The Upcoming Transition: GAO's Efforts to Assist the 111th Congress and the Next Administration
Published: 2008-09-24T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The upcoming 2009 transition will be a unique and critical period for the U.S. government. It marks the first wartime presidential transition in 40 years. It will also be the first administration change for the relatively new Department of Homeland Security operating in the post 9/11 environment. The next administration will fill thousands of positions across government; there will be a number of new faces in Congress as well. Making these transitions as seamlessly as possible is pivotal to effectively and efficiently help accomplish the federal government's many essential missions. While the Government Accountability Office (GAO), as a legislative branch agency, has extensive experience helping each new Congress, the Presidential Transition Act points to GAO as a resource to incoming administrations as well. The Act specifically identifies GAO as a source of briefings and other materials to help presidential appointees make the leap from campaigning to governing by informing them of the major management issues, risks, and challenges they will face. GAO has traditionally played an important role as a resource for new Congresses and administrations, providing insight into the issues where GAO has done work. This testimony provides an overview of GAO's objectives for assisting the 111th Congress and the next administration in their all-important transition efforts.
section_title: What GAO Found
paragraphs: GAO will highlight issues that the new President, his appointees, and the Congress will confront from day one. These include immediate challenges ranging from national and homeland security to oversight of financial institutions and markets to a range of public health and safety issues. GAO will synthesize the hundreds of reports and testimonies it issues every year so that new policy makers can quickly zero in on critical issues during the first days of the new administration and Congress. GAO's analysis, incorporating its institutional memory across numerous administrations, will be ready by the time the election results are in and transition teams begin to move out. GAO will provide congressional and executive branch policy makers with a comprehensive snapshot of how things are working across government and emphasize the need to update some federal activities to better align them with 21st century realities and bring about government transformation. In keeping with its mission, GAO will be providing Congress and the executive branch with clear facts and constructive options and suggestions that elected officials can use to make policy choices in this pivotal transition year. GAO believes the nation's new and returning leaders will be able to use such information to help meet both the nation's urgent issues and long-term challenges so that our nation stays strong and secure now and for the next generation. GAO's transition work also will highlight the need to modernize the machinery of government through better application of information technology, financial management, human capital, and contracting practices. GAO also will underscore the need to develop strategies for addressing the government's serious long-term fiscal sustainability challenges, driven on the spending side primarily by escalating health care costsand changing demographics.

section_title: Letter
paragraphs: I am pleased to be here today to contribute to your hearing on the  upcoming transition. As agreed with the Subcommittee, I will discuss the  preparations under way at the Government Accountability Office (GAO) to  meet our responsibilities under the Presidential Transition Act to assist the  incoming administration as well as the 111th Congress.
The 2009 presidential transition will be a unique and critical period for the  United States. Our nation faces a wartime presidential transition for the  first time in 40 years. In addition, this will be the first post-9/11 transition,  with a relatively new Department of Homeland Security (DHS) grappling  with the threats we face here at home while experiencing its first change  in administration. The White House will need to fill thousands of  appointments, some of which will be subject to Senate confirmation,  across the federal government. And on Capitol Hill, with 26 House  members and 5 Senators deciding not to seek reelection, there will also be  congressional newcomers.
While as a legislative branch agency GAO has extensive experience  helping each new Congress, the Presidential Transition Act points to GAO  as a resource for incoming administrations as well. The Act specifically  identifies GAO as a source of briefings and other materials to help inform  presidential appointees of the major management issues, risks, and  challenges they will face. The Act’s 2000 amendments to clearly bring GAO  into the transition picture are consistent with the role we traditionally  have played as an important resource for Congress and new  administrations during transitions. For example, we update our High-Risk  list with the start of each new Congress to focus attention on areas in need  of broad-based transformation or susceptible to waste, fraud, abuse, and  mismanagement. During the last presidential transition, we identified for  Congress and the then new administration key program and management  issues in the major departments and across government. More recently, we  assisted the 110th Congress by suggesting 36 areas for oversight based on  our work. We take our role under the Presidential Transition Act very  seriously; our planning to effectively perform this role is well under way.  To do this, we will use our institutional knowledge and broad-based work  on matters across the spectrum of government activities.
My comments today center on the six objectives of our efforts to assist the  upcoming transition as policy makers take on the serious challenges  facing our country.
Objectives for GAO’s Transition Efforts    Provide insight into pressing national issues.    Highlight the growing need for innovative, integrated approaches to  solve national and global challenges.
Document targeted opportunities to conserve resources that can be  applied to new initiatives.
Underscore critical capacity-building needs in individual agencies  that will affect implementation of whatever new priorities are  pursued.
Help inform the management improvement agendas of Congress and  the new administration.
Monitor the implementation of the Presidential Transition Act  provisions and identify potential improvements for future  transitions.
