by about $5.2 billion, which has a net present value of about $4.7 

billion. (Goal 2) $4.7

Avoided higher costs associated with a nuclear waste disposal process. In a June 2003 report, we 

recommended that DOE pursue legislative clarification from the Congress because of a legal challenge that 

threatened DOE’s ability to proceed with its less costly strategy for treating and disposing of radioactive tank 

wastes with lower concentrations of radioactivity. DOE estimated that pursuing a more expensive treatment 

and disposal strategy suitable for wastes with higher concentrations of radioactivity would increase waste 

treatment disposal costs by $55 billion to $60 billion at its Savannah River Site. The Fiscal Year 2005 National 

Defense Authorization Act contained a provision that clarified DOE’s authority to follow its planned treatment 

and disposal strategy thus avoiding a more costly process. We calculated that the net present value of the 

cost avoidance for fiscal years 2005 through 2009 was about $4.5 billion. (Goal 1) $4.5

Improved the Army’s force structure. In a report examining the Army’s force structure, we recommended 

that the Army establish mission criteria to provide a firmer basis for its Strategic Reserve, Domestic Support, 

and Homeland Defense force requirements. Such criteria would help to ensure that the Army had the right 

number and types of soldiers available for these purposes. Rather than request additional end strength, the 

Army reconfigured its existing force’s structure. In April 2003, DOD reported that the Army had included force 

structure changes in its fiscal year 2004 budget, which supported increased units for military police; military 

intelligence; special forces; and chemical, civil affairs, and psychological operations. Based on this action, the 

Army has been able to rebalance its force structure to create needed units with minimal increases in 

authorized end strength. The amount shown represents the net present value of the force structure changes 

over a 5-year period (fiscal years 2004 through 2008). (Goal 2) $3.4

Reduced the cost of federally subsidized housing projects. We determined that the Department of 

Housing and Urban Development (HUD) had not developed the systems it needed to track the status of 

unexpended balances in its project-based Section 8 housing program and therefore could not use this 

information to help manage the program and formulate budget requests for it. As a result of our work, the 

Congress required HUD to better enforce the legislative provisions requiring the recapture of capital funds not 

being utilized by public housing authorities. In fiscal year 2005, we documented—using HUD data—that a 

financial benefit of about $2.7 billion in current dollars resulted from HUD’s recapture of about $2.5 billion of 

fiscal year 2003 dollars. (Goal 1) $2.7

Avoided costs associated with higher payment rates at skilled nursing homes. In 2002, we assessed 

the impact of a 16.6 percent increase in Medicare’s daily rate for skilled nursing facilities on nurse staffing 

ratios. Our analysis showed that nurse staffing ratios changed little from April 1, 2001, through September 30, 

2002—the period during which the rate increase was in effect. In fiscal year 2003, the cost to the federal 

government of reinstating the payment rate increase was approximately $1 billion per year. Since we issued 

our report, the Congress has considered reinstating the rate increase, but it has chosen not to, largely on the 

basis of our analysis. The net present value of the annual cost avoidance for fiscal years 2004 and 2005 is 

$2 billion. (Goal 1) $2.0

Source: See Image Sources.

Financial Benefits

(Dollars in billions)
28 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART I: Management’s Discussion and Analysis

Source: GAO.

Increased tax revenues. We reported that the Internal Revenue Service (IRS) did not have systems or 

procedures in place to allow it to identify and actively pursue unpaid tax cases that may have some collection 

potential. Based on our work, IRS has taken action to better assess the potential for collecting unpaid tax 

assessment cases and has used that information to better target its collection efforts. Specifically, in 2004 IRS 

began implementing a sophisticated modeling technology to identify productive and less productive cases to 

ensure that its resources are devoted to cases with a higher likelihood of collection and to help prevent 

premature suspension of collection efforts. IRS’s analysis of the yield on collection cases after employing this 

modeling in fiscal year 2004 shows that this yield increased by about $1.8 billion (in current year dollars), or 

8.4 percent from the previous year (fiscal year 2003), without significant staffing level increases. (Goal 3) $1.8

Ensuring continued investment in the General Services Administration’s (GSA) online purchasing 

system. As of 2003, GSA had spent $84 million to develop, implement, and maintain Advantage, a system for 

ordering products and services online. However, 5 years after the system was launched, only 35 percent of all 

government-contracted vendors participated in the program, and agencies were largely using the system to 

compare pricing. To ensure GSA’s level of investment matched customer needs, we recommended that the 

agency develop a business case for a system such as Advantage, and in January 2005, GSA selected a new 

business strategy that would significantly enhance the system’s capabilities to serve as a broker between 

buyers and suppliers and provide agencies with an automated tool for formulating acquisition requirements 

and developing requests for quotes. GSA projects over $1.5 billion in financial benefits to result from 

electronic transactions, spend analysis (analysis of expenditures that shows how money is spent on goods 

and services), a searchable procurement data repository, and competitive pricing. This financial benefit has a 

net present value of just over $1.3 billion. (Goal 3) $1.3

Reduced Navy and Air Force appropriations. DOD policy requires the Defense Working Capital Fund to 

maintain cash levels to cover 7 to 10 days of operational cash and 6 months of capital asset disbursements. 

Our analysis showed that the January 2004 reported actual cash balance for the Air Force Working Capital 

Fund exceeded the 10-day cash requirement by about $1.5 billion, and the Navy’s Working Capital Fund 

reported actual cash balance exceeded the budgeted cash balance by $659 million and $408 million at the 

end of fiscal years 2002 and 2003, respectively. The Congress reduced the Navy and Air Force fiscal year 

2005 Operation and Maintenance appropriations by just under $1.3 billion due to excessive cash amounts. 

(Goal 3) $1.3

Eliminated the National Aeronautics and Space Administration’s (NASA) Prometheus 1 project. We 

issued a report questioning whether NASA had established the initial justification for its investment in the 

Prometheus 1 project and how the agency planned to ensure that critical nuclear power and propulsion 

system technologies were sufficiently developed to support deep space probes like the Jupiter Icy Moons 

Orbiter. We also reported that the approved Prometheus 1 funding profile was inadequate to support the 

planned mission—a launch to Jupiter’s Icy Moons in 2015. NASA has subsequently deferred the Jupiter Icy 

Moons Orbiter mission indefinitely, reducing the agency’s funding needs by about $1.22 billion through fiscal 

year 2009; the net present value of this reduction is over $1.1 billion. (Goal 3) $1.1

Reduced the budget request for a new foreign assistance program. In March and June 2004, we 

provided the Congress with information to help it assess the President’s $2.5 billion fiscal year 2005 budget 

request for the Millennium Challenge Account—a new foreign assistance program intended to provide 

economic assistance to countries that demonstrate a commitment to ruling justly, investing in people, and 

encouraging economic freedom. Our work provided the Congress with a framework for identifying 

relationships and tradeoffs between funding levels, compact length, and number of compacts (i.e., 

agreements). Our analysis indicated that by reducing assistance target levels, the length of compacts or both 

with participating countries, the program could operate at a lower funding level. We also estimated the effect 

of funding compacts partly from future appropriations. Our work facilitated the Congress’s decision to reduce 

the appropriation for the Millennium Challenge Account in fiscal year 2005 to $1.5 billion. (Goal 2) $1.0
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 29

PART I: Management’s Discussion and Analysis

Other Benefits

Many of the benefits that result from our work cannot be measured in dollar terms. During fiscal year 

2005, we recorded a total of 1,409 other benefits 

(see fig. 7).

Figure 7: Other Benefits GAO Recorded in Fiscal 

Year 2005

We documented 75 instances where the information 

we provided to the Congress resulted in statutory or 

regulatory changes, 595 instances where federal 

agencies used our information to improve services 

to the public, and 739 instances where agencies 

improved core business processes or governmentwide reforms as a result of our work. (See fig. 8.) 

These actions spanned the full spectrum of issues, 

from identifying that some soldiers had not been 

reimbursed for military-related travel costs they personally incurred to highlighting weaknesses in SSA’s 

policies for verifying birth certificates when issuing 

replacement Social Security cards. In figure 9 we 

provide examples of some of the other benefits we 

claimed as accomplishments in fiscal year 2005. The 

laws that we cite in the first section of this figure 

were passed in fiscal year 2005. 

Figure 8: Types of Other Benefits Recorded in 

Fiscal Year 2005 from Our Work

Note: Percentages do not add due to rounding.

0

300

600

900

1,200

1,500

2001 2002 2003 2004 2005 2005

Number

Source: GAO.

Actual Target Actual

1,409

1,000

1,197

1,043

906

799

Agencies acted on GAO information to improve services

to the public

Information GAO provided to the Congress resulted in 

statutory or regulatory changes

Core business processes improved at agencies and 

governmentwide management reforms advanced by 

GAO’s work

Categories

Source: GAO.

Other Benefits

Total 1,409

739

(52.4%)

595

(42.2%)

75

(5.3%)
30 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART I: Management’s Discussion and Analysis

Figure 9: GAO’s Selected Other (Nonfinancial) Benefits Reported in Fiscal Year 2005

Other benefits that helped to change laws

Intelligence Reform 

and Terrorism 

Prevention Act of 2004 

(Pub. L. No. 108-458) 

Our work is reflected in this law in different ways.

In our May 2004 testimony on the use of biometrics for aviation security, we reported on the need 

to identify how biometrics will be used to improve aviation security prior to making a decision to 

design, develop, and implement biometrics. Using information from our statement, the House 

introduced a bill on July 22, 2004, directing the Transportation Security Administration (TSA) to 

establish system requirements and performance standards for using biometrics, and to establish 

processes (1) to prevent individuals from using assumed identities to enroll in a biometric system 

and (2) to resolve errors. These provisions were later included in an overall aviation security bill 

and were eventually included in the Intelligence Reform and Terrorism Prevention Act of 2004, 

enacted in December 2004. (Goal 2)

We conducted a body of work assessing the physical screening of airport passengers and their 

checked baggage. We found that the installation of systems that are in line with airport baggage 

conveyor systems may result in financial benefits according to TSA estimates for nine airports. 

We also found that the effectiveness of the advance passenger screening under the process 

known as Secure Flight was not certain. TSA agreed to take corrective actions in these areas, 

and the Congress required TSA in the Intelligence Reform and Terrorism Protection Act to 

prepare a plan and guidelines for installing in-line baggage screening systems, and enacted 

measures to promote Secure Flight’s development and implementation. (Goal 1)

Real ID Act of 2005 

(Pub. L. No. 109-13) 

We reported on the verification of identity documents for drivers’ licenses, noting that visual 

inspection of key documents lent itself to possible identity fraud. To demonstrate this, our 

investigators were able to obtain licenses in two states using counterfeit documents and the 

Social Security numbers of deceased persons. The Congress established federal identification 

standards for state drivers’ licenses and other such documents and mandated third-party 

verification of identity documents presented to apply for a driver’s license. (Goal 1)

Ronald W. Reagan 

National Defense 

Authorization Act for 

Fiscal Year 2005 (Pub. 

L. No. 108-375) 

We assisted the Congress in crafting major improvements to a program intended to compensate 

individuals who worked in DOE facilities and developed illnesses related to radiation and 

hazardous materials exposure. In a 2004 report, we identified features of the originally enacted 

program that would likely lead to inconsistent benefit outcomes for claimants, in part because the 

program depended on the varying state workers compensation systems to provide some benefits. 

We also presented several options for improving the consistency of benefit outcomes and a 

framework for assessing these options. When the Congress enacted the Ronald W. Reagan 

National Defense Authorization Act for Fiscal Year 2005, it revamped this energy employees 

benefit program. Among other changes, this law federalized the payment of worker compensation 

benefits for eligible energy contractor employees and provided a schedule of uniform benefit 

payments. (Goal 1)

Source: See Image Sources.

Other Benefits
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 31

PART I: Management’s Discussion and Analysis

Federal Lands 

Recreation 

Enhancement Act (Pub. 

L. No. 108-447) 

Our work over the past several years has helped the Congress to establish and assess the 

impacts of the recreational fee demonstration program. Under this trial program, the Congress 

authorized the National Park Service, the Fish and Wildlife Service, the Bureau of Land 

Management, and the Forest Service to charge fees to visitors to, among other things, reduce the 

maintenance backlog at federal parks and historic places and protect these lands from visitor 

impacts. Since the program’s inception in 1996, we have identified issues that needed to be 

addressed to improve the program’s effectiveness that included providing (1) a more permanent 

source of funds to enhance stability, since the current program had to be reauthorized every 2 

years; (2) the participating agencies with greater flexibility in how and where they apply fee 

revenues; and (3) improvements in interagency coordination in the collection and use of revenue 

fees to better serve visitors by making the payment of fees more convenient and equitable and 

reducing visitor confusion about similar or multiple fees being charged at nearby or adjacent 

federal recreational sites. As a result of this body of work, the Congress addressed these issues 

by passing the Federal Lands Recreation Enhancement Act in December 2004. This act permits 

federal land management agencies to continue charging fees at campgrounds, rental cabins, 

high-impact recreation areas, and day-use sites that have certain facilities. The act also provides 

for a nationally consistent interagency program, more on-the-ground improvements at recreation 

sites across the nation, enhanced visitor services, a new national pass for use across interagency 

federal recreation sites and services, and public involvement in the program. (Goal 1)

Consolidated 

Appropriations Act, 

2005 (Pub. L. No. 108-

447)

Our work is reflected in this law in different ways. 

At the time of our August 2003 report, the original 1999 expiration date for the franchise fund 

pilots operating at the Departments of Commerce, Veterans Affairs, Health and Human Services, 

the Interior, and the Treasury and at the Environmental Protection Agency had been extended 

three times. These franchise funds, authorized by the Government Management Reform Act of 

1994, are part of a group of 34 intragovernmental revolving funds that were created to provide 

common administrative support services required by many federal agencies. For example, the 

Commerce Franchise Fund’s business line provides IT infrastructure support services to the 

agency. We concluded that increasing the period of authorization would help ease concerns of 

current and potential clients about franchise fund stability and might allow franchise funds to add 

new business lines, and we suggested that the authorizations be extended for longer periods. The 

Congress provided permanent authority to the Treasury franchise fund in the Consolidated 

Appropriations Act, 2005, passed on December 8, 2004. (Goal3)

In 2003, we reported that most agencies could not retain the proceeds from the sale of unneeded 

property and this acted as a disincentive to disposing of unneeded property. We stated in our 

high-risk report on federal real property that it may make sense to permit agencies to retain 

proceeds for reinvestment in real property where a need exists. Subsequently, in the 

Consolidated Appropriations Act, 2005, the Congress authorized the Administrator of GSA to 

retain the net proceeds from the conveyance of real and related personal property. These 

proceeds are to be deposited into the Federal Buildings Fund and are to be used as authorized 

for GSA’s real property capital needs. (Goal 1)

In December 2003, we reported that 184 out of 213 Alaska Native villages are affected, to some 

extent, by flooding and erosion. However, these villages often have difficulty qualifying for federal 

assistance to combat their flooding and erosion problems. In our report, we recommended that 

the Denali Commission adopt a policy to guide investment decisions and project designs in 

villages affected by flooding and erosion. In this legislation, the Congress provided the Secretary 

of the Army authority to carry out “structural and non-structural projects for storm damage 

prevention and reduction, coastal erosion, and ice and glacial damage in Alaska, including 

relocation of affected communities and construction of replacement facilities.” (Goal 1)

To improve the federal government’s ability to collect billions of dollars of outstanding criminal 

debt, we recommended in a 2001 report, that the Department of Justice work with other agencies 

involved in criminal debt collection, including the Administrative Office of the U.S. Courts, the 

Department of the Treasury (Treasury), and the Office of Management and Budget (OMB), to 

develop a strategic plan that would improve interagency processes and coordination with regard 

to criminal debt collection activities. The conference report that accompanied the Consolidated 

Appropriations Act, 2005, directed the Attorney General to assemble an interagency task force for 

the purpose of better managing, accounting for, reporting, and collecting criminal debt. (Goal 3)
32 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART I: Management’s Discussion and Analysis

Other benefits that helped to improve services to the public

Encouraged 

improvements in the 

process for ensuring 

states’ compliance with 

education laws for the 

disabled

Our report found that the Department of Education’s (Education) system for resolving 

noncompliance with the Individuals with Disabilities in Education Act is protracted. We found that 

resolution of noncompliance cases often takes several years, in part because Education took a 

year on average from the time it identified noncompliance to issue a report citing the 

noncompliance. We therefore recommended that Education improve its system of resolving 

noncompliance by shortening the amount of time it takes to issue a report of noncompliance and 

by tracking changes in response times under the new monitoring process. In response to our 

recommendation, Education has instituted an improved process for managing and tracking the 

various phases of the monitoring process, which includes the creation of a database to facilitate 

this tracking. This new tracking system will enable Education to better monitor the status of 

existing noncompliance, and thus enable the department to take appropriate action when states 

fail to come into compliance in a timely manner. (Goal 1)

Identified a weakness 

in Medicare’s telephone 

assistance service

In 2004, we found that the 24-hour 1-800-MEDICARE help line, operated by the Centers for 

Medicare & Medicaid Services (CMS), did not answer 10 percent of the calls we placed to test its 

accuracy, often because it automatically transferred some calls to claims administration 

contractors that were not open for business at the time of the call. This call transfer process 

prohibited callers from accessing information during nonbusiness hours, even though 1-800-

MEDICARE operates 24-hours a day. As a result, we recommended that CMS revise the routing 

procedures of 1-800-MEDICARE to ensure that calls are not transferred or referred to claims 

administration contractors’ help lines during nonbusiness hours. In response, CMS finished 

converting its call routing procedures. As a result, calls placed after normal business hours will be 

routed to the main 1-800-MEDICARE help line for assistance. (Goal 1)

Highlighted the need 

for increased security 

at a federal disease 

research facility

USDA scientists at the Plum Island Animal Disease Center research contagious animal diseases 

that have been found in other countries. The mission of the facility, now administered by DHS, is 

to develop strategies for protecting the nation’s animal industries and exports from these foreign 

animal diseases. In our September 2003 report, Combating Bioterrorism: Actions Needed to 

Improve Security at Plum Island Animal Disease Center, we made several recommendations to 

improve security at the facility and reduce vulnerability to terrorist attacks. Among other things, we 

recommended that the Secretary of Homeland Security, in consultation with the Secretary of 

Agriculture, enhance incident response capability by increasing the size of the guard force. DHS 

has informed us that this has been completed. According to the Director of Plum Island, DHS has 

more than doubled the number of guards assigned on each shift on Plum Island. (Goal 1)

Other benefits that helped to promote sound agency and governmentwide management

Recommended a 

process to increase the 

efficiency of DOD 

procurements

DOD spending on service contracts approaches $100 billion annually, but DOD’s management of 

services procurement is inefficient and ineffective and the dollars are not always well spent. Many 

private companies have changed management practices based on analyzing spending patterns 

and coordinating procurement efforts in order to achieve major savings. We recommended that 

DOD adopt the effective spend analysis processes used by these leading companies and use 

technology to automate spend analysis to make it repeatable. In response, DOD is developing 

new technology to do that. According to DOD and contractor project managers, one phase of the 

project was completed in December 2004. In March 2005, DOD approved a business case 

analysis to seek follow-on funding for developing a DOD-wide spend analysis system. (Goal 2)
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 33

PART I: Management’s Discussion and Analysis

Source: GAO.

In addition to the financial and other benefits 

claimed in fiscal year 2005 from our work, we also 

achieved the following results. 

Past Recommendations Implemented

One way we measure our effect on improving the 

government’s accountability, operations, and services is by tracking the percentage of recommendations that we made 4 years ago that have since been 

implemented. At the end of fiscal year 2005, 85 percent of the recommendations we made in fiscal year 

2001 had been implemented (see fig. 10), primarily 

by executive branch agencies. Putting these recommendations into practice will generate tangible benefits for the nation in the years ahead.

Figure 10: Percentage of Past Recommendations 

Implemented

Improved the Air 

Force’s oversight of 

purchase card 

transactions

As part of our audit of Air Force purchase card controls, we identified transactions that Air Force 

officials acknowledged to be fraudulent as well as potentially fraudulent transactions that the Air 

Force had not identified. To improve Air Force oversight of purchase card activity and facilitate the 

identification of systemic weaknesses and deficiencies in existing internal control and the 

development of additional control activities, we recommended that the Air Force establish an 

agencywide database of known purchase card fraud cases. In lieu of establishing a separate 

agencywide database, during fiscal year 2003, the Air Force Office of Special Investigations 

initiated quarterly reporting on its purchase card investigations to the DOD IG for macro-level 

analysis of systemic weaknesses in the program. Our ongoing collaboration with the DOD IG on 

DOD’s purchase card program confirmed that the Air Force’s Office of Special Investigations is 

working effectively with DOD’s IG on data-mining techniques for detection of potentially improper 

and fraudulent purchase card transactions. As a result of our work, the Air Force has taken action 

to reduce the financial risk associated with undetected fraud and abuse in its purchase card 

program. (Goal 3)

Encouraged the 

Census Bureau to 

produce training 

materials in other 

languages

For the 2000 Census, the United States Census Bureau (Bureau) printed material used to train 

census workers only in English, except in Puerto Rico where training materials were available in 

Spanish. However, to better prepare census workers—some of whom speak Spanish as their first 

language—to locate migrant farm workers and other hard-to-count groups, we recommended that 

the Bureau consider providing training materials in languages other than English to targeted 

areas. In response to our recommendation, the Bureau is researching foreign-language data 

collection methods as part of its preparations for the 2006 Census test and, more generally, plans 

to identify areas and operations that will require in-language training materials for areas with very 

large, new migrant populations where it will not be possible to hire bilinguals. Moreover, the 

Bureau’s June 2005 request for proposals for a Field Data Collection Automation System includes 

a requirement for the contractor to provide training applications and materials in English and 

Spanish for the handheld computers enumerators are to use to count nonrespondents. (Goal 3)

Four-year implementation rate

Source: GAO.

Actual Target Actual

0

10

20

30

40

50

60

70

80

90

2001 2002 2003 2004 2005 2005

85%

79% 79% 82% 83% 80%
34 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART I: Management’s Discussion and Analysis

The 85 percent implementation rate for fiscal year 

2005 exceeded our target for the year by 5 percentage points as well as our actual performance for the 

last 4 years. As figure 11 indicates, agencies need 

time to act on recommendations. Therefore, we 

assess recommendations implemented after 4 years, 

the point at which experience has shown that if a 

recommendation has not been implemented, it is 

not likely to be.

Figure 11: Cumulative Implementation Rate for 

Recommendations Made in Fiscal Year 2001

New Products Containing Recommendations

This year, about 63 percent of the 637 written products we issued (excluding testimonies) contained 

recommendations. (See fig. 12.) We track the percentage of new products with recommendations 

because we want to encourage staff to develop recommendations that when implemented by the Congress and agencies, produce financial and other 

benefits for the nation. However, by setting our target at 55 percent, we recognize that our products 

do not always include recommendations and that 

the Congress and agencies often find such informational reports just as useful as those that contain recommendations. Our informational reports have the 

same analytical rigor and meet the same quality 

standards as those with recommendations and, similarly, can help to bring about significant financial 

and other benefits. Hence, this measure allows us 

ample leeway to respond to requests that result in 

reports without recommendations.

Figure 12: Percentage of New Products with 

Recommendations

Multiyear Performance Goals

In addition to our annual measures, we track our 

progress on 99 multiyear performance goals. At the 

end of fiscal year 2005, we met all but 3 of our performance goals. Our performance goals measure 

the extent to which we did the work we had 

planned to do to support the Congress during fiscal 

years 2004 and 2005. Our senior managers developed these performance goals at the beginning of 

the assessment cycle (fiscal year 2004) based on 

their knowledge of specific subject areas and in 

consultation with our clients and customers. However, because congressional or GAO priorities can 

change over the period covered by these performance goals, we may not be able to meet some of 

them because resources had to be shifted away 

from planned work to address new or more urgent 

priorities. In such circumstances, we do not necessarily view an unmet performance goal as a problem. Rather, we believe it shows that we are 

responsive in carrying out our mission of serving 

the Congress and the nation and devoting our 

resources to efforts of critical importance. We consider these performance goals qualitative rather 

than quantitative because our senior managers 

determine whether enough work (i.e., key efforts) 

has been performed to achieve a performance goal. 

In Part II of this report, we list by strategic goal the 

multiyear qualitative performance goals supporting 

each strategic objective and indicate whether the 

performance goal was met.

Percentage

Source: GAO.

0

10

20

30

40

50

60

70

80

90

After

4 years

After

3 years

After

2 years

After

1 year

85%

48%

31%

20%

Percentage

Source: GAO.

Actual Target Actual

0

10

20

30

40

50

60

70

2001 2002 2003 2004 2005 2005

63%

55%

63%

53% 55%

44%
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 35

PART I: Management’s Discussion and Analysis

Focusing on Our Clients

To fulfill the Congress’s information needs, we 

strive to deliver the results of our work orally as 

well as in writing at a time agreed upon with our 

clients. Our performance this year indicates that we 

assisted our clients—the Congress—well, though 

we missed our target on both the number of hearings we participated in and our ability to deliver 

products on time.

Testimonies

Our clients often invite us to testify on our current 

and past work when it addresses issues that congressional committees are examining through the 

hearing process. During fiscal year 2005, experts 

from our staff testified at 179 congressional hearings 

covering a wide range of complex issues (see fig. 

13). For example, our senior executives testified on 

improving the security of nuclear material, federal 

oversight of mutual funds, and the management 

and control of DOD’s excess property. (See p. 36

for a summary of issues we testified on by strategic 

goal in fiscal year 2005.) Over 70 of our testimonies 

were related to high-risk areas and programs, which 

are discussed on page 43. 

However, in spite of our willingness to testify for 

our clients, we did not meet our fiscal year 2005 target of 185 testimonies, primarily because congressional committees either canceled or postponed 

several hearings at which our senior executives 

were scheduled to testify to focus instead on the 

Supreme Court nominations and Hurricane Katrina.

Figure 13: Testimonies

Timeliness

We track the percentage of our products that are 

delivered on or before the day we agreed to with 

our clients because it is critical that our work be 

done on time for it to be used by policymakers. As 

shown in figure 14, in fiscal year 2005 we missed 

our target of providing 98 percent of them by the 

promised date. 

Figure 14: Timeliness

0

50

100

150

200

250

2001 2002 2003 2004 2005 2005

Hearings at which GAO testified

Source: GAO.

Actual Target Actual

185 179

217

189

216

151

0

20

40

60

80

100

2001 2002 2003 2004 2005 2005

Percentage of products on time

Source: GAO.

Actual Target Actual

95% 96% 97% 97% 98% 97%
Address Challenges to

the Well-Being and

Financial Security of the

American People

■ Head Start grants management

■ Preparing for an influenza

 pandemic

■ Overseeing the U.S. food supply

■ Retirement options for seniors

■ Long-term health care costs and

 government budgets

■ Energy demand in the

 21st century

■ Postal service reform legislation

■ Veterans’ disability claims

■ Social Security reform

■ Wildland fire management

■ Medicaid financing issues

■ Meeting the future demand for

 energy in the United States

■ National air traffic system

■ Amtrak’s Acela train

■ Protecting nuclear material handled

at science and environmental sites

■ Providing services to seriously

 injured veterans

■ Rural housing service

■ Federal real property

■ Endangered Species Act

■ Federal oversight of the E-rate

 program

Respond to Changing

Security Threats and the

Challenges of 

Globalization

■ Army’s modular forces

■ U.S. passport fraud

■ Cargo security strategies

■ Acquisition challenges facing the

 Navy’s DD(X) destroyer program

■ Tactical aircraft modernization

■ DOD security clearances

■ Oil for Food program

■ Unmanned aerial vehicles

■ Condition of Coast Guard aircraft

and ships used in deep waters

■ Managing violations of restricted

air space

■ Federal oversight of mutual

 funds to ensure investor security

■ Port security

■ Protecting U.S. officials

 overseas from terrorist attacks

■ DOD’s business transformation

■ Transportation security issues

■ Implementing laws that protect

 the security of information

■ DOD’s national security

 personnel system

■ Acquisition challenges facing the

 Army’s future combat systems

Help Transform the

Federal Government’s Role

and How It Does Business

■ Long-term fiscal issues affecting

 the federal government

■ Gaps in military pay and benefits

■ 21st century challenges for the

 federal government

■ Air Force procurement protests

■ Human capital transformation

at DHS

■ Preparing for emergencies at

 federal agencies

■ Space shuttle workforce issues

■ Reducing the tax gap

■ U.S. government financial

statements

■ Management and control of DOD’s

 excess property

■ Pricing federal multiple award

 contracts

■ Performance budgeting

■ High-risk federal programs

■ Army National Guard travel

 reimbursement issues

■ Space acquisitions and

 investment planning

■ Improper Payments

 Information Act

■ Agencies’ continuity of

 operations plans

■ DHS’s Student and Exchange

 Visitor Information System

Selected Testimony Issues

Fiscal Year 2005

Source: GAO.

GOAL 1:

GOAL 2:

GOAL 3:
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 37

PART I: Management’s Discussion and Analysis

As part of its periodic review of our performance 

measures, the IG independently examined our process for calculating product timeliness and found 

evidence that some staff may be inconsistently 

applying the policy for changing a committed issue 

date, which ultimately affects the reliability of this 

measure. The IG also noted that the internal reporting approach may not adequately represent the 

most complete assessment of the requesters’ satisfaction with our ability to deliver products when 

our clients need them. The IG recommended that 

GAO management strengthen the guidance for 

determining timeliness and consider developing an 

alternative, more independent measure to gauge 

performance in this area. 

Therefore, beginning in fiscal year 2006, we will use 

the results of our client feedback survey as a barometer for how well we are getting our products to the 

Congress when it needs them. We will use this survey as the primary data source for our external 

timeliness measure because the responses come 

directly from our clients and are free from significant input by our staff. However, we will continue 

to use as a supplemental check to the survey our 

current process for determining timeliness and have 

already taken steps to clarify the guidance related to 

our process for changing committed issue dates. 

Both indicators will help to ensure that teams supporting strategic goals 1 through 3 continue to complete engagements on the date mutually agreed to 

with our clients. 

Since March 2002, we have been pilot testing an email survey that we send to a portion of our clients 

for direct, independent feedback from them on their 

satisfaction with the quality and timeliness of our 

work and their interactions with our staff. We tally 

responses from the survey we send to key staff 

working for the requesters of our testimony statements and our more significant written products 

(e.g., engagements assigned a risk level of “high” by 

our senior management5 and those requiring an 

investment of 500 staff days or more). Each survey 

asks the client whether the product was delivered 

on time. Because our products often have multiple 

requesters, we survey more than one congressional 

staff person per product. In fiscal year 2005, we 

sought feedback on 42 percent of the products we 

issued that year and had a 30 percent response rate 

from the congressional staff surveyed. Overall, 93 

percent of those responding to the survey either 

strongly or generally agreed that our products were 

delivered on time. 

Focusing on Our People

We could not have performed as well as we did in 

fiscal year 2005 without the support and commitment of our highly professional, multidisciplinary 

staff. Our ability to hire, develop, retain, and lead 

staff is critical to fulfilling our mission of serving the 

Congress and the American people. 

Since 2002, we have refined our processes for measuring how well we manage our human capital and 

have benchmarked our performance in this area. 

Fiscal year 2005 was the first year we held our managers accountable for our eight people measures, 

and we met six of them—slightly missing our targets for new hire rate and acceptance rate by only a 

few percentage points. These measures are directly 

linked to our goal 4 strategic objective of becoming 

a professional services employer of choice. For 

more information about our people measures, see 

Verifying and Validating Performance Data in part II 

of this report.

New Hire Rate and Acceptance Rate

Our new hire rate is the ratio of the number of people hired to the number we planned to hire. Annually, we develop a workforce plan that takes into 

account projected workload changes, as well as 

other changes, such as retirements, other attrition, 

promotions, and skill gaps. The workforce plan for 

the upcoming year specifies the number of planned 

hires and, for each new hire, specifies the skill type 

and the level. The plan is conveyed to each of our 

units to guide hiring throughout the year. Progress 

toward achieving the workforce plan is monitored 

monthly by the Chief Operating Officer and the 

Chief Administrative Officer. Adjustments to the 

workforce plan are made throughout the year, if 

5

As part of our risk-based, engagement management process, we identify a new engagement as high risk if the work 

we need to perform will likely require a large investment of our resources, involve a complex methodology, or examine 

controversial or sensitive issues.
38 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART I: Management’s Discussion and Analysis

necessary, to reflect changing needs and conditions. 

In fiscal year 2005, our adjusted plan was to hire 

281 staff. However, we were only able to bring on 

board 263 staff by year-end. Our acceptance rate 

measure is a proxy for GAO’s attractiveness as an 

employer and an indicator of our competitiveness 

in bringing in new talent. It is the ratio of the number of applicants accepting offers to the number of 

offers made. Table 3 shows that we missed the targets we set for new hire rate and acceptance rate by 

3 percentage points and 4 percentage points, 

respectively. Our calculations for each of these 

measures do not include offers extended to applicants for fiscal year 2005 vacancies that were 

accepted but for which applicants will not report for 

duty until the first quarter of fiscal year 2006. In 

addition, we were unable to fill by year-end critical 

positions for accountants/auditors due to market 

competition.

To more effectively anticipate and acquire the 

human resources we need now and in the future, 

we took steps to improve our recruitment strategy 

by expanding the focus of our student employment 

program. Rather than targeting our recruitment 

efforts solely at graduate students who are available 

to work with us during the summer, we expanded 

the program to include undergraduate students, and 

we will offer both groups employment opportunities in the fall and spring as well as during the summer. Our fiscal year 2006 recruitment strategy, 

developed in fiscal year 2005, includes (1) using targeted recruiting for special skill sets and hard-to-fill 

positions with an emphasis on diversity and 

(2) implementing year-round internships, cooperative education agreements with five local universities, and governmentwide flexibility for 

noncompetitive appointments into our Professional 

Development Program. We also launched a pilot 

program that offers employment to a limited number of undergraduate cooperative education program participants in September 2005. 

Table 3: Actual Performance and Targets Related to Our New Hire and Acceptance Rate Measures

Source: GAO.

Note: N/A indicates the data are not available.

2005

Performance measure

2001 

actual

2002 

actual

2003 

actual

2004 

actual Target Actual

New hire rate N/A 96% 98% 98% 97% 94%

Acceptance rate N/A 81% 72% 72% 75% 71%
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 39

PART I: Management’s Discussion and Analysis

Retention Rate 

We continuously strive to make GAO a place where 

people want to work. Once we have made an 

investment in hiring and training people, we would 

like them to stay with us. This measure is one indicator of whether we are attaining this objective. We 

calculate this measure by taking 100 percent of the 

on-board strength minus the attrition rate, where 

attrition rate is defined as the number of separations 

divided by the average on-board strength. We calculate this measure with and without retirements. 

Table 4 shows that we met each of our retention 

rate targets in fiscal year 2005. With the exception of 

fiscal year 2002 and 2003, our actual retention rate 

excluding and including retirements, respectively, 

has been relatively flat over the last 5 years.

Table 4: Actual Performance and Targets Related to Our Retention Rate Measures

Source: GAO.

2005

Performance measure

2001 

actual

2002 

actual

2003 

actual

2004 

actual Target Actual

Retention rate

with retirements 91% 91% 92% 90% 90% 90%

Without retirements 95% 97% 96% 95% 94% 94%
40 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART I: Management’s Discussion and Analysis

Staff Development, Staff Utilization, 

Leadership, and Organizational Climate

One way that we measure how well we are supporting our staff and providing an environment for 

professional growth and improvement is through 

our annual employee feedback survey. This Webbased survey, which is conducted by an outside 

contractor to ensure the confidentiality of every 

respondent, is administered to all of our employees 

once a year. Through the survey, we encourage our 

staff to indicate what they think about GAO’s overall operations, work environment, and organizational culture and how they rate our managers—

from the immediate supervisor to the Executive 

Committee—on key aspects of their leadership 

styles. The survey consists of over 100 questions.

In fiscal year 2005, 80 percent of our employees 

completed the survey, and we met or slightly 

exceeded our targets for all four measures (see table 

5). We first conducted this survey in fiscal year 2002 

and since then favorable responses to questions 

related to these measures have increased each year. 

Our scores this year averaged 8.5 percent higher 

than the latest Office of Personnel Management 

governmentwide survey and 5.25 percent higher 

than the latest private industry survey. In fiscal year 

2005, we also added questions to assess employees’ 

satisfaction with us. The results of the responses to 

these questions were used by the Partnership for 

Public Service (Partnership) to determine our standing in the annual Best Places to Work in the Federal 

Government rankings. In September 2005, we 

received an award from the Partnership for our 

fourth place ranking. 

Table 5: Actual Performance and Targets Related to Our Measures of Employee Satisfaction with Staff 

Development, Staff Utilization, Leadership, and Organizational Climate

Source: GAO.

Note: N/A indicates the data are not available.

2005

Performance measure

2001 

actual

2002 

actual

2003 

actual

2004 

actual Target Actual

Staff development N/A 71% 67% 70% 72% 72%

Staff utilization N/A 67% 71% 72% 74% 75%

Leadership N/A 75% 78% 79% 80% 80%

Organizational climate N/A 67% 71% 74% 75% 76%
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 41

PART I: Management’s Discussion and Analysis

Focusing on Our Internal 

Operations 

Our mission and people are supported by our internal administrative services, including information 

management, building management, knowledge 

services, human capital, financial management, and 

other services. Beginning in fiscal year 2006, we will 

begin using two new performance measures to 

assess our performance related to how well our 

internal administrative services help employees get 

their jobs done or improve employees’ quality of 

work life. These measures are directly related to our 

goal 4 strategic objectives of continuously enhancing GAO’s business and management processes and 

becoming a professional services employer of 

choice. We will use information from our annual 

customer satisfaction survey to set targets and assess 

our performance for both of these measures, which 

are shown in table 6 along with baseline data that 

we recorded for them in fiscal year 2003 and fiscal 

year 2004. The first measure encompasses 21 services that help employees get their jobs done, such 

as Internet access, desktop computer equipment, 

and voice and video communication systems. The 

second measure encompasses another 10 services 

that affect quality of work life, such as assistance 

related to pay and benefits, building security, and 

workplace safety and health. Using survey 

responses, we calculate a composite score for each 

service category that reflects employee ratings for 

(1) satisfaction with the service and (2) importance 

of the service. 

Table 6: Actual Performance and Targets Related to Our Internal Operations Measures

Source: GAO.

Notes: We will report actual data for fiscal year 2005 once the data from our November 2005 internal operations survey have 

been analyzed. N/A indicates that the data are not available yet or not applicable because we did not collect the data during this 

period.

Performance measures 2000 

actual 

2001 

actual 

2002 

actual 

2003 

actual 

2004 

actual 

2005

actual

2006 

target 

Internal operations 

Help get job done N/A N/A N/A 3.98 4.01 N/A 4.0 

Quality of work life N/A N/A N/A 3.86 3.96 N/A 4.0 
42 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART I: Management’s Discussion and Analysis

21st Century Challenges 

We have long had a statutory responsibility for 

monitoring the condition of the nation’s finances. 

Recently, in our role as the auditor of the U.S. government’s consolidated financial statements, we 

included an emphasis paragraph in our audit report 

for the fiscal year ended September 30, 2004, 

expressing our concern that the fiscal policies in 

place today will—absent unprecedented changes in 

tax policies, spending policies, or both—result in 

large, escalating, and persistent deficits that are economically unsustainable over the long term. This 

conclusion is based on the results of our long-term 

budget model, which the agency has used since 

1992.

Over the long term, the nation’s growing fiscal 

imbalance stems primarily from the aging of the 

population, rising health care costs, and lower federal revenues as a percentage of the economy. 

These trends are compounded by the presence of 

near-term deficits arising from new discretionary 

and mandatory spending as well as lower revenues 

as a share of the economy. Absent significant 

changes on the spending side, the revenue side, or 

both of the budget, these long-term deficits will 

encumber a growing share of federal resources and 

test the capacity of current and future generations to 

afford both today’s and tomorrow’s commitments. 

Continuing on this unsustainable path will gradually 

erode, if not suddenly damage, our economy, our 

standard of living, and ultimately our national security.

Addressing the nation’s long-term fiscal imbalances 

constitutes a major transformational challenge that 

may take a generation to resolve. Given the size of 

our projected deficit, we will not be able to grow 

our way out of this problem—tough choices will be 

required. In addition, traditional incremental 

approaches to budgeting will need to give way to 

more fundamental and periodic reexaminations of 

the base of government, ultimately covering discretionary and mandatory programs as well as the revenue side of the budget. The nature and magnitude 

of the fiscal, security, economic, and other adjustments that need to be considered are not amenable 

to “quick fixes”; rather they will likely require an 

iterative, thoughtful process of disciplined changes 

and reforms over many years. 

We produced the 21st century challenges report to 

help the Congress review and reconsider the base 

of federal spending and tax programs.6

 It is 

intended as one input among many that the Congress will receive as it decides what its agenda will 

be for oversight and program review. We have 

framed the issues presented as illustrative questions 

for policymakers to consider as a supplement to 

their own efforts. The questions are drawn from our 

issued work, our strategic plan prepared in consultation with the Congress, input from several inspectors general, and the institutional knowledge of our 

staff. They cover discretionary spending; mandatory 

spending, including entitlements; as well as tax policies and programs. While answers to these questions may draw on our work and that of others, 

only elected officials can and should decide which 

questions to address as well as how and when to 

address them.

Having identified the major fiscal challenge facing 

the nation, and given our role in supporting the 

Congress, we believe that we also have an obligation to provide policymakers with support in identifying issues and options that could help to address 

these fiscal pressures. In our 21st century challenges 

report, we built on our past and pending work—90 

percent of which was requested by the Congress or 

required by law—to provide policymakers with a 

comprehensive compendium of those areas 

throughout government that could be ripe for reexamination and review. The report is consistent with 

our other products, such as our high-risk reports 

(discussed below), in that it pulls together our 

insights and previous work for the Congress to help 

with its budget and programmatic deliberations and 

oversight activities.

In developing the 21st century questions, we 

reflected on the inventory of future forces working 

to reshape American society, our place in the world, 

and the various roles and responsibilities of the federal government that were presented in our Strategic Plan for Serving the Congress and the Nation 

6

GAO, 21st Century Challenges: Reexamining the Base of the Federal Government, GAO-05-325SP (Washington, D.C.: 

February 2005).
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 43

PART I: Management’s Discussion and Analysis

(2004-2009). The specific questions raised for each 

area were informed by a set of generic evaluation 

criteria that are useful in evaluating any government 

program, policy, function, or activity. The criteria 

are framed as questions and are designed to address 

the legislative basis for the program, its purpose and 

continued relevance, its effectiveness in achieving 

goals and outcomes, its efficiency and targeting, its 

affordability, its sustainability, and its management. 

We used these criteria to generate specific 21st century questions about those programs and priorities 

already identified. The 21st century questions illustrate the kinds of issues that a reexamination and 

review initiative needs to address.

Copies of this report are available upon request. In 

addition, this document is available at no charge on 

our Web site at http://www.gao.gov.

GAO’s High-Risk Program 

Since 1990, our high-risk program has highlighted 

long-standing challenges facing the federal government. Increasingly, the program has focused on 

those major programs and operations that are in 

urgent need of broad transformation, and congressional as well as executive branch action, to ensure 

that our national government functions in the most 

economical, efficient, and effective manner possible. Our latest report, released in January 2005, 

highlights 25 troubled areas across government.7

Many of these areas involve critical public service 

providers, such as the U.S. Postal Service and IRS, 

and services provided to Medicare and Medicaid 

recipients through CMS. Table 7 lists each high-risk 

area, the year it was placed on the high-risk list, and 

the strategic goal under which our work related to 

each high-risk area is generally performed.

7

GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: January 2005).
44 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART I: Management’s Discussion and Analysis

Table 7: GAO’s 2005 High-Risk List

Source: GAO.

aLegislation is likely to be necessary, as a supplement to actions by the executive branch, in order to effectively address this

high-risk area.

bTwo high-risk areas—collection of unpaid taxes and earned income credit noncompliance—have been consolidated to make 

this area. 

cThe IRS financial management high-risk area has been incorporated into this high-risk area.

2005 high-risk area

Year 

designated 

high risk 

GAO’s 

strategic 

goal

Addressing challenges in broad-based transformations

Strategic Human Capital Managementa 2001 3

U.S. Postal Service Transformation Efforts and Long-Term Outlooka 2001 1

Managing Federal Real Propertya 2003 1

Protecting the Federal Government’s Information Systems and the Nation’s Critical 

Infrastructures 1997 3

Implementing and Transforming the Department of Homeland Security 2003 2

Establishing Appropriate and Effective Information-Sharing Mechanisms to Improve Homeland 

Security 2005 3

DOD Approach to Business Transformationa 2005 2

DOD Business Systems Modernization 1995 3

DOD Personnel Security Clearance Program 2005 2

DOD Support Infrastructure Management 1997 2

DOD Financial Management 1995 3

DOD Supply Chain Management (formerly Inventory Management) 1990 2

DOD Weapon Systems Acquisition 1990 2

Managing federal contracting more effectively

DOD Contract Management 1992 2

DOE Contract Management 1990 1

NASA Contract Management 1990 2

Management of Interagency Contracting 2005 2

Assessing the efficiency and effectiveness of tax law administration

Enforcement of Tax Lawsa, b 1990 3

IRS Business Systems Modernizationc 1995 3

Modernizing and safeguarding insurance and benefit programs

Modernizing Federal Disability Programsa 2003 1

Pension Benefit Guaranty Corporation Single-Employer Insurance Programa 2003 1

Medicare Programa 1990 1

Medicaid Programa 2003 1

HUD Single-Family Mortgage Insurance and Rental Housing Assistance Programs 1994 1

Other

Federal Aviation Administration (FAA) Air Traffic Control Modernization 1995 3
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 45

PART I: Management’s Discussion and Analysis

Issued to coincide with the start of each new Congress, our high-risk update has helped sustain attention from members of the Congress who are 

responsible for oversight and from executive branch 

officials who are accountable for performance. Our 

focus on high-risk problems contributed to the Congress enacting a series of government-wide reforms 

to address critical human capital challenges, 

strengthen financial management, improve IT practices, and instill a more results-oriented government. Overall, our high-risk program has served to 

identify and help resolve serious weaknesses in 

areas that involve substantial resources and provide 

critical services to the public. Of the 43 areas that 

have appeared on our high-risk list since 1990, 16 

have improved enough to be removed from the list 

and 2 have been consolidated with other areas. We 

also continue to identify other areas that require 

attention and should be added to the list. Further, 

the current administration has looked to our highrisk program in shaping governmentwide initiatives 

such as the President's Management Agenda, which 

has at its base many of the areas we had previously 

identified as high risk. OMB, in consultation with 

us, is currently working to ensure that agencies 

develop detailed action plans to address high-risk 

areas, with the ultimate objective, over time, of seeing these items removed from our high-risk list.

Our high-risk program includes four high-risk areas 

added in 2005

■ establishing appropriate and effective 

information-sharing mechanisms to improve 

homeland security,

■ DOD approach to business transformation,

■ DOD personnel security clearance program, and

■ management of interagency contracting.

One organization-related high-risk area that exemplifies the program’s increasing focus on transformation is DOD’s approach to business 

transformation. As an organization that spends billions of dollars supporting the warfighter here and 

abroad, DOD requires transformation to meet current and emerging mission and organizational challenges. DOD has initiated various efforts to 

transform business operations; however, current 

business processes continue to result in reduced 

effectiveness and efficiencies at a time when DOD 

is challenged to maintain a high level of operations 

while competing for resources in a fiscally constrained environment. The Secretary of Defense estimates that improving business operations could 

save 5 percent of DOD’s annual budget, which 

would represent a savings of about $22 billion a 

year.8

 Business transformation requires long-term 

cultural change and business process reengineering 

and a commitment from the executive and legislative branches of government. Sound strategic planning is the foundation on which to build, but DOD 

has not yet developed a clear strategic and integrated plan for business reform. For these reasons, 

we designated—for the first time—DOD’s lack of a 

strategic and integrated planning approach to its 

business transformation as high risk.

In addition, we consolidated four high-risk areas 

involving IRS into two. First, we combined the collection of unpaid taxes area and earned income 

credit noncompliance area into a single area called 

enforcement of tax laws. We determined that while 

IRS collection efforts and compliance with the provisions of the earned income credit remain important issues, other aspects of tax law compliance are 

also significant. We concluded that the challenge 

facing IRS in enforcing the nation’s tax laws is better 

understood in this broader context. Second, we 

incorporated the IRS financial management highrisk area into the IRS business systems modernization area. We found that the main financial management-related challenge still facing IRS is the 

modernization of its outmoded financial management controls and processes and that IRS’s efforts in 

this regard are closely intertwined with its business 

systems modernization project.

In fiscal year 2005, we also removed the high-risk 

designation from three areas: Education’s student 

financial aid programs, FAA’s financial management, 

and USDA’s Forest Service financial management.

In fiscal year 2005, excluding our high-risk update 

report and its companion testimony, we issued 183 

reports and delivered 75 testimonies related to our 

high-risk areas and documented financial benefits 

totaling about $26 billion. For example, we exam8

This figure is based on DOD’s reported fiscal year 2004 budget.
46 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART I: Management’s Discussion and Analysis

ined challenges in the implementation and transformation of DHS, such as strengthening internal 

controls and addressing weaknesses in financial systems, fully establishing and institutionalizing a 

departmentwide strategic framework for managing 

information, and addressing systematic problems in 

human capital and acquisition systems, resulting in 

19 reports and 11 testimonies. We also evaluated 

the Medicare program and found weaknesses in 

program management and oversight of patient 

safety and care, inefficient payment policies, and 

areas vulnerable to fraud and abuse. Our work in 

this area resulted in approximately $3.9 billion in 

financial benefits for fiscal year 2005. Our efforts 

continue to bring attention to areas in urgent need 

of improvement and to help the Congress and federal government institute reforms to address these 

high-risk areas. 

To learn more about our work on the high-risk 

areas or to download the high-risk update in full, go 

to http://www.gao.gov/docsearch/featured/highrisk.html. 

Building Partnerships

In fiscal year 2005, we continued to explore indicators that could help us measure how well we 

develop mutually beneficial relationships with other 

accountability organizations. Such partnerships are 

important because they create opportunities for collaboration that help all organizations involved 

address common challenges and enhance their ability to improve government operations and service 

to the public. Moreover, these partnerships allow us 

and other organizations to make meaningful 

changes in our internal accountability processes and 

policies as well as leverage available resources. 

We performed an extensive literature review to 

identify indicators that other agencies and organizations in the United States and overseas are using to 

measure the success of their partnership efforts. We 

collected information on partnership activities at 

several federal agencies, such as DOE and HUD 

and at a social services agency in Australia and a 

public works cooperative in England. Though we 

found no U.S. agencies that have developed indicators for measuring the health or effectiveness of 

partnerships, the foreign organizations articulated 

the following qualitative indicators for assessing the 

performance of these relationships:

■ commitment (e.g., time and resources devoted to 

the partnership effort and sustained participation 

by the same individuals),

■ clear definition of roles and responsibilities,

■ contribution to outcomes,

■ success of the activity or project being supported 

by the partnership, and

■ value for resources spent or effective use of 

resources.

Teams and units supporting all four of our strategic 

goals have established key partnerships with a variety of organizations. For example, our partnership 

with the International Organization of Supreme 

Audit Institutions (INTOSAI) has been a longstanding relationship—cultivated primarily through 

goal 4’s external liaison activities—that has resulted 

in tangible benefits for both organizations. In fiscal 

year 2005, we actively worked on several INTOSAI 

committees, gleaning valuable insights from the 

experiences of our counterpart audit institutions. 

We also helped INTOSAI produce various publications that help to promote auditing standards for 

use around the world. Through forums and roundtable discussions, we also partnered with the Concord Coalition—a nonpartisan organization 

dedicated to informing the public about the need 

for responsible fiscal policy—to support its work in 

educating the public about financial literacy and the 

government's long-term fiscal challenges. Our external liaison activities also helped to sustain partnerships with organizations such as the 

Intergovernmental Audit Forums, the Governmental 

Accounting Standards Advisory Committee, the Partnership for Public Service (which now includes the 

Private Sector Council), the Council for Excellence 

in Government, and the Woodrow Wilson International Center for Scholars; professional associations, 

such as the Association of Government Accountants; and various GAO advisory groups. (For more 

information about these partnerships, see Strategies 

for Achieving Our Goals later in this section of the 

report.) Finally, teams supporting goals 1 through 3 

established or maintained partnerships with organizations that helped them to exchange information 

about issues related to our performance goals and 
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 47

PART I: Management’s Discussion and Analysis

key efforts in these areas. For example, several 

teams continued their ongoing partnerships with 

the National Academies of Science, sharing, for 

example, information on issues such as drinking 

water security, environmental indicators, and wind 

power development. One team also supported the 

National Academies of Science and the Organisation 

for Economic Cooperation and Development—a 

group of 30 member countries that helps to foster 

good governance in public service and corporate 

activity—in their efforts to advance the development of national performance indicators. In addition, another team worked collaboratively on a 

wide range of emerging transportation issues with 

the Eno Transportation Foundation, whose mission 

is to cultivate creative and visionary leadership for 

all modes of transportation.

In the coming years, we will attempt to describe 

these and other partnerships that our teams and 

units participate in and describe the outcomes and 

benefits derived from them to help us assess our 

performance in this area. 

Managing Our Resources

Resources Used to Achieve Our Fiscal Year 

2005 Performance Goals

Our financial statements for fiscal year 2005 

received an unqualified opinion from an independent auditor. The auditor found our internal controls to be effective—which means that no material 

weaknesses were identified—and the auditor 

reported substantial compliance with the requirements for financial systems in the Federal Financial 

Management Improvement Act of 1996. The auditor 

also found no instances of noncompliance with the 

laws or regulations in the areas tested. The statements and their accompanying notes, along with 

the auditor's report, appear later in this report. 

Table 8 summarizes key data. Compared with the 

statements of large and complex agencies in the 

executive branch, our statements present a relatively simple picture of a small yet important agency 

in the legislative branch. We focus most of our 

financial activity on the execution of our congressionally approved budget with most of our 

resources devoted to the human capital needed for 

our mission of supporting the Congress with professional, objective, fact-based, nonpartisan, nonideological, fair, and balanced information and analysis.

Table 8: GAO’s Financial Highlights: Resource Information (Dollars in millions)

Source: GAO

aThe net cost of operations figures include nonbudgetary items, such as imputed pension and depreciation costs, which are not 

included in the figures for total budgetary resources (which include current and prior year carryover authority) or total outlays.

Fiscal year 2005 Fiscal year 2004

Total budgetary resourcesa $493.8 $487.5

Total outlaysa $478.7 $469.0

Net cost of operations

Goal 1: Well-being and financial security of the American people $197.7 $194.7

Goal 2: Changing security threats and challenges of globalization 144.2 131.7

Goal 3: Transforming the federal government’s role 147.3 145.8

Goal 4: Maximizing the value of GAO 22.0 23.4

Less reimbursable services not attributable to goals (5.4) (5.5)

Total net cost of operationsa $505.8 $490.1

Actual full-time equivalents 3,189 3,224
48 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART I: Management’s Discussion and Analysis

Our budget consists of an annual appropriation 

covering salaries and expenses and revenue from 

reimbursable audit work and rental income. For fiscal year 2005, our total budgetary resources 

increased by $6.3 million from fiscal year 2004. This 

increase consists of funds needed to cover mandatory and uncontrollable costs and a one time transfer of budgetary authority from DHS for a review of 

TSA’s calendar year 2000 costs for screening passengers and property.

Our total assets were $114.4 million, consisting 

mostly of property and equipment (including the 

headquarters building, land and improvements, and 

computer equipment and software) and funds with 

the U.S. Treasury. The largest dollar change in our 

assets was in the net value of property and equipment, which decreased in fiscal year 2005 as a result 

of normal depreciation amounts being greater than 

asset purchases. Total liabilities of $94.9 million 

were composed largely of employees' accrued 

annual leave, amounts owed to other government 

agencies, accounts payable, and employees' salaries 

and benefits. The greatest changes in the liabilities 

were increases in intragovernmental accounts payable and capital lease liabilities. The increase in 

intragovernmental accounts payable relates to 

amounts due to GSA accrued at the end of the year. 

The increase in capital lease liability during fiscal 

year 2005 is primarily the result of entering into new 

leases for the replacement of substantially all the 

notebook computers and copiers at GAO headquarters.

The net cost of operating GAO during fiscal year 

2005 and fiscal year 2004 was approximately 

$506 million and $490 million, respectively. 

Expenses for salaries and related benefits accounted 

for 78 and 79 percent of our net cost of operations 

in fiscal years 2005 and 2004, respectively. Figure 15

shows how our fiscal year 2005 costs break down 

by category.

We report net cost of operations according to our 

four strategic goals, consistent with our strategic 

plan. Goal 2 accounted for the greatest dollar 

increase in our net cost of operations from fiscal 

year 2004 through fiscal year 2005. The increase is 

due to the continued efforts in homeland security. 

Costs in goal 4 decreased in fiscal year 2005 as a 

result of several goal 4 key efforts being completed 

during fiscal year 2004, the first year of the 2-year 

strategic plan period. Examples include the implementation of the Travel Manager System completed 

in fiscal year 2004 as well as the development phase 

efforts for both the performance-based compensation system and the competency-based appraisal 

system.

Figure 15: Use of Fiscal Year 2005 Funds by 

Category 

Figures 16 and 17 show our net costs by goal for fiscal year 2002 through fiscal year 2005. Figure 16

shows costs unadjusted for inflation, while figure 17 

shows the same costs in 2005 dollars, that is, 

adjusted for inflation.

Percentage of total net costs

Building and

hardware maintenance

services 10.8%

78.3%

Salaries

and benefits

Rent (space

and hardware) 3.9%

Depreciation 2.7%

Other 4.3%

Source: GAO.
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 49

PART I: Management’s Discussion and Analysis

Figure 16: Net Cost by Goal, Unadjusted for 

Inflation

Figure 17: Net Cost by Goal, Adjusted for Inflation

Audit Advisory Committee

Assisting the Comptroller General in overseeing the 

effectiveness of GAO's financial operations is a 

three-member external Audit Advisory Committee. 

The committee's report for fiscal year 2005 appears 

after our financial statements and accompanying 

notes. Current members of the committee are

■ Sheldon S. Cohen (Chairman), CPA and practicing 

attorney in Washington, D.C., former 

Commissioner and Chief Counsel of the Internal 

Revenue Service, and Senior Fellow of the 

National Academy of Public Administration.

■ Edward J. Mazur, CPA, member of the 

Governmental Accounting Standards Board, 

former State Comptroller of Virginia, and former 

Controller of the Office of Federal Financial 

Management in OMB.

■ Charles O. Rossotti, Senior Advisor at The Carlyle 

Group; former Commissioner of Internal 

Revenue; and founder and former Chief 

Executive Officer and Chairman of American 

Management Systems, Inc., an international 

business and IT consulting firm.

Limitation on Financial Statements

Responsibility for the integrity and objectivity of the 

financial information presented in the financial 

statements in this report rests with our managers. 

The statements were prepared to report our financial position and results of operations, consistent 

with the requirements of the Chief Financial Officers Act, as amended (31 U.S.C. 3515). The statements were prepared from our financial records in 

accordance with the formats prescribed in OMB Circular A-136, Financial Reporting Requirements. 

These financial statements differ from the financial 

reports used to monitor and control our budgetary 

resources. However, both were prepared from the 

same financial records.

Our financial statements should be read with the 

understanding that as an agency of a sovereign 

entity, the U.S. government, we cannot liquidate 

our liabilities (i.e., pay our bills) without legislation 

that provides resources to do so. Although future 

appropriations to fund these liabilities are likely and 

anticipated, they are not certain.

Planned Resources to Achieve Our Fiscal Year 

2006 Performance Goals

GAO’s resources include budget authority of 

$490 million for fiscal year 2006 to maintain current 

operations for serving the Congress as outlined in 

our strategic plan and allow us to continue to 

enhance our productivity, and maintain the 

progress we have made in technology and other 

transformation areas (see table 9). This funding 

level supports 3,217 full-time equivalent (FTE) per0

50

100

150

200

Goal 1 Goal 2 Goal 3 Goal 4

2002 178.3 110.5 141.0 25.3

2003 186.4 122.0 144.9 20.0

2004 194.7 131.7 145.8 23.4

2005 197.7 144.2 147.3 22.0

Dollars in millions

Source: GAO.

