Fiscal Year 2008 Budget Request: U.S. Government Accountability Office
Published: 2007-03-16T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: We would like to thank Congress for its past support of GAO. We are especially appreciative of Congressional efforts to help us avoid a furlough of our staff during fiscal year 2007. Had we not received additional funds this year and not taken other cost minimization actions, GAO would have likely been forced to furlough most staff for up to 5 days without pay. At the same time, due to funding shortfalls, we were not able to make pay adjustments retroactive to January 7, 2007. It is through the efforts of our dedicated and capable staff that we were able to provide the Congress with the professional, objective, fact-based, nonpartisan, non-ideological, fair, and balanced information it needs to meet the full range of its constitutional responsibilities. We are extremely pleased and proud to say that we helped the federal government achieve a total of $51 billion in financial benefits in fiscal year 2006--a record high that represents a return on investment of $105 for every dollar the Congress invested in us. As a result of our work, we also documented 1,342 nonfinancial benefits that helped to improve service to the public, change laws, and transform government operations. The funding we received in fiscal year 2006 allowed us to conduct work that addressed many difficult issues confronting the nation, including U.S. border security, Iraq and Hurricane Katrina activities, the tax gap and tax reform, and issues affecting the health and pay of military service members. Our client-focused performance measures indicate that the Congress valued and was very pleased with our work overall.
section_title: What GAO Found
paragraphs: There is a need for fundamental and dramatic reform to address what the government does, how it does business, and who will do the government's business. Our support to the Congress will likely prove even more critical because of the pressures created by our nation's current and projected budget deficit and growing long-term fiscal imbalance. Also, as we face current and projected supply and demand imbalance issues and a growing workload over the coming years across a wide spectrum of issues, GAO will be unable to respond to congressional demands without a significant investment in our future. We have exhausted the results that we can achieve based on prior investments. Our ability to continue to produce record results and assist the Congress in discharging its Constitutional responsibilities relating to authorization, appropriations, oversight, and other matters will be adversely impacted unless we take action now. Therefore, our fiscal year 2008 budget request is designed to restore GAO's funding to more reasonable operating levels. Specifically, we are requesting fiscal year 2008 budget authority of $530 million, an 8.5 percent increase over our fiscal year 2007 funding level. The additional funds provided in fiscal year 2007 have helped reduce our requested increase for fiscal year 2008 from 9.4 percent to 8.5 percent. This funding level also represents a reduction below the request we submitted to the Office of Management and Budget (OMB) in January as a result of targeted adjustments to our planned fiscal year 2008 hiring plan. Our fiscal year 2008 budget request will allow us to achieve our performance goals to support the Congress as outlined in our strategic plan1 and rebuild our workforce capacity to allow us to better respond to supply and demand imbalances in responding to congressional requests. This funding will also help us address our caseload for bid protest filings, which have increased by more than 10 percent from fiscal years 2002 through 2006. Our workload for the first quarter of fiscal year 2007 suggests a continuation of this upward trend in bid protest fillings. We will be seeking Congressional commitment and support to provide the funding needed to increase GAO's staffing level to 3,750 over the next 6 years in order to address critical needs including supply and demand imbalances, high-risk areas, 21st Century Challenges questions, technology assessments, and other areas in need of fundamental reform. In addition, as we get closer to when GAO may be able to render our opinion on the consolidated financial statements of the U. S. government and the Department of Defense's financial and related systems, we will need to increase our workforce capacity. We will be providing the Congress additional information on the basis for and nature of this target later this year. Importantly, as noted last year, we also plan to request legislation that will assist GAO in performing its mission work, and enhance our human capital policies, including addressing certain compensation and benefits issues of interest to our employees. We plan to submit our proposal to our Senate and House authorization and oversight committees in the near future.

section_title: Letter
paragraphs: I am pleased to appear before the subcommittee today in support of the  fiscal year 2008 budget request for the U.S. Government Accountability  Office (GAO). The requested funding will help us continue our support of  the Congress in meeting its constitutional responsibilities and will help  improve the performance and ensure the accountability of the federal  government for the benefit of the American people. An overview of GAO’s  strategic plan for serving the Congress and our core values is included as  appendix I.