subsections: section_title: Provide Insight into Pressing National Issues
paragraphs: The next Congress and new administration will confront a set of pressing  issues that will demand urgent attention and continuing oversight to  ensure the nation’s security and well-being. The goal of our transition  planning is to look across the work we have done and across the scope  and breadth of the federal government’s responsibilities to offer insights  into areas needing immediate attention. A few examples follow:    Oversight of financial institutions and markets: As events over the  past few weeks have underscored, oversight over the U.S. housing and  financial markets will certainly be among the priority matters commanding  the attention of the new administration and the 111th Congress. These  sectors of our economy have been going through a period of significant  instability and turmoil and government support is being provided to a  growing number of troubled financial institutions. Congress has taken a  number of steps to address some of the immediate effects of the market  turmoil including enactment of the Federal Housing Finance Regulatory  Reform Act of 2008, which, among other things, strengthens regulation of  the housing government-sponsored enterprises (GSE) and provides  authority to the Treasury to purchase any amount of Fannie Mae and  Freddie Mac securities. We are closely monitoring a range of implications  of the current market turmoil including the financial condition of the GSEs  and the potential exposures from federal insurance and credit programs  and possible bailouts. In addition, recent bank failures and growing  numbers of banks on the “Watchlist” raise questions about the impact on  the banking system and future federal exposures as well as on the bank  insurance fund. We have a larger body of work that involves auditing the  Federal Deposit Insurance Corporation, the newly created Federal  Housing Finance Agency, and the consolidated financial statements of the  U.S. government, as well as evaluating ongoing developments in the  housing and financial markets. We will draw on this work to provide  observations and advice, as appropriate.
While these serious disruptions require immediate attention and careful  monitoring, ongoing turmoil in the housing and financial markets has  renewed concerns about whether the current system for overseeing and  regulating financial institutions and markets is best suited to meet the  nation’s evolving needs and 21st century challenges. Later this year we  plan to issue a report describing the evolution of the current regulatory  structure and how market developments and changes have introduced  challenges for the current system. We believe this reassessment is needed  to ensure that these types of serious disruptions can be minimized in the  future. As part of this work, we are also developing a framework to assist  Congress in evaluating alternative regulatory reform proposals.
U.S. efforts in Iraq, Afghanistan, and Pakistan: Policy and  implementation challenges to achieve U.S. objectives for these countries  remain on the horizon. Hundreds of billions of dollars have been provided  to the Department of Defense (DOD) for military operations in Iraq,  Afghanistan, and Pakistan as well as to the State Department and United  States Agency for International Development (USAID) to help address  security, stabilization and reconstruction, and capacity-building efforts in  Iraq and Afghanistan. Some efforts include developing domestic security  forces, rebuilding critical infrastructure, and enhancing the countries’  capacity to govern. Since 2003, we have issued more than 170 reports on  Iraq, Afghanistan, and Pakistan, covering topics that ranged from the  readiness of U.S. forces, to the logistical implications related to  reposturing U.S. forces deployed in Iraq, to planning for counterterrorism  programs, to progress in building roads and oil pipelines.  Our transition  work will highlight the major implementation issues that need to be  addressed to ensure the development of comprehensive integrated  strategies, accountability over resources provided, and ongoing  assessments of progress, regardless of what policies are pursued in the  future.
DOD’s readiness and capabilities: Extended operations in Iraq,  Afghanistan, and elsewhere have had significant consequences for military  readiness, particularly with regard to the Army and Marine Corps. Current  operations have required the military to operate at a persistently high  tempo with the added stress of lengthy and repeated deployments. In  addition, because of the significant wear and tear on equipment,  refocusing of training on counterinsurgency operations, and other factors,  rebuilding readiness of U.S. forces is a major challenge for DOD. At the  same time, DOD faces competing demands for resources given broad- based initiatives to grow, modernize, and transform its forces. We will  offer our perspective on the competing demands DOD faces and the need  to develop sound plans to guide investment decisions, as it reassesses the  condition, size, composition, and organization of its total force, including  contractor support, to protect the country from current, emerging, and  future conventional and unconventional security threats.
Protection at home: DHS must remain prepared and vigilant with  respect to securing the homeland, particularly during the transition period  when the nation can be viewed as being particularly vulnerable. In doing  so, it is important that the new administration address key issues that, as  we reported, have impacted and will continue to impact the nation’s  security and preparedness, including better securing our borders,  enforcing immigration laws, and serving those applying for immigration  benefits; defining key preparedness and response capabilities and building  and maintaining those capabilities through effective governmental and  external partnerships; and further strengthening the security and  resiliency of critical infrastructure to acts of terrorism. In achieving its  critical mission, we found that DHS needs to more fully integrate and  strengthen its management functions, including acquisition and human  capital management; more fully adopt risk-based principles in allocating  resources to the areas of greatest need; and enhance the effectiveness of  information sharing among federal agencies and with state and local  governments and the private sector.
The decennial census: Soon after taking office, the new administration  will face decisions that will shape the outcome of the 2010 decennial  census. Next spring the first nationwide field operation—address  canvassing—of the census will begin. During address canvassing, the  Census Bureau will rely, for the first time, on hand-held computers to  verify address and map information. A complete and accurate address list  is the cornerstone of a successful census.  Earlier this year, we designated  the decennial census as a high-risk area, in part, because of ongoing  challenges in managing information technology—including hand-held  computers—and uncertainty over the total cost of the decennial census  and the Bureau’s plans for rehearsing its field operations. The Bureau has  taken some important steps to get the census back on track but did not  rehearse its largest and most costly field operation—non-response follow- up—and has little time for further course correction as it prepares to carry  out the national head count.  The results of the 2010 census are central to  apportionment, redistricting congressional boundaries, and distributing  hundreds of billions of dollars in federal aid.
