Government Efficiency and Effectiveness: Opportunities for Improvement and Considerations for Restructuring
Published: 2012-03-21T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: This testimony discusses the need to reexamine the structures and operations of the federal government. Congress also asked that we address the Reforming and Consolidating Government Act of 2012 (S. 2129), first proposed by the President and introduced in the Senate by Chairman Lieberman and Senator Warner. The federal government faces an array of challenges and opportunities to enhance performance, ensure accountability, and position the nation for the future. A number of overarching trends, such as fiscal sustainability and debt challenges, demographic and societal changes, developments in science and technology, diffuse security threats, global interdependence, and the rapid expansion of collaborative networks, underscore the need for a fundamental reconsideration of the role, operations, and structure of the federal government for the 21st century. This testimony is based on our work on government reorganization, transformation, and management issues as well as our recently issued reports that identify additional opportunities and progress made to improve the efficiency and effectiveness of government. Specifically, it addresses:
issues related to reexamining the structure of the federal government and its operations, including the Presidents request that Congress grant authority to reorganize the executive branch agencies;
federal programs or functional areas where unnecessary duplication, overlap, or fragmentation exists as well as opportunities for potential cost savings or enhanced revenues identified in our 2012 annual report; and
the status of actions taken by Congress and the executive branch to address the issues we identified in 2011.
section_title: What GAO Found
paragraphs: On February 17th, Chairman Lieberman and Senator Warner introduced S. 2129, entitled Reforming and Consolidating Government Act of 2012, a bill renewing the Presidential authority to propose government organizational changes and obtain congressional approval through an expedited process. From 1932 to 1984, Congress provided the President with some form of reorganization authority. S. 2129 renews most of the statutory framework as it existed before the authority lapsed in 1984. However, S. 2129 proposes noteworthy changes, both in terms of eliminating restrictions on the scope of a Presidents plan and placing additional requirements on such plans.
Unlike the 1984 version of the law, under S. 2129, the President would be permitted to propose the creation of a new department (or renaming of an existing department), the abolishment or transfer of an executive department, or the consolidation of two or more departments. There are currently fifteen departments, including the Department of State and the Department of Homeland Security. Additionally, the President would be permitted to propose the creation of a new agency, a restriction which was included by the 1984 amendment of this authority.
The reorganization authority proposed under this bill would permit the President, as in the 1984 version of the law, to prepare and submit to Congress reorganization plans that call for the (1) transfer of an agency or some of its functions to another agency, (2) abolishment of all or some functions of an agency, (3) consolidation of an agency or its functions or parts of an agency or some of its functions with another agency or part of another agency, (4) consolidation of part of an agency or some of its functions with another part of the same agency, or (5) authorization of an officer to delegate his or her functions.
In our 2012 annual report, we identified a total of 51 areas, including 32 areas of potential duplication, overlap, or fragmentation, as well as 19 opportunities for agencies or Congress to consider taking action that could either reduce the cost of government operations or enhance revenue collections for the Treasury. These areas involve a wide range of government missions including agriculture, defense, economic development, education, energy, general government, health, homeland security, international affairs, science and the environment, and social services. Within and across these missions, the 2012 annual report touches on virtually all major federal departments and agencies.
In our 2011 annual report, we suggested a wide range of actions for Congress and the executive branch to consider such as developing strategies to better coordinate fragmented efforts, implementing executive initiatives to improve oversight and evaluation of overlapping programs, considering enactment of legislation to facilitate revenue collection and examining opportunities to eliminate potential duplication through streamlining, collocating, or consolidating efforts or administrative services. For our 2011 follow-up report, we assessed the extent to which Congress and the executive branch addressed the 81 areasincluding a total of 176 actionsto reduce or eliminate unnecessary duplication, overlap, or fragmentation or achieve other potential financial benefits.
Our assessment of progress made as of February 10, 2012, found that 4 (or 5 percent) of the 81 areas GAO identified were addressed; 60 (or 74 percent) were partially addressed; and 17 (or 21 percent) were not addressed.

section_title: Letter
paragraphs: Thank you for the opportunity to discuss the need to reexamine the  structures and operations of the federal government. You also asked that  we address the “Reforming and Consolidating Government Act of 2012”  (S. 2129), first proposed by the President and introduced in the Senate by  Chairman Lieberman and Senator Warner. We also present our recent  work highlighting the existence of duplication, overlap, and fragmentation  across the federal government.
The federal government faces an array of challenges and opportunities to  enhance performance, ensure accountability, and position the nation for  the future. A number of overarching trends, such as fiscal sustainability  and debt challenges, demographic and societal changes, developments  in science and technology, diffuse security threats, global  interdependence, and the rapid expansion of collaborative networks,  underscore the need for a fundamental reconsideration of the role,  operations, and structure of the federal government for the 21st century.
My testimony today is based on our work on government reorganization,  transformation, and management issues as well as our recently issued  reports that identify additional opportunities and progress made to  improve the efficiency and effectiveness of government. Specifically, it  addresses:  issues related to reexamining the structure of the federal  government and its operations, including the President’s request  that Congress grant authority to reorganize the executive branch  agencies;   federal programs or functional areas where unnecessary  duplication, overlap, or fragmentation exists as well as  opportunities for potential cost savings or enhanced revenues  identified in our 2012 annual report; and   the status of actions taken by Congress and the executive branch  to address the issues we identified in 2011.
We conducted our work in accordance with generally accepted  government auditing standards or with our quality assurance framework,  as appropriate.
subsections: section_title: Reexamining Federal Government Structures and Operations
subsections: section_title: Reforming and Consolidating Government Act of 2012 (S. 2129) Would Renew and Expand President’s Authority to Propose Restructurings
paragraphs: On February 17th, Chairman Lieberman and Senator Warner introduced  S. 2129, entitled “Reforming and Consolidating Government Act of 2012”,  a bill renewing the Presidential authority to propose government  organizational changes and obtain congressional approval through an  expedited process. From 1932 to 1984, Congress provided the President  with some form of reorganization authority. S. 2129 renews most of the  statutory framework as it existed before the authority lapsed in 1984.  However, S. 2129 proposes noteworthy changes, both in terms of  eliminating restrictions on the scope of a President’s plan and placing  additional requirements on such plans.
Unlike the 1984 version of the law, under S. 2129, the President would be  permitted to propose the creation of a new department (or renaming of an  existing department), the abolishment or transfer of an executive  department, or the consolidation of two or more departments. There are  currently fifteen departments, including the Department of State and the   Additionally, the President would be  Department of Homeland Security.permitted to propose the creation of a new agency, a restriction which  was included by the 1984 amendment of this authority.
The reorganization authority proposed under this bill would permit the  President, as in the 1984 version of the law, to prepare and submit to  Congress reorganization plans that call for the (1) transfer of an agency  or some of its functions to another agency, functions of an agency, (3) consolidation of an agency or its functions or  parts of an agency or some of its functions with another agency or part of  another agency, (4) consolidation of part of an agency or some of its  functions with another part of the same agency, or (5) authorization of an  officer to delegate his or her functions.   (2) abolishment of all or some  The bill also renews most of the restrictions which have been imposed  over time on the President’s authority to reorganize. Such restrictions  prohibit plans which (1) abolish or transfer an independent regulatory  agency or all its functions, (2) consolidate two or more independent  regulatory agencies or all their functions, (3) continue an agency or  function beyond the period authorized by law, (4) authorize an agency to  exercise a function not expressly authorized by law, (5) increase the term  of an office beyond the period authorized by law, (6) deal with more than  one logically consistent subject matter, or (7) abolish enforcement  functions or programs established by statute. A President’s submission of  plans is restricted to no more than three plans pending before Congress  at any time. Finally, the authority imposes a limit on the duration of the  authority, which in this case is two years from enactment.
As commonly understood, an “agency” can be a component of a department or a free- standing entity (for example, the National Aeronautics and Space Administration). example, combining two agencies into one, but does not require that the  consolidation result in cost savings.
Also consistent with prior law, under S. 2129 the President’s submission  of a reorganization plan to Congress must include an estimate of any  reduction or increase in expenditures realized as a result of the  reorganizations included in the plan as well as an implementation section  that describes in detail (1) actions necessary or planned to complete the  reorganization, (2) the anticipated nature and substance of any orders,  directives, and other administrative and operational actions which are  expected to be required, (3) preliminary actions which have been taken in  the implementation process, and (4) a projected timetable for completion  of the implementation process.
Finally, S. 2129 renews the expedited congressional approval process as  that process was modified in 1984. The 1984 amendments to the  reorganization authority eliminated the procedure that allowed a  President’s plan to go into effect unless either house acted by passing a  motion of disapproval within a fixed period of time. Under the 1984  amendments, a plan could become effective only if approved by both  houses of Congress through a joint resolution (approved by the  President) within 90 days after the plan is submitted to Congress. This  change addressed constitutional concerns with the one-house legislative  veto, and set a higher bar for success and in essence gave Congress a  stronger role than under past reorganization authorities.
Under this expedited process, recommendations from the Senate  Committee on Homeland Security and Governmental Affairs and the  House Committee on Oversight and Government Reform to the full  Senate and House must be made within 75 days and consideration of the  resolution in both houses must be within 90 days from submission of the  plan. Consideration is limited to an up or down vote, no amendment to a plan may be considered. The President is permitted to amend or modify  the plan at anytime within the first 60 days after submission. Any such  change to a plan during this period does not impact the deadlines for  congressional consideration. The authority to modify a plan allows the  President to address any problems identified or concerns expressed  during the pendency of a plan before Congress since a plan cannot be  changed by Congress through a joint resolution.
Presidents have used reorganization authorities to submit more than 100  plans to Congress, proposing a variety of changes from minor  reorganizations to major ones.include:   Examples of approved Presidential plans  creation of the Department of Health, Education, and Welfare,  proposed by President Eisenhower in 1953 to improve the  administration of health, education, and social security functions by  elevating these functions to the departmental level;  creation of the Office of Management and Budget, proposed by  President Nixon in 1970, in part, to place greater emphasis on the  evaluation of program performance, particularly in programs that  cross agency lines, and to expand efforts to improve interagency  cooperation;  creation of the Environmental Protection Agency, proposed by  President Nixon in 1970 to consolidate the federal government’s  environment-related activities in order to ensure the effective  protection, development, and enhancement of the environment; and  creation of the Federal Emergency Management Agency, proposed  by President Carter in 1978 to improve federal emergency  management and assistance by consolidating federal emergency  preparedness, mitigation, and response activities.