I would also like to thank you and your subcommittee for your past  support of GAO. I am especially appreciative of your efforts to help us  avoid a furlough of our staff during fiscal year 2007. Had we not received  additional funds this year and not taken other cost minimization actions,  GAO would have likely been forced to furlough most staff for up to 5 days  without pay. At the same time, due to funding shortfalls, we were not able  to make pay adjustments retroactive to January 7, 2007.
It is through the efforts of our dedicated and capable staff that we were  able to provide the Congress with the professional, objective, fact-based,  nonpartisan, non-ideological, fair, and balanced information it needs to  meet the full range of its constitutional responsibilities. I am extremely  pleased and proud to say that we helped the federal government achieve a  total of $51 billion in financial benefits in fiscal year 2006—a record high  that represents a return on investment of $105 for every dollar the  Congress invested in us. As a result of our work, we also documented  1,342 nonfinancial benefits that helped to improve service to the public,  change laws, and transform government operations. The funding we  received in fiscal year 2006 allowed us to conduct work that addressed  many difficult issues confronting the nation, including U.S. border  security, Iraq and Hurricane Katrina activities, the tax gap and tax reform,  and issues affecting the health and pay of military service members. Our  client-focused performance measures indicate that the Congress valued  and was very pleased with our work overall.
While fiscal year 2006 was a record year, we will be required to constrain  vital support to our staff and engagements in fiscal year 2007 in order to  manage within available funds. Although the additional funding provided  by the subcommittee allows us to avoid a furlough of our staff, we must  implement a number of actions to cancel, reduce, or defer costs in order to  manage within fiscal year 2007 funding constraints. In fact, our fiscal year  2007 budget for most programs and line items retains funding levels at or  near fiscal year 2006 funding levels—requiring that we absorb inflationary  increases, which in turn reduce our purchasing power, erode progress  toward our strategic goals, and ultimately affect our client service and  employee support. For example, in our travel account—a critical element  in our ability to conduct firsthand evaluation of federal funding and  program activities—we expect transportation costs and per diem rates to  rise (as they do annually). Also, our ability to hire staff to replace  departing staff, address key succession planning challenges and skill gaps,  and maintain a skilled workforce will be adversely affected. While we  must hold some critical employee benefits at last year’s funding level, such  as transit benefits and student loan repayments, our pool of employees  eligible to retire has increased since last year. Also, some other agencies  may be offering increased benefits that will be attractive to our employees  and potential recruits. In addition, we have reduced or deferred needed  targeted investments and initiatives geared to further increasing  productivity and effectiveness, achieving cost savings, and addressing  identified management challenges.
Unfortunately, we expect that these actions will adversely affect our  ability to respond to congressional requests, making it even more difficult  to address supply and demand imbalances in areas such as health care,  disaster assistance, homeland security, the global “war on terrorism,”  energy and natural resources, and forensic auditing. Our diminished  capacity will likely, in turn, ultimately result in reduced annual financial  benefits, findings, and recommendations to the Congress and the nation  and necessitate reductions in our    ability to provide timely and responsive information to support  testimonies on the Congress’s legislative and oversight agenda;    products containing recommendations for improvements in government    analyses of executive branch agencies budget justifications to support    support on reauthorization activities for pending programs, such as the  farm bill, Head Start, the Children’s Health Insurance Program, and the No  Child Left Behind Act; and    oversight of legislative branch programs, including the Capitol Visitor  Center.
In an effort to identify areas for potential improvement and help ensure  accountability, we plan to contract with a public accounting firm in fiscal  year 2008 to conduct a peer review of our financial audit practice and have  an international team of auditors conduct an external peer review of our  performance audit practices. GAO has received clean opinions on its  previous external peer reviews. Consistent with generally accepted  governmental auditing standards, external peer reviews are conducted on  a 3-year cycle and serve to validate that the Congress and the American  people can rely on our work and products.
In recent years, GAO has worked cooperatively with the appropriation  committees to submit modest budget requests. During this period, and for  a variety of reasons, GAO has gone from the largest legislative branch  agency to the third largest in terms of total budgetary resources. Adjusting  for inflation, GAO’s budget authority has declined by 3 percent in constant  fiscal year 2006 dollars since fiscal year 2003, as shown in figure 1. These  modest budget results do not adequately recognize the return on  investment that GAO has been able to generate. In fact, these increases  have hampered our progress in rebuilding from the downsizing (40 percent  reduction in staffing levels) and mandated funding reductions that  occurred in the 1990s. Although GAO’s fiscal year 2008 budget request  represents a 7 percent increase in constant dollar terms over our fiscal  year 2007 operating plan, it is one of the smallest increases requested in  the legislative branch.