Retirement of the space shuttle:  A decision that must be made before  the year is out is whether to retire the space shuttle in 2010, as currently  planned, or to extend its life in view of limited options for supporting the  International Space Station.  Already, shuttle contracts are being phased  out and shuttle facilities are being closed or transferred to contracts  supporting new development efforts. A decision in favor of extending the  shuttle may offer the best course for the future of the International Space  Station, as (1) the recent conflict between Russian and the Georgian  Republic has called into question the wisdom of relying on Russian space  vehicles to ferry U.S. crew and cargo to and from the station during a 5- year gap in U.S. human spaceflight capability and (2) it still appears that  other vehicles being developed to support the station—including those  from commercial suppliers as well as NASA—may not be ready when  anticipated.  However, extending the shuttle could also have significant  consequences on the future direction of human spaceflight for the U.S.   Specifically, NASA is counting on the retirement of the shuttle to free up  resources to pursue a new generation of space flight vehicles for  exploration, which are anticipated to come on-line in 2015.  According to  NASA, reversing current plans and keeping the shuttle flying past 2010  would cost $2.5 billion to $4 billion per year.   In addition, extending the  shuttle will likely be logistically difficult, particularly since it would  require restarting production lines and possibly recertifying suppliers as  well as the shuttle vehicles.
While facing pressing issues, the next Congress and new administration  also inherit the federal government’s serious long-term fiscal challenge— driven on the spending side by rising health care costs and changing  demographics. This challenge is complicated by the need to timely address  developments such as the recent economic pressures and troubles in the  housing and financial markets. Ultimately, however, the new  administration and Congress will need to develop a strategy to address the  federal government’s long-term unsustainable fiscal path.
section_title: Highlight the Growing Need for Innovative, Integrated Approaches to Solve National and Global Challenges
paragraphs: Planning for the transition will necessarily need to address the fact that  achieving meaningful national results in many policy and program areas  requires some combination of coordinated efforts among various actors  across federal agencies, often with other governments (for example,  internationally and at state and local levels), non-government  organizations (NGO), for-profit and not for-profit contractors, and the  private sector. In recognition of this fact, recent years have seen the  adoption of a range of national plans and strategies to bring together  decision makers and stakeholders from different locations, types of  organizations, and levels of government. For example, the National  Response Plan is intended to be an all-discipline, all-hazards plan that  establishes a single, comprehensive framework for managing domestic  incidents where involvement is necessary among many levels of  government, the private sector, and nonprofit organizations. The response  and recovery efforts after 9/11 and natural disasters, the nation’s  preparations for a possible influenza pandemic, and the need to address  global food insecurity are some of the many public issues that vividly  underscore the critical importance of employing broad governance  perspectives to meet global and national needs. Our transition work will  highlight challenges the new Congress and next administration face in  devising integrated solutions to such multi-dimensional problems. Some  examples follow:    Care for servicemembers: Over the last several years, more than 30,000  servicemembers have been wounded in action; many with multiple serious  injuries such as amputations, traumatic brain injury, and post-traumatic  stress disorder. We have identified substantial weaknesses in the health  care these wounded warriors are receiving as well as the complex and  cumbersome DOD and VA disability systems they must navigate. While  improvement efforts have started, addressing the critical continuity of care  issues will require sustained attention, systematic oversight by DOD and  VA, and sufficient resources.
Health care in an increasingly global market and environment: The  spread of severe acute respiratory syndrome (SARS) from China in 2002,  recent natural disasters, and the persistent threat of an influenza pandemic  all highlight the need to plan for a coordinated response to large-scale  public health emergencies. Federal agencies must work with one another  and with state and local governments, private organizations, and  international partners to identify and assess the magnitude of threat,  develop effective countermeasures (such as vaccines), and marshal the  resources required for an effective public health response. Our transition  work on these topics—including work related to such emergencies as  SARS, Hurricane Katrina, pandemic influenza, bioterrorism, and TB—will  highlight that federal agencies still face challenges such as coordinating  response efforts and developing the capacity for a medical surge in mass  casualty events.
Food safety: The fragmented nature of the federal food oversight system  undermines the government’s ability to plan more strategically to inspect  food-production processes, identify and react more quickly to outbreaks  of food-borne illnesses, and focus on promoting the safety and integrity of  the nation’s food supply. Fifteen federal agencies collectively administer at  least 30 laws related to food safety. We have recommended, among other  things, that the executive branch reconvene the President’s Council on  Food Safety to facilitate interagency coordination on food safety  regulation and programs.
Surface transportation: The nation’s transportation infrastructure—its  aviation, highway, transit, and rail systems—is critical to the nation’s  economy and affects the daily lives of most Americans. Despite large  increases in federal spending on America’s vital surface transportation  system, this investment has not commensurately improved the  performance of the system. Growing congestion has created by one  estimate a $78 billion annual drain on the economy, and population  growth, technological change, and the increased globalization of the  economy will further strain the system. We have designated transportation  finance a high-risk area and have called for a fundamental reexamination  and restructured approach to our surface transportation policies, which  experts have suggested need to recognize emerging national and global  imperatives, such as reducing the nation’s dependence on foreign fuel  sources and minimizing the impact of the transportation system on the  global climate change.
Disaster response: Hurricane Katrina demonstrated the critical  importance of the capability to implement an effective and coordinated  response to catastrophes that leverages needed resources from across the  nation, including all levels of government as well as nongovernmental  entities. While the federal government has made progress since Katrina, as  shown in the recent response to Hurricane Gustav, we have reported that  the administration still does not have a comprehensive inventory of the  nation’s response capabilities or a systematic, comprehensive process to  assess capabilities at the local, state, and federal levels based on  commonly understood and accepted metrics for measuring those  capabilities. We have work under way to identify the actions that DHS and  the Federal Emergency Management Agency (FEMA) have taken to  implement the provisions of the Post-Katrina Emergency Management  Reform Act, which charged FEMA with the responsibility for leading and  supporting the nation in a comprehensive risk-based emergency  management system—a complex task that requires clear strategic vision,  leadership, and the development of effective partnerships among  governmental and nongovernmental entities.