President Carter was the last President to use this general grant of  reorganization authority. During the Reagan Administration, the  reorganization authority was only in place briefly at the beginning of his   first term until it lapsed, and then was reauthorized for less than two  months in 1984 at the end of his first term. The authority has not been  granted since then. Although there was expressed interest during the  108th Congress in renewing this authority, from both the Administration  and members of Congress, no such reauthorization was forthcoming.
section_title: Balancing the Role of Congress and the Executive Branch in Developing Restructuring Proposals
paragraphs: A major issue for consideration for today’s hearing is the question of  whether and how to change Congress’ normal deliberative process for  reviewing and shaping executive branch reorganization proposals.  Expedited reorganization authority can enable the President to propose  reorganizations that are intended to increase the efficiency and  effectiveness with which the government can meet existing and emerging  challenges. However, all key players should be engaged in discussions  about reorganizing government: the President, Congress, and other  parties with vested interests, including state and local governments, the  private sector, and citizens. It is important to ensure a consensus on  identified problems and needs, and to be sure that the solutions our  government legislates and implements can effectively remedy the  problems we face in a timely manner. Fixing the wrong problems, or even  worse, fixing the right problems poorly, could cause more harm than  good.
It is imperative that Congress and the administration form an effective  working relationship on restructuring initiatives. Any systemic changes to  federal structures and functions must be approved by Congress and  implemented by the executive branch, so each has a stake in the  outcome. In this regard, an administration seeking expedited approval of  complex government reorganization proposals could enhance its  prospects for success by reaching out to Congress beforehand to ensure  that congressional concerns are identified, solutions are developed, and  general agreement is reached. The normal legislative process, which by  design takes time to encourage thorough debate, helps to ensure that any  related actions are carefully considered and have broad support.  Therefore, Congress may wish to consider whether 90 days is a sufficient  amount of time for Congress to review proposals and conduct its due  diligence.
Even more importantly, all segments of the public that must regularly deal  with their government—individuals, private sector organizations, states,  and local governments—must be confident that the changes that are put  in place have been thoroughly considered and that the decisions made  today will make sense tomorrow. Excluding any key player increases the  risk of sub-optimization or failure. Congressional deliberative processes  serve the vital function of both gaining input from a variety of clientele and  stakeholders affected by any changes and providing an important  constitutional check and counterbalance to the executive branch.
Only Congress can decide whether it wishes to limit its powers and role in  government reorganizations. In certain circumstances, Congress may  deem limitations appropriate; however, care should be taken regarding the  nature, timing, and scope of any related changes. Lessons can be learned  from prior approaches to granting reorganization authority to the President.  As discussed below, prior successful reorganization initiatives reinforce the  importance of maintaining a balance between executive and legislative  roles in undertaking significant organizational changes. Safeguards are  needed to ensure congressional input and concurrence on the goals as  well as overall reorganization proposals.
Throughout the 20th century, efforts to structure the federal government  to address the economic and political concerns of the time met with  varying degrees of success. The first Hoover Commission,from 1947 to 1949, is considered by many to have been the most  successful of government restructuring efforts. The membership was   which lasted  bipartisan, including members of the administration and both houses of  Congress. Half its members were from outside government. The  commission had a clear vision, making reorganization proposals that  promoted what they referred to as “greater rationality” in the organization  and operation of government agencies and enhanced the president’s role  as the manager of the government—principles that were understood and  accepted by both the White House and Congress. Former President  Hoover himself guided the creation of a citizens’ committee to build public  support for the commission’s work. More than 70 percent of the first  Hoover Commission’s recommendations were implemented, including 26  out of 35 reorganization plans. According to a 1982 history of the Hoover  Commissions “the ease with which most of the reorganization plans  became effective reflected two factors: the existence of a consensus that  the President ought to be given deference and assistance by Congress in  meeting his managerial responsibilities and the fact that most of the  reorganization plans were pretty straightforward proposals of an  organizational character.”
Called PACGO (the President’s Advisory Council on Government Organization), it was  chaired by Nelson Rockefeller from 1953-1958. PACGO drafted 14 reorganization plans  that were presented to the President and accepted by Congress. Ronald C. Moe,  Reorganizinq the Executive Branch in the Twentieth Century: Landmark Commissions  (Washington, D.C.: Congressional Research Service, Mar. 19, 1992), 34. and water resources) that would have substantively cut federal  programs.
The lesson of the two Hoover Commissions is clear: if plans to reorganize  government are to move from recommendation to reality, creating a  consensus for them is essential to the task. In this regard, both the  process employed and the players involved in making any specific  reorganization proposals are of critical importance. The success of the  first Hoover Commission can be tied to the involvement and commitment  of both Congress and the President. Both the legislative branch and  executive branches agreed to the goals. With this agreement, a process  was established that provided for wide spread involvement, including  citizens, and transparency so that meaningful results could be achieved.
That lesson shows up again in the experience of the Ash Council, which  convened in 1969-70. Like the first Hoover Commission, the Ash Council  aimed its recommendations at structural changes to enhance the  effectiveness of the President as manager of the government. The Ash  Council proposed organizing government around broad national purposes  by integrating similar functions under major departments. It proposed that  four super departments be created economic affairs, community  development, natural resources, and human services—with State,  Defense, Treasury, and Justice remaining in place. But the Ash Council  could not gain the support of Congress. Its recommendations would have  drastically altered jurisdictions within Congress and the relationships  between committees and the agencies for which they had oversight  responsibilities. Congress was not thoroughly clear on the implications of  the four super departments, was not readily willing to change its own  structure to parallel the structure proposed by the council, and was not  eager to substantially strengthen the authority of the presidency.
section_title: Complexity of Government Reorganizations Require Clear Goals and Careful Implementation Planning
paragraphs: No matter what plans are made to reorganize the government, fulfilling  the promise of these plans will depend on their effective implementation.  The creation of a new organization may vary in terms of size and  complexity. However, building an effective organization requires  consistent and sustained leadership from top management to ensure the  needed transformation of disparate agencies, programs, functions, and  activities into an integrated organization. To achieve success, the end  result should not simply be a collection of component units, but the  transformation to an integrated, high-performance organization. The  implementation of a new organization is an extremely complex task that  can take years to accomplish.
In 2002, we convened a forum to identify and discuss useful practices  and lessons learned from major private and public sector organizational  mergers, acquisitions, and transformations that federal agencies could  implement to successfully transform their cultures and a new Department  of Homeland Security could use to merge its various originating  components into a unified department. The invited participants were  experienced in managing or studying large-scale organizational mergers,  acquisitions, and transformations. The lessons learned and key practices  gleaned from the forum provide a useful roadmap for planning the  implementation of any large scale restructuring. We subsequently issued  a report on the specific steps organizations can take to implement those  key practices.
The research suggests that the failure to adequately address—and often  even consider—a wide variety of people and cultural issues is at the heart  of unsuccessful mergers, acquisitions, and transformations. But this does  not have to be the case. While there is no one right way to manage a  successful merger, acquisition, or transformation, the experiences of both  successful and unsuccessful efforts suggest that practices that are key to  their success include the following.
Ensure top leadership drives the transformation. Leadership must  set the direction, pace, and tone and provide a clear, consistent  rationale that brings everyone together behind a single mission.
Establish a clear mission and integrated strategic goals to guide  the transformation. Together, these define the culture and serve as a  vehicle for employees to unite and rally around.
Focus on a key set of principles and priorities at the outset of the  transformation. A clear set of principles and priorities serves as a  framework to help the organization create a new culture and drive  employee behaviors.
Set implementation goals and a timeline to build momentum and  show progress from day one. Goals and a timeline are essential  because the transformation could take years to complete.
Dedicate an implementation team to manage the transformation  process. A strong and stable team is important to ensure that the  transformation receives the needed attention to be sustained and  successful.
Use the performance management system to define responsibility  and assure accountability for change. A “line of sight” shows how  team, unit, and individual performance can contribute to overall  organizational results.
Establish a communication strategy to create shared expectations  and report related progress. The strategy must reach out to  employees, customers, and stakeholders and engage them in a two- way exchange.
Involve employees to obtain their ideas and gain their ownership  for the transformation. Employee involvement strengthens the  process and allows them to share their experiences and shape policies.
Build a world-class organization. Building on a vision of improved  performance, the organization adopts the most efficient, effective, and  economical personnel, system, and process changes and continually  seeks to implement best practices.
The Department of Homeland Security’s (DHS) ongoing efforts to build a  single, unified department illustrate the complexity and challenges of  reorganizing government agencies. DHS now has more than 200,000  employees and almost $60 billion in budget authority, and completing its  transformation into a cohesive department is critical to achieving its  homeland security missions. DHS has updated and strengthened its  plans to resolve the department’s management challenges, and has  demonstrated strong leadership commitment to make improvements in  these areas. However, much work remains for DHS to implement these  plans and show sustained progress. We designated the implementation  and transformation of DHS as high risk because, among other things,  DHS had to combine 22 agencies, while ensuring no serious  consequences for U.S. national and economic security. This high-risk  area includes challenges in DHS’s management functions—financial  management, human capital, IT, and acquisitions; the effect of those  challenges on implementing DHS’s missions; and integrating the  functions. Since the department’s creation in 2003, we have issued over  1,200 products on DHS’s operations in such areas as transportation  security and emergency management, among others. These  management challenges have had a direct impact on DHS’s ability to  satisfy its missions, such as delivering major acquisitions aimed at  delivering important mission capabilities on time and within budget. We  have made over 1,600 recommendations to DHS since its creation  designed to strengthen the department’s management and operations.  DHS has implemented many of these recommendations and is in the  process of implementing others. Furthermore, our 2011 and 2012 reports  on overlapping and duplicative programs discussed later in this  statement, identified additional areas where action could be taken to  reduce overlap and potential unnecessary duplication.
In addition to integrating and strengthening the management of the  components combined to form DHS, our work across the department has  identified a number of additional observations that could be useful in  informing deliberations on other government reorganizations. These  include ensuring adequate and long-term transition support, identifying  and addressing legacy issues that existed prior to the reorganization, and  building and emphasizing partnerships and coordination mechanisms  both internal and external to the new organization, among others.
section_title: Reorganization Authority Calls For a Description of Intended Performance Improvements, Estimated Savings, and an Implementation Plan
paragraphs: Given the complex challenges associated with government restructurings,  it is important to note that S. 2129 would renew the requirement that the  President submit as part of a reorganization plan a description of what it  intends to achieve and a plan for implementation. Specifically, the  President must estimate any reduction or increase in expenditures  (itemized so far as practicable), and describe any improvements in  management, delivery of federal services, execution of the laws, and  increases in efficiency of government operations, which it is expected will  be realized as a result of the reorganizations included in the plan. The  implementation section must describe in detail the actions necessary or  planned to complete the reorganization, the anticipated nature and  substance of any orders, directives, and other administrative and  operational actions which are expected to be required for completing or  implementing the reorganization, and any preliminary actions which have  been taken in the implementation process. It must also contain a  projected timetable for completion of the implementation process. These  requirements are broadly consistent with some of the aforementioned  practices key to successful organizational transformations. The required  implementation plan will be most useful to the extent that it covers all of  the key practices in at least a preliminary form.