0

50

100

150

200

Goal 1 Goal 2 Goal 3 Goal 4

2002 191.3 118.6 151.3 27.2

2003 196.1 128.4 152.5 21.0

2004 200.1 135.3 149.8 24.0

2005 197.7 144.2 147.3 22.0

Dollars in millions

Source: GAO.
50 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART I: Management’s Discussion and Analysis

sonnel. Our resources include $483 million in direct 

appropriations and estimated revenue of $7 million 

from reimbursable audit work and rental income. 

Our fiscal year 2006 resources represent a modest 3 

percent increase over fiscal year 2005 resources—

primarily to fund mandatory pay and uncontrollable 

costs. Following the catastrophic events of Hurricanes Katrina and Rita, the Congress is considering 

governmentwide across-the-board funding reductions that might reduce fiscal year 2006 spending 

levels, and this could affect our resources. The 

nature and extent of any potential funding reduction is unknown.

Table 9: Fiscal Year 2006 Budgetary Resources by Strategic Goal

Source: GAO.

aThese amounts exclude prior year carryover authority.

Strategic goal

FTEs

Amounta

(dollars in millions)

Goal 1

Provide timely, quality service to the Congress and the federal government to 

address current and emerging challenges to the well-being and financial security 

of the American people. 1,286 $194

Goal 2

Provide timely, quality service to the Congress and the federal government to 

respond to changing threats and the challenges of global interdependence. 941 141

Goal 3

Help transform the federal government’s role and how it does business to meet 

21st century challenges. 850 129

Goal 4

Maximize the value of GAO by being a model federal agency and a world-class 

professional services organization. 140 26

Total 3,217 $490
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 51

PART I: Management’s Discussion and Analysis

Our resources support three broad program areas: 

human capital, mission operations, and critical infrastructure. We will also continue to address our 

major management challenges, which are human 

capital, information security, and physical security. 

For example, on the human capital front, to ensure 

our ability to attract and retain a highly qualified, 

high-performing, and diverse workforce, our fiscal 

year 2006 recruitment strategy enhances or expands 

existing programs for internships and professional 

development, and provides targeted recruiting for 

special skill sets and hard-to-fill positions, and to 

enhance the agency’s diversity recruiting. 

In fiscal year 2006, we plan to implement recommendations resulting from an assessment of our 

compensation system being conducted by a wellregarded consulting firm, to ensure that our compensation is fair and equitable and aligned with 

competitive labor markets.

On the information security front, to address the 

increasing threats due to compromised information 

or information systems, we will complete an audit 

of network servers and refine monitoring techniques. To extend our ability to securely access and 

transmit classified data and information, we completed installation of security features in seven of 

our field offices and plan to continue installation at 

the remaining field offices in fiscal year 2006.

On the physical security front, we are working to 

enhance our communication with external agencies, 

improve our internal communications and operations, and strengthen the technical and physical 

aspects of our emergency preparedness efforts.

Strategies for Achieving Our 

Goals 

The Government Performance and Results Act 

directs agencies to articulate not just goals, but also 

strategies for achieving those goals. As detailed in 

the following sections, our strategies primarily 

emphasize providing information from our work to 

the Congress and the public in a variety of forms 

and continuing and strengthening our internal operations. For all four strategic goals, the multiyear, 

qualitative performance goals included in our current strategic plan describe specific areas of work 

that we planned to complete by the end of fiscal 

year 2005. 

Our strategies also emphasize the importance of 

two overarching approaches: (1) working with 

other organizations on crosscutting issues and 

(2) effectively addressing the challenges to achieving our agency’s goals and recognizing the internal 

and external factors that could impair our performance. Through these strategies, which have 

proven successful for us for a number of years, we 

plan to achieve the level of performance that is 

needed to meet our annual performance measures 

and our multiyear performance goals and that in 

turn will allow us to achieve our strategic goals. 

Attaining our three external strategic goals (goals 1, 

2, and 3) and their related objectives rests, for the 

most part, on providing professional, objective, factbased, nonpartisan, nonideological, fair, and balanced information to support the Congress in carrying out its constitutional responsibilities. To 

implement the performance goals and key efforts 

related to these three goals, we develop and 

present information in a number of ways, including

■ evaluating federal policies, programs, and the 

performance of agencies; 

■ overseeing government operations through 

financial and other management audits to 

determine whether public funds are spent 

efficiently, effectively, and in accordance with 

applicable laws; 

■ investigating whether illegal or improper activities 

are occurring; 

■ analyzing the financing for government activities; 

■ conducting various constructive engagements in 

which we work proactively with agencies, when 

appropriate, to provide advice that may assist 

their efforts toward positive results; 

■ providing legal opinions that determine whether 

agencies are in compliance with applicable laws 

and regulations; 

■ conducting policy analyses to assess needed 

actions and the implications of proposed actions; 

and
52 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART I: Management’s Discussion and Analysis

■ providing additional assistance to the Congress in 

support of its oversight and decision-making 

responsibilities. 

We conduct specific engagements as a result of 

requests from congressional committees and mandates written into legislation, resolutions, and committee reports. In fiscal year 2005, we devoted 87 

percent of our engagement resources to work 

requested or mandated by the Congress. We initiated the remaining 13 percent of the engagement 

work under the Comptroller General’s authority; 

much of this work was related to government programs and operations that we have identified as 

high risk for fraud, abuse, and mismanagement; 

reviews of agencies’ budget requests; and various 

emerging challenges that are of broad-based interest 

to the Congress, such as the cost of the Global War 

on Terrorism and the status of the reconstruction 

efforts in Iraq.9

 By making recommendations to 

improve the accountability, operations, and services 

of government agencies, we contribute to increasing the effectiveness of federal spending and 

enhancing the taxpayers’ trust and confidence in 

their government.

Our staff are responsible for gathering all the relevant data and following high standards for documenting and supporting the information we collect 

and analyze. This information is, more often than 

not, documented in a product that is made available 

to the public. In some cases, we develop products 

that contain classified or sensitive information that 

cannot be made available publicly. We generally 

issue around 1,200 to 1,300 products each year, 

either electronically or in printed format. Our products include the following: 

■ letter reports and chapter reports that when 

printed, are issued with our traditional blue 

cover; 

■ correspondence, which is a written letter that 

does not have a blue cover; 

■ testimonies and statements for the record, where 

the former are delivered orally by one or more of 

our senior executives at a hearing and the latter 

are provided for inclusion in the congressional 

record; and 

■ oral briefings, which are usually given directly to 

congressional staff members. 

We also produce special publications on specific 

issues of general interest to all Americans, such as 

our primer on motor fuels that we prepared to help 

improve public understanding of the major factors 

that influence the U.S. price of gasoline and our 

guide on Social Security that answers concisely 

some basic questions about how the program 

works and why it needs to be reformed.10 Collectively, our products always contain information and 

often conclusions and recommendations that allow 

us to achieve our external strategic goals. 

Another means of ensuring that we are achieving 

our goals is to examine the impact of our past work 

and use that information to shape our future work. 

Consequently, we evaluate actions taken by federal 

agencies and the Congress in response to our past 

recommendations. The results of these evaluations 

are reported in terms of the financial benefits and 

other benefits that reflect the value of our work. We 

actively monitor the status of our open recommendations—those that remain valid but have not yet 

been implemented—and report our findings annually to the Congress and the public 

(http://www.gao.gov/openrecs.html). 

Similarly, we will use our biennial high-risk report, 

most recently issued in January 2005, to provide a 

status report on major government operations that 

we consider high risk because they are vulnerable 

to waste, fraud, abuse, and mismanagement or are 

in need of broad-based transformation. And we will 

use our report on 21st century challenges, which 

was issued in February 2005, to alert the nation’s 

leaders to current and emerging issues facing the 

nation, including the long-range budget challenge, 

the human capital crisis, postal reforms, and the 

federal government’s financial management efforts. 

9

In fiscal years 2003 and 2004, the work performed under the Comptroller General’s authority represented 8 percent 

and 10 percent, respectively, of our engagement efforts. 

10GAO, Motor Fuels: Understanding the Factors That Influence the Retail Price of Gasoline, GAO-05-525SP (Washington, 

D.C.: May 2005), and Social Security Reform: Answers to Key Questions, GAO-05-193SP (Washington, D.C.: May 2005).
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 53

PART I: Management’s Discussion and Analysis

These reports are valuable planning tools because 

they help us to identify those areas where our continued efforts are needed to maintain the focus on 

important policy and management issues that the 

nation faces. 

To attain our fourth strategic goal—an internal 

goal—and the five related objectives, we conduct 

surveys of our congressional clients and internal 

customers to obtain feedback on our products, processes, and services, and perform studies and evaluations to identify ways in which to improve them. 

Because achieving our strategic goals and objectives 

also requires strategies for coordinating with other 

organizations with similar or complementary missions, we

■ use advisory panels and other bodies to inform 

our strategic and annual work planning and

■ initiate and support collaborative national and 

international audit, technical assistance, and other 

knowledge-sharing efforts.

These two types of strategic working relationships 

allow us to extend our institutional knowledge and 

experience; to leverage our resources; and in turn, 

improve our service to the Congress and the American people. Our Strategic Planning and External 

Liaison office takes the lead and provides strategic 

focus for the work with external partner organizations, while our research, audit, and evaluation 

teams lead the work with most of the issue-specific 

organizations.

Strategic and Annual Work Planning 

Through a series of forums, advisory boards, and 

panels; periodic environmental scans; and our 

speakers’ series, we gather information and perspectives for our strategic and annual planning 

efforts. In fiscal year 2005, the Comptroller General 

convened various experts from the public, private, 

and nonprofit sectors in a series of forums and panels intended to enhance our understanding of 

emerging issues and to identify opportunities for 

action.

■ In December 2004, we hosted a forum on longterm fiscal challenges and issued a report 

summarizing the discussion in February 2005.

■ In February 2005, we convened a forum on 

defined benefits pension plans, the results of 

which were reported in June 2005. 

■ In March 2005, we convened a roundtable 

involving the accountability community on longterm fiscal challenges, the results of which were 

summarized and shared with the participants. 

■ Throughout 2005, we held five sessions of our 

speakers’ series Conversations on 21st Century 

Challenges, wherein prominent leaders discuss 

emerging themes and their implications for public 

policy. In 2005, we also initiated the Auditors 

General Speakers’ Series that provides unique 

international perspectives in support of our work; 

speakers included the auditors general of China, 

Ireland, South Korea, and Saudi Arabia. 

Advisory boards and panels also support our strategic and annual work planning for alerting us to 

issues, trends, and lessons learned across the 

national and international audit community that we 

should factor into our work. These groups include 

the Comptroller General’s Advisory Board whose 40 

members from the public and private sectors have 

broad expertise in areas related to our strategic 

objectives. Through the National Intergovernmental 

Audit Forum, chaired by the Comptroller General, 

and 10 regional intergovernmental audit forums, we 

consult regularly with federal inspectors general 

and state and local auditors. In addition, through 

the Domestic Working Group, the Comptroller General and the heads of 18 federal, state, and local 

audit organizations exchange information and seek 

opportunities to collaborate. 

We also work with a number of issue-specific and 

technical panels to improve our strategic and 

annual work planning, including the following:

■ The Advisory Council on Government Auditing 

Standards provides us guidance on promulgating 

auditing standards. These standards articulate 

auditors’ responsibilities when examining 

government organizations; programs; activities; 

functions; and government assistance received by 

contractors, nonprofits, and other 

nongovernmental organizations. The council’s 

work ensured that the revised standards would 

be generally accepted and feasible.
54 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART I: Management’s Discussion and Analysis

■ The Accountability Advisory Council, made up of 

experts in the financial management community, 

advises us on audits of the U.S. government’s 

consolidated financial statements and emerging 

issues involving financial management and 

accountability reporting.

■ The Executive Council on Information 

Management and Technology, whose 19 

members are experts from the public and private 

sectors and representatives of related professional 

organizations, helps us to identify high-risk and 

emerging issues in the IT arena. 

■ The Comptroller General’s Educators’ Advisory 

Panel, composed of deans, professors, and other 

academics from prominent universities across the 

United States, advises us on recruiting, retaining, 

and developing staff and on strategic planning 

matters. 

Internationally, we participate in INTOSAI—the 

professional organization of the national audit 

offices of 186 countries. During the fall of 2004, the 

INTOSAI Congress unanimously adopted a 5-year 

strategic plan—the first in INTOSAI’s 50-year history—that was developed by a 10-nation task force 

chaired by the Comptroller General. This plan has 

provided the foundation for the Governing Board to 

engage member institutions in advancing professional audit standards and promoting knowledge 

sharing. 

Collaborating with Others

By collaborating with others, we have strengthened 

professional standards, provided technical assistance, leveraged resources, and developed best 

practices. In our work with INTOSAI, we chair the 

accounting and reporting committee and we are an 

active member of INTOSAI’s auditing standards, 

internal control and accounting standards, and other 

technical committees. We publish INTOSAI’s quarterly International Journal of Government Auditing

in five languages to foster global understanding of 

standards, best practices, and technical issues. To 

help ensure that the public sector perspectives are 

reflected in the International Federation of Accountants Standards Development project, we are working as a member of INTOSAI's Professional 

Standards Committee as it collaborates closely with 

the International Auditing Assurance Standards 

Board and the World Bank to develop international 

auditing standards. 

To build capacity in the national audit offices 

around the world, we conduct an international 

audit fellows program for mid- to senior-level staff 

from other countries. In 2005, 20 audit fellows from 

Africa, Asia, Europe, Latin America, and the Middle 

East spent about 4 months at GAO learning how we 

are organized to do our work, how we plan our 

work, and what methodologies we use, particularly 

for performance audits. As part of our strategy to 

promote continuous learning and sustainability 

once the fellows return to their countries, we are 

working with major donors—such as the World 

Bank and the U.S. Agency for International Development—to identify or support relevant capacitybuilding projects in fellows’ institutions. Six current 

and seven former auditors general as well as several 

deputy auditors general, including the current chair 

of INTOSAI, are graduates of this program. 

Other collaborative activities undertaken by our 

staff during 2005 included the following:

■ Conferring with the Partnership for Public Service 

(Partnership), a nonprofit, nonpartisan public 

service organization committed to making the 

government an employer of choice for talented, 

dedicated Americans through educational 

outreach, research, legislative advocacy, and 

hands-on partnerships with agencies on 

workforce management issues. In late 2004, the 

Partnership merged with the Private Sector 

Council, another external partner organization 

dedicated to helping the federal government 

improve its efficiency, management, and 

productivity through the cooperative sharing of 

knowledge. During 2005, the Partnership has 

collaborated with us on a human capital 

symposium focused on performance 

management best practices and assisted us on a 

number of engagements. 

■ Actively participating in four other Domestic 

Working Group collaborative efforts of federal, 

state, and local audit officials to address issues 

regarding access to records, grants management, 

long-term fiscal challenges, and governance. 

Collaborative efforts with the Domestic Working 

Group and the National Association of State 

Auditors, Comptrollers, and Treasurers facilitated 

our work involving the states by fostering a 

cooperative working relationship with the state 

auditors on over a dozen engagements. 
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 55

PART I: Management’s Discussion and Analysis

■ Implementing the National Intergovernmental 

Audit Forum (Forum) strategic plan that was 

adopted in December 2004. This plan was 

developed by a task force composed of federal, 

state, and local auditors and an independent 

public accountant. The newly established 

committees have begun organizing to implement 

the plan, which seeks to maximize the Forum’s 

effectiveness in promoting good government and 

accountability at all levels of government. In 

addition, 21 regional Forum meetings were held, 

which brought together auditors at all 

government levels. 

Using Our Internal Experts

We coordinated extensively within our own organization on our strategic and annual performance 

planning efforts, as well as on the preparation of 

our performance and accountability reports. Our 

efforts are completed under the overall direction of 

the Comptroller General and the Chief Operating 

Officer. We relied on our Chief Administrative 

Officer/Chief Financial Officer and her staff to provide key information, such as the financial information that is included in part III of this report. Her 

staff also coordinated with others throughout the 

agency to provide the information on goal 4’s 

results, which appears in part II of this report, and 

provided input on other efforts dealing with issues 

that include financial management, budgetary 

resources, training, and security. We obtained input 

on all aspects of our strategic and annual performance planning and reporting efforts from each of 

our engagement teams and organizational units 

through their respective managing directors, as well 

as other staff responsible for planning or engagement activities in the teams. Staff from QCI prepared the report, ensuring, among other things, that 

the report addressed comments and suggestions 

received from the Association of Government 

Accountants and other reviewers. In short, we 

involved virtually every part of GAO and used our 

internal expertise in our planning and reporting 

efforts.

Addressing Management 

Challenges That Could Affect 

Our Performance 

At GAO, management challenges are identified by 

the Comptroller General, the Executive Committee, 

and the agency’s senior executives through the 

agency’s strategic planning, management, and budgeting processes. Our progress in addressing the 

challenges is monitored through our annual performance and accountability process. Under strategic 

goal 4, we establish performance goals focused on 

each of our management challenges, track our 

progress in completing the key efforts for those performance goals quarterly, and report each year on 

our progress toward meeting the performance 

goals. Each year we ask our IG to examine management’s assessment of the challenges and the 

agency’s progress in addressing them. (See app. 2 

for the IG’s assessment.)

For fiscal year 2005, we continued to address three 

management challenges—human capital, information security, and physical security. We anticipate 

that we may need to continue to address these 

management challenges in future years because 

they are evolving and will require us to continuously identify ways to adapt and improve. We 

revisit the challenges each year and refine them 

when appropriate, and when we believe we have 

sufficiently addressed these challenges we will 

remove them from our list. We will report any 

changes as we monitor and report on our progress 

in addressing the challenges through our annual 

performance and accountability process. The following sections describe our recent and planned 

efforts to address these challenges.

The Human Capital Challenge

Given our role as a key provider of professional 

and objective information and analyses to the Congress, maintaining the right mix of technical knowledge and expertise as well as general analytical 

skills is vital to achieving our mission. We spend 

about 80 percent of our resources on our people, 

but without excellent human capital policies and 

management practices, we could run the risk of 

being unable to lead by example and meet the 

expectations of the Congress and the American 

people. Our ability to meet the needs of the nation 

could also be impaired if we do not receive the 
56 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART I: Management’s Discussion and Analysis

funding that we need to adequately staff the 

agency, invest in our people, and reward our top 

performers—a mitigating external factor that we discuss along with others beginning on page 58 in this 

report.

To recruit, reward, and retain a highly qualified, 

high-performing, and diverse workforce remains 

one of our most important challenges. We 

employed a number of strategies to improve our 

recruitment efforts and support our workforce plan, 

including increasing the use of short-term and timelimited appointments and direct-hire authorities and 

implementing a pilot program for undergraduate 

cooperative education program participants. We 

also developed our fiscal year 2006 recruitment 

strategy to more directly support the agency’s workforce plan. The strategy includes enhancements or 

expansions of existing programs, such as the capability to offer internships in the fall and spring as 

well as the summer; fully implementing a cooperative education program; implementing governmentwide flexibility for noncompetitive appointments 

into the Professional Development Program—our 

system for exposing new, entry-level staff to a variety of engagements, teams, and developmental 

opportunities during their first 2 years of employment; and using special teams to employ targeted 

recruiting for special skill sets, hard-to-fill positions, 

and diversity recruiting. 

We continued to enhance our performance management and compensation systems through new 

and enhanced policies and processes. To improve 

our Performance-Based Compensation System, with 

the help of a well-regarded consulting firm, we 

implemented a revised process for determining performance-based compensation that more directly 

links individuals’ performance, as reflected by their 

appraisal, with his or her compensation. In June 

2005, our administrative and professional support 

staff completed their first year under a broadband 

pay system and a competency-based performance 

system. To ensure that these staff understood the 

new process and to foster staff acceptance, we 

employed an aggressive communication strategy 

that included meetings with staff as well as Webbased guides and questions and answers. To design 

a competitive, fair, and equitable compensation program aligned with competitive labor markets in 

which we compete for talent, we worked with the 

same consulting firm to perform a market-based 

compensation study. Based on the results of the 

market-based compensation survey, we have 

invested significantly in restructuring our analyst 

and analyst-related specialist Band II pay band into 

two pay levels to better align individual staff with 

our institutional compensation policies. We expect 

all compensation system changes to be implemented in fiscal year 2006. To ensure that our managers’ needs for support and guidance concerning 

their responsibilities in the performance management process are met, we established an organizational and performance consulting service designed 

to help managers interpret and address feedback 

they receive from our annual employee feedback 

survey, developed an e-learning course on designated performance managers’ roles and responsibilities, and developed and began issuing a report for 

managers and our Employee Advisory Council evaluating the performance management assessment 

cycle with recommendations for improvements. We 

also improved the accuracy and user-friendliness of 

our performance management Web site. 

Finally, we continued providing our staff with 

courses and opportunities to develop their knowledge and expertise, build their competency, and 

strengthen their leadership skills. We designed and 

delivered 13 new competency-building courses and 

implemented an adjunct faculty program to increase 

the number of our subject matter experts available 

to develop content for new courses, expand the 

range of courses available, and provide training 

throughout the year. We also established a group of 

analysts-in-charge representing various teams supporting goals 1 through 3 to discuss best practices 

related to managing engagements; challenges for 

new analysts-in-charge; and techniques for motivating, directing, and coaching staff. In addition, we 

upgraded our learning content management system 

to make it available on demand any time, anywhere, and provide improved tracking and reporting capabilities, and developed resource guides for 

our administrative professional and support staff 

that describe learning opportunities by competency 

and aid in creating individual development plans 

for professional growth. To deliver required core 

courses to Band I analyst staff in field offices, we 

redistributed and realigned course delivery among 

three learning hubs rather than centralizing course 

delivery in headquarters. We estimate that this decision will result in a cost avoidance of $500,000 in 

travel and per diem, as well as other benefits, such 
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 57

PART I: Management’s Discussion and Analysis

as networking among and across teams, a sustained 

focus on learning, larger classes that make more 

effective use of adjunct faculty time, and the opportunity to strengthen matrixed work relationships 

through shared learning experiences.

We continued to strengthen our strategic human 

capital management by realigning our Human Capital Office during fiscal year 2005 to better meet the 

needs of our internal customers. By consolidating 

our services under four centers of excellence, we 

will improve our customer focus, clarify lines of delegated authorities, standardize guidance across the 

Human Capital Office, and dedicate more of our 

resources to direct customer support.

While we have made progress in addressing the 

human capital challenge, more work remains to be 

done. Some of the largest efforts planned in this 

area for fiscal year 2006 include

■ implementing the market-based compensation 

ranges for our analyst and analyst-related staff,

■ determining the market-based compensation 

ranges for our administrative professional and 

support staff, 

■ implementing changes necessary to restructure 

our analyst Band II staff, 

■ continuing to strengthen our recruiting processes 

to better meet the needs of the agency and 

support our strategic goals, 

■ obtaining a better understanding of the retention 

factors affecting GAO, and 

■ identifying an appropriate methodology to 

successfully implement the Comptroller General’s 

authority to determine the amount of annual pay 

adjustments.

The Information Security Challenge

Information system security is a critical activity in 

ensuring our information system assets are safe and 

free from compromise. To address the increasing 

threats due to compromised information or information systems, we implemented a wide range of initiatives to strengthen and protect the security of our 

information systems and data.

We enhanced the security of our users’ workstations 

by installing personal firewall software to prevent 

download of viruses, anti-spyware to identify and 

eliminate malicious programs, and automatic activation of the screensaver. We also locked the GAO 

intranet home page as the default home page to 

prevent spyware from hijacking the default home 

page and downloading more spyware.

In support of the requirements in the Federal Information Security Management Act, we completed 

remediation of several key weaknesses and vulnerabilities during fiscal year 2005. These included, 

ensuring that risk assessments, system security 

plans, reviews performed under National Institute 

of Standards and Technology special publication 

800-26, and letters for authorization to operate were 

in place and that system test and evaluation reviews 

and certifications and accreditations were developed and completed as necessary.

To extend our ability to securely access and transmit 

classified data and information, we completed 

installation of the Secret Internet Protocol Router 

Network in seven of our field offices. This network 

allows our staff to obtain specific classified data 

directly from agency officials via secure e-mail, 

improves efficiency of our research through direct 

access to classified information, posts our classified 

reports for review and dissemination, electronically 

transmits our classified reports to agencies for comments, and reduces the necessity of using certified 

mail for classified data.

Finally, we continued to implement initiatives and 

improvements to our Disaster Recovery Program. 

Our most significant accomplishment was the completion of our vision of the Disaster Recovery Program/Continuity of Operations, which was 

approved and signed by the Comptroller General 

and the Chief Administrative Officer on May 31, 

2005. In support of the program we also developed 

Emergency Preparedness training video material for 

headquarters staff and installed an emergency voice 

and text notification system on the network.

We anticipate that information security will continue 

to be one of our management challenges in the 

future. In fiscal year 2006, we will further address 

that challenge by completing implementation of 

centralized auditing of network servers and devices 

to better secure our computing assets within GAO, 
58 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART I: Management’s Discussion and Analysis

refining our network monitoring procedures to 

include the use of correlation products to automate 

the detection of potentially harmful threats to our 

network, implementing improvements to our disaster recovery operations, and improving our ability 

to respond and recover in the event of a disruption 

by implementing additional technologies to lessen 

our risks.

The Physical Security Challenge

The challenge to provide a safe and secure work 

environment for employees remains a constant in 

light of domestic and international events that can 

have a profound impact on the way we conduct 

business in the United States and around the world. 

Protecting our people and our assets is paramount 

to agency operations. In fiscal year 2005, we initiated actions to enhance our communication with 

external agencies, improve our internal communications and operations, and strengthen the technical 

and physical aspects of our emergency preparedness efforts.

Externally, we established or enhanced contacts 

and procedures with local agencies to enable us to 

receive detailed intelligence that would not necessarily be provided through normal communication 

channels and to ensure coordination with the legislative branch in case of emergency. For example, 

we established emergency notification procedures 

with the Federal Bureau of Investigation Joint Terrorism Task Force; enhanced relocation procedures 

and improved relations with the U.S. Capitol Police, 

the House Sergeant of Arms, and the Emergency 

Preparedness Office; and made arrangements with 

the District of Columbia government to receive upto-date emergency notifications. We are also an 

active member of the Legislative Branch Continuity 

of Operations Plan Working Group, and we coordinated and participated in a legislative branch tabletop exercise involving a simulation of a crisis 

requiring the House of Representatives to vacate 

and relocate elsewhere.

Internally, we took several steps to support our goal 

of providing a safe and secure work environment. 

To ensure that our staff know what to do in case of 

an emergency, we conducted our first shelter in 

place drill for headquarters, and distributed shelter 

in place plans for the majority of our field offices 

and an emergency preparedness brochure for all 

staff. To reduce the agency’s security risk, we 

installed an electronic fingerprint system that 

improves the speed with which we can obtain 

screening through the Federal Bureau of Investigation, including immediate reports if prints are not 

acceptable. In addition, we are now requiring 

National Crime Information Center checks for contractors, including fingerprints, which bring our 

security requirements and procedures for contractors more in line with those for our own employees.

To help ensure continued operations, we have 

completed initiatives in the areas of technical and 

physical security. We increased our network access 

potential through installing and reactivating additional local area network ports. This will provide for 

efficient and effective use of space in the event that 

congressional staff need to relocate to our headquarters building in an emergency. Our physical 

security was improved this year with the completion of the perimeter security phase of our security 

plans. Projects completed include installation of 

high-speed rollup doors in the garage, placement of 

guard booths at our vehicle entrances, installation 

of undervehicle cameras and pop-up barriers, and 

construction of a perimeter plinth wall.

We plan to continue to assess our security operations to ensure our ability to meet ever-changing 

challenges to our security posture. In fiscal year 

2006 we will be completing work on the Integrated 

Electronic Security System, which includes installation of turnstiles at headquarters, implementation of 

smart card technology, and upgrading access control and intrusion detection systems for headquarters and the field offices. Other efforts to meet this 

continuing challenge include procurement of an 

emergency notification system, and designing and 

disseminating a more robust security education and 

awareness program for headquarters and the field 

offices. 

Mitigating External Factors 

That Could Affect Our 

Performance 

Several external factors could affect the achievement of our performance goals, including the 

amount of resources we receive, shifts in the content and volume of our work, and various national 

and international developments. Limitations 
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 59

PART I: Management’s Discussion and Analysis

imposed on our work by other organizations or limitations on the ability of other federal agencies to 

make the improvements we recommend are additional factors that could affect the achievement of 

our goals. 

The external factors that could have the most significant adverse affect on us are the constrained budget environment in which we currently work and 

the uncertain budget future we face. We are experiencing heavy demand from the Congress for work 

in a number of subject areas, especially in disaster 

recovery and preparedness in the aftermath of Hurricanes Katrina and Rita and in health care. Given 

the across-the-board funding reductions that the 

Congress is considering for fiscal year 2006, large 

current federal budget deficits, and the nation's 

long-range fiscal imbalance, the Congress is likely 

to place an increasing emphasis on fiscal constraint. 

While it is unclear how we will ultimately be 

affected, it is reasonable to assume that any attempt 

to exercise additional budgetary discipline in the 

legislative branch will include our agency. As a 

result, while we believe that we submit reasonable 

and responsible budget requests and we know that 

the return on investment that we generate is unparalleled, we must plan and prepare for the possibility 

of significant and recurring constraints on the 

resources made available to us. In addition, because 

almost 80 percent of our budget is composed of 

people-related costs, any serious budget situation 

will have an adverse impact on our human capital 

policies and practices. This, in turn, will have an 

adverse impact on our ability to serve the Congress 

and meet our performance targets. While, as we 

noted above, the nature and extent of any such 

budget constraints cannot be determined at the 

present time, our executive team is prudently 

engaged in a range of related planning activities 

that will help us to manage small reductions in our 

funding levels and still perform the high-quality 

work for the Congress that we are known for. We 

sincerely strive to lead by example, and are hopeful 

that our modest budget requests supported by our 

sound business case and proven performance 

results will encourage the Congress to provide additional resources to us and other high-performing 

entities like ours. If the Congress employs such an 

approach, we should be in a good position to continue to provide a high rate of return on the 

resources invested in the agency. However, 

employing an across-the-board cut or other nontargeted approaches would greatly impede our ability 

to do our work and may create perverse incentives 

for those agencies who are trying to model our priorities and practices. 

A growing area for us also involves our work on bid 

protests. As required by law, General Counsel prepares Comptroller General procurement law decisions that resolve protests filed by disappointed 

bidders. These bidders challenge the way individual 

federal procurements are being conducted or how 

the contracts were awarded. In recent years, we 

have experienced an increase in the number of bid 

protests that have been filed. There is a possibility 

of a further increase if the executive branch undertakes a significant number of public or private competitions under OMB Circular A-76, particularly if 

statutory changes allow representatives of employees to protest when the private sector wins these 

competitions. We will continue to monitor our 

workload in this area to ensure that we meet our 

statutory responsibilities with minimal negative 

impact on our other work. 

In addition to current and future budget constraints, 

another external factor is the extent to which we 

can obtain access to certain types of information. 

With concerns about operational security being 

unusually high at home and abroad, we may have 

more difficulty obtaining information in a timely 

manner and reporting on sensitive issues. Historically, our auditing and information gathering have 

been limited whenever the intelligence community 

is involved. In addition, we have not had the 

authority to access or inspect records or other materials held by other countries or, generally, by the 

multinational institutions that the United States 

works with to protect its interests. Consequently, 

our ability to fully assess the progress being made 

in addressing national and homeland security issues 

may be hampered. Also, we anticipate that more of 

our reports may be subject to classification reviews 

than in the past, which means that the public dissemination of these products may be limited. We 

plan to work with the Congress to identify both legislative and nonlegislative opportunities for 

strengthening our access authority as necessary and 

appropriate. 

As the Congress focuses on unpredictable events—

such as natural disasters, possible public health 

pandemics, and the global threat posed by sophisti-
60 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART I: Management’s Discussion and Analysis

cated terrorist networks—the mix of work we are 

asked to undertake may change, diverting our 

resources from some strategic objectives and performance goals. We can and do mitigate the impact of 

these events on the achievement of our goals in various ways. For example in fiscal year 2005, we

■ stayed abreast of current events (such as the 

airline industry’s financial crisis and gasoline 

prices) and communicated frequently with our 

congressional clients in order to be alert to 

possibilities that could shift the Congress’s 

priorities or trigger new priorities; 

■ quickly redirected our resources when 

appropriate (i.e., on the cost and recovery efforts 

related to Hurricane Katrina) so that we could 

deal with major changes as they occur; 

■ maintained broad-based staff expertise (i.e., in 

our social security, health care financing, and 

homeland security areas) so that we could readily 

address emerging needs; and 

■ initiated research under the Comptroller General’s 

authority on a limited number of selected topics, 

such as U.S. tsunami detection and preparedness 

efforts, the status of Iraq's reconstruction, and our 

21st century challenges and high-risk work. 

Our ability to effectively manage the demands on 

our resources could have an impact on our ability 

to meet our performance targets. However, we will 

continue to manage the congressional requests we 

receive and the work we do under the Comptroller 

General's authority in order to minimize any negative impact it may have on our ability to meet the 

needs of the Congress and the American people.
Performance Information

Part II

Part II:

Performance 

Information
62 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART II: Performance Information

Performance Information by Strategic Goal

In the following sections, we discuss how each of 

our four strategic goals contributed to our fiscal year 

2005 performance results. Specifically, for goals 1, 2, 

and 3—our external goals—we present performance results for the three annual measures that we 

assess at the goal level. Most teams and units also 

contributed toward meeting the targets for the agencywide measures that were discussed in the previous part of this report. In addition, for all four 

strategic goals, we assess our progress on our qualitative, multiyear performance goals. 
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 63

PART II: Performance Information

Source: See Image Sources.

Our first strategic goal upholds our mission to support the Congress in carrying out its constitutional 

responsibilities by focusing on work that helps 

address the current and emerging challenges affecting the well-being and financial security of the 

American people and American communities. Our 

multiyear (fiscal years 2004-2009) strategic objectives under this goal are to provide information that 

will help address 

■ the health needs of an aging and diverse 

population;

■ the education and protection of the nation’s 

children;

■ the promotion of work opportunities and the 

protection of workers;

■ a secure retirement for older Americans;

■ an effective system of justice;

■ the promotion of viable communities;

■ responsible stewardship of natural resources and 

the environment; and

■ a safe, secure, and effective national physical 

infrastructure. 

These objectives, along with the performance goals 

and key efforts that support them, are discussed 

fully in our strategic plan, which is available on our 

Web site at http://www.gao.gov. The work supporting these objectives was performed primarily by 

headquarters and field staff in the following teams: 

Education, Workforce, and Income Security; Financial Markets and Community Investment; Health 

Care; Homeland Security and Justice; Natural 

Resources and Environment; and Physical Infrastructure. 

Goal 1 Overview

Provide timely, quality service to the Congress and 

the federal government to address current and 

emerging challenges to the well-being and financial 

security of the American people 

Selected Work under Goal 1

Improving the oversight and monitoring of Head 

Start grantees: We assisted the Congress and the 

Department of Health and Human Services (HHS) in 

identifying major risk areas in the Head Start program 

and crafting solutions to address those risks. For example, we noted the lack of reliable data on enrollment 

in Head Start centers nationwide and highlighted gaps 

in Head Start’s oversight framework that put federal 

funds at risk and can reduce the quality or amount of 

services provided. HHS is now taking steps to address 

these and other gaps we identified. (See app. 1, item 

1.36.C.)

Addressing the challenges of pension reform: We 

urged the Congress to enact comprehensive pension 

reform that would reduce the financial risks to the 

Pension Benefit Guaranty Corporation and the taxpayer, as well as to put the defined benefit system on a 

more stable financial footing. The Congress subsequently included in draft legislation the key elements 

that we suggested. (See app. 1, item 1.47.C.)

Redefining rural: In assessing how a change in the 

definition of rural would impact USDA’s Rural Housing 

Service in meeting rural housing needs, we suggested 

that the Congress consider changing to a density-based 

system as a basis for making more equitable rural 

housing program eligibility determinations. (See app. 

1, item 1.55.C.)

Improving security at drinking water and wastewater plants: We identified key activities that can 

help the Environmental Protection Agency improve 

security for the water sector. Because of this work, the 

agency established common protocols for monitoring 

threats; provided simulation exercises to improve 

local, state, and regional collaboration; and significantly expanded training opportunities related to security by sponsoring several security workshops and 

seminars on topics such as wastewater system security, 

drinking water system preparedness, and emergency 

response. (See app. 1, item 1.67.C.)
64 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART II: Performance Information

To accomplish our work under these strategic objectives, we conducted engagements, audits, analyses, and 

evaluations of programs at major federal agencies and developed reports and testimonies on the efficacy and 

soundness of those programs. 

As shown in table 10, we did not meet our fiscal year 2005 performance target for financial benefits for goal 

1, but we exceeded our targets for other benefits and testimonies. 

Table 10: Strategic Goal 1’s Annual Performance Results and Targets

Source: GAO.

aOur fiscal year 2006 targets for financial benefits and other benefits differ from the targets we reported for these measures in 

our fiscal year 2006 performance plan. On the basis of our performance in fiscal year 2005, we lowered these targets from 

$19.5 billion in financial benefits and 255 in other benefits, because we anticipate that these benefits during fiscal year 2006 are 

more likely to stem from work performed under goal 2. We did not change the agencywide targets for these measures, but we 

made corresponding changes to targets for goals 2 and 3.

To help us examine trends for these measures over time, we look at their 4-year averages, which minimize 

the effect of an unusual level of performance in any single year and are shown in table 11. This table indicates that financial and other benefits have generally risen over time, while the number of testimonies has 

generally declined for goal 1 since fiscal year 2001. 

Table 11: Four-Year Rolling Averages for Strategic Goal 1

Source: GAO.

The following sections describe our performance in 

goal 1 for each of these three quantitative performance measures and describe the targets for fiscal 

year 2006. This analysis is followed by a discussion 

of our multiyear qualitative performance measures.

Financial Benefits 

The financial benefits reported for this goal in fiscal 

year 2005 totaled $15.6 billion, falling short of the 

target of $19.6 billion. This shortfall resulted, in part, 

because our work focused on nonfinancial rather 

than financial benefits. The largest of the financial 

benefits for this goal arose from our recommendation that DOE take actions to avoid costs associated 

with a nuclear waste disposal process. Other financial benefits resulting from our work under goal 1 

stemmed from HUD recapturing funds not being 

used by public housing authorities, HHS avoiding 

costs in the Medicare program, and the National 

Performance measure

2001 

actual

2002 

actual

2003 

actual

2004 

actual

2005 

target

2005 

actual

Met/ 

not met

2006 

target

Financial benefits 

(dollars in billions) $8.9 $24.1 $23.6 $26.6 $19.6 $15.6 Not met $18.7a

Other benefits 210 226 217 252 240 277 Met 242a

Testimonies 73 111 80 85 78 88 Met 89

Performance measure 2001 2002 2003 2004 2005

Financial benefits (dollars in billions) $11.9 $15.2 $17.7 $20.8 $22.5

Other benefits 177 190 209 226 243

Testimonies 114 110 99 87 91

Financial benefits valued at $4.5 billion arose from 

costs avoided after the implementation of our recommendation that DOE seek legislation to allow more 

economical disposal of certain nuclear wastes. (See 

app. 1, item 1.60.A.)
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 65

PART II: Performance Information

Park Service increasing revenues. We describe these 

and other accomplishments in the goal 1 section of 

appendix 1.

Because financial benefits often result from work 

completed in prior years, we set our fiscal year 2006 

target on the basis of our assessment of the progress 

agencies are making in implementing our past recommendations. Our analysis indicates that financial 

benefits in the future for goal 1 are likely to decline. 

We, therefore, have set the target for fiscal year 2006 

at $18.7 billion, which is higher than what we 

achieved this year.

Other Benefits 

Other tangible, nonfinancial benefits reported for 

goal 1 in fiscal year 2005 included 254 actions taken 

by federal agencies to improve their services and 

operations in response to our work and another 23 

in which information we provided to the Congress 

resulted in statutory or regulatory changes. This 

total of 277 other benefits exceeded our target of 

240. We report some of our major accomplishments 

in detail in the goal 1 section of appendix 1. For fiscal year 2006, we have set a target of 242. While this 

target is lower than what we achieved this year, it is 

about the same as the 4-year average for the goal 

and is consistent with our recognition that we are 

more likely to achieve these benefits under goals 2 

and 3 in the next few years.

Testimonies

Our witnesses testified at 88 congressional hearings 

related to this strategic goal, which exceeded the 

fiscal year 2005 target of 78 testimonies. Among the 

testimonies given were those on student loan programs, Social Security reform, Medicare spending, 

defense health care, farm program payments, and 

transportation security (see p. 36 for a list of testimony topics by goal). On the basis of our assessment of the potential need to testify on issues under 

this goal, we have set a target of presenting testimony at 89 hearings during fiscal year 2006. 

Multiyear Performance Goals 

As shown in table 12, at the close of fiscal year 

2005, we met 39 of the 40 performance goals for 

this strategic goal. We did not meet the goal of 

assessing the administrative efficiency and effectiveness of the federal court and prison systems 

because we did not receive requests to perform 

work in this area and could not undertake selfinitiated work because we needed resources for 

work requested by the Congress in other areas. For 

fiscal year 2006, we are replacing this performance 

goal with one for improving the administration of 

the nation’s election system, a goal that better 

reflects the interests of our congressional clients. 

Examples of Goal 1’s Other Benefits

Paying properly for power wheelchairs for Medicare beneficiaries: On the basis of our finding that 

the information provided to Medicare contractors that 

process wheelchair claims—one of the program’s most 

expensive items—provided insufficient detail, new 

requirements were established to make more information available. (See app. 1, item 1.9.A.)

Monitoring states’ inventories of childhood vaccines: The Centers for Disease Control and Prevention 

implemented our recommendation to develop a strategic plan that includes steps to monitor childhood vaccine supplies in state depots, which should help 

ensure that adequate inventories are available. (See 

app. 1, item 1.17.A.)

Estimating tobacco retailer violation rates: Our 

work led HHS to increase oversight of states’ monitoring of tobacco retailers; for example, HHS now visits 

states to help assess the accuracy and completeness of 

tobacco outlet lists and works with states to improve 

standardization of inspection protocols. (See app. 1, 

item 1.19.A.)
66 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART II: Performance Information

Table 12: Strategic Goal 1’s Qualitative Performance Goals, Fiscal Years 2004 and 2005

 Met

 Not met Strategic objective/performance goal

1.1. The health needs of an aging and diverse population

 1.1.1. Evaluate Medicare reform, financing, and operations

 1.1.2. Assess trends and issues in private health insurance coverage

 1.1.3. Assess actions and options for improving the Department of Veterans Affairs and the Department of 

Defense’s health care services

 1.1.4. Evaluate the effectiveness of federal programs to promote and protect the public health

 1.1.5. Evaluate the effectiveness of federal programs to improve the nation’s preparedness for the public 

health and medical consequences of bioterrorism

 1.1.6. Evaluate federal and state program strategies for financing and overseeing long-term health care

 1.1.7. Assess state experiences in providing health insurance coverage for low-income populations

1.2. The education and protection of the nation's children

 1.2.1. Analyze the effectiveness and efficiency of early childhood education, care, and nutrition programs in 

serving their target populations

 1.2.2. Assess options for federal programs to effectively address the educational and nutritional needs of 

elementary and secondary students 

 1.2.3. Determine the effectiveness and efficiency of child support enforcement and child welfare programs in 

serving their target populations

 1.2.4. Identify opportunities to better manage postsecondary, vocational, and adult education programs and 

deliver more effective services

1.3. The promotion of work opportunities and the protection of workers

 1.3.1. Assess the effectiveness of federal efforts to help adults leave welfare for work and to assist other lowincome individuals

 1.3.2. Analyze the impact of programs designed to maintain a skilled workforce and ensure employers have 

the workers they need

 1.3.3. Assess the success of various enforcement strategies to protect workers while minimizing employers’

burden in the changing work environment

 1.3.4. Identify ways to improve federal support for people with disabilities

1.4. A secure retirement for older Americans

 1.4.1. Assess the policy challenges facing the future of the Social Security system and the need for reform

 1.4.2. Bolster retirement security by identifying opportunities to foster greater pension coverage, raise 

personal saving, and increase the employment earnings of seasoned workers

 1.4.3. Identify opportunities to improve the ability of government agencies to administer and protect workers’

retirement benefits

 1.4.4. Assess the role of the Social Security number in improving government operations, minimizing fraud 

and abuse, and protecting citizens from identity theft and other illegal activity
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 67

PART II: Performance Information

Source: GAO.

Notes: In indicating whether we have met a performance goal, the responsible senior executive considers, for example, the 

amount of work conducted and recommendations made for each key effort under that performance goal, as well as other 

assistance provided to the client or customer that is related to these efforts. The senior executive then judges whether the work 

completed collectively for all key efforts has achieved the performance goal. To view the 153 key efforts for the 40 performance 

goals above, go to http://www.gao.gov/sp.html.

 Met

 Not met Strategic objective/performance goal

1.5. An effective system of justice

 1.5.1. Identify ways to improve federal agencies’ ability to prevent and respond to terrorism and other major 

crimes

 1.5.2. Assess the effectiveness of federal programs to control illegal drug use

 1.5.3. Assess federal efforts to enforce immigration and customs laws

 1.5.4. Assess the administrative efficiency and effectiveness of the federal court and prison systems

1.6. The promotion of viable communities

 1.6.1. Assess federal community and economic development assistance and its impact on communities

 1.6.2. Assess the effectiveness of federal initiatives to assist small and minority-owned businesses 

 1.6.3. Assess how the federal government can balance the promotion of home ownership with financial risk

 1.6.4. Assess federal efforts to enhance national preparedness and capacity to respond to and recover from 

natural and man-made disasters

 1.6.5. Assess how well federal programs that support affordable housing meet objectives, manage financial 

risk, and improve recipient’s well-being

1.7. Responsible stewardship of natural resources and the environment

 1.7.1. Assess the nation’s ability to ensure reliable and environmentally sound energy for current and future 

generations

 1.7.2. Assess federal strategies for managing land and water resources in a sustainable fashion for multiple 

uses

 1.7.3. Assess environmental protection strategies and programs

 1.7.4. Assess efforts to reduce the threats posed by hazardous and nuclear wastes 

 1.7.5. Assess federal programs’ ability to ensure a plentiful and safe food supply, provide economic security 

for farmers, and minimize agricultural environmental damage

1.8. A safe, secure, and effective national physical infrastructure

 1.8.1. Assess strategies for identifying, evaluating, prioritizing, financing, and implementing integrated 

solutions to the nation’s transportation infrastructure challenges

 1.8.2. Assess the impact of transportation and telecommunications policies and practices on competition 

and consumers

 1.8.3. Assess federal government’s role in fostering and overseeing telecommunications in the public interest

 1.8.4. Assess efforts to improve safety in moving people and goods across the nation’s transportation 

system 

 1.8.5. Assess efforts to improve security in all transportation modes

 1.8.6. Assess the U.S. Postal Service’s transformation efforts to ensure its viability and accomplish its 

mission

 1.8.7. Assess federal efforts to plan for, acquire, manage, maintain, secure, and dispose of the government’s 

real property assets
68 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART II: Performance Information

Source: See Image Sources.

The federal government is working to promote foreign policy goals, sound trade polices, and other 

strategies to advance the interests of the United 

States and its allies while also seeking to anticipate 

and address emerging threats to the nation’s security and economy. Given the importance of these 

efforts, our second strategic goal focuses on helping 

the Congress and the federal government respond 

to changing security threats and the challenges of 

global interdependence. Our multiyear (fiscal years 

2004-2009) strategic objectives under this goal are to 

support the congressional and federal efforts to

■ respond to emerging threats to security,

■ ensure military capabilities and readiness,

■ advance and protect U.S. international interests, 

and

■ respond to the impact of global market forces on 

U.S. economic and security interests. 

These objectives, along with the performance goals 

and key efforts that support them, are discussed 

fully in our strategic plan, which is available on our 

Web site at http://www.gao.gov. The work supporting these objectives is performed primarily by headquarters and field staff in the following teams: 

Acquisition and Sourcing Management, Defense 

Capabilities and Management, and International 

Affairs and Trade. In addition, the work supporting 

some performance goals and key efforts is performed by headquarters and field staff from the 

Information Technology, Homeland Security and 

Justice, Financial Markets and Community Investment, and Natural Resources and Environment 

teams. 

To accomplish our work under these strategic 

objectives, we conducted engagements and audits 

that involved fieldwork related to federal programs

Goal 2 Overview

Provide timely, quality service to the Congress and 

the federal government to respond to changing 

security threats and the challenges of global 

interdependence

Selected Work under Goal 2

Strengthening federal agency information security: 

In response to our identification of specific information 

security improvements needed at numerous agencies, 

some agencies strengthened their information security 

practices by, among other things, changing access controls to limit the ability to read, modify, or delete information to authorized individuals; implementing software 

change controls to allow only authorized software programs to operate; and using service continuity controls to 

protect computer-dependent operations from significant 

disruptions. (See app. 1, item 2.6.A.)

Increasing security of cargo containers to prevent 

smuggling of weapons of mass destruction: In 

response to our recommendations, DHS agreed to 

improve its ability to assess security procedures of certain 

companies, identify high-risk containers, inspect containers with scanning equipment, and manage the programs 

overall to increase the security of cargo containers in 

order to prevent terrorists from using such containers to 

smuggle weapons of mass destruction into the United 

States. (See app. 1, item 2.11.C.)

Identifying challenges to efforts to stabilize and 

rebuild Iraq: We identified the challenges to U.S. efforts 

to stabilize Iraq, reconstruct Iraq’s essential infrastructure, 

and support its elections. Our work was widely reported 

in the national media, helped inform American taxpayers 

about U.S. efforts in Iraq, and provided the Congress with 

crucial oversight information as it considered legislative 

action. (See app. 1, item 2.49.C.)

Bolstering efforts to prevent terrorists and criminals 

from obtaining U.S. passports: The Congress 

expressed grave concerns about the security gaps that we 

identified in U.S. passport operations and asked the 

Departments of State (State) and Justice to implement our 

recommendations correcting these and other systemic 

weaknesses in State’s passport fraud detection efforts. 

The agencies have begun implementing actions to close 

these critical security gaps. (See app. 1, item 2.50.C.)
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 69

PART II: Performance Information

that took us across multiple continents, including Australia, Europe, Africa, Asia, South America, and North 

America. As in the past, we developed reports, testimonies, and briefings on our work. 

As shown in table 13, we exceeded our fiscal year 2005 performance targets for financial and other benefits, 

but did not meet the target for testimonies for this goal. 

Table 13: Strategic Goal 2’s Annual Performance Results and Targets

Source: GAO. 

aOur fiscal year 2006 targets for financial benefits and other benefits differ from the targets we reported for these measures in 

our fiscal year 2006 performance plan. On the basis of our performance in fiscal year 2005, we raised these targets from 

$9.1 billion in financial benefits and 275 in other benefits. We did not change the agencywide targets for these measures, but we 

made corresponding changes to targets for goals 1 and 3.

To help us examine trends for these measures over time, we look at their 4-year averages, which minimize 

the effect of an unusual level of performance in any single year and are shown in table 14. This table indicates that financial and other benefits derived from our work have risen. At the same time, the number of testimonies for goal 2 has remained stable. 

Table 14: Four-Year Rolling Averages for Strategic Goal 2

Source: GAO.

The following sections describe our performance in 

goal 2 for each of our quantitative performance 

measures and describe the targets for fiscal year 

2006. This analysis is followed by a discussion of 

our multiyear qualitative performance measures.

Financial Benefits 

The financial benefits reported for this goal in fiscal 

year 2005 totaled $13 billion, exceeding the target 

of $9.4 billion. These accomplishments stemmed 

from engagements that recommended scaling back 

a defense program until the required technology is 

mature, increasing efficiencies in the Army’s force 

structure, reducing funding for the Millennium Challenge Account—an account established to support 

development in countries around the world—and 

for DOD’s operations and maintenance, and avoiding costs associated with the return of excess Army 

Performance 

measure

2001 

actual

2002 

actual

2003 

actual

2004 

actual

2005 

target

2005 

actual

Met/ 

not met

2006 

target

Financial benefits 

(dollars in billions) $10.5 $8.4 $7.1 $9.7 $9.4 $13.0 Met $10.5a

Other benefits 188 218 273 369 300 365 Met 282a

Testimonies 34 38 48 70 52 42 Not met 58

Performance measure 2001 2002 2003 2004 2005

Financial benefits

(dollars in billions) $6.2 $6.9 $7.9 $8.9 $9.5

Other benefits 118 154 202 262 306

Testimonies 43 41 44 48 50

A financial benefit of about $4.7 billion stemmed from 

our findings that the Missile Defense Agency could 

scale back its system development efforts until 

required technologies are more mature. (See app. 1, 

item 2.17.A).
70 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART II: Performance Information

materiel from Iraq. We describe these and other 

accomplishments in the goal 2 section of appendix 

1.

Given the large portion of the U.S. budget that 

defense spending consumes, we expect our work 

under this goal to continue to produce economies 

and efficiencies that yield billions of dollars in financial benefits for the American people each year. We 

set goal 2's fiscal year 2006 target at $10.5 billion 

based on its fiscal year 2005 4-year rolling average 

of $9.5 billion and our assessment of the progress 

agencies are making in implementing our past recommendations that might yield financial benefits. 

Other Benefits 

The other tangible benefits reported for goal 2 in 

fiscal year 2005 included 341 actions taken by federal agencies to improve their services and operations in response to our work and another 24 in 

which information we provided to the Congress 

resulted in statutory or regulatory changes. This 

total of 365 other benefits exceeded our target of 

300. Our success in this area arose from our 

increased emphasis on follow-up efforts and 

increased monitoring of our progress toward the 

targets throughout the year. Some of our major 

accomplishments are reported in detail in the goal 2 

section of appendix 1. 

Looking ahead, our assessments of the executive 

branch’s current efforts to implement our recommendations made under this goal led us to set our 

fiscal year 2006 target at 282. This target is lower 

than our fiscal year 2005 actual performance and 4-

year average for this measure because we want to 

encourage staff to identify significant and meaningful other benefits rather than numerous, narrowly 

focused ones that would easily ensure that we meet 

a higher target.

Testimonies

Our witnesses testified at 42 congressional hearings 

related to this strategic goal, missing our target of 

presenting testimony at 52 hearings. Among other 

things, we testified on U.S. passport fraud, DOD 

security clearances, the Oil for Food program, 

mutual funds, unmanned aerial vehicles, protecting 

U.S. officials oversees from terrorist attacks, and 

transportation security issues (see p. 36 for a list of 

testimony topics by goal). We have set our target for 

presenting testimony at hearings to 58 for fiscal year 

2006. This should be a challenge for us as it is 

above both our fiscal year 2005 performance and 4-

year average for this goal. 

Examples of Goal 2’s Other Benefits

Improving controls covering technology exports:

We found that a gap in control regulations covering 

exports with both military and civilian applications 

could enable individuals in most countries to legally 

obtain these items without any U.S. government 

review and that these items could be used to help 

make a cruise missile or unmanned aerial vehicle. The 

Department of Commerce subsequently proposed 

modifications to its regulations to help close the regulatory gap. (See app. 1, item 2.1.A.)

Strengthening the visa process as an antiterrorism tool: Using our work as a primary guide, State 

strengthened the visa process as an antiterrorism tool 

by, among other things, issuing guidance emphasizing 

national security as the department’s first priority in the 

visa process; developing over 80 standard operating 

procedures to ensure that consular officers properly 

review visa applications and effectively fulfill their 

national security responsibilities; and developing and 

enhancing training on analytic interviewing techniques, fraud prevention, counterterrorism, and use of 

a name check system for passports and visa applications. (See app. 1, item 2.32.A.)

Ensuring decisions to transfer U.S. weapons and 

technologies to foreign governments are adequately informed: We found that the National Disclosure Policy Committee—which approves or denies 

requests for exceptions to the criteria used to determine if classified weapons or technologies can be 

released to the requesting country—was operating 

with outdated Central Intelligence Agency risk assessments. Acting on our recommendations, the committee’s Executive Secretariat requested that the Central 

Intelligence Agency provide updated risk assessments 

for 23 countries, and those assessments are under way. 

(See app. 1, item 2.55.A.)
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 71

PART II: Performance Information

Multiyear Performance Goals 

As shown in table 15, at the close of fiscal year 

2004, we met 22 of our 23 performance goals for 

this strategic goal. We did not meet the performance 

goal of identifying opportunities to embed homeland security concepts in ongoing national initiatives because our homeland security resources were 

needed for other work requested by the Congress 

and we did not have resources in the homeland 

security area to undertake self-initiated work related 

to this performance goal. For fiscal year 2006, we 

plan to drop this performance goal and concentrate 

our resources on the remaining homeland security 

efforts. 
72 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART II: Performance Information

Table 15: Strategic Goal 2’s Qualitative Performance Goals, Fiscal Years 2004 and 2005

 Met

 Not met Strategic objective/performance goal

2.1. Respond to emerging threats to security

 2.1.1. Assess federal homeland security management, responsibility, effectiveness, and achievement of 

mission goals

 2.1.2. Identify ways to strengthen strategies related to homeland security and their implementation 

 2.1.3. Evaluate homeland security resource priorities, costs, and approaches to stimulate desired 

investments

 2.1.4. Identify opportunities to embed homeland security concepts in ongoing national initiatives

 2.1.5. Evaluate ways to strengthen government information security and protect computer and 

telecommunications systems that support the nation’s critical infrastructures 

 2.1.6. Assess the effectiveness of U.S. and international efforts to prevent the proliferation of nuclear, 

biological, chemical, and conventional weapons and sensitive technologies

2.2. Ensure military capabilities and readiness

 2.2.1. Assess DOD’s ability to maintain adequate readiness levels while addressing the force structure 

changes needed in the 21st century

 2.2.2. Assess overall human capital management practices to ensure a high-quality total force

 2.2.3. Assess the ability of weapon system acquisition programs and processes to achieve desired outcomes 

 2.2.4. Identify ways to improve the economy, efficiency, and effectiveness of DOD's support infrastructure and 

business systems and processes

 2.2.5. Assess the National Nuclear Security Administration’s efforts to maintain a safe and reliable nuclear 

weapons stockpile

 2.2.6. Assess whether DOD and the services have developed integrated systems, procedures, and doctrines 

to support joint and coalition forces on the battlefield safely and effectively

 2.2.7. Analyze and support DOD's efforts to improve planning, programming, budgeting, execution, and 

program performance

2.3. Advance and protect U.S. international interests

 2.3.1. Analyze the plans, strategies, costs, and results of the United States and its allies in conflict 

interventions

 2.3.2. Analyze the effectiveness and management of U.S. foreign aid and developmental and humanitarian 

programs and the tools used to implement them

 2.3.3. Analyze the plans, costs, and outcomes of responding to challenges to U.S. strategic interests

 2.3.4. Evaluate the extent to which U.S. interests are effectively served by U.S. participation in multilateral 

organizations

 2.3.5. Assess the strategies and management practices for U.S. foreign affairs functions and activities
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 73

PART II: Performance Information

Source: GAO.

Notes: In indicating whether we have met a performance goal, the responsible senior executive considers, for example, the 

amount of work conducted and recommendations made for each key effort under that performance goal, as well as other 

assistance provided to the client or customer that is related to these efforts. The senior executive then judges whether the work 

completed collectively for all key efforts has achieved the performance goal. To view the 88 key efforts for the 23 performance

goals above, go to http://www.gao.gov/sp.html.

2.4. Respond to the impact of global market forces on U.S. economic and security interests

 2.4.1. Analyze how U.S. interests are served through trade agreements and U.S. programs

 2.4.2. Improve understanding of the effects of a global industrial base on U.S. national security interests

 2.4.3. Assess how the United States can influence improvements in the world financial system

 2.4.4. Assess the ability of the financial services industry and its regulators to maintain a stable and efficient 

financial system in the face of market change and innovation

 2.4.5. Assess the effectiveness of regulatory programs and policies in ensuring access to financial services 

and deterring fraud and abuse in financial markets
74 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART II: Performance Information

Source: See Image Sources.

Our third strategic goal focuses on the collaborative 

and integrated elements needed for the federal government to achieve results. The work under this 

goal highlights the intergovernmental relationships 

that are necessary to achieve national goals. Our 

multiyear (fiscal years 2004-2009) strategic objectives under this goal are to

■ reexamine the federal government’s role in 

achieving evolving national objectives;

■ support the transformation to results-oriented, 

high-performing government;

■ support congressional oversight of key 

management challenges and program risks to 

improve federal operations and ensure 

accountability; and 

■ analyze the government’s fiscal position and 

strengthen approaches for addressing the current 

and projected fiscal gap. 