Cyber critical infrastructures: Cyber critical infrastructures are  systems and assets incorporating information technology—such as the  electric power grid and chemical plants—that are so vital to the nation  that their incapacitation or destruction would have a debilitating impact  on national security, our economy, and public health and safety. We have  made numerous recommendations aimed at protecting these essential  assets and addressing the many challenges that the federal government  faces in working with both the private sector and state and local  governments to do so—such as improving threat and vulnerability  assessments, enhancing cyber analysis and warning capabilities, securing  key systems, and developing recovery plans. Until these and other areas  are effectively addressed, our nation’s cyber critical infrastructure is at  risk of the increasing threats posed by terrorists, foreign intelligence  services, and others.
Also, more broadly, the Government Performance and Results Act of 1993  (GPRA) calls for a governmentwide performance plan to help Congress  and the executive branch address critical federal performance and  management issues, including redundancy and other inefficiencies.  Unfortunately, the promise of this important provision has not been  realized. The agency-by-agency focus of the budget does not provide for  the needed strategic, longer range, and integrated perspective of  government performance. A broader performance plan would provide the  President with an opportunity to assess and communicate the relationship  between individual agency goals and outcomes that transcend federal  agencies.
section_title: Document Targeted Opportunities to Conserve Resources That Can Be Applied to New Initiatives
paragraphs: Our transition work will identify opportunities to limit costs and reduce  waste across a broad spectrum of programs and agencies. While these  opportunities will not eliminate the need to address more fundamental  long-term fiscal challenges the federal government faces, concerted  attention by the new administration could conserve resources for other  priorities and improve the government’s image. Examples of areas we will  highlight and for which we will suggest needed action follow:    Improper payments: For fiscal year 2007, agencies reported improper  payment estimates of about $55 billion—including programs such as  Medicaid, Food Stamps, Unemployment Insurance, and Medicare. The  governmentwide estimate has steadily increased over the past several  years; yet even the current estimate does not reflect the full scope of  improper payments. Further, major management challenges and internal  control weaknesses continue to plague agency operations and programs  susceptible to significant improper payments. Addressing these challenges  and internal control weaknesses will better ensure the integrity of  payments and minimize the waste of taxpayers’ dollars.
DOD cost overruns: Total acquisition cost growth on the 95 major  defense programs in DOD’s fiscal year 2007 portfolio is now estimated at  $295 billion, and of the weapon programs we assessed this year, none had  proceeded through development meeting the best practice standards for  mature technologies, stable design, and mature production processes—all  prerequisites for achieving planned cost and schedule outcomes. DOD  expects to invest about $900 billion (fiscal year 2008 dollars) over the next  5 years on development and procurement, with more than $335 billion, or  37 percent, going specifically for new major weapon systems. Yet, much of  this investment will be used to address cost overruns rooted in poor  planning, execution, and oversight. By adopting best practices on  individual programs and strengthening oversight and accountability for  better outcomes, as we have consistently recommended, cost and  schedule growth could be significantly reduced.
DOD secondary inventory: DOD expends considerable resources to  provide logistics support for military forces, and the availability of spare  parts and other critical items provided through DOD’s supply chains  affects military readiness and capabilities. DOD officials have estimated  that the level of investment in DOD’s supply chains is more than $150  billion a year, and the value of its supply inventories has grown by tens of  billions of dollars since fiscal year 2001. However, as we have reported  over the years, DOD continues to have substantial amounts of secondary  inventory (spare parts) that are in excess to requirements. Most recently,  in 2007, we reported that more than half of the Air Force’s secondary  inventory, worth an average of $31.4 billion, was not needed to support  required inventory levels from fiscal years 2002 through 2005, although  increased demand due to ongoing military operations contributed to slight  reductions in the percentage of inventory on hand and the number of years  of supply it represents. In ongoing reviews of the Navy’s and the Army’s  secondary inventory, we are finding that these services also continue to  have significant amounts of inventory that exceed current requirements.  To reduce its investment in spare parts that are in excess of requirements,  DOD will need to strengthen the accountability and management of its  secondary inventory.
Oil and gas royalties: In fiscal year 2007, the Department of Interior’s  Minerals Management Service collected over $9 billion in oil and gas  royalties, but our work on the collection of federal royalties has found  numerous problems with policies, procedures, and internal controls that  raise serious doubts about the accuracy of these collections. We also  found that past implementation of royalty relief offered some oil and gas  companies during years of low oil and gas prices did not include  provisions to remove the royalty relief in the event that oil and gas prices  rose as they have, and this failure to include such provisions will likely  cost the federal government tens of billions of dollars over the working  lives of the affected leases. Finally, we have found that the federal  government ranks low among nations in terms of the percentage of total  oil and gas revenue accruing to the government. We have ongoing reviews  of Interior’s oil- and gas-leasing and royalty policies and procedures and  reports based on this work should be publicly released within the next few  months.
The tax gap: The tax gap—the difference between taxes legally owed and  taxes paid on time—is a long-standing problem in spite of many efforts by  Congress and the Internal Revenue Service (IRS) to reduce it. Recently,  IRS estimated a net tax gap for tax year 2001 of about $290 billion. We  have identified the need to take multiple approaches to reduce the tax gap,  and specifically have recommended ways for IRS to improve its  administration of the tax laws in many areas, including payroll taxes,  rental real estate income, the individual retirement account rules, income  sent offshore, and collecting tax debts.  We also suggested that Congress  consider improving tax administration or revising tax policies related to  governmental bonds, the tax preparation industry, and accelerated  depreciation for Indian reservations.
