Government Efficiency and Effectiveness: Opportunities to Reduce Fragmentation, Overlap, and Duplication and Achieve Other Financial Benefits
Published: 2015-04-14T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: As the fiscal pressures facing the government continue, so too does the need for executive branch agencies and Congress to improve the efficiency and effectiveness of government programs and activities. Such opportunities exist throughout government.
To bring these opportunities to light, Congress included a provision in statute for GAO to annually identify federal programs, agencies, offices, and initiatives (both within departments and government-wide) that are fragmented, overlapping, or duplicative. As part of this work, GAO also identifies additional opportunities to achieve cost savings or enhanced revenue collection. GAO's 2015 annual report is its fifth in this series ( GAO-15-404SP ).
This statement discusses (1) new opportunities GAO identifies in its 2015 report; (2) the status of actions taken to address the opportunities GAO identified in its 2011-2014 reports; and (3) existing and new tools available to help executive branch agencies and Congress reduce or better manage fragmentation, overlap, and duplication. To identify what actions exist to address these issues and take advantage of opportunities for cost savings and enhanced revenues, GAO reviewed and updated prior work, including recommendations for executive action and matters for congressional consideration.
section_title: What GAO Found
paragraphs: GAO's 2015 annual report identifies 66 new actions that executive branch agencies and Congress could take to improve the efficiency and effectiveness of government in 24 areas. GAO identifies 12 new areas in which there is evidence of fragmentation, overlap, or duplication. For example, GAO suggests that Congress repeal the statutorily required US Family Health Plan—a decades-old component of the Department of Defense's (DOD) Military Health System—because it duplicates the efforts of DOD's managed care support contractors by providing the same benefit to military beneficiaries. GAO also identifies 12 areas where opportunities exist either to reduce the cost of government operations or enhance revenue collections. For example, GAO suggests that Congress update the way Medicare has paid certain cancer hospitals since 1983, which could save about $500 million per year.
The executive branch and Congress have made progress in addressing the approximately 440 actions government-wide that GAO identified in its past annual reports. Overall, as of March 6, 2015, 37 percent of these actions were addressed, 39 percent were partially addressed, and 20 percent were not addressed. Executive branch and congressional efforts to address these actions over the past 4 years have resulted in over $20 billion in financial benefits, with about $80 billion more in financial benefits anticipated in future years from these actions. Although progress has been made, fully addressing all the remaining actions identified in GAO's annual reports could lead to tens of billions of dollars of additional savings.
Addressing fragmentation, overlap, and duplication within the federal government is challenging due to, among other things, the lack of reliable budget and performance information. If fully and effectively implemented, the GPRA Modernization Act of 2010 and the Digital Accountability and Transparency Act of 2014 could help to improve performance and financial information. In addition, GAO has developed an evaluation and management guide ( GAO-15-49SP ), which is being released concurrently with the 2015 annual report. This guide provides a framework for analysts and decision makers to identify and evaluate instances of fragmentation, overlap and duplication and consider options for addressing or managing such instances.

section_title: Letter
paragraphs: I appreciate the opportunity to discuss our 2015 annual report, which  presents 24 opportunities to reduce fragmentation, overlap, and  duplication and achieve other financial benefits. My testimony today  describes (1) new issues identified in our 2015 annual report; (2) the  status of actions taken by the administration and Congress to address the  issues identified in our 2011-2014 annual reports; and (3) existing and  new tools available to help executive branch agencies and Congress  reduce or better manage fragmentation, overlap, and duplication. My  comments are based upon our 2015 annual report and an evaluation and  management guide for assessing fragmentation, overlap and duplication,  which are both being released today, as well as our update on the  progress made in implementing actions that we have suggested in our  previous annual reports. These efforts are based upon work GAO  conducted in accordance with generally accepted government auditing  standards or, GAO’s quality assurance framework. More details on our  scope and methodology can be found in the full report.
subsections: section_title: Twenty-four Areas Identified to Improve Efficiency and Effectiveness across the Federal Government
paragraphs: In our 2015 annual report, we identify 12 new areas in which we found  evidence of fragmentation, overlap, or duplication, and we present 20  actions to executive branch agencies and Congress to address these  issues. As described in table 1, these areas span a wide range of federal  functions or missions.
We consider programs or activities to be fragmented when more than one  federal agency (or more than one organization within an agency) is  involved in the same broad area of national need, which may result in  inefficiencies in how the government delivers services. We identified  fragmentation in multiple programs we reviewed. For example, in our  2015 annual report, we reported that oversight of consumer product  safety involves at least 20 federal agencies, including the Consumer  Product Safety Commission (CPSC), resulting in fragmented oversight  across agencies. Although agencies reported that the involvement of  multiple agencies with various expertise can help ensure more  comprehensive oversight by addressing a range of safety concerns, they  also noted that fragmentation can result in unclear roles and potential  regulatory gaps. Although a number of agencies have a role, no single  entity has the expertise or authority to address the full scope of product  safety activities. We suggested that Congress consider establishing a  formal comprehensive oversight mechanism for consumer product safety  agencies to address crosscutting issues as well as inefficiencies related  to fragmentation and overlap, such as communication and coordination  challenges and jurisdictional questions between agencies. Mechanisms  could include, for example, formalizing relationships and agreements  among consumer product safety agencies or establishing an interagency  work group. CPSC, the Department of Homeland Security (DHS), the  Department of Housing and Urban Development, and the Department of  Commerce’s National Institute of Standards and Technology agreed with  GAO’s matter for congressional consideration, while the remaining  agencies neither agreed nor disagreed.