This provision, if implemented properly, could provide useful benchmarks  for Congress to use in deciding whether the plan is feasible, whether the  Administration has carefully considered the complex implementation  issues, and if it will produce sufficient benefits to merit the changes being  proposed.
section_title: Oversight of Implementation
paragraphs: Congressional involvement is needed not just in the initial design of the  organization, but in what can turn out to be a lengthy period of  implementation. Congress has an important role to play—both in its  legislative and oversight capacities—in establishing, monitoring, and  maintaining progress to attain the goals envisioned by government  transformation and reorganization efforts. Sustained oversight by Congress  is needed to ensure the reorganization is accomplishing its goals and to  determine whether it needs further refinement. Assessing progress is  important to ensuring implementation is moving in the right direction.
To ensure effective implementation, along with efficient and effective  oversight, Congress may need to consider realigning its own structure.  For example, the legislation which established DHS instructed both  houses of Congress to review their committee structures in light of the  reorganization of homeland security responsibilities within the executive  branch. This led to an expansion of the responsibilities of this committee  in the Senate, and the formation of the Committee on Homeland Security  in the House. However, these committees share oversight of DHS with  many other congressional committees and subcommittees.
section_title: GPRA Modernization Act Provides Another Tool to Reexamine Government Programs and Improve Coordination
paragraphs: Many federal efforts, including those related to protecting food and  agriculture, providing homeland security, and ensuring a well trained and  educated workforce, transcend more than one agency, yet agencies face  a range of challenges and barriers when they attempt to work  collaboratively. Both Congress and the executive branch have recognized  this, and in January 2011, the GPRA Modernization Act of 2010 (the Act)  was enacted, updating the almost two-decades-old Government  Performance and Results Act. The Act establishes a new framework  aimed at taking a more crosscutting and integrated approach to focusing  on results and improving government performance. Effective  implementation of the Act could play an important role in clarifying desired  outcomes, addressing program performance spanning multiple  organizations, and facilitating future actions to reduce unnecessary  duplication, overlap, and fragmentation.
The Act requires OMB to coordinate with agencies to establish outcome- oriented goals covering a limited number of crosscutting policy areas as  well as goals to improve management across the federal government,  and to develop a government-wide performance plan for making progress  toward achieving those goals. The performance plan is to, among other  things, identify the agencies and federal activities—including spending  programs, tax expenditures, and regulations—that contribute to each  goal, and establish performance indicators to measure overall progress  toward these goals as well as the individual contribution of the underlying  agencies and federal activities. The President’s budget for fiscal year  2013 includes 14 such crosscutting goals, including Science, Technology,  Engineering, and Math Education, Entrepreneurship and Small  Businesses, Job Training, Cybersecurity, Information Technology  Management, Procurement and Acquisition Management, and Real  Property Management. The Act also requires similar information at the  agency level. Each agency is to identify the various federal organizations  and activities—both within and external to the agency—that contribute to  its goals, and describe how the agency is working with other agencies to  achieve its goals as well as any relevant crosscutting goals.
section_title: Reducing Duplication, Overlap, and Fragmentation Can Improve Government Efficiency and Effectiveness
paragraphs: In our series of reports on the topic to date, we have identified a number  of areas of potential duplication, overlap, or fragmentation, as well as  opportunities for agencies or Congress to consider taking action that  could either reduce the cost of government operations or enhance  revenue collections for the Treasury. For example, our 2012 annual report  presents 51 areas where programs may be able to achieve greater  efficiencies or become more effective in providing government services.  We have also continued to monitor developments in the 81 areas that we  identified a year ago in the first report we issued in this series. Our 2011  follow-up report describes the extent to which progress has been made to  address these areas. Appendix I presents a summary of our  assessment of the overall progress made in each of the 81 areas.  Collectively, our 2011 and 2012 annual reports show that, if the actions  are implemented, the government could potentially save tens of billions of  dollars annually.
subsections: section_title: 2012 Annual Report Identified 51 Opportunity Areas
paragraphs: In our 2012 annual report, we identified a total of 51 areas, including 32  areas of potential duplication, overlap, or fragmentation, as well as 19  opportunities for agencies or Congress to consider taking action that  could either reduce the cost of government operations or enhance  revenue collections for the Treasury. These areas involve a wide range of  government missions including agriculture, defense, economic  development, education, energy, general government, health, homeland  security, international affairs, science and the environment, and social  services. Within and across these missions, the 2012 annual report  touches on virtually all major federal departments and agencies. We  expanded the scope of our work for this year’s report to focus on areas  where a mix of federal approaches is used, such as tax expenditures,  direct spending, and federal grant or loan programs.
We summarized 32 areas where government missions are fragmented  across multiple agencies or programs; agencies, offices, or initiatives may  have similar or overlapping objectives or may provide similar services to  similar populations or target similar users; and when two or more  agencies or programs are engaged in the same activities or provide the  same services to the same beneficiaries (see table 1). We found  instances where multiple government programs or activities have led to  inefficiencies, and we determined that greater efficiencies or effectiveness  might be achievable.
Overlap and fragmentation among government programs or activities can  be harbingers of unnecessary duplication. In many cases, the existence  of unnecessary duplication, overlap, or fragmentation can be difficult to  determine with precision due to a lack of data on programs and activities.  Where information has not been available that would provide conclusive  evidence of duplication, overlap, or fragmentation, we often refer to  “potential duplication” and, where appropriate, we suggest actions that  agencies or Congress could take to either reduce that potential or to  make programmatic data more reliable or transparent. In some instances  of duplication, overlap, or fragmentation, it may be appropriate for multiple  agencies or entities to be involved in the same programmatic or policy  area due to the nature or magnitude of the federal effort. For issues  where information is being reported on for the first time in the 2012  annual report, we sought comments from the agencies involved, and  incorporated those comments as appropriate.
Among the 32 areas highlighted in our 2012 annual report are the  following examples of opportunities for agencies or Congress to consider  taking action to reduce unnecessary duplication, overlap, or  fragmentation.
Unmanned Aircraft Systems: The Department of Defense (DOD)  estimates that the cost of current Unmanned Aircraft Systems (UAS)  acquisition programs and related systems will exceed $37.5 billion in  fiscal years 2012 through 2016. The elements of DOD’s planned UAS  portfolio include unmanned aircraft, payloads (subsystems and equipment  on a UAS configured to accomplish specific missions), and ground control  stations (equipment used to handle multiple mission aspects such as  system command and control). We have found that ineffective acquisition  practices and collaboration efforts in DOD’s UAS portfolio creates overlap  and the potential for duplication among a number of current programs and  systems. We have also highlighted the need for DOD to consider  commonality in UAS—using the same or interchangeable subsystems  and components in more than one subsystem to improve interoperability  of systems—to reduce the likelihood of redundancies in UAS capabilities.
Military service-driven requirements—rather than an effective  departmentwide strategy—have led to overlap in DOD’s UAS capabilities,  resulting in many programs and systems being pursued that have similar  flight characteristics and mission requirements. Illustrative of the overlap,  the Department of the Navy (Navy) plans to spend more than $3 billion to  develop the Broad Area Maritime Surveillance UAS, rather than the  already fielded Air Force Global Hawk system on which it was based.  According to the Navy, its unique requirements necessitate modifications  to the Global Hawk airframe, payload interfaces, and ground control  station. However, the Navy program office was not able to provide  quantitative analysis to justify the variant. According to program officials,  no analysis was conducted to determine the cost effectiveness of  developing the Broad Area Maritime Surveillance UAS to meet the Navy’s  requirements versus buying more Global Hawks.
The potential for overlap also exists among UAS subsystems and  components, such as sensor payloads and ground control stations. DOD  expects to spend about $9 billion to buy 42 UAS sensor payloads through  fiscal year 2016. While the fact that some multiservice payloads are being  developed shows the potential for collaboration, the service-centric  requirements process still creates the potential for overlap, including 29  sensors in our review. Further, we identified overlap and potential  duplication among 10 of 13 ground control stations that DOD plans to  acquire at a cost of about $3 billion through fiscal year 2016. According to  a cognizant DOD official, the associated software is about 90 percent  duplicative because similar software is developed for each ground control  station. DOD has created a UAS control segment working group, which is  chartered to increase interoperability and enable software re-use and  open systems. This could allow for greater efficiency, less redundancy,  and lower costs, while potentially reducing levels of contractor proprietary  data that cannot be shared across UAS programs. However, existing  ground control stations already have their own architecture and migration  to a new service-oriented architecture will not happen until at least 2015,  almost 6 years after it began.
DOD plans to significantly expand the UAS portfolio through 2040,  including five new systems in the planning stages that are expected to  become formal programs in the near future. While DOD has  acknowledged that many UAS systems were acquired inefficiently and  has begun to take steps to improve outcomes as it expands these  capabilities over the next several years, the department faces challenges  in its ability to improve efficiency and reduce the potential for overlap and  duplication as it buys UAS capabilities. For example, the Army and Navy  are planning to spend approximately $1.6 billion to acquire separate  systems that are likely to have similar capabilities to meet upcoming  cargo and surveillance requirements. DOD officials state that current  requirements do not preclude a joint program to meet these needs, but  the Army and Navy have not yet determined whether such an approach  will be used.
To reduce the likelihood of overlap and potential duplication in its UAS  portfolio, we have made several prior recommendations to DOD which  have not been fully implemented. While DOD generally agreed with our  recommendations, the overlap in current UAS programs, as well as the  continued potential in future programs, shows that DOD must still do  more to implement them. In particular, we have recommended that DOD  (1) re-evaluate whether a single entity would be better positioned to  integrate all crosscutting efforts to improve the management and  operation of UAS; (2) consider an objective, independent examination of  current UAS portfolio requirements and the methods for acquiring future  unmanned aircraft; and (3) direct the military services to identify specific  areas where commonality can be achieved. We believe the potential for  savings is significant and with DOD’s renewed commitment to UAS for  meeting new strategic requirements, all the more imperative.
