Government Efficiency and Effectiveness: Opportunities to Address Pervasive Management Risks and Challenges while Reducing Federal Costs
Released: 2017-05-17T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: The federal government faces a long-term, unsustainable fiscal path based on an imbalance between federal revenues and spending. To put the government on a more sustainable long-term path, policymakers will need to have a broad fiscal plan that considers reducing spending, increasing revenue, or more likely, a combination of the two. While addressing this structural imbalance will require fiscal policy changes, in the near term, opportunities exist to act in a number of areas to improve this situation.

This statement highlights several areas in which the federal government is facing government-wide management challenges and the opportunities to act: improper payments; IT acquisitions, operations, and cybersecurity; and federal real property. This statement draws from GAO's 2017 High-Risk List, the 2017 annual report on fragmentation, overlap, and duplication, and other related work.

Properly managing government resources can help address the federal government's fiscal challenges by preventing fraud, waste, and abuse and ensuring funds are put to the best possible use. Although these actions alone cannot put the U.S. government on a sustainable fiscal path, they would improve both the fiscal situation and the federal government's operations.

section_title: What GAO Found
paragraphs: GAO's prior work has resulted in hundreds of billions of dollars in financial benefits over the last decade as agencies and Congress acted on its recommendations. However, there are significant opportunities for further action to address government-wide challenges by implementing GAO's recommendations that would result in billions of dollars in additional benefits.

Action Needed to Address Growth in Improper Payments. Reducing payments that should not have been made or that were made in an incorrect amount could yield significant savings. The reported government-wide improper payment estimate for fiscal year 2016 was over $144 billion. This estimate was attributable to 112 programs spread among 22 agencies. Since fiscal year 2003, cumulative estimates have totaled over $1.2 trillion.

Improvements Needed in Information Technology (IT) Acquisition and Operation and in Addressing Cybersecurity Challenges. The government is projected to invest more than $89 billion on IT in fiscal year 2017. However, historically, these investments have frequently failed, incurred cost overruns and schedule slippages, or contributed little to mission-related outcomes. Better managing IT could result in billions of dollars in savings and much more efficient and effective government. Opportunities also exist to better ensure the security of federal information systems and cyber critical infrastructure and protect the privacy of personally identifiable information.

Challenges Remain in Reducing Unneeded Federal Facilities and Managing the Federal Fleet of Vehicles. Continuing to maintain unneeded facilities puts the government at risk for wasting resources due to ongoing maintenance costs as well as lost revenue from failing to sell surplus property. In addition, in fiscal year 2015, federal agencies spent about $4.3 billion on over 640,000 vehicles that agencies own or lease. In prior work, GAO found that selected agencies were spending over $20 million annually on vehicles that may not have been fully utilized. It is likely that additional cost savings are possible through enhanced agency practices.

section_title: Letter
paragraphs: Thank you for the opportunity to be here today to discuss opportunities to  improve our nation’s fiscal sustainability by addressing government-wide  management challenges. The federal government faces a long-term,  unsustainable fiscal path based on an imbalance between federal  revenues and spending. At the end of fiscal year 2016, the debt held by  the public as a share of gross domestic product was 77 percent, the  highest it has been since 1950. Absent policy changes, debt held by the  public will continue to grow and is projected to surpass its historical high  of 106 percent within 15 to 25 years.

To put the government on a more sustainable long-term path,  policymakers will need to have a broad fiscal plan that considers reducing  spending, increasing revenue, or more likely, a combination of the two.  While addressing this structural imbalance will require fiscal policy  changes, in the near term opportunities exist to act in a number of areas  to improve this situation. Properly managing government resources can  help address our fiscal challenges by preventing fraud, waste, and abuse  and ensuring funds are put to the best possible use. Although these  actions alone cannot put the U.S. government on a sustainable fiscal  path, they would improve both the fiscal situation and the federal  government’s operations.

Today, I will discuss several areas in which the federal government is  facing government-wide management risks and challenges and  opportunities to act: improper payments; information technology (IT)  acquisitions, operations, and cybersecurity; and federal real property. To  help address these long-standing management weaknesses, we have  made hundreds of recommendations over the years, including through  our High-Risk List and our work on fragmentation, overlap, and  duplication. Our High-Risk List brings attention to government operations  that are at high risk of fraud, waste, abuse, and mismanagement, or that  need broad-based transformation to address economy, efficiency, or  effectiveness challenges of government operations. In addition, for the  last 7 years, we have annually presented actions Congress or executive  branch agencies could take to reduce, eliminate, or better manage  fragmentation, overlap, or duplication; achieve cost savings; or enhance  revenue. These efforts combined have led to hundreds of billions of  dollars in financial benefits over the last decade. We estimate tens of  billions more dollars could be saved by fully implementing our remaining  open recommendations. Congress has acted and executive agencies  are addressing many of our recommendations and, as a result, progress  is being made on a number of these challenges. However, there are  further opportunities for Congress and agencies to take action on  addressing these management challenges.

My statement is based on our 2017 High-Risk List; the 2017  fragmentation, overlap, and duplication annual report; and other related  work. The work upon which this statement is based was conducted in  accordance with all sections of GAO’s Quality Assurance Framework that  are relevant to our objectives. The framework requires that we plan and  perform the engagement to obtain sufficient and appropriate evidence to  meet our stated objectives and to discuss any limitations in our work. We  believe that the information and data obtained, and the analysis  conducted, provide a reasonable basis for any findings and conclusions in  this product. More details on the scope and methodology for our reports  can be found in the full reports.
subsections: section_title: Actions Needed to Address Growth in Improper Payments
paragraphs: Improper payments remain a significant and pervasive government-wide  issue. For several years, we have reported improper payments as a  material weakness in our audit reports on the consolidated financial  statements of the U.S. government. Since fiscal year 2003—when  certain agencies began reporting improper payments as required by the  Improper Payments Information Act of 2002 (IPIA)—cumulative reported  improper payment estimates have totaled over $1.2 trillion, as shown in  figure 1.

For fiscal year 2016, agencies reported improper payment estimates  totaling $144.3 billion, an increase of over $7 billion from the prior year’s  estimate of $136.7 billion. The reported estimated government-wide  improper payment error rate was 5.1 percent of related program outlays.  These figures do not include the Department of Defense’s (DOD)  Defense Finance and Accounting Service Commercial Pay program  because of concerns regarding the reliability of the program’s estimate,  which I will discuss later in this statement. As shown in figures 2 and 3,  the reported improper payment estimates—both dollar estimates and  error rates—have been increasing over the past 3 years, largely because  of increases in Medicaid’s reported improper payment estimates.

For fiscal year 2016, overpayments accounted for approximately 93  percent of the improper payment estimate, according to  www.paymentaccuracy.gov, with underpayments accounting for the  remaining 7 percent.

Although primarily concentrated in three areas (Medicare, Medicaid, and  the Earned Income Tax Credit), the reported estimated improper  payments for fiscal year 2016 were attributable to 112 programs spread  among 22 agencies (see figure 4).

Agencies reported improper payment estimates exceeding $1 billion for  14 programs, as shown in table 1, and error rates exceeding 10 percent  for 11 programs (see table 2).
subsections: section_title: Multiple Factors Hinder Efforts to Determine the Full Extent of and Reduce Improper Payments
paragraphs: In our audit report on the fiscal year 2016 consolidated financial  statements of the U.S. government, we continued to report a material  weakness in internal control related to improper payments because the  federal government is unable to determine the full extent to which  improper payments occur and reasonably assure that appropriate actions  are taken to reduce them. Challenges include programs that do not  report any improper payment estimates or report unreliable or  understated estimates, noncompliance issues, fraud, and potentially  inaccurate risk assessments.
subsections: section_title: Programs That Do Not Report Improper Payment Estimates
paragraphs: We found that not all agencies had developed improper payment  estimates for all of the programs and activities they identified as  susceptible to significant improper payments. Eight agencies did not  report improper payment estimates for 18 risk-susceptible programs (see  table 3).

