Fiscal Year 2005 Budget Request: U.S. General Accounting Office
Published: 2004-03-04T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: GAO exists to support the Congress in meeting its constitutional responsibilities and to help improve the performance and ensure the accountability of the federal government for the benefit of the American people. GAO's work covers virtually every area in which the federal government is or may become involved, anywhere in the world. Perhaps just as importantly, our work sometimes leads us to sound the alarm over problems looming just beyond the horizon--such as our nation's enormous long-term fiscal challenges--and help policymakers address these challenges in a timely and informed manner. This testimony focuses on GAO's (1) fiscal year 2003 performance and results; (2) efforts to maximize our effectiveness, responsiveness, and value; and (3) budget request for fiscal year 2005 to support the Congress and serve the American people.
section_title: What GAO Found
paragraphs: In summary, the funding GAO received in fiscal year 2003 allowed it to conduct work that addressed many of the difficult issues confronting the nation, including diverse and diffuse security threats, selected government transformation challenges, and the nation's long-term fiscal imbalance. Perhaps the foremost challenge facing the government decision makers this year was ensuring the security of the American people. By providing professional, objective, and nonpartisan information and analyses, GAO helped inform the Congress and the executive branch agencies on key security issues, such as the nature and scope of threats confronting the nation's nuclear weapons facilities, its information systems, and all areas of its transportation infrastructure, as well as the challenges involved in creating the Department of Homeland Security. Its work was also driven by changing demographic trends, which led it to focus on such areas as the quality of care in the nation's nursing homes and the risks to the government's single-employer pension insurance program. Its work in these and other areas covered programs that involve billions of dollars and touch millions of lives. Importantly, in fiscal year 2003, GAO generated a $78 return for each $1 appropriated to the agency. With the Congress's support, GAO has demonstrated that becoming world class does not require a substantial increase in the number of staff authorized, but rather maximizing the efficient and effective use of the resources available to us. GAO has worked with Congress to obtain targeted funding for areas critical to GAO such as information technology, security, and human capital management. In keeping with the Comptroller General's belief that the federal government needs to exercise a greater degree of fiscal discipline, GAO has kept its request to $486 million, an increase of only 4.9 percent over fiscal year 2004. In keeping with the Congress' intent, GAO is continuing its efforts to revamp its budget presentation to make the linkages between funding and program areas more clear.

section_title: Letter
paragraphs: I am pleased to appear before the subcommittee today, having recently  completed my fifth year as the Comptroller General of the United States  and head of the U.S. General Accounting Office. GAO exists to support the  Congress in meeting its constitutional responsibilities and to help improve  the performance and ensure the accountability of the federal government  for the benefit of the American people. In the years ahead, our support to  the Congress will likely prove even more critical because of the pressures  created by our nation’s large and growing long-term fiscal imbalance,  which is driven primarily by known demographic and rising health care  trends. These pressures will require the Congress to make tough choices  regarding what the government does, how it does business, and who will  do the government’s business in the future. GAO’s work covers virtually  every area in which the federal government is or may become involved,  anywhere in the world. Perhaps just as importantly, our work sometimes  leads us to sound the alarm over problems looming just beyond the  horizon—such as our nation’s enormous long-term fiscal challenges—and  help policymakers address these challenges in a timely and informed  manner.
My testimony today will focus on GAO’s progress during my first five years  as Comptroller General. I will highlight our (1) fiscal year 2003  performance and results; (2) efforts to maximize our effectiveness,  responsiveness, and value; and (3) budget request for fiscal year 2005 to  support the Congress and serve the American people. Following is a  summary:    The funding we received in fiscal year 2003 allowed us to conduct work  that addressed many of the difficult issues confronting the nation,  including diverse and diffuse security threats, selected government  transformation challenges, and the nation’s long-term fiscal imbalance.  Perhaps the foremost challenge facing government decision makers  this year was ensuring the security of the American people. By  providing professional, objective, and nonpartisan information and  analyses, we helped inform the Congress and the executive branch  agencies on key security issues, such as the nature and scope of threats  confronting the nation’s nuclear weapons facilities, its information  systems, and all areas of its transportation infrastructure, as well as the  challenges involved in creating the Department of Homeland Security.  Our work was also driven by changing demographic trends, which led  us to focus on such areas as the quality of care in the nation’s nursing  homes and the risks to the government’s single-employer pension  insurance program. Our work in these and other areas covered  programs that involve billions of dollars and touch millions of lives.  Importantly, in fiscal year 2003, GAO generated a $78 return for each $1  appropriated to our agency.