These objectives, along with the performance goals 

and key efforts that support them, are discussed 

fully in our strategic plan, which is available on our 

Web site at http://www.gao.gov. The work supporting these objectives is performed primarily by headquarters and field staff from the Applied Research 

and Methods, Financial Management and Assurance, Information Technology, and Strategic Issues 

teams. In addition, the work supporting some performance goals and key efforts is performed by 

headquarters and field staff from the Acquisition 

and Sourcing Management and Natural Resources 

and Environment teams. This goal also includes our 

bid protest and appropriations law work, which is 

performed by staff in General Counsel, and our 

fraud investigations, which are conducted by staff 

from the Forensic Audits and Special Investigations 

unit within the Financial Management and Assurance team. 

Goal 3 Overview

Help transform the federal government’s role and 

how it does business to meet 21st century challenges

Selected Work under Goal 3

Cost effectively managing a multibillion dollar IT 

investment: DHS program managers who track cargo entering and leaving the United States implemented our recommendations related to developing and using enterprise 

architecture, following an incremental system acquisition 

approach, establishing system acquisition process controls, 

and ensuring the independence of DHS’s function to oversee 

the program. (See app. 1, item 3.19.C.)

Improving criminal debt collection: Our efforts resulted 

in the Congress directing the Department of Justice to 

develop a strategic plan with the other involved federal 

agencies to improve the federal government’s ability to collect billions of dollars of outstanding criminal debt. The 

department has begun to act on this directive. (See app. 1, 

item 3.20.C.)

Improving governmentwide telecommunications 

acquisition: Because of concerns that we raised regarding a 

governmentwide telecommunications contract known as 

Networx, GSA drafted measures to address each of the program’s goals and is working to revise the draft measures 

based on our feedback. In addition, the Congress directed 

the agency to delay the release of its final request for proposals until information was available on the level of service 

contractors would be required to provide at each location. 

(See app. 1, item 3.21.C.)

Raising awareness of selected technology used to block 

pornography: We found that the filters offered by selected 

peer-to-peer file-sharing applications—which allow Internet 

users to find and exchange information, including images 

and videos—varied in their ability to block pornographic 

images. (See app. 1, item 3.29.C.)

Conducting the first financial audit of the Securities 

and Exchange Commission (SEC): Our audit of SEC for 

the fiscal year ended 2004—the first conducted at SEC—

resulted in a clean opinion on its financial statements. Nevertheless, we identified material internal control weaknesses 

over financial statements and disclosures, recording and 

reporting disgorgements and civil penalties, and information 

security, which SEC is taking steps to address. (See app. 1, 

item 3.60.C.)
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 75

PART II: Performance Information

To accomplish our work under these four objectives, we conducted audits, evaluations, and analyses in 

response to congressional requests and carried out work initiatives under the Comptroller General’s authority. As in the past, we developed reports, testimonies, and briefings on our work. 

As shown in table 16, we exceeded our fiscal year 2005 performance targets for financial and other benefits 

for this goal, but did not meet the target for testimonies at the goal level. 

Table 16: Strategic Goal 3’s Annual Performance Results and Targets

Source: GAO. 

aOur fiscal year 2006 targets for financial benefits and other benefits differ from the targets we reported for these measures in 

our fiscal year 2006 performance plan. On the basis of our performance in fiscal year 2005, we lowered the financial benefit 

target from $10.4 billion. We also raised the target for other benefits from 520. We did not change the agencywide targets for 

these measures, but we made corresponding changes to targets for goals 1 and 2.

To help us examine trends for these measures over time, we look at their 4-year averages, which minimize 

the effect of an unusual level of performance in any single year and are shown in table 17. This table indicates that documentation of financial and other benefits derived from our work under this goal have risen, 

while the number of testimonies for goal 3 has declined overall. 

Table 17: Four-Year Rolling Averages for Strategic Goal 3 

Source: GAO.

The following sections describe our performance in 

goal 3 for each of our quantitative performance 

measures and describe the targets for fiscal year 

2006. This analysis is followed by a discussion of 

our qualitative performance measures.

Financial Benefits

The financial benefits reported for this goal in fiscal 

year 2005 totaled $11 billion, exceeding our target 

of $8.5 billion. These efforts included increasing 

revenues from IRS collections, avoiding costs by 

using streamlined federal acquisition strategies, 

reduced funding due to improved cash management processes in the Air Force’s working capital 

fund and to postponement of NASA’s Prometheus 1 

project, and reducing costs associated with the 2010 

Census. We describe these and other accomplishments in the goal 3 section of appendix 1.

Performance 

measure

2001 

actual

2002 

actual

2003 

actual

2004 

actual

2005 

target

2005 

actual

Met/ 

not met

2006 

target

Financial benefits

(billions of dollars) $7.0 $5.2 $4.7 $7.6 $8.5 $11.0 Met $9.8a

Other benefits 401 462 553 576 460 767 Met 526a

Testimonies 42 65 56 60 55 47 Not met 63

Performance measure 2001 2002 2003 2004 2005

Financial benefits

(dollars in billions) $5.3 $5.5 $5.5 $6.1 $7.1

Other benefits 407 445 480 498 590

Testimonies 86 78 67 56 57

A financial benefit of about $1.8 billion stemmed from 

our findings that led IRS to increase revenue collections. (See app. 1, item 3.51.A).
76 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART II: Performance Information

Under goal 3, we typically work on core government business processes and governmentwide management reforms. Our assessments of the executive 

branch’s current efforts to implement the recommendations we made in our work under this goal 

indicate that financial benefits related to this goal 

are likely to be in line with our 4-year average; consequently, we set the target for financial benefits at 

$9.8 billion for fiscal year 2006. 

Other Benefits

The other tangible benefits reported for goal 3 in 

fiscal year 2005 included 739 instances in which 

agencies’ core business processes were improved or 

governmentwide management reforms were 

advanced because of our work. In addition, there 

were 28 instances in which information we provided to the Congress resulted in statutory or regulatory changes. This total of 767 other benefits 

exceeded our target of 460. The larger number of 

other benefits occurred mainly in our financial management and information technology areas where 

we tend to make multiple, specific recommendations for change to more than one entity. We 

describe some of our major accomplishments in the 

goal 3 section of appendix 1.

Looking ahead, our assessments of the executive 

branch’s current efforts to implement our recommendations made under this goal led us to set a fiscal year 2006 target of 526 other benefits for goal 3. 

We recognize that this target is lower than our fiscal 

year 2005 actual performance, but we set it at this 

level because we want to encourage staff to identify 

significant and meaningful other benefits rather than 

numerous, narrowly focused ones that would easily 

ensure that we meet a higher target.

Testimonies

Our witnesses testified at 47 congressional hearings 

related to this strategic goal, falling short of the target of 55. Among the testimonies presented were 

those on Army Reserve and Army National Guard 

pay, tax system abuse by DOD contractors, diploma 

mills, federal purchase and travel cards, NASA’s 

shuttle program, and DOD contract management 

(see p. 36 for a list of testimony topics by goal). For 

fiscal year 2006, we have set a target of presenting 

testimony at 63 hearings because we expect the 

level of hearings to be higher than it was in fiscal 

year 2005; the anticipated increase stems from our 

work on bid protests and on contracting activities 

resulting from federal Hurricane Katrina cleanup 

and recovery efforts.

Examples of Goal 3’s Other Benefits

Adding rigor to the Coast Guard’s oversight of 

Deepwater program contractors: We found that 

(1) the Coast Guard’s evaluation of a contractor 

responsible for developing and delivering assets for 

the Deepwater Program—established to modernize 

the Coast Guards’ aging fleet of ships and aircraft—

lacked the necessary rigor to be effective and (2) two 

subcontractors were solely responsible for deciding 

whether to compete assets or make the assets themselves. Based on our recommendations, the Coast 

Guard improved the criteria for assessing the system 

integrator’s performance and required the subcontractors to provide notification of decisions to make assets 

valued at $10 million or more. (See app. 1, item 3.6.A.)

Preventing improper sales of sensitive clothing 

and textile items: On the basis of our findings that it 

improperly sold over the Internet excess clothing with 

reflectant properties that prevent detection with infrared technologies, DOD issued a more stringent policy, 

which determined that these items are of a sufficiently 

critical and sensitive nature to require total destruction—an action that should help prevent this sensitive 

technology from falling into the wrong hands. (See 

app. 1, item 3.31.A.)

Improving accountability at the Department of 

Labor (DOL): We recommended that OMB revise its 

audit guidance to require sufficient testing for auditors 

to be able to positively state whether agency financial 

management systems comply with requirements (positive assurance). DOL’s IG advised us that it had followed our advice and became the first federal agency 

to provide positive assurance. (See app. 1, item 

3.34.A.)

Improving NASA’s cost-estimating processes: Acting on our recommendations, NASA has removed barriers to cost estimation—such as the lack of reliable 

financial and performance data and the lack of incentives to measure and monitor cost trends—and 

improved its cost-estimating practices. (See app. 1, 

item 3.37.A.)
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 77

PART II: Performance Information

Multiyear Performance Goals 

As shown in table 18, at the close of fiscal year 

2005, we met all of the 19 performance goals for 

this strategic goal.
78 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART II: Performance Information

Table 18: Strategic Goal 3’s Qualitative Performance Goals, Fiscal Years 2004 and 2005

Source: GAO.

Notes: In indicating whether we have met a performance goal, the responsible senior executive considers, for example, the 

amount of work conducted and recommendations made for each key effort under that performance goal, as well as other 

assistance provided to the client or customer that is related to these efforts. The senior executive then judges whether the work 

completed collectively for all key efforts has achieved the performance goal. To view the 90 key efforts for the 19 performance

goals above, go to http://www.gao.gov/sp.html.

 Met

 Not met Strategic objective/performance goal

3.1. Reexamine the federal government’s role in achieving evolving national objectives

 3.1.1. Examine emerging challenges and opportunities to position the federal government for the 21st 

century

 3.1.2. Develop new resources and approaches that can be used to assess the nation’s position and progress

 3.1.3. Explore ways to evaluate the effectiveness of the entire set of policy tools that the federal government 

uses to achieve national objectives

 3.1.4. Assess how involvement of state and local governments and nongovernmental organizations affects 

federal program implementation and achievement of national goals

3.2. Support the transformation to results-oriented, high-performing government

 3.2.1. Analyze and support efforts to improve the human capital infrastructure key to the successful 

transformation of the government

 3.2.2. Assess and support efforts to improve results-oriented management across the government

 3.2.3. Analyze efforts to build high-performing organizations

 3.2.4. Identify ways to improve the collection, dissemination, and quality of federal information

 3.2.5. Identify ways to improve financial management infrastructure capacity to provide useful information for 

managing results and costs day to day

 3.2.6. Assess the government’s planning, implementation, and use of information technology to improve 

performance and modernize federal programs and operations

 3.2.7. Identify ways to improve how federal agencies acquire goods and services

3.3. Support congressional oversight of key management challenges and program risks to improve federal 

operations and ensure accountability

 3.3.1. Highlight the federal programs and operations at highest risk and the major performance and 

management challenges confronting agencies

 3.3.2. Assess the management and results of the federal investment in science and technology and the 

effectiveness of efforts to protect intellectual property

 3.3.3. Identify ways to strengthen accountability for the federal government’s assets and operations

3.4. Analyze the government’s fiscal position and strengthen approaches for addressing the current and projected 

fiscal gap

 3.4.1. Analyze the long-term fiscal position of the federal government

 3.4.2. Analyze the structure and information for budgetary choices and explore alternatives for improvement

 3.4.3. Contribute to congressional deliberations on tax policy

 3.4.4. Support congressional oversight of federal tax administration

 3.4.5. Assess the reliability of financial information on the government’s fiscal position and financing sources
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 79

PART II: Performance Information

Source: See Image Sources.

The focus of our fourth strategic goal is to make 

GAO a model organization. For us, this means that 

our work is driven by our external clients and internal customers, our managers exhibit the characteristics of leadership and management excellence, our 

employees are devoted to ensuring quality in our 

work process and products through continuous 

improvement, and our agency is regarded by current and potential employees as an excellent place 

to work. Our multiyear (fiscal years 2004-2009) strategic objectives under this goal are to

■ continuously improve client and customer 

satisfaction and stakeholder relationships;

■ lead strategically to achieve enhanced results;

■ leverage GAO’s institutional knowledge and 

experience; 

■ continuously enhance GAO’s business and 

management processes; and

■ become a professional services employer of 

choice. 

These objectives, along with the performance goals 

and key efforts that support them, are discussed 

fully in our strategic plan, which is available on our 

Web site at http://www.gao.gov. The work supporting these objectives is performed under the direction of CAO with assistance on specific key efforts 

being provided by staff from the Applied Research 

and Methods team and from offices such as Strategic Planning and External Liaison, Congressional 

Relations, OOI, QCI, and Public Affairs. 

To accomplish our work under these five objectives, we plan to perform internal studies and complete projects that further the strategic goal.

Goal 4 Overview

Maximize the value of GAO by being a model federal 

agency and a world-class professional services 

organization

Selected Work under Goal 4 

Improving dissemination of GAO products: We continued our pilot to produce and disseminate GAO reports in an 

electronic format, and, based on the positive client feedback 

we received on the products we provided in electronic format, we plan to make the use of electronic products routine. 

We also improved the process for creating and posting to 

our Web site the electronic supplements to our reports, 

enabling our staff to view all features of a supplement before 

it is posted on the Internet, easing navigation within the electronic supplement, and more readily identifying the product 

as a GAO product. (See app. 1, item 4.3.C.)

Enhancing our classification and compensation systems: We more directly linked the process for determining 

compensation to an individual's performance, as reflected on 

the appraisal, and used a market-based compensation study 

to design a competitive, fair, and equitable compensation 

program that is aligned with competitive labor markets in 

which we compete for talent. In addition, our administrative 

and professional support staff completed their first year 

under a broadband pay system and a competency-based 

performance system. (See app. 1, item 4.13.C.)

Improving customer service through use of Web-based 

technology: We upgraded our Web-based time and attendance system and our automated competency-based performance system, developed and implemented a Web-based 

request system for scheduling GAO vans that transport our 

staff to official meetings, redesigned the Web-based phone 

book, and deployed a major enhancement to our Web-based 

employee locator system. (See app. 1, item 4.27.C)

Ensuring our IT security: To ensure our IT security we 

installed personal firewall software, implemented changes to 

ensure desktop security and foil spyware, and implemented 

an integrated security approach for our Web-based systems. 

(See app. 1, item 4.32.C.)

Ensuring our physical security: We enhanced our physical security by completing the perimeter security efforts, 

including installation of high speed rollup doors, guard 

booths, undervehicle cameras, pop-up barriers, and a perimeter plinth wall. (See app. 1, item 4.33.C.)
80 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART II: Performance Information

Multiyear Performance Goals 

The annual measures used to assess our performance under our external strategic goals are not 

applicable to this internal strategic goal, but the 

multiyear qualitative performance goals do apply. 

As shown in table 19, at the close of fiscal year 

2005, we met 16 of the 17 performance goals for 

this strategic goal. We did not meet our performance goal of maximizing the collection, use, and 

retention of essential organizational knowledge. 

While we completed substantial work for this performance goal, we will not complete this work until 

after fiscal year 2005. Specifically, our work has 

been slower than we anticipated because funding 

was rescinded in fiscal year 2004 and some essential 

steps—such as developing prototypes and conducting pilot tests—have taken longer than we initially 

anticipated. We now plan to complete efforts under 

this performance goal during fiscal year 2006. 
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 81

PART II: Performance Information

Table 19: Strategic Goal 4’s Qualitative Performance Goals, Fiscal Years 2004 and 2005

Source: GAO.

Notes: In indicating whether we have met a performance goal, the responsible senior executive considers, for example, the 

amount of work conducted for each key effort under that performance goal, as well as other assistance provided to the client or

customer that is related to these efforts. The senior executive then judges whether the work completed collectively for all key

efforts has achieved the performance goal. To view the 80 key efforts for the 17 performance goals above, go to 

http://www.gao.gov/sp.html.

 Met

 Not met Strategic objective/performance goal

4.1. Continuously improve client and customer satisfaction and stakeholder relationships

 4.1.1. Strengthen communication with congressional clients and more broadly measure their satisfaction with 

GAO’s work

 4.1.2. Assess internal customer satisfaction with GAO’s services and processes and implement and measure 

improvement efforts

 4.1.3. Strengthen relationships with GAO's stakeholders and increase the accessibility of GAO's products

4.2. Lead strategically to achieve enhanced results

 4.2.1. Integrate planning, budgeting, and performance measurement to achieve enhanced results

 4.2.2. Strengthen GAO’s strategic human capital management to achieve enhanced results

 4.2.3. Ensure exemplary practices and systems in GAO’s fiscal operations

 4.2.4. Strengthen IT governance practices and processes to achieve strategic results

4.3. Leverage GAO’s institutional knowledge and experience

 4.3.1. Maximize the collection, use, and retention of essential organizational knowledge

 4.3.2. Increase GAO’s knowledge-sharing capability

 4.3.3. Enhance knowledge sharing with other national and international accountability and professional 

organizations

4.4. Continuously enhance GAO’s business and management processes

 4.4.1. Improve engagement support services

 4.4.2. Use enabling technology to improve GAO’s crosscutting business processes

4.5. Become a professional services employer of choice

 4.5.1. Promote an environment that is fair and unbiased and that values opportunity and inclusiveness

 4.5.2. Provide GAO staff with tools, technology, and a world-class working environment

 4.5.3. Provide a safe and secure workplace

 4.5.4. Enhance employee views about GAO

 4.5.5. Improve the development and experiences of newly hired staff
82 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART II: Performance Information

Data Quality and 

Program Evaluation

Verifying and Validating 

Performance Data 

Each year, we measure our performance by 

(1) evaluating our annual performance on measures 

that cover the outcomes and outputs related to our 

work results, client service, and management of our 

people and (2) assessing our progress in performing work related to the multiyear qualitative performance goals. To assess our performance in fiscal 

year 2005, we used performance data that were 

complete and actual (rather than projected) for all 

of our performance measures. We believe the data 

to be reliable because we followed the criteria and 

verification and validation procedures described 

here to ensure the data’s quality.

The specific sources of the data for our annual performance measures and multiyear qualitative performance goals, procedures for independently 

verifying and validating these data, and the limitations of these data are described in table 20.
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 83

PART II: Performance Information

Table 20: How We Ensure Data Quality for Our Annual Performance Measures and Multiyear Performance 

Goals 

Results measures

Financial benefits

Definition and 

background

Our work—including our findings and recommendations—may produce benefits to the federal 

government that can be estimated in dollar terms. These benefits can result in better services to 

the public, changes to statutes or regulations, or improved government business operations. A 

financial benefit is an estimate of the federal monetary effect of agency or congressional 

actions. These financial benefits generally result from work that we completed over the past 

several years but can also result from information about questionable activities referred to us by 

agencies’ IGs. The funds made available as a result of the actions taken in response to our 

work may be used to reduce government expenditures, increase revenues, or reallocate funds 

to other areas. Financial benefits included in our performance measures are net benefits—that 

is, estimates of financial benefits that have been reduced by the costs associated with taking 

the action that we recommended. We convert all estimates involving past and future years to 

their net present value and use actual dollars to represent estimates involving only the current 

year. Financial benefit amounts vary depending on the nature of the benefit, and we can claim 

financial benefits over multiple years based on a single agency or congressional action.

Financial benefits are linked to specific recommendations or other work. To claim that financial 

benefits have been achieved, our staff must file an accomplishment report documenting that 

(1) the actions taken as a result of our work have been completed or substantially completed, 

(2) the actions generally were taken within 2 fiscal years prior to the filing of the accomplishment 

report, (3) a cause-and-effect relationship exists between the benefits reported and our 

recommendation or work performed, and (4) estimates of financial benefits were based on 

information obtained from third parties. Prior to fiscal year 2002, we limited the period over 

which the benefits from an accomplishment could be accrued to no more than 2 years. 

Beginning in fiscal year 2002, we extended the period to 5 years for certain types of 

accomplishments known to have multiyear effects, such as those associated with multiyear 

reductions in longer term projects, changes embodied in law, program terminations, or sales of 

government assets yielding multiyear financial benefits. For financial benefits involving events 

that occur on a regular but infrequent basis—such as the decennial census—we may extend 

the measurement period until the event occurs in order to compute the associated financial 

benefits using GAO's present value calculator. 

Managing directors decide when their staff can claim financial benefits. A managing director 

may choose to claim a financial benefit all in 1 year or decide to claim it over several years, 

especially if the benefit spans future years and the managing director wants greater precision 

as to the amount of the benefit.

Data sources Our Accomplishment Reporting System provides the data for this measure. Teams use this 

Web-based data system to prepare, review, and approve accomplishments and forward them to 

QCI for its review. Once accomplishment reports are approved, they are compiled by QCI, 

which annually tabulates total financial benefits agencywide and by goal. 
84 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART II: Performance Information

Verification and validation Our policies and procedures require us to use the Accomplishment Reporting System to record 

the financial benefits that result from our work. They also provide guidance on estimating those 

financial benefits. The teams identify when a financial benefit has occurred as a result of our 

work. Teams develop estimates based on third-party sources, such as the agency that acted on 

our work, a congressional committee, or the Congressional Budget Office, and file 

accomplishment reports based on those estimates. The estimates are reduced by any 

identifiable offsetting costs. Teams develop workpapers to support accomplishments with 

evidence that meets our evidence standard, supervisors review the workpapers, and an 

independent person within GAO reviews the accomplishment report. The team's managing 

director or director is authorized to approve financial accomplishment reports with benefits of 

less than $100 million.

The team forwards the report to QCI, which reviews all accomplishment reports and approves 

accomplishment reports claiming benefits of $100 million or more. QCI provides summary data 

on approved financial benefits to unit managers, who check the data on a regular basis to make 

sure that approved accomplishments submitted by their staff have been accurately recorded. 

Our Engagement Reporting System also contains fiscal year 2005 accomplishment data. In 

fiscal year 2005, QCI approved accomplishment reports covering 94 percent of the dollar value 

of financial benefits we reported.

Every year, our IG reviews accomplishment reports that claim benefits of $500 million or more. 

In addition, on a periodic basis, the IG independently tests compliance with our process for 

claiming financial benefits of less than $500 million. The IG is currently completing a review of 

fiscal year 2005 financial benefits of less than $500 million.

Data limitations Not every financial benefit from our work can be readily estimated or documented as 

attributable to our work. As a result, the amount of financial benefits is a conservative estimate. 

Estimates are based on information from third parties and are based on both objective and 

subjective data, and as a result, professional judgment is required in reviewing accomplishment 

reports. The IG is currently completing a review of financial benefits, including ensuring that our 

existing verification and validation steps are reasonable and adequately minimize any adverse 

impact from this limitation.

Other benefits (nonfinancial)

Definition and 

background

Our work—including our findings and recommendations—may produce other benefits to the 

federal government that cannot be estimated in dollar terms. These benefits can result in better 

services to the public, changes to statutes or regulations, or improved government business 

operations. Other (nonfinancial) benefits generally result from work that we completed over the 

past several years.

Other benefits are linked to specific recommendations or other work that we completed over 

several years. To claim that other benefits have been achieved, staff must file an 

accomplishment report that documents that (1) the actions taken as a result of our work have 

been completed or substantially completed, (2) the actions generally were taken within the past 

2 fiscal years of filing the accomplishment report, and (3) a cause-and-effect relationship exists 

between the benefits reported and our recommendation or work performed.

Data sources Our Accomplishment Reporting System provides the data for this measure. Teams use this 

automated system to prepare, review, and approve accomplishments and forward them to QCI 

for its review. Once accomplishment reports are approved, they are compiled by QCI, which 

annually tabulates total other (nonfinancial) benefits agencywide and by goal.
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 85

PART II: Performance Information

Verification and validation Our policies and procedures require us to use the Accomplishment Reporting System to record 

the other benefits that result from our findings and recommendations. Staff in the teams file 

accomplishment reports to claim that benefits have resulted from their work. Teams develop 

workpapers to support accomplishments with evidence that meets our evidence standard. 

Supervisors review the workpapers; an independent person within GAO reviews the 

accomplishment report; and the team's managing director or director approves the 

accomplishment report to ensure the appropriateness of the claimed accomplishment, including 

attribution to our work.

The team forwards the report to QCI, where it is reviewed for appropriateness. QCI provides 

summary data on other benefits to unit managers, who check the data on a regular basis to 

make sure that approved accomplishments from their staff have been accurately recorded. 

Additionally, on a periodic basis, the IG independently tests compliance with our process for 

claiming other benefits. For example, the IG tested this process in fiscal year 2005 and found it 

to be reasonable. The IG also suggested actions to strengthen documentation of our other 

benefits and to encourage the timely processing of the supporting accomplishment reports. We 

are currently examining this performance measure and considering possible alternative 

methods for determining our impact in this area. 

Data limitations The data may be underreported because we cannot always document a direct cause-and-effect 

relationship between our work and benefits it produced. However, we feel that this is not a 

significant limitation on the data because the data represent a conservative measure of our 

overall contribution toward improving government.

Percentage of products with recommendations

Definition and 

background

We measure the percentage of our written products (chapter and letter reports and numbered 

correspondence) issued in the fiscal year that included at least one recommendation. We make 

recommendations that specify actions that can be taken to improve federal operations or 

programs. We strive for recommendations that are directed at resolving the cause of identified 

problems; that are addressed to parties who have the authority to act; and that are specific, 

feasible, and cost-effective. Some products we issue contain no recommendations and are 

strictly informational in nature.

We track the percentage of our written products that are issued during the fiscal year and 

contain recommendations. This indicator recognizes that our products do not always include 

recommendations and that the Congress and agencies often find such informational reports 

just as useful as those that contain recommendations. For example, informational reports, 

which do not contain recommendations, can help to bring about significant financial and other 

benefits. 

Data sources Our Documents Database records recommendations as they are issued. The database is 

updated daily. As our staff monitor implementation of recommendations, they submit updated 

information to the database.

Verification and validation Through a formal process, each team identifies the number of recommendations included in 

each product and an external contractor enters them into a database. We provide our managers 

with reports on the recommendations being tracked to help ensure that all recommendations 

have been captured and that each recommendation has been completely and accurately 

stated. Additionally, on a periodic basis, the IG independently tests the teams' compliance with 

our policies and procedures related to this performance measure. For example, during fiscal 

year 2003, the IG tested and determined that our process for determining the percentage of 

written products with recommendations was reasonable. In fiscal year 2005, we used the same 

procedures to compute and report this measure.

Data limitations This measure is a conservative estimate of the extent to which we assist the Congress and 

federal agencies because not all products and services we provide lead to recommendations. 

For example, the Congress may request information on federal programs that is purely 

descriptive or analytical and does not lend itself to recommendations.
86 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART II: Performance Information

Past recommendations implemented

Definition and 

background

We make recommendations designed to improve the operations of the federal government. For 

our work to produce financial or other benefits, the Congress or other federal agencies must 

implement these recommendations. As part of our audit responsibilities under generally 

accepted government auditing standards, we follow up on recommendations we have made 

and report to the Congress on their status. Experience has shown that it takes time for some 

recommendations to be implemented. For this reason, this measure is the percentage rate of 

implementation of recommendations made 4 years prior to a given fiscal year (e.g., the fiscal 

year 2005 implementation rate is the percentage of recommendations made in fiscal year 2001 

products that were implemented by the end of fiscal year 2005). Experience has shown that if a 

recommendation has not been implemented within 4 years, it is not likely to be implemented.

This measure assesses action on recommendations made 4 years previously, rather than the 

results of our activities during the fiscal year in which the data are reported. For example, the 

cumulative percentage of recommendations made in fiscal year 2001 that were implemented in 

the ensuing years is as follows: 20 percent by the end of the first year (fiscal year 2002), 31 

percent by the end of the second year (fiscal year 2003), 48 percent by the end of the third year 

(fiscal year 2004), and 85 percent by the end of the fourth year (fiscal year 2005).

Data sources Our Documents Database records recommendations as they are issued. The database is 

updated daily. As our staff monitor implementation of recommendations, they submit updated 

information to the database.

Verification and validation Through a formal process, each team identifies the number of recommendations included in 

each product, and an external contractor enters them into a database.

Policies and procedures specify that our staff must verify, with sufficient supporting 

documentation, that an agency's reported actions are adequately being implemented. Staff 

update the status of the recommendations on a periodic basis. To accomplish this, our staff may 

interview agency officials, obtain agency documents, access agency databases, or obtain 

information from an agency's IG. Recommendations that are reported as implemented are 

reviewed by a senior executive in the unit and by QCI.

Summary data are provided to the units that issued the recommendations. The units check the 

data regularly to make sure the recommendations they have reported as implemented have 

been accurately recorded. We also provide to the Congress a database with the status of 

recommendations that have not been implemented, and we maintain a publicly available 

database of open recommendations that is updated daily.

Additionally, on a periodic basis, the IG independently tests our process for calculating the 

percentage of recommendations implemented for a given fiscal year. For example, the IG 

determined that our process was reasonable for calculating the percentage of 

recommendations that had been made in our fiscal year 1999 products and implemented by the 

end of fiscal year 2003. In fiscal year 2005, we followed the same process for calculating the 

percentage of recommendations that had been made in fiscal year 2001 products and 

implemented by the end of fiscal year 2005.

Data limitations The data may be underreported because sometimes a recommendation may require more than 

4 years to implement. We also may not count cases in which a recommendation is partially 

implemented. However, we feel that this is not a significant limitation to the data because the 

data represent a conservative measure of our overall contribution toward improving 

government.

Client measures

Testimonies

Definition and 

background

The Congress may ask us to testify at hearings on various issues. Participation in hearings is 

one of our most important forms of communication with the Congress, and the number of 

hearings at which we testify reflects the importance and value of our institutional knowledge in 

assisting congressional decision making. When multiple GAO witnesses with separate 

testimonies appear at a single hearing, we count this as a single testimony. We do not count 

statements submitted for the record when a GAO witness does not appear.
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 87

PART II: Performance Information

Data sources The data on hearings at which we testify are compiled in our congressional hearing system 

managed by staff in our Congressional Relations office.

Verification and validation The units responding to requests for testimony are responsible for entering data in the 

congressional hearing system. After a GAO witness has testified at a hearing, our 

Congressional Relations office verifies that the data in the system are correct and records the 

hearing as one at which we testified. Congressional Relations provides weekly status reports to 

unit managers, who check to make sure the data are complete and accurate. Additionally, on a 

periodic basis, the IG independently examines the process for recording the number of hearings 

at which we testified. For example, the IG determined that our process for recording hearings 

during fiscal year 2003 was reasonable. In fiscal year 2005, we followed the same process for 

recording hearings.

Data limitations This measure does not include statements for the record that we prepare for congressional 

hearings. Also, this measure may be influenced by factors other than the quality of our 

performance in any specific year. The number of hearings held each year depends on the 

Congress's agenda, and the number of times we are asked to testify may reflect congressional 

interest in work in progress, as well as work completed that year or the previous year. To 

mitigate this limitation, we try to adjust our workload to reflect cyclical changes in the 

congressional schedule. We also outreach to our clients on a continuing basis to increase their 

awareness of our readiness to participate in hearings.

Timeliness

Definition and 

background

The likelihood that our products will be used is enhanced if they are delivered when needed to 

support congressional and agency decision making. To determine whether our products are 

timely, we compute the proportion of our products that are issued by the dates agreed to with 

our clients or, for our work performed under the Comptroller General’s authority, by the dates 

agreed to internally. The “committed” issue date for a product can be changed for requesterrelated reasons and for other significant reasons beyond GAO’s control. Managing directors 

approve extensions to committed issue dates for their teams’ engagements, and the teams 

document in their workpapers the reasons for extensions and the managing directors’ approval. 

In fiscal year 2005, we extended the issue date on about one-third of our products.

Data sources The data supporting this measure are from our Mission and Assignment Tracking System, 

which is used to monitor our progress on our engagements.

Verification and validation Our staff enter the data supporting this measure into our Mission and Assignment Tracking 

System. The data are then uploaded into our Engagement Reporting System, allowing the 

teams to monitor their performance on this measure on a daily basis, if necessary, and resolve 

any issues. When an assignment is completed, data on its target and completion dates are 

reported to the project manager, who reviews and signs the report to confirm its accuracy. 

Additionally, on a periodic basis, the IG independently examines our process for calculating 

product timeliness.

Data limitations We do not measure the timeliness of all of our external products. Products such as staff studies, 

certain correspondence, and guidance are not part of our main product line and are excluded. 

To ensure that the data for this measure are sound, staff must follow the policy guidance as 

described above. However, based on the IG's 2005 review, there is evidence that some staff 

may be inconsistently applying the policy for changing a committed issue date, which ultimately 

affects the reliability of our measure. Also, our staff perform the process of changing a 

committed issue date, and thus the resulting data may not adequately represent an 

independent assessment of the requesters' satisfaction with our ability to deliver products when 

our clients need them. To mitigate these limitations, in fiscal year 2006 we will use our more 

direct client feedback survey as the primary indicator for our ability to deliver products on time to 

our clients.
88 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART II: Performance Information

Multiyear qualitative performance goals

Definition and 

background

In addition to our other measures, we consult with our congressional clients and other outside 

experts in setting our multiyear qualitative performance goals. Thus, assessing the extent to 

which we achieve our performance goals helps focus our efforts on issues of critical importance 

and provides a tool for holding ourselves accountable for the resources the Congress provides. 

These goals measure the extent to which we did the work we had planned to do to support the 

Congress over a period of time. In this case, they cover fiscal years 2004 and 2005.

For each performance goal, we identify the key efforts needed to achieve it. To determine 

whether a performance goal has been met, we assess the work completed under the goal's key 

efforts. In making this assessment, the responsible senior executives for strategic goals 1 

through 3—our external goals—consider, for example, the number of products issued (such as 

reports and testimonies) and the recommendations made for each key effort as well as any 

other assistance provided to the Congress related to these efforts. Senior executives then judge 

whether the work completed collectively for all key efforts actually achieved the performance 

goal. For strategic goal 4—our internal goal—senior executives also judge whether the 

performance goals have been met based on the work done on the goals’ key efforts.

Data sources The data supporting senior executives' assessments come from our Engagement Reporting 

System for strategic goals 1 through 3 and from reports produced by the managers responsible 

for each key effort for strategic goal 4. Teams and units maintain the supporting data used. 

Verification and validation The assessment of each performance goal under strategic goals 1 through 3 is supported by 

documentation showing, for example, by key effort the number of reports issued and 

recommendations made during the assessment period. The assessment of the performance 

goals under strategic goal 4 is also supported by documentation showing the work completed 

under each key effort. Managing directors in all four goals sign this documentation.

At the end of a multiyear assessment cycle, QCI reviews the assessments from each of the 

goals and checks supporting documentation for a sample of performance goals to ensure that 

criteria are consistently applied and that requirements are met. On a periodic basis, our IG 

independently tests our process for determining whether performance goals are met. The IG is 

currently completing its test of our multiyear performance goal process for fiscal year 2005.

Data limitations The assessment data represent opinions in the form of qualitative, professional judgments that 

senior managers make about their own work performed under each performance goal. 

However, we feel that the verification and validation steps that we take minimize any adverse 

impact from this limitation.

People measures

New hire rate

Definition and 

background

This performance measure is the ratio of the number of people hired to the number we planned 

to hire. Annually, we develop a workforce plan that takes into account projected workload 

changes, as well as other changes, such as retirements, other attrition, promotions, and skill 

gaps. The workforce plan for the upcoming year specifies the number of planned hires and, for 

each new hire, specifies the skill type and the level. The plan is conveyed to each of our units to 

guide hiring throughout the year. Progress toward achieving the workforce plan is monitored 

monthly by the Chief Operating Officer and Chief Administrative Officer. Adjustments to the 

workforce plan are made throughout the year, if necessary, to reflect changing needs and 

conditions.

Data sources The Executive Committee approves the workforce plan. The workforce plan is coordinated and 

maintained by CAO. Data on accessions—that is, new hires coming on board—is taken from a 

database that contains employee data from USDA's National Finance Center (NFC) database, 

which handles payroll and personnel data for GAO and other agencies.
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 89

PART II: Performance Information

Verification and validation CAO maintains a database that monitors and tracks all our hiring offers, declinations, and 

accessions. In coordination with our Human Capital Office, our CAO staff input workforce 

information supporting this measure into the CAO database. While the database is updated on 

a daily basis, monthly reports are provided to the Chief Operating Officer and the Chief 

Administrative Officer to monitor progress by GAO units in achieving workforce plan hiring 

targets. CAO continuously monitors and reviews accessions maintained in the NFC data 

against its database to ensure consistency and to resolve discrepancies. The office follows up 

on any discrepancies. In addition, on a periodic basis, the IG examines our process for 

calculating the new hire rate. During fiscal year 2004, the IG independently reviewed this 

process and found it to be reasonable. The IG also suggested actions to improve the 

documentation of the process used to calculate this measure. We have implemented the IG's 

suggestions.

Data limitations There is a lag of one to two pay periods (up to 4 weeks) before the NFC database reflects actual 

data. We generally allow sufficient time before requesting data for this measure to ensure that 

we get accurate results.

Acceptance rate

Definition and 

background

This measure is the ratio of the number of applicants accepting offers to the number of offers 

made. Acceptance rate is a proxy for GAO's attractiveness as an employer and an indicator of 

our competitiveness in bringing in new talent.

Data sources The information required is the number of job offers made (excluding interns, 

experts/consultants, and reemployed annuitants), the number of offers declined, and the 

number of individuals who come on board. Our CAO staff maintain a database that contains the 

job offers made and accepted or declined. Data on accessions—that is, new hires coming on 

board—are taken from a database that contains employee data from USDA's NFC database, 

which handles payroll and personnel data for GAO and other agencies.

Verification and validation Human capital managers in the Human Capital Office work with the CAO to ensure that each 

job offer made and its outcome (declination or acceptance) is noted in the database that is 

maintained by CAO’s staff; periodic checking is performed to review the accuracy of the 

database. In addition, on a periodic basis, the IG examines our process for calculating the 

acceptance rate. During fiscal year 2004, the IG independently reviewed this process and found 

it to be reasonable. The IG also suggested actions to improve the documentation of the process 

used to calculate this measure and the reporting of this measure. We have implemented the 

IG's suggestions.

Data limitations See New hire rate, Data limitations.

Retention rate

Definition and 

background

We continuously strive to make GAO a place where people want to work. Once we have made 

an investment in hiring and training people, we would like to retain them. This measure is one 

indicator that we are attaining that objective and is the inverse of attrition. We calculate this 

measure by taking 100 percent of the onboard strength minus the attrition rate, where attrition 

rate is defined as the number of separations divided by the average on-board strength. We 

calculate this measure with and without retirements.

Data sources Data on retention—that is, people who are on board at the beginning of the fiscal year and are 

still here at the end of the fiscal year as well as the average number of people on board during 

the year—are taken from a CAO database that contains some data from the NFC database, 

which handles payroll and personnel data for GAO and other agencies.

Verification and validation CAO staff continuously monitor and review accessions and attritions against the contents of 

their database that has NFC data and they follow up on any discrepancies. In addition, on a 

periodic basis, the IG examines our process for calculating the retention rate. During fiscal year 

2004, the IG reviewed this process and found it to be reasonable. The IG also suggested 

actions to improve the documentation of the process used to calculate this measure. We have 

implemented the IG's suggestions.

Data limitations See New hire rate, Data limitations.
90 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART II: Performance Information

Staff development

Definition and 

background

One way that we measure how well we are doing and identify areas for improvement is through 

our annual employee feedback survey. This Web-based survey, which is conducted by an 

outside contractor to ensure the confidentiality of every respondent, is administered to all of our 

employees once a year. Through the survey, we encourage our staff to indicate what they think 

about GAO's overall operations, work environment, and organizational culture and how they 

rate our managers—from the immediate supervisor to the Executive Committee—on key 

aspects of their leadership styles. The survey consists of over 100 questions.

This measure is based on staff's favorable responses to four of the six questions related to staff 

development on our annual employee survey. This subset of questions was selected on the 

basis of senior management's judgment about the questions' relevance to the measure and 

specialists' knowledge about the development of indexes. Staff were asked to respond to these 

four questions on a five-point scale or choose “no basis to judge/not applicable” or ”no answer”.

Data sources These data come from our staff's responses to an annual Web-based survey. The survey 

questions we used for this measure ask staff how much positive or negative impact (1) internal 

training, (2) computer-based training, (3) external training and conferences, and (4) on-the jobtraining have on their ability to do your job during the last 12 months. From the staff who 

expressed an opinion, we calculated the percentage of staff selecting the two categories that 

indicate satisfaction with or a favorable response to the question. For this measure, the 

favorable responses were either “very positive impact” or “generally positive impact.”

Verification and validation The employee feedback survey gathers staff opinions on a variety of topics. The survey is 

password protected, and only the outside contractor has access to passwords. In addition, 

when the survey instrument was developed, extensive focus groups and pretests were 

undertaken to refine the questions and provide definitions as needed. We have historically 

achieved a high response rate (over 80 percent) to the survey, which indicates that its results 

are largely representative of the GAO population. In addition, many teams and work units 

conduct follow-on work to gain a better understanding of the information from the survey.

In addition, on a periodic basis, the IG independently examines our process for calculating the 

percentage of favorable responses for staff development. The IG examined this process during 

fiscal year 2004 and found it to be reasonable. The IG also suggested actions to improve the 

documentation of the process used to calculate this measure. We have implemented the IG's 

suggestions.

Data limitations The information contained in the survey is the self-reported opinions of staff expressed under 

conditions of confidentiality. Accordingly, there is no way to further validate those expressions of 

opinion.

The practical difficulties of conducting any survey may introduce errors, commonly referred to 

as nonsampling errors. These errors could result from, for example, respondents 

misinterpreting a question or data entry staff incorrectly entering data into a database used to 

analyze the survey responses. Such errors can introduce unwanted variability into the survey 

results. We took steps in the development of the survey to minimize nonsampling errors. 

Specifically, when we developed the survey instrument we held extensive focus groups and 

pretests to refine the questions and define terms used to decrease the chances that 

respondents would misunderstand the questions. We also limited the chances of introducing 

nonsampling errors by creating a Web-based survey for which respondents entered their 

answers directly into an electronic questionnaire. This approach eliminated the need to have the 

data keyed into a database by someone other than the respondent, thus removing an additional 

source of error.

Staff utilization

Definition and 

background

This measure is based on staff's favorable responses to three of the six questions related to 

staff utilization on our annual employee survey. This subset of questions was selected on the 

basis of senior management's judgment about the questions' relevance to the measure and 

specialists' knowledge about the development of indexes. Staff were asked to respond to these 

three questions on a five-point scale or choose no basis to judge/not applicable” or “no 

answer.” (For background information about our entire employee feedback survey, see Staff 

development.)
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 91

PART II: Performance Information

Data sources These data come from our staff's responses to an annual Web-based survey. The survey 

questions we used for this measure ask staff how often the following occurred in the last 12 

months: (1) my job made good use of my skills; (2) GAO provided me with opportunities to do 

challenging work; and (3) in general, I was utilized effectively. From the staff who expressed an 

opinion, we calculated the percentage of staff selecting the two categories that indicate 

satisfaction with or a favorable response to the question. For this measure, the favorable 

responses were either “very positive impact or “generally positive impact.”

Verification and validation See Staff development, Verification and validation.

Data limitations See Staff development, Data limitations.

Leadership

Definition and 

background

This measure is based on staff's favorable responses to 10 of 20 questions related to six areas 

of leadership on our annual employee survey. This subset of questions was selected on the 

basis of senior management's judgment about the questions' relevance to the measure and 

specialists' knowledge about the development of indexes. Specifically, our calculation included 

responses to 1 of 4 questions related to empowerment, 2 of 4 questions related to trust, all 3 

questions related to recognition, 1 of 3 questions related to decisiveness, 2 of 3 questions 

related to leading by example, and 1 of 3 questions related to work life. Staff were asked to 

respond to these 10 questions on a five-point scale or choose “no basis to judge/not applicable” or “no answer.” (For background information about our entire employee feedback survey, see 

Staff development, Definition and background.)

Data sources These data come from our staff's responses to an annual Web-based survey. The survey 

questions we used for this measure ask staff about empowerment, trust, recognition, 

decisiveness, leading by example, and work life as they pertain to the respondent's immediate 

supervisor. For example, we looked at the responses related to specific qualities of our 

managers, such as “My immediate supervisor gave me the opportunity to do what I do best” and “My immediate supervisor provided meaningful incentives for high performance.” From the 

staff who expressed an opinion, we calculated the percentage of staff selecting the two 

categories that indicate satisfaction with or a favorable response to the question. For this 

measure, the favorable responses were either “always or almost always” or “most of the time.”

Verification and validation See Staff development, Verification and validation.

Data limitations See Staff development, Data limitations.

Organizational climate

Definition and 

background

This measure is based on staff's favorable responses to 5 of the 13 questions related to 

organizational climate on our annual employee survey. This subset of questions was selected 

on the basis of senior management's judgment about the questions' relevance to the measure 

and specialists' knowledge about the development of indexes. Staff were asked to respond to 

these 5 questions on a five-point scale or choose “no basis to judge” or “no answer.” (For 

background information about our entire employee feedback survey, see Staff development.)

Data sources These data come from our staff's responses to an annual Web-based survey. The survey 

questions we used for this measure ask staff to think back over the last 12 months and indicate 

how strongly they agree or disagree with each of the following statements: (1) a spirit of 

cooperation and teamwork exists in my work unit; (2) I am treated fairly and with respect in my 

work unit; (3) my morale is good; (4) sufficient effort is made in my work unit to get the opinions 

and thinking of people who work here; and (5) overall, I am satisfied with my job at GAO. From 

the staff who expressed an opinion, we calculated the percentage of staff selecting the two 

categories that indicate satisfaction with or a favorable response to the question. For this 

measure, the favorable responses were either “strongly agree” or “generally agree.”

Verification and validation See Staff development, Verification and validation.

Data limitations See Staff development, Data limitations.
92 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART II: Performance Information

Source: GAO.

Program Evaluation 

To assess our progress toward our first three strategic goals and their objectives and to update them 

for our strategic plan, we evaluate actions taken by 

federal agencies and the Congress in response to 

our recommendations. The results of these evaluations are conveyed in this performance and 

accountability report as financial benefits and other 

benefits that reflect the value of our work.

In addition, we actively monitor the status of our 

open recommendations—those that remain valid 

but have not yet been implemented—and report 

our findings annually to the Congress and the public (http://www.gao.gov/openrecs.html). We use 

the results of that analysis to determine the need for 

further work in particular areas. For example, if an 

agency has not implemented a recommended 

action that we consider to be worthwhile, we may 

decide to pursue further action with agency officials 

or congressional committees, or we may decide to 

undertake additional work on the matter.

We also use our biennial high-risk series to provide 

a status report on those major government operations considered high risk because of their vulnerabilities to waste, fraud, abuse, and mismanagement 

or the need for broad-based transformation. The 

series is a valuable evaluation and planning tool 

Internal operations measures

Help get job done and Quality of work life

Definition and 

background

To measure satisfaction with GAO internal operations and solicit ideas on ways to improve 

them, we administer an annual web-based survey, known as our customer satisfaction survey, 

that asks employees to rate 31 administrative services, on a scale of 1 (low) to 5 (high), for 

those services that are important to them and that they have had experience with or used 

recently. For each selected service, employees are asked to indicate their level of satisfaction 

from 1 to 5, and provide a written reason for their rating and recommendations for improvement 

if desired. Based on the survey results, we calculate composite scores for two measures: one 

measure reflects the satisfaction with the 21 services that help employees get their job done 

and the second measure reflects satisfaction with another 10 services that affect quality of work 

life. 

Since 2003, we have collected baseline data from our internal customer satisfaction survey, but 

we will set targets and hold managers accountable for these two performance measures for the 

first time in 2006.

Data sources To determine how satisfied GAO employees are with internal operations, we calculate 

composite scores for two measures. One measure reflects the satisfaction with the 21 services 

that help employees get their job done. These services include Internet and intranet services, IT 

customer support, mail services, and voice communication services. The second measure 

reflects satisfaction with another 10 services that affect quality of work life. These services 

include assistance related to pay and benefits, building maintenance and security, and 

workplace safety and health. The composite score represents how employees rated their 

satisfaction with services in each of these areas relative to how they rated the importance of 

those services to them. The importance scores and satisfaction levels are both rated on a scale 

of 1 (low) to 5 (high).

Verification and validation To ensure the security of the survey data, the survey is housed on a Web site maintained by an 

outside contractor and only the contractor has access to the password-protected results. We 

analyze the results by demographic representation (unit, tenure, location, band level, and job 

type) to ensure that its results are largely representative of the GAO population. In addition, 

each GAO unit responsible for internal operations conducts follow-on work, including analyzing 

the written comments to gain a better understanding of the information from the survey.

Data limitations The information contained in the survey is self-contained. Therefore, there is no information to 

validate the views expressed by staff. We do not plan any actions to remedy this limitation 

because we feel it would violate the pledge of confidentiality that we make to our staff regarding 

the survey responses. 
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 93

PART II: Performance Information

because it helps us to identify those areas where 

our continued efforts are needed to maintain the 

focus on important policy and management issues 

that the nation faces.

To help ensure the quality of our work supporting 

strategic goals 1, 2, and 3, an external peer review 

was completed of the processes and practices we 

use to perform many of our engagements, specifically, performance audits. The review—conducted 

by an international team of auditors that was led by 

the Office of the Auditor General of Canada—

assessed whether our quality assurance policies and 

procedures were suitably designed and operating 

effectively. The peer review team examined the 

design of our engagement quality control system 

and the audit documentation for a sample of our 

products. The reviewers found that we have 

designed and implemented an effective system of 

quality controls for our performance audits to 

ensure reasonable compliance with generally 

accepted government auditing standards. The 

review team issued its final report in April 2005. In 

addition, a team of external auditors reviewed our 

process and procedures for performing our financial 

audits of other agencies. In the comment letter 

accompanying the clean opinion report that 

resulted from the financial audit peer review, the 

auditor included a suggestion for clarifying our 

quality control policies and procedures. We have 

begun to implement this suggestion. 

In addition, a team of independent auditors completed a review of our financial management and 

assurance procedures, which we contract for every 

3 years. The auditors concluded that our system of 

quality control for the accounting and auditing practice was designed to meet applicable quality control 

standards and that we complied with this system for 

the period reviewed. Thus, the auditors were reasonably assured that our financial audits conformed 

with professional standards and gave us a clean 

opinion. 

To help ensure the quality of our internal processes 

and systems supporting strategic goal 4, we conducted an evaluation that supported our strategic 

objectives under goal 4, in response to a mandate in 

the House report on the fiscal year 2005 legislative 

branch appropriation (H.R. Rep. No. 108-577). This 

mandate asked that we identify opportunities to 

reduce costs, outsource, and streamline our internal 

operations. As a result of our review this year, we 

streamlined the travel document audit process of 

our travel function and have selected a service provider to provide accounts payable transaction processing services. Both of these actions will result in 

measurable cost savings in the future.

In addition, an organizational and performance consulting firm examined our three-tier pay band system for our analysts and other professional staff and 

compared the compensation we provide these two 

groups with the compensation received by employees performing comparable work in the U.S. marketplace. Based on the results of this study, we 

reassessed the roles and responsibilities of our 

midlevel (Band II) analysts and adjusted compensation levels for other professional staff. As a result of 

this study, we are restructuring our analyst and analyst-related specialist pay bands to better align compensation and responsibilities and adjust 

compensation levels for other professional staff.

We also completed a number of other studies and 

evaluations related to goal 4's strategic objectives. 

These studies resulted in internal products or briefings in fiscal year 2005 that are not available publicly.

■ Financial management. We conducted internal 

reviews of our compliance with requirements set 

forth in 31 U.S.C. 3512 (commonly referred to as 

the Federal Managers' Financial Integrity Act) and 

OMB Circular A-127, Financial Management 

Systems. The A-127 review covered consistency 

with the Standard General Ledger, adequacy of 

integration, reporting requirements, general 

ledger maintenance, and travel manager. The 

Financial Integrity Act review covered payroll 

testing; Financial Management System functions, 

including reporting; capitalized assets; budget 

administration controls; GAO mission and 

assignment tracking system; and internal controls 

for purchases, payments, and employee 

reimbursements. These reviews uncovered no 

problems and showed that we have the proper 

controls in place and that they are being 

followed.

■ Observations on the performance 

assessment cycle. The Executive Committee 

reviewed our 2004 annual performance 

management assessment data and requested that 
94 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART II: Performance Information

OOI make recommendations for improvements 

in the areas of staff feedback, communication, 

and training. OOI provided draft 

recommendations to the managing directors, the 

Employee Advisory Council, Blacks in 

Government, the Hispanic Liaison Group, the 

Gay and Lesbian Employee Association, the 

Asian-American Liaison Group, and an agency 

representative for veterans, and forwarded their 

comments to the Executive Committee. 

■ Training for field office staff. We studied how 

best to deliver core training courses to our Band I 

staff in our field offices and determined that the 

most cost-effective way was to use a “hub” 

approach. Specifically, we identified San 

Francisco, Denver, and Atlanta as our three 

learning hubs where staff from these and nearby 

offices will complete groups of courses in five 

sets of 1-week sessions. The study concluded that 

among other things, this approach would be 

significantly less costly than bringing all Band I 

staff to GAO headquarters and result in a cost 

avoidance of $500,000 in travel and per diem 

expenditures. 

■ Electronic records management. In fiscal year 

2005 we began pilot testing an electronic records 

management system that will store all of our 

workpapers, reports, and testimonies and make 

them available to all of our staff. We plan to 

conclude this pilot in fiscal year 2006. 

■ Customer satisfaction with internal 

operations and services. We conducted our 

second customer satisfaction survey to measure 

customer satisfaction with internal operational 

services, determine the impact of our 

improvement efforts launched as a result of our 

first survey, refine our targets, and make 

necessary adjustments to improve services and 

reduce the gaps between what our customers 

expect and the services available to them. We 

also used the information from this survey to 

refine our internal operations measures.

■ IT Security Program assessment. We 

contracted for an audit of our security practices 

and controls based upon the Federal Information 

Security Management Act and National Institute 

of Standards and Technology guidance. This 

assessment was designed to analyze the 

effectiveness of our IT Security Program and 

assist management in determining how to best 

utilize resources to protect our information and 

information systems. It is a critical on-site 

examination and analysis of the program to 

ascertain the present program status, to identify 

deficiencies or excesses, to determine the 

protection needed, and to make 

recommendations for improvement. 
Financial Information

Part III

Part III:

Financial 

Information
96 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART III: Financial Information

Source: See Image Sources.

From the

Chief Financial Officer

rceiOfnfFialicCfeFomhriet

November 15, 2005

I am pleased to report that in fiscal year 2005 the U.S. Government Accountability 

Office continued to set the standard for excellence in government financial management. For the 19th consecutive year, independent auditors gave our financial statements an unqualified opinion with no material weaknesses and no major compliance 

problems. The financial statements that follow were prepared, audited, and made 

publicly available as an integral part of this performance and accountability report 45 

days after the end of the fiscal year. In addition, for the fourth year in a row, the Association of Government Accountants awarded us a certificate of excellence in accountability reporting for our fiscal year 2004 annual performance and accountability 

report. 

During fiscal year 2005 we continued to make strides toward our strategic goal of 

becoming a model federal agency and a world-class professional services organization. We are leading the way in performance management through new and 

enhanced policies and processes. With the help of a consultant, we analyzed and 

designed a competitive, fair, and equitable compensation program aligned with the 

labor markets in which GAO competes for talent. Further, we invested significantly in 

restructuring our analysts’ and specialists’ pay bands to better align compensation 

with responsibilities. In June, our administrative staff completed their first cycle under 

a similar competency-based system designed to establish a clear link between 

employee performance and GAO’s mission, core values, and strategic goals and 

objectives. This system will enable fair, honest, and properly applied measures of performance based on standards that are reasonable, appropriate, and clear to employees. Having a consistent competency-based performance management system 

throughout the agency will help to ensure that the work of all our staff is aligned with 

our core values and strategic direction.
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 97

PART III: Financial Information

This year, we performed an extensive review of agency operations for potential cost 

savings, outsourcing, streamlining, and other opportunities to increase operational 

efficiency and effectiveness, as the result of a mandate in House Report 108-577. We 

had previously decided to cease operations of our internal print plant as a result of a 

reduced demand for printed products. The closing of the print plant was completed 

in October 2004, and all our printing needs are now met through contracts. Another 

area affected by our streamlining efforts this fiscal year was our accounting branch 

within the Office of Financial Management. Aiming to focus our financial management staff on greater value-added input to GAO activities, we have begun to shift the 

efforts of our staff away from routine transaction processing and toward a greater role 

in strategic business decision analysis and support. This shift will occur through a 

combination of automation, reallocation of resources within GAO, and outsourcing 

some data entry functions. Last year's implementation of the Travel Manager system 

has enabled us to streamline the auditing of our travel vouchers and transfer the 

remaining efforts from financial management to field office staff, more efficiently 

using administrative resources available throughout the agency. We cross-serviced the 

accounts payable function to the Department of the Interior’s National Business Center. This center performs invoice receipt, processing, and payment activities for a 

number of other agencies; by utilizing the center’s services, we will realize savings 

through eliminating data entry positions and focusing the efforts of the remaining 

staff on higher end financial analysis and decision support.

To improve our operations through the use of new technology, we have embarked 

on an extensive effort to replace our current financial management system. Although 

our current system has served us well over the years, upgrades are no longer offered 

and technical support has become increasingly difficult to find. We have adopted, 

and are following, best practice processes to select and implement our next generation financial management system. This is part of a larger enterprise architecture effort 

that will improve integration of all our systems that interact with our financial data. 

We also improved our internal communications by implementing a new system for 

electronic dissemination and storage of agencywide communications, a new administrative services Web site, and a searchable administrative services directory.
98 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART III: Financial Information

Looking forward to fiscal year 2006, we realize that there are many challenges ahead. 

In addition to our work on the new financial system, we continue to voluntarily 

implement the additional requirements of OMB's revised Circular A-123, which 

requires management to specifically document, assess, and attest to the effectiveness 

of internal controls over financial reporting beginning in fiscal year 2006. In addition 

to these efforts, we will continue to investigate and implement new approaches to 

improve the efficiency and effectiveness of our preparation of quality products for 

our clients in the Congress and the American people.

Sallyanne Harper

Chief Financial Officer
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 99

PART III: Financial Information

Overview of Financial Statements

Our financial statements and accompanying notes 

begin on page 107.

4 Our financial statements for the 

fiscal years ended September 30, 2005 and 2004, 

were audited by an independent auditor, Cotton & 

Co., LLP.

Cotton & Co., LLP, rendered an unqualified opinion 

on our financial statements and an unqualified 

opinion on the effectiveness of our internal controls 

over financial reporting and compliance with laws 

and regulations. The auditor also reported that we 

have substantially complied with the applicable 

requirements of the Federal Financial Management 

Improvement Act (Improvement Act) of 1996 and 

found no reportable instances of noncompliance 

with selected provisions of laws and regulations. 

(For further information about this law, see footnote 

1 on page 9.) In the opinion of the independent 

auditor, the financial statements are presented fairly 

in all material respects and are in conformity with 

generally accepted accounting principles.

Financial Systems and 

Internal Controls

We recognize the importance of strong financial systems and internal controls to ensure our accountability, integrity, and reliability. To achieve a high 

level of quality, management maintains a quality 

control program and seeks advice and evaluation 

from both internal and external sources.

We are committed to fulfilling the internal control 

objectives of 31 U.S.C. 3512, commonly referred to 

as the Federal Managers' Financial Integrity Act 

(Integrity Act). (For further information about this 

law, see footnote 1 on page 9.) Although we are not 

subject to the act, we comply voluntarily with its 

requirements. Our internal controls are designed to 

provide reasonable assurance that obligations and 

costs are in compliance with applicable laws and 

regulations; funds, property, and other assets are 

safeguarded against loss from unauthorized acquisition, use, or disposition; and revenues and expenditures applicable to our operations are properly 

recorded and accounted for to enable our agency to 

prepare reliable financial reports and maintain 

accountability over our assets.

Our management assesses compliance with these 

controls through a series of comprehensive internal 

reviews, applying the evaluation criteria in OMB's 

guidance for implementing the Integrity Act. The 

results of these reviews are discussed with our 

Audit Advisory Committee, and action is taken to 

correct deficiencies as they are identified.

We assessed our internal controls as of 

September 30, 2005, based on the criteria mentioned above for effective internal controls in the 

federal government. On the basis of this assessment, we believe that as of September 30, 2005, we 

have effective internal controls in place. Additionally, our independent auditor found that we maintained effective internal controls over financial 

reporting and compliance with laws and regulations. Consistent with our evaluation, the auditor 

found no material internal control weaknesses.