Because agencies did not report improper payment estimates for these  risk-susceptible programs, the government-wide improper payment  estimate is understated and agencies are hindered in their efforts to  reduce improper payments in these programs. For example, the  Department of Health and Human Services (HHS) did not report an  improper payment estimate for Temporary Assistance for Needy Families,  a program with outlays of over $15 billion for fiscal year 2016. HHS cited  statutory limitations prohibiting the agency from requiring states to  participate in an improper payment measurement for the program.

Another example is the U.S. Department of Agriculture’s (USDA)  Supplemental Nutrition Assistance Program (SNAP). Although USDA has  reported improper payment estimates for this program in prior years, the  agency did not report an estimate for fiscal year 2016. In its fiscal year  2016 agency financial report, USDA stated that it was unable to validate  data provided by 42 of the 53 state agencies that administer the program.  USDA stated that it could not adjust for this unreliability and calculate a  national error rate.

section_title: Potentially Unreliable or Understated Estimates
paragraphs: Improper payment estimates for certain programs may be unreliable or  understated. For example, in May 2013 we reported that DOD had major  deficiencies in its process for estimating fiscal year 2012 improper  payments in the Defense Finance and Accounting Service (DFAS)  Commercial Pay program, including deficiencies in identifying a complete  and accurate population of payments. The foundation of reliable  statistical sampling estimates is a complete, accurate, and valid  population from which to sample. As of October 2016, DOD was still  developing key quality assurance procedures to ensure the completeness and accuracy of sampled populations. Therefore, DOD’s fiscal year 2016  improper payment estimates, including its estimate for the DFAS  Commercial Pay program, may not be reliable. DFAS Commercial Pay’s  reported program outlays are significant—approximately $249 billion for  fiscal year 2016. Consequently, a small change in the program’s  estimated error rate could result in a significant change in the dollar value  of its improper payment estimate.

Also, flexibility in how agencies are permitted to implement improper  payment estimation requirements can contribute to inconsistent or  understated estimates. For example, in February 2015, we reported that  DOD uses a methodology for estimating TRICARE improper payments  that is less comprehensive than the methodology the Centers for  Medicare & Medicaid Services (CMS) used for Medicare. Though the  programs are similar in that they pay providers on a fee-for-service basis  and depend on contractors to process and pay claims, TRICARE’s  methodology does not examine the underlying medical record  documentation to discern whether each sampled payment was supported  or whether the services provided were medically necessary. On the other  hand, Medicare’s methodology more completely identifies improper  payments beyond those resulting from claim processing errors, such as  those related to provider noncompliance with coding, billing, and payment  rules.

As a result, the estimated improper payment error rates for TRICARE and  Medicare are not comparable, and TRICARE’s error rate is likely  understated. In addition, corrective actions for TRICARE improper  payments do not address issues related to medical necessity errors—a  significant contributor to Medicare improper payments. We recommended  that DOD implement a more comprehensive TRICARE improper payment  methodology and develop more robust corrective action plans that  address the underlying causes of improper payments. In October 2016,  DOD requested proposals for claim record reviews—including medical  record reviews—to begin the process of incorporating medical record  reviews in its methodology for calculating improper payment rates.

section_title: IGs Report Greater Agency Noncompliance
paragraphs: Since fiscal year 2011, the Improper Payments Elimination and Recovery  Act (IPERA) has required agencies’ inspectors general (IG) to annually  report on the respective agencies’ compliance under the act. IGs at 15  of the 24 Chief Financial Officers Act (CFO Act) agencies found their  respective agencies to be noncompliant under IPERA for fiscal years  2014 and 2015, the highest total since IGs began their annual compliance  reviews. Although noncompliance has occurred across all six of the  criteria listed in IPERA, the most common issues are noncompliance  related to reporting and meeting improper payment reduction targets or  reporting an error rate below 10 percent. Continued noncompliance  further highlights the need for additional efforts to reduce improper  payments.

section_title: Improper Payments Involving Fraud
paragraphs: Fraud is one specific type of improper payment and is particularly difficult  to identify and estimate. Fraud involves obtaining something of value  through willful misrepresentation. Whether an act is fraudulent is  determined through the judicial or other adjudicative system, which is one  reason why fraud is not likely to be part of agencies’ annual improper  payment estimates. According to Office of Management and Budget  (OMB) guidance, agencies should refer matters involving possible  fraudulent activities to the appropriate parties, such as the relevant Office  of the Inspector General or the Department of Justice (DOJ).

While improper payment estimates are not a measure of fraud, a lack of  sufficient supporting documentation may mask the true causes of  improper payments—including fraud. When payments lack the  appropriate supporting documentation, their validity cannot be  determined. It is possible that these payments were for valid purposes,  but it is also possible that the lack of documentation could conceal  fraudulent activities. For fiscal year 2016, HHS cited documentation errors  as a major contributor to improper payments in its Medicare fee-for- service program, such as durable medical equipment and home health  claims. We have found that these areas are also vulnerable to fraud, and  recent cases continue to raise concerns.

The report on the Health Care Fraud and Abuse Control (HCFAC)  program for fiscal year 2016 lists several examples of fraud specifically  related to durable medical equipment and home health claims, including  one case in which a doctor approved and certified in excess of 11,000  Medicare beneficiaries, who were not home bound, for home health care  services between 2006 and 2011, resulting in nearly $375 million in  fraudulent claims. For fiscal year 2016, HHS and DOJ reported that the  federal government won or negotiated over $2.5 billion in health care  fraud judgments and settlements through the HCFAC program. In fiscal  year 2016, DOJ opened 930 new criminal health care fraud  investigations, and HHS IG investigations resulted in 765 criminal actions  and 690 civil actions. Table 4 lists other examples of fraud in various  programs.

Additionally, we have recently reported on antifraud efforts and cases of  potential fraud in various programs, including the following examples.

In April 2017, we reported that the Social Security Administration  (SSA) needed to develop a comprehensive strategic approach to help  enhance antifraud activities in its disability programs. Although SSA  has taken steps in this area, its new antifraud office is still evolving.  SSA has worked to identify and address fraud risks in its disability  programs, but it has not yet comprehensively assessed these fraud  risks or developed a strategic approach to help ensure its antifraud  activities effectively mitigate those risks. Although SSA has several  prevention and detection activities in place to address known fraud  risks in its disability programs, the agency has not developed and  documented an overall antifraud strategy that aligns its antifraud  activities to its fraud risks.

Without conducting a fraud risk assessment that aligns with leading  practices and developing an antifraud strategy, SSA’s disability  programs may remain vulnerable to new fraud schemes, and SSA will  not be able to effectively prioritize its antifraud activities. Among other  things, we recommended that SSA conduct a comprehensive fraud  risk assessment for its disability programs and develop a  corresponding antifraud strategy. SSA agreed with the  recommendations.

In August 2014, we identified 28 cases of potential fraud related to  Supplemental Nutrition Assistance Program benefits (food stamps).  Over 30 days, we detected 28 postings from one popular e-commerce  website that advertised the potential sale of food stamp benefits in  exchange for cash, services, and goods—including places to live,  vehicles, cooking and cleaning services, phones, and beer. We  recommended that USDA take steps, such as providing guidance and  training, to enhance the consistency of state reporting on their  antifraud efforts. Though it has not yet implemented the new form,  USDA has revised the form to collect recipient integrity performance  information and has provided training to state agency and regional  office personnel on the new form.