Ultimately, long-term fiscal pressures and other emerging forces will test  the capacity of the policy process to reexamine and update priorities and  portfolios of federal entitlement programs, policies, programs,  commitments, and revenue approaches. In that regard, the “base” of  government—spending and revenue—also must be reassessed so that  emerging needs can be addressed while outdated and unsustainable  efforts can be either reformed or eliminated. Tax expenditures should be  part of that reassessment. Spending channeled through the tax code  results in forgone federal revenue that summed to an estimated $844  billion in 2007 and has approximated the size of total discretionary  spending in some years. Yet, little is known about the performance of  credits, deductions, and other tax preferences, statutorily defined as tax  expenditures, which are often aimed at policy goals similar to those of  federal spending programs. Because tax expenditures represent a  significant investment of resources, and in some program areas are the  main tool used to accomplish federal goals, this is a significant gap in the  information available to decision makers.
section_title: Underscore Critical Capacity Building Needs in Individual Agencies That Will Affect Implementation of Whatever New Priorities Are Pursued
paragraphs: While some progress has been made in recent years, agencies still all too  often lack the basic management capabilities needed to address current  and emerging demands. As a result, any new administration will face  challenges in implementing its policy and program agendas because of  shortcomings in agencies’ management capabilities. Accordingly, our  transition effort will synthesize our wide range of work and identify the  key management challenges unique to individual departments and major  agencies. Additionally, our transition work will emphasize five key themes  common to virtually every government agency.
Select a senior leadership team that has the experience needed to  run large, complex organizations: It is vitally important that leadership  skills, abilities, and experience be among the key criteria the new  President uses to select his leadership teams in the agencies. The Senate’s  interest in leveraging its role in confirmation hearings as evidenced by  Senator Voinovich’s request to us to suggest management-related  confirmation questions and your interest in hearings such as this one will  send a strong message that nominees should have the requisite skills to  deal effectively with the broad array of complex management challenges  they will face. It is also critical that they work effectively with career  executives and agency staff.
Given that management improvements and transformations can take years  to achieve, steps are needed to ensure a continuous focus on those efforts.  Agencies need to develop executive succession and transition-planning  strategies that seek to sustain commitment as individual leaders depart  and new ones arrive. For example, in creating a Chief Management Officer  (CMO) position for DHS, Congress has required the DHS CMO to develop  a transition and succession plan to guide the transition of management  functions with a new administration. More broadly speaking, though, the  creation of a chief operating officer (COO)/CMO position in selected  federal agencies can help elevate, integrate, and institutionalize  responsibility for key management functions and transformation efforts  and provide continuity of leadership over a long term. For example,  because of its long-standing management weaknesses and high-risk  operations, we have long advocated the need for a COO/CMO for DOD to  advance management integration and business transformation in the  department. In the fiscal year 2008 National Defense Authorization Act,  Congress designated the Deputy Secretary of Defense as the department’s  CMO.
Strengthen the capacity to manage contractors and recognize  related risks and challenges: Enhancing acquisition and contracting  capability will be a critical challenge for many agencies in the next  administration in part because many agencies (for example, DOD, DHS,  the Department of Energy, and the Centers for Disease Control and  Prevention) are increasingly reliant on contractors to carry out their basic  operations. In fiscal year 2007, federal agencies spent $436 billion on  contracts for products and services. At the same time, our high-risk list  areas include acquisition and contract management issues that collectively  expose hundreds of billions of taxpayer dollars to potential waste and  misuse. To improve acquisition outcomes, we have stated that agencies  need a concentrated effort to address existing problems while facilitating a  reexamination of the rules and regulations that govern the government- contractor relationship in an increasingly blended workforce. For  example, since agencies have turned to contractor support to augment  their capabilities, they need to ensure that contractors are playing  appropriate roles and that the agencies have retained sufficient in-house  workforce capacity to monitor contractor cost, quality, and performance.
Better manage information technology (IT) to achieve benefits and  control costs: A major challenge for the federal government is managing  its massive investment in IT—currently more than $70 billion annually.  Our reports have repeatedly shown that agencies and the government as a  whole face challenges in prudently managing major modernization efforts,  ensuring that executives are accountable for IT investments, instituting  key controls to help manage such projects, and ensuring that computer  systems and information have adequate security and privacy protections.
The Office of Management and Budget (OMB) identifies major projects  that are poorly planned by placing them on a Management Watch List and  requires agencies to identify high-risk projects that are performing poorly.  OMB and federal agencies have identified approximately 413 IT projects— totaling at least $25.2 billion in expenditures for fiscal year 2008—as being  poorly planned, poorly performing, or both. OMB has taken steps to  improve the identification of the Management Watch List and high-risk  projects since GAO testified last September, including publicly disclosing  reasons for placement on the Management Watch List and clarifying high- risk project criteria. However, more needs to be done by both OMB and  the agencies to address recommendations GAO has previously made to  improve the planning, management, and oversight of poorly planned and  performing projects so that potentially billions in taxpayer dollars are not  wasted.
Address human capital challenges: Governmentwide, about one-third  of federal employees on board at the end of fiscal year 2007 will become  eligible to retire on the new administration’s watch. Certain occupations— air traffic controllers and customs and border protection personnel among  them—are projected to have particularly high rates of retirement eligibility  come 2012. As experienced employees retire, they leave behind critical  gaps in leadership and institutional knowledge, which could adversely  affect the government’s ability to carry out its diverse responsibilities.  Agencies must recruit and retain employees able to create, sustain, and  thrive in organizations that are flatter, results-oriented, and externally  focused, and who can collaborate with other governmental entities as well  as with the private and nonprofit sectors to achieve desired outcomes. The  Office of Personnel Management needs to continue to ensure that its own  workforce has the skills needed to successfully guide agency human  capital improvements and agencies must make appropriate use of  available authorities to acquire, develop, motivate, and retain talent.