In addition, we are committed to fulfilling the objectives of the Improvement Act, which is also covered 

within 31 U.S.C. 3512. Although we are not subject 

to the act, we voluntarily comply with its requirements. We believe that we have implemented and 

maintained financial systems that comply substantially with federal financial management systems 

requirements, applicable federal accounting standards, and the United States Government Standard 

General Ledger at the transaction level as of September 30, 2005. We made this assessment based on criteria established under the Improvement Act and 

guidance issued by OMB. Also, our auditor reported 

4

Note 14 to the financial statements describes our Davis Bacon Act trust function. For more detailed Davis Bacon Act 

financial information, contact our General Counsel.
100 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART III: Financial Information

that we had substantially complied with the applicable requirements of the Improvement Act as of September 30, 2005.

GAO’s IG also conducts audits and investigations 

that are internally focused, functions as an independent fact-gathering adviser to the Comptroller General, and reviews all accomplishment reports 

totaling $500 million or more. During fiscal year 

2005, the IG examined compliance with our policy 

and procedures for conflict-of-interest determinations, recruiting and hiring, performance evaluations, career advancement, professional 

development, continuing professional education, 

GAO’s information security program and practices, 

performance-based compensation process for analysts and attorneys, and benefits for transit and 

parking. In addition, the IG independently tests our 

compliance with procedures related to our performance data on a rotating basis over a 3-year period; 

these actions are specifically identified in the table 

that begins on page 83. No material weaknesses 

were reported by the IG. During fiscal year 2005, 

we completed actions related to 12 IG recommendations, none of which affected the financial statements. There are no unresolved issues.

Our Audit Advisory Committee assists the Comptroller General in overseeing the effectiveness of our 

financial reporting and audit processes, internal 

controls over financial operations, and processes to 

ensure compliance with laws and regulations relevant to our financial operations. 

As of September 30, 2005, the committee consisted 

of Sheldon S. Cohen (Chairman), Edward J. Mazur, 

and Charles O. Rossotti, whose relevant experience 

was described on page 49 of this report. The committee's report and the report from our independent 

auditors are included on the following pages.
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 101

PART III: Financial Information

Audit Advisory Committee’s Report

The Audit Advisory Committee (the Committee) assists the Comptroller General in 

overseeing the U.S. Government Accountability Office's (GAO) financial operations. 

As part of that responsibility, the Committee meets with agency management and its 

internal and external auditors to review and discuss GAO's external financial audit 

coverage, the effectiveness of GAO's internal controls over its financial operations, 

and its compliance with certain laws and regulations that could materially impact 

GAO's financial statements. GAO's external auditors are responsible for expressing an 

opinion on the conformity of GAO's audited financial statements with the U.S. generally accepted accounting principles. The Committee reviews the findings of the internal and external auditors, and GAO's responses to those findings, to ensure that 

GAO's plan for corrective action includes appropriate and timely follow-up measures. 

In addition, the Committee reviews the draft Performance and Accountability Report, 

including its financial statements, and provides comments to management who has 

primary responsibility for the Performance and Accountability report. The Committee 

met two times with respect to its responsibilities as described above. During these 

sessions, the Committee met with the internal and external auditors without GAO 

management being present and discussed with the external auditors the matters that 

are required to be discussed by generally accepted auditing standards. Based on procedures performed as outlined above, we recommend that GAO's audited statements 

and footnotes be included in the 2005 Performance and Accountability Report.

Sheldon S. Cohen

Chairman

Audit Advisory Committee
102 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART III: Financial Information

Independent Auditor’s Report
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 103

PART III: Financial Information
104 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART III: Financial Information
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 105

PART III: Financial Information
106 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART III: Financial Information

Purpose of Each Financial Statement

■ A balance sheet presents the combined amounts 

we had available to use (assets) versus the 

amounts we owed (liabilities) and the residual 

amounts after liabilities were subtracted from 

assets (net position).

■ A statement of net cost presents the annual cost 

of our operations. The gross cost less any 

offsetting revenue earned from our activities is 

used to arrive at the net cost of work performed 

under our four strategic goals.

■ A statement of changes to net position presents 

the accounting items that caused the net position 

section of the balance sheet to change from the 

beginning to the end of the fiscal year.

■ A statement of budgetary resources presents how 

budgetary resources were made available to us 

during the fiscal year and the status of those 

resources at the end of the fiscal year.

■ A statement of financing reconciles the resources 

available to us with the net cost of operating the 

agency.
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 107

PART III: Financial Information

Balance Sheets

Financial Statements

U.S. Government Accountability Office

Balance Sheets

As of September 30, 2005 and 2004

(Dollars in thousands)

2005 2004

Assets

Intragovernmental

Funds with the U.S. Treasury and cash (Note 2 and 3) $65,878 $67,169

Accounts receivable (Note 2) 877 1,501

Total Intragovernmental 66,755 68,670

Property and equipment, net (Note 4) 47,291 49,180

Other 310 382

Total Assets $114,356 $118,232

Liabilities

Intragovernmental (Note 2)

Accounts payable $11,805 $7,359

Employee benefits (Note 6) 2,262 1,928

Workers' compensation (Note 7) 2,121 1,961

Total Intragovernmental 16,188 11,248

Accounts payable 12,121 12,749

Salaries and benefits (Note 6) 16,493 15,035

Accrued annual leave and other (Note 5) 30,093 29,958

Workers' compensation (Note 7) 10,357 9,819

Capital leases (Note 9) 9,657 5,934

Total Liabilities 94,909 84,743

Net Position

Unexpended appropriations 27,003 34,621

Cumulative results of operations (7,556) (1,132)

Total Net Position (Note 13) 19,447 33,489

Total Liabilities and Net Position $114,356 $118,232

The accompanying notes are an integral part of these statements.
108 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART III: Financial Information

Statements of Net Cost

Financial Statements

U.S. Government Accountability Office

Statements of Net Cost

For Fiscal Years Ended September 30, 2005 and 2004

(Dollars in thousands)

2005 2004 

Net Costs by Goal 

Goal 1: Well-Being/Financial Security of American People $197,761 $194,733 

Less: reimbursable services (31) (2)

Net goal costs 197,730 194,731 

Goal 2: Changing Security Threats/Challenges of Global

 Interdependence 144,281 131,745 

Less: reimbursable services (81) (85)

Net goal costs 144,200 131,660 

Goal 3: Transforming the Federal Government's Role 150,196 148,196 

Less: reimbursable services (2,878) (2,435)

Net goal costs 147,318 145,761 

Goal 4: Maximize the Value of GAO 22,034 23,410 

Less: reimbursable services - -

Net goal costs 22,034 23,410 

Less: reimbursable services not attributable to goals (5,432) (5,493)

Net Cost of Operations (Note 10) $505,850 $490,069 

The accompanying notes are an integral part of these statements.
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 109

PART III: Financial Information

Statements of Changes in Net Position

Financial Statements

U.S. Government Accountability Office

Statements of Changes in Net Position

For Fiscal Years Ended September 30, 2005 and 2004

(Dollars in thousands)

2005 2004

 Cumulative 

Results of 

Operations

 Unexpended 

Appropriations

 Cumulative 

Results of 

Operations

 Unexpended 

Appropriations

Balances, Beginning of Fiscal Year ($1,132) $34,621 $2,338 $40,327

Budgetary Financing Sources

Current year appropriations - 467,205 - 457,606

Appropriations transferred in 1,644

Lapsed budget authority - (2,349) - (1,809)

Appropriations used 474,118 (474,118) 461,503 (461,503)

Other Financing Sources

Intragovernmental transfer of property 

and equipment (1) - (788) - 

Federal employee retirement benefit 

costs paid by OPM and imputed to 

GAO (Note 6) 25,309 - 25,884 - 

Total Financing Sources 499,426 (7,618) 486,599 (5,706)

Net Cost of Operations (505,850) - (490,069) - 

Net Change (6,424) (7,618) (3,470) (5,706)

Balances, End of Fiscal Year ($7,556) $27,003 ($1,132) $34,621 

The accompanying notes are an integral part of these statements.
110 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART III: Financial Information

Statements of Budgetary Resources

Financial Statements

U.S. Government Accountability Office

Statements of Budgetary Resources

For Fiscal Years Ended September 30, 2005 and 2004

(Dollars in thousands)

2005 2004 

Budgetary Resources (Note 11)

Current year appropriations $467,205 $457,606

Transfers of budget authority 1,644 - 

Unobligated appropriations, beginning of fiscal year 14,066 18,895

Reimbursable services (Note 10) 8,422 8,015

Cost-sharing and pass-through CPA contract reimbursements 2,470 3,006

 

Total Budgetary Resources $493,807 $487,522

Status of Budgetary Resources

Obligations incurred $480,378 $471,647

Unobligated appropriations, end of fiscal year 11,080 14,066

Lapsed budget authority 2,349 1,809

 

Total Status of Budgetary Resources $493,807 $487,522

Relationship of Obligations to Outlays

Obligations incurred $480,378 $471,647

Obligated balance, net - beginning of fiscal year 53,103 50,487

Less: Obligated balance, net - end of fiscal year (54,798) (53,103)

Total Outlays 478,683 469,031

Less: Reimbursable services (8,422) (8,015)

 Cost-sharing and pass-through CPA contract reimbursements (2,470) (3,006)

 

Net Outlays $467,791 $458,010

Outlays

Disbursements $478,683 $469,031

Collections (10,892) (11,021)

 

Net Outlays $467,791 $458,010

The accompanying notes are an integral part of these statements.
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 111

PART III: Financial Information

Statements of Financing

Financial Statements

U.S. Government Accountability Office

Statements of Financing

For Fiscal Years Ended September 30, 2005 and 2004

(Dollars in thousands)

2005 2004

Resources Used to Finance Activities

 Budgetary Resources Obligated

Obligations incurred $480,378 $471,647

Less: Reimbursable services (Note 10) (8,422) (8,015)

 Cost-sharing and pass-through CPA contract reimbursements (2,470) (3,006)

Net obligations 469,486 460,626

 Other Resources

Intragovernmental transfer of property and equipment (1) (788)

Federal employee retirement benefit costs paid by OPM and imputed to GAO 

(Note 6) 25,309 25,884

Net other resources used to finance activities 25,308 25,096

 

Total resources used to finance activities 494,794 485,722

Resources Used to Finance Items Not Part of the Net Cost of Operations

Net decrease in unliquidated obligations 4,632 876 

Costs capitalized on the balance sheet (9,069) (11,703)

Total resources used to finance items not part of the net cost of

 operations (4,437) (10,827)

Total resources used to finance the net cost of operations 490,357 474,895

Components That Require/Generate Resources in Future Periods

Increase/(decrease) in Workers' Compensation, Accrued Annual Leave, and 

Other Liabilities (Note 12) 732 (1,630)

Costs That Do Not Require Resources

Depreciation 14,761 16,804

Net Cost of Operations $505,850 $490,069

The accompanying notes are an integral part of these statements.
112 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART III: Financial Information

Notes to Financial Statements

Note 1. Summary of Significant 

Accounting Policies

Reporting Entity

The accompanying financial statements present the 

financial position, net cost of operations, changes in 

net position, budgetary resources, and financing of 

the U.S. Government Accountability Office (GAO). 

GAO, an agency in the legislative branch of the federal government, supports the Congress in carrying 

out its constitutional responsibilities. GAO carries 

out its mission primarily by conducting audits, evaluations, analyses, research, and investigations and 

providing the information from that work to the 

Congress and the public in a variety of forms. The 

financial activity presented relates primarily to the 

execution of GAO’s congressionally approved budget. GAO’s budget consists of an annual appropriation covering salaries and expenses and revenue 

from reimbursable audit work and rental income. 

The revenue from audit services and rental income 

is included on the Statement of Budgetary 

Resources as “reimbursable services.” The financial 

statements, except for federal employee benefit 

costs paid by the Office of Personnel Management 

(OPM) and imputed to GAO, do not include the 

effects of centrally administered assets and liabilities 

related to the federal government as a whole, such 

as interest on the federal debt, which may in part be 

attributable to GAO; they also do not include activity related to GAO’s trust function described in Note 

14. 

Basis of Accounting 

GAO’s financial statements have been prepared on 

the accrual basis of accounting in conformity with 

Generally Accepted Accounting Principles for the 

federal government. Accordingly, revenues are recognized when earned and expenses are recognized 

when incurred, without regard to the receipt or payment of cash. These principles differ from budgetary reporting principles. The differences relate 

primarily to the capitalization and depreciation of 

property and equipment, as well as the recognition 

of other long-term assets and liabilities. The statements were also prepared in conformity with Office 

of Management and Budget (OMB) Circular A-136,

Financial Reporting Requirements.

Assets

Intragovernmental assets are those assets that arise 

from transactions with other federal entities. Funds 

with the U.S. Treasury composed the majority of 

intragovernmental assets on GAO’s balance sheet.

Funds with the U.S. Treasury

The U.S. Treasury processes GAO’s receipts and disbursements. Funds with the U.S. Treasury represent 

appropriated funds Treasury will provide to pay liabilities and to finance authorized purchase commitments.

Accounts Receivable

GAO’s accounts receivable are due principally from 

federal agencies for reimbursable services; therefore, GAO has not established an allowance for 

doubtful accounts. 

Property and Equipment

The GAO building qualifies as a multi-use heritage 

asset, is GAO’s only heritage asset, and is reported 

with property and equipment on the balance sheet. 

The designation of multi-use heritage asset is a 

result of both being listed in the National Register of 

Historic Places and being used in general government operations. Statement of Federal Financial 

Accounting Standards No. 16 requires accounting 

for multiuse heritage assets as general property, 

plant, and equipment to be included in the balance 

sheet and depreciated. Maintenance of the building 

has been kept on a current basis. The building is 

depreciated on a straight-line basis over 25 years. 

Generally, property and equipment individually 

costing more than $15,000 are capitalized at cost. 

Building improvements and leasehold improvements are capitalized when the cost is $25,000 or 

greater. Bulk purchases of lesser value items that 

aggregate more than $150,000 are also capitalized at 

cost. Assets are depreciated on a straight-line basis 

over the estimated useful life of the property as fol-
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 113

PART III: Financial Information

lows: building improvements, 10 years; computer 

equipment, software, and capital lease assets, ranging from 3 to 6 years; leasehold improvements, 5 

years; and other equipment, ranging from 5 to 20 

years. GAO’s property and equipment have no 

restrictions as to use or convertibility except for the 

restrictions related to the GAO building’s classification as a multi-use heritage asset. 

Liabilities

Liabilities represent amounts that are likely to be 

paid by GAO as a result of transactions that have 

already occurred.

Accounts Payable

Accounts payable consists of amounts owed to federal agencies and commercial vendors for goods, 

services, and other expenses received but not yet 

paid. 

Federal Employee Benefits

GAO recognizes its share of the cost of providing 

future pension benefits to eligible employees over 

the period of time that they render services to GAO. 

The pension expense recognized in the financial 

statements equals the current service cost for GAO’s 

employees for the accounting period less the 

amount contributed by the employees. OPM, the 

administrator of the plan, supplies GAO with factors 

to apply in the calculation of the service cost. These 

factors are derived through actuarial cost methods 

and assumptions. The excess of the recognized 

pension expense over the amount contributed by 

GAO and employees represents the amount being 

financed directly through the Civil Service Retirement and Disability Fund administered by OPM. 

This amount is considered imputed financing to 

GAO (see Note 6).

GAO recognizes a current-period expense for the 

future cost of postretirement health benefits and life 

insurance for its employees while they are still 

working. GAO accounts for and reports this 

expense in its financial statements in a manner similar to that used for pensions, with the exception 

that employees and GAO do not make current contributions to fund these future benefits.

Federal employee benefit costs paid by OPM and 

imputed to GAO are reported as resources on the 

Statements of Changes in Net Position and Financing and are also included as a component of net 

cost by goal on the Statements of Net Cost.

Annual, Sick, and Other Leave

Annual leave is recognized as an expense and a liability as it is earned; the liability is reduced as leave 

is taken. The accrued leave liability is principally 

long-term in nature. Sick leave and other types of 

leave are expensed as leave is taken.

Contingencies

GAO has certain claims and lawsuits pending 

against it. Provision is included in GAO’s financial 

statements for losses considered probable and estimable. Management believes that losses from certain other claims and lawsuits are reasonably 

possible but are not material to the fair presentation 

of GAO’s financial statements and provision for 

these losses is not included in the financial statements. 

Note 2. Intragovernmental 

Assets, Liabilities, and 

Revenues

Intragovernmental assets, liabilities, and revenues 

arise from transactions with other federal entities. 

Details of GAO’s intragovernmental assets, liabilities, and revenues, by agency, as of September 30, 

2005 and 2004, are as follows:
114 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART III: Financial Information

Intragovernmental assets as of September 30, 2005 and 2004: 

Dollars in thousands

Dollars in thousands

Intragovernmental liabilities as of September 30, 2005 and 2004: 

Dollars in thousands

Fiscal Year 2005 intragovernmental assets

Fund balance with 

Treasury Accounts receivable Total

Department of the Treasury $65,875 - $65,875

Cash 3 - 3

Federal Deposit Insurance Corporation - $613 613

Securities and Exchange Commission - 233 233

Other - 31 31

Total intragovernmental assets $65,878 $877 $66,755

Fiscal Year 2004 intragovernmental assets

Fund balance with 

Treasury Accounts receivable Total

Department of the Treasury $67,163 - $67,163

Cash 6 - 6

Federal Deposit Insurance Corporation - $546 546

Securities and Exchange Commission - 850 850

Other - 105 105

Total intragovernmental assets $67,169 $1,501 $68,670

Fiscal Year 2005 intragovernmental 

liabilities

Accounts 

payable

Employee 

benefits

Workers’ 

compensation Total

General Services Administration $10,363 - - $10,363

Department of Labor 284 - $2,121 2,405

Office of Personnel Management 549 $1,701 - 2,250

Department of the Treasury - 561 - 561

Government Printing Office 227 - - 227

Department of Veterans Affairs 139 - - 139

Other 243 - - 243

Total intragovernmental liabilities $11,805 $2,262 $2,121 $16,188
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 115

PART III: Financial Information

Dollars in thousands

Intragovernmental revenues for fiscal years 2005 

and 2004: 

Dollars in thousands

GAO’s pricing policy for reimbursable services is to 

seek reimbursement for actual costs incurred, 

including overhead costs where allowed by law. 

Therefore, revenues, as listed above, and costs that 

generated those revenues are equivalent.

Note 3. Funds with the U.S. 

Treasury and Cash

GAO’s funds with the U.S. Treasury consist of only 

appropriated funds. GAO also maintains cash 

imprest funds for use in daily operations. The status 

of these funds as of September 30, 2005 and 2004 is 

as follows:

Dollars in thousands

Fiscal Year 2004 intragovernmental 

liabilities

Accounts 

payable

Employee 

benefits

Workers’ 

compensation Total

General Services Administration $5,559 - - $5,559

Office of Personnel Management - $1,884 - 1,884

Department of the Treasury 661 44 - 705

Government Printing Office 361 - - 361

Department of Agriculture 271 - - 271

Department of Labor 215 - $1,961 2,176

Other 292 - - 292

Total intragovernmental liabilities $7,359 $1,928 $1,961 $11,248

Intragovernmental revenue 2005 2004

U.S. Army Corps of Engineers $4,856 $4,799

Federal Deposit Insurance 

Corporation 1,774 1,540

Securities and Exchange 

Commission 1,057 849

State Department 248 361

Other 420 390

Total intragovernmental 

revenue $8,355 $7,939

Intergovernmental revenue $8,355 $7,939

Nongovernmental revenue 67 76 

Total revenue $8,422 $8,015

2005 2004

Unobligated balance

Available $1,296 $3,609

Unavailable 9,781 10,451

Obligated balances not yet 

disbursed 54,798 53,103 

Total funds with U.S. Treasury 65,875 67,163 

Cash 3 6 

Total funds with U.S. Treasury 

and cash $65,878 $67,169
116 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART III: Financial Information

Note 4. Property and Equipment, Net

The composition of property and equipment as of September 30, 2005, is as follows:

Dollars in thousands

The composition of property and equipment as of September 30, 2004, is as follows:

Dollars in thousands

The decrease in the acquisition value of assets 

under capital lease in fiscal year 2005 relates to the 

retirement of fully depreciated assets during fiscal 

year 2005 in conjunction with implementing a new 

asset management system.

Note 5. Liabilities Not Covered 

by Budgetary Resources

The liabilities on GAO’s Balance Sheets as of September 30, 2005 and 2004, include liabilities not 

covered by budgetary resources, which are liabilities for which congressional action is needed before 

budgetary resources can be provided. Although 

future appropriations to fund these liabilities are 

likely and anticipated, it is not certain that appropriations will be enacted to fund these liabilities. The 

composition of liabilities not covered by budgetary 

resources as of September 30, 2005 and 2004, is as 

follows:

Classes of property and equipment Acquisition value

Accumulated 

depreciation Book value

Building $15,664 $10,652 $5,012

Land 1,191 – 1,191

Building improvements 112,855 93,638 19,217

Computer and other equipment and software 33,663 22,290 11,373

Leasehold improvements 5,956 5,152 804

Assets under capital lease 20,223 10,529 9,694 

Total property and equipment $189,552 $142,261 $47,291

Classes of property and equipment Acquisition value

Accumulated 

depreciation Book value

Building $15,664 $10,025 $5,639

Land 1,191 – 1,191

Building improvements 109,389 87,413 21,976

Computer and other equipment and software 34,525 20,533 13,992

Leasehold improvements 5,091 4,895 196

Assets under capital lease 30,321 24,135 6,186 

Total property and equipment $196,181 $147,001 $49,180
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 117

PART III: Financial Information

Dollars in thousands

Note 6. Federal Employee 

Benefits

All permanent employees participate in the contributory Civil Service Retirement System (CSRS) or the 

Federal Employees Retirement System (FERS). Temporary employees and employees participating in 

FERS are covered under the Federal Insurance Contributions Act (FICA). To the extent that employees 

are covered by FICA, the taxes they pay to the program and the benefits they will eventually receive 

are not recognized in GAO’s financial statements. 

GAO makes contributions to CSRS, FERS, and FICA 

and matches certain employee contributions to the 

thrift savings component of FERS. All of these payments are recognized as operating expenses. 

In addition, all permanent employees are eligible to 

participate in the contributory Federal Employees 

Health Benefits Program (FEHBP) and Federal 

Employees’ Group Life Insurance Program (FEGLIP) 

and may continue to participate after retirement. 

GAO makes contributions through OPM to FEHBP 

and FEGLIP for active employees to pay for their 

current benefits. GAO’s contributions for active 

employees are recognized as operating expenses. 

Using the cost factors supplied by OPM, GAO has 

also recognized an expense in its financial statements for the estimated future cost of postretirement health benefits and life insurance for its 

employees. These costs are financed by OPM and 

imputed to GAO.

Amounts owed to OPM and Treasury as of September 30, 2005 and 2004, are $2,262,000 and 

$1,928,000, respectively, for FEHBP, FEGLIP, FICA, 

FERS, and CSRS contributions and are shown on the 

Balance Sheet as an employee benefits liability.

Details of the major components of GAO’s federal 

employee benefit costs for the years ended September 30, 2005 and 2004, are as follows:

Dollars in thousands

Comptrollers General and their surviving beneficiaries who qualify and so elect to participate are paid 

retirement benefits by GAO under a separate retirement plan. These benefits are paid from current 

year appropriations. Because GAO is responsible 

for future payments under this plan, the estimated 

present value of accumulated plan benefits of 

$2,836,000 as of September 30, 2005, and 

$2,937,000 as of September 30, 2004, is included as 

a component of salary and benefit liabilities on 

GAO’s Balance Sheet.

2005 2004

Intragovernmental liabilities—

Workers’ compensation $2,121 $1,961

Salaries and benefits—

Comptrollers General 

retirement plan 2,836 2,937

Accrued annual leave and 

other 30,093 29,958

Workers’ compensation 10,357 9,819

Capital leases 9,657 5,934 

Total liabilities not covered by 

budgetary resources $55,064 $50,609

Federal Employee Benefits 

Costs 2005 2004

Federal employee retirement 

benefit costs paid by OPM 

and imputed to GAO:

Estimated future pension 

costs (CSRS/FERS) $11,476 $13,341

Estimated future 

postretirement health and 

life insurance 

(FEHBP/FEGLIP) 13,833 12,543

Total $25,309 $25,884

Pension expenses 

(CSRS/FERS) $28,583 $26,896

Health and life insurance 

expenses (FEHBP/FEGLIP) $15,130 $14,257

FICA payment made by GAO $15,261 $14,545

Thrift Saving Plan – matching 

contribution by GAO $8,439 $7,889
118 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART III: Financial Information

Note 7. Workers’ Compensation

The Federal Employees’ Compensation Act (FECA) 

provides income and medical cost protection to 

covered federal civilian employees injured on the 

job, employees who have incurred a work-related 

occupational disease, and beneficiaries of employees whose death is attributable to a job-related 

injury or occupational disease. Claims incurred for 

benefits for GAO employees under FECA are 

administered by the Department of Labor (DOL) 

and are paid, ultimately, by GAO.

For fiscal year 2004, and again in fiscal year 2005, 

GAO used estimates provided by DOL to report the 

FECA liability. This practice is consistent with the 

practices of other federal agencies.

GAO recorded an estimated liability for claims 

incurred but not reported as of September 30, 2005 

and 2004, which is expected to be paid in future 

periods. This estimated liability of $10,357,000 and 

$9,819,000 as of September 30, 2005 and 2004, 

respectively, is reported on GAO’s Balance Sheets. 

GAO also recorded a liability for amounts paid to 

claimants by DOL as of September 30, 2005 and 

2004, of $2,121,000 and $1,961,000, respectively, 

but not yet reimbursed to DOL by GAO. The 

amount owed to DOL is reported on GAO’s Balance 

Sheets as an intragovernmental liability.

Note 8. Building Lease Revenue 

The U.S. Army Corps of Engineers (USACE) entered 

into an agreement with GAO to lease the entire 

third floor of the GAO building. USACE provided all 

funding for the third floor renovation. Occupancy 

began August 3, 2000, for an initial period of 3 

years, with options to renew on an annual basis for 

7 additional years. Total rental revenue to GAO 

includes a base rent, which remains constant for the 

entire 10-year period, plus operating expense reimbursements at a fixed amount for the first 3 years, 

with escalation clauses from year 4 through year 10 

if the option years are exercised. Beginning in fiscal 

year 2002, USACE leased additional space on the 

sixth floor with occupancy lasting through the original lease term. 

Rent received by GAO for fiscal year 2005 and 2004 

was $4,856,000 and $4,799,000, respectively. These 

amounts are included in reimbursable services on 

the Statements of Budgetary Resources and Financing (see Note 2). Total rental revenue for the 

remaining period of the 10-year lease is as follows:

Dollars in thousands

*If option years are exercised.

Note 9. Leases

Capital Leases

GAO has entered into capital leases for office 

equipment and computer equipment under which 

the ownership of the equipment covered under the 

leases transfers to GAO when the leases expire. 

When GAO enters into these leases, the present 

value of the future lease payments is capitalized, net 

of imputed interest, and recorded as a liability. The 

acquisition value and accumulated depreciation of 

GAO’s capital leases are shown in Note 4, Property 

and Equipment, Net. As of September 30, 2005 and 

2004, the capital lease liability was $9,657,000 and 

$5,934,000, respectively. This increase in capital 

lease liability is a result of replacing substantially all 

the copiers and notebook computers at GAO during 

2005 and recording new capital lease liabilities. 

These lease agreements are written as contracts 

with a base year and option years. The option years 

are subject to the availability of funds. Early termination of the leases for reasons other than default is 

subject to a negotiation between the parties. These 

leases are lease-to-ownership agreements. GAO’s 

leases are short term in nature and no liability exists 

beyond the years shown in the following table. 

GAO’s estimated future minimum lease payments 

under the terms of the leases are as follows:

Fiscal year ending September 30

Total rental 

revenue*

2006 $4,916

2007 4,978

2008 5,045

2009 5,111

2010 5,179 

Total $25,229
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 119

PART III: Financial Information

Dollars in thousands

Operating Leases

GAO leases office space, predominately for field 

offices, from GSA and has entered into various 

other operating leases for office communication and 

computer equipment. Lease costs for office space 

and equipment for fiscal year 2005 and fiscal year 

2004 amounted to approximately $10,752,000 and 

$7,991,000, respectively. Leases for equipment 

under operating leases are generally less than 

1 year, therefore there are no associated future minimum lease payments. Estimated future minimum 

lease payments for field office space under the 

terms of the leases are as follows: 

Dollars in thousands

Leased property and equipment must be capitalized 

if certain criteria are met (see Capital Leases description). Because property and equipment covered 

under GAO’s operating leases do not satisfy these 

criteria, GAO’s operating leases are not reflected on 

the Balance Sheets. However, annual lease costs 

under the operating leases are included as components of net cost by goal in the Statements of Net 

Cost.

Note 10. Net Cost of Operations

Expenses for salaries and related benefits for fiscal 

year 2005 and fiscal year 2004 amounted to 

$395,783,000 and $389,104,000, respectively, which 

were about 78 percent of GAO’s annual net cost of 

operations in fiscal year 2005 and 79 percent in fiscal year 2004. Included in the net cost of operations 

are federal employee benefit costs paid by OPM 

and imputed to GAO of $25,309,000 in fiscal year 

2005 and $25,884,000 in fiscal year 2004.

Revenues from reimbursable services are shown as 

an offset against the full cost of the goal to arrive at 

its net cost. Earned revenues that are insignificant or 

cannot be associated with a major goal are shown 

in total, the largest component of which is rental 

revenue from the lease of space in the GAO building. Revenues from reimbursable services for fiscal 

year 2005 and fiscal year 2004 amounted to 

$8,422,000 and $8,015,000, respectively. Further 

details of the intragovernmental components are 

provided in Note 2.

The net cost of operations represents GAO’s operating costs that must be funded by financing sources 

other than revenues earned from reimbursable services. These financing sources are presented in the 

Statements of Changes in Net Position. 

Note 11. Budgetary Resources

Budgetary resources made available to GAO 

include current appropriations, spending authority 

from budget transfers, unobligated appropriations, 

and reimbursements arising from both revenues 

earned by GAO from providing goods and services 

to other federal entities for a price (reimbursable 

services) and cost-sharing and pass-through contract arrangements with other federal entities. 

For fiscal year 2004 differences exist between the 

total budgetary resources on the Statements of Budgetary Resources and the budget authority amount 

in the fiscal year 2006 President’s Budget. These differences are due to (1) unobligated funds available 

in expired accounts not included in the President’s 

Budget submission and (2) reimbursements from 

cost-sharing and pass-through contract arrangements that could not have been anticipated at the 

time the President’s Budget was developed. In addiFiscal year ending September 30 Total

2006 $5,019

2007 4,015

2008 1,343

2009 241

2010 54 

Total estimated future lease payments 10,672

Less: imputed interest (1,015)

Net capital lease liability $9,657

Fiscal year ending September 30 Total

2006 $7,559

2007 4,293

2008 3,435

2009 2,859

2010 2,376

2011 and thereafter 3,845 

Total estimated future lease payments $24,367
120 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART III: Financial Information

tion, as the fiscal year 2007 President’s Budget is not 

yet available, comparison between the Statements 

of Budget Resources and the actual fiscal year 2005 

data in the President’s Budget cannot be performed.

For fiscal year 2005, budget transfers consisted of 

budget authority transferred from the Department of 

Homeland Security for a review of the Transportation Security Administration’s calendar year 2000 

cost for screening passengers and property. Reimbursements from cost-sharing and pass-through 

contract arrangements consisted primarily of collections from other federal entities (1) for the support 

of the Federal Accounting Standards Advisory Board 

and (2) to utilize GAO contracts to obtain services. 

The costs and reimbursements for these activities 

are not included in the Statements of Net Cost.

Note 12. Components That 

Require/Generate Resources in 

Future Periods

Increases/decreases in workers’ compensation, 

accrued annual leave, and other liabilities are 

reported in the Statements of Financing. These 

changes represent the increases/decreases in liabilities not covered by budgetary resources, as 

reported in Note 5.

Dollars in thousands

Note 13. Net Position

Net position on the balance sheets consist of unexpended appropriations and cumulative results of 

operations. Unexpended appropriations are the 

sum of the total unobligated appropriations and 

undelivered goods and services. Cumulative results 

of operations represent the excess of financing 

sources over expenses since inception. Details of 

the components of GAO’s cumulative results of 

operations for the fiscal years ended September 30, 

2005 and 2004, are as follows:

Dollars in thousands

Liabilities not covered by budgetary resources are 

liabilities for which congressional action is needed 

before budgetary resources can be provided. See 

Note 5 for breakdown.

Note 14. Davis-Bacon Act Trust 

Function

GAO is responsible for administering for the federal 

government the trust function of the Davis-Bacon 

Act receipts and payments and publishes separate, 

audited financial statements for this fund. GAO 

maintains this fund to pay claims relating to violations of the Davis-Bacon Act and Contract Work 

Hours and Safety Standards Act. Under these acts, 

DOL investigates violation allegations to determine 

if federal contractors owe additional wages to covered employees. If DOL concludes that a violation 

has occurred, GAO collects the amount owed from 

the contracting federal agency, deposits the funds 

into an account with the U.S. Treasury, and remits 

payment to the employee. GAO is accountable to 

the Congress and to the public for the proper 

administration of the assets held in the trust. Trust 

assets under GAO’s administration totaled approximately $4,666,000 as of September 30, 2005. These 

Fiscal year ending September 30 2005 2004

Liabilities not covered by budgetary 

resources $55,064 $50,609 

Liabilities that are not components 

of net cost:

Capital leases (9,657) (5,934)

Current year liabilities not covered 

by budgetary resources that are 

components of net cost 45,407 44,675

Prior year liabilities that are not 

components of current year net 

costs (44,675) (46,305)

Increase/(decrease) in workers’

compensation, accrued annual 

leave, and other liabilities, as 

reported on the Statements of 

Financing $732 $(1,630) 

2005 2004

Investment in property and 

equipment, net $47,291 $49,180

Other – supplies inventory 217 297

Liabilities not covered by 

budgetary resources (55,064) (50,609)

Cumulative results of operations $(7,556) $(1,132)
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 121

PART III: Financial Information

assets are not the assets of GAO nor the federal 

government and are held for distribution to appropriate claimants. During fiscal year 2005, receipts 

and disbursements in the trust amounted to 

$526,000 and $612,000, respectively. Because the 

trust assets and related liabilities are not assets and 

liabilities of GAO, they are not included in the 

accompanying financial statements.
122 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART III: Financial Information
Appendixes

Part IV

Part IV:

Appendixes
124 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART IV: Appendixes

1. Accomplishments and Other Contributions

In pursuing our strategic goals during fiscal year 

2005, we recorded hundreds of accomplishments 

and made numerous other contributions. This 

appendix provides details on the most significant of 

these. In reporting accomplishments (designated by 

an A in the item number below) and other contributions (designated by a C in the item number below), 

we are holding ourselves accountable for the 

resources we received to implement our strategic 

plan. The accomplishments document financial 

benefits or other benefits achieved through action 

on our findings or recommendations. 

Typically, the accomplishments describe work that 

we completed in prior fiscal years because it takes 

time to implement recommendations, realize benefits, and record them. The other contributions, 

which often refer to work completed in fiscal year 

2005, describe instances in which we provided 

information or recommendations that aided congressional decision making or informed the public 

debate to a significant degree. At the end of each 

accomplishment and contribution summary, we list 

the reference number for products associated with 

the work discussed. In the online version of this 

document, readers can link directly to these products if they want additional information. 
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 125

PART IV: Appendixes

Source: See Image Sources.

The health needs of an aging 

and diverse population

1.1.A. Improving the Call Transfer Process 

Used by 1-800-MEDICARE: In 2004, we found 

that the 24-hour 1-800-MEDICARE help line, operated by the Department of Health and Human Services’s (HHS) Centers for Medicare & Medicaid 

Services (CMS), did not answer 10 percent of the 

calls we placed to test its accuracy, often because it 

automatically transferred some calls to claims 

administration contractors that were not open for 

business at the time of the calls. This call transfer 

process prohibited callers from accessing information during nonbusiness hours, even though 1-800-

MEDICARE operates 24-hours a day. As a result, we 

recommended that CMS revise the routing procedures of 1-800-MEDICARE to ensure that calls are 

not transferred or referred to claims administration 

contractors’ help lines during nonbusiness hours. In 

response, CMS finished converting its call routing 

procedures. As a result, calls placed after normal 

business hours will be routed to the main 1-800-

MEDICARE line, which operates 24-hours a day. 

(GAO-05-130)

1.2.A. Reforming Medicare Payments for 

Inhalation Therapy Drugs: We provided information on the costs to suppliers of dispensing inhalation therapy drugs to Medicare beneficiaries. The 

Medicare Prescription Drug, Improvement, and 

Modernization Act of 2003 revised the payment formula for most outpatient drugs, including inhalation 

therapy drugs, covered under Medicare part B. 

Under the revised formula, effective 2005, Medicare’s payment was intended to be closer to acquisition costs. We found that under the previous 

system, the higher dispensing costs incurred by 

some suppliers were covered by the excess payments for these drugs, but that under the revised 

payment system, the necessary costs of dispensing 

inhalation therapy drugs may not be covered. As 

we recommended, CMS—the agency that administers Medicare—evaluated the costs of dispensing 

inhalation therapy drugs and used our analysis to 

help set an appropriate dispensing fee. 

(GAO-05-72) 

1.3.A. Requiring Out-of-Cycle Inspections for 

Medicare Suppliers: Although durable medical 

equipment suppliers are inspected when applying 

for Medicare billing privileges and reinspected 

every 3 years, this predictable timing has allowed 

suppliers intent on committing fraud to create the 

illusion of legitimacy long enough to enter the program. The Medicare contractor responsible for 

screening suppliers conducts out-of-cycle inspections but is not required to do so by its contract and 

can curtail this activity at any time. Because conducting out-of-cycle inspections has been valuable, 

we recommended routinely conducting them to 

better identify potentially fraudulent suppliers. During the course of our review of the supplier screening process, we held discussions on this topic with 

CMS staff who were writing the statement of work 

for a new contract that is scheduled to be awarded 

in December 2005. As a result, CMS included language in the new contract that will require the contractor to conduct random, out-of-cycle site visits as 

resources permit. (GAO-05-656)

1.4.A. Identifying Chain Suppliers for 

Medicare Site Inspections: Site inspections of 

durable medical equipment suppliers help verify 

their compliance with Medicare’s standards and 

help safeguard the program against fraud. CMS 

allows its enrollment contractor to exempt suppliers 

in chains with 25 or more locations from the inspections. However, the contract did not clearly state 

Strategic Goal 1

Provide Timely, Quality Service to the Congress and 

the Federal Government to Address Current and 

Emerging Challenges to the Well-Being and 

Financial Security of the American People
126 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART IV: Appendixes

that all 25 locations in the chain have to have active 

billing numbers. As a result, we found that the contractor had been exempting some suppliers in 

chains that currently had fewer than 25 locations 

with active billing numbers, including some with 

locations that had billing privileges revoked due to 

noncompliance with Medicare’s standards. After we 

informed CMS, the agency revised its contract to 

clarify that a chain consisted of 25 or more active 

supplier locations. (GAO-05-656)

1.5.A. Classifying Inpatient Rehabilitation 

Facilities: In an April 2005 report, we recommended that CMS refine the rule used by Medicare 

to classify inpatient rehabilitation facilities. Medicare 

classifies these facilities using the “75 percent rule.” 

If a facility can show that during 1 year, at least 75 

percent of its patients required intensive rehabilitation for 1 of 13 specified conditions, it may be classified as an inpatient rehabilitation facility and paid 

at a higher rate than is paid for less intensive rehabilitation in other settings, such as an acute care 

hospital or a skilled nursing facility. Enforcement of 

the rule was suspended in 2002, resumed in July 

2004, and suspended again in January 2005 pending 

issuance of our report on the rule. We found that 

there are patients in these facilities who may not 

need the intense level of services provided in them 

and that CMS has not been routinely reviewing 

admissions to these facilities to determine if they 

were medically justified. We recommended that 

CMS conduct reviews for medical necessity and produce more information about the effectiveness of 

inpatient rehabilitation to support future efforts to 

refine the rule over time to increase its clarity about 

which types of patients are most appropriate for 

inpatient rehabilitation facilities. CMS generally 

agreed with our recommendations and issued a regulation on June 24, 2005, to resume enforcement of 

the procedures for classifying these facilities, stating 

that facilities that do not comply with the requirements of the rule would have their classification terminated. (GAO-05-366 and GAO-05-825T)

1.6.A. Improving Medicare Communications 

with Providers: To improve communications 

with physicians, we recommended that the administrator of CMS adopt a standard approach that would 

promote the quality, consistency, and timeliness of 

communications by publishing a national bulletin 

for physicians. We found that bulletins issued by 

Medicare contractors were poorly organized and 

contained dense legal language. We also noted that 

some failed to include information or provided little 

advance notice about upcoming program changes. 

CMS implemented our recommendation by developing a series of educational articles, “Medlearn 

Matters,” which are available at CMS’s Web site and 

replace the individual articles previously developed 

by each Medicare contractor. (GAO-02-249)

1.7.A. Improving Medicare Call Center 

Responses to Policy-Oriented Inquiries from 

Providers: To improve the accuracy and completeness of responses to policy-oriented inquiries 

from providers, we recommended that the Administrator of CMS create a process to routinely screen 

and triage calls by routing complex policy-oriented 

questions to staff with the expertise to adequately 

address them. We found that the responses of call 

center customer service representatives to our 

policy-oriented questions were largely incorrect. 

Among other things, we noted that these call centers did not have the capability of identifying the 

subject of providers’ questions so their calls could 

be routed to the most appropriate customer service 

representatives. We recommended that the Administrator of CMS take steps to ensure that all customer 

service representatives have the necessary tools to 

respond to such calls by developing clear and easily 

accessible policy-oriented materials that are electronically searchable. CMS instructed most of its 

contractors to develop an inquiry triage process for 

telephone inquiries by January 2005. Call centers 

must have at least two levels of customer service 

representatives dedicated to responding to provider 

inquiries. Questions requiring in-depth research 

must be referred to a new group of staff, known as 

Provider Relations Research Specialists, who are 

trained to do the necessary research to provide 

complete and accurate responses to the inquiries. 

(GAO-04-669)

1.8.A. Improving Home Health Performance 

Standards and Oversight: In 2002, we reported 

that CMS’s oversight of state home health agency 

survey activities was limited and needed to be 

improved. CMS responded by developing annual 

performance standards as a way to routinely monitor important state home health survey activities. 

For example, states are now evaluated to ensure 

that all home health agencies are surveyed at least 

once every 3 years, as required by statute. States are 

now evaluated on whether deficiencies found dur-
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 127

PART IV: Appendixes

ing home health surveys are appropriately and sufficiently supported and documented. Finally, states 

are now evaluated on whether home health complaints and incidents are appropriately prioritized 

based on the seriousness of the allegations received 

and whether those alleging immediate jeopardy to a 

patient are investigated within 2 working days of 

receipt by the state agency. These new standards 

allow CMS to monitor state performance over time 

and to work with state agencies to improve the 

quality of home health survey activities and ultimately the care provided to Medicare home health 

beneficiaries. In the same report, we stated that 

CMS had not applied the oversight tools that it uses 

to monitor state nursing home surveys to the survey 

activities of home health agencies. As a result, CMS 

officials generally were unaware of the variability in 

the extent to which states cited home health deficiencies and were unable to offer insights as to the 

underlying causes. Since our report, CMS has created a Web-based data reporting system that accumulates and stores data related to a variety of home 

health agency survey activities, including overdue 

surveys and home health agencies with identified 

serious deficiencies. Thus, CMS and states are now 

able to readily access important data related to 

home health survey activities to ensure that problems are addressed in a timely manner and Medicare beneficiaries receive the best quality care 

available. (GAO-02-382)

1.9.A. Paying Properly for Power Wheelchairs 

for Medicare Beneficiaries: In 2004, we examined the steps taken by CMS to respond to 

improper payments by the Medicare program for 

power wheelchairs. Medicare spending for power 

wheelchairs—one of the Medicare program’s most 

expensive items of equipment—had increased more 

than fourfold from 1999 through 2003. We reported 

that the information provided to Medicare contractors that process wheelchair claims did not provide 

sufficient detail for determining if power wheelchair 

claims should be paid, and we recommended that 

documentation supplied to these contractors be 

revised. In August 2005, CMS established a new 

requirement that the relevant clinical documentation 

from a patient’s medical record be maintained by 

the supplier along with a written prescription for 

the power wheelchair and be submitted to the contractor upon request. (GAO-04-716T and 

GAO-05-43)

1.10.A. Leveraging Experts’ Knowledge in 

Implementing Medicare Competitive Bidding: 

Each year, Medicare pays billions of dollars for beneficiaries’ medical equipment and supplies. We have 

repeatedly reported that Medicare payments for 

some of these items are out of line with actual market prices. In 2007, CMS is slated to begin a largescale effort to conduct Medicare competitive bidding for medical equipment and supplies. In September 2004, we recommended that as it 

implements the competitive bidding program, the 

agency seek input from individuals with technical 

knowledge about the items and services suppliers 

provide to beneficiaries. Subsequently, CMS 

appointed an advisory and oversight committee to 

advise the agency about the implementation of 

competitive bidding and about standards for suppliers that want to participate in the Medicare program. (GAO-04-765) 

1.11.A. Revising the Health Insurance 

Portability and Accountability Act’s (HIPAA) 

Model Certificate of Creditable Group Health 

Plan Coverage: HIPAA sets minimum federal 

standards for certain aspects of private health insurance to improve access to health insurance for people obtaining coverage through employment as well 

as for those purchasing it as individuals. For example, HIPAA limits the time that preexisting conditions may be excluded from coverage for many 

people changing jobs and guarantees access to coverage for certain individuals losing group coverage. 

HIPAA also requires that each person losing health 

coverage receive a certificate that documents the 

length of prior coverage. We determined, however, 

that the model certificate the federal agencies had 

developed as part of the 1997 interim rules had limitations as an educational tool. For example, it neither explicitly informed consumers that they had a 

group-to-individual portability right nor highlighted 

any of the restrictions on this right. To more explicitly inform consumers of their HIPAA rights, we recommended that HHS’s Health Care Financing 

Administration—now known as CMS—and the 

Department of Labor (DOL) revise the model certificate to highlight key provisions and restrictions of 

the law and to inform consumers about appropriate 

contacts for additional information. As a result of 

our work, in 2004 HHS, DOL, and the Department 

of the Treasury (Treasury) issued final regulations 

for health coverage portability for group health 

plans and group health insurance issuers. The final 
128 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART IV: Appendixes

regulations cite our recommendation and include a 

modified certificate of creditable coverage, which 

includes an explicit description of HIPAA’s portability rights and lists telephone numbers that can be 

called for additional information. 

(GAO/HEHS-99-100)

1.12.A. Making Medicare’s Coverage Process 

More Understandable: Each year, CMS makes 

important decisions on whether new technology 

will be covered for Medicare’s beneficiaries. However, the rationale for CMS’s decisions has sometimes been uncertain because of the lack of clear 

coverage criteria. In 2003, we recommended that 

CMS develop written criteria for assessing whether a 

medical service or item is reasonable and necessary 

and could be covered by Medicare. In 2004, CMS 

published information on how it intends to develop 

public guidance discussing factors to be considered 

in making coverage decisions. In addition, CMS 

issued draft guidance in 2005 on how it would 

make coverage decisions for certain items or services for which sufficient data are not available. 

CMS also stated that it will seek public input on 

possible topics for new guidance documents. 

(GAO-03-175) 

1.13.A. Determining Higher Payments’ Effects 

on Nurse Staffing: The Congress enacted a temporary increase in the nursing component of the 

Medicare payment rate for skilled nursing facilities, 

effective April 1, 2001, and directed us to assess the 

impact of the increased payments on nursing staff 

in skilled nursing facilities. We found that after the 

nursing-related payment rate increase took effect, 

nurse staffing per patient day changed little. The 

payment increase expired September 30, 2002, and 

the Congress did not reinstate it during fiscal year 

2005, resulting in a cost avoidance of about $2 billion. (GAO-03-176)

1.14.A. Assessing Medicare’s Skilled Nursing 

Facility Payment Rate: A 1999 law authorized 

CMS to raise all Medicare payment rates for skilled 

nursing facilities by 4 percent for 2 years. Prior to 

the September 30, 2002, expiration of this 4 percent 

add-on, provider representatives argued that the 

add-on should be restored, citing payment shortfalls 

from other payers. In a 2002 report, however, we 

found that under the prospective payment system, 

most freestanding skilled nursing facilities’ Medicare 

payments substantially exceeded the costs of caring 

for Medicare patients, contributing to facilities’ overall positive financial condition. Specifically, the 

median Medicare margin was about 8 percent in 

1999 and almost 19 percent in 2000. Consequently, 

the Congress declined to restore the 4 percent addon from 2002 through 2005. The Medicare Payment 

Advisory Commission also contributed to this congressional decision by reporting similar results 

about the facilities’ Medicare payments. 

(GAO-03-183)

1.15.A. Strengthening Guidelines for Nursing 

Home Fire Investigations: In 2004, we reported 

on two recent nursing home fires in which 31 residents died. Our review revealed weaknesses in federal fire safety standards for nursing homes and in 

federal and state oversight. To improve federal 

oversight of state fire safety activities and better 

ensure the adequacy of federal fire safety standards, 

we recommended that the Administrator of CMS 

ensure thorough investigations are conducted following multiple-death nursing home fires so that 

fire safety standards can be reevaluated and modified where appropriate. In response to our study, 

CMS developed and issued a standardized procedure to ensure that both state survey agencies and 

its own staff take appropriate action to investigate 

health facility fires that result in serious injury or 

death. (GAO-04-660)

1.16.A. Developing a Strategy to Ensure an 

Appropriate Workforce: In June 2004, we recommended that the Substance Abuse and Mental 

Health Services Administration develop a detailed 

succession strategy to ensure that it has the appropriate workforce to carry out its mission. We 

reported that it had not developed a detailed succession strategy to prepare for the loss of essential 

expertise and to ensure that the agency continues to 

have the ability to fill key positions. In February 

2005, the Substance Abuse and Mental Health Services Administration developed a succession planning document that includes strategies related to 

recruitment, the selection process, training, and 

leadership development. The document also 

includes strategies for anticipating the loss of or 

additional coverage needed for critical positions 

and job functions. (GAO-04-683)
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 129

PART IV: Appendixes

1.17.A. Monitoring States’ Inventories of 

Childhood Vaccines: The Centers for Disease 

Control and Prevention has implemented our recommendation to develop a strategic plan that 

includes steps to monitor childhood vaccine supplies in state depots. The agency’s strategic plan for 

the expansion of the pediatric vaccine stockpiles 

indicates that the agency will “Monitor state inventory levels on a routine basis.” Specifically, its 

National Immunization Program requires states and 

other grantees to report, via automated software or 

monthly reports, the total number of doses of 18 

childhood vaccines that are in stock at the state’s 

central and secondary depots. (GAO-02-987)

1.18.A. Counting Clinical Research 

Expenditures at the National Institutes of 

Health (NIH): In a 2002 report describing NIH’s 

implementation of the Clinical Research Enhancement Act of 2000, we stated that NIH’s reports of 

clinical research expenditures did not include precise figures because the process of counting clinical 

research dollars varied widely across NIH’s institutes 

and centers. We recommended that NIH strengthen 

its tracking and reporting of intramural and extramural expenditures for clinical research by developing and implementing a consistent, accurate, and 

practical way for all institutes and centers to count 

intramural and extramural clinical research expenditures. NIH implemented this methodology in order 

to respond to our recommendation, to make the 

reporting of clinical research transparent and rational, and to provide accurate and consistent data. 

(GAO-02-965)

1.19.A. Estimating Tobacco Retailer Violation 

Rates: To help ensure the quality of states’ estimates of tobacco retailer violation rates, we recommended that the Secretary of HHS direct the 

Administrator of the Substance Abuse and Mental 

Health Services Administration to help states 

improve the validity of their samples by working 

more closely with them; revising the inspection protocol guidance to better reflect research results, particularly regarding the ages of minor inspectors, and 

working with states to develop a more standardized 

inspection protocol; and ensuring that all states’ 

retailer violation rates exclude invalid inspections, 

particularly those in which the ages of minors and 

outcomes of inspections are unknown. The agency 

reported that in addition to other activities, it (1) is 

requiring states that selected their samples from a 

list of outlets to annually report and justify the accuracy and completeness of their tobacco outlet lists, 

making site visits to help states assess the accuracy 

and completeness of tobacco outlet lists, offering 

technical assistance to states on improving the quality and validity of samples drawn from outlet lists, 

and conducting reviews of states’ sampling frames; 

(2) will work with states to discontinue the use of 

14-year-olds as inspectors by 2007 and will continue 

to work with states to improve standardization of 

inspection protocols and carefully monitor changes 

in inspector characteristics over time; and (3) has 

instituted review protocols that require states to 

exclude inspections that do not include the age or 

sex of minor inspectors and the outcome of inspections. The agency also developed a computer system to assist states in estimating violation rates by 

using software that only operates if complete data 

sets that include the age and gender of each inspector and the outcome of the inspection are entered in 

the system, and it reported that in fiscal year 2005, 

the majority of states used the system to report their 

survey data and inspection results. (GAO-02-74)

1.20.A. Improving Processing of Premium 

Changes from Health Plans: The Trade Adjustment Assistance Reform Act of 2002 established the 

health coverage tax credit (HCTC), which pays 65 

percent of the premium cost for qualified individuals. For the advance credit, the HCTC program 

remits its share of the premium payment directly to 

the health plan. We found that enrollees sometimes 

face delays in having the correct amount of their 

advance HCTC payment adjusted and paid 

promptly to their health plans if they fail to notify 

the HCTC program office when their health plans 

change their premiums. This problem was attributed largely to the time it takes for HCTC enrollees 

to notify the HCTC program of their new premiums 

and for the HCTC program to adjust the allowable 

premium amount. In September 2004, we recommended that the Commissioner of Internal Revenue 

encourage participating health plans to provide 

notification of changes in premiums directly to the 

HCTC program office in order to simplify payment 

processing and avoid disruptions resulting from 

premium changes. In its comments to our draft 

report, the Internal Revenue Service (IRS) stated that 

it agreed that accepting notification of premium 

changes from participating health plans would be 

an administrative improvement, and it would 

develop an action plan to address the recommenda-
130 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART IV: Appendixes

tion. In December 2004, IRS’s proposal to standardize the HCTC program’s ability to process bulk 

premium changes made upon a health plan’s 

request was approved by the HCTC executive 

change control board. The change was implemented in the spring of 2005. (GAO-04-1029)

1.21.A. Improving Monitoring and Tracking of 

Physical Exam Programs: Servicemembers 

who leave the military and file disability claims with 

the Department of Veterans Affairs (VA) may be 

subject to potentially duplicative physical exams in 

order to meet requirements of both the Department 

of Defense (DOD) and VA. To streamline the process for these servicemembers, DOD and VA have 

attempted to coordinate their physical exam 

requirements by developing a single separation 

exam program. We recommended that DOD and VA 

develop systems to monitor and track the progress 

of implementing the single separation exam program. VA hired an official in November 2004 to 

monitor the single separation exam program at certain sites where VA and DOD have memorandums 

of understanding in place. This official monitors and 

tracks the progress of the single separation exam 

program in several ways. First, each VA regional 

office must provide a monthly report on the sites’ 

activities. Included in these reports is information 

on the number of single separation exams that have 

been conducted. In addition, this official has conducted on-site evaluations at five locations and is 

planning to make seven additional site visits in the 

near future. The official will use information 

obtained during these site visits to develop best 

practices for other single separation exam programs 

and plans to continue to conduct site visits in the 

future. DOD uses VA’s tools and its database to 

monitor the progress of single separation examination sites. Each month, DOD reviews VA’s database 

to determine where a program is in place. 

(GAO-05-64)

1.22.A. Supporting DOD’s Implementation of a 

Uniform Pharmacy and Tiered Co-payment 

System: In a 2001 report, we recommended that 

the Secretary of Defense complete the development 

and implementation of a formulary of brand-name 

drugs applicable to defense pharmacy programs, 

including the use of tiered retail and mail order 

pharmacy co-payments. A formulary is a list of 

drugs that health care organizations encourage or 

require their providers to use when they write prescriptions for patients, thus allowing the organizations to secure better prices for those drugs. DOD 

concurred with the recommendation and published 

a notice in the Federal Register that it was amending 

regulations to implement a uniform formulary drug 

list for DOD’s Military Health Care System. The 

amendment states that the pharmacy benefits program, which includes the uniform formulary and an 

associated tiered co-payment structure, is applicable 

to all of the uniformed services. Under a tiered system, the co-payment borne by beneficiaries is generally lower for drugs on the uniform list of 

formulary drugs and higher for drugs not on the list. 

(GAO-01-588)

1.23A. Improving VA and DOD Capabilities to 

Electronically Order Medications and 

Perform Drug Interaction Checks: In 2002, we 

recommended that VA and DOD require providers 

to use computerized order entry of medications for 

shared patients where it is available. DOD agreed 

with this recommendation, and a pilot project is 

ongoing between DOD and VA in Hawaii in which 

electronic medication orders will be placed in the 

DOD system and electronically pushed to the VA 

system. The first phase is operational and allows 

DOD’s Composite Health Care System providers to 

order prescriptions for dispensing at the VA Medical 

Center Honolulu pharmacy. Development of the 

second phase began in September 2004 and will 

allow VA Medical Center Honolulu providers to 

order prescriptions for dispensing at DOD’s Tripler 

Army Medical Center. The interface system was 

developed on the legacy Composite Health Care 

System. The pilot system will be modified to work 

on Composite Health Care System II, which began 

worldwide deployment in January 2004. In the 

same report, we recommended that the agencies 

develop the capability to perform a comprehensive 

drug interaction check that uses medication information from all VA and DOD facilities and mail 

order operations and DOD’s network pharmacies. 

According to DOD, the departments are exploring 

alternatives to best meet the legislative requirements 

for achieving a “real-time interface, data exchange, 

and checking of prescription drug data of outpatients and using national standards for the exchange 

of outpatient medication information.” In June 2005, 

DOD reported that DOD and VA have developed a 

pharmacy interface as part of a multiphase project 

to support the agencies’ goal of complete health 

care data systems interoperability. The agencies’ 
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 131

PART IV: Appendixes

bidirectional pharmacy, which enables the electronic exchange of prescription information 

between two pharmacies—Tripler Army Medical 

Center and the Veteran Affairs Pacific Island Health 

Care System—represents a significant achievement 

in advancing interoperability between VA and DOD 

health care information systems. A phased-in 

deployment of the new system is scheduled from 

October through December 2005. (GAO-02-1017)

1.24.A. Purchasing Surgical Supplies More 

Economically: In June 2002 testimony, we 

reported that joint contracting for surgical and medical supplies could yield meaningful savings for VA 

and DOD. Specifically, we pointed out that our 

analysis of about 100 identical medical and surgical 

items that VA and DOD contract for separately indicated that joint purchasing would yield savings. We 

also noted that the future of joint procurement initiatives depends on each department’s commitment 

to joint procurement. In July 2005, VA and DOD 

demonstrated a commitment to joint procurement 

by announcing their decision to standardize the 

purchase of nearly 200 general surgical instruments 

throughout the military and VA health care systems—an action that should save about $180,000 

annually. (GAO-02-872T)

1.25.A. Improving VA’s Oversight Policy for 

Community Nursing Homes: In July 2001, we 

reported on weaknesses in VA’s oversight of community nursing homes under contract to VA. Among 

other issues, we reported that VA lacked a comprehensive policy for overseeing community nursing 

homes. We recommended that VA establish a policy 

for overseeing all community nursing homes that 

may rely on annual state inspections and comparative reviews to assess the sufficiency of state survey 

data. In response to our recommendation, VA has 

established such a policy, as outlined in its community nursing home oversight procedures handbook, 

dated June 4, 2004. This handbook provides a protocol for conducting community nursing home 

oversight, relying on initial and annual state 

reviews, monthly site visits, and a comparative 

review by VA to assess the sufficiency of state surveys. (GAO-01-768)

1.26.A. Providing Guidance for VA and DOD 

Health Resource Sharing: In 2000, we suggested that the Congress provide guidance and 

direction to VA and DOD to further encourage the 

sharing of health care resources. Through the 

National Defense Authorization Act of Fiscal Year 

2003, the Congress directed VA and DOD to 

(1) develop and publish a joint strategic vision statement and a joint strategic plan to shape, focus, and 

prioritize the coordination and sharing efforts 

among appropriate elements of the two departments; (2) establish a DOD-VA Health Executive 

Committee to recommend to the secretaries the strategic direction for the joint coordination and sharing 

efforts between and within the two departments; 

(3) establish a joint incentives fund program to provide incentives to implement, fund, and evaluate 

creative coordination and sharing initiatives; and 

(4) establish a health care resources sharing project 

to serve as a test for evaluating the feasibility, the 

advantages, and the disadvantages of measures and 

programs designed to improve the sharing and 

coordination of health care resource sharing. 