In December 2014, we reported approximately $39 million of  Hurricane Sandy assistance as at risk for potential fraud or improper  payments. Among other issues, these cases included instances in  which Social Security numbers were not valid or were used by  multiple recipients, rental assistance was received while the recipient  was incarcerated, and duplicate payments were not flagged by the  Federal Emergency Management Agency (FEMA). Among other  things, we recommended that FEMA assess the cost and feasibility of  obtaining SSA’s full death file to help identify potentially fraudulent or  improper applications for assistance. In June 2016, FEMA reported  that it was evaluating the cost and feasibility of obtaining the publicly  available Death Master File. However, our recommendation refers to  SSA’s full death file, which is a more comprehensive source of death  data. We continue to believe that FEMA should assess the cost and  feasibility of obtaining SSA’s full death file.

In May 2015, we found thousands of Medicaid beneficiaries and  hundreds of providers involved in potential improper or fraudulent  payments in four selected states (Arizona, Florida, Michigan, and New  Jersey) during fiscal year 2011, which at the time of our study was the  most recent year for which reliable data were available. For  example, people using the identities of about 200 deceased  beneficiaries received about $9.6 million in Medicaid benefits  subsequent to the beneficiaries’ deaths, and about 90 providers had  suspended or revoked licenses in the state where they performed  Medicaid services yet received a combined total of at least $2.8  million from those states. We recommended that CMS issue guidance  for screening beneficiaries who are deceased and supply more- complete data for screening Medicaid providers. HHS has taken  certain actions—such as working with states to address data access  issues—but has not provided guidance to states as we  recommended.

While fraud can be more difficult to address than other types of improper  payments, implementing strategies to reduce improper payments in  general may also help to reduce opportunities for fraud. In July 2015, we  issued A Framework for Managing Fraud Risks in Federal Programs  (Framework). The Framework identifies a comprehensive set of leading  practices that serve as a guide for program managers to use when  developing or enhancing efforts to combat fraud in a strategic, risk-based  manner. The leading practices described in the Framework include  control activities to prevent, detect, and respond to fraud, with an  emphasis on prevention, as well as structures and environmental factors  that influence or help managers achieve their objective to mitigate fraud  risks. In addition, the Framework calls for managers to conduct  monitoring and incorporate feedback on an ongoing basis.

Enacted in June 2016, the Fraud Reduction and Data Analytics Act of  2015 required OMB to establish guidelines for agencies to identify fraud  risks and design and implement control activities to prevent, detect, and  respond to fraud. The act required OMB to incorporate the leading  practices found in the Framework. Further, the act requires agencies to  report on their fraud risks and their implementation of fraud reduction  strategies as part of their annual financial reports beginning in fiscal year  2017. We will assess these efforts to help Congress monitor agencies’  progress in addressing and reducing fraud risks. As stewards of taxpayer  dollars, federal managers have the ultimate responsibility in overseeing  how hundreds of billions of dollars are spent annually. Thus, they are well  positioned to use the leading practices outlined in the Framework, while  considering the related fraud risks as well as the associated costs and  benefits of implementing the practices, to help ensure that taxpayer  resources are spent efficiently and effectively.

section_title: Potentially Inaccurate Risk Assessments
paragraphs: Agencies conduct risk assessments to determine which programs need to  develop improper payment estimates. However, in IPERA compliance  reports for fiscal year 2015—the most current reports available—various  IGs reported issues related to agencies’ improper payment risk  assessments. For example:

The IG for the General Services Administration (GSA) reported that  the agency’s risk assessment was flawed because, among other  things, the questionnaires in the assessment did not ask if programs  actually experience improper payments and were distributed to  individuals who did not have direct or specific knowledge of improper  payments. Further, the IG found that the agency did not evaluate  relevant reports—such as IG reports or our reports—to identify  relevant findings, and two of the six questionnaires that the IG  reviewed included incomplete information.

The IG for the Department of Housing and Urban Development (HUD)  found that the agency did not assess all of its programs on a 3-year  cycle and did not consider all nine of the required risk factors in  conducting its risk assessment. The IG also noted instances in  which the agency did not rate risk factors in accordance with the  agency’s own policy.

It is also important to note that 9 of the 24 CFO Act agencies either  reported no improper payment estimates or reported estimates for only  disaster relief programs funded through the Disaster Relief Appropriations  Act, 2013 for fiscal year 2016. The nine agencies were:

U.S. Agency for International Development

Department of Commerce (disaster relief only)

Department of the Interior (disaster relief only)

Department of Justice (disaster relief only)

National Aeronautics and Space Administration (disaster relief only).

section_title: Strategies for Reducing Improper Payments
paragraphs: Agencies can use detailed root cause analysis and related corrective  actions to implement preventive and detective controls to reduce  improper payments. Collaboration with other relevant entities can also  assist federal agencies in reducing improper payments.
subsections: section_title: Root Cause Analysis
paragraphs: Root cause analysis is key to understanding why improper payments  occur and developing effective corrective actions to prevent them. In  2014, OMB established new guidance to assist agencies in better  identifying the root causes of improper payments and assessing their  relevant internal controls. Agencies across the federal government began  reporting improper payments using these more detailed root cause  categories for the first time in their fiscal year 2015 financial reports.  Further identification of the true root causes of improper payments can  help to determine the potential for fraud. Figure 5 shows the root causes  of government-wide improper payments for fiscal year 2016, as reported  by OMB. We will continue to focus on agencies’ efforts to both identify the  root causes and take appropriate actions to reduce improper payments.

Implementing strong preventive controls can serve as the frontline  defense against improper payments. When agencies proactively prevent  improper payments, they increase public confidence in program  administration and they avoid the difficulties associated with the “pay and  chase” aspects of recovering overpayments. Examples of preventive  controls include up-front eligibility validation through data sharing,  predictive analytic technologies, and program design review and  refinement. For example, we have made the following recommendations  and matters for congressional consideration to improve preventive  controls in various programs.

Using the Do Not Pay (DNP) working system. Established by OMB  and hosted by the Department of the Treasury (Treasury), the DNP  working system is a web-based, centralized data-matching service  that allows agencies to review multiple databases—such as data on  deceased individuals and entities barred from receiving federal  awards—before making payments. In October 2016, we found that  the 10 agencies we reviewed used the DNP working system in limited  ways, in part because OMB had not provided a clear strategy and  guidance. Only 2 of these 10 agencies used the DNP working  system on a preaward or prepayment basis for certain types of  payments. Because the DNP working system offers a single point of  access to multiple databases, agencies may be able to streamline  their existing data matching processes. Among other things, we  recommended that OMB develop a strategy—and communicate it  through guidance—for whether and how agencies should use the  DNP working system to complement or streamline existing data  matching processes. OMB generally agreed with the concept of  developing a strategy and said it would explore the concept further.

Further, we found that the death records offered through the DNP  working system do not include state-reported death data. SSA officials  stated that sharing its full death file—which includes state-reported  death data—would require an amendment to the Social Security Act.  We suggested that Congress amend the Social Security Act to  explicitly allow SSA to share its full death file with Treasury for use  through the DNP working system. Sharing the full death file through  the DNP working system would enhance efforts to identify and  prevent improper payments.

Expanding error correction authority. The Internal Revenue  Service (IRS) has the authority to correct some calculation errors and  check for other obvious noncompliance such as claims for a deduction  or credit that exceed statutory limits. We have suggested to Congress  that such authority be authorized on a broader basis rather than on a  piecemeal basis and that controls may be needed to help ensure that  this authority is used properly. Also, Treasury has proposed  expanding IRS’s “math error” authority to “correctible error” authority  to permit it to correct errors in cases where information provided by  the taxpayer does not match information in government databases,  among other things. Providing these authorities could help IRS correct  additional errors—including some errors with Earned Income Tax  Credit claims—and avoid burdensome audits and taxpayer penalties.