Fragmentation can also be a harbinger for overlap or duplication. Overlap  occurs when multiple agencies or programs have similar goals, engage in  similar activities or strategies to achieve them, or target similar  beneficiaries. We found overlap among federal programs or initiatives in a  variety of areas, including nonemergency medical transportation (NEMT).  Forty-two programs across six different federal departments provide  NEMT to individuals who cannot provide their own transportation due to  age, disability, or income constraints. For example, NEMT programs at  both Medicaid, within the Department of Health and Human Services  (HHS), and the Department of Veterans Affairs (VA) have similar goals (to  help their respective beneficiaries access medical services), serve  potentially similar beneficiaries (those individuals who have disabilities,  are low income, or are elderly), and engage in similar activities (providing  NEMT transportation directly or indirectly).
We found a number of challenges to coordination for these NEMT  programs. For example, Medicaid and VA largely do not participate in  NEMT coordination activities in the states we visited, in part because both  programs are designed to serve their own populations of eligible  beneficiaries and the agencies are concerned that without proper controls  payments could be made for services to ineligible individuals. However,  because Medicaid and VA are important to NEMT, as they provide  services to potentially over 90 million individuals, greater interagency  cooperation—with appropriate controls and safeguards to prevent  improper payments— could enhance services to transportation- disadvantaged individuals and save money. An interagency coordinating  council was developed to enhance federal, state, and local coordination  activities, and it has taken some actions to address human service- transportation program coordination. However, the council has not  convened since 2008 and has provided only limited leadership. For  example, the council has not issued key guidance documents that could  promote coordination, including an updated strategic plan.
To improve efficiency, we recommended that the Department of  Transportation (DOT), which chairs the interagency coordinating council,  take steps to enhance coordination among the programs that provide  NEMT. In response, DOT agreed that more work is needed to increase  coordination activities with all HHS agencies, especially the Centers for  Medicare & Medicaid Services (CMS). DOT also said the Federal Transit  Administration is asking its technical assistance centers to assist in  developing responses to NEMT challenges.
In other aspects of our work, we found evidence of duplication, which  occurs when two or more agencies or programs are engaged in the same  activities or provide the same services to the same beneficiaries. An  example of duplicative federal efforts is the US Family Health Plan  (USFHP)—a statutorily required component of the Department of  Defense’s (DOD) Military Health System—and TRICARE Prime, which  offers the same benefits to military beneficiaries. The USFHP was  initially incorporated into the Military Health System in 1982 when  Congress enacted legislation transferring ownership of certain U.S. Public  Health Service hospitals to specific health care providers, referred to as  designated providers under the program. During the implementation of  the TRICARE program in the 1990s, Congress required the designated  providers to offer the TRICARE Prime benefit to their enrollees in  accordance with the National Defense Authorization Act for Fiscal Year  1997. Today, the USFHP remains a health care option required by statute  to be available to eligible beneficiaries in certain locations, despite  TRICARE’s national presence through the managed care support  contractors. However, the USFHP has largely remained unchanged, and  its role has not since been reassessed within the Military Health System.
DOD contracts with managed care support contractors to administer  TRICARE Prime—TRICARE’s managed care option—in three regions in  the United States (North, South, and West). Separately, TRICARE Prime  is offered through the USFHP by designated providers in certain locations  within the same three TRICARE regions that are served by a managed  care support contractor. Thus, the USFHP offers military beneficiaries the  same TRICARE Prime benefit that is offered by the managed care  support contractors across much of the same geographic service areas  and through many of the same providers. As a result, DOD has incurred  added costs by paying the USFHP designated providers to  simultaneously administer the same TRICARE Prime benefit to the same  population of eligible beneficiaries in many of the same locations as the  managed care support contractors. To eliminate this duplication within  DOD’s health system and potentially save millions of dollars, we  suggested that Congress terminate the statutorily required USFHP.
In addition to areas of fragmentation, overlap, and duplication, our 2015  report identified 46 actions that the executive branch and Congress can  take to reduce the cost of government operations and enhance revenue  collections for the U.S. Treasury in 12 areas. These opportunities for  executive branch or congressional action exist in a wide range of federal  government missions (see table 2).
Examples of opportunities to reduce costs or enhance revenue collections  from our 2015 annual report include updating the way Medicare pays  certain cancer hospitals, rescinding unobligated funds, and re-examining  the appropriate size of the Strategic Petroleum Reserve.