(GAO/HEHS-00-52)

1.27.C. Highlighting Increasing Financial 

Burden of Long-term Care Spending: In an 

April 2005 testimony, we reported that projected 

spending for long-term care services for the elderly 

could nearly quadruple from 2000 through 2050. 

Public payers primarily finance the cost of longterm care services, especially the Medicaid program, 

which is one of the largest funding sources. Projected increases in long-term care spending have 

significant implications for federal and state budgets, as future spending is expected to also rely 

heavily on public payers. We highlighted these 

growing concerns, which will be fueled in part by 

the aging baby boom generation, and identified 

several areas that the Congress needs to consider as 

it shapes any reform proposals. Our information 

helped focus congressional and public attention to 

the increasing federal and state budgetary issues 

due to long-term care and will continue to inform 

future congressional debate as the Congress, states, 

and the American public search for solutions to this 

growing problem. (GAO-05-564T)

1.28.C. Ensuring Seamless Transition from 

DOD to VA Health Care: In our work to ensure 

that servicemembers who leave active duty (veterans) are able to make a smooth transition from 

DOD health care services to VA health care services, 

we found that DOD does not have specific procedures for routinely transmitting to VA health information on servicemembers who are likely to be 
132 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

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discharged from the military because of their medical conditions and may seek VA health care services 

in the future. Additionally, DOD does not share 

information on the responses to the postdeployment health assessment questionnaire for Reserve 

and National Guard members who have left active 

duty. This questionnaire is completed following 

deployment to a location outside of the United 

States, including locations involved in Operation 

Enduring Freedom and Operation Iraqi Freedom. 

VA officials state that aggregate information from 

the postdeployment health assessment questionnaires would help VA plan for the future health care 

needs of these new veterans. The Congress used 

our findings to hold hearings and to stress the need 

to improve the exchange of medical information 

from DOD to VA. In response to our findings, VA 

and DOD continue to work together to identify the 

medical information that is needed to ensure a 

smooth transition from DOD to VA health care services. (GAO-05-722T and GAO-05-1052T)

1.29.C. Improving VA’s Patient Safety 

Program: The Institute of Medicine’s estimate that 

98,000 patients die each year from accidents at U.S. 

hospitals makes patient safety a critical issue. We 

measured clinicians’ familiarity with, participation 

in, and cultural support of VA’s Patient Safety Program at four VA facilities. We found that threefourths of the clinicians were familiar with the concepts of teams investigating causes of unintentional 

adverse events. In addition, at one facility, the culture blocked participation for many clinicians. Clinicians articulated that a culture change could be 

stimulated by VA leadership actions and open communication. VA will implement an action plan to 

improve patient safety at its facilities by setting goals 

to increase staff familiarity with the major concepts 

of the program, participating in teams that investigate causes of unintentional adverse events, and 

promoting cultural support of the program—to the 

extent that each facility has established mutual trust 

and fostered comfort in reporting close calls and 

adverse events. In addition, VA plans to develop 

tools for measuring these goals by specific facility 

and to develop interventions when goals have not 

been met. (GAO-05-83)

1.30.C. Identifying Needed Changes in 

Managing Medicare Appeals: We identified 

weaknesses in a plan prepared by the Social Security Administration (SSA) and HHS regarding the 

transfer of the Medicare appeals workload from SSA 

to HHS. Our work found that important details concerning the transfer—mandated by the Congress to 

be completed by October 1, 2005—were omitted 

from the plan. We recommended that the Secretary 

of HHS and the Commissioner of SSA take steps to 

complete a substantive and detailed transfer plan 

that includes contingency provisions. At the request 

of the Senate Committee on Finance, we continued 

to monitor both agencies’ efforts and subsequently 

identified three areas of concern—maintaining 

appellant access, meeting critical human resource 

needs, and resolving operational issues. The Senate 

Committee on Finance relied on our work in urging 

the agencies to take action to ensure that Medicare 

beneficiaries have access to a fair and accessible 

appeals process. (GAO-05-45 and GAO-05-703R)

The education and protection 

of the nation’s children

1.31.A. Using Student Data for Commercial 

Activities: As required under the No Child Left 

Behind Act, the Department of Education (Education) addressed pupil privacy by notifying states 

and school districts of the requirements to develop 

policies that cover the collection, disclosure, and 

use of personal data about students for commercial 

purposes and that include requirements for parental 

notification and permission. In 2004, we reported 

that many school districts had not developed effective policies that corresponded to state and federal 

law and others did not understand or were unaware 

of the guidance. After we recommended that Education take additional action to help districts implement effective policies, the agency worked with 

state education associations to provide training on 

the new requirements and discussed them at a 

National School Boards Association conference. 

Education also plans to disseminate the policy 

requirements to all states affiliated with the National 

School Boards Association and through the association’s free e-mail service that provides participants 

with weekly updates on legal issues. (GAO-04-810)

1.32.A. Improving Compliance with the 

Individuals with Disabilities in Education 

Act: The Individuals with Disabilities Act requires 

states to provide educational and related services 

that facilitate learning to students with disabilities 
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PART IV: Appendixes

based on their individual needs. We reported that 

Education’s system for resolving noncompliance 

with the act often takes several years and that some 

of the data used to monitor state compliance are 

weak. We recommended that Education improve its 

system of resolving noncompliance by shortening 

the amount of time it takes to issue a report of noncompliance, by tracking changes in response times 

under the new monitoring process, and by developing and providing states with more guidance for 

collecting data. As a result, Education instituted an 

improved monitoring process and created a database to facilitate tracking. The agency also provided 

guidance to states and developed a state survey for 

better data collection, offering states assistance with 

analyzing and reporting the data. Education also 

created the Center on Secondary, Transition, and 

Postsecondary School Outcomes for Students with 

Disabilities to help states implement and improve 

data systems to measure outcomes for students with 

disabilities and met with states to help them 

develop outcome measurement systems to improve 

special education data reporting. (GAO-04-879) 

1.33.A. Strengthening Mediation to Resolve 

Disputes over Special Education Services: 

School districts and families may disagree about 

what kinds of special services, if any, are needed 

for children and how they should be provided. 

Some disagreements that cannot be resolved 

quickly become formal disputes that can be costly, 

both financially and in terms of the harm done to 

relationships. We found that officials in several 

states emphasized the importance of using mediation, a voluntary process, to resolve these disputes. 

Mediation was successful in achieving agreements, 

strengthening relationships and fostering communication between families and educators, resolving 

disputes more quickly, and reducing costs. However, the degree to which mediation was offered 

and used varied among the states we visited, and 

mediation agreements were not always implemented or enforced. The Congress noted that our 

report showed that the incidence of formal dispute 

resolution mechanisms, including mediation, has 

been generally low relative to the number of children with disabilities and included an amendment 

to the Individuals with Disabilities Education 

Improvement Act requiring mediation agreements 

to be executed through a legally binding agreement, enforceable in any state court of competent 

jurisdiction or in a district court of the United States. 

The act was reauthorized in December 2004. 

(GAO-03-897)

1.34.A. Clarifying Guidance on Using the Wage 

Withholding Process to Collect Child Support 

Payments: Changes to the wage withholding process can reduce the number of noncustodial parents 

who have their wages improperly withheld. In a 

2002 report, we reviewed the wage withholding 

form used by private firms and state child support 

enforcement agencies. HHS’s Office of Child Support Enforcement, which establishes enforcement 

policies and guidance, issued a wage withholding 

form, along with guidance, for employers to use for 

automatically deducting amounts from an 

employee’s wages or income to pay a debt or child 

support obligation. The office considers wage withholding the most effective tool for collecting child 

support, reporting that it is responsible for over 60 

percent of successful collections. However, we 

found that the form and guidance made it difficult 

for employers to determine whether a private firm 

sent the form or if an appropriate authority had 

approved wage withholding. As a result, wages 

were inappropriately withheld from noncustodial 

parents. Consequently, we recommended specific 

changes to the form and guidance. The Office of 

Child Support Enforcement established a task group 

of stakeholders in the child support enforcement 

community to address these recommendations, and 

the group made several changes and clarifications 

to the form and guidance that resolved our concerns. The office subsequently informed state and 

tribal agencies administering child support enforcement plans of the revised form and guidance and 

stated that all public and private firms should use 

the revised form immediately. (GAO-02-349)

1.35.C. Influencing Temporary Changes in 

Subsidy Payments for 9.5 Percent Loans: To 

encourage lenders to make student loans under the 

Federal Family Education Loan Program, the federal 

government guarantees lenders a statutorily specified rate of return—called lender yield. Some lenders may issue tax-exempt bonds to raise capital to 

make or purchase loans; loans financed with such 

bonds issued prior to October 1, 1993, are guaranteed a minimum lender yield of 9.5% (hereafter 

called 9.5% loans). When the interest rate paid by 

borrowers is less than the lender yield, the government pays lenders the difference—a subsidy called 
134 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART IV: Appendixes

special allowance payments. In September 2004, we 

reported that subsidy payments for 9.5% loans had 

increased significantly in recent years, rising from 

$209 million in fiscal year 2001 to over $600 million 

in fiscal year 2004. We identified loopholes in legislation and regulatory guidance that enabled lenders 

to maintain or increase the amount of 9.5% loans 

they held in three ways—recycling, refunding 

bonds, and transferring. We suggested that the Congress change the yield for loans made or purchased 

in the future with the proceeds of tax-exempt bonds 

issued prior to October 1, 1993, and any associated 

refunding bonds, to better reflect market interest 

rates. As a result of our work, the Congress enacted 

the Taxpayer-Teacher Protection Act in October 

2004, which temporarily changed the lender yield 

on certain loans to one that reflects market interest 

rates. This legislative change will save the government $285 million in fiscal years 2005 and 2006. In 

addition, as part of the Higher Education Act reauthorization, the Congress passed legislation in July 

2005 that would permanently end the minimum 9.5 

percent yield and could avert millions in future subsidy payments. (GAO-04-1070) 

1.36.C. Improving the Oversight and 

Monitoring of Head Start Grantees: Through a 

series of testimonies and reports, we assisted the 

Congress and HHS’s Administration for Children 

and Families in identifying major risk areas in the 

Head Start program and crafting solutions to 

address those risks. For example, we reported on 

the lack of reliable data on enrollment in Head Start 

centers throughout the country. We also highlighted 

gaps in Head Start’s oversight framework that put 

federal funds at risk and can reduce the quality or 

amount of services that the program can provide to 

poor children and their families. The agency does 

not have a comprehensive risk assessment strategy 

that would allow it to identify weaknesses in grantees that could limit the program’s ability to achieve 

its objectives. Further, the agency does not have a 

process in place to ensure that oversight reviews are 

conducted in accordance with the framework it 

designed to assess grantee compliance with program and financial management requirements. Also, 

the agency does not effectively use grantees’ financial reports and audits in its day-to-day monitoring 

activities to identify high-risk grantees and resolve 

their problems. HHS is now taking steps to address 

these and other gaps we identified. Once these 

gaps have been addressed, we recommended that 

the Administration for Children and Families make 

greater use of its authority to seek competition in 

communities that are currently served by poorly 

performing Head Start grantees. The agency plans 

to work with the Congress to seek changes in the 

law that would give the Secretary more flexibility in 

replacing poorly performing grantees. Head Start 

reauthorization bills incorporated measures to 

define underenrollment and prescribed methods to 

ensure that underenrollment is promptly addressed. 

The bills also provide the Secretary with more flexibility to seek competition in those cases where a 

community has been served by a high-risk grantee. 

(GAO-04-17, GAO-05-176, GAO-05-465T, and 

GAO-05-473T)

The promotion of work 

opportunities and the 

protection of workers

1.37.A. Improving SSA’s Disability Claims 

Process: In response to several of our recommendations, SSA took action to improve its disability 

claims decision-making process. SSA developed and 

implemented the Case Processing and Management 

System, a nationwide system to support case processing operations, which is intended to speed up 

hearings and appeal decisions. To further increase 

efficiency, SSA has established electronic folders for 

use at all levels. SSA also designated a lead component agency to compile racial bias and misconduct 

complaint information filed against administrative 

law judges, who make disability determination decisions at the hearings level. SSA created a form to 

capture key information on racial bias and misconduct, and now stores the data in an electronic database, as we recommended. As a result, SSA can 

more readily identify patterns of racial bias and misconduct in complaints against administrative law 

judges and improve its assessment of the judges’ 

decision-making accuracy. In addition, we reported 

that applicants had difficulty understanding the fivestep disability determination process and the importance of providing SSA with information about how 

their disability prevented them from substantial 

gainful activity. In compliance with our recommendations, the agency’s Web site now includes clarifying information on all steps in the process and 

makes its interactive adult disability report more 

readily available to all claimants. These efforts can 
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expedite the claims process and help SSA make the 

right decisions on the disability process as early as 

possible. (GAO-02-322, GAO-02-831, and 

GAO-05-495)

1.38.A. Helping to Expand Apprenticeship 

Programs: In a 2001 report, we found that DOL 

lacked a systematic process to expand 

apprenticeship—an employee training program 

administered by DOL—and did not systematically 

locate resources for apprenticeships needing funds. 

Employers’ negative perceptions of the program 

also impeded its use. We recommended that DOL 

work with state apprenticeship councils and others 

to identify occupations that need skilled labor and 

could support apprenticeships and to develop plans 

to encourage apprenticeship in these occupations; 

share information about apprenticeships, especially 

among employers in occupations that traditionally 

have not used apprenticeship; and help identify 

funding to develop apprenticeships. In addressing 

these concerns, DOL implemented the Advancing 

Apprenticeship Initiative, which trained staff to 

work in high-growth industries new to apprenticeship, and developed marketing materials tailored to 

specific industries. DOL approved several apprenticeships in these industries. The agency also established the federal Advisory Committee on 

Apprenticeship to foster communication among 

business, labor, and the public sector and to advise 

DOL. Additionally, DOL used the Internet to share 

information about occupations that were new to 

apprenticeships. Finally, DOL leveraged $18.5 million in federal funds for marketing and pilot projects 

in growing industries and secured almost $5.5 million in private funds to stimulate apprenticeship 

development. (GAO-01-940) 

1.39.A. Improving Oversight at the Mine Safety 

and Health Administration: DOL’s Mine Safety 

and Health Administration improved oversight of its 

programs through changes to its operations, guidance, and data collection efforts, addressing many 

of the concerns raised in our 2003 report. We found 

weaknesses (1) in the agency’s oversight of 6-

month district inspections, timely correction of hazards identified during inspections, guidance to 

inspectors, and data collection to evaluate performance and prevent future accidents and (2) in the 

agency’s preparation for a likely shortage of inspectors in the future. Subsequently, the agency implemented a process for quarterly review of key 

inspection data to monitor the status of timely 

abatement of violations; increased the focus of its 

accountability program on core inspection activities, 

including the correction of hazards; adopted measures and standard operating procedures to 

improve the monitoring of 6-month reviews; 

stepped up its reviews and evaluation of inspection 

data and, when deficiencies were identified, took 

corrective action; and developed national procedures to ensure accident investigation data are 

entered into its Accident Investigation database. The 

agency also expedited the hiring process for inspectors and expanded recruitment possibilities by using 

a new competency-based recruitment approach that 

provides more flexibility and fills vacancies much 

faster. In addition, in 2005, the agency identified 

ways to improve data collection from contractors to 

better track fatalities, injury rates, and trends and 

revised its General Inspections Procedures Handbook, which is now available on each inspector’s 

computer for ready access to all the guidance 

needed to conduct an inspection. Such efforts can 

strengthen oversight to better protect the safety and 

health of coal miners. (GAO-03-945)

1.40.A. Improving Coordination to Enhance 

Charitable Contributions in Disasters: Many 

large charities reported raising billions of dollars to 

aid survivors of the September 11, 2001, terrorist 

attacks. We found that questions about how best to 

use the funds as well as service delivery difficulties 

complicated charities’ responses to this disaster. We 

recommended that the Federal Emergency Management Agency (FEMA) convene a working group to 

implement strategies for future disasters. With 

FEMA’s encouragement, national voluntary agencies 

developed the Collaborative Assistance Network 

(Network) to promote a coordinated approach to 

providing disaster relief services. The Network 

seeks to identify ways to coordinate more effectively and efficiently with voluntary and government agencies in catastrophic and major disaster 

events. Work groups consisting of representatives 

from national voluntary agencies are seeking to (1) 

ensure access to available services by sharing service delivery information and client data and (2) 

streamline the intake process and minimize the 

administrative burden by identifying common application form requirements and accepted standards 

for document verification. (GAO-03-259)
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1.41.C. Improving Enforcement of Fugitive 

Felon Provisions: To better implement the fugitive felon provisions of the Personal Responsibility 

and Work Opportunity Reconciliation Act, we recommended that the Secretary of HUD test the feasibility and effectiveness of routinely matching its 

nationwide tenant file with the National Crime 

Information Center arrest warrant database to help 

identify tenants in housing assistance programs 

nationwide who are fugitive felons and subject to 

eviction. According to a HUD Office of Inspector 

General (IG) semiannual report to the Congress, the 

IG established the Fugitive Felon Initiative to assist 

HUD in responding to this recommendation. Under 

this initiative, the IG began computer matching its 

nationwide tenant file with the U.S. Marshals Service’s arrest warrant database, the Federal Bureau of 

Investigation’s National Crime Information Center 

arrest warrant database, and the wanted person 

data maintained by state and local law enforcement 

agencies. In August 2005, HUD’s IG reported that 

the initiative had resulted in the apprehension of 

over 5,900 wanted felons. (GAO-02-716)

1.42.C. Addressing the Health Problems of 

Nuclear Weapons Workers: We assisted the 

Congress in crafting major improvements to a program intended to compensate individuals who 

worked in nuclear weapons facilities and developed 

illnesses due to exposure to hazardous materials. 

We identified program features that would likely 

lead to inconsistent benefit outcomes for claimants, 

in part because the program depended on varying 

state workers compensation systems to provide 

benefits. We also presented several options for 

improving the consistency of benefit outcomes and 

a framework for assessing these options. As a result, 

the Congress overhauled the program as part of the 

Ronald W. Reagan National Defense Authorization 

Act for Fiscal Year 2005. This legislation replaced 

the program with a new one that federalizes the 

payment of benefits and provides a schedule of uniform benefit payments for eligible individuals. 

(GAO-04-249T, GAO-04-298T, GAO-04-515, 

GAO-04-516, and GAO-04-571T)

1.43.C. Improving Transitional Assistance to 

Seriously Injured Servicemembers: In our 

work on transitional assistance to seriously injured 

servicemembers and Reserve and National Guard 

members, including vocational rehabilitation and 

employment services, we found that more collaboration between VA and DOD is needed to expedite 

services for seriously injured servicemembers. We 

also found that enhanced services could improve 

transition assistance for Reserve and National Guard 

members. The Congress used our findings to hold 

hearings and highlight the need to improve these 

services. In response to our recommendation, VA 

and DOD have taken initial steps, including signing 

a memorandum of understanding, to lay the 

groundwork for sharing data and improving their 

assistance to seriously injured servicemembers and 

Reserve and National Guard members as they transition to civilian life. (GAO-05-167 and GAO-05-544)

A secure retirement for older 

Americans

1.44.A. Improving Management at the 

Employee Benefits Security Administration: 

Our report on the DOL’s Employee Benefits Security Administration’s management resulted in 

improvements to strengthen safeguards for participants in employee benefit plans protected by the 

Employee Retirement Income Security Act. In studying concerns about the agency’s enforcement program, we identified weaknesses in the agency’s 

enforcement strategy, investigative process, and 

human capital management. We made recommendations to address the lack of information needed to 

assess benefit plans’ noncompliance with the act, 

lack of coordination to share best practices information on investigations, lack of a centrally coordinated quality review process to ensure the proper 

conduct of investigations, and failure of the agency 

to consider succession planning and workforce 

retention as part of its human capital strategy. The 

agency subsequently issued a report on a noncompliance study and initiated additional studies that 

provided the information needed to identify compliance improvements. The agency established a Best 

Practices Sharing Team that developed a Web site 

on which investigators can share investigative plans 

and practices, and the agency developed a process 

to review case quality that ensures the independence of the case reviewer. In addition, the agency 

assessed its workforce retention and training needs 

and included this analysis in its Human Capital Strategic Management Plan, which addresses areas such 

as skill shortages, future staffing needs, and competency requirements. (GAO-02-232)
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1.45.A. Avoiding Disproportionately Adverse 

Effects on Pension Plan Participants from 

Securities and Exchange Commission (SEC) 

Regulations: Market timing by mutual fund investors has negatively affected pension plan participants and other long-term investors. In an effort to 

stop this abusive practice, SEC issued proposed regulations that would impose mandatory redemption 

fees on certain mutual fund transactions. We analyzed the potential effects of these proposed regulations on pension plan participants and, in a 2004 

report, concluded that it could result in plan participants paying fees intended to deter market timing, 

even where there is clearly no intent to engage in 

abusive trading. Many such transactions are automated and, therefore, the plan participant would 

have no control over whether he or she is assessed 

a redemption fee. Thus, the proposed rule could 

affect plan participants more adversely than other 

investors. We recommended that SEC’s Commissioners change the proposed regulations to prevent 

pension plan participants from being more 

adversely affected than other investors. SEC 

addressed this concern in a final rule issued in 

March 2005 that made the fees no longer mandatory. In this way, mutual fund companies may 

exempt any pension plan transaction where there is 

clearly no intent to engage in market timing. 

(GAO-04-799) 

1.46.A. Strengthening the Integrity of the 

Social Security Card and Other Identification 

Documents: We recently reported on weaknesses 

in SSA’s enumeration processes and found that 

SSA’s policies for verifying birth certificates for children under age 1 and issuing replacement Social 

Security cards were weak and could expose SSA to 

fraud. Because Social Security numbers are central 

to many aspects of American life, they are vulnerable to fraud and financial crimes and, thus, sought 

by identity thieves. We also reported on the verification of identity documents for drivers’ licenses, noting that visual inspection of key documents lent 

itself to possible identity fraud. To demonstrate this, 

our investigators were able to obtain licenses in two 

states using counterfeit documents and the Social 

Security numbers of deceased persons. Subsequently, the Congress included provisions in the 

Intelligence Reform and Terrorism Prevention Act 

mandating that SSA implement regulations for independently verifying birth documents for all field 

office Social Security number applicants, limit the 

number of replacement cards issued to individuals, 

and add death and fraud indicators to Social Security number verification systems for state agencies 

issuing drivers’ licenses and identity cards. In addition, the Congress passed the Real ID Act of 2005, 

which established federal identification standards 

for state drivers’ licenses and other such documents, 

and mandated third-party verification of identity 

documents. (GAO-04-11, GAO-04-768T, 

GAO-04-1099T, and GAO-05-59)

1.47.C. Addressing the Challenges of Pension 

Reform: Numerous reports and testimonies in 

2005 urged the Congress to take timely action to 

enact comprehensive pension reform. The goal of 

such reform is to reduce the financial risks to the 

Pension Benefit Guaranty Corporation and the taxpayer, as well as to put the defined benefit system 

on a more stable financial footing. We urged that 

the Congress consider, for example, revisions to the 

existing rules governing the funding of defined benefit plans so that plans would be better funded and 

thus more able to meet benefit promises to plan 

participants. We also urged that there be changes to 

the Pension Benefit Guaranty Corporation insurance 

premium structure in how shutdown benefits are 

funded by plan sponsors, and that the Congress 

address the legal uncertainty concerning hybrid 

pension plans like cash balance plans. All of these 

key elements have been included in legislation in 

both the House and the Senate. In addition, we 

organized a Comptroller General forum involving 

experts and policymakers to discuss the many 

aspects of pension reform. The discussion and 

ensuing report have contributed to the Congress’s 

and the public’s understanding of the issues in this 

high-risk area and helped shape the proposed legislation. (GAO-05-360T, GAO-05-578SP, and 

GAO-05-794T)

An effective system of justice

1.48.A. Limiting Terrorists’ Access to Guns: In 

a January 2005 report, we identified a number of 

potential problems in the procedures that the Federal Bureau of Investigation and applicable state 

agencies follow when a potential gun purchaser is 

identified as a valid match with a terrorist watch list 

record. While being on the watch list does not, in 

itself, disqualify an applicant from purchasing a 

gun, it is extremely important that steps are taken to 
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ensure that the applicant does not have other disqualifying factors. These other factors could include 

a felony conviction or illegal alien status. The Federal Bureau of Investigation and states are allowed 

to share information with other law enforcement 

officials in order to validate the match and to ensure 

that other factors that would prohibit the sale are 

fully investigated. We made a number of recommendations intended to ensure that all allowable 

information is shared in cases of potential matches 

with the terrorist watch list and that states handle 

these cases consistently. Our recommendations 

have been adopted. (GAO-05-127)

1.49.C. Improving Immigration Enforcement: 

In several reports, we stressed that the Department 

of Homeland Security (DHS) should use performance information and employee feedback to manage its programs and operations. We reported that 

the federal response to alien smuggling could be 

improved if DHS tracked the results of alien smuggling referrals by U.S. Customs and Border Protection to U.S. Immigration and Customs Enforcement, 

that decisions about how to allocate scarce DHS 

resources could be improved if DHS developed 

additional measures on the performance of its Border Patrol-operated interior traffic checkpoints, and 

that future DHS transformations and communications strategies could be improved if DHS sought 

feedback from employees about their ideas and 

concerns. DHS concurred with our recommendations in these areas, and we believe that their implementation will contribute to DHS’s effectiveness in 

enforcing the nation’s immigration laws and 

addressing long-standing management challenges. 

We also contributed to congressional debate by 

describing immigration-related management challenges confronting DHS, quantifying the costs of 

incarcerating criminal aliens, questioning the usefulness of an annual address reporting requirement for 

aliens, and describing how DHS has addressed 

immigration enforcement objectives. (GAO-05-66, 

GAO-05-81, GAO-05-204, GAO-05-305, 

GAO-05-337R, and GAO-05-435)

1.50.C. Improving Evaluation of Contractor 

Performance: In a June 2005 report, we recommended that DHS’s U.S. Citizenship and Immigration Services (USCIS) take steps to ensure that 

specific performance measurement requirements 

are finalized before awarding new performancebased contracts for operating USCIS call centers and 

that performance evaluation records are properly 

maintained. While discussing these issues during 

the course of our work, USCIS officials told us they 

planned to take the corrective actions. Further, in its 

formal comments on our draft report, DHS generally agreed with our recommendations, noting that 

a draft solicitation for new contracts specifically 

identified nonnegotiable performance requirements 

and that written records of performance assessments and performance evaluation meetings will be 

maintained and readily available for review by interested parties. These actions will improve USCIS’s 

efforts in evaluating the performance of contractoroperated call centers and encourage quality services 

at the call centers. (GAO-05-526)

1.51.C. Providing Evidence regarding 

Effectiveness of Adult Drug Courts: With 1,200 

operating drug courts in 2004, and an additional 500 

being planned, it is extremely important that their 

effectiveness be assessed. Drug court programs 

generally allow some defendants with substance 

abuse problems to enter these programs as an alternative to prison or probation. The combination of 

court supervision and substance abuse treatment is 

intended to reduce recidivism and drug abuse 

relapse compared to more traditional sentencing. 

Our review of 27 methodologically strong evaluations of drug courts provided evidence supporting 

drug courts as a means to reduce recidivism. Data 

concerning relapse was less clear for several reasons. While our review did not allow us to pinpoint 

specific aspects of drug courts that lead to their success, it was clear that program actions that help participants stay in and complete the program were 

linked to recidivism reductions. This is an important 

piece of information, given that the 2005 National 

Drug Control Strategy calls for an increase in federal 

drug court spending from about $40 million to 

about $70 million in 2006. (GAO-05-219)

The promotion of viable 

communities

1.52.A. Improving Oversight of Federal 

Housing Administration (FHA) Lenders: In a 

November 2004 report, we recommended ways that 

the Department of Housing and Urban Development (HUD) could improve its oversight of lenders 

participating in FHA’s single-family mortgage insur-
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PART IV: Appendixes

ance programs. Due in part to poor lender oversight, we have designated HUD’s single-family 

mortgage insurance programs as high risk. In 

response to our report, HUD (1) issued updated 

standards for granting FHA lenders the authority to 

underwrite loans and determine their eligibility for 

FHA mortgage insurance without HUD’s prior 

review, (2) revised the system used to evaluate the 

underwriting quality of loans insured by FHA so 

that it better reflects the risks different errors pose to 

the insurance fund, and (3) issued guidance specifying when action must be taken against lenders that 

fail to comply with FHA’s program requirements. 

These changes will help HUD identify the lenders 

that pose the greatest insurance risk to the department and hold lenders accountable for poor performance. (GAO-05-13)

1.53.A. Reducing the Cost of Federal 

Subsidized Housing Projects: We determined 

that HUD had not developed the systems it needed 

to track the status of unexpended balances in its 

project-based Section 8 housing program and therefore could not use this information to help manage 

the program and formulate budget requests for it. 

Because of our work, the Congress required HUD 

to better enforce the legislative provisions requiring 

the recapture of capital funds not being utilized by 

public housing authorities. HUD recaptured about 

$2.531 billion in fiscal year 2003, or about $2.7 billion in current dollars. (GAO-01-663T)

1.54.C. Improving First Responder 

Interoperable Communications: We noted that 

interoperable communications equipment was 

being bought without the fundamental first step of 

developing a clear, comprehensive plan for what 

needed to be communicated, to whom, and when. 

Without such a plan it was not possible to know 

whether the equipment purchased would meet 

defined needs. We recommended that DHS, 

through its grant guidance, encourage each state to 

establish a single statewide body to develop a single comprehensive statewide interoperability plan 

and that grant funding depend on conformance 

with such a plan. In its report accompanying the fiscal year 2006 appropriations bill, the Senate Committee on Appropriations directed that before grant 

dollars could be obligated for interoperable equipment, jurisdictions must certify that they have implementation plans that include governance structures, 

policies, procedures, training, and planned exercises. (GAO-04-231T, GAO-04-740, and 

GAO-04-1057T)

1.55.C. Redefining Rural: We assessed how a 

change in the definition of rural would affect the 

U.S. Department of Agriculture’s (USDA) Rural 

Housing Service in meeting rural housing needs. By 

(1) presenting a time line of how the Congress had 

increased population limits over the past 50 years, 

(2) building on our prior work on Rural Housing 

Service management issues and how changes in 

technology and demographics have linked rural to 

urban areas, and (3) using geographically coded 

national data to show that such questionable eligibility determinations also exist nationwide, we were 

able to suggest that the Congress consider changing 

to a density-based system as a basis for making 

more equitable rural housing program eligibility 

determinations. The Rural Housing Service’s Administrator agreed (1) that it does not make sense to 

use outdated boundaries, (2) to take our suggestion 

to work with USDA’s Economic Research Service to 

develop a density-based system, (3) to propose legislative changes, and (4) to fix the data reliability 

problems we identified. The changes that the 

Administrator has agreed to make will help the 

Rural Housing Service use its scarce resources more 

efficiently and allocate its funding more fairly and 

equitably in accord with the intent and purposes of 

rural housing programs. The new rural definition 

could also have major implications for other federal 

agencies that allocate resources by population or 

location. (GAO-05-110)

Responsible stewardship of 

natural resources and the 

environment

1.56.A. Preparing for Asian Soybean Rust: 

Beginning in February 2005, we raised concerns 

regarding USDA’s preparations for Asian soybean 

rust, which is a harmful, quick-spreading fungal disease that first appeared in the United States in 2004 

and threatens America’s $16 billion annual soybean 

production. As a result of our recommendations, 

USDA (1) developed a coordinated federal-state 

plan to manage the disease; (2) provided soybean 

producers with additional guidance on farming 

practices and documentation required to file an 
140 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART IV: Appendixes

Asian soybean rust insurance claim; (3) authorized 

the use of about $1.2 million in contingency funding to help monitor, report, and manage the disease 

during the 2005 growing season; and (4) agreed to 

revise its insurance data system so that it can collect 

information on the number and dollar amounts of 

claims submitted and paid as a result of Asian soybean rust. (GAO-05-668R) 

1.57.A. Improving Transparency of Water 

Bank Operations: In March 2005, we reported 

that the Bureau of Reclamation’s Klamath Project 

water bank management and accounting practices 

lacked transparency, creating confusion and doubt 

among stakeholders such as farmers, environmentalists, and tribes. A credible water bank is essential 

to easing conflicts over water use among these 

groups by increasing river flows for salmon while 

ensuring irrigation water for farmers under ongoing 

drought conditions. Acting on our recommendation, 

the bureau improved the information provided to 

stakeholders by creating a water bank Web page, 

updated biweekly, with information on how much 

water has been delivered by the water bank, the 

current water delivery schedule, links to real-time 

water flow gauges and other information, and documents relevant to water bank management. 

(GAO-05-283)

1.58.A. Improving the Bonneville Power 

Administration’s (BPA) Financial Condition: 

BPA, which markets 45 percent of the electric 

power consumed in the Pacific Northwest, experienced significant financial problems in 2001 and 

2002 while substantially increasing its electric power 

rates. BPA’s open-ended obligation to provide 

power to the region was the primary cause of these 

rate increases. In response to our recommendations, 

BPA agreed to limit the power it sells at its lowest 

rate to the amount generated by the Federal Power 

System and to sell any additional power at rates that 

reflect the cost of generating or acquiring that 

power. These rate policies will help ensure that BPA 

remains competitive in the changing electricity 

industry and reduce the risk of BPA defaulting on its 

Treasury debt. (GAO-04-694)

1.59.A. Realizing Financial Benefits in the 

Environmental Protection Agency’s (EPA) 

Superfund Program: During the past few years, 

we have noted that opportunities exist for EPA to 

recover unspent funds from inactive contracts under 

its Superfund program—established in 1980 to 

locate, investigate, and clean up the worst hazardous waste sites nationwide. In 2001, we developed 

a method for targeting potential deobligations and 

shared this approach with EPA. During our fiscal 

year 2005 budget justification review process, EPA 

acknowledged that our method for identifying 

deobligations was very useful in identifying unspent 

funds and that this method is still in use today. The 

deobligated funds have enabled the agency to 

address its backlog of hazardous waste sites that 

need remediation without receiving additional 

appropriations to conduct these cleanups. The 

financial benefits resulting from these deobligations 

in fiscal year 2005 total about $370 million. (Based 

on briefings)

1.60.A. Reducing Nuclear Waste Cleanup 

Costs: Our work over the last 2 years helped to 

avoid a substantial increase in the cost of treating 

and disposing of high-level nuclear waste at the 

Department of Energy’s (DOE) Savannah River Site. 

DOE’s long-standing plan for treating the waste was 

in jeopardy because of a legal challenge that could 

have resulted in the agency pursuing a substantially 

more costly treatment and disposal alternative that 

had little added environmental benefit. We recommended that DOE seek legislative clarification from 

the Congress to minimize delays and cost increases. 

In October 2004, the Congress clarified DOE’s 

authority to follow its planned treatment and disposal strategy, thus avoiding a cost increase at the 

Savannah River Site of $55 billion to $60 billion. The 

cost avoidance for fiscal years 2005 through 2009 

will be about $4.5 billion. (GAO-03-593, 

GAO-03-930T, and GAO-04-611)

1.61.A. Improving the Security of the Plum 

Island Animal Disease Center: In September 

2003, we found that security at the federal Plum 

Island Animal Disease Center, which contains highly 

contagious foreign animal disease pathogens, was 

insufficient and needed substantial improvement. 

We found that the center’s physical security was 

incomplete, that the security force’s response capability was limited, and that the security plan did not 

consider the possibility of a terrorist attack. In addition, center officials were not adequately controlling 

access to areas where pathogens are located, in part 

by allowing access by foreign scientists without 

security clearances. DHS, which assumed overall 

responsibility for Plum Island from USDA in June 
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PART IV: Appendixes

2003, agreed with our assessment and recommendations. Subsequently, these departments have 

taken many actions to improve physical security 

and security planning for Plum Island, such as the 

addition of guards, security lighting, surveillance 

cameras, locks, alarms, and visitor inspections. 

Access to the pathogens has been restricted. Also, a 

Federal Protective Service officer has been assigned 

to Plum Island, and this step is expected to facilitate 

a further strengthening of the security response 

force. (GAO-03-847)

1.62.A. Protecting Our Food Supply from 

Deliberate Contamination: In 2003, we reported 

that USDA and the Food and Drug Administration—

the principal federal agencies responsible for ensuring food safety—issued security guidelines to help 

food processors identify measures to prevent or mitigate the risk of deliberate contamination during 

food production. However, we reported that the 

majority of federal food safety inspectors were not 

receiving training on food security issues addressed 

by the guidelines. To increase the inspectors’ 

knowledge and understanding of food security 

issues and facilitate their discussions about the 

guidelines with food processors, we recommended 

that such training be provided. This year, USDA 

directed its food inspectors to implement food security verification procedures during their routine food 

safety inspections. As part of implementing these 

new security procedures, the agency has provided 

training on the security guidelines for industry and 

on practical antiterrorist strategies. (GAO-03-342)

1.63.A. Reducing Overlaps and Duplication in 

Federal Food Safety Activities: During 2005, 

we continued to report and testify on the organization of federal food safety functions—a highly complex and fragmented system that stems from 30 

principal laws and is administered by 15 federal 

agencies. This system results in inefficient use of 

resources, inconsistent oversight and enforcement, 

and ineffective coordination. In the past, we have 

recommended that the federal statutes be streamlined and that food safety functions be consolidated 

into a single agency. This year, our work identified 

overlapping and duplicative inspection activities 

conducted by USDA and the Food and Drug 

Administration at food-processing facilities that fall 

under the regulatory jurisdiction of both agencies. 

Although the agencies have entered into an agreement to make more efficient use of their resources 

and to reduce overlap and duplication, we found 

that they are not routinely communicating findings 

of mutual concern, such as sanitation problems 

affecting foods produced at these facilities—

whether the foods fall under USDA or Food and 

Drug Administration jurisdiction. We recommended 

that the agencies ensure implementation of the 

agreement. USDA took prompt action and in June 

2005 issued a directive, entitled Responsibilities in 

Dual Jurisdiction Establishments. The directive 

states that each agency’s resources and experience 

will be used efficiently and that duplication of 

inspection effort is to be avoided. It also states that 

USDA and the Food and Drug Administration agree 

to communicate at the district office level about 

(1) findings of hazardous, contaminated, or mislabeled foods; (2) processes that may result in contamination or recalls; or (3) food tampering. 

(GAO-05-213)

1.64.A. Improving Recreation Fee Programs 

on Federal Lands: Our work over the past several years has helped the Congress to establish and 

assess the impacts of the recreational fee demonstration program. Under this trial program, the Congress authorized the Department of the Interior’s 

National Park Service, Bureau of Land Management, 

and Fish and Wildlife Service and USDA’s Forest 

Service to charge fees to visitors to, among other 

things, reduce the maintenance backlog at federal 

parks and historic places and protect these lands 

from the wear and tear caused by visitors. Since the 

program’s inception in 1996, we have identified 

issues that needed to be addressed to improve the 

program’s effectiveness. These issues included providing (1) a more permanent source of funds to 

enhance stability, since the current program had to 

be reauthorized every 2 years; (2) the participating 

agencies with greater flexibility in how and where 

they apply fee revenues; and (3) improvements in 

interagency coordination in the collection and use 

of revenue fees to better serve visitors by making 

the payment of fees more convenient and equitable 

and reducing visitor confusion about similar or multiple fees being charged at nearby or adjacent federal recreational sites. As a result of this body of 

work, the Congress designed and enacted the Federal Lands Recreation Enhancement Act, which 

addresses all of our reported issues, including providing a more permanent source of funding for the 
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PART IV: Appendixes

agencies. (GAO/RCED-99-7, GAO/T-RCED-99-77, 

GAO/T-RCED-99-101, GAO/RCED-00-37R, 

GAO-02-10, GAO-03-470, and GAO-04-745T)

1.65.A. Providing Federal Assistance to Alaska 

Native Villages Affected by Flooding and 

Erosion: We reported that while 184 out of 213 

Alaska Native villages are affected to some extent 

by flooding and erosion, these villages often have 

difficulty qualifying for federal assistance to combat 

these problems. We recommended that the Denali 

Commission (established by the Congress to provide economic development services and to meet 

infrastructure needs in rural Alaska) adopt a policy 

to guide investment decisions and project designs in 

villages affected by flooding and erosion. We also 

identified four alternatives that could increase federal service delivery to the affected villages. In 

response to our findings, the Denali Commission 

adopted an investment policy, which will ensure 

that federal funds are expended in the most effective and efficient manner possible, and the Congress provided the Secretary of the Army authority 

to carry out “structural and nonstructural projects for 

storm damage prevention and reduction, coastal 

erosion, and ice and glacial damage in Alaska, 

including relocation of affected communities and 

construction of replacement facilities.” (GAO-04-142

and GAO-04-895T)

1.66.C. Clarifying Policies on Wetlands: The 

U.S. Army Corps of Engineers (USACE) is responsible for implementing Section 404 of the Clean Water 

Act, our nation’s primary wetlands protection program. Under this program, a property owner must 

obtain a permit from USACE before undertaking 

any activities that may degrade or destroy waters or 

wetlands that fall under federal jurisdiction. In 2004, 

we reported that USACE’s district offices and staff 

were interpreting and applying federal regulations 

differently when determining whether a water or 

wetland falls under federal jurisdiction and that 

these differences might result in different jurisdictional decisions in similar situations. As we recommended, USACE is evaluating its districts’ differing 

practices and determining what revisions to its guidance will be needed to ensure more consistency in 

decisions about which waters and wetlands fall 

under federal jurisdiction. (GAO-04-297)

1.67.C. Improving Security at Drinking Water 

and Wastewater Plants: We identified key activities that can help EPA improve security for the 

water sector. As a result of this work, EPA has 

begun to implement a number of these actions. 

First, the agency established common protocols for 

monitoring threats. In particular, it developed a list 

of Standardized Analytical Methods, providing a 

common standard for environmental laboratories’ 

use in measuring contamination events and their 

associated threats. In addition, EPA provided simulation exercises to improve local, state, and regional 

collaboration. Specifically, it provided drinking 

water and wastewater systems with a series of tabletop exercises to help them prepare and carry out 

emergency response plans and strengthen relationships between utilities and local, state, and federal 

officials in the event of a terrorist attack. Finally, 

EPA significantly expanded training opportunities 

related to security by sponsoring several security 

workshops and seminars on topics such as wastewater system security, drinking water system preparedness, and emergency response. As a result, 

water sector personnel have additional tools and 

training opportunities to support them in their 

efforts to protect against terrorist attacks. 

(GAO-04-29, GAO-04-1098T, and GAO-05-165)

1.68.C. Improving Oversight of EPA Grant 

Programs: EPA has long faced problems in managing its grants, which constitute over one-half of 

the agency’s annual budget, or $4 billion annually. 

Our work over the past 3 years has identified the 

major challenges facing EPA in managing its grants, 

including awarding, overseeing, and obtaining 

results from grants. EPA issued a 5-year grants management plan and policies, which for the first time 

offers a comprehensive road map with goals and 

milestones for addressing the challenges we identified. However, we found that the policies and plan 

will require strengthening, enhanced accountability, 

and sustained commitment to succeed. For example, EPA’s new oversight policy mandates more indepth monitoring of grantees, but it does not build 

in a process for analyzing the results of in-depth 

monitoring to address systemic grantee problems. 

In addition, its 5-year plan does not completely 

address how EPA will hold all managers and staff 

accountable for successfully fulfilling their responsibilities. Our recommendations, which EPA has 

begun to implement, will help to ensure that EPA is 

providing effective oversight of grants and holding 
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PART IV: Appendixes

managers and staff accountable for their grants 

management responsibilities. (GAO-03-846, 

GAO-04-383R, GAO-04-459, and GAO-05-149R)

1.69.C. Improving EPA’s Knowledge of 

Environmental Conditions: In a November 2004 

report, we recommended that EPA establish clear 

lines of responsibility and accountability among its 

various organizational components and identify 

specific requirements for developing and using 

environmental indicators. Environmental indicator 

sets assemble quantitative measures of conditions 

and trends to assess the state of the environment 

and natural resources and to gauge progress toward 

specific goals. We reported that EPA needs to 

develop a more systematic approach to developing 

these indicators to ensure that information on environmental conditions and trends is incorporated 

into EPA’s efforts to plan strategically, allocate 

resources, and assess progress toward meeting environmental goals and objectives. EPA is currently 

working to link its indicators to the agency’s strategic planning activities and investigating opportunities to link environmental information to 

management reporting and accountability systems. 

(GAO-05-52)

1.70.C. Identifying Challenges to Ensuring 

Competition in Natural Gas Markets: Recent 

reports on the impact of soaring natural gas prices 

have outlined the volatile nature of natural gas 

prices that are driven by supply and demand imbalances. However, these reports also have highlighted 

the important role the federal government plays in 

ensuring that prices are determined in a competitive 

and informed marketplace. We found that federal 

agencies face major challenges in ensuring that natural gas prices are determined in a competitive and 

informed marketplace. For example, we found that 

the Federal Energy Regulatory Commission lacks an 

adequate regulatory and oversight approach and is 

reviewing its statutory authority and market monitoring tools. The Commodity Futures Trading Commission does not have regulatory authority for overthe-counter derivatives markets. It does have antimanipulation authority and is currently investigating 

what role, if any, these markets played in the natural gas price spike of 2000 through 2001. Finally, the 

Energy Information Administration has an outdated 

natural gas data collection program, but has made 

efforts to reassess its data needs to provide more 

useful information. (GAO-03-46) 

1.71.C. Enhancing Oversight of Electricity 

Markets: Our recent reports on electricity market 

restructuring have encouraged the Federal Energy 

Regulatory Commission to, among other things, 

enhance its oversight of these markets to reduce the 

potential that firms could inappropriately exercise 

the use of market power, reduce the uncertainty private companies face when upgrading transmission 

lines to their power plants, and support consumer 

pricing and other programs that encourage consumers to adjust their electricity usage in response to 

changes in market conditions. Action in this last 

area alone—encouraging consumers to respond to 

changing electricity market conditions—could save 

billions of dollars as well as enhance reliability in 

the U.S. electricity sector more generally. 

(GAO-04-204 and GAO-04-844)

1.72.C. Identifying the Effects of Oil Mergers 

on Consumers: Our work on the effects of mergers and market concentration in the U.S. petroleum 

industry, which found that the wave of mergers and 

market concentration that occurred in the 1990s led 

to higher gasoline prices, prompted a reevaluation 

by the Federal Trade Commission of how it reviews 

petroleum industry mergers in an effort to protect 

U.S. consumers from potential anticompetitive 

effects of such mergers in the future. (GAO-04-96)

1.73.C. Improving the Nuclear Regulatory 

Commission’s Oversight of Nuclear Power 

Plants: In a series of reports and testimonies, we 

have identified a number of challenges to the 

Nuclear Regulatory Commission’s ability to effectively regulate the safety and security of the nation’s 

commercial nuclear power plants. We have made a 

number of recommendations to improve force-onforce exercises (mock terrorist attacks) that test 

nuclear power plants’ defenses, and we are currently assessing the process the commission used to 

revise the design basis threat, which describes the 

terrorist threat plants are required to defend against. 

As part of this review, we have observed force-onforce exercises at two nuclear power plants and 

confirmed that the commission is implementing 

improvements we recommended that will better 

enable the commission to evaluate plants’ ability to 

defend against terrorist attacks. In 2005, we 

reported that plants’ control and accounting of 

radioactive spent nuclear fuel have been uneven 

and that the commission should establish specific 

requirements and inspection procedures for control 
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PART IV: Appendixes

and accounting of loose fuel rods and segments. In 

response to our recommendation, the commission 

is clarifying its guidance to plants on control and 

accounting of spent fuel and revising its inspection 

procedures—actions that if properly implemented, 

will reduce the risk that plants will report additional 

cases of missing spent nuclear fuel. (GAO-03-752, 

GAO-04-1064T, GAO-05-339, and GAO-05-754T)

A safe, secure, and effective 

national physical 

infrastructure

1.74.A. Improving Oversight of State Highway 

Safety Programs: In 2003 we reported that 

National Highway Traffic Safety Administration 

(NHTSA) regional offices were inconsistent in their 

oversight of state highway safety programs. Consequently, states with relatively poor safety performance sometimes received less oversight than states 

with better safety performance. We recommended 

that NHTSA provide clear guidance to its regional 

offices on the appropriate use of program management reviews and program improvement plans. In 

response to our recommendations, NHTSA developed new policies for its regional offices on when it 

is appropriate to use management reviews and 

improvement plans to assist state highway safety 

programs. Among other things, the new procedures 

direct NHTSA regional offices to conduct management reviews in each state at least every 3 years. In 

addition, the new procedures direct NHTSA 

regional offices to work with a state in collaboratively developing a performance enhancement plan 

(formerly known as an improvement plan) when a 

state fails to meet performance goals, shows substandard performance, or fails to show improvement toward priority safety program goals over a 3-

year period. The Congress is considering specifying 

these improvements and mandating that we perform a follow-up review. (GAO-03-474)

1.75.A. Updating Assessments of Highway 

Traffic Safety Data Systems: In a November 

2004 report, we recommended that the Congress 

consider requiring states to have assessments of 

their traffic records safety data systems that are no 

more than 5 years old in order to participate in 

NHTSA’s traffic safety data improvement program. 

According to NHTSA officials, these assessments 

were valuable starting points in helping states take 

stock of the strengths and weaknesses of their 

entire systems. During our review, we found some 

assessments submitted by states that were nearly 10 

years old. We also found assessments based on 

recent information reflected the dynamic and often 

changing reality of state safety data systems. In 

August 2005, the Congress passed the Safe, 

Accountable, Flexible, and Efficient Transportation 

Equity Act of 2005. The act included our recommendation that states have up-to-date assessments 

or audits of their highway safety data and traffic 

records systems in order to participate in NHTSA’s 

state traffic safety information system improvements 

grant program. By implementing this eligibility 

requirement, NHTSA will have improved monitoring of state progress and have made a more 

detailed accounting of traffic data system improvements made as a result of the grant program. 

(GAO-05-24)

1.76.A. Improving NHTSA’s Oversight Efforts: 

We found that NHTSA was inconsistent in its use of 

management reviews and improvement plans in 

providing oversight of state highway safety programs. We recommended that NHTSA develop 

guidance on the use of management and improvement plans. In response, NHTSA, in April 2004, 

reported to the Congress that it was establishing 

new procedures to address problems we identified. 

These new procedures included conducting triennial management reviews and establishing performance enhancement plans for states that fail to 

meet program goals over 3-year period. In February 

2005, we discussed incorporating our recommendations and alternative language for the surface transportation reauthorization bill with congressional 

staff. In July 2005, the Congress passed the Safe, 

Accountable, Flexible and Efficient Transportation 

Equity Act: a Legacy for Users, which enacted the 

NHTSA policies established directly in response to 

our recommendations. The law directs NHTSA to 

conduct triennial management reviews of state 

highway safety programs and program reviews of 

states that fail to make substantial progress in meeting priority program goals over a 3-year period. 

(GAO-03-474) 

1.77.A. Authorizing the Retention of Proceeds 

from Real Property: In 2003, we reported that 

most agencies could not retain the proceeds from 

the sale of unneeded property and this acted as a 
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PART IV: Appendixes

disincentive to disposing of unneeded property. We 

concluded that agencies should be permitted to 

retain proceeds for reinvestment from real property 

where a need exists. Subsequently, in the 2005 Consolidated Appropriations Act, for fiscal year 2005 the 

Congress authorized the Administrator of the General Services Administration (GSA) to retain the net 

proceeds from the conveyance of real and related 

personal property. These proceeds are to be deposited into the Federal Buildings Fund and are to be 

used for GSA’s real property capital needs. 

(GAO-03-122)

1.78.A. Identifying Improvements Needed to 

Strengthen Security and Achieve Efficiencies 

in Airport Passenger and Checked Baggage 

Screening: We conducted a body of work assessing the physical screening of airport passengers and 

their checked baggage, as well as the prescreening 

of passenger names against terrorist watch lists, 

designed to identify and prevent terrorist threats. 

We found that insufficient screener staffing and a 

lack of high-speed Internet and intranet connectivity at the nation’s airports resulted in the majority of 

screeners not meeting legislatively mandated 

screener training requirements, and that weakness 

and vulnerabilities continued to exist in passenger 

and checked baggage screening systems. We also 

found that DHS’s Transportation Security Administration’s (TSA) internal solutions for deploying 

explosive detection systems to screen checked baggage resulted in operational inefficiencies and 

diminished security, and that its efforts to install inline baggage screening systems have been limited. 

Related to passenger prescreening against terrorist 

watch lists, we found the effectiveness of TSA’s 

Secure Flight program in identifying passengers 

who should undergo additional security scrutiny 

had not been determined, and that TSA had not 

resolved how passenger data would be transmitted 

from air carriers to TSA to support Secure Flight 

operations. We also reported that TSA did not comply with Privacy Act requirements by not fully disclosing to the public its use of personal information 

from commercial data sources during testing as 

required. Specifically, a TSA contractor collected 

more than 100 million commercial data records containing personal information, such as name, date of 

birth, and telephone number, without informing the 

public. Based on this work, we made numerous 

recommendations to strengthen screener training, 

systematically evaluate baggage screening needs at 

airports, and manage the risks associated with 

Secure Flight’s development and implementation. 

TSA agreed to take corrective actions in these areas. 

Several pieces of legislation were passed requiring a 

plan and guidelines for installing in-line baggage 

screening systems and measures to strengthen 

Secure Flight’s development and implementation, 

based in part on our work. (GAO-05-324, 

GAO-05-356, GAO-05-365, GAO-05-457, and 

GAO-05-864R)

1.79.C. Implementing Postal Reforms to 

Address Structural and Systemic 

Deficiencies: Our testimony identified the need 

for comprehensive postal reform legislation to 

address challenges that threaten the U.S. Postal Service’s long-term outlook and identified some of the 

key principles for postal reform, including the need 

for additional managerial flexibility to improve the 

efficiency of postal operations and increased transparency and accountability for results, which have 

been incorporated into pending postal reform legislation. We also reported that the Postal Service faces 

challenges in eliminating excess capacity in its mail 

processing infrastructure, but its infrastructure 

realignment strategy was not sufficiently clear or 

accountable. The Congress referred to our work 

related to postal infrastructure realignment and said 

that it would work to ensure that the Postal Service 

implemented our recommendations. Language in 

postal reform legislation would require the Postal 

Service to report to the Congress on how it plans to 

modernize its infrastructure and provide greater 

transparency through annual reports on its progress 

in this area. We also testified that one of the key elements of postal reform is to clarify the Postal Service’s mission and role so that it remains focused on 

universal postal service. Two of our reports on the 

Postal Service’s electronic commerce activities contributed to language in pending postal reform legislation to limit the Postal Service’s mission to 

delivering physical mail pieces to avoid the financial 

costs the Postal Service has incurred when it ventured away from its core business. 

(GAO/GGD-00-188, GAO-02-79, GAO-05-261, and 

GAO-05-453T)

1.80.C. Improving Congressional Oversight of 

the Airline Industry’s Financial Condition: We 

reported on the deteriorating financial condition of 

the U.S. commercial airline industry, providing the 

Congress with some key insights into the underly-
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PART IV: Appendixes

ing structural problems hampering the industry’s 

recovery. Since 2001, the major U.S. airlines have 

lost more than $30 billion, with four major U.S. legacy airlines—Delta, Northwest, United, and US Airways—operating under bankruptcy protection. 

United and US Airways terminated their pension 

programs, transferring their plans to the Pension 

Benefit Guaranty Corporation at a net cost to the 

corporation of $9.7 billion; plan participants lost 

$5.3 billion in benefits (in constant 2005 dollars). 

We also reported that the airlines faced a considerable liquidity crisis over and above pension funding 

requirements. Legislative pension reform allowing 

airlines to amortize pension contributions over 

more years would relieve some of the liquidity pressures, but does not ensure that they will avoid 

bankruptcy because it does not fully address other 

fundamental structural problems, such as other high 

fixed costs. (GAO-05-83, GAO-05-945, and 

GAO-05-835T)

1.81.C. Identifying Federal Action Needed to 

Secure Cargo Transported by Air: We found 

that TSA took initial steps in applying a risk-based 

managed approach to address air cargo security. 

However, TSA had not yet established a methodology or schedule for completing assessments of vulnerabilities and critical assets. We also found that 

TSA had not developed measures to assess the adequacy of air carrier compliance and systematically 

analyze audit results to target future inspections, or 

assessed the effectiveness of its enforcement actions 

to ensure compliance with security requirements. 

We also found that TSA’s future plans for enhancing 

air cargo security pose financial, operational, and 

technological challenges to the agency and air cargo 

industry stakeholders, and that TSA may have 

underestimated the cost of proposed security measures. We recommended that among other actions, 

TSA complete assessments of air cargo vulnerabilities and critical assets; develop measures to gauge 

air carrier compliance; and ensure that data used in 

identifying elevated risk cargo are complete, accurate, and current. TSA generally concurred with the 

findings and recommendations in the restricted version of the report. (Based on a report that contains 

sensitive material and is not available to the public)

1.82.C. Improving Federal and Private Sector 

Efforts to Secure General Aviation: We found 

that a systematic assessment of threats to general 

aviation—all aviation other than commercial and 

military—had not been conducted, and that TSA 

and the Federal Aviation Administration (FAA) had 

taken limited steps to secure related airports, aircraft, and infrastructure. We also found that TSA has 

not established policies and procedures for reviewing and revalidating the need for flight restrictions 

that limit access to airspace for indefinite periods 

that could negatively affect the general aviation 

industry. We further found limitations in TSA’s process for requiring background checks of foreign 

candidates for U.S. flight training schools. We recommended, among other things, that TSA develop a 

plan for implementing a risk-managed approach to 

strengthen general aviation security, and that FAA 

establish a documented process for reviewing and 

revalidating flight restrictions. TSA and FAA agreed 

to take corrective actions, and legislation, based on 

input from our work, was passed requiring DHS to 

improve pilot licenses to prevent tampering and 

alterations. TSA issued an interim final rule in July 

2005 to restore limited general aviation aircraft 

operations at Reagan National airport. 

(GAO-05-144)

1.83.C. Identifying Federal Action Needed to 

Strengthen Airport Perimeter Security and 

Access Controls: We conducted a comprehensive review of airport perimeter security and access 

controls that addressed and made associated recommendations related to employee access to secure 

airport areas, including airport employee screening 

requirements. We briefed numerous congressional 

committees on this work and conferred with congressional staff as language was drafted for the 

Intelligence Reform and Terrorism Prevention Act of 

2004. We also briefed the 9/11 Commission—whose 

recommendations formed the basis for this act—on 

our results in this area. (GAO-04-728)

1.84.C. Enhancing Federal Leadership Needed 

to Address Rail Security: We found that TSA 

had not completed risk assessments of the passenger rail industry, or completed a methodology for 

determining how to analyze and characterize risks 

that have been identified through other risk assessment initiatives. The lack of a risk management 

framework will make it difficult for TSA to compare 

risks across sectors, prioritize them, and allocate 

resources accordingly. We also found that federal 

and rail industry officials raised questions about the 

feasibility of implementing and complying with TSA 

rail security directives. We also observed security 
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PART IV: Appendixes

practices among certain foreign passenger rail systems or their governments that are currently not 

used by the domestic rail operators or the U.S. government, which could be considered for use in the 

United States. We recommended, among other 

things, that TSA develop a plan for completing its 

methodology for conducting risk assessments and 

develop rail security standards that can be measured and enforced. We also recommended that 

TSA consider the feasibility of implementing certain 

security practices in the United States that are currently used by foreign rail operators. DHS, the 

Department of Transportation, and Amtrak 

reviewed a draft of this report and generally agreed 

with the report’s recommendations. Further, DHS 

stated that it appreciated the thorough analysis and 

discussion of rail security initiatives within our 

report and that it will continue to be cognizant of 

the areas of passenger rail security where further 

improvements can be made. (GAO-05-851)

1.85.C. Coordinating Agencies’ Facility 

Protection Efforts and Promoting Key 

Practices: The Interagency Security Committee is 

chaired by DHS and is composed of representatives 

from most agencies. In November 2004, we recommended that DHS direct the committee to develop 

an action plan that identifies resource needs, goals, 

and time frames for meeting its responsibilities, and 

propose strategies for addressing the challenges it 

faces. Such an action plan would provide a road 

map for DHS to use in developing resource priorities and for the committee to use in communicating 

its planned actions to agencies and other stakeholders, including the Congress. DHS agreed to implement this recommendation. In addition, the 

committee has begun to implement our recommendation to establish a set of key practices that could 

guide agencies’ efforts in the facility protection area. 