Adding prepayment reviews in Medicare fee-for-service. In April  2016, we found that CMS could improve its claim review programs by  conducting additional prepayment reviews. Using prepayment  reviews to deny improper claims and prevent overpayments is  consistent with CMS’s goal to pay claims correctly the first time. It can  also better protect Medicare funds because not all overpayments can  be collected. CMS uses recovery auditors (RA)–among other types of  claim review contractors–and in 2013 and 2014, 85 percent of RA  claim reviews were postpayment. Because CMS is required by law to  pay RAs contingency fees from recovered overpayments, the RAs  can only conduct prepayment reviews under a demonstration. From  2012 through 2014, CMS conducted a demonstration in which the  RAs conducted prepayment reviews and were paid contingency fees  based on claim denial amounts. CMS officials considered the  demonstration a success. However, CMS has not requested  legislation that would allow for RA prepayment reviews by amending  existing payment requirements and thus may be missing an  opportunity to better protect Medicare funds.

We recommended that CMS seek legislative authority to allow RAs to  conduct prepayment claim reviews. HHS did not concur with this  recommendation, stating that CMS has implemented other programs  as part of its efforts to move away from the “pay and chase” process  of recovering overpayments. We continue to believe that seeking  authority to allow RAs to conduct prepayment reviews is consistent  with CMS’s strategy to pay claims properly the first time.

section_title: Detective Controls
paragraphs: Although preventive controls remain the frontline defense against  improper payments, effective detection techniques can help to quickly  identify and recover those overpayments that do occur. Detective controls  play a significant role not only in identifying improper payments but also in  providing information on why these improper payments were made,  highlighting areas that need stronger preventive controls. Examples of  detective controls include data mining and recovery auditing. The  following are examples of recommendations we have made to improve  detective controls in various programs.

Improvements to recovery efforts in Medicare Advantage. In April  2016, we reported that CMS needs to fundamentally improve its  efforts to recover substantial amounts of improper payments in the  Medicare Advantage program. CMS conducts two types of risk  adjustment data validation (RADV) audits to identify and correct  Medicare Advantage improper payments: national RADV activities  and contract-level RADV audits. Both types of audits determine  whether the diagnosis codes submitted by Medicare Advantage  organizations are supported by a beneficiary’s medical record  documentation. Contract-level RADV audits seek to identify and  recover improper payments from Medicare Advantage organizations  and thus to deter them from submitting inaccurate beneficiary  diagnoses. However, we found that CMS does not focus its RADV  audits on the contracts with the highest potential for improper  payments and has not developed specific plans or a timetable for  including recovery auditor contractors in the contract-level RADV audit  process.

We made several recommendations, including that CMS modify the  selection of contracts for contract-level RADV audits to focus on those  most likely to have high rates of improper payments and that CMS  develop specific plans and a timetable for incorporating a recovery  audit contractor in the Medicare Advantage program. In response to  our report, HHS concurred with the recommendations and reaffirmed  its commitment to identifying and correcting Medicare Advantage  improper payments. By implementing our recommendations, CMS  could recover hundreds of millions of dollars in improper payments by  improving its processes for auditing payments to Medicare Advantage  organizations.

Review of federal determinations of Medicaid eligibility. In  October 2015, we reported that additional efforts were needed to  ensure that state spending is appropriately matched with federal funds  in Medicaid. States and the federal government share in the  financing of the Medicaid program, with the federal government  matching most state expenditures for Medicaid services on the basis  of a statutory formula. CMS has implemented interim measures to  review the accuracy of state eligibility determinations and examine  states’ expenditures for different eligibility groups, for which states  may receive multiple federal matching rates.

However, some states have delegated authority to the federal  government to make Medicaid eligibility determinations through the  federally facilitated exchange. CMS has excluded these states from  the reviews. This creates a gap in efforts to ensure that only eligible  individuals are enrolled in Medicaid and that state expenditures are  correctly matched by the federal government. We recommended that  CMS review federal Medicaid eligibility determinations to ascertain the  accuracy of these determinations and institute corrective action plans  where necessary.

HHS has taken some steps to improve the accuracy of Medicaid  eligibility determinations, as we recommended, but has not conducted  a systematic review of federal eligibility determinations. For example,  in March 2017, HHS reported that it is reviewing federal  determinations of Medicaid eligibility in two of the nine states that  have delegated eligibility determination authority to the federal  marketplace. Although the actions HHS has taken have value, they  are not sufficient to identify erroneous eligibility determinations.  Specifically, without a systematic review of federal eligibility  determinations, the agency lacks a mechanism to identify and correct  errors and associated payments.

section_title: Collaborating with Other Entities
paragraphs: Agencies may consider collaborating with relevant entities—such as  OMB, states, state auditors, and the IG community—to strengthen efforts  to reduce improper payments. In November 2016, we held a discussion  with various state auditors and federal agencies to identify potential  opportunities to strengthen collaboration, focusing on federal and state  initiatives related to improper payments. Further, in September 2015, we  reported on the Recovery Operations Center’s (ROC) significant  analytical services, provided primarily to IGs to support antifraud and  other activities. While funding for the ROC ended in September 2015,  officials from some small- and medium-sized IGs stated that they do not  have the capabilities to develop independent data analytics or pay for a  similar service, thus foregoing the ROC’s capabilities. We suggested that  Congress may wish to consider directing the Council of the Inspectors  General on Integrity and Efficiency to develop a legislative proposal to  reconstitute the essential capabilities of the ROC to help ensure federal  spending accountability.

section_title: Opportunities Exist to Improve the Acquisition and Operation of IT and to Address Cybersecurity Challenges
paragraphs: The federal government is projected to invest more than $89 billion on IT  in fiscal year 2017. Our work has found that federal IT investments have  too frequently failed or incurred cost overruns and schedule slippages  while contributing little to mission-related outcomes. The federal  government has spent billions of dollars on failed and poorly performing  IT investments, which often suffered from ineffective management in  areas such as project planning, requirements definition, and program  oversight and governance. In many instances, agencies had not  consistently applied best practices that are critical to successfully  acquiring IT.

In addition to spending money on new IT development, federal agencies  reported spending the majority of their IT funds on operating and  maintaining a large number of legacy (i.e., steady-state) investments. Of  the more than $80 billion reportedly spent on federal IT in fiscal year  2015, 26 federal agencies spent about $61 billion on operations and  maintenance, more than three-quarters of the total amount spent. (See  figure 6).

Further, federal legacy IT investments are becoming increasingly  obsolete; many use outdated software languages and hardware parts that  are unsupported. Specifically, in May 2016, we reported that many  agencies were using systems which had components that were, in some  cases, at least 50 years old. For example, we determined that DOD was  using 8-inch floppy disks in a legacy system that coordinates the  operational functions of the nation’s nuclear forces. In addition, Treasury  was using assembly language code—a computer language initially used  in the 1950s and typically tied to the hardware for which it was developed.  Table 5 provides examples of legacy systems across the federal  government that agencies report are 30 years old or older and use  obsolete software or hardware, and identifies those that do not have  specific plans with time frames to modernize or replace these  investments.

To address this issue, we recommended that 12 agencies identify and  plan to modernize or replace legacy systems, including establishing time  frames, activities to be performed, and functions to be replaced or  enhanced. Most agencies agreed with our recommendations or had no  comment.

The spending on legacy systems has also increased over time.  Specifically, between fiscal years 2010 and 2017, operations and  maintenance spending has increased, while the amount invested in  developing new systems has decreased by about $7.3 billion since fiscal  year 2010. (See figure 7.)