Shortly after I was appointed Comptroller General in November 1998, I  determined that the agency should undertake a major transformation  effort. As a result, GAO has become more results-oriented, partnerial, and  client focused. With your support, we have made strategic investments;  realigned the organization; streamlined our business processes;  modernized our performance classification, compensation, and reward  systems; enhanced our ability to attract, retain and reward top talent;  enhanced the technology and infrastructure supporting our staff and  systems; and made other key investments. These transformational efforts  have allowed GAO to model best practices, lead by example, and provide  significant support to Congressional hearings, while achieving record  results and very high client satisfaction ratings without significant  increases in funding.
We have taken a number of steps to deal with funding shortfalls in the past  few years; however, we cannot continue to employ the same approaches.  Our staff has become increasingly stretched and we are experiencing  backlogs in several areas of critical importance to the Congress (e.g.,  health care, homeland security, energy and natural resources). In addition,  we have deferred key initiatives and technology upgrades (e.g.,  engagement and administrative process upgrades) for several years and it  would not be prudent to continue to do so. These actions are having an  adverse effect on employee morale, our ability to produce results, and the  return on investment that we can generate.
There is a need for fundamental and dramatic reform to address what the  government does, how it does business, and who will do the government’s  business. Our support to the Congress will likely prove even more critical  because of the pressures created by our nation’s current and projected  budget deficit and growing long-term fiscal imbalance. Also, as we face  current and projected supply and demand imbalance issues and a growing  workload over the coming years across a wide spectrum of issues, GAO  will be unable to respond to congressional demands without a significant  investment in our future. We have exhausted the results that we can  achieve based on prior investments. Our ability to continue to produce  record results and assist the Congress in discharging its Constitutional  responsibilities relating to authorization, appropriations, oversight, and  other matters will be adversely impacted unless we take action now.
Therefore, our fiscal year 2008 budget request is designed to restore GAO’s  funding to more reasonable operating levels. Specifically, we are  requesting fiscal year 2008 budget authority of $530 million, an 8.5 percent  increase over our fiscal year 2007 funding level. The additional funds  provided in fiscal year 2007 have helped reduce our requested increase for  fiscal year 2008 from 9.4 percent to 8.5 percent. This funding level also  represents a reduction below the request we submitted to the Office of  Management and Budget (OMB) in January as a result of targeted  adjustments to our planned fiscal year 2008 hiring plan. Our fiscal year  2008 budget request will allow us to achieve our performance goals to  support the Congress as outlined in our strategic plan and rebuild our  workforce capacity to allow us to better respond to supply and demand  imbalances in responding to congressional requests. This funding will also  help us address our caseload for bid protest filings, which have increased  by more than 10 percent from fiscal years 2002 through 2006. Our  workload for the first quarter of fiscal year 2007 suggests a continuation of  this upward trend in bid protest fillings.
We will be seeking your commitment and support to provide the funding  needed to increase GAO’s staffing level to 3,750 over the next 6 years in  order to address critical needs including supply and demand imbalances,  high-risk areas, 21st Century Challenges questions, technology  assessments, and other areas in need of fundamental reform. In addition,  as we get closer to when GAO may be able to render our opinion on the  consolidated financial statements of the U. S. government and the  Department of Defense’s financial and related systems, we will need to  increase our workforce capacity. We will be providing the Congress  additional information on the basis for and nature of this target later this  year.
Importantly, as I noted last year, we also plan to request legislation that  will assist GAO in performing its mission work, and enhance our human  capital policies, including addressing certain compensation and benefits  issues of interest to our employees. We plan to submit our proposal to our  Senate and House authorization and oversight committees in the near  future.