This initiative could be used to evaluate agency 

actions, identify lessons learned, and develop strategies for overcoming challenges. (GAO-05-49)

1.86.C. Providing Critical Information for the 

Congress Regarding Issues Related to the 

Digital Television Transition: Since 2002, we 

have reported why the transition from analog to 

digital television will not be likely to end by 2006—

the target date originally set by the Congress. We 

have provided critical recommendations and information for policymakers to consider in their 

attempts to further the transition. Completing this 

transition is critical because the return of radio frequency spectrum used for analog broadcast television at the end of the digital television transition 

will provide many benefits to society, such as easing the spectrum scarcity facing public safety first 

responders; engendering economic growth and 

consumer value from spectrum redeployed to wireless services; and affording the federal government 

auction revenues, which could range from about 

$10 billion to $30 billion according to some studies. 

We reported on the digital television transition in 

Germany, and the Congress is now considering providing subsidies to low-income households, which 

was a feature of the German transition plan. This 

year, we also provided information on the likely 

costs of a subsidy to certain households for the purchase of digital television equipment and we also 

testified about the administrative issues that may 

arise in implementing a subsidy program. Legislation has been introduced in both the Senate and 

House aimed at speeding the transition using a subsidy program. (GAO-05-258T)

1.87.C. Enhancing the New Car Assessment 

Program: In 2005, we reported that NHTSA’s New 

Car Assessment Program, which subjects new vehicles to crash and rollover tests, is at a crossroads 

and needs to be changed to remain relevant. For 

example, we found that the usefulness of current 

testing has been eroded by changes in the vehicle 

fleet that have occurred since the program began in 

1978. The growing number of large pickups, minivans, and sport utility vehicles in the nation’s vehicle fleet is creating different safety risks, particularly 

with regard to the incompatibility of large and small 

vehicles and vehicle rollover, which we found that 

the New Car Assessment Program does not fully 

address. In addition, the very success of the program has brought it to a point where it is not clear 

that the program’s goals can continue to be met. 

Because almost all vehicles today receive top ratings in frontal and side crash tests, the program provides little incentive for manufacturers to further 

improve vehicle safety and does not provide consumers with information that differentiates the 

safety of one vehicle compared to another—two 

key goals of the program. Our recommendations 

will have continuing value in improving the safety 

of new vehicles. The agency generally agreed with 

the report, and it plans to address the key issues we 

raised to improve the program—namely, examining 

the growing size of vehicles in the nation’s fleet, the 
148 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART IV: Appendixes

risks associated with vehicle rollover, new technologies that can help prevent crashes from occurring, 

and ways to provide the public with improved 

safety information in a more timely manner. 

(GAO-05-370)

1.88.C. Reevaluating the Funding of Highway 

and Transit Grant Programs: In light of the 

nation’s long-term fiscal outlook and the need to 

fundamentally reexamine the base of federal spending, we have highlighted the need to reevaluate 

highway and transit grant programs financed 

through the Highway Trust Fund. The trust fund 

was created to construct the interstate highway system—although the system is now complete, the 

program’s basic financing and delivery mechanisms 

have not changed. Most highway grant funds are 

apportioned by formula, without regard to the 

needs or capacity of recipients. Evidence also suggests that increased federal highway grants do not 

result in commensurate increases in overall investment because states and localities in part substitute 

federal funds for funds they otherwise would have 

spent on highways. The Department of Transportation has established performance measures and outcomes to enhance mobility and security, but the 

program has no mechanism to link funding with the 

accomplishment of these measures and outcomes. 

In addition, while a wide range of factors must be 

considered when selecting highway or transit 

projects, decision makers often do not use formal 

analytical tools when evaluating projects, and even 

when they do, these analyses generally do not drive 

investment decisions. The Federal Highway Administration oversees the expenditure of tens of billions 

of federal dollars a year but lacks goals and measures that guide its activities, workforce plans that 

support these goals and measures, and data collection and analysis efforts to identify problems and 

transfer lessons learned. To improve federally 

funded highway and transit programs, we suggested that the Congress consider expanding the 

mandate of a proposed national commission to 

assess possible changes to the federal-aid highway 

program, including changes to the program’s 

design, structure, and funding formulas; the roles of 

the various levels of government; and the inclusion 

of greater performance and outcome-oriented features. In addition, we recommended that the Federal Highway Administration link its activities and 

staff expectations to oversight goals and measures; 

develop workforce plans that support its goals and 

measures; and develop the capability to track costs, 

identify problems, and transfer lessons learned. 

(GAO-04-802, GAO-05-172, GAO-05-173, and 

GAO-05-325SP) 
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 149

PART IV: Appendixes

Source: See Image Sources.

Respond to emerging threats to 

security

2.1.A. Improving Controls Covering 

Technology Exports: In response to our recommendation, the Department of Commerce (Commerce) reviewed whether the existing catchall 

provision to address missile proliferation by certain 

entities—such as terrorist organizations or individuals—sufficiently protects U.S. national security interests, reported the results of the review, and 

proposed modifications to the rule to help close the 

regulatory gap. We reported that a gap in control 

regulations covering exports with both military and 

civilian applications (dual-use exports) could enable 

individuals in most countries to legally obtain, without any U.S. government review, U.S. dual-use 

items not on the Commerce Control List that could 

be used in making a cruise missile or unmanned 

aerial vehicle. (GAO-04-175)

2.2.A. Improving Controls over Computer 

Exports: In response to our recommendation to 

address the shortcomings of computer export controls, a Commerce council convened a panel of government and industry representatives to develop a 

replacement for the current method of measuring 

the composite theoretical performance of highperformance computers. The council advises Commerce on the technical parameters for export controls applicable to dual-use commodities and the 

administration of these controls. Composite theoretical performance is currently measured in millions 

of theoretical operations per second. The council’s 

experts met and reached a consensus on using a 

new, simpler method for measuring performance. 

(GAO-01-10)

2.3.A. Improving Processes to Share 

Information on Maritime Threats: In April 

2005, we identified U.S. Coast Guard procedures for 

providing security clearances that needed to be 

improved to get classified threat information to key 

state, local, and private sector stakeholders involved 

in port security. These stakeholders needed access 

to classified information, but did not have federal 

security clearances allowing them to receive the 

threat information. Lack of adequate guidance from 

Coast Guard Headquarters had stalled the process 

to provide clearances to more than 350 state, local, 

and private sector officials. Based on our findings, 

the Coast Guard provided the guidance and took 

other steps to expedite the process. This improvement will make it easier for key stakeholders in 

maritime activities to get sensitive threat information 

and thus take appropriate protective actions to 

ensure port security. (GAO-05-394)

2.4.A. Improving Management of U.S. Coast 

Guard Deepwater Program: Based on a body 

of work assessing the U.S. Coast Guard’s Deepwater 

program, we identified areas for improved program 

oversight and management. We found that while 

the Coast Guard generated some limited information on the condition of its legacy assets, the majority of the Coast Guard’s measures were not 

sufficiently robust to link an asset’s declining condition to degradation in mission capabilities or performance. We noted that without such measures, the 

extent and severity of the decline in the existing 

deepwater legacy assets and their true condition 

could not be fully determined. Based on our findings, the Coast Guard has begun developing 

improved measures to more accurately capture data 

on the extent to which its deepwater legacy assets 

are degraded in their mission capabilities. This 

improvement will provide more accurate and meanStrategic Goal 2

Provide Timely, Quality Service to the Congress and 

the Federal Government to Respond to Changing 

Security Threats and the Challenges of Global 

Interdependence
150 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART IV: Appendixes

ingful information to the Coast Guard as well as to 

DHS as it decides where to spend limited budget 

dollars to obtain the greatest capabilities in the 

Deepwater program. In addition, we recommended 

the Coast Guard update the original 2002 Deepwater acquisition schedule in time to support the fiscal 

year 2006 Deepwater budget submission to DHS 

and the Congress and at least once a year thereafter 

to support each budget submission. We also recommended that the updated schedule include the current status of asset acquisition phases, interim phase 

milestones, and the critical paths linking assets. 

Based on our recommendations, the Coast Guard 

has taken steps to update the outdated schedule 

and has indicated that it plans to continue to update 

the schedule each month for internal efforts. The 

Coast Guard Deepwater Deputy Program Executive 

Officer agrees that these efforts to update the Deepwater acquisition schedule and integrate the individual schedules of the assets have improved the 

Coast Guard’s overall management of the program. 

(GAO-05-307T, GAO-05-651T, and GAO-05-757)

2.5.A. Ensuring Proper Implementation of 

Biometrics for Aviation Security: In our May 

2004 testimony on the use of biometrics (a wide 

range of technologies that can be used to verify 

identity by measuring and analyzing human characteristics) for aviation security, we reported on the 

need to identify how biometrics will be used to 

improve aviation security prior to making a decision 

to design, develop, and implement biometrics. 

Using information from our statement, the House 

introduced a bill on July 22, 2004, directing TSA to 

establish system requirements and performance 

standards for using biometrics, and to establish processes (1) to prevent individuals from using 

assumed identities to enroll in a biometric system 

and (2) to resolve exceptions. These provisions 

were later included in an overall aviation security 

bill and were eventually included in the Intelligence 

Reform and Terrorism Prevention Act of 2004. 

(GAO-04-785T)

2.6.A. Strengthening Federal Agency 

Information Security: In 2005, we identified 

specific information security improvements needed 

at the following agencies: DHS, IRS, SEC, FAA, the 

Defense Logistics Agency, and the Federal Deposit 

Insurance Corporation. Also, on the basis of our 

prior recommendations, agencies—including VA, 

IRS, the Bureau of the Public Debt, the Federal 

Deposit Insurance Corporation, the Federal Reserve, 

and Commerce—took numerous actions to 

strengthen their information security practices. 

Actions included improvements to agencies’ information security programs to aid in understanding 

risks and selecting and properly implementing 

effective controls; access controls to limit the ability 

to read, modify, or delete information to authorized 

individuals; software change controls to allow only 

authorized software programs to operate; and service continuity controls to protect computer-dependent operations from significant disruptions. 

(GAO-05-262, GAO-05-482, GAO-05-486, 

GAO-05-567T, GAO-05-700, and GAO-05-712)

2.7.C. Improving the Government’s Ability to 

Respond to Terrorist Attacks and Other 

Emergencies: We helped the Congress move 

toward ensuring that the federal government is prepared for emergencies, including terrorist attacks. 

For example, we reported, based on detailed 

assessments of continuity of operations plans at 

major federal agencies, that agencies had not yet 

identified their essential functions that must be 

accomplished in an emergency and that none of the 

plans met the requirements of federal guidance. 

This work has focused congressional, agency, and 

public interest on these issues. Further, consistent 

with our recommendations, the Homeland Security 

Council initiated a major effort to identify essential 

functions governmentwide, including the identification of eight national essential functions and a process for identifying related agency-level functions. 

In addition, FEMA, which is the executive agent for 

continuity of operations planning, issued improved 

guidance addressing the prioritization of essential 

functions and the identification of associated 

resources. Finally, two agencies that did not have 

continuity plans in place have now developed 

them. As a result of these actions, the federal government is better positioned to respond to emergencies and continue essential services during and after 

emergencies of all types. (GAO-05-577 and 

GAO-05-619T)

2.8.C. Assessing and Improving Chemical 

Facility Security: In March 2005, we reported 

that DHS has estimated that there are about 4,000 

chemical manufacturing facilities in the United 

States, but the exact number is uncertain. About 

1,100 of these facilities belong to two major chemical associations that require their member compa-
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PART IV: Appendixes

nies and facilities to take actions to assess and 

improve their security. Only those facilities that are 

subject to the Maritime Transportation Security Act 

are required by federal law or regulation to take any 

actions to assess and improve their security, and the 

Coast Guard has not yet assessed the effectiveness 

of those actions. The Congress directed DHS to 

begin vulnerability assessments of those chemical 

facilities at highest risk and develop a protection 

strategy for the chemical sector that includes clear, 

measurable benchmarks for improving security and 

sharing lessons learned throughout the sector. 

(GAO-05-327)

2.9.C. Promoting Government Efforts to 

Address Emerging Security Threats: In fiscal 

year 2005, we reported on three emerging information security issues facing the federal government: 

security of wireless networks in the federal government; information security of third-party services; 

and emerging cybersecurity threats, such as spam, 

phishing, spyware, and malware. We found that 

agencies generally were not effectively applying the 

requirements in the Federal Information Security 

Management Act of 2002 (FISMA) to protect and 

maintain the confidentiality, integrity, and availability of their information and information systems. 

Also, we noted that by relying on a contractor’s 

assessment of an agency’s information systems, an 

agency official may not obtain a clear understanding of the effectiveness of security controls or be 

assured of the validity of the responses without 

independent testing. The Office of Management and 

Budget (OMB) recognized the significance of our 

findings and took immediate action, implementing 

several recommendations. Specifically, OMB made 

key changes to improve its fiscal year 2005 FISMA 

reporting instructions to the federal agencies, 

including (1) specifying that self-reporting by contractors does not meet agencies’ FISMA requirements to ensure the security of their information 

systems and (2) requiring agencies to report on 

their policies and special procedures pertaining to 

new technologies and emerging threats, including 

wireless, spyware, and malware. OMB’s actions 

could help to focus federal agencies’ efforts to 

address and mitigate these emerging information 

security issues. (GAO-05-231, GAO-05-362, and 

GAO-05-383)

2.10.C. Improving Policies and Oversight 

Needed for TSA’s Designation of Sensitive 

Security Information: In June 2005, we reported 

that TSA lacked guidance and procedures, aside 

from the regulations themselves, for determining 

what constitutes sensitive security information. TSA 

also lacked a system of internal controls to ensure 

that the sensitive security information designation is 

being appropriately applied. It is clearly very important that some information related to threats to or 

protection of our transportation systems be held out 

of the public domain. However, it is also the case 

that the public has a legitimate interest and need for 

information related to threats and vulnerabilities. 

While TSA has indicated that it was already in the 

process of taking some steps to develop guidance 

and to institute internal control procedures, our 

work reinforced the need to take steps to ensure 

proper application of the sensitive security information designation. (GAO-05-677)

2.11.C. Increasing Security of Cargo 

Containers to Prevent Smuggling of Weapons 

of Mass Destruction: We identified a number of 

limitations in two DHS programs designed to 

increase the security of cargo containers and prevent terrorists from using such containers to smuggle weapons of mass destruction into the United 

States. The department was reducing its scrutiny of 

shipments from certain companies before it had 

assurances that the companies had adequate security procedures in place. We also found that not 

enough staff had been assigned to identify high-risk 

containers at several key ports. In addition, the 

department did not have technical requirements in 

place to assess the ability of foreign countries to 

inspect the containers with scanning equipment. 

Finally, the department had not developed performance measures to evaluate the performance of 

these cargo container programs. In response to our 

recommendations, the department agreed to 

improve its ability to assess company security procedures, identify high-risk containers, inspect containers with scanning equipment, and manage the 

programs overall. (GAO-05-404, GAO-05-466T, and 

GAO-05-557)

2.12.C. Enhancing Government and Private 

Sector Critical Infrastructure Protection 

Efforts: Critical infrastructure protection activities 

are intended to enhance the security of the public 

and private infrastructures that are essential to our 
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PART IV: Appendixes

national security, economic security, and public 

health and safety. Critical infrastructures include 

energy, information technology (IT) and telecommunications, water supply, and the defense industrial base. Over the last several years, we helped 

promote the progress made by federal agencies and 

nonfederal infrastructure sectors in implementing 

the activities required and suggested by federal critical infrastructure protection policy. For example, 

we highlighted where the government needed to 

improve public health IT infrastructure, which 

affects the nation’s ability to respond to public 

health emergencies, including bioterrorism. In May 

2005, we reported on DHS’s progress in fulfilling 13 

key cybersecurity-related critical infrastructure protection responsibilities identified in law and federal 

policies. We noted that while DHS has initiated multiple efforts, it has not fully addressed any of the 13 

key cybersecurity-related responsibilities, and it has 

much work ahead in order to be able to fully 

address them. We also reported that DHS faces a 

number of challenges that have impeded its ability 

to fulfill its cyber critical infrastructure protection 

responsibilities. Key challenges include achieving 

organizational stability, gaining organizational 

authority, overcoming hiring and contracting issues, 

increasing awareness about cybersecurity roles and 

capabilities, establishing effective partnerships with 

stakeholders (other federal agencies, state and local 

governments, and the private sector), achieving 

two-way information sharing with these stakeholders, and demonstrating the value DHS can provide. 

This work resulted in recommendations that DHS 

strengthen its ability to implement key cybersecurity 

responsibilities by prioritizing and completing critical activities and resolving underlying challenges. 

(GAO-05-308 and GAO-05-434)

Ensure military capabilities 

and readiness

2.13.A. Rebalancing Army Force Structure to 

Create Needed Units and Avoid $3.4 Billion of 

Costs: In May 2001, we recommended that the 

Department of the Army establish mission criteria to 

provide a firmer basis for its strategic reserve, 

domestic support, and homeland defense requirements. At the time of our review, the Army reported 

it was experiencing a 45,000-position shortfall in its 

warfighting force, and we were concerned that the 

Army might not be making the best allocation of its 

available end strength among all of its mission 

requirements. In response, the Army programmed 

force structure changes affecting 34,018 spaces over 

the period covering fiscal years 2004 through 2009, 

increasing available units for military police, military 

intelligence, special forces, chemical, civil affairs, 

and psychological operations. Army officials agreed 

that these actions have created a substantial cost 

avoidance of at least $3.4 billion because the Army 

was able to rebalance the force to create needed 

units, with minimal increases in authorized end 

strength. (GAO-01-485)

2.14.A. Improving DOD’s Weapon Acquisition 

Process: Since 1990, we have designated DOD’s 

weapon acquisitions as a high-risk area due largely 

to persistent cost increases, schedule delays, and 

performance shortfalls. In our March 2005 report on 

54 weapon acquisition programs, which represent a 

total investment of over $800 billion, we noted significant cost growth and schedule delays—largely 

the result of programs not complying with DOD’s 

policy on demonstrating high levels of technology, 

design, and production knowledge before key program commitments were made. Just 4 years ago, the 

largest 5 programs cost about $281 billion; today, in 

the same base year dollars, the largest 5 programs 

cost about $521 billion. In light of these facts, the 

Congress called for more oversight and better outcomes from weapon system programs. In response, 

DOD established the Defense Acquisition Performance Assessment Project to assess every aspect of 

the current acquisition system and provide a road 

map for restructuring DOD’s weapon acquisition 

system. Additionally, the Air Force has been 

directed to take actions to improve its software 

development practices, as our work demonstrated 

that additional controls would help increase successful outcomes of complex software-intensive 

weapon systems. (GAO-04-393 and GAO-05-301)

2.15.A. Contributing to Properly Funding the 

Military’s Needs: We reviewed the reasonableness of DOD’s fiscal year 2005 budget request, its 

use of budgeted funds in prior years, and its future 

resource needs. By the end of September 2004, we 

identified billions of dollars in potential costs 

avoided and opportunities for DOD to improve its 

internal oversight of the use and tracking of funds. 

Overall, our work contributed to multiple actions 

that resulted in total financial benefits of about 
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PART IV: Appendixes

$2.4 billion. Specifically, our work analyzing various 

aspects of DOD’s operation and maintenance budget request for fiscal year 2005 resulted in the Congress reducing DOD’s budget by almost $2 billion 

because of high unobligated balance levels and an 

overstatement of need in the civilian pay budget 

request. For example, our papers assisted the Congress in identifying funds not used by providing 

analyses of average unobligated balances for fiscal 

years 1999 through 2003 and the unexpended balances canceled and reverted to the U.S. Treasury for 

fiscal years 1994 through 1998. The congressional 

conferees subsequently reduced DOD’s fiscal year 

2005 operation and maintenance budget by 

$833.1 million for the active and reserve military 

components and defense agencies. We also 

reported that the Defense Emergency Response 

Fund for the war on terrorism continued to maintain 

a high level of unobligated funds for several years. 

Based on our continued monitoring of these funds, 

the Congress directed DOD to transfer about $130 

million in unobligated funds to the Iraqi Freedom 

Fund. Our past work also prompted DOD to 

become more engaged in managing its contracts 

looking for opportunities for greater economy and 

efficiency. The Army estimated that by adopting our 

recommendations for increased monitoring, it was 

able to save over $300 million in its Balkan support 

contracts. (GAO-05-328) 

2.16.A. Improving the Outcomes of DOD’s 

Aircraft System Acquisitions: DOD’s F/A-22 

Raptor, Joint Strike Fighter, Global Hawk 

Unmanned Aerial Vehicle, and E-10A Command 

and Control Aircraft programs—which together represent about a $322 billion investment—have not 

captured key knowledge early enough to efficiently 

and effectively manage program risks. Since the 

F/A-22’s inception in 1986, the Air Force has 

planned for large investments in new capabilities 

without developing a new business case to justify 

these investments or aircraft quantities. The Joint 

Strike Fighter program has encountered serious 

design problems that required major changes to 

reduce the weight of the aircraft, and further design 

changes are likely. Delayed delivery, as well as 

reduced quantities, of both the F/A-22 and the Joint 

Strike Fighter could require existing aging aircraft to 

remain in the inventory longer. The Global Hawk 

program has been restructured twice to develop 

and produce a new and larger aerial vehicle in half 

the time originally planned. The accelerated schedule depends on a risky acquisition strategy that has 

already resulted in cost increases, schedule slippages, and performance trade-offs. Consistent with 

our recommendations, the Congress is considering 

(1) funding reductions that would slow Joint Strike 

Fighter development to allow the program to 

mature and (2) decreased procurement of the Global Hawk until a new acquisition strategy that 

reduces risk and justifies further investments is completed. Our review of the E-10A program raised 

questions about the overall business case for the 

program as well as DOD’s strategy to make important decisions before critical knowledge about the 

aircraft’s design, manufacturing, and reliability was 

known. DOD subsequently reduced the program’s 

budget by a total of $600 million and delayed the 

program by 5 years until it could demonstrate more 

knowledge about the aircraft. (GAO-05-6, 

GAO-05-271, GAO-05-273, GAO-05-304, 

GAO-05-390T, and GAO-05-519T)

2.17.A. Improving DOD’s Missile Defense 

System Acquisitions: DOD plans to spend nearly 

$67 billion over the next 6 years to develop and 

field ballistic missile defenses. The diverse set of 

technologies that must be developed, integrated, 

and deployed across an array of land-, air-, sea-, 

and space-based platforms makes this system a 

challenging and risky endeavor, as evidenced by 

recent test failures and the delayed activation of an 

initial capability. Although DOD aims to place capabilities in the hands of the warfighter more quickly 

and with the flexibility to respond to an evolving 

threat, DOD has been unable to deliver the quantities promised within the original cost estimates—

due in part to a lack of knowledge about the 

emerging technologies. Additionally, the year-toyear variability of the program’s goals has made 

congressional oversight of the execution of this program difficult. Based on our reporting of these 

issues since 2003, DOD has taken a more knowledge-based approach to developing an element of 

the system. Over a 5-year period—from fiscal year 

2005 through fiscal year 2009—program funding 

will be reduced by about $5.2 billion, which has a 

present value of about $4.7 billion. DOD has also 

taken specific actions to ensure that the fielded system is adequately tested and that the Congress has 

adequate information to conduct oversight of this 

large and complex program. (GAO-03-441, 

GAO-04-409, and GAO-05-243)
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PART IV: Appendixes

2.18.A. Improving DOD’s Acquisition Business 

Processes: For fiscal year 2003, the Congress 

appropriated $47 billion to the military departments 

and the Missile Defense Agency for defense 

research and development—$3.8 billion dollars of 

which DOD subsequently shifted, or reprogrammed, from one research and development 

account to another or temporarily withheld. 

Although the Congress permits such reprogramming, we found that programs had reprogrammed 

funds multiple times and some had inflated their 

budget requests in anticipation of funding adjustments. At the same time, reporting on reprogrammed funds has been of limited use in terms of 

content and timing. As a result of our work, the 

Congress has taken action to end inappropriate 

reprogramming practices and to provide detailed 

and timely data on reprogramming and withholding 

activity. The Congress is considering restricting 

DOD’s ability to rebaseline programs—a practice 

we found reduced cost increases below the threshold that would trigger required reporting to the 

Congress—as well as directing DOD to analyze 

alternatives to weapon system programs that 

exceeded their original cost baselines by more than 

15 percent. (GAO-04-944 and GAO-05-182)

2.19.C. Improving the Outcomes of Land 

System Acquisitions: The Army’s Future Combat 

Systems—a networked suite of light and agile 

weapons and other systems—is, in the Army’s 

words, the “greatest technology and integration 

challenge the Army has ever undertaken.” An 

investment of well over $100 billion, we found that 

this program is at significant risk for not delivering 

required capability within cost and schedule estimates. Nearly 2 years after program launch and with 

$4.6 billion invested, requirements are still changing 

and only 1 of the system’s more than 50 technologies has sufficiently matured. Based on our findings, 

the Congress has begun to take action to restrict 

funding for key program elements until certain 

requirements have been met and demonstrated, and 

to require independent analyses of the rationale and 

cost of additional requirements for the systems. Significantly enhanced communications and networking capabilities are also critical to the Future 

Combat Systems’ success. However, we have 

reported that each of the key communications programs is struggling to meet ambitious sets of user 

requirements and steep technical challenges within 

highly compressed schedules. In particular, the Joint 

Tactical Radio System program has been unable to 

mature and integrate technologies and come up 

with an effective design to meet key requirements—delaying the delivery of capabilities to the 

warfighter. As a result, the program is significantly 

over cost and behind schedule, and DOD is considering options for restructuring it. In light of our findings, the Congress has proposed reducing the 

funding for the program in fiscal year 2006 and 

introduced legislation requiring DOD to strengthen 

the management and oversight of the Joint Tactical 

Radio System development efforts and to report on 

its plans for restructuring the program. 

(GAO-05-442T and GAO-05-669)

2.20.C. Improving the Outcomes of DOD’s Sea 

System Acquisitions: The Navy’s DD(X) 

Destroyer is designed to be an advanced, multimission ship that will support forces ashore. The first 

ship is expected to cost over $3 billion. However, as 

the program approached two key milestones, it was 

clear that the destroyer’s demanding requirements 

and time frames presented substantial challenges 

that greatly increased the risk of cost overruns, 

schedule delays, and degraded performance. As a 

result of our work, the Congress is considering 

rescinding fiscal year 2005 funds for the program 

and delaying approval of advance procurement 

funds for fiscal year 2006. The Navy is also developing a new class of surface warship-the Littoral Combat Ship-that is being designed to use helicopters, 

unmanned vehicles, and other systems that operate 

at a distance from the ship and that can be rapidly 

reconfigured to accomplish specific mine, antisubmarine, and surface warfare missions. However, like 

the destroyer, this program’s requirements, operations, and technology created a number of challenges so that within the program’s tight schedule 

between the delivery of the initial version of the 

ship and subsequent—and more sophisticated—

versions, there would be little time to draw on lessons learned. As a result of our work, the Congress 

has begun to take action to limit the Navy’s ability 

to procure subsequent versions until the results of 

an operational evaluation of the initial version is 

completed and the Navy has reported on its acquisition strategy for the subsequent versions. 

(GAO-04-973, GAO-05-255, GAO-05-752R, and 

GAO-05-924T)
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2.21.C. Highlighting Issues Confronting DOD 

in Managing Its Facilities Infrastructure: For 

several years, our reports on DOD infrastructure 

have frequently cited the underfunding of maintenance and repairs, resulting in the deterioration of 

facilities, and the negative effects on the quality of 

life for those living and working at military installations and on their ability to accomplish their mission activities. Our July 2005 report on DOD’s 

selection process and recommendations for its 2005 

round of base realignments and closures indicated 

the process followed was generally logical, was reasoned and well documented, and has the potential 

for financial benefits and some reductions in excess 

infrastructure capacity; however, mechanisms will 

be needed to monitor implementation of finalized 

recommendations to validate and periodically 

update projected financial benefit estimates. In June 

2005, we recommended that DOD resolve longstanding inconsistencies among the services’ definitions of base operations and support functions and 

expedite development and consistent application of 

a model for determining requirements. Also in June 

2005, we reported that military training ranges are 

in varying degrees of degradation or lacked the necessary upgrades to meet training needs. DOD concurred with our recommendations that focused on 

the need for a more comprehensive approach for 

addressing deficiencies to ensure that its military 

ranges are sustainable and modernized, provide for 

more realistic training, and achieve DOD’s transformation goals. Finally, our May 2005 report on 

DOD’s efforts to privatize its utility systems found 

that the department’s economic analyses supporting 

individual utility privatization decisions gave an 

unrealistic sense of financial benefit to a program 

that generally increases government costs in order 

to pay contractors for enhanced services and capital 

improvements. We made several recommendations 

to help ensure the reliability of future analyses and 

to improve the implementation and oversight the 

program. (GAO-05-433, GAO-05-534, GAO-05-556, 

and GAO-05-785)

2.22.C. Contributing to Congressional 

Oversight of Transformation of the Armed 

Forces: Transformation is one of three top priorities of the National Military Strategy. DOD’s transformation includes a number of efforts to adopt 

new operational concepts, restructure forces, and 

rebalance its active and reserve components in 

order to prepare the force to meet future global 

challenges. We contributed to congressional oversight of DOD’s transformation plans by reporting on 

three key areas: DOD’s New Triad, which defines 

the strategic capabilities that play a critical role in 

defending the United States; the Army’s modular 

force initiative; and DOD’s initiatives to rebalance 

active and reserve forces. First, we reported on the 

need for greater visibility of projected spending and 

future investments for DOD’s New Triad. The New 

Triad is an effort by DOD to significantly change its 

definition and conceptual framework for its strategic 

capabilities to include not only the nuclear capabilities, but also offensive conventional strike forces, 

active and passive defenses, and a revitalized 

defense infrastructure. Second, we testified on the 

Army’s efforts to convert its division-based force to 

a modular brigade-based force—considered to be 

the most significant restructuring of the Army since 

World War II. We noted that the Army will be challenged to provide its new modular units with some 

required skilled personnel and equipment needed 

to achieve planned capabilities. We also reported 

on the services’ plans to move servicemembers to 

high-demand specialties and noted that the plans 

are not fully developed and funding has not been 

identified to implement the planned changes. 

Finally, we reported that the Army’s current policy 

of maintaining its reserve forces at low levels of 

readiness has resulted in unplanned and ad hoc 

transfers of personnel and equipment to deploying 

units, which have degraded the ability of nondeployed units to prepare for future overseas or 

homeland missions. (GAO-05-21, GAO-05-200, 

GAO-05-443T, GAO-05-540, GAO-05-660, and 

GAO-05-962R)

2.23.C. Contributing to Improved Warfighter 

Support and Readiness: We identified five systemic deficiencies in the way DOD’s supply chain 

provided support to U.S. troops in Iraq that led to 

shortages of tires, batteries, body armor, uparmored high-mobility multipurpose wheeled vehicles and armor kits, and other items. DOD’s ability 

to achieve its goal of providing sufficient numbers 

of the right items at the right time to meet the 

warfighter’s needs was impeded by inaccurate Army 

war reserve spare parts requirements, inaccurate 

supply forecasts, insufficient and delayed funding, 

delayed acquisition, and ineffective distribution. We 

recommended that DOD take numerous actions to 

enhance logistics support to deployed forces, such 

as update war reserve models and run them annu-
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PART IV: Appendixes

ally to determine war reserve requirements, develop 

models for computing supply requirements for 

operations and provide the item managers with 

timely information for making supply decisions, 

assess the industrial-base capacity to meet updated 

demands for critical items, clearly state who has 

responsibility and authority for synchronizing supply distribution from the United States to deployed 

units during operations, and establish common supply information systems that can requisition and 

match incoming supplies to facilitate expeditious 

and accurate distribution. (GAO-05-275)

2.24C. Contributing to Congressional 

Oversight of the Development and Design of 

DOD’s National Security Personnel System: 

DOD’s new personnel management system—the 

National Security Personnel System—will have farreaching implications for civil service reform across 

the federal government. If designed and implemented properly, this system could serve as a 

model for governmentwide transformation in 

human capital management. The 2004 National 

Defense Authorization Act gave DOD significant 

flexibilities for managing more than 700,000 defense 

civilian employees. In February 2004, DOD and the 

Office of Personnel Management (OPM) released 

for public comment the proposed regulations for 

the new system. We contributed to the debate by 

providing the Congress with timely information and 

testimony on the far-reaching implications that 

DOD’s new personnel management system will 

have, not just for the management of the department, but for civil service reform across the federal 

government. For example, the Comptroller General 

testified on our preliminary observations on DOD’s 

proposed National Security Personnel System regulations in such areas as pay and performance management, adverse actions and appeals, and labormanagement relations; the multiple challenges 

DOD faces in implementing the new system; and a 

governmentwide framework to advance human 

capital reform. In addition, our written products on 

DOD’s efforts to design its new personnel management system helped the Congress monitor and 

assess the progress of DOD’s implementation effort. 

(GAO-05-432T, GAO-05-517T, GAO-05-559T, 

GAO-05-641R, GAO-05-770R, GAO-05-771R, and 

GAO-05-730) 

2.25.C. Helping Shape the Debate on 

Improving Military Compensation: The cost to 

provide military compensation—which includes a 

myriad of pays, benefits, and deferred compensation—has grown steeply in recent years. This 

upward cost trend is especially dramatic for certain 

military-related entitlements, like providing lifetime 

health care for retired members and their families. 

The growth has been somewhat obscured, however, because the total cost of military compensation is scattered around the federal budget, leaving 

the Congress with an incomplete picture of the true 

costs. We reported in July 2005 that the cost to the 

government for providing active duty compensation 

had grown by fiscal year 2004 to about $158 billion, 

or approximately $112,000 for each active duty 

member. More than half these costs were for benefits and deferred compensation, such as retirement 

and health care. DOD’s approach is inefficient and 

may not be appropriate for meeting the human capital demands facing the military in the 21st century. 

Moreover, it has left many military members unsatisfied with their pay and benefits, despite their large 

and growing costs. Our work has served to stimulate and shape the debate within the executive 

branch. For example, the Comptroller General in 

July 2005 briefed the Defense Advisory Committee 

on Military Compensation. Our findings also alerted 

the President, the Congress, and the American people that DOD’s approach may not be affordable in 

the longer term, especially when considered against 

the inevitable fiscal constraint facing the military 

and the nation. People are an organization’s most 

important asset, but DOD must balance its investments across a wide range of programs, including 

infrastructure and hardware. Like many other federal programs described in our report entitled 21st 

Century Challenges: Reexamining the Base of the 

Federal Government, we believe military compensation is an area for reexamination. (GAO-05-325SP

and GAO-05-798)

2.26.C. Influencing DOD’s Plan to Improve 

Supply Chain Management: In April 2005, the 

Director of OMB testified his agency agreed that fixing the management deficiencies highlighted by our 

high-risk report has the potential to save billions of 

dollars, dramatically improve service, and 

strengthen public confidence and trust in the performance and accountability of government. He 

then announced a DOD, OMB, and GAO collaborative effort to reduce DOD’s supply chain manage-
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PART IV: Appendixes

ment risk level. To more efficiently and effectively 

supply support to the warfighter, DOD would prepare a plan for improving the visibility over supplies, the accuracy of supply forecasting, and the 

seamless distribution of supplies in support of 

deployed forces. Since then, DOD has been developing its plan for improving management practices 

and soliciting comments from OMB and GAO on its 

format and content. The draft plan cites goals, specific focus areas for improvement, the responsible 

organizations, baseline metrics and data for measuring progress, performance targets for fiscal years 

2005 through 2007, and details on 10 specific initiatives it expects will contribute to achieving these 

targets. We are waiting for DOD to finalize and fully 

implement the plan. (GAO-05-207)

2.27.C. Improving the Use of Private Security 

Providers in Iraq: The United States is spending 

billions of dollars to reconstruct Iraq while combating an insurgency that has targeted military and 

contractor personnel and the Iraqi people. This 

environment, coupled with the fact that providing 

security for agencies and contractors is not part of 

the U.S. military’s stated mission, created a need for 

U.S. government agencies and reconstruction contractors to obtain substantially more security services than are typically needed when operating in 

other countries. Our work found that neither the 

agencies nor the reconstruction contractors were 

fully prepared to address this need. As a result, contractors had difficulty obtaining suitable security 

providers, and coordination between the military 

and private security providers continued to be problematic. In addition, agencies had limited data on 

the role, cost, and implications of using private 

security providers in Iraq. Our work provided the 

Congress information to increase its understanding 

of the issues associated with using private security 

providers to support reconstruction efforts and 

prompted DOD and other reconstruction agencies 

to initiate efforts to address the issues we identified. 

(GAO-05-737)

2.28.C. Improving the Outcomes of DOD’s 

Space System Acquisitions: In fiscal year 2006 

alone, DOD expects to spend almost $20 billion to 

develop and procure satellites and other space systems. These systems collect information on the 

capabilities and intentions of potential adversaries 

and enable U.S. military forces to be warned of missile attacks and to communicate and navigate while 

avoiding hostile actions, making them increasingly 

critical to every facet of military operations as well 

as the U.S. economy and homeland security. DOD’s 

introduction of these important capabilities over 

time has not come without difficulties. Space system 

acquisitions have experienced problems over the 

past decade that have driven up costs by billions of 

dollars and delayed the delivery of needed capabilities to the warfighter. Since 2003, we have pointed 

out that DOD’s acquisition policies and processes 

have not fostered a disciplined, knowledge-based 

approach to acquisitions. In response to our 

reports, DOD revised its policies and processes to 

increase the knowledge about space programs 

before investment decisions are made, and the Congress has held hearings on how to get better outcomes from space system acquisitions. 

(GAO-05-570R and GAO-05-891T)

2.29.C. Improving Management of Funding for 

the Global War on Terrorism: We recently 

reviewed the reasonableness of DOD’s fiscal year 

2005 supplemental budget request to support the 

Global War on Terrorism, its use of budgeted funds 

in prior years, its future resource needs, and the status of its war expenditures. We identified significant 

problems with DOD’s processes for recording and 

reporting costs related to the war, raising concerns 

about the reliability of cost data used by DOD and 

the Congress in determining future funding needs. 

We also reported separately on the adequacy of 

supplemental appropriations for the war, identifying 

gaps between funding and war-related expenses, 

and the various actions DOD took to cover the difference, including deferring programs, to free up 

funds to help cover the gaps. We found that DOD 

had not considered using all available funds that 

were intended to support the war. If DOD had 

done so, it could have reduced or eliminated the 

gaps. We made several recommendations to help 

improve the reliability of DOD’s cost reporting. In 

response, DOD has taken a range of corrective 

actions, including revising pertinent guidance, correcting recording errors, and establishing new methods for determining and reporting costs. 

(GAO-05-767 and GAO-05-882)

2.30.C. Improving Management of DOD’s 

Business Transformation Efforts: DOD 

spends billions of dollars to sustain key business 

operations intended to support the warfighter, 

including systems and processes related to the man-
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PART IV: Appendixes

agement of contracts, finances, the supply chain, 

support infrastructure, and weapons systems acquisition. DOD has embarked on a series of efforts to 

reform its business operations, including modernizing underlying IT business systems. However, serious inefficiencies remain. The areas of DOD’s 

overall management approach that remain high risk 

include business transformation; business systems 

modernization; contract, financial, supply chain, 

and support infrastructure management; and 

weapon systems acquisition. Furthermore, limitations in DOD’s approach to strategic planning and 

budgeting hinder its efforts to transform military 

capabilities and supporting business operations. 

During this fiscal year, we reported and testified on 

inefficiencies in DOD’s business operations, such as 

the lack of sustained leadership, the lack of a strategic and integrated business transformation plan, and 

inadequate incentives. In particular, we pointed out 

the need for DOD to establish a chief management 

official to lead the department’s overall business 

transformation efforts. In response to our work, 

DOD has acknowledged the need for better leadership accountability and has designated a senior official to be the focal point for business 

transformation. It has also stated that it is developing a plan to guide key business reform efforts. We 

will continue to monitor DOD’s efforts in these 

areas. (GAO-05-140T, GAO-05-207, GAO-05-520T, 

and GAO-05-629T)

Advance and protect U.S. 

international interests

2.31.A. Designating American Samoa as a 

High-Risk Grantee: After the Congress cited our 

December 2004 report and its recommendations, 

the Deputy Assistant Secretary of the Interior 

announced in June 2005 that the department was 

designating the American Samoa government as a 

high-risk grantee as a tool to encourage other federal agencies to support the fiscal reform process in 

American Samoa. We had assisted the Congress in 

drafting language for a congressional report that 

would implement our recommendation. According 

to the report, the committee had reviewed our 

recent report concerning accountability for federal 

grants to American Samoa and urged the Secretary 

to use his authority to encourage other agencies to 

consider designating American Samoa a high-risk 

grantee. In order to be removed from high-risk category, the American Samoa government will have to 

satisfy three conditions: (1) complete single audits 

by the statutory deadline, resulting in materially 

clean opinions, for 2 consecutive years; (2) have a 

balanced budget for 2 consecutive years, without 

regard for nonrecurring windfalls such as insurance 

settlements; and (3) remain in compliance with the 

memorandum of agreement executed with the 

Department of the Interior in 2002, as well as the 

related fiscal reform plan. (GAO-05-41)

2.32.A. Strengthening the Visa Process as an 

Antiterrorism Tool: Using our work as a primary 

guide, the Department of State (State) has strengthened the visa process as an antiterrorism tool. State 

issued guidance emphasizing national security as 

the department’s first priority in the visa process; 

developed more than 80 standard operating procedures to ensure that consular officers properly 

review visa applications, effectively fulfill their 

national security responsibilities, and have a stepby-step, unambiguous guide for all procedures; 

established special teams to visit posts and reinforce 

standard operating procedures and management 

practices; and developed and enhanced training on 

analytic interviewing techniques, fraud prevention, 

counterterrorism, and the use of the Consular Lookout and Support System to check names on visa and 

passport applications. (GAO-03-132NI)

2.33.A. Improving Programs to Protect 

Internally Displaced Persons: In response to 

our work, the United Nations established a specific 

division to coordinate overall efforts to assist internally displaced persons—those forced to flee their 

homes because of armed conflict and persecution 

but who remain within their own country. The 

United Nations High Commissioner for Refugees 

(UNHCR) conducted a detailed review of its efforts 

to assist and protect displaced persons and, according to State officials, has implemented a more 

robust response for internally displaced persons. 

Ending a bureaucratic stalemate that lasted several 

years, the United States Agency for International 

Development (USAID) was designated the lead U.S. 

agency for internally displaced persons and instituted triweekly coordination meetings with State. In 

response to our recommendation that the Secretary 

of State strengthen international organizations’ protection efforts by implementing training programs 

and forming country-level protection working 
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PART IV: Appendixes

groups, United Nations’ organizations, U.S. government agencies, and nongovernmental organizations 

implemented internally displaced persons training 

programs for their staff. Also, according to State and 

USAID officials, country-level protection working 

groups are standard practice in countries with refugees and internally displaced persons. For example, 

in Sudan there are three protection working groups 

in Darfur. Finally, in response to our recommendations that the Secretary of State include a focus on 

internally displaced persons in annual reporting, 

State increased the breadth and scope of internally 

displaced persons reporting in its annual human 

rights report. State also improved the reporting format on internally displaced persons’ issues by concentrating the bulk of its findings into one section of 

the individual country reports and harmonizing 

report language. (GAO-01-803) 

2.34.A. Improving Efforts to Employ U.S. 

Citizens at United Nations’ Organizations: In 

response to our recommendations for increasing 

efforts to achieve equitable representation of Americans employed in United Nations’ organizations, 

State has undertaken several actions. Beginning in 

2002, State incorporated U.S. employment targets 

for the United Nations and a strategy for implementing those targets in its performance and accountability report. State’s recruitment strategy includes 

establishing and coordinating governmentwide 

efforts, promoting the detail and transfer of federal 

employees, and working with United Nations’ agencies to encourage their hiring of more Americans. 

Also, State directed its missions to United Nations’ 

organizations to redouble their efforts to promote 

increased U.S. representation on the staffs of United 

Nations’ agencies by meeting with each of the 

heads of the major United Nations’ agencies for 

which they were responsible. Each mission received 

specific guidance on what either the prescribed 

geographic distribution targets or negotiated targets 

were for each organization. As part of this effort, 

State provided each mission the department’s 

annual reports to the Congress on efforts by the 

United Nations to employ Americans with specific 

instructions to share the report with United Nations’ 

officials and encourage better recruitment of U.S. 

citizens. Consequently, some United Nations’ agencies are more aware of U.S. employment issues and 

have taken strides to ensure that the United States 

does not fall below its geographical target. For 

example, because many of their U.S. employees will 

be eligible for retirement soon, the Secretariat has 

invited the United States to offer the National Competitive Recruitment exam. (GAO-01-839)

2.35.A. Improving Information on 

International Development Results: As a result 

of our work, USAID reported that it aggregated performance data for agencywide reporting in sectors 

where data are sufficiently comparable to use as 

common indicators. We recommended that USAID’s 

Administrator provide clearer evidence of progress 

toward achieving agency outcomes, including, 

where possible, aggregate performance results 

across agency objectives and the activities under 

them. Although USAID reported that it made 

progress toward achieving the selected outcomes, 

the extent of the progress was unclear because the 

agency based its support on disaggregated and, in 

some cases, out-of-date and selective data. 

(GAO-01-721)

2.36.A. Improving Reporting of 

Microenterprise Results: USAID uses information from its Microenterprise Results Reporting system to prepare annual reports. This system was 

created to track USAID’s funding and program data 

related to small, informally organized businesses, 

called microenterprises. In response to our recommendations to improve the accuracy and completeness of its annual reports, USAID has undertaken 

several corrective actions that included adding language citing the limitations of its data on outreach 

to the poor and improving the collection, analysis, 

and reporting of data on meeting its spending targets. For example, it issued new guidance on what 

information should be collected, added requirements to perform spot checks on the data to 

improve accuracy, provided better instructions to 

clearly stipulate what portion of USAID assistance to 

institutions can be reported as microenterprise 

funding, and added clarifications in its annual report 

to better inform the reader of USAID’s contribution 

to the institutions. Additionally, USAID took several 

actions to improve the completeness and accuracy 

of its reporting on microfinance institution sustainability. These actions include a requirement that 

each institution explain its sustainability calculations, that USAID review and follow up on problematic calculations, and that annual reports 

highlight the variance in sustainability reporting. 
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PART IV: Appendixes

Finally, USAID’s report will now indicate that 

USAID funding alone is not responsible for the 

accomplishments highlighted. (GAO-04-171)

2.37.A. Improving Workforce Planning at 

USAID: In response to our recommendation that 

the USAID Administrator develop and institutionalize a strategic workforce planning and management 

system to help the agency plan for changes in its 

workforce and continue operations in an uncertain 

environment, USAID initiated a comprehensive 

workforce analysis and planning effort to predict 

workload and staffing demands for the future, identify current workforce gaps, and develop necessary 

solutions to close those gaps. The workforce plan 

institutes a process that will allow the agency to 

project its staffing requirements and to develop targeted initiatives to meet those requirements. Plans 

have been made to integrate the workforce planning model and its results into other agency planning processes. We reported that USAID’s ability to 

deliver foreign assistance in an uncertain environment was becoming increasingly difficult as a result 

of several human capital vulnerabilities, such as its 

ad hoc approach to workforce planning. 

(GAO-03-946)

2.38.A. Significantly Reducing the Wait for 

Student Visas: As a result of our work, science 

students and scholars should be able to obtain visas 

significantly faster now than in 2004. In response to 

our recommendation, the Secretary of State, in coordination with the Director of the Federal Bureau of 

Investigation, the Secretary of Homeland Security, 

and others, reduced the length of time it takes for 

science students and scholars to obtain visas by taking several actions to improve the program and 

shorten the time allotted for security checks from 56 

days to 15 days. For example, State and an intelligence agency agreed that the agency would reduce 

its response time from 15 to 10 days. 

(GAO-04-371 and GAO-05-198)

2.39.A. Expanding Refugee Protection: State 

worked with UNHCR to respond to our recommendations to reform elements of UNHCR’s human capital management, including its staffing system, in 

order to better protect refugee women and girls 

from sexual abuse and violence. Specifically, 

UNHCR implemented a new personnel rotation policy to fill positions at hardship posts, began a pilot 

program to provide training on protection for nongovernmental organizations working with UNCHR 

in the field, institutionalized a project to fill staffing 

gaps, and included discussions on the prevention of 

sexual exploitation of refugee women and girls at 

meetings and in an annual report. State urged 

UNHCR to undertake these changes and contributed funding for projects to provide training on protection and provide UNHCR with personnel to fill 

staffing gaps. (GAO-03-663)

2.40.A. Developing More Comprehensive 

Interagency Strategic Plans for Democracy 

Assistance: In response to our work, USAID and 

State included in their first jointly prepared strategic 

plan a strategic goal of advancing the growth of 

democracy and good governance. The plan refers 

to working with key partners and crosscutting programs and highlights key areas of focus, including 

promoting the rule of law and developing governance and human rights infrastructures. The two 

agencies also (1) established a joint policy council 

to ensure that interagency coordination is implemented at the working level and (2) are developing 

a common tool at the country level to reflect strategic planning. USAID also held training sessions for 

democracy officers aimed at enhancing the quality 

of democracy programs by providing exposure to 

the latest academic thinking, programming from 

other regions, and comparison among similar 

approaches now being undertaken in Latin America. (GAO-03-358)

2.41.A. Improving the Accountability and 

Effectiveness of Microenterprise Programs: 

In response to our recommendations intended to 

improve program accountability and effectiveness, 

the House International Relations Committee crafted 

legislation to improve the accountability and impact 

of microeconomic development funds. Specifically, 

the Congress noted that USAID is not currently 

organized to adequately coordinate, implement, and 

monitor such programs. The Congress passed the 

Microenterprise Results and Accountability Act of 

2004 in December 2004. The law required USAID to 

establish an Office of Microenterprise Development 

and implement a program of central funding in 

order to improve program effectiveness, accountability, and efficiency. (GAO-04-171)
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PART IV: Appendixes

2.42.A. Reducing the Amount Requested for 

the Millennium Challenge Account: Our work 

contributed to the Congress’s decision to appropriate $1.5 billion for the Millennium Challenge 

Account in fiscal year 2005—a reduction of $1 billion from the President’s request. In March and June 

2004, we provided budget papers and follow-up 

briefings to the Congress to help it assess the President’s $2.5 billion fiscal year 2005 budget request 

for the account, which is a new foreign assistance 

program intended to provide economic assistance 

to countries that demonstrate a commitment to ruling justly, investing in people, and encouraging 

economic freedom. Our work made a unique contribution by providing a framework for identifying 

the relationships and trade-offs between funding 

levels, compact length, and numbers of compacts 

under several illustrative scenarios. We showed the 

impact of reducing the President’s budget request 

by about $1 billion; suggested that the Millennium 

Challenge Account could compensate for lower levels of funding by reducing compact length, assistance target levels, or both; and estimated the effect 

of funding compacts partly from future appropriations. The fiscal year 2005 appropriations conference report recommended that the account 

negotiate shorter duration compacts because of 

budget constraints and directed it to fund compacts 

from existing appropriations, rather than partially 

using future appropriations. (Based on briefings)

2.43.A. Improving Consultation on United 

Nations’ Peacekeeping: In September 2001, we 

recommended that the Secretary of State provide 

the Congress with timely, detailed, and complete 

information about shortfalls for new or substantially 

revised peacekeeping operations and plans to mitigate the shortfalls. In response, State has provided 

detailed briefings to the Congress each month about 

new or substantially revised operations and the 

issues that confront the department. Also, in its notifications to the Congress, State now includes discussions about the shortfalls in operations and the 

steps to mitigate them. (GAO-01-917)

2.44.A. Improving Oversight of the 

Multinational Force and Observers (MFO): 

We recommended that State ensure that staff with 

accounting expertise carry out financial oversight 

responsibilities for MFO—the body that monitors 

the peace treaty between Egypt and Israel—and 

that State’s MFO Advisory Board should monitor 

and document State compliance with its oversight 

guidelines. In response, the board included representatives from State’s IG to review MFO audits and 

adopted a mission statement to ensure adequate 

and documented review and analysis of MFO’s 

activities and budget in accordance with established 

guidelines. State’s IG reviewed MFO’s latest annual 

external audit and financial statements in August 

2004 and found no problems. A State official said 

that the IG will routinely participate on the board 

and will check on the quality of MFO’s audits 

through an annual review of MFO-audited financial 

statements and relate them to prior years’ statements. Moreover, any irregularities will be brought 

to the attention of State bureaus. We noted that 

State had not provided employees who possess the 

expertise to carry out many of its financial oversight 

responsibilities for MFO. (GAO-04-883)

2.45.A. Improving USAID’s Caribbean Housing 

Reconstruction Program: Based on our observations, USAID and its primary contractor for housing refined their selection criteria and implemented 

mechanisms to make sure only those most in need 

obtained assistance. We are concurrently monitoring 

the progress of USAID’s efforts to repair damage in 

Grenada, Jamaica, and Haiti caused by several hurricanes. We had previously identified weaknesses in 

the selection process, observing that the contractor 

did not have mechanisms for staff conducting site 

inspections to verify that people applying for housing assistance were only those in most need. (Based 

on a briefing)

2.46.A. Improving Counternarcotics 

Assistance to Colombia: In response to our recommendations, State and DOD provided a report to 

the Congress detailing support for U.S. counternarcotics assistance to Colombia, including funding, 

training, maintenance, and logistics for the U.S.-

provided helicopters. A subsequent DOD white 

paper also outlined timeliness, planning, and coordination to eventually turn operations and maintenance responsibilities over to the Colombians. We 

recommended that the Secretaries of State and 

Defense (1) determine training and logistical support requirements and identify future funding 

sources to support the U.S.-provided helicopters 

and other major equipment items already delivered 

to Colombia and (2) complete U.S. implementation 

plans and coordinate with Plan Colombia—Colombia’s integrated strategy to meet its most pressing 
162 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART IV: Appendixes

challenges, including combating the narcotics 

industry—so that any future U.S. assistance is adequately supported and plans for its use are clearly 

identified and agreed to. (GAO-01-26) 

2.47.C. Strengthening Accountability at the 

Global Fund: Based partly on our work, legislation was introduced that would make 25 percent of 

the U.S. contribution to The Global Fund to Fight 

AIDS, Tuberculosis, and Malaria conditional on the 

Secretary of State’s certification that the fund has 

undertaken certain actions, including actions to 

(1) establish clear progress indicators upon which 

to determine the release of incremental disbursements, (2) release such disbursements only if positive results have been attained based on these 

indicators, and (3) provide support and oversight to 

country-level entities to enable them to fulfill their 

mandates. (GAO-05-639)

2.48.C. Overseeing the United Nations’ Reform 

and the Oil for Food Program: Earlier this year, 

we testified before the Congress that the United 

Nations had not assessed the status and impact of 

its reforms or developed a system to monitor and 

evaluate program results. We also identified 702 

findings and 667 recommendations in the 58 internal audit reports of the Oil for Food program in Iraq 

but noted several limitations on scope and authority. Partly on the basis of our work, the Congress 

introduced a bill requiring reforms in the United 

Nations’ accountability and directing us to review 

the implementation of United Nations reforms. The 

Congress also cited our report on United Nations 

reform efforts in a draft United Nations reform bill. 

(GAO-05-346T and GAO-05-392T)

2.49.C. Identifying Challenges to Efforts to 

Stabilize and Rebuild Iraq: We identified the 

challenges to U.S. efforts to stabilize Iraq, reconstruct Iraq’s essential infrastructure, and support its 

elections. We reported that the United States has 

provided about $24 billion for these purposes from 

fiscal years 2003 through 2005. Our analysis of 

Iraq’s security showed that the insurgency in Iraq 

has grown in intensity and sophistication. Moreover, 

the difficulty in training and equipping Iraqi forces 

and developing capable and loyal Iraqi leadership 

challenge efforts to stabilize Iraq and withdraw U.S. 

troops. We found that U.S. reconstruction efforts 

have made some progress in increasing Iraq’s electrical generation capacity, refurbishing oil facilities, 

restoring some water treatment plants, and rehabilitating some health facilities. However, as of May 

2005, Iraq’s crude oil production and power generation were lower than before the 2003 conflict, and 

some completed water projects were not functioning as intended. Moreover, reconstruction faces significant challenges, such as rebuilding in an 

insecure environment, ensuring that rehabilitated 

infrastructure is maintained after projects are turned 

over to the Iraqis, and measuring program results. 

In the water and sanitation sector, we recommended actions to improve U.S. efforts to measure 

progress and impact and to help the Iraqis operate 

and maintain new and repaired facilities. We also 

reported that the United States provided about $130 

million to support Iraq’s elections. All these findings 

were widely reported in the national media, helped 

inform American taxpayers about U.S. efforts in 

Iraq, and provided the Congress with crucial oversight information as it considers legislative action. 

(GAO-05-431T, GAO-05-872, GAO-05-876, and 

GAO-05-932R)

2.50.C. Bolstering Efforts to Prevent Terrorists 

and Criminals from Obtaining U.S. 

Passports: Our work uncovered alarming security 

gaps in U.S. passport operations that made it more 

difficult to protect U.S. citizens from terrorists, criminals, and others who would do harm to the United 

States. We found that State was not receiving information from the Terrorist Screening Center—established to, among other things, provide continual 

operational support for thousands of federal screeners worldwide—on certain persons listed in the federal government’s consolidated terrorist watch list 

and, therefore, could not integrate that information 

into its name-check system. We also found that State 

was not routinely obtaining the names of other individuals wanted by both federal and state law 

enforcement authorities for various crimes—some 

very serious. We made a number of recommendations for correcting these and other systemic weaknesses that we identified in State’s passport fraud 

detection efforts. The Congress expressed grave 

concerns about the security vulnerabilities we identified and, citing maintaining the integrity of the U.S. 

passport as a critical component of our global effort 

to fight terrorism, called upon State and the Department of Justice (Justice) to implement our recommendations. The agencies have begun 

implementing actions to close these critical security 

gaps. (GAO-05-477 and GAO-05-853T)
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Respond to the impact of global 

market forces on U.S. economic 

and security interests

2.51.A. Using Better Measures for Trade 

Adjustment Assistance Outcomes: In response 

to our recommendations to establish more effective 

measures of desired outcomes of Trade Adjustment 

Assistance Centers, which were established to assist 

firms that have been adversely affected by import 

competition, Commerce established new measures 

to determine the percentage of clients taking action 

as a result of the assistance facilitated by the centers 

and the percentage of those actions taken by centers’ clients that achieved the expected results. Commerce subsequently reported that the performance 

measures were established to determine the value 

added to the centers, to further define the relevance 

of the assistance by the centers, and to determine if 

the assistance facilitated by the centers is market 

based. This responds to our second recommendation that Commerce apply these measures as criteria 

to evaluate the effectiveness of the centers in helping injured firms adjust to import competition. 

(GAO-01-12)

2.52.A. Strengthening DOD’s Anti-Tamper 

Program: U.S. weapons and technologies that are 

exported, stolen, or lost or damaged during combat 

and routine missions are vulnerable to reverse engineering and other exploitations, which can weaken 

U.S. military advantage, shorten the expected life of 

a system, and erode the U.S. industrial base’s technological competitiveness. In an effort to protect 

U.S. weapons and technologies from exploitation, 

in 1999 DOD established a policy directing each 

military service to implement anti-tamper techniques—a policy that has proven difficult to implement on individual weapon systems. Consistent 

with recommendations we made in March 2004, 

DOD issued a report that provides guidance to program managers about the relative cost and effectiveness of generic anti-tamper techniques. According 

to DOD, the guidance will help program managers 

consider anti-tamper technologies in the design, 

development, and fielding of their systems. 