Recognizing the severity of issues related to the government-wide  management of IT, in December 2014, Congress enacted IT acquisition  reform provisions (commonly referred to as the Federal Information  Technology Acquisition Reform Act or FITARA) as part of the Carl Levin  and Howard P. ‘Buck’ McKeon National Defense Authorization Act for  Fiscal Year 2015. Among other things, the law requires action to: (1)  consolidate federal data centers, (2) enhance transparency and improve  risk management, (3) enhance agency chief information officer (CIO)  authority, (4) review IT investment portfolios, (5) expand training and use  of IT acquisition cadres, (6) purchase software government-wide, and (7)  maximize the benefit of federal strategic sourcing.

In February 2015, we introduced a new government-wide high-risk area,  Improving the Management of IT Acquisitions and Operations. This area  highlights several critical IT initiatives in need of additional executive  branch and congressional oversight, including (1) reviewing troubled  projects; (2) increasing the use of incremental development; (3) providing  transparency relative to the cost, schedule, and risk levels for major IT  investments; (4) reviewing agencies’ operational investments; (5)  consolidating data centers; and (6) streamlining agencies’ portfolios of IT  investments. We noted that agencies have inconsistently implemented  these initiatives and that more work remained to demonstrate progress in  achieving successful IT acquisitions and operations outcomes.

Further, our February 2015 High-Risk report stressed that, beyond  implementing FITARA, OMB and agencies needed to continue to  implement our prior recommendations in order to improve their ability to  effectively and efficiently invest in IT. Specifically, between fiscal years  2010 and 2015, we made 803 recommendations to OMB and federal  agencies to address shortcomings in IT acquisitions and operations,  including many to improve the implementation of the critical IT initiatives  mentioned earlier and other government-wide, cross-cutting efforts. We  noted that OMB and agencies should demonstrate government-wide  progress in the management of IT investments by, among other things,  implementing at least 80 percent of our recommendations related to  managing IT acquisitions and operations within 4 years.

In February 2017, we issued an update to our High-Risk Series and  reported that, while progress had been made in improving the  management of IT acquisitions and operations, significant work still  remained to be completed. For example, as of December 2016, OMB  and the agencies had fully implemented 366 (or about 46 percent) of the  803 recommendations. This was a 23 percent increase compared to the  percentage we reported as being fully implemented in 2015. However, in  fiscal year 2016, we made 202 new recommendations, thus further  reinforcing the need for OMB and agencies to address the shortcomings  in IT acquisitions and operations. Our ongoing work has shown that OMB  and agencies’ implementation of these recommendation will likely result  in billions of dollars in cost savings.

To better ensure that IT investments are made in the most effective  manner possible, OMB has established several initiatives to improve the  acquisition and operations of IT and achieve cost savings. However,  these efforts have been implemented inconsistently and additional OMB  and agency progress is needed to more effectively and efficiently invest in  IT.

Incremental development. OMB has emphasized the need to deliver  investments in smaller parts, or increments, in order to reduce risk;  deliver capabilities more quickly; increase the likelihood that cost,  schedule, and performance goals will be met; and facilitate the  adoption of emerging technologies. In 2010, it called for agencies’  major investments to deliver functionality every 12 months and, since  2012, every 6 months. Subsequently, FITARA codified a requirement  that agency CIOs certify that IT investments are adequately  implementing incremental development, as defined in the annual  capital planning guidance issued by OMB. However, in August  2016, we reported that approximately 36 percent of active software  projects had not planned to deliver usable functionality every 6  months for fiscal year 2016, as required by OMB guidance.

We also reported that, although OMB had issued guidance requiring  covered agency CIOs to certify that each major IT investment’s plan  for the current year adequately implements incremental development,  only three of seven agencies selected for in-depth GAO review (the  Departments of Commerce, Homeland Security, and Transportation)  had defined processes and policies intended to ensure that the  department CIO certifies that major IT investments are adequately  implementing incremental development. Accordingly, we  recommended that the remaining four agencies establish a policy and  process for certifying that major IT investments’ adequately use  incremental development. Education and HHS agreed with our  recommendation, while DOD disagreed and stated that its existing  policies address the use of incremental development. However, we  noted that the department’s policies did not comply with OMB’s  guidance and that we continued to believe our recommendation was  appropriate. Treasury did not comment on the recommendation. In  total, we have made 23 recommendations to OMB and agencies to  improve their implementation of incremental development; and as of  May 2017, 17 of our recommendations remained open.

Federal data center consolidation. Over time, the federal  government’s increasing demand for IT has led to a dramatic rise in  the number of federal data centers (defined as data processing and  storage facilities over 500 square feet with strict availability  requirements) and a corresponding increase in operational costs. To  improve the efficiency, performance, and environmental footprint of  federal data center activities, OMB established the Federal Data  Center Consolidation Initiative in February 2010. In a series of reports  over the past 6 years, we determined that, while data center  consolidation could potentially save the federal government billions of  dollars, weaknesses existed in several areas, including agencies’ data  center consolidation plans and OMB’s tracking and reporting on cost  savings.

As of March 2017, the 24 federal agencies participating in OMB’s data  center consolidation initiative had collectively reported closing 4,679  of the 10,058 total data centers and achieving approximately $2.8  billion in cost savings or avoidances from fiscal year 2012 through  2016. Further, as of December 2016, agencies were planning a total  of approximately $378 million in cost savings between fiscal years  2016 and 2018. However, this is significantly less than the  approximately $4.0 billion in fiscal year 2016 through 2018 planned  savings that agencies reported to us in November 2015 and OMB’s  $2.7 billion cost savings goal for agencies to achieve by the end of  fiscal year 2018. Of the recommendations that we made to 10  agencies in March 2016 to complete their planned data center cost  savings targets for fiscal years 2016 through 2018, all remain open.  In total, we have made 111 recommendations to OMB and agencies  to improve the federal data center consolidation effort. As of May  2017, 45 of our recommendations remained open.

IT investment portfolio management. In March 2012, OMB  launched an initiative, referred to as PortfolioStat, to maximize the  return on IT investments across the government’s portfolio.  PortfolioStat is designed to assist agencies in assessing the current  maturity of their IT investment management process, making  decisions on eliminating duplicative investments, and moving to  shared solutions (such as cloud computing) within and across  agencies.

In November 2013, we reported that agencies had identified  duplicative spending as part of PortfolioStat and that this initiative had  the potential to save at least $5.8 billion through fiscal year 2015;  however, weaknesses existed in agencies’ implementation of the  initiative, such as limitations in the CIOs’ authority. In April 2015, we  reported that, although agencies had achieved approximately $1.1  billion in PortfolioStat savings, inconsistencies in OMB’s and  agencies’ reporting made it difficult to reliably measure progress in  achieving savings. In total, we have made 69 recommendations to  improve OMB and agencies’ implementation of PortfolioStat; and as  of May 2017, only 7 of our recommendations had been implemented.

Management of software licenses. In May 2014, we reported on  federal agencies’ management of software licenses and determined  that better management was needed to achieve significant savings  government-wide. In particular, 22 of the 24 major agencies did not  have comprehensive license policies and only 2 had comprehensive  license inventories. As a result, agencies’ oversight of software  license spending was limited or lacking, thus, potentially leading to  missed savings. The potential savings could be significant considering  that, in fiscal year 2012, 1 major federal agency reported saving  approximately $181 million by consolidating its enterprise license  agreements, even though its oversight process was ad hoc. We  recommended that OMB issue needed guidance to agencies and  made 135 recommendations to the agencies to improve their policies  and practices for managing licenses. As of May 2017, 123 of our  recommendations have not yet been implemented.