My testimony today will focus on key efforts that GAO has undertaken to  support the Congress, our fiscal year 2006 performance results, our budget  request for fiscal year 2008 to support the Congress and serve the  American people, and proposed legislative changes.
subsections: section_title: Key Efforts to Support the Congress
paragraphs: As is the case with each new Congress, we are beginning to have  discussions with regard to many new requests for GAO’s professional,  objective, fact-based, nonpartisan, and non-ideological information,  analysis, and recommendations. On November 17, 2006, I was pleased to  offer three sets of recommendations for your consideration as part of the  agenda of the 110th Congress. The first recommendation suggests targets  for near-term oversight; the second proposes policies and programs in  need of fundamental reform and re-engineering; the third lists governing  issues. The proposals represent an effort to synthesize GAO’s institutional  knowledge and special expertise and suggest both the breadth and the  depth of the issues facing the new Congress. We at GAO stand ready to  assist the 110th Congress in meeting its constitutional responsibilities. To  be effective, congressional hearings and other activities should offer  opportunities to share best practices, facilitate governmentwide  transformation, and promote accountability for delivering positive results.
On January 9, 2007, we presented GAO’s assessment of the key oversight  issues related to Iraq for consideration in developing the oversight agenda  of the 110th Congress and in analyzing the President’s revised strategy for  Iraq. This assessment was based on our ongoing work and the 67 Iraq- related reports and testimonies we have provided to the Congress since  May 2003. Our work spans the security, political, economic, and  reconstruction prongs of the U.S. national strategy in Iraq. The broad,  crosscutting nature of this work helps minimize the possibility of overlap  and duplication by any individual inspector general. Our work has focused  on the U.S. strategy and costs of operating in Iraq, training and equipping  the Iraqi security forces, governance and reconstruction issues, the  readiness of U.S. military forces, and achieving desired acquisition  outcomes. Our current work draws on our past work and regular site visits  to Iraq and the surrounding region, such as Jordan and Kuwait. We plan to  establish a presence in Iraq beginning later this fiscal year to provide  additional oversight of issues deemed important to the Congress; subject  to approval by the U.S. Department of State and adequate funding. We  have requested supplemental fiscal year 2007 funds of $374,000 to support  this effort.
In January of this year, 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 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. Issued to  coincide with the start of each new Congress, our high-risk update, first  issued in 1993, has helped Members of the Congress who are responsible  for oversight and executive branch officials who are accountable for  performance. Our high-risk program focuses on major government  programs and operations that need urgent attention or transformation to  ensure that our government functions in the most economical, efficient,  and effective manner possible. Overall, our high-risk program has served  to identify and help resolve a range of serious weaknesses that involve  substantial resources and provide critical services to the public. Table 1  details our 2007 high-risk list.
In February of this year, we issued a new publication entitled Fiscal  Stewardship: A Critical Challenge Facing Our Nation that is designed to  provide the Congress and the American public, in a relatively brief and  understandable form, selected budget and financial information regarding  our nation’s current financial condition, long-term fiscal outlook, and  possible ways forward. In the years ahead, our support to the Congress  will likely prove even more critical because of the pressures created by  our nation’s current and projected budget deficit and growing long-term  fiscal imbalance. Indeed, as the Congress considers those fiscal pressures,  it will be grappling with tough choices about what government does, how  it does business, and who will do the government’s business. GAO is an  invaluable tool for helping the Congress review, reprioritize, and revise  existing mandatory and discretionary spending programs and tax policies.
In addition, I have participated in a series of town hall forums around the  nation to discuss the federal government’s current financial condition and  deteriorating long-term fiscal outlook, including the challenges posed by  known long-term demographic trends and rising health care costs. These  forums, popularly referred to as the “Fiscal Wake-up Tour,” are led by the  Concord Coalition and also include the Heritage Foundation, the  Brookings Institution, and a range of “good government” groups. The  Fiscal Wake-up Tour states the facts regarding the nation’s current  financial condition and long-term fiscal outlook in order to increase public  awareness and accelerate actions by appropriate federal, state, and local  officials.
section_title: Performance, Results, and Plans
paragraphs: We anticipate that the funds requested for fiscal year 2008 will support  efforts similar to those just completed in fiscal year 2006. The following  discussions summarize that work.