(GAO-04-302)

2.53.A. Improving Oversight of Trade 

Adjustment Assistance: We identified expenditures of almost $1.7 million for training, trade readjustment allowances, relocation, and job search 

allowances that were reported for trade adjustment 

petitions that according to DOL’s database, were 

not certified and had been denied. Based on our 

analysis and recommendation, DOL identified 

reports from 31 states that included petitions that 

had been denied and asked the states to review 

their reports to determine whether these were data 

entry errors or if benefits were wrongly paid. As of 

March 2003, none of the states had identified any 

wrongly paid benefits, according to DOL. Further, 

DOL stated that it has corrected all errors that it has 

identified. (GAO-01-59 and GAO-01-988T)

2.54.A. Improving Monitoring of Community 

Adjustment and Investment Program: In 

response to our recommendation, Treasury set up a 

system to monitor the number of jobs created or 

preserved by the borrowers of its loans and loan 

guarantees, as well as by grant recipients, in distressed communities under the Community Adjustment and Investment Program. The program 

conducted its first survey of job creation and preservation outcomes in September 2002 and plans to do 

its first survey of another program soon. Grant 

recipients report quarterly and in a final report on 

progress in meeting the annual goals. The Congress 

created the program in December 1993 to assist 

communities suffering job losses due to changing 

trade patterns with Mexico and Canada. 

(GAO/NSIAD-00-229)

2.55.A. Ensuring Decisions to Transfer U.S. 

Weapons and Technologies to Foreign 

Governments Are Adequately Informed: In 

2001, transfers of U.S. weapons and technologies to 

foreign governments totaled over $12 billion, representing 46 percent of the world market share—a 15 

percent increase from 1997. Before transfers are 

approved, the U.S. government must first determine 

if classified weapons or technologies can be 

released to the requesting country according to criteria set out in the National Disclosure Policy. To 

make this determination, a number of federal agencies and committees assess a number of factors 

including the risks that would be involved if a classified weapon or technology were to be compromised or end up in unfriendly hands. These 

assessments are based, in part, on intelligence infor-
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PART IV: Appendixes

mation. However, in July 2003, we found that the 

National Disclosure Policy Committee—which 

reviews and approves or denies requests for exceptions to the National Disclosure Policy—was operating with outdated Central Intelligence Agency risk 

assessments. Acting on our recommendations, the 

committee’s Executive Secretariat requested that the 

Central Intelligence Agency provide updated risk 

assessments for 23 countries. (GAO-03-694)

2.56.A. Improving Training under Trade 

Adjustment Assistance: The Congress acted on 

our matters for congressional consideration when it 

passed the Trade Act of 2002, inserting language to 

amend the Trade Act of 1974. Specifically, the language (1) permits workers to receive payments during breaks in training lasting up to 30 days, which 

allows workers to continue to receive income benefits during unavoidable, extended interruptions in 

training; (2) standardizes the training enrollment 

deadline for trade-affected workers; (3) refines 

training waiver policies for certified workers; and 

(4) expedites review of petitions by the Secretary of 

Labor, reducing the time from 60 to 40 days, 

thereby permitting displaced workers to more 

quickly access retraining and financial support services. (GAO-01-59 and GAO-01-988T)

2.57.A. Improving Information Security 

Practices: In response to the September 11, 2001, 

terrorist attacks, we have examined and reported on 

the adequacy of the steps that financial market participants have taken to reduce their vulnerability to 

attacks, including those by hackers attempting to 

gain unauthorized access to a specific organization’s 

networks or systems or those arising from malicious 

computer viruses or worms that seek to damage 

data or deny access to legitimate users. From October 2003 through April 2005, we reviewed the measures taken by selected critical financial market 

organizations, including exchanges, clearing organizations, and payment system processors, to protect 

themselves from electronic attacks. As part of these 

reviews, we found that the selected financial market 

organizations were taking steps to prevent their 

operations from being disrupted by electronic 

attacks. Each of the organizations had implemented 

the major elements of a sound information security 

program. However, at each of these organizations, 

we identified 11 to 38 suggested improvements that 

could be taken to further improve their protections 

against attacks. Many of the improvements we identified related to how these organizations could 

implement additional controls to prevent unauthorized access to networks and information systems 

and to better detect intrusion attempts when they 

occur. We briefed staff from SEC and the Federal 

Reserve Board of Governors on the detailed results 

of our reviews, and they both indicated that they 

will use our work to monitor the progress of the 

organizations they oversee in implementing the 

information security improvements. (GAO-05-679R)

2.58.A. Strengthening the Government’s Ability 

to Monitor Foreign Investors’ Compliance 

with National Security Agreements: In 1988, 

the Congress passed the Exon-Florio amendment to 

the Defense Production Act, authorizing the President to suspend or prohibit a foreign acquisition of 

U.S. companies if the acquisition poses a threat to 

national security. In some cases, the Committee on 

Foreign Investment in the United States—an interagency committee that is chaired by the Secretary of 

the Treasury and is responsible for reviewing foreign acquisitions—may negotiate an agreement 

with the foreign investor on measures to mitigate 

national security concerns. However, in 2002, we 

reported that weaknesses in some agreements made 

it difficult to ensure compliance. Specifically, we 

found that agreements did not indicate the agency 

responsible for monitoring compliance and lacked 

monitoring provisions, such as time frames for 

implementing mitigation measures and consequences for noncompliance. Consistent with our 

suggestions, the committee has begun including 

specific time frames for compliance and the specific 

member agency office responsible for reviewing 

compliance with recently negotiated agreements. 

(GAO-02-736)

2.59.C. Contributing to Federal Financial 

Literacy Efforts: Research has shown that many 

Americans lack the knowledge of basic personal 

economics they need to make informed financial 

judgments and manage their money effectively. Yet 

financial literacy is increasingly important in a world 

where consumers must choose from an array of 

complicated financial products and services and 

employees must take on more responsibility for 

their retirement savings. Our financial literacy forum 

contributed to federal and nationwide discussion on 

possible topics, target populations, and methods of 

delivery for federal financial education efforts and 

the role of program evaluation. Our study on con-
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PART IV: Appendixes

sumer knowledge and behavior regarding credit 

reporting outlined ways to improve consumers’ 

understanding of the information contained in 

credit reports and how their actions can influence 

the contents of their reports. The study will help the 

Financial Literacy and Education Commission—

which was established to improve financial literacy 

and education of people in the United States—and 

other groups following its lead to identify and penetrate particular demographic groups that would 

benefit the most from financial education efforts. 

(GAO-05-95 and GAO-05-223)

2.60.C. Developing an Approach to Analyze 

Offshoring of Services: Offshoring of services 

generally refers to an organization’s purchase from 

other countries of services that it previously produced or purchased domestically, such as software 

programming or services provided by telephone 

call centers. Our offshoring work has provided the 

Congress with an analytical approach for understanding a controversial and politically sensitive 

topic. The work took advantage of our ability to 

assemble a crosscutting team to analyze complex 

data to craft a unique report, which has served as 

the basis for numerous public presentations in the 

United States and Europe. Our analysis led the 

international Organisation for Economic Cooperation and Development to adopt our approach. The 

government of Sweden sought out the team for further coordination of the Organisation for Economic 

Cooperation and Development’s efforts to understand the impact of offshoring in Europe. We are 

now routinely included in offshoring panel discussions, due to our objective and clear analysis of the 

practice and concept of offshoring and the multiple 

U.S. databases that relate to offshoring. 

(GAO-04-932)

2.61.C. Improving Transparency of U.S. 

Reporting on Currency Manipulation Issues: 

In a 2005 review of currency manipulation issues, 

we provided comprehensive analysis on a key international policy issue and increased the transparency 

of Treasury reporting on its manipulation assessments. Our report provided objective information 

on the legal determinants of currency manipulation, 

differences between currency undervaluation and 

manipulation, and the basis for recent Treasury 

findings. Partly in response to our ongoing work, 

Treasury added information to its semiannual currency report about its criteria for manipulation 

assessments. In addition, Treasury introduced a link 

to Web-based information about U.S. consultations 

with the International Monetary Fund to meet a legislative requirement. (GAO-05-351) 

2.62.C. Prompting Action to Reform the U.S. 

Export Control System: Over the years, we have 

reported on the need to address weaknesses and 

inefficiencies in export controls to ensure that U.S. 

interests—economic as well as military—are safeguarded and that defense-related items do not fall 

into the wrong hands. We have made numerous 

recommendations aimed at correcting these weaknesses and inefficiencies, such as clarifying jurisdiction over the export of missile technologies and 

establishing formal guidelines for reviewing and 

monitoring the flow of export license applications. 

Despite our findings and recommendations, we 

reported early this year that the export control system remained fundamentally unchanged. As a result 

of our work, the Congress has begun to take action 

to reexamine and reform the U.S. export control 

system. (GAO-02-63, GAO-02-120, GAO-05-234, 

and GAO-05-468R) 
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PART IV: Appendixes

Source: See Image Sources.

Reexamine the federal 

government’s role in achieving 

evolving national objectives

3.1.A. Enhancing the Knowledge Base on 

Indicators: We have been working as a catalyst 

regarding approaches and options for measuring 

national performance using comprehensive key 

indicator systems. The U.S. government has 

invested billions of dollars in a rich variety of topical 

information (on the economy, the environment, and 

society and culture) that could underpin a national 

system. However, although several states, counties, 

and cities have developed key indicator systems, 

the United States lacks such a system at the national 

level. A comprehensive key indicator system for the 

United States could serve as a trusted source for reliable, fact-based information that could inform a 

much-needed reexamination of the base of existing 

programs, policies, functions, and activities. In fiscal 

year 2005, we issued the results of a wide-ranging 

study of comprehensive key indicator systems in 

the United States and elsewhere. We also contributed to the planning and implementation of the 

Organisation for Economic Development’s first 

World Forum on Key Indicators. The participation 

of over 500 officials representing 43 nations provided a key opportunity to share experiences and 

an impetus for further action and improvement. 

One such action was publication of the 2005 Factbook and an interactive Web site that present a 

range of statistics on member countries. At the 

Forum, representatives of the Key National Indicators Initiative discussed efforts to develop a comprehensive key national indicator system for the United 

States. We helped build the foundation for the Key 

National Indicators Initiative effort, which is housed 

under the National Academies. (GAO-03-672SP and 

GAO-05-1)

3.2.C. Reexamining the Base of the Federal 

Government: In February 2005, we issued a report 

calling for, defining, and illustrating how to carry 

out a fundamental reexamination of what the federal government does, how it does it, who does it, 

and how it gets paid for. Prompted by unsustainable fiscal commitments and the need to ready the 

federal government for the emerging challenges of 

the 21st century, the federal government and the 

Congress need to reexamine entitlements, tax policy, and discretionary spending governmentwide. 

The Congress held two hearings to learn more 

about such reexamination, and it has been a focal 

point of sustained outreach efforts agencywide. The 

report has been instrumental in beginning to shape 

both the interest of some in the Congress in how to 

deal with the 21st century challenges, as well as the 

lens through which we structure and prioritize our 

own work. (GAO-05-325SP, GAO-05-317T, and 

GAO-05-352T)

Support the transformation to 

results-oriented, highperforming government

3.3.A. Improving the Defense Information 

Systems Agency’s (DISA) IT Investment 

Planning and Management Controls: In March 

2002, we identified numerous opportunities for 

DISA to improve planning and management controls over its $3.5 billion annual IT spending. Implementation of our recommendations helped DISA 

realize improvements in its strategic planning 

(including development of a strategic plan and 

implementation of a plan), organizational structure 

management, enterprise architecture management 

(including soon using the architecture to support IT 

investment decisions), IT investment management 

Strategic Goal 3

Help Transform the Federal Government’s Role and 

How It Does Business to Meet 21st Century 

Challenges
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PART IV: Appendixes

(including soon implementing portfolio management), customer relations management, and knowledge management. While responding to these 

recommendations required major change in its 

management systems and required years to complete, the changes realized to date helped DISA 

focus on improving warfighter support and better 

focus its IT spending. (GAO-02-50)

3.4.A. Achieving Significant Financial Benefits 

by Leveraging DOD’s Buying Power: In fiscal 

year 2004, DOD spent over $127 billion on service 

contracts—more than two-thirds of the $189 billion 

spent by the entire federal government in that year. 

Despite this significant share of spending, DOD’s 

management of service procurement is inefficient 

and ineffective and the dollars are not always well 

spent. Many private companies have managed their 

procurements by using spend analysis, which 

involves analyzing spending patterns and coordinating procurement in order to achieve substantial 

financial benefits. In response to our report, DOD 

and contractor project managers pilot-tested Webbased technology that links and pulls data from disparate sources; maps and organizes the data into a 

common taxonomy of products, services, and suppliers; and produces spend analysis reports. The 

proposed virtual spend data warehouse will enable 

DOD to identify high-volume, high-dollar services 

and product spending—opportunities for strategic 

sourcing that will result in financial benefits and 

quality improvements. In March 2005, DOD 

approved a business case analysis to seek follow-on 

funding for developing a departmentwide spend 

analysis system. DOD projects $4 billion to $10 billion in annual financial benefits once the system is 

in place and used to support strategic sourcing 

across DOD. (GAO-03-661)

3.5.A. Encouraging Efficiency in DHS 

Acquisitions: In March 2003, 22 federal agencies 

and organizations essentially merged to form 

DHS—a transformation GAO has designated high 

risk since 2003. With a budget of almost $40 billion, 

DHS was challenged to leverage its substantial buying power and boost administrative efficiency. 

Based on our work, DHS has developed acquisition 

strategies for purchasing goods and services that 

include basic office supplies, ammunition, weapons, and IT. As a result of these strategies, DHS 

reported approximately $14 million in cost reductions and cost avoidances for fiscal year 2004, with 

cost reductions expected to continue to grow, 

according to agency officials. At the same time, DHS 

was challenged to maintain an effective acquisition 

workforce. The contracting workforce of one of 

DHS’s largest entities—with annual obligations for 

goods and services totaling $1.7 billion—had not 

grown sufficiently to manage an increased workload. In addition, Immigration and Naturalization 

Service field offices relied heavily on contracting 

officers who performed contracting duties along 

with their mission-related responsibilities and who 

are not career contracting officers. Consistent with 

our recommendations, DHS developed a plan, 

based on best practices, that defines the acquisition 

workforce, focuses on the need for continual training, and implements a certification program. DHS 

also phased out all collateral duty contracting officers, allowing only those individuals with specific 

contracting officer authority to execute contracts 

and related agreements on DHS’s behalf. 

(GAO-02-230, GAO-03-799, GAO-04-870, and 

GAO-05-179)

3.6.A. Providing Needed Rigor to the Coast 

Guard’s Oversight of Deepwater Program 

Contractors: The Coast Guard established the 

Deepwater program to modernize and replace its 

fleet of ships and aircraft used for search and rescue, drug interdiction, offshore inspection, and 

other missions that generally occur beyond 50 miles 

from shore. Deepwater is the largest and most complex procurement project in the Coast Guard’s history. In June 2002, the Coast Guard awarded a 

contract to a system integrator to develop and 

deliver the Deepwater assets, and from fiscal years 

2002 through 2004, the Congress appropriated 

almost $1.5 billion for the program. However, in 

March 2004 we reported that the Coast Guard’s 

evaluation of the system integrator’s performance 

lacked the rigor to effectively assess the contractor’s 

performance. We also found that the two subcontractors—Lockheed Martin and Northrop Grumman—were solely responsible for deciding whether 

to compete Deepwater assets or make the assets 

themselves, and the Coast Guard had no insight 

into these decisions. Based on our recommendations, the Coast Guard has improved the criteria for 

assessing the system integrator’s performance and 

has asked the system integrator to provide notification of a subcontractor decision to make instead of 

compete assets valued at $10 million or more. 

(GAO-04-380)
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PART IV: Appendixes

3.7.A. Ensuring Continued Investment in GSA’s 

Online Purchasing System: In 1995, GSA 

launched Advantage, an Internet-based system for 

ordering products and services online. As of 2002, 

GSA had spent $84 million to develop, implement, 

and maintain the system. However, 5 years after the 

system was launched, only 35 percent of all 

government-contracted vendors participated in the 

program, and agencies were largely using the system to compare pricing. To ensure GSA’s level of 

investment matched customer needs, we recommended that the agency develop a business case for 

an online ordering and market research system such 

as Advantage. In January 2005, GSA selected a new 

business strategy that would significantly enhance 

the system’s capabilities to serve as a broker 

between buyers and suppliers and provide agencies 

with an automated tool for formulating acquisition 

requirements and developing requests for quotes. 

Although GSA expects to invest $124 million to 

implement the enhanced system, the agency 

projects over $1.5 billion in financial benefits from 

electronic transactions, spend analyses (reviews of 

expenditures that shows how money is spent on 

goods and services), a searchable procurement data 

repository, and competitive pricing. This financial 

benefit has a present value of just over $1.3 billion. 

Consistent with our recommendation, GSA’s new 

business strategy also calls for reviewing and adding as appropriate new performance measures to 

track results and outcomes of the enhanced system. 

(GAO-03-328)

3.8.A. Delivering Results through 

Performance-Based Service Contracting: In 

fiscal year 2004, federal agencies spent roughly 

$189 billion acquiring services from contractors—an 

area we have designated high risk for over a decade 

for DOE, DOD, and the National Aeronautics and 

Space Administration (NASA), which together 

account for most of the federal spending on services. To achieve greater financial benefits and better outcomes, the Congress and OMB have 

encouraged agencies to use performance-based service contracting, where the contracting agency 

specifies the desired outcome and the contractor 

decides how best to achieve this outcome. Although 

performance-based contracts can encourage contractors to find innovative ways to deliver services 

and offer other significant benefits, agencies historically have not widely used this strategy. Consistent 

with our recommendations—particularly when 

acquiring unique and complex services that require 

strong government oversight, OMB’s Office of Federal Procurement Policy improved its guidance for 

using performance-based contracting and established a fiscal year 2005 target for using performance-based service acquisition methods. The 

office also partnered with the Defense Acquisition 

University, the Federal Acquisition Institute, federal 

government agencies, and industry associations to 

establish an online acquisition center of excellence. 

The Services Acquisition Reform Act of 2003 provides an additional incentive for the use of performance-based contracting by giving executive 

agencies authority to treat qualifying contracts or 

task orders as contracts for commercial items. The 

act also requires agencies to collect data on these 

contracts and OMB to report to the Congress on the 

use of this incentive. Finally, OMB has taken steps 

to better track civilian agencies’ use of performancebased service contracting. (GAO-02-1049 and 

GAO-03-716T)

3.9.A. Promoting a Well-Trained Federal 

Acquisition Workforce: Procurement reforms, 

technological changes, and downsizing have placed 

unprecedented demands on the federal acquisition 

workforce. Acquisition workers are now expected 

to have greater knowledge of market conditions, 

industry trends, and the technical details of the 

commodities and services they procure. Despite 

congressional reforms enacted in the 1990s to 

ensure the federal acquisition workforce has the 

right skills to meet such challenges, we reported in 

July 2002 that agencies needed to better define and 

track their acquisition workforce training to inform 

the agencies’ human capital strategic planning and 

ensure an adequately trained acquisition workforce. 

A number of actions have been taken in response 

to recommendations we made. As required by the 

Services Acquisition Reform Act of 2003, GSA established an acquisition workforce training fund, and 

certain civilian executive agencies have designated 

noncareer chief acquisition officers to establish clear 

lines of authority, accountability, and responsibility 

for acquisition decisions. OMB’s Office of Federal 

Procurement Policy required each chief acquisition 

officer to implement a budget strategy that reflects 

his or her agency’s workforce development needs 

and organizational structure and to appoint an individual with acquisition experience to lead the 

agency’s acquisition career management program. 

The interagency Chief Acquisition Officer Council 
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PART IV: Appendixes

has established a Human Capital Working Group 

that is assessing skills required in the federal acquisition workforce, identifying skill gaps, and targeting training funds to those gaps. (GAO-02-737 and 

GAO-03-281)

3.10.A. Improving OMB’s Competitive Sourcing 

Processes: Under competitive sourcing, federal 

agencies open their commercial activities to competition among public and private sector sources, and 

this process begins each year with agencies developing inventories of their commercial positions. A 

large body of our work from 2000 through 2004 recommended sustained improvement in the use of 

annual inventories and greater consistency in classifying commercial positions to support competitive 

sourcing as well as revisions to processes for the 

performance of commercial activities that are 

described in OMB Circular A-76, Performance of 

Commercial Activities. In addition, we recommended various improvements to OMB’s proposed 

revisions to Circular A-76 processes to bring them 

more in line with the Commercial Activities Panel’s 

principles for improving the competitive sourcing 

decisions of the government. The congressionally 

mandated panel, chaired by the Comptroller General and composed of federal and private sector 

experts, stressed the importance of linking sourcing 

policy with agency missions, promoting sourcing 

decisions that provide value to the taxpayer regardless of the service provider selected, and ensuring 

greater accountability for performance. In response 

to our work and the inclusion of competitive sourcing as one of the President’s management initiatives, 

OMB has undertaken a sustained effort since 2003 

to improve and maintain a governmentwide commitment to developing useful annual inventories, 

improving guidance for classifying commercial positions, and incorporating most of the A-76 sourcing 

principles adopted by the panel. In fiscal years 2003 

and 2004, OMB reported that agencies’ competitive 

sourcing efforts will yield billions of dollars in financial benefits. (GAO/GGD/NSIAD-00-244, 

GAO-02-498T, GAO-02-1022R, GAO-03-391R, 

GAO-03-1022T, and GAO-04-367)

3.11.A. Improving Collection of Delinquent 

Nontax Debt: In a series of reports and testimonies over the past several years, we promoted federal agencies’ use of key provisions of the Debt 

Collection Improvement Act of 1996 to collect nontax delinquent debt, which exceeds $70 billion 

annually. Acting on our recommendations, Treasury 

and other federal agencies have continued to take 

steps to implement the act’s key provisions to 

improve collections. For example, Treasury 

included additional federal salary payments in its 

payment offset program and continued to offset 

Social Security payments to recover delinquent 

debts. Also, certain agencies—including Education 

and HHS—have published final rules allowing the 

implementation of administrative wage garnishment 

under the Debt Collection Improvement Act. These 

actions, along with additional steps taken by Treasury and other agencies to improve debt collection 

processes in response to our recommendations, 

have added about $374 million to a steady stream of 

recoveries. (GAO/T-AIMD-98-195, 

GAO/AFMD-90-12, GAO-02-308, GAO-02-313, and 

GAO-02-463)

3.12.A. Assessing Programs Related to a 

Common Outcome: To review the relative contributions of similar programs to common or crosscutting goals and outcomes and to facilitate 

comparisons and trade-offs between such programs, we recommended that OMB conduct Program Assessment Rating Tool (PART) assessments of 

similar programs and activities in the same year. 

Consistent with these recommendations, for the fiscal year 2006 budget, OMB used PART in conducting two crosscutting analyses to inform the 

President’s Budget request—Community and Economic Development programs and Rural Water programs. The Community and Economic 

Development analysis formed the basis for the 

administration’s proposal to consolidate various of 

these programs into a $3.7 billion program at Commerce. The budget also indicated the administration’s intention to develop recommendations to 

consolidate and reform Rural Water programs. 

(GAO-04-174)

3.13.A. Monitoring the Effectiveness of OMB’s 

PART: To improve OMB’s ability to judge the efficacy of PART, we recommended that the Director of 

OMB centrally monitor agency implementation and 

progress on PART recommendations and report 

such progress in OMB’s budget submission to the 

Congress. Consistent with this recommendation, in 

the PART Summary Worksheets submitted with the 

fiscal year 2006 President’s Budget Request, OMB 

reported on the status of each program’s recommendations. In April 2005, OMB also implemented 
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PART IV: Appendixes

PARTWeb, a Web-based data collection tool to, 

among other things, centrally track the implementation and status of PART recommendations. 

(GAO-04-174)

3.14.A. Assisting Agencies in Implementing 

Leading Diversity Management Practices: In 

January 2005, we identified nine leading practices 

that experts agreed should be considered when an 

organization is developing and implementing diversity management. We also provided examples of 

how 10 selected federal agencies implemented 

these practices. As the federal government strives to 

better manage its diverse workforce, our report is 

being used by agencies to begin the dialogue necessary to create an environment that is inclusive of 

individual differences, responsive to the diverse 

needs of employees, and ultimately provides for 

accountability and fairness for all employees. For 

example, in July 2005, the Census Bureau held a 

diversity fair that focused on five of the diversity 

management practices discussed in our report (top 

leadership commitment, diversity as part of an organization’s strategic plan, diversity linked to performance, employee involvement, and diversity 

training). A panel of officials from the selected 

agencies featured in our report discussed their 

agencies’ implementation of the practices with Census Bureau employees in the morning, and executives from those agencies engaged in a frank 

discussion with Census Bureau executives in the 

afternoon about implementation strategies and barriers. (GAO-05-90)

3.15.A. Controlling the Cost of the 2010 

Census: A body of congressionally requested 

products we issued in 2004 on plans for the 2010 

Census contributed to congressional decision making that will reduce the life cycle cost of the next 

decennial headcount by around $807 million, and 

could produce better quality data. Specifically, 

members of the Congress cited findings contained 

in our report on census cost and design issues to 

secure legislative support for operational reforms 

that could help control the cost of the 2010 Census, 

the price tag of which is currently estimated at more 

than $11 billion. These same reforms, which include 

a short-form-only census and various technological 

improvements, could produce more accurate and 

timely information for data users as well. Additional 

taxpayer savings stemmed from our review of the 

feasibility of counting U.S. citizens living abroad. 

We concluded that enumerating this population 

group would not be cost-effective because of the 

difficulties in obtaining an adequate response rate 

and other challenges. Partly as a result of our findings and recommendation to the Congress, legislators eliminated funding for any future planning and 

testing activities. (GAO-04-37 and GAO-04-898)

3.16.A. Strengthening Senior Executive 

Performance Management: High-performing 

organizations understand that their top leadership 

needs to lead the way to transform their agencies’ 

cultures to be more results-oriented, customer 

focused, and collaborative in nature. Recognizing 

this important leadership role, the Congress authorized a new performance-based pay system for 

members of the federal government’s Senior Executive Service in 2003. Yet we found that Education, 

HHS, and NASA had opportunities to use their performance management systems more strategically. 

Based on a report we issued in May 2004, these 

agencies are now implementing a series of recommendations that can help them provide a clear and 

direct linkage between their senior executives’ performance and organizational results. (GAO-05-69SP

and GAO-05-832SP)

3.17.C. Helping Enhance Legislative Branch 

Agencies’ Efforts to Improve Performance 

and Accountability: Our work has assisted legislative branch agencies in guiding their respective 

management improvement and transformation 

efforts. The Government Printing Office used our 

work to guide the realignment of its human capital 

office, which will assist its leadership in managing 

its workforce and will support its overall transformation. To help ensure that the Office of Compliance maintains institutional continuity into the 

future, the Congress acted on our recommendations 

to amend the Congressional Accountability Act to 

permit the reappointment of its Board of Directors 

to an additional term. We encouraged the Architect 

of the Capitol and the U.S. Capital Police to make 

needed improvements to basic management functions, such as IT, financial management, strategic 

planning, and human capital management. We also 

provided recommendations to the Architect of the 

Capitol on ways to improve cost and schedule management of the Capitol Visitors Center project. As a 

result of our work, the Architect strengthened 

project management resources and obtained new 

cost and schedule estimates; and the Congress pro-
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vided additional funds for the project. Additionally, 

we surveyed all of the legislative branch agencies to 

identify their efforts to cross-service and outsource 

administrative services, implement management 

and operational improvements, and streamline 

organizational structures and operations. Our survey 

also provided the legislative branch agencies the 

opportunity to document their efforts to incorporate 

best practices and to make management improvements in the areas of IT, financial management, strategic planning, human capital management, and 

acquisition. (GAO-04-85, GAO-04-299, GAO-04-400, 

GAO-04-830, GAO-04-966, GAO-05-714T, 

GAO-05-811T, GAO-05-910T, and GAO-05-1037T)

3.18.C. Strengthening the Nation’s Border 

Security: DHS’s United States Visitor and Immigrant Status Indicator Technology (US-VISIT) program is a legislatively required, multibillion-dollar 

effort to track the entry and exit of foreign visitors 

traveling to the United States. In reviewing the fiscal 

year 2005 expenditure plan for the US-VISIT program, we identified a number of areas where USVISIT could improve its program management activities, including developing reliable cost estimates 

and managing system capacity to support mission 

needs, and provided the Congress with information 

upon which to make funding decisions. We noted 

that the program office was not employing the kind 

of rigorous and disciplined management controls 

typically associated with successful programs and 

that as the program grows in scope and complexity, 

these controls would become even more critical. 

The US-VISIT program management office concurred with our recommendations and has begun 

implementing some of our recommendations, 

including establishing an effective program office 

structure, developing effective risk management 

processes and plans, and developing a human capital strategy. (GAO-05-202)

3.19.C. Helping the Government Cost 

Effectively Manage Multibillion-Dollar IT 

Modernizations and Investments: DHS’s Automated Commercial Environment is a multibilliondollar program that tracks cargo entering and leaving the United States. Managers of the program 

have implemented our past recommendations 

related to developing and using enterprise architecture, following an incremental system acquisition 

approach, establishing system acquisition process 

controls, and ensuring the independence of its function to oversee the program. Further, DHS has 

improved management of the program by reducing 

the degree of concurrent system development activities and reconciling program cost estimates with 

independent estimates. Our recent recommendations have focused on the need for DHS to 

strengthen accountability for the Automated Commercial Environment program and better ensure the 

delivery of promised system capabilities and benefits within budget and on time. (GAO-03-406,

GAO-04-719, and GAO-05-267)

3.20.C. Improving Criminal Debt Collection: 

To improve the federal government’s ability to collect billions of dollars of outstanding criminal debt, 

we recommended that Justice work with other 

agencies involved in criminal debt collection, 

including the Administrative Office of the U.S. 

Courts, Treasury, and OMB, to develop a strategic 

plan that would improve interagency processes and 

coordination with regard to criminal debt collection 

activities. In subsequent reports, we continued to 

identify criminal debt collection problems and followed up with Justice on the status of this and other 

related recommendations. We kept interested congressional parties informed of the status of outstanding criminal debt and Justice’s lack of progress 

in implementing this recommendation, which 

resulted in the Congress directing the Attorney General to develop a strategic plan with the other 

involved federal agencies to improve criminal debt 

collection. Specifically, the conference report that 

accompanied the Consolidated Appropriations Act 

of 2005 included language to further the implementation of our 2001 recommendation on establishing 

an interagency task force for more effectively managing, accounting for, reporting, and collecting 

criminal debt. As a result, Justice has begun to meet 

with the Administrative Office of the U.S. Courts, 

Treasury, and OMB as a joint task force to develop 

the strategic plan as recommended. (GAO-01-664, 

GAO-04-338, and GAO-05-80)

3.21.C. Improving Agency Preparation for 

Governmentwide Telecommunications 

Acquisition: During fiscal year 2005, we reviewed 

GSA’s planning for a governmentwide telecommunications acquisition program, known as Networx. 

In March 2005, we testified on GSA’s progress in 

addressing management challenges identified during our earlier reviews, including a lack of performance measures and inadequate transition planning 
172 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

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for the Networx contracts. During our review, we 

identified several areas of concern to GSA officials, 

which they subsequently addressed. For example, 

we determined that GSA had not established performance measures to aid in program management. 

GSA subsequently drafted measures to address each 

of the program’s goals and is working to revise the 

draft measures based on our feedback. Also, we 

pointed out that GSA had not provided potential 

offerors with enough information on the level of 

service they would be required to provide at each 

location. Without this information, offerors would 

have had difficulty preparing realistic proposals. In 

response, GSA delayed the release of its final 

request for proposals until information on the 

required levels of service was available. 

(GAO-04-1085T and GAO-05-361T)

3.22.C. Improving OMB Oversight of At-Risk IT 

Investments: In April 2005, we recommended that 

OMB strengthen its oversight of major IT investments by better utilizing the business cases it collects and analyzes as part of the annual formulation 

of the President’s Budget. In the President’s Budget 

for Fiscal Year 2005, OMB reported that based on its 

evaluation of the projects’ business cases, about half 

of the 1,200 major IT investments submitted by 

agencies for funding were at risk. The total value of 

these investments was about $22 billion out of a 

total IT budget of about $60 billion. We reported 

that OMB never aggregated these at-risk projects 

into a single list and that its oversight of these 

projects was inconsistent, which limited the potential value of the management watch list. We recommended that OMB create a centralized capability for 

creating and monitoring these at-risk projects and 

that it use the additional insights provided in its statutorily mandated reporting to the Congress. The 

governmentwide analysis and consolidated tracking 

of projects’ risk level made possible by an aggregated management watch list will enhance OMB’s 

and the Congress’s ability to ensure that funds are 

being wisely spent and to take effective and timely 

action on the billions in IT investments judged to be 

at risk. (GAO-05-276)

3.23.C. Improving OPM’s Ability to Manage 

Retirement System Modernization: We 

reported that OPM did not have key system acquisition, change management, and investment management processes in place to help manage its 

Retirement Systems Modernization program and 

recommended that OPM establish the management 

processes needed for effective oversight of that program. Subsequently, OPM initiated efforts to 

develop a comprehensive acquisition strategy, identify interdependencies between project components, develop project tracking processes, establish 

risk management processes, and implement investment management processes. The agency also identified milestones for completing these activities over 

the next few months. As a result of our review, 

OPM is working to improve its ability to manage its 

modernization program. In addition, the Congress is 

better informed about the status of OPM’s acquisition and is now in a better position to oversee 

OPM’s project management of its retirement systems 

modernization program. (GAO-05-237)

3.24.C. Getting the Best Value for Goods and 

Services through Interagency Contracts: Federal agencies are increasingly relying on interagency 

contracts, leveraging the government’s aggregate 

buying power to procure commonly used goods 

and services more efficiently. From 1994 through 

2004, GSA’s interagency contract sales alone 

jumped almost 750 percent to $32.5 billion. Given 

the rapid growth of taxpayer dollars involved—

along with the limited expertise of users and administrators and unclear accountability for ensuring 

proper use—we designated interagency contract 

management as a high-risk area in January 2005. 

Our work since then has continued to draw attention to the risks associated with interagency contracting arrangements, such as noncompetitive 

prices for goods and services, orders placed outside 

the scope of contracts, and inadequate management 

controls. To ensure the government is getting the 

best value from these types of contracting arrangements, we recommended that agencies clarify roles 

and responsibilities and establish clear, consistent, 

and enforceable policies and processes. DOD and 

other agencies are beginning to take action to 

respond to our recommendations. (GAO-05-201, 

GAO-05-207, GAO-05-229, and GAO-05-456)

3.25.C. Leveraging the Government’s 

Significant Buying Power: In fiscal year 2004, 

federal agencies procured more than $327 billion in 

goods and services. Despite this significant cost, it is 

not clear that the federal government is fully leveraging its enormous buying power because agency 

procurement processes are decentralized. Recognizing the potential to use federal purchasing dollars 
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more wisely, several of our reports examined best 

commercial procurement practices to reduce costs, 

stay competitive, and improve service levels. From 

2002 through 2004, we reported how leading companies were implementing strategic sourcing 

approaches to leverage their buying power and foster new ways of doing business, and recommended 

several actions that agencies could take to adopt 

similar best practices to achieve the type of financial 

benefits and procurement performance improvements experienced by these companies. In May 

2005, OMB adopted a new policy directing federal 

agencies to implement the types of strategic sourcing approaches we recommended, and beginning 

next year, agencies must report annually on their 

strategic sourcing outcomes, including price reductions for goods and services and total procurement 

cost reductions. According to OMB’s federal procurement policy officials, OMB aligned much of its 

May 2005 strategic sourcing policy with the commercial best practices identified in our reports. 

(GAO-02-230, GAO-03-661, and GAO-04-870)

3.26.C. Helping Customs Improve its 

Modernization Program: Our work has resulted 

in DHS’s Customs and Border Protection improving 

its ability to manage its multibillion-dollar IT modernization program and provided the Congress with 

information on which to base funding decisions. 

Our recommendations have focused on the need 

for Customs and Border Protection to strengthen 

accountability for its modernization program and 

better ensure the delivery of promised system capabilities and benefits within budget and on time. The 

agency’s progress toward addressing our earlier recommendations that it reduce the degree of concurrent system development activities, reconcile 

program cost estimates with independent estimates, 

and address human capital weaknesses has 

improved management of its modernization program. Adoption of our earlier recommendations 

related to developing and using an enterprise architecture, following an incremental system acquisition 

approach, establishing system acquisition process 

controls, and ensuring the independence of its function to oversee the modernization program has 

resulted in reduced exposure to risk. (GAO-03-406, 

GAO-04-719, and GAO-05-267)

3.27.C. Improving the Federal Government’s 

Collection, Use, and Dissemination of Federal 

Information: We have provided assistance to the 

Congress in ensuring that federal information is 

effectively managed and leveraged to improve 

agency performance and protect citizens’ rights. For 

example, since key amendments to the Freedom of 

Information Act were passed in 1996, we have produced a body of work reporting on agency actions 

to implement the act, and congressional decision 

makers as well as the press have come to rely on 

our reports to gauge agencies’ progress. In early 

2005, bills were introduced to make further amendments to the act, we were asked to provide key status information at a May 2005 hearing on such 

measures as the numbers of Freedom of Information Act requests agencies have been processing 

annually and the size of the backlog of open 

requests that is carried over from one year to the 

next. Our analysis has provided a basis of discussion and debate for the Congress, the news media, 

and the public. We also made contributions to the 

Congress’s upcoming reauthorization of the Paperwork Reduction Act, which provides the framework 

for managing federal information. In February, we 

sponsored a forum to explore reauthorization 

issues, which was attended by experts and key 

stakeholders in the executive and legislative 

branches. In addition, we reported on agencies’ 

efforts to review proposed information collections—a critical process added to the act in the last 

reauthorization—and made suggestions to the Congress to strengthen the act’s paperwork reduction 

requirements. On the issue of privacy, we commented on emerging issues in reporting on five case 

studies involving federal efforts to mine data, 

including personal information, and identified ways 

to improve privacy and security protections. In 

addition, we reported on shortcomings in TSA’s initial public privacy notices on Secure Flight, its new 

passenger screening system, and as a result, the 

agency took prompt action to more fully disclose its 

use of personal information. Regarding records 

management, we made contributions toward ensuring that valuable electronic records created today 

will be accessible in the future by reporting on the 

progress that the National Archives and Records 

Administration has made in developing an 

advanced electronic records archive. (GAO-05-12, 

GAO-05-405, GAO-05-420, GAO-05-424, 

GAO-05-648T, GAO-05-864R, GAO-05-866, and 

GAO-04-927)
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3.28.C. Using IT to Transform Health Care: 

Our work has helped to highlight the importance of 

IT in health care delivery and public health by identifying benefits of selected IT applications, which, 

among other things, have reduced costs, improved 

quality of care, and improved communications 

within health care delivery organizations and insurers. We have also highlighted the limited progress 

being made by federal agencies to improve the 

public health IT infrastructure, which affects the 

nation’s ability to respond to public health emergencies, including bioterrorism. In addition, several 

significant bipartisan bills focused on health IT have 

been introduced in the House and the Senate that 

address interoperability standards, improvements to 

patient safety, and grants for health IT projects that 

demonstrate costs and benefits—areas of importance emphasized by our work. Our reports and 

resulting recommendations are also helping to drive 

HHS improvements such as the appointment of a 

National Coordinator for Health IT whose objective 

is to help transform the health care industry’s use of 

IT. In July 2004, the National Coordinator issued the 

framework for strategic action, which outlined an 

approach to the nationwide implementation of electronic health records and interoperable health IT. 

This framework addresses the adoption of data 

standards and actively involves the private sector 

(such as the American Health Information Community task force) as integral components needed to 

transform the use of IT for health care delivery. In 

addition, HHS has issued requests for proposals for 

developing a prototype of a National Health Information Network architecture. Later this year, the 

National Coordinator is expected to release a comprehensive strategic plan, which we anticipate will 

implement our recommendations. (GAO-03-139, 

GAO-04-224, GAO-04-947T, GAO-04-991R, 

GAO-05-308, GAO-05-309R, and GAO-05-628)

3.29.C. Improving the Understanding of 

Selected File-Sharing Programs: Peer-to-peer 

file-sharing programs represent a major change in 

the way Internet users find and exchange information by allowing direct communication between 

computer users who can access and share digital 

music, images, and video files. These programs also 

can be a conduit for sharing pornographic images 

and videos. During fiscal year 2005, we reviewed 

selected electronic file sharing applications to 

(1) determine the extent to which they provide easy 

access to pornographic images and (2) assess the 

ability of the applications’ filters to block pornographic images. We found that pornographic images 

are easily shared and accessed by the selected filesharing applications, and that the pornography filters offered by the selected programs varied in their 

ability to block pornographic images. Our review 

contributed substantially to the Congress’s and the 

public’s understanding of the uses of peer-to-peer 

file-sharing applications to access and share pornography. (GAO-05-634)

3.30.C. Ensuring Executive Branch Agency 

Compliance with Continuity of Operations 

Guidance: We identified weaknesses in the processes agencies had used to identify the essential 

functions that should be quickly restored after being 

disrupted by an emergency and the plans to support restoring them (known as continuity of operations plans). These weaknesses included 

inconsistencies in the number of functions identified by agencies and the inclusion of functions that 

appeared to be of secondary importance. In 

response to these concerns, the President’s Homeland Security Advisor began an interagency effort in 

January 2005 to define governmentwide essential 

functions and to review and validate agencyidentified essential functions. Also, DHS published 

revised guidance for agency continuity planning. 

Our most recent evaluation found that agencies had 

already begun addressing weaknesses identified in 

our original assessment. For example, two major 

agencies that did not have continuity plans in place 

in October 2002 have since implemented plans. In 

addition, the recent steps taken by DHS and the 

White House could result in an increased emphasis 

on the most critical government functions and better planning to ensure that those functions are 

quickly restored regardless of the type of event that 

caused the disruption. (GAO-04-160, GAO-04-638T, 

GAO-05-577, and GAO-05-619T)
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PART IV: Appendixes

Support congressional oversight 

of key management challenges 

and program risks to 

improving federal operations 

and ensuring accountability

3.31.A. Preventing Improper Sales of Sensitive 

Clothing and Textile Items: Our audit of controls over excess DOD property found that DOD 

improperly sold excess clothing with infrared reflectant properties over the Internet to the public. Infrared reflectant technology prevents detection and 

State has established criteria for designating certain 

of these items as defense articles. In response to our 

work, DOD issued a more stringent policy than 

State’s guidelines. DOD determined these items to 

be of a sufficiently critical and sensitive nature to 

require the same demilitarization control as significant military equipment—total destruction—an 

action that should help prevent this sensitive technology from falling into the wrong hands. 

(GAO-04-15NI and GAO-04-81TNI)

3.32.A. Bolstering Governmentwide Actions to 

Identify and Report Improper Payments: 

Since fiscal year 2000, our recommendations aimed 

at raising the level of attention given to improper 

payments by the agencies that are subject to the 

Chief Financial Officers Act of 1990 contributed to 

the Congress passing the Improper Payments Information Act of 2002. This act required all agencies to 

identify programs and activities susceptible to significant improper payments, estimate the annual 

amount of improper payments, and report on the 

amount of and their actions to reduce their 

improper payments. Fiscal year 2004 marked the 

first year that federal agencies governmentwide 

were required by the act to report improper payment information. From our review of fiscal year 

2004 performance and accountability reports, the 11 

programs or activities that provided this information 

for the first time reported improper payments totaling over $700 million. For example, HHS disclosed 

an improper payment amount of $255 million for its 

Head Start program. Similarly, USDA disclosed an 

improper payment amount of $125 million for its 

Federal Crop Insurance Corporation program. 

USDA, which has a long history of analyzing payment error rates for the Food Stamp Program, also 

reported that the improper payment rate for the 

Food Stamp Program had been reduced significantly, primarily due to the rate reduction in 

improper overpayments. Specifically, Food Stamp 

Program improper overpayments declined from 

6.16 percent in base year 2002 to 5.05 percent in fiscal year 2003, resulting in a $249.7 million reduction 

in improper overpayments for fiscal year 2003. On 

the basis of our analysis of USDA statistically projected error rates and OMB’s reduction estimates of 

the Food Stamp Program, we expect to continue to 

see financial benefits stemming from these changes 

over the next 4 fiscal years. (GAO-02-749, 

GAO-03-750T, GAO-03-991T, GAO-04-99, and 

GAO-04-631T)

3.33.A. Ensuring That USCIS Becomes Selfsupporting: We determined that fees USCIS collected were not sufficient to fully fund the cost of 

processing applications for U.S. citizenship and naturalization as contemplated by existing law. USCIS 

charged fees to process applications for U.S. citizenship and naturalization, but was also receiving 

appropriated funds to pay for administrative and 

overhead costs. Our work highlighted the need for 

USCIS, among other things, to increase its fees in 

order to alleviate the need for appropriated funds. 

In April 2004, USCIS increased its fees, thereby 

enabling it to discontinue its partial reliance on taxpayer financing. The additional federal revenues for 

fiscal years 2004 and 2005 were $551 million. 

(GAO-04-309R)

3.34.A. Improving Accountability at DOL: 

OMB’s audit guidance for reporting compliance 

with the Federal Financial Management Improvement Act of 1996 (FFMIA) calls for either reporting 

identified problems or stating that none came to 

auditors’ attention during testing. In our annual 

report on FFMIA, we recommended that OMB 

revise its audit guidance to require auditors to perform sufficient testing to be able to positively state 

whether an agency’s systems substantially complied 

with the act’s requirements (positive assurance). 

Although OMB has not done so, in fiscal year 2004, 

DOL’s IG contracted with an independent public 

accounting firm to perform sufficient testing to 

allow positive assurance of FFMIA compliance, if 

warranted. DOL’s IG advised us that DOL had 

decided to be the first federal agency to provide 

positive assurance because of our continual emphasis on this topic. Positive assurance provides users 

with substantially greater confidence that agency 
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PART IV: Appendixes

systems provide the reliable, useful, and timely 

management information envisioned by the act. 

(GAO-02-29, GAO-03-1062, and GAO-05-881)

3.35.A. Helping NASA Recognize Significant 

Challenges with the Prometheus 1 Project: In 

2003, NASA initiated the Prometheus 1 project to 

explore the outer reaches of the solar system. However, in February 2005, we reported that the 

Prometheus 1 project, which the Congressional 

Budget Office estimated would cost about $10 billion, faced challenges in setting realistic requirements, preparing reliable cost estimates, and 

advancing complex critical technologies—challenges NASA has had difficulty overcoming in a 

number of other costly space initiatives. Additionally, the approved funding for Prometheus 1 was 

inadequate to support a planned 2015 launch to 

Jupiter’s icy moons. Based on concerns about cost 

and technical complexity and consistent with our 

recommendations, NASA has deferred the Jupiter 

Icy Moons Orbiter mission indefinitely and is shifting the focus of its Prometheus 1 project. Eliminating the Jupiter Icy Moons Orbiter mission from its 

fiscal year 2006 budget request reduces NASA’s 

funding needs by more than $1.1 billion through fiscal year 2009. (GAO-05-242)

3.36.A. Strengthening NASA’s Integrated 

Financial Management Program: For more 

than a decade, we have identified NASA’s contract 

management as a high-risk area—in part, because 

the agency lacked an integrated financial management system, hampering its ability to oversee contracts, control program costs, and ensure an 

effective human capital management strategy. In 

April 2000, NASA initiated the Integrated Financial 

Program—its third effort at modernizing its financial 

management system. More than 3 years later, we 

reported that insufficient processes for ensuring 

adequate funding reserves for contingencies—along 

with uncertain reliability of cost estimates and optimistic schedules—put the program at risk of schedule delays and cost growth. In our fiscal year 2005 

review, we found that NASA has implemented a 

methodology that enables programs to identify 

high-severity risks and determine their direct relationship to reserves, which is in line with our recommendation. This methodology should help the 

agency ensure that the program’s reserve funding is 

sufficient to cover the potential cost impact of risks 

and unknowns. (GAO-04-118)

3.37.A. Improving NASA’s Cost-Estimating 

Processes: NASA’s inability to collect, maintain, 

and report the full cost of its programs—along with 

persistent cost growth—has put NASA’s contract 

management on our high-risk list for more than a 

decade. Through a review of selected programs, we 

found that NASA lacks the basic cost-estimating processes needed to establish priorities, quantify risks, 

and make informed investment decisions. As a 

result, programs may be restructured to fit available 

resources, increasing the risk of cost and schedule 

overruns and failure to meet program objectives. 

We also identified a number of barriers to implementing effective cost-estimating practices, including the lack of reliable financial and performance 

data and the lack of incentives to measure and 

monitor cost trends. Acting on recommendations 

we made in May 2004, NASA has taken actions to 

remove these barriers and improve its cost-estimating practices, including establishing requirements to 

facilitate the efficient and effective use of NASA’s 

cost-estimating staff, requirements for independent 

assessments at program and project milestones, and 

enforcement mechanisms for ensuring that project 

cost-estimating requirements are met before the 

project proceeds to the next milestone. 

(GAO-04-642)

3.38.A. Avoiding Additional Losses from Loan 

Sales: We found that the Small Business Administration (SBA) improperly calculated the results of 

billions of dollars of loan sales and could not determine the value of its remaining disaster loan portfolio. We recommended that SBA correct the 

calculation of the results of its loan sales and determine the value of its remaining disaster loan portfolio before conducting additional sales. In response, 

SBA conducted a detailed review of its financial 

records relating to the disaster loan program, 

including the completed loan sales, and shortly 

thereafter discontinued the loan sale program. SBA’s 

analysis identified a fundamental flaw in the 

method used to determine whether a sale was beneficial to the government and allowed SBA to 

develop a more reliable process to calculate the 

results of a sale and to value the remaining loan 

portfolio. SBA’s analysis showed that its prior sales 

of disaster loans resulted in losses of over $900 million as opposed to gains as previously reported. 

Prior to our review, SBA had intended to sell its 

remaining disaster portfolio of about $3 billion as 

well as loans disbursed in the future. Had SBA pro-
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PART IV: Appendixes

ceeded with these sales using the same flawed pricing model, it would have continued to incur 

significant losses, estimated to be approximately 

$441.4 million over 5 years. (GAO-03-87)

3.39.A. Increasing the Collection of Delinquent 

Federal Taxes: We have long advocated 

increased use of Treasury’s offset program to intercept federal payments to those who have delinquent nontax and tax debt. Under this program, 

federal payments can be levied to pay taxpayers’ 

outstanding tax debt. We identified missed collection opportunities because few payment streams 

were subject to the offset program, including those 

of disbursing offices outside of Treasury. We noted 

that millions of dollars of tax debt could be collected if Treasury levied such federal payments 

using its existing capacity. Fiscal year 2004 marked 

the first significant success due to (1) increasing 

numbers of programs subject to the levy program 

and (2) IRS releasing substantially more tax debt to 

be included in the levy program. We determined 

that tax levy collections using Treasury’s levy 

authority for fiscal years 2004 and 2005 totaled 

$308 million dollars. (GAO/T-AIMD-98-195, 

GAO/GGD-00-65, and GAO-01-711)

3.40.A. Revising DOD Working Capital Fund 

Appropriations: Over the years, we have 

reviewed various aspects of defense working capital 

funds, including cash management requirements. 

Our work on cash management this year showed 

that (1) the Air Force working capital fund would 

exceed the cash requirement at the end of fiscal 

year 2005 and (2) the Navy’s working capital fund 

budget did not project excess cash at the end of fiscal year 2005, but these projections have not been 

reliable in recent years. Based on our review, the 

Congress reduced the Air Force and Navy fiscal year 

2005 appropriations for operation and maintenance 

by a total of just under $1.3 billion due to excessive 

cash amounts. (GAO-04-498)

3.41.A. Improving Accountability at DHS: At 

the time that it was created in 2003, DHS was not 

subject to two key financial management improvement laws—the Chief Financial Officers Act of 1990 

and FFMIA—whose key goals are, among other 

things, providing the Congress and agency management with reliable financial information for daily 

management and decision making and improving 

financial management systems and controls to properly safeguard the government’s assets. Because of 

the size of DHS, the internal control weaknesses it 

inherited, and the importance of these laws in 

improving financial management, we urged the 

Congress to require DHS to be subject to these 

laws. We also supported the concept of DHS 

obtaining internal control opinions over financial 

reporting, similar to what Sarbanes-Oxley requires 

for publicly traded companies. On October 16, 

2004, the Department of Homeland Security Financial Accountability Act was signed in to law by the 

President, requiring DHS to comply with the provisions of these laws. The act also requires DHS to 

obtain an opinion on its internal controls over 

financial reporting, making it the first agency covered by the Chief Financial Officers Act that is 

required to do so. (GAO-03-1134T, GAO-04-774, 

and GAO-04-945T)

3.42.C. Increasing Reuse of Excess DOD 

Property: Our assessment of DOD’s excess property program showed that DOD does not have 

management controls in place to maximize reuse of 

excess items. Of $33 billion in excess commodity 

disposals in fiscal years 2002 through 2004, $4 billion were reported to be in new, unused, and excellent condition. DOD found in-house use for 

$495 million (12 percent) of these items. However, 

the remaining $3.5 billion (88 percent) represented 

significant waste and inefficiency because new, 

unused, and excellent condition items were transferred and donated outside of DOD, sold for pennies on the dollar, or destroyed even though other 

DOD units concurrently bought many of these same 

items. We identified at least $400 million of fiscal 

year 2002 and 2003 commodity purchases for which 

new, unused, and excellent condition items were 

available for reutilization. In response, the Defense 

Logistics Agency pledged to have systems improvements in place by January 2006 to prevent purchases of new items when identical items are 

available for reutilization. (GAO-05-277 and 

GAO-05-729T) 

3.43.C. Focusing Attention on Financial 

Hardships Experienced by Army Guard and 

Reserve Soldiers: We reported that injured and ill 

Army Reserve soldiers—who are entitled to extend 

their active duty status to receive treatment—had 

been inappropriately removed from active duty status in the automated systems that control pay and 

access to medical care. Many of our case study sol-
178 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART IV: Appendixes

diers incurred severe, permanent injuries fighting 

for their country, including loss of a limb, hearing 

loss, and back injuries. Nonetheless, these soldiers 

had to navigate the Army’s convoluted and poorly 

defined process for extending active duty service. In 

responding to our report, DOD described its completed, ongoing, and planned actions to address 

each of our 22 recommendations. If effectively 

implemented, these actions should be important 

steps in developing comprehensive, effective solutions for dealing with Reserve component soldiers 

with service-connected injuries or illnesses. 

(GAO-05-125 and GAO-05-322T)

3.44.C. Improving Travel Reimbursement 

Process for Mobilized Army Guard Soldiers: 

We reported and testified that mobilized Army 

Guard soldiers have experienced significant problems getting accurate, timely, and consistent reimbursements for out-of-pocket travel expenses. Army 

Guard soldiers in our case study units reported a 

number of problems that they and their families 

endured due to delayed or unpaid travel reimbursements, including debts on their personal credit 

cards, difficulty paying their monthly bills, and 

inability to make child support payments. As a 

result of our recommendations, DOD is taking 

action to correct the deficiencies noted in the areas 

of processes, human capital, and automated systems. However, with regard to DOD’s longer term 

automated systems initiatives, we identified problems that raise concerns about whether and when 

complete and lasting solutions to these issues will 

be implemented. (GAO-05-79 and GAO-05-400T)

3.45.C. Identifying Airline Passenger and 

Property Screening Costs: Funding for aviation 

security programs remains a central issue because 

passenger and air carrier security fees are not sufficient to fully cover TSA’s costs. In the post-September 11 environment, passenger screening and who 

pays for it are highly visible and extremely sensitive 

topics to the traveling public, air carriers, airports, 

security companies, trade organizations, and the 

federal government. One of the fees that TSA is 

authorized to collect is currently based on airlines’ 

self-reported costs of providing passenger and 

property screening during calendar year 2000. 

These self-reported amounts totaled $319 million. 

Because this amount was much lower than anticipated, the Congress asked us to provide an independent assessment of the airlines’ passenger and 

property screening costs in 2000, the last full year 

prior to September 11, 2001. We estimated that passenger and property screening costs in 2000 for the 

major cost components were about $448 million or 

$129 million more than the air carriers reported. 

Accordingly, we recommended—and TSA agreed to 

consider—using the analysis and estimates in our 

study in determining the future basis for this fee. 

(GAO-05-558)

3.46.C. Supporting the Congress in Its Efforts 

to Focus on the Importance of Internal 

Control: The 1982 Federal Managers’ Financial 

Integrity Act required the Comptroller General to 

issue internal control standards and OMB to issue 

guidelines for agencies to follow in assessing their 

internal controls. In 2004, OMB revised its internal 

control guidance contained in Circular A-123, in an 

effort to strengthen the requirements for conducting 

management’s assessment of internal control over 

financial reporting and bring a principles-based 

approach to establishing and reporting on internal 

control. In February of 2005, we provided our views 

on OMB’s revised circular, highlighting issues critical to successful implementation of the revised circular. We also outlined the importance of internal 

control, summarized the Congress’s long-standing 

interest in internal control and the related statutory 

framework, and discussed our experiences and lessons learned from agency internal control assessments since the early 1980s. (GAO-05-321T)

3.47.C. Helping NASA to Address Its Human 

Capital Challenges: At the end of this decade, 

NASA plans to retire its Space Shuttle. Retiring the 

space shuttle—and in the larger context, implementing the President’s new vision for space exploration—will require NASA to rely on its most 

important asset: its workforce. The space shuttle 

workforce currently consists of about 2,000 civil service and 15,600 contractor personnel, including a 

large number of scientists and engineers. After we 

began our work on NASA’s human capital challenges related to retiring the Space Shuttle, NASA 

directed panel teams to examine human capital as 

an element of the shuttle program’s mission execution and transition needs. Consistent with our findings, the teams made various recommendations on 

steps that should be taken to address human capital 

concerns, including developing and implementing a 

critical skills retention plan, developing a communication plan to ensure the workforce is informed, 
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 179

PART IV: Appendixes

establishing an agencywide team to integrate 

human capital planning efforts, and developing a 

detailed budget that includes funding for human 

capital retention and reduction strategies. 

(GAO-05-230 and GAO-05-718T)

3.48.C. Modernizing the Accountability 

Profession for the 21st Century: We were 

actively engaged with other accountability organizations in building a solid foundation for an effective 

and ethical accountability profession prepared for 

the challenges of the 21st century. We provided 

leadership on key issues involving fair presentation 

of financial reporting overall and key aspects of 

auditing standards. We also provided the essential 

public interest perspective in the development of 

U.S. and international auditing standards that will 

fundamentally strengthen audit performance and 

improve the effectiveness of audits in the private 

and public sectors. We also continued to provide 

leadership in accountability for all levels of government auditors and financial management professionals in the United States—state, local, and 

federal—through training, technical advice, and 

leadership in auditing and internal control standards. Our experts responded to thousands of auditors’ inquiries on the Government Auditing 

Standards, and provided training sessions at more 

than 50 professional conferences and workshops 

across the country for state, local, and federal government auditors and financial management professionals. In addition, we contributed insight and 

recommendations to ongoing Sarbanes-Oxley Act 

reforms, which posed significant challenges for corporations and auditors. In venues such as an SEC 

roundtable and the Public Company Accounting 

Oversight Board’s Standing Advisory Group, we 

contributed to efforts to improve and streamline the 

audit process. On the international front, we provided leadership in developing strong, globally 

accepted auditing standards for the International 

Organization of Supreme Audit Institutions (INTOSAI), which is an association of national government audit organizations, and the International 

Auditing and Assurance Standards Board, which is 

working to establish auditing standards to be used 

around the world. (Based on briefings)

Analyze the government’s 

fiscal position and strengthen 

approaches for addressing the 

current and projected fiscal 

gap

3.49.A. Improving GSA’s Capital Financing 

Decisions: In our December 2004 report, we recommended that GSA’s Administrator, among others, 

perform business case analyses and ensure that the 

full range of funding alternatives, including the 

technical feasibility of useful segments, are analyzed 

when making capital financing decisions. In a 

May 12, 2005, letter to the Comptroller General, 

GSA’s Administrator wrote that in response to our 

recommendation, GSA will develop a pro forma 

business case analysis that is similar to the analysis 

used for projects using appropriated funds and can 

be used for Energy Savings Performance Contracts, 

which provide capital improvements, such as lighting retrofits and ventilation systems, for federal facilities without the government recording the full cost 

up-front. In addition, GSA has promulgated supplemental internal procedures to be followed when 

entering into these contracts. The procedures 

require the performance of a life cycle cost analysis 

as part of the contract evaluation process. 

(GAO-05-55)

3.50.A. Permanently Reauthorizing Selected 

Franchise Fund Pilots: In August 2003, the Congress was considering the reauthorization of the six 

franchise fund pilots operating at the Department of 

the Interior, Commerce, Treasury, VA, HHS, and 

EPA. These franchise funds, authorized by the Government Management Reform Act of 1994, are part 

of a group of 34 intragovernmental revolving funds 

that were created to provide common administrative support services required by many federal 

agencies. For example, the Commerce Franchise 

Fund’s business line provides IT infrastructure support services to the agency. The Congress established these self-supporting, businesslike entities to 

provide such services on a fully reimbursable basis. 