In light of these issues, we convened a forum on September 14, 2016, to  explore challenges and opportunities for CIOs to improve federal IT  acquisitions and operations—with the goal of better informing  policymakers and government leadership. Forum participants, including  13 current and former federal agency CIOs, members of Congress, and  private sector IT executives, identified key actions related to seven topics:  (1) strengthening FITARA, (2) improving CIO authorities, (3) budget  formulation, (4) governance, (5) workforce, (6) operations, and (7)  transition planning. For example, participants noted that challenges with IT operations, such as the use of increasingly obsolete systems, should  be addressed by, among other things, using a strategic approach for  legacy system migration and migrating more services to cloud computing  services. A summary of the key actions, by topic area, identified during  the forum is provided in figure 8.
subsections: section_title: Cybersecurity Presents an Ongoing Challenge
paragraphs: In addition to improving the acquisition and operation of IT, opportunities  also exist to better ensure the security of federal information systems and  cyber critical infrastructure and protect the privacy of personally  identifiable information (PII). Safeguarding federal computer systems and  the systems that support critical infrastructures—referred to as cyber  critical infrastructure protection—has been a longstanding concern. The  security of federal cyber assets has been on our High-Risk List since  1997, the first time we added a government-wide issue to the list. In 2003,  we expanded this high-risk area to include the protection of critical cyber  infrastructure. In 2015, we added protecting the privacy of PII that is  collected, maintained, and shared by both federal and nonfederal entities.

As we reported in our February 2017 High-Risk report, the federal  government has taken steps intended to improve the security of its cyber  assets. For example, in July 2016, the President released Presidential  Policy Directive (PPD)-41, which set forth principles governing the federal  government’s response to cyber incidents involving government or private  sector entities. Further, in July 2016, OMB issued a revised Circular A- 130, Managing Information as a Strategic Resource, to reflect changes in  law and advances in technology and to ensure consistency with executive  orders, presidential directives, recent OMB policy, and National Institute  of Standards and Technology (NIST) standards and guidelines. Most  recently, on May 11, 2017, the President issued an executive order titled  Strengthening the Cybersecurity of Federal Networks and Critical  Infrastructure. Among other things, the order is intended to hold  department and agency heads accountable for managing cybersecurity  risk to their enterprise and support cybersecurity risk management efforts  of owners and operators of the Nation’s critical infrastructures.

In addition, the Executive Office of the President (EOP) and the  Department of Homeland Security (DHS) developed corrective action  plans intended to improve the protection of cyber assets and PII. DHS  and EOP also took other steps, such as developing and using metrics for  measuring agency progress in implementing initiatives on information  security regarding continuous monitoring, strong authentication, and anti- phishing and malware defense.

However, securing cyber assets remains a challenge for federal  agencies. In prior reports, we made a number of recommendations to  federal agencies concerning challenges in the following areas:

Designing and implementing risk-based cybersecurity programs at  federal agencies.

Providing government-wide intrusion detection and prevention  services.

Strengthening security over industry and public health data at the  Food and Drug Administration.

Improving security controls over high-impact systems.

Addressing cybersecurity for the nation’s critical infrastructures.

Protecting the security and privacy of electronic health information.

Ensuring privacy when face recognition systems are used.

Protecting the privacy of users’ data on state-based marketplaces.

Improving consumer privacy protections.

Until the administration and executive branch agencies implement the  approximately 1,000 open recommendations that we have made to  address these cyber challenges, resolve identified deficiencies, and fully  implement effective security programs and privacy practices, a broad  array of federal assets and operations remain at risk of fraud, misuse, and  disruption, and the nation’s most critical federal and private sector  infrastructure systems will remain at increased risk of attack from  adversaries. As we have previously stated, Congress should also  consider amending privacy laws to more fully protect the PII collected,  used, and maintained by the federal government.

section_title: Challenges Remain in Reducing Unneeded Federal Facilities and Managing the Federal Fleet of Vehicles
paragraphs: In 2003, we added Federal Real Property to our High-Risk List, in part  due to long-standing challenges federal agencies face in managing  federally owned real property, including disposal of excess and  underutilized property. Continuing to maintain these unneeded facilities  puts the government at risk for wasting resources due to ongoing  maintenance costs as well as lost revenue from failing to sell surplus  property. Despite past and ongoing efforts, the federal government  continues to maintain excess and underutilized property.

Our work has found that significant challenges persist in managing real  property in general and underutilized property in particular, including a  lack of reliable data to measure the extent of the problem, a complex  disposal process, costly environmental requirements, competing  stakeholder interests, and limited accessibility of some federal properties.  As of May 2017, we have 32 open recommendations to the General  Services Administration (GSA) to address these challenges. The  experiences of the Department of Veterans Affairs (VA), DOD, DHS, and  the GSA illustrate some of these challenges.

VA facility alignment. VA operates one of the largest health care  systems in the United States, with 168 medical centers and more than  1,000 outpatient facilities, totaling over 6,000 reported buildings in its  portfolio. Of these buildings, VA reported in February 2016 that over  1,000 are unneeded or underutilized, representing 11.5 million square  feet of space, requiring an estimated $26 million annually to operate  and maintain according to VA (see figure 9). As VA’s care model  shifts over time from inpatient to outpatient care, this will likely result  in additional underutilized space. However, VA has found it difficult  and costly to modernize existing facilities. A previous VA effort aimed  at modernizing and better aligning facilities was not fully implemented  due in part to stakeholder opposition. We recommended in April 2017  that VA improve guidance to effectively communicate with  stakeholders and evaluate those efforts. VA agreed with the  recommendations.

DHS reuse of St. Elizabeths. DHS efforts to consolidate its  headquarters on the west campus of St. Elizabeths has faced  numerous delays and cost increases. The west campus of St.  Elizabeths, a National Historic Landmark in Washington, D.C., is  made up of 61 buildings on about 182 acres. Many of the buildings  have been vacant for extended periods of time and are in badly  deteriorated condition. (See figure 10.) The Coast Guard has moved  into a newly constructed building on the campus, but most of the  project has been delayed. The estimated timeline for completing the  project has been extended multiple times, from an initial estimated  completion date of 2016, to an estimated completion date of 2021  based on a scaled back plan.

DOD support infrastructure. DOD manages a global real property  portfolio that consists of more than 562,000 facilities. In 1997, we  added DOD’s support infrastructure management to the High-Risk List  and since then, have reported on various obstacles DOD has  experienced in reducing excess infrastructure, more efficiently using  facilities, reducing base support costs, and achieving efficiencies by  consolidating or eliminating duplicative support services. DOD has  shown some improvement in managing its infrastructure to better  achieve reductions and efficiencies, but challenges remain.

DOD continues to maintain excess facilities, and needs to ensure  accuracy of its real property data to better identify potential areas to  reduce and consolidate facilities. For example, in March 2016 we  found DOD lacked reliable data to effectively assess how it uses  leases. We recommended actions to improve the accuracy and  completeness of these data, such as breaking out the cost and square  footage information on multiple properties included in a single lease.  DOD agreed with our findings, but did not agree with our  recommendation and has not taken action to implement it. If DOD  does not improve the reliability of its data, the department will  continue to be limited in its ability to monitor its reduction of excess  infrastructure, identify opportunities to consolidate underutilized  facilities, and identify opportunities to reduce reliance on costly leased  space by moving DOD organizations into excess facilities.

GSA warehouses. In 2014, we found that some GSA warehouses  listed as “used” had been vacant for as long as 10 years. GSA only  lists warehouses as unused if they are in the process of being  disposed, making it difficult to identify which warehouses are actually  underutilized or vacant. Two examples located in Washington, D.C.  are shown in figure 11. We recommended that GSA improve its data  related to warehouses. GSA agreed with the recommendations.

GSA, however, continues to lack a strategic approach to prioritize  warehouses and make long-term, informed decisions about  government warehouse space. As a result, GSA may have limited  ability to address this potentially growing gap as well as the unique  challenges facing GSA’s warehouse portfolio. Such a strategy would  enable GSA and tenant agencies to prioritize their needs and take a  long-term view of the warehouse inventory to support better informed  decisions.