In fiscal year 2006, major events like the nation’s recovery from natural  disasters, ongoing military conflicts abroad, terrorist threats, and potential  pandemics repeatedly focused the public eye on the federal government’s  ability to operate effectively and efficiently and provide services to  Americans when needed. Our work during the year helped the Congress  and the public judge how well the federal government performed its  functions and consider alternative approaches for improving operations  and laws when performance was less than adequate. For example, teams  supporting all three of our external strategic goals performed work related  to every facet of the Hurricane Katrina and Rita disasters—preparedness,  response, recovery, long-term recovery, and mitigation. We developed a  coordinated and integrated approach to ensure that the Congress’s need  for factual information about disaster preparedness, response, recovery,  and reconstruction activities along the Gulf Coast was met. We examined  how federal funds were used during and after the disaster and identified  the disaster rescue, relief, and rebuilding processes that worked well and  not so well throughout the effort. To do this, staff drawn from across the  agency spent time in the hardest hit areas of Louisiana, Mississippi,  Alabama, and Texas, collecting information from government officials at  the federal, state, and local levels as well as from private organizations  assisting with this emergency management effort. We briefed  congressional staff on our preliminary observations early in fiscal year  2006 and subsequently issued over 30 reports and testimonies on  Hurricanes Katrina and Rita by fiscal year end, focusing on, among other  issues, minimizing fraud, waste, and abuse in disaster assistance and  rebuilding the New Orleans hospital care system.
The following tables provide summary information on GAO’s fiscal year  2006 performance and the results achieved in support of the Congress and  the American people. Additional information on our performance results  can be found in Performance and Accountability Highlights Fiscal Year  2006 at www.gao.gov.
Table 2 provides examples of how GAO assisted the nation in fiscal year  2006.
subsections: section_title: Outcomes of Our Work and the Road Ahead
paragraphs: During fiscal year 2006, we used 16 annual performance measures that  capture the results of our work; the assistance we provided to the  Congress; our ability to attract, retain, develop, and lead a highly  professional workforce; and how well our internal administrative services  help employees get their jobs done and improve their work life (see table  3). We generally exceeded the targets we set for all of our performance  measures, which indicate our ability to produce results for the nation and  serve the Congress.
In fiscal year 2006, our work generated $51 billion in financial benefits,  primarily from actions agencies and the Congress took in response to our  recommendations. Of this amount, about $27 billion resulted from changes  to laws or regulations, $10 billion resulted from agency actions based on  our recommendations to improve services to the public, and $14 billion  resulted from improvements to core business processes. See figure 2 for  examples of our fiscal year 2006 financial benefits.
section_title: Financial Beneﬁts Financial Beneﬁts
paragraphs: (Dollars in billions) (Dollars in billions)
Ensured continued monetary benefits from federal spectrum auctions.
Encouraged DOD to identify and reduce unobligated funds in the military services’ operations and maintenance budget  Recommended payment methods that cut Medicare costs for durable medical equipment, orthotics, and prosthetics.
Helped to ensure that certain U.S. Postal Service retirement-related benefits would be funded.
Identified recoverable costs for the Tennessee Valley Authority.
Helped to increase collections of civil debt.
Encouraged the Department of Housing and Urban Development to take actions to reduce improper payments.
Supported the Department of Energy’s efforts to reduce its carryover funds.
Many of the benefits that result from our work cannot be measured in  dollar terms. During fiscal year 2006, we recorded a total of 1,342  nonfinancial benefits. For example, we documented 61 instances where  information we provided to the Congress resulted in statutory or  regulatory changes, 667 instances where federal agencies improved  services to the public, and 614 instances where agencies improved core  business processes or governmentwide reforms were advanced. These  actions spanned the full spectrum of national issues, from identifying the  adverse tax impact of combat pay and certain tax credits on low-income  military families to improving the Department of State’s process for  developing staffing projections for new embassies. See figure 3 for  additional examples of GAO’s nonfinancial benefits in fiscal year 2006.
During fiscal year 2006, experts from our staff testified at 240  congressional hearings covering a wide range of complex issues (seetable  4). For example, our senior executives testified on a variety of issues,  including freight rail rates, AIDS assistance programs, and federal  contracting. Over 100 of the hearings at which we testified were related to  areas and programs we designated as high risk.
subsections: section_title: GAO’s Fiscal Year 2008 Request to Support the Congress
paragraphs: Our fiscal year 2008 budget request seeks the resources necessary to allow  GAO to rebuild and enhance its workforce, knowledge capacity, employee  programs, and infrastructure. These items are critical to ensure that GAO  can continue to provide congressional clients with timely, objective, and  reliable information on how well government programs and policies are  working and, when needed, recommendations for improvement. In the  years ahead, our support to the Congress will likely prove even more  critical because of the pressures created by our nation’s current and  projected budget deficit and growing long-term fiscal imbalance. GAO is  an invaluable tool for helping the Congress review, reprioritize, and revise  existing mandatory and discretionary spending programs and tax policies.