Build on the progress of the statutory management framework:  Over the last 2 decades, Congress has put in place a legislative framework  for federal management that includes results-based management,  information technology, and financial management reforms. As a result of  this framework and the efforts of Congress and the Bush and Clinton  administrations, there has been substantial progress in establishing the  basic infrastructure needed to create high-performing organizations across  the federal government. However, work still remains and sustained  attention by Congress and the incoming administration will be a critical  factor in ensuring the continuing and effective implementation of the  statutory management reforms.
section_title: Help Inform the Management Improvement Agendas of Congress and the New Administration
paragraphs: Initiated in 1990, GAO’s high-risk program has brought a much greater  focus to areas in need of broad-based transformations and those  vulnerable to waste, fraud, abuse, and mismanagement. It also has  provided the impetus for the creation of several statutory management  reforms. GAO’s current high-risk list covers 28 areas, as shown in the chart  below.
Our updates to the list, issued every 2 years at the start of each new  incoming Congress, have helped in setting congressional oversight  agendas. The support of this Subcommittee and others in Congress has  been especially important to the success of this program. Further,  administrations have consistently turned to the high-risk list in framing  their management improvement initiatives. The current administration in  particular, working with Congress, has provided a valuable and focused  effort in requiring agencies to develop meaningful corrective action plans  for each area that we have designated as high-risk. As a consequence of  efforts by Congress, the agencies, OMB, and others, much progress has  been made in many high-risk areas, but key issues need continuing  attention. Sustained efforts in these areas by the next Congress and  administration will help improve service to the American public,  strengthen public confidence in the government’s performance and  accountability, potentially save billions of dollars, and ensure the ability of  government to deliver on its promises.
GAO High-Risk list as of September 2008  Addressing Challenges In Broad-Based Transformations
Strategic Human Capital Management
Managing Federal Real Property
Protecting the Federal Government’s Information Systems and the  Nation’s Critical Infrastructures
Implementing and Transforming the Department of Homeland Security
Establishing Appropriate And Effective Information-Sharing  Mechanisms to Improve Homeland Security
DOD Approach to Business Transformation
DOD Business Systems Modernization
DOD Personnel Security Clearance Program
DOD Support Infrastructure Management
DOD Supply Chain Management
DOD Weapon Systems Acquisition
FAA Air Traffic Control Modernization
Financing the Nation’s Transportation System
Effective Protection of Technologies Critical to U.S. National Security
Transforming Federal Oversight of Food Safety
The 2010 Census (New)
section_title: Monitor the Implementation of the Presidential Transition Act Provisions and Identify Potential Improvements for Future Transitions
paragraphs: The world has obviously changed a great deal since the Presidential  Transition Act of 1963. And while there have been periodic amendments to  the Act, neither the Act nor the transition process itself has been subject to  a comprehensive or systematic assessment of whether the Act is setting  transitions up to be as effective as they might be. We will be monitoring  the transition and reaching out to the new administration, Congress, and  outside experts to identify lessons learned and any needed improvements  in the Act’s provisions for future transitions.
On a related matter, concerns are always expressed during any transition  about the conversion of noncareer political appointees from the existing  administration to civil service career appointments.  Civil service laws,  rules, and regulations, require that all personnel actions, including such  conversions, remain free of political influence or other improprieties and  meet the nine standards known as “merit system principles.” During a  presidential election period, the Office of Personnel Management (OPM)  conducts a pre-appointment review of all competitive service appointment  actions that involve the appointment or conversion of a Schedule C or  Noncareer Senior Executive Service (SES) employee.
At the request of Congress, we have regularly reported on such  conversions for many years. Most recently, we reported in 2006 that for  the period of May 2001 through April 2005, 23 of 41 agencies reviewed  reported converting 144 individuals from noncareer to career positions,  130 individuals at the GS-12 level or higher.  The remaining 18 agencies  reported making no conversions.  We found that agencies used  appropriate authorities and followed procedures in making the majority  (93) of the 130 conversions reported at the GS-12 level or higher.  It  appeared that agencies did not follow proper procedures for 18  conversions, including by creating career positions specifically for  particular individuals, posting SES vacancy announcements for less than  the minimum time requirement, and failing to apply veteran’s preference;  we referred those 18 conversions to the Office of Personnel Management  and recommended that the Director determine whether additional actions  were needed.  For the other 19, agencies did not provide enough  information for us to make an assessment.
Congress has again turned to us to monitor conversions.  Specifically, we  have been asked to report for 42 agencies on (1) the number and types of  conversions of individuals holding noncareer positions to career positions  from May 2005 through May 2009 and (2) whether agencies used  appropriate appointment authorities and followed proper procedures  consistent with merit systems principles in making the conversions.  We  expect to provide the requesters with interim information on our findings  and issue a final report early in spring 2010.