Updating the way Medicare pays certain cancer hospitals: To better  control Medicare spending and generate cost savings of almost $500  million per year, Congress should consider changing Medicare’s cost- based payment methods for certain cancer hospitals. Medicare pays  the majority of hospitals using an approach known as the inpatient  and outpatient prospective payment systems (PPS). Under a PPS,  hospitals are paid a predetermined amount based on the clinical  classification of each service they provide to beneficiaries. Beginning  in 1983, in response to concern that certain cancer hospitals would  experience payment reductions under such a system, Congress  required the establishment of criteria under which 11 cancer hospitals  are exempted from the inpatient PPS and receive payment  adjustments under the outpatient PPS. Since these cancer hospitals  were first designated in the early 1980s, cancer care and Medicare’s  payment system have changed significantly. Advances in techniques  and drugs have increased treatment options and allowed for more  localized delivery of care. Along with these developments, the primary  setting for cancer care has shifted from the inpatient setting to the  outpatient setting. In addition, Medicare’s current payment system  better recognizes the resource intensity of hospital care than the  system put in place in 1983.
While most hospitals are paid a predetermined amount based on the  clinical classification of each service they provide to beneficiaries,  Medicare generally pays these 11 cancer hospitals based on their  reported costs, providing little incentive for efficiency. We found that if  beneficiaries who received care at the 11 cancer hospitals had  received inpatient and outpatient services at nearby PPS teaching  hospitals, Medicare might have realized substantial savings in 2012.  Specifically, we estimated inpatient savings of about $166 million; we  calculated outpatient savings of about $303 million if forgone payment  adjustments were returned to the Medicare Trust Fund. Until  Medicare pays these cancer hospitals in a way that encourages  greater efficiency, Medicare remains at risk for overspending.
Rescinding unobligated funds: Congress may wish to consider  permanently rescinding the entire $1.6 billion balance of the U.S.  Enrichment Corporation (USEC) Fund, a revolving fund in the U.S.  Treasury. As part of a 2001 GAO legal opinion, we determined that  the USEC Fund was available for two purposes, both of which have  been fulfilled: (1) environmental clean-up expenses associated with  the disposition of depleted uranium at two specific facilities and (2)  expenses of USEC privatization. Regarding the first authorized  purpose, the construction of intended facilities associated with the  disposition of depleted uranium has been completed. Regarding the  second authorized purpose, USEC privatization was completed in  1998 when ownership of USEC was transferred to private investors.  In an April 2014 report to Congress, the Department of Energy’s  (DOE) National Nuclear Security Administration stated that the USEC  Fund was one of two sources of funding that it was exploring to  finance research, development, and demonstration of national nuclear  security-related enrichment technologies. However, this is not one of  the authorized purposes of the USEC Fund. Transparency in budget  materials is important for informing congressional decisions, and  DOE’s efforts to utilize USEC Fund monies instead of general fund  appropriations diminish that transparency.
The House of Representatives included language to permanently  rescind the USEC Fund in H.R. 4923, Energy and Water  Development and Related Agencies Appropriations Act, which passed  the House on July 10, 2014. However, the rescission was not included  in Public Law 113-235, Consolidated and Further Continuing  Appropriations Act, 2015. As of March 2015, legislation containing a  similar rescission had not been introduced in the 114th Congress.
Re-examining the appropriate size of the Strategic Petroleum  Reserve: DOE should assess the appropriate size of the Strategic  Petroleum Reserve (SPR) to determine whether excess crude oil  could be sold to fund other national priorities. The United States holds  the SPR so that it can release oil to the market during supply  disruptions to protect the U.S. economy from damage. After decades  of generally falling U.S. crude oil production, technological advances  have contributed to increasing U.S. production. Monthly crude oil  production has increased by almost 68 percent from 2008 through  April 2014, and increases in production in 2012 and 2013 were the  largest annual increases since the beginning of U.S. commercial  crude oil production in 1859, according to the Energy Information  Administration (EIA).
As of September 2014, the reserve had 106 days of imports, which  DOE estimated was valued at about $45 billion as of December 2014.  In addition, as of September 2014, private industry held reserves of  141 days. As a member of the International Energy Agency, the  United States is required to maintain public and private reserves of at  least 90 days of net imports and to release these reserves and reduce  demand during oil supply disruptions.