Consistent with our strategic goal to be a model agency, we continuously  assess our operations to ensure that GAO remains an effective, high- performing organization, providing timely, critical support to the Congress  while being fiscally responsive. Our objective is to be an employer of  choice; maintain skills/knowledge, performance-based, and market- oriented compensation systems; adopt best practices; benchmark service  levels and costs against comparable entities; streamline our operations to  achieve efficiencies; assess opportunities for cross-servicing, outsourcing,  or business process re-engineering; and leverage technology to increase  efficiency, productivity, and results. We also continue to partner within  and across the legislative branch through the legislative branch Chief  Administrative Officers, financial management, and procurement councils.
Transformational change and innovation is essential for progress. Our  fiscal year 2008 budget request includes funds to regain the momentum  needed to achieve these goals. Our fiscal year 2008 budget request will  allow GAO to    address supply and demand imbalances in responding to congressional  requests for studies in areas such as health care, disaster assistance,  homeland security, the global “war on terrorism,” energy and natural  resources, and forensic auditing;   address our increasing bid protest workload;    be more competitive in the labor markets where GAO competes for talent;    address critical human capital components, such as knowledge capacity  building, succession planning, and staff skills and competencies;   enhance employee recruitment, retention, and development programs;  restore program funding levels and regain our purchasing power;    undertake critical initiatives necessary to continuously re-engineer  processes geared to increasing our productivity and effectiveness and  addressing identified management challenges; and   pursue critical structural and infrastructure maintenance and  improvements.
Our fiscal year 2008 budget request represents an increase of $41.7 million  (or 8.5 percent) over our fiscal year 2007 funding level and includes about  $523 million in direct appropriations and authority to use about $7.5  million in offsetting collections as illustrated in table 5. This request  reflects a reduction of nearly $5.4 million in nonrecurring fiscal year 2007  costs used to offset the fiscal year 2008 increase.
Mandatory pay and uncontrollable cost increases. We are requesting  $24.9 million to cover anticipated mandatory performance-based pay and  uncontrollable inflationary increases resulting primarily from annual  across-the-board and performance-based increases, annualization of prior  fiscal year costs, and an increase in the number of compensable days in  fiscal year 2008. These costs also include uncontrollable inflationary  increases imposed by vendors as the cost of doing business.
Rebuilding our capacity. Our fiscal year 2007 budget request sought  funds to support an increase of 50 FTEs from 3,217 to 3,267. However, in  order to manage within expected funding levels in fiscal year 2007, we will  significantly curtail hiring by about 50 percent below the previous year,  resulting in a projected FTE utilization of 3,159—well below our planned  level. In fiscal years 2007 and 2008, we anticipate attrition of over 600 staff  that will result in a significant drain on GAO’s knowledge capacity or  institutional memory. Further, almost 20 percent of all GAO staff will be  eligible for retirement by the end of fiscal year 2008, including almost 45  percent of our senior executive service.
Thus, in fiscal year 2008, we are seeking funds to rebuild our staff and  knowledge capacity. In fiscal year 2008, we plan to hire about 490 staff— the maximum that we could reasonably absorb—increasing our FTE  utilization to 3,217. While we are tempering our immediate FTE request,  increasingly higher demands are being placed on GAO. We are  experiencing supply and demand imbalances in several areas of critical  importance to the Congress (e.g., health care, homeland security, and  energy and natural resources). We have also seen an increase in the  number of bid protest filings.
Also, to remain competitive in the labor markets, we need to increase  employee benefits in areas such as student loan repayments and transit  subsidies where funding constraints in fiscal year 2007 limit our flexibility.  For example, effective in January 2007, the IRS increased the monthly  benefit for transit subsidies for eligible employees who commute using  public transportation. GAO, however, is unable to extend this increased  benefit to staff.
In addition, we need to ensure that staff have the appropriate tools and  resources to perform effectively, including training and development,  travel funds, and technology. And when our staff perform well, they  should be appropriately rewarded.