Finally, as you may know, under the Federal Vacancies Reform Act of  1998, federal agencies must file reports with the Comptroller General and  each House of Congress on certain executive office positions that require  Presidential nomination and Senate confirmation.  Agencies are required  to report (1) the vacancy and the date of the vacancy, (2) the name of any  person serving in an acting capacity and the date such service began, (3)  the name of any person nominated to the Senate to fill the position and the  date of the nomination, and (4) the date of a rejection, withdrawal, or  return of a nomination.  To meet our responsibilities under the Act, we  maintain a database on our Web site (www.gao.gov) of current and past  vacant positions, based on the reports submitted by the agencies.  The law  also requires us to inform relevant congressional committees, the  President, and OPM if an acting officer is serving longer than the specified  period under the Act (210 days, except following a Presidential  inauguration when the period is 300 days).  We have issued 12 such letters  since 1998.
In summary, our goal will continue to be to provide congressional and  executive branch policy makers with a comprehensive snapshot of how  things are working across government and to emphasize the need to  update some federal activities to better align them with 21st century  realities and bring about government transformation. In keeping with our  role, we will be providing Congress and the executive branch with clear  facts and constructive options and suggestions that our elected officials  can use to make policy choices in this pivotal transition year. The nation’s  new and returning leaders will be able to use such information to help  address both the nation’s urgent issues and long-term challenges so that  our nation stays strong and secure now and for the next generation.
Chairman Towns, Mr. Bilbray, and Members of the Subcommittee, this  concludes my prepared statement. I would be happy to respond to any  questions you may have.
section_title: Related GAO Products
subsections: section_title: Oversight of Financial Institutions and Markets
paragraphs: Housing Government-Sponsored Enterprises: A Single Regulator Will  Better Ensure Safety and Soundness and Mission Achievement   (GAO-08-563T, Mar. 6, 2008).
Financial Regulation: Industry Trends Continue to Challenge the  Federal Regulatory Structure (GAO-08-32, Oct. 12, 2007).
section_title: U.S. Efforts in Iraq, Afghanistan, and Pakistan
paragraphs: Operation Iraqi Freedom: Actions Needed to Enhance DOD Planning for  Reposturing of U.S. Forces from Iraq (GAO-08-930, Sept. 10,  2008).
Securing, Stabilizing, and Reconstructing Afghanistan: Key Issues for  Congressional Oversight (GAO-07-801SP, May 24, 2007).
Securing, Stabilizing and Rebuilding Iraq: Progress Report: Some Gains  Made, Updated Strategy Needed (GAO-08-837, June 23, 2008).
Combating Terrorism: The United States Lacks Comprehensive Plan to  Destroy the Terrorist Threat and Close the Safe Haven in Pakistan's  Federally Administered Tribal Areas (GAO-08-622, April 17, 2008).
Combating Terrorism: Increased Oversight and Accountability Needed  over Pakistan Reimbursement Claims for Coalition Support Funds  (GAO-08-806, June 24, 2008)
section_title: DOD’s Readiness and Capabilities
paragraphs: Military Readiness: Impact of Current Operations and Actions Needed  to Rebuild Readiness of U.S. Ground Forces (GAO-08-497T, Feb. 14, 2008).
Force Structure: Restructuring and Rebuilding the Army Will Cost  Billions of Dollars for Equipment but the Total Cost Is Uncertain   (GAO-08-669T, Apr. 10, 2008).
section_title: Protecting the Homeland
paragraphs: Department of Homeland Security: Progress Report on Implementation  of Mission and Management Functions (GAO-07-454, Aug. 17, 2007).
Department of Homeland Security: Progress Made in Implementation of  Management Functions, but More Work Remains (GAO-08-646T,   Apr. 9, 2008).
section_title: The Decennial Census
paragraphs: 2010 Census: Census Bureau's Decision to Continue with Handheld  Computers for Address Canvassing Makes Planning and Testing Critical  (GAO-08-936, July 31, 2008).
Information Technology:  Significant Problems of Critical Automation  Program Contribute to Risks Facing 2010 Census (GAO-08-550T,   Mar. 5, 2008).
section_title: Retirement of the Space Shuttle
paragraphs: NASA: Challenges in Completing and Sustaining the International Space  Station (GAO-08-581T, Apr. 24, 2008).
NASA: Ares I and Orion Project Risks and Key Indicators to Measure  Progress (GAO-08-186T, Apr. 3, 2008).
section_title: Long-Term Fiscal Outlook
paragraphs: The Nation's Long-Term Fiscal Outlook: April 2008 Update (GAO-08- 783R, May 16, 2008).
Budget Issues: Accrual Budgeting Useful in Certain Areas but Does Not  Provide Sufficient Information for Reporting on Our Nation's Longer- Term Fiscal Challenge (GAO-08-206, Dec. 20, 2007).
Fiscal Exposures: Improving the Budgetary Focus on Long-Term Costs  and Uncertainties (GAO-03-213 (Jan. 24, 2003).
Long-Term Fiscal Outlook: Long-Term Federal Fiscal Challenge Driven  Primarily by Health Care (GAO-08-912T, June 17, 2008).
section_title: Wounded Servicemembers
paragraphs: DOD and VA: Preliminary Observations on Efforts to Improve Care  Management and Disability Evaluations for Servicemembers   (GAO-08-514T, Feb. 27, 2008).
DOD and VA: Preliminary Observations on Efforts to Improve Health  Care and Disability Evaluations for Returning Servicemembers (GAO- 07-1256T, Sept. 26, 2007).
section_title: Health Care in an Increasingly Global Market and Environment
paragraphs: Emergency Preparedness: States are Planning for Medical Surge, but  Could Benefit from Shared Guidance for Allocating Scarce Medical  Resources (GAO-08-668, June 13, 2008).