Housing assistance: In fiscal year 2010, the federal government incurred  about $170 billion in obligations for housing-related programs and  estimated revenue forgone for tax expenditures of which tax expenditures  represent $132 billion (about 78 percent). Support for homeownership in  the current economic climate has expanded dramatically with nearly all  mortgage originations having direct or indirect federal assistance. The  Department of the Treasury (Treasury) and the Board of Governors of the  Federal Reserve System together invested more than $1.67 trillion in  Fannie Mae and Freddie Mac, the government-sponsored enterprises,  which issue and guarantee mortgage-backed securities. Examining the  benefits and costs of housing programs and tax expenditures that  address the same or similar populations or areas, and potentially  consolidating them, could help mitigate overlap and fragmentation and  decrease costs.
We identified 20 different entities that administer 160 programs, tax  expenditures, and other tools that supported homeownership and rental  housing in fiscal year 2010. In addition, we identified 39 programs, tax  expenditures, and other tools that provide assistance for buying, selling,  or financing a home and eight programs and tax expenditures that  provide assistance to rental property owners. We found overlap in  products offered and markets served by the Department of Agriculture’s  (USDA) Rural Housing Service (RHS) and the Department of Housing  and Urban Development’s (HUD) Federal Housing Administration (FHA),  among others. In September 2000 and again as part of our ongoing work,  we questioned the need for maintaining separate programs for rural  areas. In September 2000, we recommended that Congress consider  requiring USDA and HUD to examine the benefits and costs of merging  programs, such as USDA’s and HUD’s single-family guaranteed loan and  multifamily portfolio management programs.
While USDA and HUD have raised concerns about merging programs,  our recent work has shown increased evidence of overlap and that some  RHS and FHA programs can be consolidated. For example, the two  agencies overlap in products offered (mortgage credit and rental  assistance), functions performed (portfolio management and  preservation), and geographic areas served. Specifically, RHS and HUD  guarantee single-family and multifamily loans, as well as offer rental  subsidies using similar income eligibility criteria. And, both agencies have  been working to maintain and preserve existing multifamily portfolios.  Although RHS may offer its products only in rural areas, it is not always  the insurer of choice in those areas. For example, in fiscal year 2009 FHA  insured over eight times as many single-family loans in economically  distressed rural counties as RHS guaranteed. And, many RHS loan  guarantees financed properties near urban areas—56 percent of single- family guarantees made in fiscal year 2009 were in metropolitan counties.
Regarding consolidation, we found that RHS relies on more in-house staff  to oversee its single-family and multifamily loan portfolio of about $93  billion than HUD relies on to manage its single-family and multifamily loan  portfolio of more than $1 trillion, largely because of differences in how the  programs are administered. RHS has a decentralized structure of about  500 field offices that was set up to interact directly with borrowers. RHS  relies on over 1,600 full-time equivalent staff to process and service its  direct single-family loans and grants. While RHS limits its direct loans to  low income households and its guaranteed loans to moderate income  households, FHA has no income limits and does not offer a comparable  direct loan program. HUD operates about 80 field offices and primarily  interacts through lenders, nonprofits, and other intermediaries. RHS and  FHA programs both utilize FHA-approved lenders and underwriting  processes based on FHA’s scorecard—an automated tool that evaluates  new mortgage loans. RHS has about 530 full-time equivalent staff to  process its single-family guaranteed loans. FHA relies on lenders to  process its loans. Although FHA insures far more mortgages than RHS  guarantees, FHA has just over 1,000 full-time equivalent staff to oversee  lenders and appraisers and contractors that manage foreclosed  properties. While the number of RHS field offices decreased by about 40  percent since 2000, its decentralized field structure continues to reflect  the era in which it was established—the 1930s, when geography and  technology greatly limited communication and transportation. These  limitations have diminished and HUD programs can be used in all areas  of the country.
We first recommended in September 2000 —and have followed up since  then—that Congress consider requiring USDA and HUD to examine the  benefits and costs of merging those programs that serve similar markets  and provide similar products, and require these same agencies to explore  merging their single family insured lending and multifamily portfolio  management programs. At that time, USDA stated that some of the  suggestions made in our report to improve the effectiveness of current  programs may better serve rural areas. However, USDA also stated that  the gap in housing affordability between rural and urban areas, as well as  the importance of rural housing programs to the Department’s broader  Rural Development mission area, would make merging RHS’s programs  with HUD’s programs unfeasible and detrimental to rural America. HUD  also stated that it believes any opportunity to improve the delivery of rural  housing services should be explored, but stated that the differences  between RHS’s and FHA’s single-family programs are sizable and that  without legislative changes to product terms, efforts to merge the  programs would likely result in a more cumbersome rather than a more  efficient delivery system. HUD added that it had been working with USDA  in a mutual exchange of information on best practices and would explore  possible avenues of coordination.
The agencies have been working to align certain requirements of the  various multifamily housing programs. In addition, in February 2011, the  Administration reported to Congress that it would establish a task force to  evaluate the potential for coordinating or consolidating the housing loan  programs of HUD, USDA, and the Department of Veterans Affairs (VA).  According to HUD, a benchmarking effort associated with the task force  was recently begun. Our ongoing work considers options for consolidating  these programs and we expect to make additional related  recommendations.
Furthermore, Treasury and the Internal Revenue Service (IRS) provide  numerous types of housing assistance through tax expenditures.  Although often necessary to meet federal priorities, some tax  expenditures can contribute to mission fragmentation and program  overlap that, in turn, can create service gaps, additional costs, and the  potential for duplication. For example, to qualify for a historic preservation  tax credit, rehabilitation must preserve historic character, which may  conflict with states’ efforts to produce energy-efficient, low-income  properties with tax credits, and could increase project costs.
We recommended in September 2005 and reiterated in March 2011 that  coordinated reviews of tax expenditures with related spending programs  could help policymakers reduce overlap and inconsistencies and direct  scarce resources to the most-effective or least-costly methods to deliver  federal support. Specifically, we recommended that the Director of  OMB, in consultation with the Secretary of the Treasury, develop and  implement a framework for conducting performance reviews of tax  expenditures. OMB, citing methodological and conceptual issues,  disagreed with our 2005 recommendations. To date, OMB had not used  its budget and performance review processes to systematically review tax  expenditures and promote integrated reviews of related tax and spending  programs. However, in its fiscal year 2012 budget guidance, OMB  instructed agencies, where appropriate, to analyze how to better integrate  tax and spending policies with similar objectives and goals. The GPRA  Modernization Act of 2010 also envisions such an approach for selected  cross-cutting areas. Such an analysis could help identify redundancies.
Military and veterans health care: We found that DOD and VA need to  improve integration across care coordination and case management  programs to reduce duplication and better assist servicemembers,  veterans, and their families. DOD and VA have care coordination and  case management programs that are intended to provide continuity of  care for wounded, ill, and injured servicemembers and veterans. DOD  and VA established the Wounded, Ill, and Injured Senior Oversight  Committee (Senior Oversight Committee) to address identified problems  in providing care to wounded, ill, and injured servicemembers as well as  veterans. Under the purview of this committee, the departments  developed the Federal Recovery Coordination Program (FRCP), a joint  program administered by VA that was designed to coordinate clinical and  nonclinical services for “severely” wounded, ill, and injured  servicemembers—who are most likely to be medically separated from the  military—across DOD, VA, other federal agencies, states, and the private  sector. Separately, the Recovery Coordination Program (RCP) was  established in response to the National Defense Authorization Act for  Fiscal Year 2008 to improve the care, management, and transition of  recovering servicemembers. It is a DOD-specific program that was  designed to provide nonclinical care coordination to “seriously” wounded,  ill, and injured servicemembers, who may return to active duty unlike  those categorized as “severely” wounded, ill, or injured. The RCP is  implemented separately by each of the military services, most of which  have implemented the RCP within their existing wounded warrior  programs.
As a result of these multiple efforts, many recovering servicemembers  and veterans are enrolled in more than one care coordination or case  management program, and they may have multiple care coordinators and  case managers, potentially duplicating agencies’ efforts and reducing the  effectiveness and efficiency of the assistance they provide. For example,  recovering servicemembers and veterans who have a care coordinator  also may be enrolled in one or more of the multiple DOD or VA programs  that provide case management services to “seriously” and “severely”  wounded, ill, and injured servicemembers, veterans, and their families.  These programs include the military services’ wounded warrior programs  and VA’s Operation Enduring Freedom/Operation Iraqi Freedom Care  Management Program, among others.
We found that inadequate information exchange and poor coordination  between these programs have resulted in not only duplication of effort,  but confusion and frustration for enrollees, particularly when case  managers and care coordinators duplicate or contradict one another’s  efforts. For example, an FRCP coordinator told us that in one instance  there were five case managers working on the same life insurance issue  for an individual. In another example, an FRCP coordinator and an RCP  coordinator were not aware the other was involved in coordinating care  for the same servicemember and had unknowingly established conflicting  recovery goals for this individual. In this case, a servicemember with  multiple amputations was advised by his FRCP coordinator to separate  from the military in order to receive needed services from VA, whereas  his RCP coordinator set a goal of remaining on active duty. These  conflicting goals caused considerable confusion for this servicemember  and his family.
DOD and VA have been unsuccessful in jointly developing options for  improved collaboration and potential integration of the FRCP and RCP care  coordination programs, although they have made a number of attempts to  do so. Despite the identification of various options, no final decisions to  revamp, merge, or eliminate programs have been agreed upon.
The need for better collaboration and integration extends beyond the  FRCP and RCP to also encompass other DOD and VA case  management programs, such as DOD’s wounded warrior programs that  also serve seriously and severely wounded, ill, and injured  servicemembers and veterans. In October 2011, we recommended that  the Secretaries of Defense and Veterans Affairs direct the co-chairs of the  Senior Oversight Committee to expeditiously develop and implement a  plan to strengthen functional integration across all DOD and VA care  coordination and case management programs that serve recovering  servicemembers, veterans, and their families, including—but not limited  to—the FRCP and RCP. DOD and VA provided technical comments on  the report, but neither specifically commented on our recommendation.  We plan to track the extent to which progress has been made to address  our recommendation.
Information technology investment management: OMB reported that in  fiscal year 2011, there were approximately 7,200 information technology  (IT) investments totaling at least $79 billion. OMB provides guidance to  agencies on how to report on their IT investments and requires agencies  to identify each investment by a single functional category and sub- category. These categorizations are intended to enable OMB and others  to analyze investments with similar functions, as well as identify and  analyze potentially duplicative investments across agencies. We found  that DOD and the Department of Energy (DOE) need to address  potentially duplicative IT investments to avoid investing in unnecessary  systems.