With the Congress’s support, we have demonstrated that becoming  world class does not require a substantial increase in the number of  staff authorized, but rather maximizing the efficient and effective use  of the resources available to us. We have worked with you to obtain  targeted funding for areas critical to GAO such as information  technology, security, and human capital management. We are grateful  to the Congress for supporting our efforts through pending legislation  that, if passed, would give us additional human capital flexibilities.  During tight budget times, these flexibilities would allow us, among  other things, more options to deal with mandatory pay and related  costs.
In keeping with my belief that the federal government needs to  exercise a greater degree of fiscal discipline, we have kept our request  to $486 million, an increase of only 4.9 percent over fiscal year 2004. I  also applaud the Congress’s request that all legislative branch agencies  examine how they could work toward a more transparent budget  presentation. In keeping with the Congress’s intent, we are continuing  our efforts to revamp our budget presentation to make the linkages  between funding and program areas more clear. I hope that in the  future the Congress will be able to use such performance information  to make tough choices on funding, thereby enabling it to avoid across- the-board reductions that penalize agencies that exercise fiscal  discipline and generate high returns on investment and real results.
subsections: section_title: Fiscal Year 2003 Performance and Results
paragraphs: GAO is a key source of professional and objective information and  analysis and, as such, plays a crucial role in supporting congressional  decision making. For example, in fiscal year 2003, as in other years, the  challenges that most urgently engaged the attention of the Congress  helped define our priorities. Our work on issues such as the nation’s  ongoing battle against terrorism, Social Security and Medicare reform, the  implementation of major education legislation, human capital  transformations at selected federal agencies, and the security of key  government information systems all helped congressional members and  their staffs to develop new federal policies and programs and oversee  ongoing ones. Moreover, the Congress and the executive agencies took a  wide range of actions in fiscal year 2003 to improve government  operations, reduce costs, or better target budget authority based on GAO’s  analyses and recommendations. In fiscal year 2003, GAO served the  Congress and the American people by helping to  identify steps to reduce improper payments and credit card fraud in  government programs; restructure government and improve its processes and systems to  maximize homeland security;   prepare the financial markets to continue operations if terrorism    update and strengthen government auditing standards;  improve the administration of Medicare as it undergoes reform;   encourage and help guide federal agency transformations;    contribute to congressional oversight of the federal income tax system;  identify human capital reforms needed at the Department of Defense,  the Department of Homeland Security, and other federal agencies; raise the visibility of long-term financial commitments and imbalances  in the federal budget; reduce security risks to information systems supporting the nation’s  critical infrastructures;   oversee programs to protect the health and safety of today’s workers;    ensure the accountability of federal agencies through audits and    serve as a model for other federal agencies by modernizing our  approaches to managing and compensating our people.
To ensure that we are well positioned to meet the Congress’s future needs,  we update our 6-year strategic plan every 2 years, consulting extensively  during the update with our clients in the Congress and with other experts  (see app. I for our strategic plan framework).
The following table summarizes selected performance measures and  targets for fiscal years 1999 through 2005. Highlights of our fiscal year 2003  accomplishments and their impact on the American public are shown in  the following sections.
subsections: section_title: Benefits Reported
paragraphs: Many of the benefits produced by our work can be quantified as dollar  savings for the federal government (financial benefits), while others  cannot (other benefits). Both types of benefits resulted from our efforts to  provide information to the Congress that helped (1) improve services to  the public, (2) provide information that resulted in statutory or regulatory  changes, and (3) improve core business processes and advance  governmentwide management reforms.
In fiscal year 2003, our work generated $35.4 billion in financial benefits— a $78 return on every dollar appropriated to GAO. The funds made  available in response to our work may be used to reduce government  expenditures or reallocated by the Congress to other priority areas. Nine  accomplishments accounted for nearly $27.4 billion, or 77 percent, of our  total financial benefits for fiscal year 2003. Six of these accomplishments  totaled $25.1 billion. Table 2 lists selected major financial benefits in fiscal  year 2003 and describes the work contributing to financial benefits over  $500 million.
Many of the benefits that flow to the American people from our work  cannot be measured in dollar terms. During fiscal year 2003, we recorded a  total of 1,043 other benefits—up from 607 in fiscal year 1999. As shown in  appendix II, we documented instances where information we provided to  the Congress resulted in statutory or regulatory changes, where federal  agencies improved services to the public and where agencies improved  core business processes or governmentwide reforms were advanced.
These actions spanned the full spectrum of national issues, from securing  information technology systems to improving the performance of state  child welfare agencies. We helped improve services to the public by    Strengthening the U.S. visa process as an antiterrorism tool. Our  analysis of the U.S. visa-issuing process showed that the Department of  State’s visa operations were more focused on preventing illegal  immigrants from obtaining nonimmigrant visas than on detecting  potential terrorists. We recommended that State reassess its policies,  consular staffing procedures, and training program. State has taken  steps to adjust its policies and regulations concerning the screening of  visa applicants and its staffing and training for consular officers.