Influenza Pandemic: Efforts Under Way to Address Constraints on  Using Antivirals and Vaccines to Forestall a Pandemic (GAO-08-92, Dec.  21, 2007).
section_title: Food Safety
paragraphs: Federal Oversight of Food Safety: High-Risk Designation Can Bring  Needed Attention to Fragmented System (GAO-07-449T, Feb. 8, 2007).
Federal Oversight of Food Safety: FDA's Food Protection Plan Proposes  Positive First Steps, but Capacity to Carry Them Out Is Critical (GAO- 08-435T, Jan. 29, 2008).
section_title: Surface Transportation
paragraphs: Surface Transportation Programs: Proposals Highlight Key Issues and  Challenges in Restructuring the Programs (GAO-08-843R, July 29, 2008).
Surface Transportation: Restructured Federal Approach Needed for More  Focused, Performance-Based, and Sustainable Programs (GAO-08-400,  Mar. 6, 2008).
section_title: Disaster Response
paragraphs: Catastrophic Disasters: Enhanced Leadership, Capabilities, and  Accountability Controls Will Improve the Effectiveness of the Nation’s  Preparedness, Response, and Recovery System (GAO-06-618,   Sept. 6, 2006).
Emergency Management: Observations on DHS's Preparedness for  Catastrophic Disasters (GAO-08-868T, June 11, 2008).
section_title: Cyber Critical Infrastructure Protection
paragraphs: Critical Infrastructure Protection: Sector-Specific Plans’ Coverage of Key  Cyber Security Elements Varies (GAO-08-113, Oct. 31, 2007).
Critical Infrastructure Protection: Multiple Efforts to Secure Control  Systems Are Under Way, but Challenges Remain (GAO-07-1036,   Sept. 10, 2007).
section_title: Improper Payments
paragraphs: Improper Payments: Status of Agencies' Efforts to Address Improper  Payment and Recovery Auditing Requirements (GAO-08-438T,   Jan. 31, 2008).
Fiscal Year 2007 U.S. Government Financial Statements: Sustained  Improvement in Financial Management Is Crucial to Improving  Accountability and Addressing the Long-Term Fiscal Challenges    (GAO-08-847T, June 5, 2008).
section_title: DOD Cost Overruns
paragraphs: Defense Acquisitions: Better Weapon Program Outcomes Require  Discipline, Accountability, and Fundamental Changes in the  Acquisition Environment (GAO-08-782T, June 3, 2008).
Defense Acquisitions: Assessments of Selected Weapon Programs.   (GAO-08-467SP, Mar. 31, 2008).
section_title: DOD Supply Chain Management
paragraphs: DOD's High-Risk Areas: Efforts to Improve Supply Chain Can Be  Enhanced by Linkage to Outcomes, Progress in Transforming Business  Operations, and Reexamination of Logistics Governance and Strategy  (GAO-07-1064T, July 10, 2007).
Defense Inventory: Opportunities Exist to Save Billions by Reducing Air  Force’s Unneeded Spare Parts Inventory (GAO-07-232, Apr. 27, 2007).
section_title: Oil and Gas Royalties
paragraphs: Oil and Gas Royalties: The Federal System for Collecting Oil and Gas  Revenues Needs Comprehensive Reassessment (GAO-08-691, Sept. 3,  2008).
Mineral Revenues: Data Management Problems and Reliance on Self- Reported Data for Compliance Efforts Put MMS Royalty Collections at  Risk (GAO-08-893R, Sept. 12, 2008).
section_title: The Tax Gap
paragraphs: Highlights of the Joint Forum on Tax Compliance:  Options for  Improvement and Their Budgetary Potential (GAO-08-703SP, June 2008).
Tax Compliance:  Multiple Approaches Are Needed to Reduce the Tax  Gap (GAO-07-488T, Feb. 16, 2007).
section_title: Tax Expenditures
paragraphs: Government Performance and Accountability:  Tax Expenditures  Represent a Substantial Federal Commitment and Need to Be  Reexamined (GAO-05-690, Sept. 23, 2005).
Higher Education:  Multiple Higher Education Tax Incentives Create  Opportunities for Taxpayers to Make Costly Mistakes (GAO-08-717T,   May 1, 2008).
section_title: Senior Leadership Team
paragraphs: Organizational Transformation:  Implementing Chief Operating  Officer/Chief Management Officer Positions in Federal Agencies   (GAO-08-34, Nov. 1, 2007).
section_title: Contract Management
paragraphs: Defense Management: DOD Needs to Reexamine Its Extensive Reliance  on Contractors and Continue to Improve Management and Oversight   (GAO-08-572T, Mar. 11, 2008).
Federal Acquisitions and Contracting:  Systemic Challenges Need  Attention (GAO-07-1098T, July 17, 2007).
section_title: Information Technology Management
paragraphs: Information Technology: OMB and Agencies Need to Improve Planning,  Management, and Oversight of Projects Totaling Billions of Dollars   (GAO-08-1051T, July 31, 2008).
Information Security: Progress Reported, but Weaknesses at Federal  Agencies Persist (GAO-08-571T, Mar. 12, 2008).
section_title: Human Capital
paragraphs: Office of Personnel Management:  Opportunities Exist to Build on  Recent Progress in Internal Human Capital Capacity (GAO-08-11, Oct.  31, 2007).
Human Capital:  Transforming Federal Recruiting and Hiring Efforts  (GAO-08-762T, May 8, 2008).
section_title: High-Risk Series
paragraphs: High-Risk Series: An Update (GAO-07-310, Jan. 31, 2007).
section_title: Oversight Letter
paragraphs: Suggested Areas for Oversight for the 110th Congress (GAO-07-235R,   Nov. 17, 2006).
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