We found in September 2014 that DOE had taken steps to assess  aspects of the SPR but had not recently reexamined its size. Without  such a reexamination, DOE cannot be assured that the SPR is  holding an appropriate amount of crude oil. If, for example, DOE  found that 90 days of imports was an appropriate size for the SPR, it  could sell crude oil worth $6.7 billion and use the proceeds to fund  other national priorities. In addition, by reducing the SPR to 90 days,  DOE may be able to reduce its operating costs by about $25 million   DOE concurred with our recommendation, stating that a  per year.broad, long-range review of the SPR is needed and that it has initiated  a process for conducting a comprehensive re-examination of the  appropriate size of the SPR.
section_title: Congress and Executive Branch Agencies Continue to Make Progress toward Addressing Our Identified Actions
paragraphs: In addition to the 66 new actions identified for this year’s annual report,  we have continued to monitor the progress that executive branch  agencies or Congress have made in addressing the issues we identified  in our 2011-2014 annual reports.
subsections: section_title: Overall Progress on 2011- 2014 Actions
paragraphs: The executive branch and Congress have made progress in addressing a  number of the approximately 440 actions we previously identified (fig.  1). In total, as of March 6, 2015, the date we completed our audit work,  we found that overall 169 (37 percent) were addressed, 179 (39 percent)  were partially addressed, and 90 (20 percent) were not addressed. An  additional 46 actions have been assessed as addressed over the past  year; these include 13 actions identified in 2011, 14 actions identified in  2012, 11 actions identified in 2013, and 8 identified in 2014.
Executive branch and congressional efforts from fiscal years 2011  through 2014 have resulted in over $20 billion in realized cost savings to  date, with another approximately $80 billion in additional benefits  projected to be accrued through 2023.the progress that has been made over the last 4 years.
Combat Uniforms: In our 2013 annual report, we found that DOD’s  fragmented approach could lead to increased risk on the battlefield for  military personnel and increased development and acquisition costs.
In response, DOD developed and issued guidance on joint criteria to  help ensure that future service-specific uniforms will provide  equivalent levels of performance and protection. In addition, a  provision in the National Defense Authorization Act for Fiscal Year  2014 established as policy that the Secretary of Defense shall  eliminate the development and fielding of service-specific combat and  camouflage utility uniforms in order to adopt and field common  uniforms for specific environments to be used by all members of the  armed forces. Most recently, the Army chose not to introduce a new  family of camouflage uniforms into its inventory, in part because of  this legislation, resulting in a cost avoidance of about $4.2 billion over  5 years.
Employment and Training: Congress and executive branch agencies  have taken actions to help address the proliferation of certain  employment programs and improve the delivery of benefits.  Specifically, in June 2012, we reported on 45 programs administered  by nine federal agencies that supported employment for people with  disabilities and found these programs were fragmented and often  provided similar services to similar populations. The Workforce  Innovation and Opportunity Act, enacted in July 2014, eliminated  three programs that supported employment for people with  disabilities, including the Veterans’ Workforce Investment Program,  administered by the Department of Labor, and the Migrant and  Seasonal Farmworker Program and Projects with Industry,  administered by the Department of Education. In addition, the Office  of Management and Budget (OMB) worked with executive agencies to  propose consolidating or eliminating two other programs, although  Congress did not take action and both programs continued to receive  funding.
The Workforce Innovation and Opportunity Act also helped to promote  efficiencies for some of the 47 employment and training programs that  support a broader population (including people with and without  disabilities), which we reported on in 2011. In particular, this law  requires states to develop a unified state plan that covers all  designated core programs in order to receive certain funding. As a  result, states’ implementation of the requirement may enable them to  increase administrative efficiencies in employment and training  programs—a key objective of our prior recommendations. In addition,  the House Budget Resolution for fiscal year 2016streamlining and consolidating federal job training programs and  empowering states with the flexibility to tailor funding and programs to  specific needs of their workforce, consistent with our  recommendations in this area.
Farm Program Payments: We reported in our 2011 annual report that  Congress could save up to $5 billion annually by reducing or  eliminating direct payments to farmers. These are fixed annual  payments based on a farm’s history of crop production. Farmers  received them regardless of whether they grew crops and even in  years of record income. Direct payments were expected to be  transitional when first authorized in 1996, but subsequent farm bills  continued these payments. Congress passed the Agricultural Act of  2014, which eliminated direct payments to farmers and should save  approximately $4.9 billion annually from fiscal year 2015 through fiscal  year 2023, according to the Congressional Budget Office.
section_title: Committed Leadership Is Needed to Fully Address the Remaining Actions
paragraphs: Although Congress and executive branch agencies have made progress  toward addressing the actions we have identified, further steps are  needed to fully address the remaining actions, as shown in table 3. More  specifically, 57 percent of the actions addressed to executive branch  agencies and 66 percent of the actions addressed to Congress identified  in our 2011-2014 reports remain partially or not addressed.
As our work has shown, committed leadership is needed to overcome the  many barriers to working across agency boundaries, such as agencies’  concerns about protecting jurisdiction over missions and control over  resources or incompatible procedures, processes, data, and computer  systems. Without increased or renewed leadership focus, opportunities  will be missed to improve the efficiency and effectiveness of programs  and save taxpayers’ dollars.
subsections: section_title: Reducing Contract Spending through Strategic Sourcing
paragraphs: In our 2013 annual report, we reported that federal agencies could  achieve significant cost savings annually by expanding and improving  their use of strategic sourcing—a contracting process that moves away  from numerous individual procurement actions to a broader aggregated  approach. In particular, DOD, DHS, DOE, and VA accounted for 80  percent of the $537 billion in federal procurement spending in fiscal year  2011, but reported managing about 5 percent, or $25.8 billion, through  strategic sourcing efforts. In contrast, leading commercial firms leverage  buying power by strategically managing 90 percent of their spending— achieving savings of 10 percent or more of total procurements costs.  While strategic sourcing may not be suitable for all procurement  spending, we reported that a reduction of 1 percent from procurement  spending at these agencies would equate to over $4 billion in savings  annually—an opportunity also noted in the House Budget Resolution for  fiscal year 2016. However, a lack of clear guidance on metrics for  measuring success has hindered the management of ongoing strategic  sourcing efforts across the federal government.