In February 2012, we completed a review that examined the 3 largest  categories of IT investments within DOD, DOE, and the Department of  Homeland Security (DHS) and found that although the departments use  various investment review processes to identify duplicative investments,  37 of our sample of 810 investments were potentially duplicative at DOD  and DOE.spending for fiscal years 2007 through 2012 for these two agencies. We  found that DOD and DOE had recently initiated specific plans to address  potential duplication in many of the investments we identified—such as  plans to consolidate or eliminate systems—but these initiatives had not  yet led to the consolidation or elimination of duplicative investments or  functionality.
These investments account for about $1.2 billion in IT  In addition, while we did not identify any potentially duplicative  investments at DHS within our sample, DHS officials have independently  identified several duplicative investments and systems. DHS has plans to  further consolidate systems within these investments by 2014, which it  expects to produce approximately $41 million in cost savings. DHS  officials have also identified 38 additional systems that they have  determined to be duplicative.
Further complicating agencies’ ability to identify and eliminate duplicative  investments is that investments are, in certain cases, misclassified by  function. For example, one of DHS’s Federal Emergency Management  Agency (FEMA) investments was initially categorized within the Employee  Performance Management sub-function, but DHS agreed that this  investment should be assigned to the Human Resources Development  sub-function. Proper categorization is necessary in order to analyze and  identify duplicative IT investments, both within and across agencies.
In February 2012, we recommended that the Secretaries of DOD and DOE  direct their Chief Information Officers to utilize existing transparency  mechanisms to report on the results of their efforts to identify and eliminate,  where appropriate, each potentially duplicative investment that we  identified, as well as any other duplicative investments. The agencies  agreed with our recommendation. We also recommended that DOD, DOE,  and DHS correct the miscategorizations of the investments we identified  and ensure that investments are correctly categorized in agency  submissions, which would enhance the agencies’ ability to identify  opportunities to consolidate or eliminate duplicative investments. DOD and  DHS agreed with our recommendation, but DOE disagreed that two of the  four investments we identified were miscategorized, explaining that its  categorizations reflect funding considerations. However, OMB guidance  indicates that investments should be classified according to their intended  purpose. Consequently, we believe the recommendation is warranted.
Department of Homeland Security grants: From fiscal years 2002 through  2011, FEMA, under DHS, allocated about $20.3 billion to grant recipients  through four specific programs (the State Homeland Security Program,  Urban Areas Security Initiative, Port Security Grant Program, and Transit  Security Grant Program) to enhance the capacity of states, localities, and  other entities, such as ports or transit agencies, to prevent, respond to,  and recover from a terrorism incident. We found that DHS needs better  project information and coordination to identify and mitigate potential  unnecessary duplication among four overlapping grant programs.
In February 2012, we identified multiple factors that contributed to the risk  of FEMA potentially funding unnecessarily duplicative projects across  these four grant programs. These factors include overlap among grant  recipients, goals, and geographic locations, combined with differing levels  of information that FEMA had available regarding grant projects and  recipients. We also reported that FEMA lacked a process to coordinate  application reviews across the four grant programs and grant applications  were reviewed separately by program and were not compared across  each other to determine where possible unnecessary duplication may  occur. Specifically, FEMA’s Homeland Security Grant Program branch  administered the Urban Areas Security Initiative and State Homeland  Security Program while the Transportation Infrastructure Security branch  administered the Port Security Grant Program and Transit Security Grant  Program. We and the DHS Inspector General have concluded that  coordinating the review of grant projects internally would give FEMA more  complete information about applications across the four grant programs,  which could help FEMA identify and mitigate the risk of unnecessary  duplication across grant applications.
We also identified actions FEMA could take to identify and mitigate any  unnecessary duplication in these programs, such as collecting more  complete project information as well as exploring opportunities to  enhance FEMA’s internal coordination and administration of the  programs. We suggested that Congress may wish to consider requiring  DHS to report on the results of its efforts to identify and prevent  duplication within and across the four grant programs, and consider these  results when making future funding decisions for these programs.
Science, Technology, Engineering, and Math education programs:  Federal agencies obligated $3.1 billion in fiscal year 2010 on Science,  Technology, Engineering, and Mathematics (STEM) education programs.  These programs can serve an important role both by helping to prepare  students and teachers for careers in STEM fields and by enhancing the  nation’s global competitiveness. In addition to the federal effort, state and  local governments, universities and colleges, and the private sector have  also developed programs that provide opportunities for students to pursue  STEM education and occupations. Recently, both Congress and the  administration have called for a more strategic and effective approach to  the federal government’s investment in STEM education. For example,  Congress directed the Office of Science and Technology Policy, within  the Executive Office of the President, to establish a committee under its  component National Science and Technology Council to, among other  things, develop a 5-year governmentwide STEM education strategic plan  and identify areas of duplication among federal programs. We found  that strategic planning is needed to better manage overlapping programs  across multiple agencies.
GAO, Science, Technology, Engineering, and Mathematics Education: Strategic  Planning Needed to Better Manage Overlapping Programs across Multiple Agencies,  GAO-12-108 (Washington, D.C.: Jan. 20, 2012). offered through multiple programs. For example, 177 of the 209 programs  (85 percent) were primarily intended to serve two or more target groups.  Overlap can frustrate federal officials’ efforts to administer programs in a  comprehensive manner, limit the ability of decision makers to determine  which programs are most cost-effective, and ultimately increase program  administrative costs.
Even when programs overlap, the services they provide and the  populations they serve may differ in meaningful ways and would therefore  not necessarily be duplicative. There may be important differences  between the specific STEM field of focus and the program’s stated goals.  For example, we identified 31 programs that provided scholarships or  fellowships to doctoral students in the field of physics. However, one  program’s goal was to increase environmental literacy related to estuaries  and coastal watersheds while another program focused on supporting  education in nuclear science, engineering, and related trades. In addition,  programs may be primarily intended to serve different specific populations  within a given target group. Of the 34 programs providing services to K-12  students in the field of technology, 10 are primarily intended to serve  specific underrepresented, minority, or disadvantaged groups and 2 are  limited geographically to individual cities or universities.
However, little is known about the effectiveness of federal STEM  education programs. Since 2005, when we first reported on this issue, we  have found that the majority of programs have not conducted  comprehensive evaluations of how well their programs are working.  Agency and program officials would benefit from guidance and  information sharing within and across agencies about what is working and  how to best evaluate programs. This would not only help to improve  individual program performance, but could also inform agency- and  governmentwide decisions about which programs should continue to be  funded. Furthermore, although the National Science and Technology  Council is in the process of developing a governmentwide strategic plan  for STEM education, we found that agencies have not used outcome  measures for STEM programs in a way that is clearly reflected in their  own performance plans and performance reports—key strategic planning  documents. The absence of clear links between the programs and  agencies’ planning documents may hinder decision makers’ ability to  assess how agencies’ STEM efforts contribute to agencywide  performance goals and the overall federal STEM effort.
We reported in January 2012 that numerous opportunities exist to  improve the planning for STEM programs. For example, we  recommended that the National Science and Technology Council develop  guidance for how agencies can better incorporate governmentwide STEM  education strategic plan goals and their STEM education efforts into their  respective performance plans and reports, as well as determining the  types of evaluations that may be feasible and appropriate for different  types of STEM education programs. We also recommended that the  National Science and Technology Council work with agencies, through  the strategic planning process, to identify STEM education programs that  might be candidates for consolidation or elimination. OMB stated that our  recommendations are critical to improving the provision of STEM  education across the federal government. In separate comments, the  Office of Science and Technology Policy said its own analysis of STEM  education programs identified no duplicative programs and where it  identified overlapping programs it found that some program  characteristics differed. As an illustration, the Office of Science and  Technology Policy explained that there could be two STEM education  programs, one that worked with inner city children in New York City and  another with rural children in North Dakota. We agree that it may be  important to serve both of these populations, but it is not clear that two  separate administrative structures are necessary to ensure both  populations are served. The Office of Science and Technology Policy said  it would address our recommendations in the 5-year Federal STEM  Education Strategic Plan, which will be released in spring 2012.  Furthermore, the President’s Fiscal Year 2013 budget established STEM  education programs as one of fourteen cross-agency priority goals. These  goals are intended to enhance progress in areas needing more cross- government collaboration.
Coordination of space system organizations: U.S. government space  systems—such as the Global Positioning System (GPS) and space- based weather systems—provide a wide range of capabilities to a large  number of users, including the federal government, U.S. businesses and  citizens, and other countries. Space systems are usually very expensive,  often costing billions of dollars to acquire. More than $25 billion a year is  appropriated to agencies for developing space systems. These systems  typically take a long time to develop, and often consist of multiple  components, including satellites, ground control stations, terminals, and  user equipment. Moreover, the nation’s satellites are put into orbit by  rockets that can cost more than $100 million per launch. We have found  that costs of space programs tend to increase significantly from initial cost  estimates. A variety of agencies, such as the Federal Aviation  Administration, the National Oceanic and Atmospheric Administration,  and DHS rely on government space systems to execute their missions,  but responsibilities for acquiring space systems are diffused across  various DOD organizations as well as the intelligence community and the  National Aeronautics and Space Administration. Fragmented leadership  has led to program challenges and potential duplication in developing  multi-billion dollar space systems. In some cases, problems with these  systems have been so severe that acquisitions were either canceled or  the needed capabilities were severely delayed.
Fragmented leadership and lack of a single authority in overseeing the  acquisition of space programs have created challenges for optimally  acquiring, developing, and deploying new space systems. This  fragmentation is problematic not only because of a lack of coordination  that has led to delays in fielding systems, but also because no one person  or organization is held accountable for balancing governmentwide needs  against wants, resolving conflicts and ensuring coordination among the  many organizations involved with space acquisitions, and ensuring that  resources are directed where they are most needed. For example, we  reported in April 2009 that the coordination of GPS satellites and user  equipment segments is not adequately synchronized due to funding shifts  and diffuse leadership in the program, likely leading to numerous years of  missed opportunities to utilize new capabilities.steps to better coordinate the GPS segments by creating the Space and  Intelligence Office within the Office of the Under Secretary of Defense for  Acquisition, Technology, and Logistics and conducting enterprise level  reviews of the GPS program. However, DOD has not yet established a  single authority responsible for ensuring that all GPS segments, including  user equipment, are synchronized to the maximum extent practicable.
DOD has also undertaken a number of initiatives to improve leadership  over defense space acquisitions, but these actions have not been in place  long enough to determine whether acquisition outcomes will improve.  Moreover, the initiatives do not extend to the space activities across the  government. We and others, including the Commission to Assess United  States National Security Space Management and Organization, have  previously recommended a number of changes to the leadership of the  space community and have consistently reported that a lack of strong,  centralized leadership has led to inefficiencies and other problems. But  the question as to what office or leadership structure above the  department level would be effective and appropriate for coordinating all  U.S. government space programs and setting priorities has not been  addressed.