Enhancing quality of care in nursing homes. In a series of reports and  testimonies since 1998, we found that, too often, residents of nursing  homes were being harmed and that programs to oversee nursing home  quality of care at the Centers for Medicare and Medicaid Services were  not fully effective in identifying and reducing such problems. In 2003,  we found a decline in the proportion of nursing homes that harmed  residents but made additional recommendations to further improve  care.
Making key contributions to homeland security. Drawing on an  extensive body of completed and ongoing work, we identified specific  vulnerabilities and areas for improvement to protect aviation and  surface transportation, chemical facilities, sea and land ports, financial  markets, and radioactive sealed sources. In response to our  recommendations, the Congress and cognizant agencies have  undertaken specific steps to improve infrastructure security and  improve the assessment of vulnerabilities.
Improving compliance with seafood safety regulations. We reported  that when Food and Drug Administration (FDA) inspectors identified  serious violations at seafood processing firms, it took FDA 73 days on  average, well above its 15-day target. Based on our recommendations,  FDA now issues warning letters in about 20 days.
We helped to change laws in the following ways:    We highlighted the National Smallpox Vaccination program volunteers’  concerns about losing income if they sustained injuries from an  inoculation. As a result, the Smallpox Emergency Personnel Protection  Act of 2003 (Pub. L. No. 108-20) provides benefits and other  compensation to covered individuals injured in this way.
We performed analyses that culminated in the enactment of the Postal  Civil Service Retirement System Funding Reform Act of 2003 (Pub. L.  No. 108-18), which reduced USPS’s pension costs by an average of $3  billion per year over the next 5 years. The Congress directed that the  first 3 years of savings be used to reduce USPS’s debt and hold postage  rates steady until fiscal 2006.
We also helped to promote sound agency and governmentwide  management by    Encouraging and helping guide agency transformations. We highlighted  federal entities whose missions and ways of doing business require  modernized approaches, including the Postal Service and the Coast  Guard. Among congressional actions taken to deal with modernization  issues, the House Committee on Government Reform established a  special panel on postal reform and oversight to work with the  President’s Commission on the Postal Service on recommendations for  comprehensive postal reform. Our recommendations to the Coast  Guard led to better reporting by the Coast Guard and laid the  foundation for key revisions the agency intended to make to its  strategic plan.
Helping to advance major information technology modernizations. Our  work has helped to strengthen the management of the complex  multibillion-dollar information technology modernization program at  the Internal Revenue Service (IRS) to improve operations, promote  better service, and reduce costs. For example, IRS implemented several  of our recommendations to improve software acquisition, enterprise  architecture definition and implementation, and risk management and  to better balance the pace and scope of the program with IRS’s  capacity to effectively manage it.
Supporting controls over DOD’s credit cards. In a series of reports and  testimonies beginning in 2001, we highlighted pervasive weaknesses in  DOD’s overall credit card control environment, including the  proliferation of credit cards and the lack of specific controls over its  multibillion-dollar purchase and travel card programs. DOD has taken  many actions to reduce its vulnerabilities in this area.
section_title: Benefits to State and Local Governments
paragraphs: While our primary focus is on improving government operations at the  federal level, sometimes our work has an impact at the state and local  levels. To the extent feasible, in conducting our audits and evaluations, we  cooperate with state and local officials. At times, our work results will  have local applications, and local officials will take advantage of our  efforts. We are conducting a pilot to determine the feasibility of measuring  the impact of our work on state and local governments. The following are  examples we have collected during our pilot where our work is relevant  for state and local government operations:  Identity theft. Effective October 30, 1998, the Congress enacted the  “Identity Theft and Assumption Deterrence Act of 1998” prohibiting the  unlawful use of personal identifying information, such as names, Social  Security numbers, and credit card numbers. GAO report GGD-98-100BR  is mentioned prominently in the act’s legislative history. Subsequently,  a majority of states have enacted identity theft laws. Sponsors of some  of these state enactments—Alaska, Florida, Illinois, Michigan,  Pennsylvania, and Texas—mentioned the federal law and/or our report.  For example, in 1999, Texas enacted SB 46, which is modeled after the  federal law. Justice officials said that enactment of state identity theft  laws has multijurisdictional benefits to all levels of law enforcement— federal, state, and local.
Pipeline safety. Our report GAO-RCED-00-128, Pipeline Safety: The  Office of Pipeline Safety Is Changing How It Oversees the Pipeline  Industry, found that the Department of Transportation’s Office of  Pipeline Safety was reducing its reliance on states to help oversee the  safety of interstate pipelines. The report stated that allowing states to  participate in this oversight could improve pipeline safety. As a result,  the Office of Pipeline Safety modified its Interstate Pipeline Oversight  Program for 2001-2002 to allow greater opportunities for state  participation.