Since our 2013 report, OMB has made progress by issuing guidance on  calculating savings for government-wide strategic sourcing contracts, and  in December 2014 it issued a memorandum on category management  that, among other things, identifies federal spending categories suitable  for strategic sourcing. These categories cover some of the government’s  largest spending categories, including information technology and  professional services. According to OMB, these categories accounted for  $277 billion in fiscal year 2013 federal procurements. This level of  spending suggests that by using smarter buying practices the government  could realize billions of dollars in savings. In addition, the administration  has identified expanded use of high-quality, high-value strategic sourcing  solutions as one of its cross-agency priority goals, which are a limited set  of outcome-oriented, federal priority goals. However, until OMB sets  government-wide goals and establishes metrics, the government may  miss opportunities for billions in cost savings through strategic sourcing.
section_title: More Effectively Targeting Defense Resources
paragraphs: Our work on defense has highlighted opportunities to improve  efficiencies, reduce costs, and address overlapping and potentially  duplicative services that result from multiple entities providing the same  service, including the following examples.
Combatant Command Headquarters Costs: Our body of work has  raised questions about whether DOD’s efforts to reduce headquarters  overhead will result in meaningful savings. In 2013, the Secretary of  Defense directed a 20 percent cut in management headquarters  spending throughout DOD, to include the combatant commands and  service component commands. In June 2014, we found that mission  and headquarters-support costs for the five geographic combatant  commands and their service component commands we reviewed  more than doubled from fiscal years 2007 through 2012, to about $1.7  billion. We recommended that DOD more systematically evaluate the  sizing and resourcing of its combatant commands. If the department  applied the 20 percent reduction in management headquarters  spending to the entire $1.7 billion DOD used to operate and support  the five geographic combatant commands in fiscal year 2012, we  reported that DOD could achieve up to an estimated $340 million in  annual savings.
Electronic Warfare: We reported in 2011 that all four military services  in DOD had been separately developing and acquiring new airborne  electronic attack systems and that spending on new and updated  systems was projected to total more than $17.6 billion during fiscal  years 2007-2016. While the department has taken steps to better  inform its investments in airborne electronic attack capabilities, it has  yet to assess its plans for developing and acquiring two new  expendable jamming decoys to determine if these initiatives should be  merged.
More broadly, we identified multiple weaknesses in the way DOD  acquires weapon systems and the actions that are needed to address  these issues, which we recently highlighted in our high-risk series update  in February 2015. For example, further progress must be made in  tackling the incentives that drive the acquisition process and its  behaviors, applying best practices, attracting and empowering acquisition  personnel, reinforcing desirable principles at the beginning of programs,  and improving the budget process to allow better alignment of programs  and their risks and needs. The House Budget Resolution for fiscal year  2016 encourages a continued review to improve the affordability of  defense acquisitions. Addressing the issues that we have identified could  help DOD improve the returns on its $1.4 trillion investment in major  weapon systems and find ways to deliver capabilities for less than it has  in the past.
section_title: Efficiently Managing Information Technology
paragraphs: The federal government annually invests more than $80 billion on  information technology (IT). The magnitude of these expenditures  highlights the importance of avoiding duplicative investments to better  ensure the most efficient use of resources. Opportunities remain to  reduce or better manage duplication and the cost of government  operations in critical IT areas, many of which require agencies to work  together to improve systems, including the following examples.
Information Technology Investment Portfolio Management: To better  manage existing IT systems, in March 2012 OMB launched the  PortfolioStat initiative. PortfolioStat requires agencies to conduct an  annual, agency-wide review of their IT portfolios to reduce commodity  IT spending and demonstrate how their IT investments align with their  missions and business functions, among other things. In 2014, we  found that while the 26 federal agencies required to participate in  PortfolioStat had made progress in implementing OMB’s initiative,  weaknesses existed in agencies’ implementation of the initiative, such  as limitations in the Chief Information Officer’s authority. In the  President’s Fiscal Year 2016 Budget submission, the administration  proposes to use PortfolioStat to drive efficiencies in agencies’ IT  programs. As noted in our recent high-risk series update, we have  made more than 60 recommendations to improve OMB and agencies’  implementation of PortfolioStat and provide greater assurance that  agencies will realize the nearly $6 billion in savings they estimated  they would achieve through fiscal year 2015.