We have suggested that OMB work with the National Security Council to  assess whether a governmentwide oversight body for space acquisitions  is needed. OMB agreed that coordinating space activities across the U.S.  government has been and continues to be a major challenge, but is  concerned that our recommendation would add an extra layer of space  bureaucracy on top of ongoing coordination efforts as well as additional  costs and possible confusion regarding roles and authorities among the  existing mechanisms. We believe that the recommendation is sufficiently  flexible to allow for an implementation approach that would address these  concerns.
Defense Language and Culture Training: DOD has emphasized the  importance of developing language skills and knowledge of foreign  cultures within its forces to meet the needs of current and future military  operations and it has invested millions of dollars to provide language and  culture training to thousands of servicemembers, including those  deploying to ongoing operations. For example, we estimated that DOD  invested about $266 million for fiscal years 2005 through 2011 to provide  general purpose forces with training support, such as classroom  instruction, computer-based training, and training aids. We found that  DOD has not developed an integrated approach to reduce fragmentation  in the military services’ language and culture training approaches and  overlap in the content of training products acquired by the military  services and other organizations.
In May 2011, we reported that language and culture training within DOD  is not provided through a single department- or servicewide program, but  rather multiple DOD organizations oversee the development and  acquisition of language and culture training and related products and  deliver training.Secretary of Defense for Personnel and Readiness establish internal  mechanisms to assist the department in reaching consensus with the  military services and other DOD entities on training priorities, synchronize   We recommended that the Office of the Under  the development of service- and departmentwide plans with the budget  process, and guide efforts to monitor progress. DOD agreed with our  recommendation.
We also found that the military services have not fully coordinated efforts to  develop and acquire language and culture training products. As a result,  the services have acquired overlapping and potentially duplicative  products, such as reference materials containing country- or region-specific  cultural information and computer software or web-based training programs  that can be used within a distributed learning training environment. To  illustrate, we analyzed 18 DOD language and culture training products and  found that the content overlapped to some extent with at least one other  training product. For Afghan languages, DOD invested in at least five  products that were intended to build basic foreign language skills or specific  language skills needed to perform military tasks.
We suggested that the Office of the Under Secretary of Defense for  Personnel and Readiness and the military services designate  organizational responsibility and a supporting process to inventory and  evaluate existing language and culture products and plans for additional  investments, eliminate any unnecessary overlap and duplication, and  adjust resources accordingly, as well as take steps to develop and  contract for new products that can be used by more than one military  service. DOD agreed that departmentwide coordination efforts could be  improved and noted that our analysis would be useful in targeting specific  areas for improvement.
Federal facility risk assessments: Federal facilities continue to be  vulnerable to terrorist attacks and other acts of violence, as evidenced by  the 2010 attacks on the IRS building in Austin, Texas, and the federal  courthouse in Las Vegas, Nevada, which resulted in loss of life. DHS’s  Federal Protective Service (FPS) is the primary federal agency  responsible for providing physical security and law enforcement  services—including conducting risk assessments—for the approximately  9,000 federal facilities under the control and custody of the General  Services Administration. We found that agencies are making duplicate  payments for facility risk assessments by completing their own  assessments, while also paying DHS for assessments that the  department is not performing.
We reported in June 2008 and also have recently found that multiple  federal agencies are expending additional resources to assess their own  facilities; although, according to an FPS official, the agency received $236  million from federal agencies for risk assessments and other security  services in fiscal year 2011. For example, an IRS official stated that IRS  completed risk assessments based on concerns about risks unique to its  mission for approximately 65 facilities that it also paid FPS to assess.  Additionally, Environmental Protection Agency officials said that the  agency has conducted its own assessments based on concerns with the  quality and thoroughness of FPS’s assessments. These assessments are  conducted by teams of contractors and agency employees, cost an  estimated $6,000, and can take a few days to a week to complete.
FPS’s planned risk assessment tool is intended to provide FPS with the  capability to assess risks at federal facilities based on threat, vulnerability,  and consequence; and track countermeasures to mitigate those risks, but  it is unclear if the tool will help minimize duplication. According to an  official, FPS planned to use its Risk Assessment and Management  Program to complete assessments of about 700 federal facilities in fiscal  year 2010 and 2,500 facilities in fiscal year 2011. However, as we  reported in July 2011, FPS experienced cost overruns, schedule delays,  and operational issues with developing this program and as a result the  agency could not use it to complete risk assessments. since November 2009, the agency has only completed four risk  assessments using its Risk Assessment and Management Program.
We identified several steps that DHS could take to address duplication in  FPS’s risk assessments. For example, in July 2011 we recommended  that DHS develop interim solutions for completing risk assessments while  addressing challenges with the Risk Assessment and Management  Program. In addition, in February 2012, we suggested DHS work with  federal agencies to determine their reasons for duplicating the activities  included in FPS’s risk assessments and identify measures to reduce this  duplication. DHS agreed with our July 2011 recommendation and has  begun taking action to address it, but did not comment on the action we  identified in February 2012.
GAO, Federal Protective Service: Actions Needed to Resolve Delays and Inadequate  Oversight Issues with FPS’s Risk Assessment and Management Program, GAO-11-705R  (Washington, D.C.: July 15, 2011).
Our 2012 annual report also summarized 19 areas—beyond those  directly related to duplication, overlap, or fragmentation—describing other  opportunities for agencies or Congress to consider taking action that  could either reduce the cost of government operations or enhance  revenue collection for the Treasury. These cost saving and revenue- enhancing opportunities also span a wide range of federal government  agencies and mission areas (see table 2).
Examples of opportunities for agencies or Congress to consider taking  action that could either reduce the cost of government operations or  enhance revenue collections include:
Air Force food service: According to Air Force officials, most Air Force  installations have their own individual contracts for food service, with a  total cost of approximately $150 million per year for all Air Force  installations. We found that the Air Force has opportunities to reduce its  overall food service costs by millions of dollars annually by reviewing food  service contracts and adjusting them, when appropriate, to better meet  the needs of its installations, including aligning labor needs with the actual  number of meals served by the dining facilities.
The Air Force recently undertook an initiative to improve food service at  six pilot installations, with intentions to eventually expand this initiative to  more Air Force installations. Among other intended outcomes, Air Force  officials stated that the first group of pilot installations achieved cost  savings when compared to their previous contracts while also increasing  hours of operation in the dining facilities and serving an additional  500,000 meals per year. We compared the estimated amount of food  service labor at the six pilot installations under prior contracts to the  projected work schedules under the initiative and found that by adjusting  staffing levels for contractor staff at dining facilities, the contractor  reduced the total number of labor hours at five of the six pilot installations  by 53 percent. For example, at one installation, the number of estimated  labor hours decreased from approximately 2,042 hours per week to 920.  For the sixth installation where the labor hours did not decrease, the Air  Force Audit Agency had recently conducted a review that found that the  number of food service personnel did not align with workload estimates.  As a result, the Air Force renegotiated its workload estimates and pay  rates, resulting in savings of approximately $77,000 annually.
During our review, we discussed the potential opportunity for achieving  additional savings by reviewing staffing levels at other installations  outside of the initiative with Air Force officials. As a result, the Air Force  issued a memorandum directing a review of existing food service  contracts to determine if the contracts meet current mission needs. The  memorandum indicated that special attention must be given to whether  the food service contract workload estimates were properly aligned with  the actual number of meals served. In July 2011, we recommended that  the Secretary of the Air Force monitor the actions taken in response to  the direction to review food service contracts, and take actions, as  appropriate, to ensure that cost-savings measures are implemented.  According to Air Force officials, eight installations have recently reviewed  and renegotiated their food service contracts for a total savings of over  $2.5 million per year. The potential exists for other installations that rely  on contracts to meet their food service needs to achieve similar financial  benefits. For example, the Air Force has requested that each of its  installations conduct a 100 percent review of existing food service  contracts to determine if their current contract workload estimates meet  current mission needs or if the contracts require modification. In addition,  the Office of the Secretary of Defense planned to share the results of the  Air Force’s review of its food service labor costs to achieve cost savings  with the other military services.
Navy information technology network: In 2007, the Navy established the  Next Generation Enterprise Network program (NGEN) to replace and  improve the Navy Marine Corps Intranet. According to the President’s  fiscal year 2012 budget request, the NGEN program has spent about  $434 million on work associated with the transition from the Navy Marine  Corps Intranet. The Navy estimated that NGEN would cost approximately  $50 billion to develop, operate, and maintain through fiscal year 2025. We  found that better informed decisions were needed to ensure a more cost- effective acquisition approach for the Navy’s NGEN program.
We reported in March 2011 that the Navy selected an approach that was  not considered as part of its analysis of alternatives and that it estimated  would cost at least $4.7 billion more than any of the four assessed  alternatives. In addition, we reported that the Navy’s schedule for NGEN  also did not provide a reliable basis for program execution because it did  not adequately satisfy key schedule estimating best practices, such as  establishing the critical path (the sequence of activities that, if delayed,  impacts the planned completion date of the project) and assigning  resources to all work activities. We also found that the Navy’s acquisition  decisions were not always performance- or risk-based. In particular,  senior executives approved the NGEN program’s continuing progress in  the face of known performance shortfalls and risks.
To address these weaknesses, we recommended in March 2011 that the  Navy limit further investment in NGEN until it conducts an immediate  interim review to reconsider the selected acquisition approach. We also  identified an additional action that the Navy could take to facilitate  implementation of the approach resulting from this review by ensuring  that the NGEN schedule reflects key schedule estimating practices and  future program reviews and decisions fully reflect the program’s  performance and exposure to risk. DOD agreed with our recommendation  to ensure that future NGEN acquisition reviews and decisions fully reflect  the state of the program’s performance and its exposure to risks. The  department did not agree with our recommendation to reconsider its  acquisition approach; however, the Navy is currently in the process of  reviewing and making changes to the NGEN acquisition strategy. We are  undertaking work that will assess the extent to which the Navy has  conducted its interim review to reconsider its acquisition approach and  evaluate the revised strategy.