Temporary Assistance for Needy Families Grant Program. We reported  on key national and state labor market statistics and changes in the  levels of cash assistance and employment activities in five selected  states. We also highlighted the fact that the five states had faced severe  fiscal challenges and had used reserve funds to augment their spending  above the amount of their annual Temporary Assistance for Needy  Families block grant from the federal government.
section_title: GAO’s High-Risk Program
paragraphs: Issued to coincide with the start of each new Congress, our high-risk  update lists government programs and functions in need of special  attention or transformation to ensure that the federal government  functions in the most economical, efficient, and effective manner possible.  This is especially important in light of the nation’s large and growing long- term fiscal imbalance. Our latest report, released in January 2003,  spotlights more than 20 troubled areas across government. Many of these  areas involve essential government services, such as Medicare, housing  programs, and postal service operations that directly affect the lives and  well-being of the American people.
Our high-risk program, which we began in 1990, includes five high-risk  areas added in 2003:  implementing and transforming the new Department of Homeland  Security,   modernizing federal disability programs,    Pension Benefit Guaranty Corporation’s (PBGC) single-employer  pension insurance program.
In fiscal year 2003, we also removed the high-risk designation from two  programs:  the Social Security Administration’s Supplemental Security Income  program, and   Asset Forfeiture programs administered by the U.S. Departments of  Justice and the Treasury.
In fiscal 2003, we issued 208 reports and delivered 112 testimonies related  to high-risk areas, and our related work resulted in financial benefits  totaling almost $21 billion. Our sustained focus on high-risk problems also  has helped the Congress enact a series of governmentwide reforms to  strengthen financial management, improve information technology, and  create a more results-oriented and accountable federal government. The  President’s Management Agenda for reforming the federal government  mirrors many of the management challenges and program risks that we  have reported on in our performance and accountability series and high- risk updates, including a governmentwide initiative to focus on strategic  management of human capital.
Following GAO’s designation of federal real property as a high-risk issue,  the Office of Management and Budget (OMB) has indicated its plans to add  federal real property as a new program initiative under the President’s  Management Agenda. OMB recently issued an executive order on federal  real property that addresses many of GAO’s concerns, including the need  to better emphasize the importance of government property to effective  management. We have an ongoing dialog with OMB regarding the high-risk  areas, and OMB is working with agency officials to address many of our  high-risk areas. Some of these high-risk areas may require additional  authorizing legislation as one element of addressing the problems.
Our fiscal year 2003 high-risk list is shown in table 3.
section_title: Testimonies
paragraphs: During fiscal year 2003 GAO executives testified at 189 congressional  hearings—sometimes with very short notice—covering a wide range of  complex issues. Testimony is one of our most important forms of  communication with the Congress; the number of hearings at which we  testify reflects, in part, the importance and value of our expertise and  experience in various program areas and our assistance with  congressional decision making. The following figure highlights, by GAO’s  three external strategic goals for serving the Congress, examples of issues  on which we testified during fiscal year 2003.
While the vast majority of our products—97 percent—were completed on  time for our congressional clients and customers in fiscal year 2003, we  slightly missed our target of providing 98 percent of them on the promised  day. We track the percentage of our products that are delivered on the day  we agreed to with our clients because it is critical that our work be done  on time for it to be used by policymakers. Though our 97 percent  timeliness rate was a percentage point improvement over our fiscal year  2002 result, it was still a percentage point below our goal. As a result, we  are taking steps to improve our performance in the future by encouraging  matrix management practices among the teams supporting various  strategic goals and identifying early those teams that need additional  resources to ensure the timely delivery of their products to our clients.
section_title: Maximizing GAO’s Effectiveness, Responsiveness, and Value
paragraphs: The results of our work were possible, in part, because of the changes we  have made to maximize the value of GAO. With the Congress’s support, we  have demonstrated that becoming world class does not require substantial  staffing increases, but rather maximizing the efficient and effective use of  the resources available to us. Since I came to GAO, we have developed a  strategic plan, realigned our organizational structure and resources, and  increased our outreach and service to our congressional clients. We have  developed and revised a set of congressional protocols, developed agency  and international protocols, and better refined our strategic and annual  planning and reporting processes. We have worked with you to make  changes in areas where we were facing longer-term challenges when I  came to GAO, such as in the critical human capital, information  technology, and physical security areas. We are grateful to the Congress  for supporting our efforts through pending legislation that, if passed,  would give us additional human capital flexibilities that will allow us,  among other things, to move to an even more performance-based  compensation system and help to better position GAO for the future. As  part of our ongoing effort to ensure the quality of our work, this year a  team of international auditors will perform a peer review of GAO’s  performance audit work issued in calendar year 2004.