Federal Data Centers: In September 2014, we found that  consolidating federal data centers would provide an opportunity to  improve government efficiency and achieve cost savings and  avoidances of about $5.3 billion by fiscal year 2017. Although OMB  has taken steps to identify data center consolidation opportunities  across agencies, weaknesses exist in the execution and oversight of  the consolidation efforts. Specifically, we reported many agencies are  not fully reporting their planned savings to OMB as required; GAO  estimates that the savings have been underreported to OMB by  approximately $2.2 billion. It will continue to be important for agencies  to complete their inventories and implement their plans for  consolidation to better ensure continued progress toward OMB’s  planned consolidation, optimization, and cost-savings goals.
Information Technology Operations and Maintenance: Twenty-seven  federal agencies plan to spend about $58 billion—almost three- quarters of the overall $79 billion budgeted for federal IT in fiscal year  2015—on the operations and maintenance of legacy investments.
Given the magnitude of these investments, it is important that  agencies effectively manage them to better ensure the investments  (1) continue to meet agency needs, (2) deliver value, and (3) do not  unnecessarily duplicate or overlap with other investments.  Accordingly, OMB developed guidance that calls for agencies to  analyze (via operational analysis) whether such investments are  continuing to meet business and customer needs and are contributing  to meeting the agency’s strategic goals. In our 2013 annual report, we  reported that agencies did not conduct such an analysis on 52 of the  75 major existing information technology investments we reviewed.
As a result, there was increased potential for these information  technology investments in operations and maintenance—totaling $37  billion in fiscal year 2011—to result in waste and duplication.
To avoid wasteful or duplicative investments in operations and  maintenance, we recommended that agencies analyze all information  technology investments annually and report the results of their  analyses to OMB. Agencies have made progress in performing some  operational analyses; however, until the agencies fully implement their  policies and ensure complete and thorough operational analyses are  being performed on their multibillion-dollar operational investments,  there is increased risk that these agencies will not know whether  these investments fully meet their intended objectives, therefore  increasing the potential for waste and duplication.
Geospatial Investments: In a 2013 report, we found that 31 federal  departments and agencies invested billions of dollars to collect,  maintain, and use geospatial information—information linked to  specific geographic locations that supports many government  functions, such as maintaining roads and responding to natural  disasters. We found that federal agencies had not effectively  implemented policies and procedures that would help them identify  and coordinate geospatial data acquisitions across the government,  resulting in duplicative investments.
In a 2015 report, we reported that federal agencies had made  progress in implementing geospatial data-related policies and  procedures. However, critical items remained incomplete, such as  coordinating activities with state governments, which also use a  variety of geospatial datasets—including address data and aerial  imagery—to support their missions. We found that a new initiative to  create a national address database could potentially result in  significant savings for federal, state, and local governments. To foster  progress in developing such a national database, we suggested that  Congress consider assessing existing statutory limitations on address  data. We also recommended that the interagency coordinating body  for geospatial information (1) establish subcommittees and working  groups to assist in furthering a national address database and (2)  identify discrete steps to further a national imagery program  benefitting governments at all levels. Finally, we recommended that  the Director of OMB require agencies to report on their efforts to  implement policies and procedures before making new investments in  geospatial data. OMB generally agreed with this recommendation. In  addition, in March 2015, the Geospatial Data Act of 2015 was  introduced and includes provisions to improve oversight and help  reduce duplication in the management of geospatial data, consistent  with our recommended actions. Fully addressing the actions in our  two reports could help reduce duplicative investments and the risk of  missing opportunities to jointly acquire data, potentially saving millions  of dollars.
The federal IT acquisition reforms enacted in December 2014 reinforced  a number of the actions that we have recommended to address IT  management issues. It established that the Chief Information Officer in each agency has a significant role in the decision processes for planning,  programming, management, governance and oversight related to  information technology, as well as approval for IT budget requests. In  addition, the law containing these reforms codifies federal data center  consolidation, emphasizing annual reporting on cost savings and detailed  metric reporting and OMB’s PortfolioStat process, focusing on reducing  duplication, consolidation, and cost savings. If effectively implemented,  this legislation should improve the transparency and management of IT  acquisitions and operations across the government.
section_title: Improving Fiscal Oversight of Medicare and Medicaid
paragraphs: Over the years, we have identified a number of actions that have the  potential for sizable cost savings through improved fiscal oversight in the  Medicare and Medicaid programs. For example, CMS could save billions  of dollars by improving the accuracy of its payments to Medicare  Advantage programs, such as through methodology adjustments to  account for diagnostic coding differences between Medicare Advantage  and traditional Medicare. In addition, we found that federal spending on  Medicaid demonstrations could be reduced by billions of dollars if HHS  were required to improve the process for reviewing, approving, and  making transparent the basis for spending limits approved for Medicaid  demonstrations. In particular, our work between 2002 and 2014 has  shown that HHS approved several demonstrations without ensuring that  they would be budget neutral to the federal government.