DOD health care costs: DOD spends billions of dollars annually on its  worldwide healthcare system. Currently, health care costs constitute  nearly 10 percent of DOD’s baseline budget request. For its fiscal year  2012 budget, according to DOD documentation, DOD received $52.7  billion to provide health care to approximately 9.6 million active duty  servicemembers, reservists, retirees, and their dependents. DOD  recognizes that it must address the rate at which health care costs are  rising and has stated that it intends to continue to develop health care  initiatives that will improve the quality and standard of care, while  reducing growth in overall costs. Our ongoing work has found that DOD  has identified 11 initiatives intended to slow the rise in its health care  costs, but it has not fully applied results-oriented management practices  to its efforts or an overall monitoring process, which limits its  effectiveness in implementing these initiatives and achieving related cost  savings goals.
DOD’s initiatives consist primarily of changes to clinical and business  practices in areas ranging from primary care to psychological health to  purchased care reimbursement practices. Partly in response to our  ongoing work assessing DOD’s management of its initiatives, the  department has taken some initial steps toward managing their  implementation by developing a number of high-level, non-monetary  metrics and corresponding goals for each strategic initiative, and other  management tools, such as implementation plans that will include key  elements such as investment costs and savings estimates. However,  DOD currently has completed only one implementation plan, which  contains the one available cost savings estimate among all the initiatives.  Without completing its plans and incorporating elements such as problem  definitions, resources needed, goals, performance measures, and cost  estimates into them, DOD will not be fully aware if these initiatives are  achieving projected cost savings and other performance goals.
In addition, DOD has not completed the implementation of an overall  monitoring process across its portfolio of initiatives for overseeing the  initiatives’ progress or identified accountable officials and their roles and  responsibilities for all of its initiatives. DOD’s 2007 Task Force on the  Future of Military Health Care noted that the current Military Health  System does not function as a fully integrated health care system. For  example, while the Assistant Secretary of Defense for Health Affairs  controls the Defense Health Program budget, the services directly  supervise their medical personnel and manage their military treatment  facilities. Therefore, as Military Health System leaders develop and  implement their plans to control rising health care costs, they will need to  work across multiple authorities and areas of responsibility. Until DOD  fully implements a military-wide mechanism to monitor progress and  identify accountable officials, including their roles and responsibilities  across its portfolio of initiatives, DOD may be hindered in its ability to  achieve a more cost-efficient military health system.
In order to enhance its efforts to manage rising health care costs and  demonstrate sustained leadership commitment for achieving the  performance goals of the Military Health System’s strategic initiatives, we  plan to recommend as part of our ongoing work that DOD complete and  fully implement detailed implementation plans for each of the approved  health care initiatives in a manner consistent with results-oriented  management practices, such as the inclusion of upfront investment costs  and cost savings estimates; and complete the implementation of an  overall monitoring process across its portfolio of initiatives for overseeing  the initiatives’ progress and identifying accountable officials and their  roles and responsibilities for all of its initiatives. We believe that DOD may  realize projected cost savings and other performance goals by taking  these actions to help ensure the successful implementation of its cost  savings initiatives. Given that DOD identified these initiatives as steps to  slow the rapidly growing costs of its medical program, if implemented  these initiatives could potentially save DOD millions of dollars. DOD  generally agreed with our planned recommendations.
Excess uranium inventories: DOE maintains large inventories of depleted  and natural uranium that it no longer requires for nuclear weapons or fuel  for naval nuclear propulsion reactors. We reported in March and April  2008 and again in June 2011 that under certain conditions, the federal  government could generate billions of dollars by marketing inventories of  excess uranium to commercial power plants to use in their reactors.
Specifically, we identified options that DOE could take to market the  excess uranium inventories for commercial use. For example, DOE could  contract to re-enrich inventories of depleted uranium hexafluoride (a by- product of the uranium enrichment process), consisting of hundreds of  thousands of metric tons of material that are stored at DOE’s uranium  enrichment plants. Although DOE would have to pay for processing, the  resulting re-enriched uranium could be potentially sold if the sales price of  the uranium exceeded processing costs. DOE could also pursue an  option of selling the depleted uranium inventory “as-is”. This approach  would require DOE to obtain the appropriate statutory authority to sell  depleted uranium in its current unprocessed form. Firms such as nuclear  power utilities and enrichment companies might find it cost effective to  purchase the uranium and re-enrich it as a source of nuclear fuel.
If executed in accordance with federal law, DOE sales of natural uranium  could generate additional revenue for the government. Natural uranium on  its own cannot fuel nuclear reactors and weapons. Rather, it is shipped to a  conversion facility, where it is converted for the enrichment process. We  reported in September 2011 that in 7 transactions executed since 2009  DOE has, in effect, sold nearly 1,900 metric tons of natural uranium into the  market, using a contractor as a sales agent, to fund environmental cleanup  services. DOE characterized these sales as barter transactions— exchanges of services (environmental cleanup work) for materials  (uranium). While DOE received no cash directly from the transactions, it  allowed its contractor to keep cash from the sales, which DOE would  otherwise have owed to the United States Treasury. Because federal law  requires an official or agent of the government receiving money for the  government from any source to deposit the money in the Treasury, we  found that these transactions violated the miscellaneous receipts statute.
We have reported that congressional action may be needed to overcome  legal obstacles to the pursuit of certain options for the sale of depleted  and natural uranium. Specifically, our March 2008 report suggested that  Congress may wish to explicitly provide direction about whether and how  DOE may sell or transfer depleted uranium in its current form. Our  September 2011 report suggested that if Congress sees merit in using  the proceeds from the barter, transfer, or sale of federal uranium assets  to pay for environmental cleanup work, it could consider providing DOE  with explicit authority to barter excess uranium and to retain the proceeds  from these transactions. We also suggested that Congress could direct  DOE to sell uranium for cash and make those proceeds available by  appropriation for environmental cleanup work.
Congress has taken some actions in response to our work. For example,  the Consolidated Appropriations Act, 2012, among other things, requires  the Secretary of Energy to provide congressional appropriations  committees with information on the transfer, sale, barter, distribution, or  other provision of uranium in any form and an estimate of the uranium  value along with the expected recipient of the material. The Consolidated  Appropriations Act, 2012 also requires the Secretary to submit a report  evaluating the economic feasibility of re-enriching depleted uranium.
Medicare and Medicaid fraud detection systems: We have designated  Medicare and Medicaid as high-risk programs, in part due to their  susceptibility to improper payments—estimated to be about $65 billion in  fiscal year 2011. To integrate data about all types of Medicare and  Medicaid claims and improve its ability to detect fraud, waste, and abuse  in these programs, the Centers for Medicare and Medicaid Services  (CMS) initiated two information technology programs—the Integrated  Data Repository, which is intended to provide a centralized repository of  claims data for all Medicare and Medicaid programs, and One Program  Integrity, a set of tools that enables CMS contractors and staff to access  and analyze data retrieved from the repository. According to CMS  officials, the systems are expected to provide financial benefits of more  than $21 billion by the end of fiscal year 2015. We found that CMS needs  to ensure widespread use of technology to help detect and recover  billions of dollars of improper payments of claims and better position itself  to determine and measure financial and other benefits of its systems.
We reported in June 2011 that CMS had developed and begun using both  systems, but was not yet positioned to identify, measure, or track benefits  realized from these programs. For example, although in use since 2006,  the Integrated Data Repository did not have Medicaid claims data or  information from other CMS systems that store and process data related  to the entry, correction, and adjustment of claims due to funding and other  technical issues. These data are needed to help analysts prevent  improper payments. Program officials told us that they had begun  incorporating these data in September 2011 and planned to make them  available to program integrity analysts in spring 2012. Regarding  Medicaid data, agency officials stated that they did not account for  difficulties associated with integrating data from the various types and  formats of data stored in disparate state systems or develop reliable  schedules for its efforts to incorporate these data. In particular, program  officials did not consider certain risks and obstacles, such as technical  challenges, as they developed schedules for implementing the Integrated  Data Repository. Lacking reliable schedules, CMS may face additional  delays in making available all the data that are needed to support  enhanced program integrity efforts.
In addition, CMS had not trained its broad community of analysts to use  the One Program Integrity system because of delays introduced by a  redesign of initial training plans that were found to be insufficient.  Specifically, program officials planned for 639 analysts to be using the  system by the end of fiscal year 2010; however only 41—less than 7  percent—were actively using it as of October 2010. Because of these  delays, the initial use of the system was limited to a small number of CMS  staff and contractors. In updating the status of the training efforts in  November 2011, although we did not validate these data, CMS officials  reported that a total of 215 program integrity analysts had been trained  and were using the system. However, program officials had not finalized  plans and schedules for training all intended users.
In June 2011, we recommended that CMS take a number of actions to  help ensure the program’s success toward achieving the billions of dollars  in financial benefits that program integrity officials projected, such as  finalizing plans and reliable schedules for incorporating additional data  into the Integrated Data Repository and conducting training for all  analysts who are intended to use the One Program Integrity system. CMS  agreed with our recommendations and identified steps the agency is  taking to implement them. We plan to conduct additional work to  determine whether CMS has addressed our recommendations and  identified financial benefits and progress toward meeting agency goals  resulting from the implementation of its fraud detection systems.
Medicare Advantage: In fiscal year 2010, the federal government spent  about $113 billion on the Medicare Advantage program, a private plan  alternative to the original Medicare program that covers about a quarter of  Medicare beneficiaries. CMS, the agency that administers Medicare,  adjusts payments to Medicare Advantage plans based on the health  status of each plan’s enrollees. The agency could achieve billions of  dollars in additional savings by better adjusting for differences between  Medicare Advantage plans and traditional Medicare providers in the  reporting of beneficiary diagnoses.
CMS calculates a risk score for every beneficiary—a relative measure of  health status—which is based on a beneficiary’s demographic  characteristics, such as age and gender, and major medical conditions.  To obtain information on the medical conditions of beneficiaries in  traditional Medicare, CMS generally analyzes diagnoses—numerically  coded by providers into Medicare defined categories—on the claims that  providers submit for payment. For beneficiaries enrolled in Medicare  Advantage plans, which do not submit claims, CMS requires plans to  submit diagnostic codes for each beneficiary. Analysis has shown that  risk scores are higher for Medicare Advantage beneficiaries than for  beneficiaries in traditional Medicare with the same characteristics.
Medicare Advantage plans have a financial incentive to ensure that all  relevant diagnoses are coded, as this can increase beneficiaries’ risk  scores and, ultimately, payments to the plans. Many traditional Medicare  providers are paid for services rendered, and providers have less  incentive to code all relevant diagnoses. Policymakers have expressed  concern that risk scores for Medicare Advantage beneficiaries have  grown at a faster rate than those for traditional Medicare, in part because  of differences in coding diagnoses. In 2005, Congress directed CMS to  analyze and adjust risk scores for differences in coding practices, and in  2010, CMS estimated that 3.41 percent of Medicare Advantage risk  scores were due to differences in diagnostic coding practices. It reduced  the scores by an equal percentage, thereby saving $2.7 billion.