subsections: section_title: Making GAO’s Work Accessible to the American People
paragraphs: We continued our policy of proactive outreach to our congressional  clients, the press, and the public to enhance the visibility of our products.  On a daily basis we compile and publish a list of our current reports. This  feature has more than 18,000 subscribers, up 3,000 from last year. We also  produced an update of our video on GAO, “Impact 2003.” Our external  Web site continues to grow in popularity, having increased the number of  hits in fiscal year 2003 to an average of 3.4 million per month, 1 million  more per month than in fiscal year 2002. In addition, visitors to the site are  downloading an average of 1.1 million files per month. As a result, demand  for printed copies of our reports has dramatically declined, allowing us to  phase out our internal printing capability.
section_title: Promoting Sound Financial Management and Improving Strategic Management
paragraphs: For the 17th consecutive year, GAO’s financial statements have received  an unqualified opinion from our independent auditors. We prepared our  financial statements for fiscal year 2003 and the audit was completed a  month earlier than last year and a year ahead of the accelerated schedule  mandated by OMB. For a second year in a row, the Association of  Government Accountants awarded us a certificate of excellence; this year  the award was for the fiscal year 2002 annual performance and  accountability report.
section_title: Aligning GAO’s Workforce and Mission Needs
paragraphs: Given our role as a key provider of information and analyses to the  Congress, maintaining the right mix of technical knowledge and expertise  as well as general analytical skills is vital to achieving our mission.  Because we spend about 80 percent of our resources on our people, we  need excellent human capital management to meet the expectations of the  Congress and the nation. Accordingly, in the past few years, we have  expanded our college recruiting and hiring program and focused our  overall hiring efforts on selected skill needs identified during our  workforce planning effort and to meet succession planning needs. For  example, we identified and reached prospective graduates with the  required skill sets and focused our intern program on attracting those  students with the skill sets needed for our analyst positions. Our efforts in  this area were recognized by Washingtonian magazine, which listed GAO  as one of the “Great Places to Work” in its November 2003 issue.  Continuing our efforts to promote the retention of staff with critical skills,  we offered qualifying employees in their early years at GAO student loan  repayments in exchange for their signed agreements to continue working  at GAO for 3 years.
We also have begun to better link compensation, performance, and results.  In fiscal year 2002 and 2003, we implemented a new performance appraisal  system for our analyst, attorney, and specialist staff that links performance  to established competencies and results. We evaluated this system in fiscal  year 2003 and identified and implemented several improvements, including  conducting mandatory training for staff and managers on how to better  understand and apply the performance standards, and determining  appropriate compensation. We will implement a new competency based  appraisal system, pay banding and a pay for performance system for our  administrative professional and support services staff this fiscal year.
To train our staff to meet the new competencies, we developed an outline  for a new competency-based and role- and task-driven learning and  development curriculum that identified needed core and elective courses  and other learning resources. We also completed several key steps to  improve the structure of our learning organization, including hiring a Chief  Learning Officer and establishing a GAO Learning Board to guide our  learning policy, to set specific learning priorities, and to oversee the  implementation of a new training and development curriculum.
We also drafted our first formal and comprehensive strategic plan for  human capital to communicate both internally and externally our strategy  for enhancing our standing as a model professional services organization,  including how we plan to attract, retain, motivate, and reward a high- performing and top-quality workforce. We expect to publish the final plan  this fiscal year. Our Employee Advisory Council is now a fully  democratically elected body that advises GAO’s senior executives on  matters of interest to our staff. We also established a Human Capital  Partnership Board to gather opinions of a cross section of our employees  about upcoming initiatives and ongoing programs. The 15-member board  will assist our Human Capital Office in hearing and understanding the  perspectives of its customers—our staff.
In addition, we will continue efforts to be ready to implement the new  human capital authorities included in legislation currently pending before  the Senate. This legislation, if passed, would give us more flexibility to  deal with mandatory pay and related costs during tight budgetary times.
section_title: Managing Our Information Technology Resources
paragraphs: Our resourceful management of information technology was recognized  when we were named one of the “CIO (Chief Information Officer) 100” by  CIO Magazine, recognizing excellence in managing our information  technology (IT) resources through “creativity combined with a  commitment to wring the most value from every IT dollar.” We were one  of three federal agencies named, selected from over 400 applicants, largely  representing private sector firms. In particular, we were cited for  excellence in asset management, staffing and sourcing, and building  partnerships, and for implementing a “best practice”—staffing new  projects through internal “help wanted” ads.