GSA high-value leases. To reduce its overreliance on costly leases,  we recommended in September 2013 that GSA develop a long-term,  cross-agency strategy that facilitates consideration of targeted  investments in ownership. GSA agreed with our recommendation  and has taken steps to prioritize lease purchases, but has not yet  developed a strategy that considers its full portfolio of high-value  leases. Such a strategy would strengthen the business case for  stakeholders to increase ownership investments in high-value leased  properties—a necessary step for fully addressing GSA’s overreliance  on leasing in situations where ownership would be more cost effective  in the long run.

The administration and Congress have taken recent steps to reform real  property management and address the long-standing challenge of  reducing excess and underutilized property. For example, in 2015, OMB  implemented our recommendation by issuing government-wide  guidance—the National Strategy for the Efficient Use of Real Property— which aligns with many of the desirable characteristics of effective  national strategies that we have previously identified. In December  2016, two real property reform laws were also enacted that could address  the long-standing problem of federal excess and underutilized property.

The Federal Assets Sale and Transfer Act of 2016 may help address  stakeholder influence by establishing an independent board to identify  and recommend civilian federal buildings for disposal. The President  has not yet appointed the board, but GSA has started gathering  information from the agencies to support the board once it is constituted.  In addition, the Federal Property Management Reform Act of 2016  codified the Federal Real Property Council (FRPC)—a group of senior  real property officers from each federal agency— to collaborate to  improve real property management and reduce costs to the federal  government. For example, the act requires that the FRPC, in  consultation with OMB and GSA, update annually a property  management plan template with government-wide performance measures  to reduce surplus property and achieve better utilization of underutilized  property.
subsections: section_title: Challenges to Managing the Federal Vehicle Fleet
paragraphs: In fiscal year 2015, federal agencies spent about $4.3 billion on over  640,000 vehicles that agencies own or lease. Agencies are responsible  for managing their vehicle fleet, which includes making decisions about  the number of vehicles the agency needs and deciding when to dispose  of a vehicle. In two reviews we conducted between 2015 and 2017, we  found that selected agencies were spending over $20 million annually on  vehicles that may not have been fully utilized. At six agencies, we found  that agencies either had no criteria to determine if a vehicle was used,  could not document that the agency applied their utilization criteria, or  retained vehicles that did not meet the agency’s criteria.

In January 2016 and April 2017, we recommended that specific agencies  take actions to identify and eliminate unnecessary vehicles from their  respective fleets. In response to our recommendations, some agencies  have taken steps to identify underutilized vehicles in their fleets. However,  given the decentralized nature of federal fleets and our analysis of a small  sample of agencies, it is likely that additional cost savings are possible  through enhanced agency practices.

I recently met with the Director of OMB to discuss a range of issues,  including those discussed today. Following that meeting, I sent the  Director a letter highlighting open priority recommendations to OMB on  important issues. I am also meeting with the heads of the major agencies  to discuss the pressing management risks and challenges that confront  their agencies, as well as sending them individual letters identifying the  priority GAO open recommendations that need their personal attention.  We have found in recent years that such letters are helpful in focusing  attention on the most important issues.

Ultimately, addressing the federal government’s long-term unsustainable  fiscal path will require broad fiscal policy changes to address the  imbalance between federal revenues and spending. However, by taking  immediate action on government-wide management challenges,  Congress and the executive branch can begin to address our fiscal  situation by preventing fraud, waste, and abuse and ensuring funds are  put to the best possible use.

Thank you, Chairman Enzi, Ranking Member Sanders, and members of  the Committee, this concludes my prepared statement. I would be  pleased to answer questions.

section_title: GAO Contacts
paragraphs: For further information on this testimony, please contact J. Christopher  Mihm, Managing Director, Strategic Issues, who may be reached at (202)  512-6806 or mihmj@gao.gov, or Susan J. Irving, Director for Federal  Budget Analysis, Strategic Issues, who may be reached at (202) 512- 6806 or irvings@gao.gov. Contact points for the individual areas listed in  our 2017 Fragmentation, Overlap, and Duplication annual report can be  found on the first page of each area in GAO-17-491SP. Contact points for  the individual high-risk areas are listed in GAO-17-317 and on our high- risk website. Contact points for our Congressional Relations and Public  Affairs offices may be found on the last page of this statement.

section_title: Related GAO Products
paragraphs: 2017 Annual Report: Additional Opportunities to Reduce  Fragmentation, Overlap, and Duplication and Achieve Other Financial  Benefits. GAO-17-491SP. Washington, D.C.: April 26, 2017.

High-Risk Series: Progress on Many High-Risk Areas, While  Substantial Efforts Needed on Others. GAO-17-317. Washington,  D.C.: February 15, 2017.

High-Risk Series: An Update. GAO-15-290. Washington, D.C.:  February 11, 2015.
subsections: section_title: Improper Payments
paragraphs: SSA Disability Benefits: Comprehensive Strategic Approach Needed  to Enhance Antifraud Activities. GAO-17-228. Washington, D.C.: April  17, 2017.

Financial Audit: Fiscal Years 2016 and 2015 Consolidated Financial  Statements of the U.S. Government. GAO-17-283R. Washington,  D.C.: January 12, 2017.

Improper Payments: Strategy and Additional Actions Needed to Help  Ensure Agencies Use the Do Not Pay Working System as Intended.  GAO-17-15. Washington, D.C.: October 14, 2016.

Medicare: Claim Review Programs Could Be Improved with Additional  Prepayment Reviews and Better Data. GAO-16-394. Washington,  D.C.: April 13, 2016.

Medicare Advantage: Fundamental Improvements Needed in CMS’s  Effort to Recover Substantial Amounts of Improper Payments.  GAO-16-76. Washington, D.C.: April 8, 2016.

Medicaid: Additional Efforts Needed to Ensure that State Spending is  Appropriately Matched with Federal Funds. GAO-16-53. Washington,  D.C.: October 16, 2015.

Federal Spending Accountability: Preserving Capabilities of Recovery  Operations Center Could Help Sustain Oversight of Federal  Expenditures. GAO-15-814. Washington, D.C.: September 14, 2015.

A Framework for Managing Fraud Risks in Federal Programs.

GAO-15-593SP. Washington, D.C.: July 2015.

Medicaid: Additional Actions Needed to Help Improve Provider and  Beneficiary Fraud Controls. GAO-15-313. Washington, D.C.: May 14,  2015.

Improper Payments: TRICARE Measurement and Reduction Efforts  Could Benefit from Adopting Medical Record Reviews. GAO-15-269.  Washington, D.C.: February 18, 2015.

Supplemental Nutrition Assistance Program: Enhanced Detection  Tools and Reporting Could Improve Efforts to Combat Recipient  Fraud. GAO-14-641. Washington, D.C.: August 21, 2014.

DOD Financial Management: Significant Improvements Needed in  Efforts to Address Improper Payment Requirements. GAO-13-227.  Washington, D.C.: May 13, 2013.

Health Care Fraud: Types of Providers Involved in Medicare,  Medicaid, and the Children’s Health Insurance Program Cases.  GAO-12-820. Washington, D.C.: September 7, 2012.

Recovery Act: IRS Quickly Implemented Tax Provisions, but  Reporting and Enforcement Improvements Are Needed. GAO-10-349.  Washington, D.C.: February 10, 2010.

section_title: Information Technology
paragraphs: Information Technology: Opportunities for Improving Acquisitions and  Operations. GAO-17-251SP. Washington, D.C.: April 11, 2017.

Information Technology Reform: Agencies Need to Increase Their  Use of Incremental Development Practices. GAO-16-469.  Washington, D.C.: August 16, 2016.

Information Technology: Federal Agencies Need to Address Aging  Legacy Systems. GAO-16-468. Washington, D.C.: May 25, 2016.