We identified shortcomings in CMS’s method for adjusting Medicare  Advantage payments to reflect differences in diagnostic coding practices  between Medicare Advantage and traditional Medicare. CMS did not use  the most recent risk score data for its estimates; account for the  increasing annual impact of coding differences over time; or account for  beneficiary characteristics beyond differences in age and mortality  between the Medicare Advantage and traditional Medicare populations,  such as sex, Medicaid enrollment status, and beneficiary residential  location. We estimated that a revised methodology that addressed these  shortcomings could have saved Medicare between $1.2 billion and $3.1  billion in 2010 in addition to the $2.7 billion in savings that CMS’s 3.41  percent adjustment produced. We expect that savings in future years will  be greater. In January 2012, we recommended that CMS take action to  help ensure appropriate payments to Medicare Advantage plans and  improve the accuracy of the adjustment made for differences in coding  practices over time. The Department of Health and Human Services  characterized our results as similar to those obtained by CMS.
User fees: User fees assign part or all of the costs of federal programs  and activities—the cost of providing a benefit that is above and beyond  what is normally available to the general public—to readily identifiable  users of those programs and activities. Regularly reviewing federal user  fees and charges can help Congress and federal agencies identify  opportunities to address inconsistent federal funding approaches and  enhance user financing, thereby reducing reliance on general fund  appropriations.
The Chief Financial Officers Act of 1990 (CFO Act) requires agencies to  biennially review their fees and to recommend fee adjustments, as  appropriate; additionally, OMB Circulars No. A-11 and No. A-25 direct  agencies to discuss the results of these reviews and any resulting  proposals, such as adjustments to fee rates, in the CFO annual report  required by the CFO Act. In 2011, we surveyed the 24 agencies  covered by the CFO Act on their review of user fees. Twenty-one of the  23 agencies that responded reported charging more than 3,600 fees and  collecting nearly $64 billion in fiscal year 2010, but agency responses  indicated varying levels of adherence to the biennial review and reporting  requirements. The survey responses indicated that for most fees,  agencies (1) had not discussed fee review results in annual reports, and  (2) had not reviewed the fees and were inconsistent in their ability to  provide fee review documentation.
We found specific examples where a comprehensive review of user fees  could lead to cost savings or enhanced revenues for the government. For  example, reviewing and adjusting as needed the air passenger  immigration inspection user fee to fully recover the cost of the air  passenger immigration inspection activities could reduce general fund  appropriations for those activities. International air passengers arriving in  the United States are subject to an immigration inspection to ensure that  they have legal entry and immigration documents. International air  passengers pay the immigration inspection fee when they purchase their  airline tickets, but the rate has not been adjusted since fiscal year 2002.  In recent years, U.S. Immigration and Customs Enforcement and U.S.  Customs and Border Protection, the agencies responsible for conducting  inspection activities, have relied on general fund appropriations to help  fund activities for which these agencies have statutory authority to fund  with user fees. In fiscal year 2010, this amounted to over $120 million for  the U.S. Customs and Border Protection alone. In September 2007, we  recommended that the Secretary of Homeland Security report  immigration inspection activity costs to ensure fees are divided between  U.S. Immigration and Customs Enforcement and U.S. Customs and  Border Protection according to their respective immigration inspection  activity costs and to develop a legislative proposal to adjust the air  passenger immigration inspection fee if it was found to not recover the  costs of inspection activities. DHS agreed with our recommendations, but  some of the recommendations remain unimplemented. In February  2012, we suggested that Congress may wish to require the Secretary of  Homeland Security to fully implement these recommendations which  would serve to help to better align air passenger immigration inspection  fee revenue with the costs of providing these services and achieve cost  savings by reducing the reliance on general fund appropriations.
Similarly, we identified options for adjusting the passenger aviation  security fee, a uniform fee on passengers of U.S. and foreign air carriers  originating at airports in the United States. Passenger aviation security  fees collected offset amounts appropriated to the Transportation Security  Administration for aviation security. In recent years, several options have  been considered for increasing the passenger aviation security fee.  However, the fee has not been increased since it was imposed in  February 2002. We suggested that Congress may wish to consider  increasing the passenger security fee. Such an increase could further  offset the need for appropriated funds to support civil aviation security  costs from about $2 billion to $10 billion over 5 years.
Tax gap: The financing of the federal government depends largely on the  IRS’s ability to collect federal taxes every year, which totaled $2.34 trillion  in 2010. For the most part, taxpayers voluntarily report and pay their  taxes on time. However the size and persistence of the tax gap— estimated in 2012 for the 2006 tax year to be a $385 billion difference  between the taxes owed and taxes IRS ultimately collected for that year— highlight the need to make progress in improving compliance by those  taxpayers who do not voluntarily pay what they owe. Given that tax  noncompliance ranges from simple math errors to willful tax evasion, no  single approach is likely to fully and cost-effectively address the tax gap.  A multifaceted approach to improving compliance that includes enhancing  IRS’s enforcement and service capabilities can help reduce the tax gap.
One approach we have identified is the expansion of third-party  information reporting, which improves taxpayer compliance and enhances  IRS’s enforcement capabilities. The tax gap is due predominantly to  taxpayer underreporting and underpayment of taxes owed. At the same  time, taxpayers are much more likely to report their income accurately  when the income is also reported to IRS by a third party. By matching  information received from third-party payers with what payees report on  their tax returns, IRS can detect income underreporting, including the  failure to file a tax return. Expanding information reporting to cover  payments for services by all owners of rental real estate and to cover  payments to corporations for services would improve payee compliance.  The Joint Committee on Taxation estimated revenue increases of $5.9  billion over a 10-year period for just these two expansions.
section_title: Status of Actions Taken to Address the Areas Identified in 2011 Annual Report
paragraphs: In our 2011 annual report, we suggested a wide range of actions for  Congress and the executive branch to consider such as developing  strategies to better coordinate fragmented efforts, implementing executive  initiatives to improve oversight and evaluation of overlapping programs,  considering enactment of legislation to facilitate revenue collection and  examining opportunities to eliminate potential duplication through  streamlining, collocating, or consolidating efforts or administrative  services. For our 2011 follow-up report, we assessed the extent to which  Congress and the executive branch addressed the 81 areas—including a  total of 176 actions—to reduce or eliminate unnecessary duplication,  overlap, or fragmentation or achieve other potential financial benefits.
Our assessment of progress made as of February 10, 2012, found that 4  (or 5 percent) of the 81 areas GAO identified were addressed; 60 (or 74  percent) were partially addressed; and 17 (or 21 percent) were not  addressed. Appendix I presents GAO’s assessment of the overall progress  made in each area. In updating the actions we identified in the 2011 annual  report, we asked the agencies involved and the Office of Management and  Budget (OMB) for their review and incorporated comments as appropriate.  We applied the following criteria in making these overall assessments for  the 81 areas. We determined that an area was:  “addressed” if all actions needed in that area were addressed;  “partially addressed” if at least one action needed in that area showed  some progress toward implementation, but not all actions were  addressed; and  “not addressed” if none of the actions in that area were addressed.
As of February 10, 2012, the majority of 176 actions needed within the 81  areas identified by GAO have been partially addressed. Specifically, 23  (or 13 percent) were addressed; 99 (or 56 percent) were partially  addressed; 54 (or 31 percent) were not addressed. We applied the  following criteria in making these assessments.
For legislative branch actions:  “addressed,” means relevant legislation is enacted and addresses all  aspects of the action needed;  “partially addressed,” means a relevant bill has passed a committee,  the House or Senate, or relevant legislation has been enacted, but  only addressed part of the action needed; and  “not addressed,” means a bill may have been introduced, but did not  pass out of a committee, or no relevant legislation has been  introduced.
For executive branch actions:  “addressed,” means implementation of the action needed has been  completed;  “partially addressed,” means the action needed is in development;  started but not yet completed; and  “not addressed,” means the administration and/or agencies have  made minimal or no progress toward implementing the action needed.
In addition to the actions reported above, Congress has held a number of  hearings and OMB has provided guidance to executive branch agencies  on areas that we identified that could benefit from increased attention and  ongoing oversight. Since the issuance of our March 2011 report, we have  testified numerous times on our first annual report and on specific issues  highlighted in the report. Further, OMB has instructed agencies to  consider areas of duplication or overlap identified in our 2011 report and  by others in their fiscal year 2013 budget submissions and management  plans. The OMB guidance also advised agencies to take a number of  other steps to enhance efficiency, such as identifying and including in  their budget submissions cost-saving efforts that will improve operational  efficiency and taxpayers’ rate of return, including program integration,  reorganizations within and between agency components, and resource  realignment to improve public services.
In conclusion Mr. Chairman, Ranking Member Collins, and Members of  the Committee, options exist for Congress and agencies to reexamine the  federal government’s structure and operations in order to improve its  efficiency and effectives. A number of the issues are difficult to address  and implementing many of the actions identified will take time and  sustained leadership. This concludes my prepared statement. I would be  pleased to answer any questions you may have. Thank you.
The information in this statement is based upon work conducted for  completed GAO products and certain ongoing audits, which were  conducted in accordance with generally accepted government auditing  standards or with our Quality Assurance Framework as appropriate. For  further information on this testimony, please contact Janet St. Laurent,  Managing Director, Defense Capabilities and Management, who may be  reached at (202) 512-4300, or StLaurentJ@gao.gov; and Zina Merritt,  Director, Defense Capabilities and Management, who may be reached at  (202) 512-4300, or MerrittZ@gao.gov. Specific questions about individual  issues may be directed to the area contact listed at the end of each area  summary in the reports. Contact points for our Congressional Relations  and Public Affairs offices may be found on the last page of this statement.
section_title: Appendix I: Overall Progress Made in Each of the 81 Areas Identified in GAO’s 2011 Annual Report
paragraphs: This appendix presents a summary of GAO’s assessment of the overall  progress made in each of the 81 areas that we identified in our March  2011 report in which Congress and the executive branch could take  actions to reduce or eliminate potential duplication, overlap, and  fragmentation or achieve other potential financial benefits. For each of the  34 areas related to duplication, overlap, or fragmentation that GAO  identified, table 3 presents GAO’s assessment of the overall progress  made in implementing the actions needed in that area. For each of the 47  areas where GAO identified cost saving or revenue enhancement  opportunities, table 4 presents GAO’s assessment of the overall progress  made in implementing the actions GAO identified.
As noted above, table 4 presents GAO’s assessment of the overall  progress made in addressing the 47 cost-saving and revenue-enhancing  areas.