We have expanded and enhanced the IT Enterprise Architecture program  we began in fiscal year 2002. We formally established an Enterprise  Architecture oversight group and steering committee to prioritize our IT  business needs, provide strategic direction, and ensure linkage between  our IT Enterprise Architecture and our capital investment process. We  implemented a number of user friendly Web-based systems to improve our  ability to obtain feedback from our congressional clients, facilitate access  to our information for the external customer, and enhance productivity for  the internal customer. Among the new and enhanced Web-based systems  were    an application to track and access General Counsel work by goal, team,    a Web site on emerging trends and issues to provide information for  our teams and offices as they consult with the Congress; and   an automated tracking application for our staff to monitor the status of  products to be published.
In addition, we developed and released a system to automate an existing  data collection and analysis process, greatly expanding our annual  capacity to review DOD weapons systems programs. As a result, we were  able to increase staff productivity and efficiency and enhance the  information and services provided to the Congress. In the past, we were  able to complete a review annually of eight DOD weapons systems  programs. In fiscal year 2003 we reviewed 30 programs and reported on 26.  Within the next year, that number will grow to 80 per year.
section_title: Increasing Information Security
paragraphs: We recognize the ongoing, ever present threat to our shared IT systems  and information assets and continue to promote awareness of this threat,  maintain vigilance, and develop practices that protect information assets,  systems, and services. As part of our continuing emergency preparedness  plan, we upgraded the level of telecommunications services between our  disaster recovery site and headquarters, expanded our remote connectivity  capability, and improved our response time and transmission speed. To  further protect our data and resources, we drafted an update to our  information systems security policy, issued network user policy  statements, hardened our internal network security, expanded our  intrusion detection capability, and addressed concerns raised during the  most recent network vulnerability assessment.
We plan to continue initiatives to ensure a secure environment, detect  intruders in our systems, and recover in the event of a disaster. We are  also continuing to make the investments necessary to enhance the safety  and security of our staff, facilities, and other assets for the mutual benefit  of GAO and the Congress. In addition, we plan to continue initiatives  designed to further increase employees’ productivity, facilitate knowledge  sharing, and maximize the use of technology through tools available at the  desktop and by reengineering the systems that support our business  processes.
section_title: Providing a Safe and Secure Workplace
paragraphs: On the basis of recommendations resulting from our physical security  evaluation and threat assessment, we continue to implement initiatives to  improve the security and safety of our building and personnel. In terms of  the physical plant improvements, we upgraded the headquarters fire alarm  system and installed a parallel emergency notification system. We  completed a study of personal protective equipment, and based on the  resulting decision paper, we have distributed escape hoods to GAO staff.  We have also made a concerted effort to secure the perimeter and access  to our building. Several security enhancements will be installed in fiscal  year 2004, such as vehicle restraints at the garage ramps; ballistic-rated  security guard booths; vehicle surveillance equipment at the garage  entrances; and state-of-the-art electronic security comprising intrusion  detection, access control, and closed-circuit surveillance systems.
section_title: Preparing for Peer Review
paragraphs: A team of international auditors, led by the Office of the Auditor General  of Canada, will conduct a peer review for calendar year 2004 of our  performance audit work. This entails reviewing our policies and internal  controls to assess the compliance of GAO’s work with government audit  standards. The review team will provide GAO with management  suggestions to improve our quality control systems and procedures. Peer  reviews will be conducted every 3 years.
section_title: GAO’s Fiscal Year 2005 Request to Support the Congress
paragraphs: GAO is requesting budget authority of $486 million for fiscal year 2005.  The requested funding level will allow us to maintain our base authorized  level of 3,269 full-time equivalent (FTE) staff to serve the Congress,  maintain operational support at fiscal year 2004 levels, and continue  efforts to enhance our business processes and systems. This fiscal year  2005 budget request represents a modest increase of 4.9 percent over our  fiscal year 2004 projected operating level, primarily to fund mandatory pay  and related costs and estimated inflationary increases. The requested  increase reflects an offset of almost $5 million from nonrecurring fiscal  year 2004 initiatives, including closure of our internal print plant, and $1  million in anticipated reimbursements from a planned audit of the  Securities and Exchange Commission’s (SEC) financial statements. Our  requested fiscal year 2005 budget authority includes about $480 million in  direct appropriations and authority to use $6 million in estimated revenue  from reimbursable audit work and rental income.
To achieve our strategic goals and objectives for serving the Congress, we  must ensure that we have the appropriate human capital, fiscal, and other  resources to carry out our responsibilities. Our fiscal year 2005 request  would enable us to sustain needed investments to maximize the  productivity of our workforce and to continue addressing key  management challenges: human capital, and information and physical  security. We will continue to take steps to “lead by example” within the  federal government in these and other critical management areas.