Data Center Consolidation: Agencies Making Progress, but Planned  Savings Goals Need to Be Established .  GAO-16-323. Washington, D.C.: March 3, 2016.

Information Technology: Additional OMB and Agency Actions Needed  to Ensure Portfolio Savings Are Realized and Effectively Tracked.  GAO-15-296. Washington, D.C.: April 16, 2015.

Data Center Consolidation: Reporting Can Be Improved to Reflect  Substantial Planned Savings. GAO-14-713. Washington, D.C.:  September 25, 2014.

Federal Software Licenses: Better Management Needed to Achieve  Significant Savings Government-Wide. GAO-14-413. Washington,  D.C.: May 22, 2014.

Information Technology: Additional OMB and Agency Actions Are  Needed to Achieve Portfolio Savings. GAO-14-65. Washington, D.C.:  November 6, 2013.

Information Technology: OMB and Agencies Need to More Effectively  Implement Major Initiatives to Save Billions of Dollars. GAO-13-796T.  Washington, D.C.: July 25, 2013.

Data Center Consolidation: Strengthened Oversight Needed to  Achieve Cost Savings Goal. GAO-13-378. Washington, D.C.: April 23,  3013.

Data Center Consolidation: Agencies Making Progress on Efforts, but  Inventories and Plans Need to Be Completed. GAO-12-742.  Washington, D.C.: July 19, 2012.

Data Center Consolidation: Agencies Need to Complete Inventories  and Plans to Achieve Expected Savings. GAO-11-565. Washington,  D.C.: July 19, 2011.

section_title: Federal Real Property and Vehicles
paragraphs: Federally Owned Vehicles: Agencies Should Improve Processes to  Identify Underutilized Vehicles. GAO-17-426. Washington, D.C.: April  25, 2017.

VA Real Property: VA Should Improve Its Efforts to Align Facilities  with Veterans’ Needs. GAO-17-349. Washington, D.C.: April 5, 2017.

Federal Real Property: Efforts Made, but Challenges Remain in  Reducing Unneeded Facilities. GAO-16-869T. Washington, D.C.:  September 23, 2016.

Defense Infrastructure: More Accurate Data Would Allow DOD to  Improve the Tracking, Management, and Security of Its Leased  Facilities. GAO-16-101. Washington, D.C.: March 15, 2016.

Federally Leased Vehicles: Agencies Should Strengthen Processes to  Reduce Underutilized Vehicles. GAO-16-136. Washington, D.C.:  January 14, 2016.

Federal Real Property: Strategic Focus Needed to Help Manage Vast  and Diverse Warehouse Portfolio. GAO-15-41. Washington, D.C.:  November 12, 2014.

DOD Joint Bases: Implementation Challenges Demonstrate Need to  Reevaluate the Program. GAO-14-577. Washington, D.C.: September  19, 2014.

Defense Infrastructure: DOD Needs to Improve Its Efforts to Identify  Unutilized and Underutilized Facilities. GAO-14-538. Washington,  D.C.: September 8, 2014.

Federal Real Property: Greater Transparency and Strategic Focus  Needed for High-Value GSA Leases. GAO-13-744. Washington, D.C.:  Sept. 19, 2013.

Federal Real Property: National Strategy and Better Data Needed to  Improve Management of Excess and Underutilized Property.  GAO-12-645. Washington, D.C.: June 20, 2012.

Excess Facilities: DOD Needs More Complete Information and a  Strategy to Guide Its Future Disposal Efforts. GAO-11-814.  Washington, D.C.: September 19, 2011.

section_title: Long-Term Fiscal Outlook
paragraphs: The Nation’s Fiscal Health: Action is Needed to Address the Federal  Government’s Fiscal Future. GAO-17-237SP. Washington, D.C.:  January 17, 2017.

Fiscal Outlook & The Debt Key Issues Page, accessed April 28, 2017,

Social Security’s Future: Answers to Key Questions. GAO-16-75SP.

Washington, D.C.: October 27, 2015.

Fiscal Outlook: Addressing Improper Payments and the Tax Gap  Would Improve the Government’s Fiscal Position. GAO-16-92T.  Washington, D.C.: October 1, 2015.

This is a work of the U.S. government and is not subject to copyright protection in the  United States. The published product may be reproduced and distributed in its entirety  without further permission from GAO. However, because this work may contain  copyrighted images or other material, permission from the copyright holder may be  necessary if you wish to reproduce this material separately.

Fast facts: The federal government is on a long-term, unsustainable fiscal path—it is spending more money than it is collecting. We've made hundreds of recommendations through our High Risk list and our work on duplicative, overlapping, and fragmented federal programs that could help the government save tens of billions of dollars.

In this testimony, we discuss some of these recommendations, including reducing improper payments (particularly in the areas of Medicare, Medicaid, and the Earned Income Tax Credit), improving IT management and cybersecurity of federal IT systems, and better managing federal real property.

Question-summary annotations: questions: question: What action needs to be taken?
answer: Action Needed to Address Growth in Improper Payments.
child_questions: question: What is the suggested action to increase savings?
answer: Reducing payments that should not have been made or that were made in an incorrect amount could yield significant savings.

question: What improper payment existed in the government in 2016?
answer: The reported government-wide improper payment estimate for fiscal year 2016 was over $144 billion.
child_questions: question: To what was the improper payment attributed?
answer: The reported government-wide improper payment estimate for fiscal year 2016 was over $144 billion. This estimate was attributable to 112 programs spread among 22 agencies.

question: What is the total improper payment estimated to have totaled since 2003?
answer: Since fiscal year 2003, cumulative estimates have totaled over $1.2 trillion.

questions: question: What is needed regarding IT?
answer: Improvements Needed in Information Technology (IT) Acquisition and Operation and in Addressing Cybersecurity Challenges.

question: What is the government planning regarding IT?
answer: The government is projected to invest more than $89 billion on IT in fiscal year 2017.
child_questions: question: What is the issue with their investment?
answer: However, historically, these investments have frequently failed, incurred cost overruns and schedule slippages, or contributed little to mission-related outcomes.

question: How could the government better serve IT?
answer: Better managing IT could result in billions of dollars in savings and much more efficient and effective government.
child_questions: question: What other ways could IT be improved?
answer: Opportunities also exist to better ensure the security of federal information systems and cyber critical infrastructure and protect the privacy of personally identifiable information.

questions: question: What challenges exist in federal facilities and vehicles?
answer: Challenges Remain in Reducing Unneeded Federal Facilities and Managing the Federal Fleet of Vehicles.
child_questions: question: What maintenance issues exist regarding the facilities?
answer: Continuing to maintain unneeded facilities puts the government at risk for wasting resources due to ongoing maintenance costs as well as lost revenue from failing to sell surplus property.

question: What maintenance issues exist regarding the vehicles?
answer: In addition, in fiscal year 2015, federal agencies spent about $4.3 billion on over 640,000 vehicles that agencies own or lease.
child_questions: question: What has GAO discovered about the spending of some agencies on vehicles?
answer: In prior work, GAO found that selected agencies were spending over $20 million annually on vehicles that may not have been fully utilized.

question: What is likely possible in reducing unnecessary use?
answer: It is likely that additional cost savings are possible through enhanced agency practices.

questions: question: What is the government facing fiscally in the future?
answer: The federal government faces a long-term, unsustainable fiscal path based on an imbalance between federal revenues and spending.
child_questions: question: How can policymakers put the government on a more sustainable path?
answer: To put the government on a more sustainable long-term path, policymakers will need to have a broad fiscal plan that considers reducing spending, increasing revenue, or more likely, a combination of the two.
child_questions: question: How can this change be enacted?
answer: While addressing this structural imbalance will require fiscal policy changes, in the near term, opportunities exist to act in a number of areas to improve this situation.