To address this issue, we suggested that Congress could require the  Secretary of Health and Human Services to improve the Medicaid  demonstration review process, through steps such as improving the  review criteria, better ensuring that valid methods are used to  demonstrate budget neutrality, and documenting and making clear the  basis for the approved limits. We concluded in August 2014 that HHS’s  approval of $778 million dollars of hypothetical costs (i.e., expenditures  the state could have made but did not) in the Arkansas demonstration  spending limit and the department’s waiver of its cost-effectiveness  requirement is further evidence of our long-standing concerns that HHS is  approving demonstrations that may not be budget-neutral. HHS’s  approval of the Arkansas demonstration suggests that the Secretary may  continue to approve section 1115 Medicaid demonstrations that raise  federal costs, inconsistent with the department’s policy of budget  neutrality. We maintain that enhancing the process HHS uses to  demonstrate budget neutrality of its demonstrations could save billions in  federal expenditures.
In our February 2015 high-risk series update, we reported that while CMS  had taken positive steps to improve Medicare and Medicaid oversight in  recent years, in several areas, CMS had still to address some issues and  recommendations, and improper payment rates have remained   We reported that to achieve and demonstrate  unacceptably high. reductions in the estimated $60 billion dollars in Medicare improper  payments in 2014, CMS should fully exercise its authority related to  strengthening its provider and supplier enrollment provisions and address  our open recommendations related to prepayment and postpayment  claims review activities. Similarly, in the area of Medicaid for which the  federal share of estimated improper payments was $17.5 billion in 2014,  we have made recommendations targeted at (1) improving the  completeness and reliability of key data needed for ensuring effective  oversight, (2) implementing effective program integrity processes for  managed care, (3) ensuring clear reporting of overpayment recoveries,  and (4) refocusing efforts on program integrity approaches that are cost- effective. These recommendations, if effectively implemented, could  improve program management, help reduce improper payments in these  programs, and achieve cost savings.
section_title: Increasing Tax Revenue Collections
paragraphs: Over the last 4 years, our work identified multiple opportunities for the  government to increase revenue collections. For example, in 2014, we  identified three actions that Congress could authorize that could increase  tax revenue collections from delinquent taxpayers by hundreds of millions  of dollars over a 5-year period: limiting issuance of passports to  applicants, levying payments to Medicaid providers, and identifying  security clearance applicants. For example, Congress could consider  requiring the Secretary of State to prevent individuals who owe federal  taxes from receiving passports. We found that in fiscal year 2008,  passports were issued to about 16 million individuals; about 1 percent of  these collectively owed more than $5.8 billion in unpaid federal taxes as  of September 30, 2008. According to a 2012 Congressional Budget Office  estimate, the federal government could save about $500 million over a 5- year period by revoking or denying passports to those with certain federal  tax delinquencies.
section_title: Implementing Benefit Offsets
paragraphs: We have also identified opportunities to implement program benefit  offsets, in which certain program benefits for individuals are reduced in  recognition of other benefits received. Examples include the following:
Social Security Offsets: In our 2011 annual report, we reported that  the Social Security Administration (SSA) needs data from state and  local governments on retirees who receive pensions from employment  not covered under Social Security to better enforce offsets and ensure  benefit fairness. In particular, SSA needs this information to fairly and  accurately apply the Government Pension Offset, which generally  applies to spouse and survivor benefits, and the Windfall Elimination  Provision, which applies to retired worker benefits. The Social  Security’s Government Pension Offset and Windfall Elimination  Provision take noncovered employment into account when calculating  Social Security benefits. While information on receipt of pensions from  noncovered employment is available for federal pension benefits from  the federal Office of Personnel Management, it is not available to SSA  for many state and local pension benefits.
The President’s Fiscal Year 2016 Budget submission re-proposed  legislation that would require state and local governments to provide  information on their noncovered pension payments to SSA so that the  agency can apply the Government Pension Offset and Windfall  Elimination Provision. The proposal includes funds for administrative  expenses, with a portion available to states to develop a mechanism  to provide this information. Also, we continue to suggest that  Congress consider giving the Internal Revenue Service the authority  to collect the information that SSA needs to administer these offsets.  Providing information on the receipt of state and local noncovered  pension benefits to SSA could help the agency more accurately and  fairly administer the Government Pension Offset and Windfall  Elimination Provision and could result in an estimated $2.4 billion— $6.5 billion in savings over 10 years if enforced both retrospectively  and prospectively. If Social Security enforced the offsets only  prospectively, the overall savings still would be significant.
Disability and Unemployment Benefits: In our 2014 annual report, we  found that 117,000 individuals received concurrent cash benefit  payments in fiscal year 2010 from the Disability Insurance and  Unemployment Insurance programs totaling more than $850 million  because current law does not preclude the receipt of overlapping  benefits. Individuals may be eligible for benefit payments from both  Disability Insurance and Unemployment Insurance due to differences  in the eligibility requirements; however, in such cases, the federal  government is replacing a portion of lost earnings not once, but twice.  The President’s Fiscal Year 2016 Budget submission proposes to  eliminate these overlapping benefits, and during the 113th Congress,  bills had been introduced in both the U.S. House of Representatives  and the Senate containing language to reduce Disability Insurance  payments to individuals for the months they collect Unemployment  Insurance benefits. According to CBO, this action could save $1.2  billion over 10 years in the Social Security Disability Insurance  program. Congress should consider passing legislation to offset  Disability Insurance benefit payments for any Unemployment  Insurance benefit payments received in the same period.