If the Congress wishes for GAO to conduct technology assessments, we  are also requesting $545,000 to obtain four additional FTEs and contract  assistance and expertise to establish a baseline technology assessment  capability. This funding level would allow us to conduct one assessment  annually and avoid an adverse impact on other high priority congressional  work.
section_title: Concluding Remarks
paragraphs: We are grateful to the Congress for providing support and resources that  have helped us in our quest to be a world class professional services  organization. The funding we received in fiscal year 2004 is allowing us to  conduct work that addressed many difficult issues confronting the nation.  By providing professional, objective, and nonpartisan information and  analyses, we help inform the Congress and executive branch agencies on  key issues, and covered programs that continue to involve billions of  dollars and touch millions of lives.
I am proud of the outstanding contributions made by GAO employees as  they work to serve the Congress and the American people. In keeping with  my strong belief that the federal government needs to exercise fiscal  discipline, our budget request for fiscal year 2005 is modest, but would  maintain our ability to provide first class, effective, and efficient support  to the Congress and the nation to meet 21st century challenges in these  critical times.
This concludes my statement. I would be pleased to answer any questions  the Members of the Subcommittee may have.
section_title: Appendix II: GAO Accomplishments That Helped Change Laws, Improve Services, or Promote Sound Management
paragraphs: GAO Efforts That Helped to Change Laws and/or Regulations  Consolidated Appropriations Resolution, 2003, Public Law 108-7. The law includes GAO’s recommended language that the  administration’s competitive sourcing targets be based on considered research and sound analysis.
Smallpox Emergency Personnel Protection Act of 2003, Public Law 108-20. GAO’s report on the National Smallpox Vaccination  program highlighted volunteers’ concerns about losing income if they sustained injuries from an inoculation. This statute provides  benefits and other compensation to covered individuals injured in this way.
Postal Civil Service Retirement System Funding Reform Act of 2003, Public Law 108-18. Analyses performed by GAO and  OPM culminated in the enactment of this law that reduces USPS’s pension costs by an average of $3 billion per year over the next 5  years. The Congress directed that the first 3 years of savings be used to reduce USPS’s debt and hold postage rates steady until  fiscal 2006.
Accountability of Tax Dollars Act of 2002, Public Law 107-289. A GAO survey of selected non-CFO Act agencies demonstrated  the significance of audited financial statements in that community. GAO provided legislative language that requires 70 additional  executive branch agencies to prepare and submit audited annual financial statements.
Emergency Wartime Supplemental Appropriations Act, 2003, Public Law 108-11. GAO assisted congressional staff with drafting  a provision that made available up to $64 million to the Corporation for National and Community Service to liquidate previously  incurred obligations, provided that the Corporation reports overobligations in accordance with the requirements of the Antideficiency  Act.
Intelligence Authorization Act for Fiscal Year 2003, Public Law 107-306. GAO recommended that the Director of Central  Intelligence report annually on foreign entities that may be using U. S. capital markets to finance the proliferation of weapons,  including weapons of mass destruction, and this statute instituted a requirement to produce the report.
GAO Efforts That Helped to Improve Services to the Public  Strengthening the U.S. Visa Process as an Antiterrorism Tool. Our analysis of the U.S. visa-issuing process showed that the  Department of State’s visa operations were more focused on preventing illegal immigrants from obtaining nonimmigrant visas than on  detecting potential terrorists. We recommended that State reassess its policies, consular staffing procedures, and training program.  State has taken steps to adjust its policies and regulations concerning the screening of visa applicants and its staffing and training for  consular officers.
Enhancing Quality of Care in Nursing Homes. In a series of reports and testimonies since 1998, we found that, too often, residents  of nursing homes were being harmed and that programs to oversee nursing home quality of care at the Centers for Medicare and  Medicaid Services were not fully effective in identifying and reducing such problems. In 2003, we found a decline in the proportion of  nursing homes that harmed residents but made additional recommendations to further improve care.
Making Key Contributions to Homeland Security. Drawing upon an extensive body of completed and ongoing work, we identified  specific vulnerabilities and areas for improvement to protect aviation and surface transportation, chemical facilities, sea and land  ports, financial markets, and radioactive sealed sources. In response to our recommendations, the Congress and cognizant agencies  have undertaken specific steps to improve infrastructure security and improve the assessment of vulnerabilities.
Improving Compliance with Seafood Safety Regulations. We reported that when Food and Drug Administration (FDA) inspectors  identified serious violations at seafood processing firms, it took FDA 73 days on average, well above its 15-day target. Based on our  recommendations, FDA now issues warning letters in about 20 days.
Strengthening Labor’s Management of the Special Minimum Wage Program. Our review of this program resulted in more  accurate measurement of program participation and noncompliance by employees and prevented inappropriate payment of wages  below the minimum wage to workers with disabilities.