Undertake critical investments. We are requesting funds to undertake  critical investments that would allow us to implement technology  improvements and streamline and re-engineer work processes to enhance  the productivity and effectiveness of our staff, conduct essential  investments that have been deferred as the result of funding constraints  and cannot continue to be deferred, and implement responses to changing  federal conditions, such as smart card technology. Also, during recent  years, we reduced, deferred, and slowed the pace of critical upgrades (e.g.,  engagement and administrative process upgrades) and deferred  nonessential administrative activities. In fiscal year 2008, we would like to  have sufficient funding to take action to protect our current investments  and continue to be a model agency and lead by example.
Legislative authority. We are requesting legislation to establish a Board  of Contract Appeals at GAO to adjudicate contract claims involving  contracts awarded by legislative branch agencies. GAO has performed this  function on an ad hoc basis over the years for appeals of claims from  decisions of the Architect of the Capitol on contracts that it awards.  Recently we have agreed to handle claims arising under Government  Printing Office contracts. The legislative proposal would promote  efficiency and predictability in the resolution of contractor and agency  claims by consolidating such work in an established and experienced  adjudicative component of GAO and would permit GAO to recover its  costs of providing such adjudicative services from legislative branch users  of such services.
We also plan to request legislation that will assist GAO in performing its  mission work and enhance our human capital policies, including  addressing certain compensation and benefits issues of interest to our  employees. While there are a number of important provisions, today I will  only discuss several of the significant ones. Regarding provisions  concerned with mission work, we have identified a number of legislative  mandates that are either no longer meeting the purpose intended or should  be performed by an entity other than GAO. We are working with the  cognizant entities and the appropriate authorization and oversight  committees to discuss the potential impact of legislative relief for these  issues. Another provision would modernize the authority of the  Comptroller General to administer oaths in performance of the work of  the office. To keep the Congress apprized of difficulties we have  interviewing agency personnel and obtaining agency views on matters  related to ongoing mission work, we will suggest new reporting  requirements. When agencies or other entities ignore a request by the  Comptroller General to have personnel provide information under oath,  make personnel available for interviews, or provide written answers to  questions, the Comptroller General would report to the Congress as soon  as practicable and also include such information in the annual report to  the Congress.
In regard to GAO’s human capital flexibilities, among other provisions, we  are proposing a flexibility that allows us to better approximate market  rates for professional positions by increasing our maximum pay for other  than the Senior Executive Service and Senior Level from GS-15, step 10, to  Executive Level III. Additionally, under our revised and contemporary  merit pay system, certain portions of an employee’s merit increase, below  applicable market-based pay caps, are not permanent. Since this may  impact an employee’s high three for retirement purposes, another key  provision of the bill would enable these nonpermanent payments to be  included in the retirement calculation for all GAO employees, except  senior executives and senior level personnel.
section_title: Concluding Remarks
paragraphs: In summary, I believe that you will find our budget request reasonable,  responsible, and well-justified given the important role that GAO plays and  the unparalleled return on investment that GAO generates. We are grateful  for the Congress’s continued support of our mutual effort to improve  government and for providing the resources that allow us to be a world- class professional services organization. We are proud of our record  performance and the positive impact we have been able to effect in  government over the past year and believe an investment in GAO will  continue to yield substantial returns for the Congress and the American  people. Our nation will continue to face significant challenges in the years  ahead. GAO’s expertise and involvement in virtually every facet of  government positions us to provide the Congress with the timely,  objective, and reliable information it needs to discharge its constitutional  responsibilities.
Mrs. Chairwoman and Members of the Subcommittee, this concludes my  prepared statement. At this time, I would be pleased to answer any  questions that you or other Members of the Subcommittee may have.
section_title: Appendix I: Serving the Congress—GAO’s Strategic Plan Framework
paragraphs: 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.
Provide Timely, Quality Service to the Congress and the Provide Timely, Quality Service to the Congress and the Federal Government to . . . Federal  Government to . . . . . .. . . 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 related to . . . and Financial Security of the American Peoplerelated to . . .
Natural resources use and environmental protection . . .. . . Respond to Changing Security Threats and the Challenges of Respond to Changing Security Threats and the Challenges of   Global Interdependence involving . . .   Global Interdependence involving . . .
Key management challenges and program risks Fiscal position and financing of the government 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 in the areas of . . . a World-Class Professional Services Organization  in the areas of . . .
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