Table 4 highlights some of our suggested actions within these and other  areas that could result in tens of billions of dollars in cost-savings or  revenue-enhancement opportunities, according to estimates from GAO,  executive branch agencies, the Congressional Budget Office, or the Joint  Committee on Taxation.
section_title: Existing and New Tools Can Assist in Identifying, Evaluating, and Addressing Fragmentation, Overlap, or Duplication
paragraphs: For GAO’s most recent work on GPRAMA, see GAO, Government Efficiency and  Effectiveness: Inconsistent Definitions and Information Limit the Usefulness of Federal  Program Inventories, GAO-15-83 (Washington D.C.: Oct. 31, 2014); Managing for  Results: Selected Agencies Need to Take Additional Efforts to Improve Customer Service,  GAO-15-84 (Washington D.C.: Oct. 24, 2014); and Managing for Results: Agencies’  Trends in the Use of Performance Information to Make Decisions, GAO-14-747  (Washington D.C.: Sept. 26, 2014). In addition, information on GAO’s work on GPRAMA  can be found at  http://www.gao.gov/key_issues/managing_for_results_in_government/issue_summary. a greater focus on expenditures and outcomes are essential to  improving the efficiency and effectiveness of federal efforts.
To help analysts and decision makers better assess the extent of  fragmentation, overlap and duplication, GAO has developed an  evaluation and management guide (GAO-15-49SP), which is being  released concurrently with our 2015 annual report. The guide includes  two parts. Part one provides four steps for analysts—including federal,  state, and local auditors; congressional staff; and researchers—to identify  and evaluate instances of fragmentation, overlap or duplication. Each  step includes examples that illustrate how to implement suggested  actions or consider different types of information. Part two provides  guidance to help policymakers reduce or better manage fragmentation,  overlap, and duplication.
In recognition that the pervasiveness of fragmentation, overlap, and  duplication may require attention beyond the program level, the guide  also includes information on a number of options Congress and the  executive branch may consider to address these issues government- wide. Some of these options are executive branch reorganization, special  temporary commissions, interagency groups, automatic sunset  provisions, and portfolio or performance-based budgeting. These options  can be used independently or together to assist policymakers in  evaluating and addressing fragmentation, overlap, and duplication  beyond the programmatic level.
Congress can also use its power of the purse and oversight powers to  incentivize executive branch agencies to act on our suggested actions  and monitor their progress. In particular, the Senate Budget Resolution  for fiscal year 2016 directs committees to review programs and tax  expenditures within their jurisdiction for waste, fraud, abuse, or  duplication and to consider the findings from our past annual reports.  Also, the accompanying report for the House Budget Resolution for fiscal  year 2016grants into three categories—first responder, law enforcement, and  victims—which is consistent with our prior work recommending that DOJ  better target its grant resources. The resolution also highlights a number  of the issues presented in our annual reports—including the multiple  programs that support Science, Technology, Engineering, and  Mathematics education, housing assistance, homeland security  preparedness grants, and green building initiatives—notes the number of  programs that will need to be reauthorized in fiscal year 2016, and states  that our findings should result in programmatic changes in both  authorizing statutes and program funding levels. Congressional use of our  findings in its decision making for the identified areas of fragmentation,  overlap, and duplication will send an unmistakable message to agencies  that Congress considers these issues a priority. Through its budget,  appropriations, and oversight processes, Congress can also shift the  burden to the agencies to demonstrate the effectiveness of their  programs to justify continued funding.   proposes that the Department of Justice (DOJ) streamline  We will continue to conduct further analysis to look for additional or  emerging instances of fragmentation, overlap, and duplication and  opportunities for cost savings or revenue enhancement. Likewise, we will  continue to monitor developments in the areas we have already identified  in this series. We stand ready to assist this and other committees in  further analyzing the issues we have identified and evaluating potential  solutions.
Chairman Chaffetz, Ranking Member Cummings, and Members of the  Committee, this concludes my prepared statement. I would be pleased to  answer questions.
section_title: GAO Contacts
paragraphs: For further information on this testimony or our April 14, 2015, reports,  please contact Orice Williams Brown, Managing Director, Financial  Markets and Community Investment, who may be reached at (202) 512- 8678 or williamso@gao.gov, and A. Nicole Clowers, Director, Financial  Markets and Community Investment, who may be reached at (202) 512- 8678 or clowersa@gao.gov. Contact points for the individual areas listed  in our 2015 annual report can be found at the end of each area at  GAO-15-404SP. Contact points for our Congressional Relations and  Public Affairs offices may be found on the last page of this statement.
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