Reducing National Security Risks Related to Sales of Excess DOD Property. We reported that DOD did not have systems and  procedures in place to maintain visibility and control over 1.2 million chemical and biological protective suits and certain equipment  that could be used to produce crude forms of anthrax. Unused suits (some of which were defective) and equipment were declared  excess and sold over the Internet. DOD has taken steps to notify state and local responders who may have purchased defective  suits. Also, DOD has taken action to restrict chemical-biological suits to DOD use only—an action that should eliminate the national  security risk associated with sales of these sensitive military items. Lastly, DOD has suspended sales of the equipment in question  pending the results of a risk assessment.
GAO Efforts That Helped to Change Laws and/or Regulations  Protecting the Retirement Security of Workers. We alerted the Congress to potential dangers threatening the pensions of millions  of American workers and retirees. The pension insurance program’s ability to protect workers’ benefits is increasingly being  threatened by long-term, structural weaknesses in the private-defined, pension benefit system. A comprehensive approach is needed  to mitigate or eliminate the risks.
Improving Mutual Fund Disclosures. To improve investor awareness of mutual fund fees and to increase price competition among  funds, we identified alternatives for regulators to increase the usefulness of fee information disclosed to investors. Early in fiscal year  2003, the Securities and Exchange Commission issued proposed rules to enhance mutual fund fee disclosures using one of our  recommended alternatives.
GAO Efforts That Helped to Promote Sound Agency and Governmentwide Management  Encouraging and Helping Guide Agency Transformations. We highlighted federal entities whose missions and ways of doing  business require modernized approaches, including the Postal Service, and the Coast Guard. Among congressional actions taken to  deal with modernization issues, the House Committee on Government Reform established a special panel on postal reform and  oversight to work with the President’s Commission on the Postal Service on recommendations for comprehensive postal reform. We  also reported this year on the Coast Guard’s ability to effectively carry out critical elements of its mission, including its homeland  security responsibilities. We recommended that the Coast Guard develop a blueprint for targeting its resources to its various mission  responsibilities and a better reporting mechanism for informing the Congress on its effectiveness. Our recommendations led to better  reporting by the Coast Guard and laid the foundation for key revisions the agency intended to make to its strategic plan.
Helping DOD Recognize and Address Business Modernization Challenges. Several times we have reported and testified on the  challenges DOD faces in trying to successfully modernize about 2,300 business systems, and we made a series of recommendations  aimed at establishing the modernization management capabilities needed to be successful in transforming the department. DOD has  implemented some key architecture management capabilities, such as assigning a chief architect and creating a program office, as  well as issuing the first version of its business enterprise architecture in May 2003. In addition, DOD has revised its system  acquisition guidance. By implementing our recommendations, DOD is increasing the likelihood that its systems investments will  support effective and efficient business operations and provide for timely and reliable information for decision making.
Helping to Advance Major Information Technology Modernizations. Our work has helped to strengthen the management of the  complex, multibillion-dollar information technology modernization program at the Internal Revenue Service (IRS) to improve  operations, promote better service, and reduce costs. For example, IRS implemented several of our recommendations to improve  software acquisition, enterprise architecture definition and implementation, and risk management and to better balance the pace and  scope of the program with its capacity to effectively manage it.
Improving Internal Controls and Accountability over Agency Purchases. Our work examining purchasing and property  management practices at FAA identified several weaknesses in the specific controls and overall control environment that allowed  millions of dollars of improper and wasteful purchases to occur. Such weaknesses also contributed to many instances of property  items not being recorded in FAA’s property management system, which allowed hundreds of lost or missing property items to go  undetected. Acting on our findings, FAA established key positions to improve management oversight of certain purchasing and  monitoring functions, revised its guidance to strengthen areas of weakness and to limit the allowability of certain expenditures, and  recorded assets into its property management system that we identified as unrecorded.
Strengthening Government Auditing Standards. Our publication of the Government Auditing Standards in June 2003 provides a  framework for audits of federal programs and monies. This comes at a time of urgent need for integrity in the auditing profession and  for transparency and accountability in the management of scarce resources in the government sector. The new revision of the  standards strengthens audit requirements for identifying fraud, illegal acts, and noncompliance, and gives clear guidance to auditors  as they contribute to a government that is efficient, effective, and accountable to the people.
Supporting Controls over DOD’s Credit Cards. In a series of reports and testimonies beginning in 2001, we highlighted pervasive  weaknesses in DOD’s overall credit card control environment, including the proliferation of credit cards and the lack of specific  controls over its multibillion dollar purchase and travel card programs. We identified numerous cases of fraud, waste, and abuse and  made 174 recommendations to improve DOD’s credit card operations. DOD has taken many actions to reduce its vulnerabilities in  this area.
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