We concluded in our report that increasing the 

period of authorization would help to ease the concerns of current and potential clients about franchise fund stability and might allow franchise funds 

to add new business lines. The Congress provided 
180 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART IV: Appendixes

permanent authority to the Commerce and Treasury 

franchise funds in the Consolidated Appropriations 

Acts of 2004 and 2005, respectively. (GAO-03-1069)

3.51.A. Improving IRS’s Methodology for 

Pursuing Delinquent Taxes: Our report on IRS’s 

fiscal year 1999 financial statements stated that IRS 

did not have systems or procedures in place to 

allow it to identify and actively pursue cases that 

may have some collection potential. We recommended that IRS improve its capacity to assess the 

collectibility of delinquent taxes as a way of deciding on which debts to focus collection efforts. In 

2004, IRS began implementing sophisticated modeling technology to differentiate between more and 

less productive cases in order to make better 

resource allocation decisions. IRS’s analysis showed 

that its collections of delinquent taxes with approximately the same resources increased by about 

$1.8 billion, or 8.4 percent from the previous year. 

(GAO-01-42)

3.52.A. Improving Agency Capital Planning: In 

2004, we evaluated VA, National Park Service, and 

Bureau of Prisons capital planning practices against 

the practices used by leading private companies 

and state and local governments that we identified 

in a 1998 report. We found that capital plans were 

not being done or needed to be centralized or 

expanded to reflect all the capital investment decisions made by the agencies. We also noted that the 

Congress and OMB should receive the plans to 

make agencies’ longer term priorities transparent 

and to promote a longer term perspective in capital 

decision making. Since our 2004 report, all three 

agencies developed and improved capital plans, 

making them available to key decision makers. 

Also, as agencies developed such plans, capital 

asset management systems and asset inventories 

were improved as part of their efforts to better 

determine actual capital asset needs. (GAO-04-138)

3.53.A. Revising Tax Rules on Expatriation of 

Individuals: Certain high income or high net 

worth individuals are subject to an alternative 

method of income taxation for the 10 years after 

they relinquish their U.S. citizenship or noncitizens 

terminate their residency. In our May 2000 report to 

the Joint Committee on Taxation, we provided 

information on IRS, Immigration and Naturalization 

Service, and State Department procedures for preventing individuals who do not comply with these 

tax rules from reentering the United States, analyses 

of their tax returns, and information related to their 

country of citizenship and residence after leaving 

the United States. In February 2003, the committee 

issued a report on the tax law and immigration 

treatment of relinquishment of citizenship and termination of long-term residency. The report extensively cited our assistance to the committee and 

provided the basis for the American Jobs Creation 

Act of 2004 to revise the tax rules related to citizenship relinquishment or residency termination. To 

accompany the conference agreement, the committee estimated that budget effect of the revised tax 

rules for the 2005 to 2014 period will be to increase 

revenues about $377 million. We are recognizing 

$121 million of this increased revenue over the 2005 

to 2009 period as an accomplishment. 

(GAO/GGD-00-110R)

3.54.C. Contributing to the Tax Reform 

Debate: We issued several products in fiscal year 

2005 that looked at the cost, complexity, and fairness of our tax system. For example, two products 

focused on a major contributor to these costs, tax 

expenditures. One looked at tax expenditures as a 

whole, noting their growth and lack of oversight 

compared to federal spending. The other found that 

the rules governing the tax expenditures for higher 

education are complex and taxpayers often make 

decisions counter to their own financial interest. We 

also reviewed the literature on the costs of the current tax system—economic efficiency and compliance costs beyond the taxes actually paid—and 

reported that estimates of compliance burden range 

from 1.0 to 1.5 percent of Gross Domestic Product, 

while estimates of the economic efficiency losses 

are on the order of 2 to 5 percentage points of 

Gross Domestic Product. Complexity also breeds 

noncompliance. As we reported, IRS estimates that 

the tax gap is over a quarter of a trillion dollars. 

Lack of confidence in the current tax system is driving proposals for reform. We also issued a special 

publication providing background on revenue 

needs, the criteria for a good tax system, and key 

questions to help policymakers and the public 

make up their own minds on tax reform proposals. 

(GAO-05-527T, GAO-05-684, GAO-05-690, 

GAO-05-753, GAO-05-878, and GAO-05-1009SP)
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 181

PART IV: Appendixes

3.55.C. Analyzing the Federal Government’s 

Long-term Fiscal Imbalance: We continue to 

provide updated analyses of our nation’s large and 

growing long-term fiscal challenge and the risks it 

poses to our future. Simply put, our nation’s fiscal 

policy is on an unsustainable course. Absent substantive policy change, a growing imbalance 

between expected federal spending and tax revenue will lead to escalating and ultimately unsustainable federal deficits and debt. We hosted a forum in 

December 2004 to identify ways to broaden public 

understanding and dialogue so that action could be 

more likely, more informed, and more immediate. 

Taken together, our efforts have helped foster collaborations between groups and individuals across 

the political and policy spectrum aiming at 

increased public understanding of the nature, magnitude, and potential consequences of the longterm fiscal challenge. (GAO-05-282SP)

3.56.C. Conducting the First GAO 

Appropriations Law Forum: We held our first 

Appropriations Law Forum on March 10, 2005, to 

highlight the more relevant federal appropriations 

law topics from the year as well as provide members of the community an opportunity to discuss 

appropriations law issues and to meet other appropriations counsel. Over 100 attorneys from government agencies participated in the forum, which 

focused on the Congress’s power of the purse, with 

sessions that included an overview of significant 

decisions issued in 2004, a discussion of interagency 

transactions, and an overview of the availability of 

appropriated funds to purchase food. Material from 

the forum was subsequently posted on our Web site 

and is routinely used by federal appropriations law 

practitioners. (Based on a forum)

3.57.C. Achieving the First Annual Update of 

the Red Book: In March 2005, we published the 

first annual update of the third edition of volume I 

of Principles of Federal Appropriations Law (known 

as the Red Book) to improve its value as a timely, 

exemplary resource for understanding federal 

appropriations law matters. The update presented a 

cumulative supplement to the published third edition text that includes all relevant decisions from 

January 1 to December 31, 2004. It was posted electronically on our Web site and contains links to all 

cited our decisions. The update has served as an 

invaluable new reference tool for the entire federal 

government and has been welcomed by the federal 

procurement community, composed of hundreds of 

attorneys and even more practitioners, as an 

extremely helpful publication. (GAO-05-354SP)

3.58.C. Amending the Antideficiency Act to 

Include GAO: We drafted legislative language 

amending the Antideficiency Act to require the 

heads of executive agencies and the Mayor of the 

District of Columbia to transmit to the Comptroller 

General copies of reports of violations at the same 

time violations are reported to the Congress and the 

President. Our provision was inserted into the Consolidated Appropriations Act 2005. We also drafted 

report language for the Senate report, which 

instructs us to establish a central repository of 

Antideficiency Act reports and states that the Comptroller General will track all Antideficiency Act 

reports, including responses to Comptroller General 

legal decisions and opinions and findings in audit 

reports and financial statement reviews. (Based on 

legal assistance)

3.59.C. Increasing the Oversight of the Vehicle 

Donations Program: The American Jobs Creation Act of 2004 included a provision limiting the 

amount that a taxpayer can claim for a donated 

motor vehicle, boat, or plane to the gross proceeds 

received from the sale when the value exceeds $500 

and the item is sold by the charitable organization. 

Prior to this law, IRS’s guidance instructed taxpayers 

donating vehicles to charities to establish the value 

of a donation based on its fair market value. Our 

November 2003 report on charitable vehicle donations stated that the proceeds received by charities 

from vehicle donations were 5 percent or less of the 

value donors claimed as a deduction on their tax 

returns. We consulted with congressional staff on a 

legislative proposal to address the problem by 

allowing taxpayers to only take a tax deduction for 

the selling price of the donated vehicle instead of 

the fair market value. As a direct result of our 

report, a bill was introduced in the Congress that 

included a revenue raiser to address the vehicle 

donations problem, and this revenue raiser was ultimately included in the American Jobs Creation Act. 

(GAO-04-73)

3.60.C. Advancing Accountability with the 

First Financial Audit of SEC: We conducted the 

first-ever audit of SEC for the fiscal year ended 2004. 

SEC plays a prominent and critically important role 

in overseeing the U.S. securities markets and in 
182 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART IV: Appendixes

enforcing accountability for corporations whose 

securities are traded in those markets. Completion 

of the first financial statement audit of SEC represented a significant advance in the commission’s 

accountability to the public. SEC earned an unqualified, or clean, opinion on its financial statements, 

meaning that we found that its financial statements 

and accompanying notes are presented fairly in all 

material respects and in conformity with generally 

accepted accounting principles. We also found that 

in preparing its first complete set of financial statements, SEC had made significant progress in building a financial reporting structure. Nevertheless, we 

found that SEC had material weaknesses in internal 

control over financial statements and disclosures, 

recording and reporting disgorgements and civil 

penalties, and information security, and therefore 

we issued an adverse opinion on internal control. In 

congressional testimony, the Comptroller General 

said that SEC must lead by example in internal control. He said that a higher standard of accountability 

is important to SEC as a government regulator and 

to the success of its programs, activities, and leadership in the business community. SEC agreed with 

the majority of our recommendations and has taken 

steps to address the weaknesses we found. 

(GAO-05-244, GAO-05-693R, and GAO-05-880T) 
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 183

PART IV: Appendixes

Source: See Image Sources.

Continuously improve client 

and customer satisfaction and 

stakeholder relationships

4.1.C. Strengthening Communication with our 

Congressional Clients: To provide new members 

of the Congress and their staff with information 

about GAO and our working relationship with the 

Congress and to obtain information on client needs, 

the Comptroller General and the Congressional 

Relations staff met with new members and their 

staffs and have continued to meet and seek feedback from other committee members and staff who 

have been long-standing clients of GAO. We also 

sought to further improve our products, processes, 

and services by routinely providing feedback from 

our Web-based client survey to our managing directors who direct engagements supporting goals 1, 2, 

and 3. (Based on internal activities)

4.2.C. Measuring Congressional Satisfaction 

with Our Work: We collect feedback on our 

products (all testimonies and high interest and 

higher cost written products) from every congressional committee, expanding our coverage from our 

two oversight committees. We received 96 percent 

favorable responses to our client feedback survey 

for fiscal year 2005. Feedback on the nature of the 

comments has been provided to our managing 

directors, and our training now incorporates some 

of the most frequently received feedback. (Based 

on internal activities)

4.3.C. Developing Options for Electronic 

Dissemination: As part of our ongoing pilot 

project to test the feasibility of producing and disseminating GAO reports in an electronic format, we 

provided over 70 products to various congressional 

requesters in an electronic format rather than generating hard copy reports. Electronic reports allow our 

clients to search and excerpt text more easily and to 

follow Web links for further information. Client 

feedback on our electronic dissemination process 

has been positive, and we plan to make the use of 

electronic products routine. As part of another 

effort, we modified processes for our electronic 

supplements, which are electronic copies of the 

complete results of Web-based surveys that were 

conducted in conjunction with our work and are 

posted on our Web site. Specifically, we modified 

the software program that generates these supplements and simplified the process for creating and 

posting them. As a result, paperwork requirements 

involved in requesting a product number are 

reduced for our staff, staff can view all features of 

the supplement before it is posted on the Internet, 

clients and other readers can more easily navigate 

within the electronic supplement, and the product 

is more readily identified as a GAO product. (Based 

on internal activities)

4.4.C. Assessing Internal Customer 

Satisfaction with Our Services and 

Processes: In fiscal year 2004, we launched the 

Chief Administrative Office (CAO) customer satisfaction survey and established baselines for key performance indicators. Based on an analysis of the 

gap between customer expectations and satisfaction 

with services provided, we established targets for 

improvement for the most important CAO areas, 

and CAO units developed and implemented a number of improvement efforts. We conducted the second customer satisfaction survey in November 2004 

to measure the impact of our improvement efforts, 

refine our targets, and make necessary adjustments 

to reduce the gap between customer expectations 

and the satisfaction with services provided. The folStrategic Goal 4

Maximize the Value of GAO by Being a Model 

Federal Agency and a World-Class Professional 

Services Organization
184 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART IV: Appendixes

lowing are examples of the improvements we 

made. To improve communications, we implemented a new system for disseminating and storing 

agencywide communications and notices; a new 

administrative services Web site (the GAO Administrative Gateway) to provide information about our 

administrative services in a more customer-focused 

and user-friendly format, including direct links to 

CAO unit Web sites; and a searchable administrative 

services directory. We also addressed two major IT 

pain points identified in the survey: (1) we replaced 

the software that allowed secure network access in 

conference rooms but resulted in considerable network slowness and response times for users with 

one that enhances security while providing simple, 

direct, and stable access to the network, reducing 

customer frustration and the number of help desk 

calls, and (2) we procured new network printers 

with greater paper capacity, finishing capabilities, 

and print speed to replace an aging fleet of printers 

that were prone to breakdowns and were inconveniently located for staff. (Based on internal activities)

4.5.C. Assessing GAO Staff Views on Overall 

Operations and the Work Environment: We 

launched our fifth employee feedback survey in 

May 2005, a confidential survey conducted online 

that provides an opportunity for our employees to 

provide their views on GAO’s work environment. 

The results are used to assess employees’ satisfaction with GAO and are analyzed to compile the 

people measures that are discussed in parts I and II 

of this report. Eighty percent of our employees 

completed the survey, and the overall results were 

very positive with improvement recorded in every 

people measure. Our scores averaged 8.5 percent 

higher than the latest OPM governmentwide survey 

and 5.25 percent higher than the latest private 

industry survey. This year we also added questions 

to assess employees’ satisfaction with GAO. The 

results of the responses to these questions were 

used by the Partnership for Public Service to determine our standing in the annual Best Places to 

Work in the Federal Government rankings. In September, we received an award from the Partnership 

for Public Service for our fourth place ranking. 

(Based on internal activities)

4.6.C. Strengthening Relationships with Our 

Stakeholders and Increasing the Accessibility 

of Our Products: We developed and issued international protocols to strengthen our relationships 

with our stakeholders in the international community. We released the draft protocols for a 1-year 

pilot in October 2005 and plan to issue the final version in early fiscal year 2006. We also continued 

work on our agency protocols, which provide 

clearly defined and transparent policies and practices on how we interact with the executive branch 

agencies in performing our work. Since we began 

pilot-testing the protocols in December 2002, we 

have been monitoring their application. During that 

time we have received comments indicating that the 

protocols (1) help to ensure a consistent and unified 

GAO approach throughout the federal government 

and (2) could benefit, in some areas, from additional clarification. In response to these comments, 

we revised the protocols in October 2004 to clarify 

our relationship with the agencies where we perform work and our methods of communicating and 

exchanging information with them. Where applicable, we also revised the protocols to reflect the 

updated congressional protocols that were issued 

July 16, 2004. The international peer review team 

that independently assessed the effectiveness of our 

quality assurance system for conducting performance audits cited GAO’s agency protocols in its 

April 2005 report as a good practice that will be of 

interest to other national audit offices. (Based on 

internal activities)

4.7.C. Achieving External Recognition: We 

won an American Graphic Design Award for excellence in communication and design for our publication About GAO, a brochure that provides an 

overview of GAO and its history, mission, and key 

performance statistics. Fewer than 10 percent of the 

approximately 10,000 entries from advertising agencies, graphic design firms, corporate creative departments, and publishers were selected for an award 

by a panel of judges from the design and publishing 

fields. In addition, one of our systems—the Electronic Assistance Guide for Leading Engagements, 

which brings together in one place on the intranet 

everything our staff members need to carry out an 

engagement—was selected by the E-Gov Institute 

from among 120 entries as one of 14 government IT 

applications to receive its Pioneer Award. This 

award recognizes government organizations that 

have illustrated results-oriented government during 
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 185

PART IV: Appendixes

the past year. Finally, our Chief Information Officer 

was recognized as one of the 10 recipients of Government Computer News’ government IT leadership 

awards for “demonstrating the essential qualities of 

leadership.” (Based on internal activities)

Lead strategically to achieve 

enhanced results

4.8.C. Integrating Planning, Budgeting, and 

Performance Measurement: We continued our 

efforts to integrate our planning, budgeting, and 

measurement process to ensure a logical, timely, 

and accurate progression of information from one 

activity to the next during the fiscal year process 

while avoiding duplication of effort in information 

gathering and report preparation. For example, we 

aligned the contents of and time frames for the performance plan, performance and accountability 

report, and budget with our new 3-year strategic 

planning process. We also established a matrixed 

team to document the entities and activities associated with the workforce plan, budget, and human 

capital to help ensure integration of the time frames 

and content of planning and performance measurement. To improve performance measurement, we 

continued to refine our measures by dropping the 

measure that counted the number of recommendations we made in our reports annually and introducing two new measures related to our internal 

operations. Beginning in fiscal year 2006, these 

internal operations measures will help us track our 

ability to provide useful administrative services that 

help staff perform their jobs and contribute to the 

quality of their work lives. We also continued to 

explore ways to assess our performance in creating 

and sustaining partnerships with external organizations and entities. (Based on internal activities)

4.9.C. Improving Our Strategic and Budget 

Planning Processes: As part of our planning 

activities for the fiscal year 2005 performance and 

accountability report, we incorporated lessons 

learned from the successful issuance of our fiscal 

year 2004 performance and accountability report on 

November 15. We accelerated issuance of this 

report from January 31 to November 15 to comply 

with OMB guidelines and the spirit of the Government Performance and Results Act. We also modified the format and revised some text in the fiscal 

year 2004 and 2005 performance and accountability 

reports to address suggestions and recommendations from external reviewers, such as the Association for Government Accountants, and the Mercatus 

Center. For the fourth year in a row, the Association 

of Government Accountants awarded our performance and accountability report the Certificate of 

Excellence in Accountability Reporting. We also 

implemented changes to our budget and resource 

planning process designed to improve the efficiency of the process and ensure increased integration among IT investments, budget, procurement, 

and workforce planning. The revised process will 

help ease customers’ administrative burden, provide 

greater consistency among the resource planning 

components, and provide a more comprehensive 

assessment of our resource needs. (Based on internal activities)

4.10.C. Strengthening Our Strategic Human 

Capital Management: Based on feedback from 

our customer satisfaction survey, our Human Capital Office was realigned in June 2005 to consolidate 

services under four centers of excellence: the Talent 

Acquisition and Human Capital Consulting Center, 

the Learning Center, the Performance and Pay Management Center, and the Human Capital Strategic 

and Operations Center. This consolidation enables 

us to improve our customer focus and our understanding of our customer needs. In addition, the 

realignment has helped to clarify lines of delegated 

authorities, standardized guidance across the 

Human Capital Office, and allowed us to dedicate 

more of our resources to direct customer support. 

(Based on internal activities)

4.11.C. Retaining and Attracting Staff: To more 

effectively anticipate and secure an adequate supply 

of talent for current and future needs, we have 

improved our recruitment strategy by redefining the 

student employment program to include both graduate and undergraduate career experiences during 

the fall and spring as well as the summer and 

increasing the use of short-term and time-limited 

appointments and direct-hire authorities. Our fiscal 

year 2006 recruitment strategy, developed this year 

and recently approved by our Executive Committee, 

includes year-round internships; implementing 

cooperative education agreements with five local 

universities; implementing governmentwide flexibility for noncompetitive appointments into the Professional Development Program; and using targeted 

recruiting for special skill sets, hard-to-fill positions, 
186 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART IV: Appendixes

and diversity recruiting. We also launched a pilot 

program that offers employment to a limited number of undergraduate cooperative education program participants in September 2005. (Based on 

internal activities)

4.12.C. Refining Performance Management: 

We enhanced and improved our communications 

with managers and staff in fiscal year 2005 through 

implementation of a number of initiatives such as 

providing an organizational and performance consulting service to address organizational needs of 

our managers; issuing a report to our managing 

directors and the Employee Advisory Council that 

evaluates the performance management assessment 

cycle with recommendations for improvement; 

redesigning the performance management Web site 

to improve its user-friendliness; providing direct 

links to performance Web site information in GAO 

notices, e-mails, policy documents, and other forms 

of communication to staff; and developing an elearning course—Roles and Responsibilities of the 

Designated Performance Manager—that provides 

our managers and supervisors with timely access to 

the information on our performance management 

process and their responsibilities. We also made 

specific improvements to the analysts, specialists, 

and investigators performance management system, 

including shortening the processing time for 

appraisals, pay, and promotion decisions; distinguishing feedback on performance from feedback 

on pay and promotion potential; and reducing the 

amount of paperwork required. (Based on internal 

activities)

4.13.C. Enhancing Our Classification and 

Compensation Systems: We continued to 

enhance our performance management and compensation systems through new and enhanced policies and processes. We revised the process for 

determining performance-based compensation so 

that the compensation is more directly linked to an 

individual’s performance, as reflected on the 

appraisal. In addition, our administrative and professional support staff completed their first year 

under a broadband pay system and a competencybased performance system in June 2005. To ensure 

that these staff understood the new process, as well 

as to foster staff acceptance, we employed an 

aggressive communication strategy that included 

meetings with staff, as well as Web-based guides 

and questions and answers. We also sought to 

strengthen our compensation system. To design a 

competitive, fair, and equitable compensation program aligned with competitive labor markets in 

which we compete for talent, we worked with a 

consulting firm to perform a market-based compensation study. Based on the results of the study, we 

have invested significantly in restructuring our analyst and analyst-related specialist Band II pay band 

into two pay levels to better align compensation 

and responsibilities. Other improvements we have 

implemented to ensure our managers’ needs for 

support and guidance concerning their responsibilities in the performance management process are 

met include establishing an organizational and performance consulting service, developing an elearning course on designated performance managers’ roles and responsibilities, developing and issuing a report for managers and our Employee 

Advisory Council evaluating the performance management assessment cycle with recommendations 

for improvements, and improving the accuracy and 

user-friendliness of our performance management 

Web site. (Based on internal activities)

4.14.C. Enhancing Opportunities for 

Training: We designed 13 new competencybuilding courses that focused on expanding the 

professional skills of auditors, assisting supervisors 

in providing oversight to the engagement process, 

and equipping designated performance managers 

to develop assigned staff. As a result, our staff have 

an opportunity to improve the quality of our writing, our methodological analysis, and our ability to 

identify appropriate developmental activities for 

continued professional growth. To further 

strengthen our definition of effective leadership and 

provide new leaders with an opportunity for peerto-peer mentoring and problem solving, we have 

established a community of practice consisting of 

analysts-in-charge who graduated from a course on 

supervision. This community of practice meets regularly to discuss best practices; challenges facing 

new analysts in charge; techniques for motivating, 

directing, and coaching staff; how to effectively use 

and contribute to our performance management 

system; and tools to improve performance. We also 

implemented an adjunct faculty program, certifying 

line auditors as adjunct faculty. This program 

enlarges the number of subject matter experts available to develop content for new courses, expands 

the range of courses available for more experienced 

staff, and meets the needs of both headquarters and 
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PART IV: Appendixes

field staff. To deliver required core curricula to 

Band I analyst staff in the field offices in the most 

cost-effective manner, we developed and implemented a hub approach whereby we deliver 

courses that have been grouped into five sets of 

week-long sessions at three learning hubs (San 

Francisco, Denver, and Atlanta). This decision was 

based on our analysis that showed it would cost 

twice as much to centralize Band I program delivery 

in headquarters as it would to distribute and realign 

programs among the three learning hubs. This represents a cost avoidance of $500,000 in travel and 

per diem and offers a number of intangible benefits, 

such as networking among and across teams, a sustained focus on learning, larger classes that make 

more effective use of adjunct faculty time, and the 

opportunity to strengthen matrixed work relationships through shared learning experiences. (Based 

on internal activities)

4.15.C. Providing Online Job Aids and Support 

Tools: To increase our ability to provide courses, 

job aids, or performance support tools to our staff 

online, in December 2004 we implemented an 

upgraded learning content management system. 

The upgraded system makes this learning content 

available on demand, anytime, anywhere, for our 

staff. It also provides the ability to identify core, 

required curricula for designated staff; track completion of the courses; capture information on completion of commercially licensed professional 

development courseware and simulations into our 

training information system; generate management, 

utilization, and course completion reports; and 

effectively launch e-learning developed in GAO 

directly to the learner’s desktop. To bring equity to 

learning opportunities for both analyst and mission 

support staff, we organized information about the 

over 1,900 professional development courses 

deployed to our desktops last fiscal year as well as 

other centrally taught, instructor-led classes into 

online learning resource guides for administrative 

professional and support staff. The resource guides, 

which parallel the design for analyst staff, organize 

learning opportunities by competency, suggest job 

developmental activities, and lay out practical learning tracks for staff and their supervisors to use in 

creating individual development plans for professional growth. (Based on internal activities) 

4.16.C. Ensuring Exemplary Practices and 

Systems in Our Fiscal Operations: Our fiscal 

year 2005 financial statements were prepared, and 

the audit was completed with a clean opinion 

within 45 days after the end of the fiscal year. This 

quick turnaround allowed the statements and auditor’s report to be included in the performance and 

accountability report in the time frame mandated by 

OMB. Based on a fiscal year 2004 financial statement audit recommendation by our independent 

external auditors, we have developed an Anti-Fraud 

Program within GAO. Key elements of the program 

will include creation of an Anti-Fraud Web site and 

employee awareness training. Employees will be 

able to report significant instances of fraud, waste, 

and abuse in our operations anonymously and 

without fear of retaliation to the Anti-Fraud Web 

site, which will be overseen by our IG. Fraud 

awareness training modules will be included in our 

internal ethics training and the Web-based computer 

security awareness training that staff must take 

annually. Finally, in anticipation of a focused effort 

in fiscal year 2006 to replace our current financial 

management system, we established a steering 

committee, a management team, and a project team 

to analyze agency requirements and select the 

replacement system. (Based on internal activities)

4.17.C. Strengthening IT Governance Practices 

and Processes: In fiscal year 2005, we took 

actions related to two surveys of our IT organization. The first survey reviewed how we compared 

with peer organizations of similar technical complexity, size, and workload in terms of costs. While 

the overall results were positive and showed that 

we are very competitive with our peers, there were 

two areas identified for potential cost reductions—

desktop hardware and voice communications. In 

replacing our installed base of notebook computers 

by the close of fiscal year 2005, we have achieved 

some of these cost reductions. And we have an 

effort under way to contract for a voice communications system, which will yield additional financial 

benefits and reduce the number of support staff 

required for voice communications, bringing us 

within the competitive range for like organizations. 

The second survey assessed the skills of our IT staff 

in business and IT technical areas and evaluated 

how well we are positioned in workforce planning 

compared to peer organizations. Based on the survey results, we identified our skill strengths and 

weaknesses, training needs, and current and future 
188 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART IV: Appendixes

workforce gaps and initiated an action plan to 

address the identified skill gaps and ensure workforce continuity and talent management. (Based on 

internal activities)

Leverage GAO’s institutional 

knowledge and experience

4.18.C. Maximizing the Collection, Use, and 

Retention of Essential Organizational 

Knowledge: As a knowledge-based professional 

services organization, it is important that we identify 

and implement strategies to increase organizational 

knowledge retention and transfer. We began a pilot 

of an electronic records management system, which 

we plan to implement in fiscal year 2006, that will 

capture our records—such as our workpapers, 

reports, and testimonies—and make them accessible electronically to all GAO staff. We plan to implement the final version of this system in fiscal year 

2006. We have also made more types of organizational information accessible by beginning to digitize certain document collections—such as the 

legislative histories and the General Counsel’s files 

that document legal research—and identifying GAO 

data sets, databases, and data models to make them 

available as well. We are currently assessing the policy and cultural implications of making all GAO 

records available to all GAO staff. In addition, we 

established a working group of employees from different parts of the agency to explore ways we could 

improve our reporting. These efforts may include 

creating new product types, revising our existing 

reporting format, or using other communication 

modes. Key members of this group also began to 

develop short- and long-term communications standards for various media to guide the presentation of 

all of our publications. (Based on internal activities)

4.19.C. Increasing Our Knowledge-Sharing 

Capability: The Human Capital Reform Act of 

2004 granted authority for an executive exchange 

program with private sector organizations. This 

year, we finalized our policy for an executive 

exchange program and received Executive Committee approval for the forms, templates, and brochures we developed to be used in the program. 

This program will further the institutional interests 

of GAO and the Congress by providing training and 

skill development opportunities for our employees 

as well as obtaining the expertise of selected private 

sector employees. In fiscal year 2005, we also 

implemented several changes to improve customer 

satisfaction with our external Web site, including 

integration of our products database with a search 

engine that provides more relevant and targeted 

results for customers using our search utility and 

links to both primary and related GAO products, an 

enhanced presentation of search results, enhanced 

capabilities for narrowing a full-text search, updated 

content on several pages, and making more site visitors eligible for the satisfaction survey through 

expansion of the survey throughout the site and 

using a version of the survey that works with popup blockers and additional browser types. Overall, 

customer satisfaction with the site, as measured by 

the American Customer Satisfaction Index, 

increased six points from June 2004 to September 

2005. We also initiated development of Web-based 

just-in-time training for many of our Web-based 

library databases. These databases will have 

instantly available step-by-step instructions that are 

only a click away on all GAO desktops. Finally, as 

part of continuing efforts to support operations, we 

have developed standards to aid analysts in conducting their research. These standards are available 

on the Knowledge Services and Information Services Web sites as well as in the Electronic Assistance Guide for Leading Engagements. To 

accompany the standards, we included a formatted 

checklist that analysts can use as a tool in performing literature searches. (Based on internal activities)

4.20.C. Enhancing Knowledge Sharing with 

Other National Accountability and 

Professional Organizations: We convened a 

number of forums, symposia, and other meetings to 

provide opportunities for an exchange of knowledge between accountability and professional organizations, experts, and stakeholders within the 

United States. For example, we held Comptroller 

General forums that covered topics such as longterm fiscal challenges and defined benefit pension 

plans. In addition, our speakers’ series, called Conversations on 21st Century Challenges, brought five 

distinguished leaders to speak to our staff on issues 

affecting the United States and its place in the 

world. Nationally, our continued participation in the 

Domestic Working Group—a group of federal, 

state, and local auditors that meets to discuss 

mutual challenges—on efforts such as access to 

records, governance, long-term fiscal challenges, 
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 189

PART IV: Appendixes

and grants management facilitated collaboration 

between GAO teams and state auditors on 14 

issues. The Partnership for Public Service and the 

National Association of State Auditors, Controllers, 

and Treasurers assisted us on a number of engagements and helped to facilitate our access to state 

and local auditors on engagements relating to 

improper payments. Through the National Intergovernmental Audit Forum, we convened 21 regional 

forum meetings to update federal, state, and local 

auditors on changes to professional audit standards, 

the implications of Sarbanes-Oxley for the audit 

profession, and other key issues affecting the audit 

community. In addition, we helped organize and 

develop briefings on program evaluation for OMB 

examiners in response to concerns about how they 

were assessing agency program evaluations with 

PART. As a result, these examiners should be able to 

more realistically judge the quality of the evaluation 

evidence presented to them and communicate more 

clearly to agency staff what evaluation information 

they need. (Based on internal activities)

4.21.C. Enhancing Knowledge Sharing with 

International Accountability and Professional 

Organizations: Internationally, we continued to 

provide leadership in the implementation of 

INTOSAI’s first strategic plan by having the Comptroller General serve as the Vice-Chair of the Governing Board’s newly created Finance and 

Administration Committee and as board liaison for 

the strategic plan’s capacity building goal. He also 

chairs INTOSAI’s Accounting and Reporting Committee and several GAO employees are active members of the Auditing Standards, Internal Control 

Standards, Information Technology, Public Debt, 

and other technical committees. This year, we 

played a major role in developing international 

internal control standards that were adopted at the 

INTOSAI Congress. To help ensure that U.S. public 

sector perspectives are reflected in the International 

Federation of Accountants’ standards development 

project, we are collaborating closely with the International Auditing and Assurance Standards Board 

and the World Bank. We also expanded our global 

network and reputation by promoting education 

and knowledge sharing through the International 

Auditor Fellowship Program and the Visitor Program in which 20 fellows from Africa, Asia, Latin 

America, the Caribbean, and Eastern Europe participated. We received about 600 visitors from 63 countries, including officials from our counterpart 

organizations, parliaments, and central government 

ministries. We also initiated the Auditors General 

Speaker Series that provides unique international 

perspectives and insights in support of our work. 

Speakers in this series included the auditors general 

of South Korea, China, Saudi Arabia, and Ireland. 

(Based on internal activities)

Continuously enhance GAO’s 

business and management 

processes

4.22.C. Improving Engagement Support 

Services: In fiscal year 2005, we improved 

engagement support services through various 

efforts. For example, we streamlined and simplified 

the Audit Documentation Set as part of the final 

phase of the document’s pilot test, which was 

launched in January 2004. The Audit Documentation Set helps to ensure that our engagements are 

consistent with the generally accepted government 

auditing standards and our Quality Assurance 

Framework and that our work and engagementrelated decisions have been systematically documented. After revising the January 2004 document 

based on extensive comments from analyst staff, we 

solicited comments from staff again in May 2005 

and issued the final version of the Audit Documentation Set in July 2005. The new version should 

require less time to complete because it eliminated 

duplicate requirements and no longer requires documentation of steps where not applicable responses 

are self-evident. In a separate effort, we implemented two changes to improve the efficiency of 

the report production process and enhance customer service in response to comments we received 

through internal surveys. Specifically, we reduced 

the number of Product Assistance Groups—which 

provide services such as graphics design, editing 

and writing assistance, and report production—

from four to three and realigned the teams and 

offices that they serve. In addition, we placed a fulltime manager in charge of outside printing and 

graphics procurement, which has become more 

important since the elimination of our in-house 

printing capacity in fiscal year 2004. These changes 

will allow us to continue to support product development more efficiently and economically. (Based 

on internal activities)
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4.23.C. Obtaining a Clean Opinion on Our 

Performance Audit Practice: We obtained a 

clean opinion on our performance audit practice 

from an international team of experienced auditors—the first time that we have sought such an 

opinion. The independent reviewers concluded that 

we have designed and implemented an effective 

system of quality controls to provide reasonable 

assurance of complying with generally accepted 

government auditing standards, which are designed 

to ensure that audits of government activities are 

objective, independent, and reliable. This opinion 

validated that the Congress and the American people can rely on our work and products. (Based on 

internal activities)

4.24.C. Improving Staff Assignments: Throughout the fiscal year, we rolled out first a prototype 

and then a pilot of our staffing information system, 

which is intended to integrate staffing data from 

related but disparate systems, reduce staff time 

spent researching staffing and engagement data, 

and enable better staffing decisions by identifying 

staff skills and availability early in the job process. 

The system should provide more visibility to current 

and future engagement staffing needs and a uniform means for staff to express future assignment 

preferences and short-term availability. Having a 

common system will also support the engagement 

staffing process across all GAO teams and maximize 

the use of staff by facilitating their assignment to 

multiple activities (multitasking) and sharing of staff 

expertise across teams (matrixes). (Based on internal activities)

4.25.C. Initiating Process Improvement: We 

identified two areas—travel and accounts payable—

for alternative sourcing in order to aid our financial 

management office in achieving its vision of shifting 

the efforts of our staff away from routine transaction 

processing and toward a greater role in policy, 

guidance development, reporting, and oversight. 

We selected a service provider to perform routine 

data entry functions, and we have transferred posttravel audits of travel documents to field office staff, 

resulting in increased efficiency and productivity of 

our workforce. To improve our IT operations, we 

used a competency diagnostic tool provided 

through the Chief Information Officer Executive 

Board—an organization that provides strategic, 

case-study-based research to senior IT executives—

to examine the organization of our IT operations 

from the perspective of our Information Systems 

and Technology Services staff. The tool focuses on 

eight core areas of IT management—governance, 

performance measurement, security, infrastructure, 

applications, vendor management, talent management, and business enablement. Analysis of the 

results by the Executive Board included benchmarking our organization against other public and 

private IT organizations and making recommendations for improvement, which included expanding 

the use of the diagnostic tool to examine the organization of our IT operations from the perspective of 

all GAO customers. In addition, following the closing of our in-house print plant, the increase of 

electronic-only report issuances has resulted in both 

financial benefits and efficiency gains. Reports no 

longer need to be printed on a 24-hour schedule to 

meet issue dates, resulting in significant financial 

benefits and allowing the teams and the Product 

Assistance Groups additional time to produce 

higher quality reports. We set a ceiling of 200 for 

printed copies of products, resulting in printing cost 

reductions that will total an estimated $189,000 over 

2 years. (Based on internal activities)

4.26.C. Using Enabling Technology to Improve 

Our Crosscutting Business Processes: We 

completed several efforts in fiscal year 2005 to provide better efficiency in our business processes. We 

automated two processes—the awards nomination 

process and the posting of individualized pay—saving staff time. The automated awards nomination 

process also provides award nomination tracking 

and approval and payment status and automatically 

sends out status reports on the nomination via email. We installed ceiling-mounted projectors in five 

meeting rooms in headquarters to allow staff to use 

the equipment without needing to reserve equipment or schedule support staff ahead of time. We 

also acquired and deployed a Web-based, userfriendly, cost-effective project management software 

package that allows our staff to view files received 

from other agencies that use that software. (Based 

on internal activities)

4.27.C. Using Web-Based Technology to 

Improve or Replace Existing Systems: We 

improved our customer service in several areas 

using Web-based technology. In response to customer requests for a more user-friendly interface, 

we upgraded our Web-based time and attendance 

system, which streamlined data entry so that time 
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 191

PART IV: Appendixes

charges can be entered all on one screen, provided 

staff the ability to charge compensatory time while 

on travel, and enhanced the administrative functions to support the needs of our human capital 

staff. We also upgraded our automated competencybased performance system to include our administrative professional and support services staff during 

their first year under the new competency-based 

system and incorporate revised attorney competencies, new security requirements, new report features, enlarged font for improved readability, and 

online help and system feedback links. We 

improved our customer service for employees 

requesting GAO transportation to business meetings 

by providing a Web-based request system to take 

the place of the manual system used to collect information to schedule GAO vans and drivers. This new 

system allows users a more dependable way to submit requests and allows property management staff 

to make better-informed decisions when scheduling 

vans and drivers. In addition, we redesigned the 

Web-based phone book, making it more userfriendly, including additional information and mail 

and location links, and improving its search capabilities. Finally, we deployed a major enhancement to 

our Web-based employee locator system to enable 

easy location of our employees when they are on 

official business travel overseas. (Based on internal 

activities)

Become a professional services 

employer of choice

4.28.C. Promoting an Environment That Is 

Fair and Unbiased and Values Opportunity 

and Inclusiveness: The Office of Opportunity 

and Inclusiveness (OOI) made recommendations 

concerning proposed agency policy on reasonable 

accommodations and corresponding guidance. As a 

result, we developed a defined program for reasonable accommodation to (1) ensure a systematic 

approach to providing a safe and efficient workplace for staff members who have disabilities as 

defined by the Americans with Disabilities Act and 

(2) enhance the role of the reasonable accommodations coordinator as a central contact person who 

follows the accommodation process from the point 

of request through implementation. At the request 

of the Comptroller General, OOI drafted several 

recommendations addressing recent trends noted in 

our 2004 annual assessment data and concerns in 

the areas of staff feedback, communication, and 

training. These recommendations were discussed 

with a cross section of employee groups and forwarded with comments to the Executive Committee, which approved the recommendations. As a 

result, OOI set up a task force to determine how 

best to implement the recommendations. OOI also 

addressed the issue of sexual harassment in the 

workplace, conducting a number of workshops at 

the request of team managers. These workshops 

served to emphasize the agency’s zero tolerance 

posture concerning sexual harassment. (Based on 

internal activities)

4.29.C. Promoting Diversity: To help ensure 

that we attract a diverse pool of applicants for our 

vacant positions, we expanded our equal employment opportunity hiring statement in our vacancy 

announcements to specify the basis for our hiring 

selections, and we began providing a contact person and number for applicants who need a reasonable accommodation for the application process. To 

help retain talent we acquired through the summer 

internship program, the OOI Managing Director met 

with our 2005 summer interns to discuss his office’s 

role and to provide guidance on important steps 

that interns can take to enhance their chances for 

successful conversion to permanent GAO employment. To increase retention of our Professional 

Development Program employees, the OOI Managing Director met with the their advisors to discuss 

the importance of ensuring that all program participants are provided appropriate training opportunities as well as the opportunity to demonstrate their 

abilities in all performance competencies. In addition, OOI provided several presentations during the 

fiscal year aimed at providing staff with information 

and reinforcing the agency’s position on diversity 

and promoting a fair and unbiased work environment, including a panel discussion on diversity in 

the workforce; a presentation to new Band II analysts on the importance of promoting an environment that is fair and unbiased and that values 

opportunity and inclusiveness for all staff; and a 

presentation to Senior Executive Service employees 

on leading practices for maintaining diversity, focusing on top leadership commitment and ways in 

which officials can communicate that commitment. 

Our Asian American Liaison Group also continued 

to actively promote diversity and provide opportunities for GAO staff professional development. This 
192 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART IV: Appendixes

group actively coordinates with the Human Capital 

Office to define and meet transparent recruiting 

goals and is spearheading creation of a committee 

to aid the Human Capital Office in increasing and 

targeting diversity recruitment in the most fair and 

efficient manner and improving overall diversity 

yield. To provide professional development opportunities, the group hosted external speakers such as 

the U.S. Postal Service’s Vice President of Diversity 

Development, an expert from the American Association of Retired Persons, and a panel featuring four 

Asian American congressional staff. In addition, the 

group and the Human Capital Office cosponsored a 

self-assessment workshop to provide practical tools 

for GAO employees to use to highlight their accomplishments, addressing cultural and other sensitivities that may affect one’s ability to do so effectively. 

(Based on internal activities)

4.30.C. Upgrading Tools and Technology: We 

completed a number of major upgrades to our tools 

and technology in fiscal year 2005, such as replacing outdated phone systems and equipment in the 

Chicago, Denver, Los Angeles, Seattle, and Dallas 

Field Offices to increase reliability and stability of 

the systems; replacement of older servers with upto-date, bigger, and faster equipment; upgrading 

our server software, making it easier to patch and 

update and providing easier server administration 

and improved security; replacing existing copiers 

and multifunction machines with modern, more 

reliable units to reduce downtime for customers and 

standardize our printing hardware platform; installing updated desktop and office productivity software on our notebook computers, resulting in a 

single notebook platform that reduces maintenance 

costs; providing remote access software that is more 

reliable, is more secure, and provides worldwide 

access for dial-in users, supplementing available 

digital subscriber line and cable access; and installing a major software upgrade on the new notebooks that provides better access to the most up-todate hardware drivers, tools, security updates, 

patches, and customer-requested product changes, 

as well as better organization of e-mail. (Based on 

internal activities)

4.31.C. Providing a World-Class Working 

Environment: We completed all physical relocations of staff related to our organizational realignment, enabling more efficient function of 

organizations through proximity of staff requiring 

close interaction. We also awarded a new 5-year 

contract for cafeteria services, providing reasonably 

priced, quality meals for our employees. In the area 

of IT, we significantly enhanced the reliability and 

availability of access to the Internet by obtaining a 

redundant Internet connection that provides two 

paths to the Internet and ensures that users will 

have access to a fast Internet connection in the 

event that one connection fails or experiences slowness. In response to user comments on the customer feedback survey, we provided enhanced 

audio for videoconferences by making technical 

improvements. We upgraded our broadcast communications system that delivers live and prerecorded 

programs to our staff’s desktops by replacing equipment, which increased capacity to meet growing 

demand by increasing storage capacity and improving the video file distribution process. We are now 

able to deliver live programs to all GAO desktops 

nationwide, replacing the use of video teleconferencing in the field offices. Finally, we upgraded our 

cable television service by moving to satellite television, which, among other things, will improve 

reception for televisions in managing directors’ 

offices and the cafeteria and provide closed-circuit 

television programming capabilities. (Based on 

internal activities)

4.32.C. Ensuring the Security of Our IT 

Systems: We strengthened security through personal firewall software that prevents the download 

of viruses while staff are on travel or working from 

home and other software that helps identify and 

eliminate malicious programs. In addition, we 

improved network security by automatically activating the screensaver after a period of inactivity, 

removing several games that were preinstalled on 

our new notebook computers, and locking the 

GAO intranet page as the default home page to prevent spyware from hijacking the default home page 

and downloading more spyware. Based on the 

results of a third-party independent annual assessment conducted to ensure that our systems and network meet industry security standards, we created a 

plan of action and milestones to remediate vulnerabilities, bringing us into compliance with FISMA 

requirements. This ensures that risk assessments, 

the system security plan, information security program assessments, and operator authorizations are 

in place for all major systems and other systems as 

required and that we have developed and completed system test and evaluation reviews and certi-
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 193

PART IV: Appendixes

fications and accreditations as necessary. In 

conjunction with the upgrade to our time and attendance system, we implemented an integrated security approach that protects and validates 

transactions in our Web-based systems, ensuring 

that no changes have been made once a transaction 

is approved. While the function is transparent to the 

user, internal controls capability is significantly 

enhanced and it also addresses the need for digital 

signatures in a Web-based environment. We also 

continued installation of the Secret Internet Protocol 

Router Network in our field offices and completed 

the process in Seattle, Norfolk, Los Angeles, Huntsville, Denver, Dallas, and Atlanta. This network 

access allows our staff to obtain specific classified 

data directly from agency officials via secure e-mail, 

improves the efficiency of our research through 

direct access to classified information, posts our 

classified reports for review and dissemination, 

electronically transmits our classified reports to 

agencies for comments, and reduces the need to 

use certified mail for classified data. (Based on internal activities)

4.33.C. Providing a Safe and Secure 

Workplace: To meet our goal of providing a safe 

and secure workplace for our employees, we 

implemented internal procedures and policies to 

enhance our security posture. For example, we conducted our first shelter in place drill for our headquarters staff, and developed and distributed shelter 

in place plans for the majority of our field offices; 

we further enhanced our communications with staff 

by developing and distributing an Emergency Preparedness Plan brochure; and we began requiring 

that contractors undergo a check conducted by our 

Security and Safety unit (through the Federal 

Bureau of Investigation’s National Crime Information Center) and be fingerprinted, reducing the 

agency’s security risk. We also improved the speed 

with which we can obtain the results of the Federal 

Bureau of Investigation’s screening of fingerprints 

taken for security checks by procuring and installing 

an electronic fingerprint system. The system allows 

for instant transfer of information to the bureau and 

reports immediately if prints are not acceptable. Our 

employees are also happier with this system as it is 

an inkless, paperless process. In the event that 

emergency relocation of staff in the headquarters 

building is required, we have provided additional 

network access for displaced teams by installing 

and activating additional local area network ports in 

some conference and training rooms, and have 

reactivated existing disconnected local area network 

ports in all remaining conference rooms in headquarters. We completed the perimeter security build 

out phase of our security plans, including installation of high-speed rollup doors, guard booths, 

undervehicle cameras, pop-up barriers, and a 

perimeter plinth wall. Finally, we completed a number of significant items in support of our Disaster 

Recovery Program. We completed the vision of the 

Disaster Recovery Program/Continuity of Operations, which was approved and signed by the 

Comptroller General and Chief Administrative 

Officer on May 31, 2005; developed video materials 

for Emergency Preparedness training for headquarters staff; and installed an emergency voice and text 

notification system on the network. (Based on internal activities)

4.34.C. Enhancing Emergency Coordination: 

Externally, to increase our ability to obtain detailed 

intelligence and ensure coordination with the legislative branch in case of an emergency, we established contacts and procedures with local agencies, 

including establishment of emergency notification 

procedures with the Federal Bureau of Investigation’s Joint Terrorism Task Force; enhancement of 

relocation procedures and relations with the U.S. 

Capitol Police, House Sergeant of Arms, and emergency preparedness offices; participation as a member of the Legislative Branch CAO Council on 

Continuity of Operations Plans; coordination of and 

participation in the Legislative Branch CAO Table 

Top Exercise; and completion of arrangements with 

the District of Columbia government to receive upto-date emergency notifications. (Based on internal 

activities)
194 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

2. From the Inspector General
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 195

PART IV: Appendixes

3. GAO’s Report on Personnel Flexibilities

The GAO Personnel Flexibilities Act of 2000 (Pub. L. 

No. 106-303) and the GAO Human Capital Reform 

Act of 2004 (Pub. L. No. 108-271) require us to provide a review of the actions we have taken in fiscal 

year 2005 under specific sections of these acts. This 

appendix details the activities we have undertaken 

separately for each act.

GAO Personnel Flexibilities Act 

of 2000

Several sections of this act were made permanent 

by the 2004 act; the actions taken related to these 

provisions are reported under the new act. Section 

3 of the 2000 act amended our prior reduction-inforce procedures, added a new provision, and 

required us to report the effect of using this authority on preference eligibles such as disabled veterans. During fiscal year 2005, one GAO employee 

was separated using reduction-in-force procedures 

and that individual was not a preference eligible. 

GAO Human Capital Reform 

Act of 2004

The first two sections of this act made permanent 

our authority to offer voluntary early retirement and 

voluntary separation incentive payments. We 

revised our regulations for offering voluntary early 

retirement on November 15, 2004. These regulations allow us to announce agencywide voluntary 

retirement opportunities with specific time frames 

and, under an exception provision, allow us to 

authorize early retirement for up to 5 employees in 

any organizational unit in any fiscal year without an 

agencywide announcement. During fiscal year 

2005, a voluntary early retirement opportunity was 

offered from November 2 through December 16, 

2004. Applicants were required to retire between 

December 31, 2004, and January 3, 2005. Of the 9 

applications that were received, 7 were approved 

(all 7 applicants separated in the required time 

period) and 2 were denied. Under the exception 

provision, there have been 12 applications for early 

retirement, of which 8 were approved (6 of these 

applicants separated in fiscal year 2005 and 2 will 

separate in fiscal year 2006), 2 were denied, and 2 

are pending decision. This authority has been very 

helpful in reshaping our workforce by reducing the 

number of high-graded managers and replacing 

many of them with entry-level and midlevel hires 

who possess the skills and knowledge that will 

allow us to accomplish our mission and serve the 

needs of the Congress and the American people for 

many years to come.

The voluntary separation incentive provision 

requires us to make the payment out of current 

appropriations and to pay an additional amount 

into the retirement fund. In certain circumstance, 

these costs can be considerable and, given the 

many demands on our resources, present a strong 

financial incentive to use the provision sparingly, if 

at all. Thus, we anticipate little or no use of this 

authority. For this reason, as well as to avoid creating unrealistic employee expectations, we have not 

developed and issued regulations to implement this 

authority.

Section 3 of the act established a requirement that 

an employee must be performing at a satisfactory 

level in order to receive an annual pay adjustment 

and amended 31 U.S.C. 732(c), which required our 

employees’ pay to be adjusted at the same time and 

to the same extent as the General Schedule, to 

authorize the Comptroller General to determine the 

amount of annual pay adjustments and described 

the factors to be considered in making those determinations. The Comptroller General’s authority 

under section 3 is effective for increases on or after 

October 1, 2005. On January 4, 2005, we issued regulations addressing the satisfactory performance 

requirement for GAO’s analysts and attorneys 

(employees covered by validated competencybased appraisal systems for at least one full 

appraisal cycle). The regulations provided for withholding annual increases from any employee whose 

performance on any competency was rated below 

expectations. These regulations will be revised to 
196 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART IV: Appendixes

make this requirement applicable to all remaining 

employees prior to the January 2006 annual adjustment, at which time those employees will have 

completed one full appraisal cycle under the new 

competency-based appraisal system. We plan to 

issue regulations covering the determination of pay 

adjustments prior to January 2006—the first opportunity for the Comptroller General to exercise this 

authority. 

Section 4 authorizes the Comptroller General to 

establish pay retention regulations applicable to 

employees who are placed in lower grades or 

bands as a result of workforce restructuring, reclassification, or other appropriate circumstances. Draft 

regulations are currently under review. We intend to 

complete the review and consultation process and 

implement the regulation prior to January 2006.

Section 6 authorizes GAO to provide increased 

annual leave to key employees. We posted draft 

regulations for employee comment on 

December 29, 2004. These regulations would permit designated key employees with less than 3 

years of federal service to earn 6 hours of annual 

leave per pay period. GAO’s Executive Committee 

is considering employee comments before finalizing 

the regulations and, due to the complicated nature 

of the many issues raised, we anticipate finalization 

of the regulations and implementation of this provision in early fiscal year 2006.

Section 7 authorized GAO to establish an Executive 

Exchange Program. After soliciting and analyzing 

employees’ comments on draft regulations, we 

issued the final regulations on May 20, 2005. We 

also developed draft forms, templates, and brochures to be used in implementing this program in 

fiscal year 2006.

Section 9 incorporated additional requirements for 

GAO’s performance management system, all of 

which are addressed by our competency-based 

appraisal systems. Additionally, we conduct an 

annual review and assessment of our performance 

management policies and processes as part of 

ongoing continuous improvement.

Finally, section 10 requires us to consult with any 

interested groups or associations representing officers and employees of GAO when implementing 

changes brought about by this act. As evidenced in 

the narrative above, this is a practice that we have 

implemented for several years. Typically, in implementing changes such as those in this act, we consult with interested groups and associations within 

GAO, provide them with draft policies and regulations, and obtain input from them on suggested 

clarifications or changes to the policies and regulations. We carefully consider this input and incorporate it, when appropriate, before distributing 

policies and regulations for comment to all employees. We will continue this practice in implementing 

the changes relating to the act and have already 

taken steps to ensure that all GAO groups, associations, and employees are aware of the impending 

changes in the performance management system 

related to this act.
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 197

PART IV: Appendixes

4. GAO’s Federal Information Security 

Management Act Efforts

Federal IT security management, policy, and procedures continue to evolve, and we have focused 

efforts on integrating these evolving policies and 

practices into our IT processes. During the past 

year, we stepped up efforts to improve our 

information security program, processes, and 

procedures, implementing key requirements set 

forth in FISMA provisions enacted under the EGovernment Act of 2002, in National Institute of 

Standards and Technology 800 series guidance, and 

in Federal Information Processing Standards Publication 199. While we are not obligated by law to 

comply with FISMA, we have adopted FISMA 

requirements to help ensure that we establish an 

effective information security program and to fulfill 

our goal of being a model federal agency. 

We have instituted a wide range of programs and 

processes to assess, on a recurring basis, the status 

of our information security program, including the 

results of internal reviews by program offices and 

security staff. Consistent with FISMA requirements, 

our IG independently evaluated our information 

security program during fiscal year 2005. The IG 

commented on our progress in correcting identified 

weaknesses and implementing FISMA requirements 

and offered additional recommendations to further 

strengthen our IT security program. We also follow 

the standard practice of using a public accounting 

firm, as well as other external sources, to provide 

independent external evaluations and testings of IT 

controls on our major applications. Results of these 

reviews and evaluations, to date, have identified no 

material weaknesses in our major applications. In 

addition, we have substantially elevated information 

systems security consciousness at GAO by putting 

into practice requirements consistent with FISMA 

through our efforts to

■ implement an enterprisewide risk-based security 

program;

■ develop essential policies, procedures, and 

reporting mechanisms to ensure that our security 

program is integrated into every aspect of IT 

system life cycle planning and maintenance;

■ provide recurring security training and awareness 

to all of our staff;

■ integrate security into our capital investment 

control process; and

■ implement an enterprise disaster recovery 

solution.

We have defined security initiatives that have 

pointed to the need for changes in our existing 

technology infrastructure, as well as new security 

tools and appliances. During fiscal year 2005, we 

undertook a number of projects that have significantly improved our information security program. 

Among these projects are the following:

■ Certification and accreditation methodology.

We have revised the IT policy and procedures on 

certification and accreditation of our information 

systems. This policy establishes the foundation 

for our requirement to certify and accredit 

information systems that we supported. In 

addition, the methodology identifies activities, 

documentation, and the timeliness necessary to 

provide a complete risk assessment. 

■ Certification and accreditation of the General 

Support System and major applications. We 

have completed revision of documentation for 

the certification and accreditation of our 

information systems, which includes the General 

Support System (our network) and four major 

applications. An update to existing risk 

assessments, system security plans, National 

Institute of Standards and Technology Special 

Publication 800-26 reviews, system tests and 

evaluations were accomplished to ensure the 

appropriate security controls had been 
198 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

PART IV: Appendixes

implemented, risk to GAO was validated, and 

system documentation included current 

approval by the designated approval authority.

■ Vulnerability assessment. We have instituted a 

process consistent with the requirements cited in 

FISMA to scan the General Support System for 

vulnerabilities and potential areas that could be 

exploited. We integrated this process with our 

network operations to maintain up-to-date 

patched systems to ensure a stable network. 

Using a scanning software tool, each network 

device is scanned on a routine schedule to 

identify vulnerabilities that are remediable via 

patches and configuration changes in order to 

ensure secure services and system standardization 

and meet our network hardening guidelines. 

■ Wireless network protocol implementation.

We have implemented the use of the Institute of 

Electrical and Electronics Engineers 802.1x 

protocol—which covers network access control 

and is used to provide authenticated network 

access—in our team and conference rooms, 

nationwide. This validation process ensures 

computer equipment that connects to our 

network is in fact GAO equipment, removing the 

potential risk for non-GAO equipment to have 

uncontrolled access to our network. The initial 

deployment of this technology was implemented 

in fiscal year 2005. This technology is also being 

examined for use beyond conference rooms in 

fiscal year 2006.

■ Centralized plan of actions and milestones.

Tracking the results of various audits of our 

information systems was previously 

accomplished separately, using the 

methodologies specific to each audit. By 

integrating these tracking methods into a single 

program, we were able to gain synergy in 

monitoring the risks and remediation efforts and 

improve security within our information systems.

■ Enterprise FISMA tool. The procurement of an 

automated tool to enhance the security tracking 

and documentation of our information systems 

was completed in late 2005. This program will 

become our source for managing audit findings 

and remediation efforts, documenting annual 

assessments, and tracking certification and 

accreditation.

■ Enterprise event correlation application. We 

procured an event correlation engine, in late 

fiscal year 2005, to assist with the monitoring of 

diverse network traffic that identifies potential 

threats to our network environment. The use of 

this tool will allow the effective use of limited 

resources to minimize risk to GAO while 

vigilantly monitoring network activities.

■ Classified processing upgrade. In the past, our 

investigative mission work requiring electronic 

access to classified defense information had been 

limited to select sites with limited access. During 

fiscal year 2005, we expanded our Secret Internet 

Protocol Router Network connections to seven 

GAO field office sites, providing each site with a 

secure computing facility and new equipment. 

Rooms were outfitted with dedicated switches, 

routers, firewalls, intrusion detection devices, 

servers, and workstations. Installation at the 

remaining field locations is scheduled to occur in 

fiscal year 2006.

■ Enterprise anti-spyware. We deployed an 

enterprise anti-spyware application as part of the 

standard desktop image. This application 

automatically monitors and remediates various 

types of intrusion and monitoring programs, such 

as adware and Trojan viruses, to prevent 

desktops from becoming infected with spyware. 

The implementation of this program has 

significantly reduced the amount of work 

required to reimage desktops due to spyware.

■ Enterprise Internet screening. We piloted the 

implementation of an Internet screening tool that 

provides antivirus and anti-spyware protection to 

our Web-based activities. This package will 

provide added security for the Web and improve 

the overall security posture for GAO’s information 

systems.

■ Security Program Plan. We implemented a 

formalized Security Program Plan that provides 

the road map of activities for our Information 

Systems Security Group over the next few years 

to improve both the program and technical 

components of our network security. We also 

established a number of working groups to 

effectively support our security program. The IT 

Security Users Group meets monthly to share 

information about security-related activities, 

including policy, procedures, and guidance, on 

the network, while the Remediation Group meets 
GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005 199

PART IV: Appendixes

monthly to provide input on activities related to 

the remediation of findings documented from 

audits and maintained in the centralized plan of 

actions and milestones. 

■ FISMA Month. We instituted a novel program 

that takes place each August and is called FISMA 

Month. Because FISMA reporting is key to our 

annual security assessment, implementing FISMA 

Month focuses staff on the time frames and 

review requirements and helps to ensure that the 

documentation of our program activities is 

complete and up-to-date. This activity provides a 

snapshot of our program that has been in effect 

the entire year.

■ Security awareness training. We implemented 

a robust security awareness training program, 

which included awareness training for all of our 

staff and contractors and specialized security 

training for staff with enhanced access to the 

GAO network (primarily our IT operations staff). 

All training used Web-based courses. 
200 GAO PERFORMANCE AND ACCOUNTABILITY REPORT 2005

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