oversight

Government Efficiency and Effectiveness: Opportunities for Improvement and Considerations for Restructuring

Published by the Government Accountability Office on 2012-03-21.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                             United States Government Accountability Office

GAO                          Testimony
                             Before the Committee on Homeland
                             Security and Governmental Affairs,
                             U.S. Senate

                             Government Efficiency and
For Release on Delivery
Expected at 10:00 a.m. EDT
Wednesday, March 21, 2012

                             Effectiveness:
                             Opportunities for
                             Improvement and
                             Considerations for
                             Restructuring
                             Statement of Patricia A. Dalton
                             Chief Operating Officer




GAO-12-454T
Mr. Chairman, Ranking Member Collins, and Members of the Committee:

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. 1

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




1
 See GAO, 2012 Annual Report: Opportunities to Reduce Duplication, Overlap and
Fragmentation, Achieve Savings, and Enhance Revenue, GAO-12-342SP (Washington,
D.C.: Feb. 28, 2012) and Follow-up on 2011 Report: Status of Actions Taken to Reduce
Duplication, Overlap, and Fragmentation, Save Tax Dollars, and Enhance Revenue,
GAO-12-453SP (Washington, D.C.: Feb. 28, 2012).




Page 1                                                                    GAO-12-454T
                               •    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.



Reexamining Federal
Government
Structures and
Operations

Reforming and              On February 17th, Chairman Lieberman and Senator Warner introduced
Consolidating Government   S. 2129, entitled “Reforming and Consolidating Government Act of 2012”,
Act of 2012 (S. 2129)      a bill renewing the Presidential authority to propose government
                           organizational changes and obtain congressional approval through an
Would Renew and Expand     expedited process. From 1932 to 1984, Congress provided the President
President’s Authority to   with some form of reorganization authority. 2 S. 2129 renews most of the
Propose Restructurings     statutory framework 3 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. 4 Additionally, the President would be




                           2
                            Ronald C. Moe, Congressional Research Service, The President’s Reorganization
                           Authority: Review and Analysis (Washington, D.C.: Mar. 8, 2001).
                           3
                            The Presidential reorganization authority is codified at chapter 9 of title 5 of the United
                           States Code.
                           4
                            See 5 U.S.C. § 101 for a list of all executive departments.




                           Page 2                                                                            GAO-12-454T
permitted to propose the creation of a new agency, a restriction which
was included by the 1984 amendment of this authority. 5

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, 6 (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.

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.

S. 2129 would impose an additional requirement that any plan permitted
to go into effect must be an efficiency-enhancing plan as determined by
the Office of Management and Budget (OMB). In order for a plan to be
considered an efficiency-enhancing plan, the Director of OMB must
determine that such plan will result in, or is likely to result in, either a
decrease in the number of agencies or cost savings in performing the
functions that are the subject of the plan. Therefore, this provision would
allow for a consolidation that decreases the number of agencies by, for



5
 Reorganization Act Amendments of 1984, Pub. L. No. 98-614, 98 Stat. 3192
(Nov. 8, 1984).
6
 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).




Page 3                                                                      GAO-12-454T
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. 7 This
change addressed constitutional concerns with the one-house legislative
veto, 8 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. 9 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


7
Days are calculated by calendar days of continuous session of Congress.
8
 Immigration and Naturalization Service v. Chadha, 462 U.S. 919 (1983), holding the one-
house legislative veto unconstitutional.
9
 This 75 day period begins once a resolution of approval has been introduced in the
House and the Senate. A resolution must be introduced the first day of session following
submission of a plan.




Page 4                                                                       GAO-12-454T
                              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.

Use of Prior Reorganization   Presidents have used reorganization authorities to submit more than 100
Authorities                   plans to Congress, proposing a variety of changes from minor
                              reorganizations to major ones. 10 Examples of approved Presidential plans
                              include:

                              •   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




                              10
                                Henry B. Hogue, Congressional Research Service, Executive Branch Reorganization
                              Initiatives During the 112th Congress: A Brief Overview (Washington, D.C.: Feb. 13,
                              2012).




                              Page 5                                                                    GAO-12-454T
                           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. 11 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. 12


Balancing the Role of      A major issue for consideration for today’s hearing is the question of
Congress and the           whether and how to change Congress’ normal deliberative process for
Executive Branch in        reviewing and shaping executive branch reorganization proposals.
                           Expedited reorganization authority can enable the President to propose
Developing Restructuring   reorganizations that are intended to increase the efficiency and
Proposals                  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


                           11
                             In 1995, the President was authorized to prepare and transmit to congress a
                           reorganization plan pursuant to this reorganization authority for reorganizing the surface
                           transportation activities of the Department of Transportation and the relationship of the
                           Saint Lawrence Seaway Development Corporation to the Department. Pub. L. No. 104-50,
                           § 335, 109 Stat. 436 (Nov. 15, 1995).
                           12
                             Toward a Logical Governing Structure: Restoring Executive Reorganization Authority;
                                                                                              th
                           Hearing Before House Committee on Government Reform, 108 Cong. (2003). Moreover,
                           during consideration of the reform of the intelligence community, the House passed
                           version of the bill included a reauthorization of the Presidential reorganization authority
                           which was limited to reorganization plans involving enumerated intelligence units. See,
                           9/11 Recommendations Implementation Act, H.R. 10, 108th Cong. § 5021 (2003). This
                           provision was not enacted.




                           Page 6                                                                        GAO-12-454T
                            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.

Successful Government       Throughout the 20th century, efforts to structure the federal government
Reorganizations Balanced    to address the economic and political concerns of the time met with
Executive and Legislative   varying degrees of success. The first Hoover Commission, 13 which lasted
Roles                       from 1947 to 1949, is considered by many to have been the most
                            successful of government restructuring efforts. The membership was



                            13
                              The commission’s formal name was the Commission on Organization of the Executive
                            Branch. Its membership: Former President Herbert Hoover, Dean Acheson, Sen. George
                            Aiken, Rep. Clarence Brown, Arthur Flemming, James A. Forrestal, Joseph P. Kennedy,
                            Rep. Carter Manasco, Sen. John L. McClellan, George Mead, James K. Pollock, and
                            James Rowe.




                            Page 7                                                                  GAO-12-454T
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. 14 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.” 15

By contrast, the second Hoover Commission, referred to as Hoover II,
which lasted from 1953 to 1954, examined policy areas with the goal of
cutting government programs. However, Hoover II lacked the support of
the President, who preferred to use his own advisory group 16 in managing
the government. It also lacked the support of Congress and the public,
neither of which, according to CRS, cared to cut the government at a time
when federally run programs were generally held in high esteem and
considered efficient and beneficial. 17 More than 60 percent of Hoover II’s
recommendations were implemented, but these were mostly drawn from
the commission’s technical recommendations rather than from its major
ones (such as changing the government’s policies on lending, subsidies,



14
  Ronald C. Moe, The Hoover Commissions Revisited (Boulder, Colorado: Westview
Press, 1982), 2.
15
 Ronald C. Moe, Congressional Research Service, The President’s Reorganization
Authority: Review and Analysis (Washington, D.C.: Mar. 8, 2001).
16
  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.
17
 Moe, 105.




Page 8                                                                   GAO-12-454T
and water resources) that would have substantively cut federal
programs. 18

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.




18
  Summary of the Objectives, Operations, and Results of the Commissions on
Organization of the Executive Branch of the Government (First and Second Hoover
Commissions), House Committee on Government Operations (Washington, D.C.: May
1963), 31-33.




Page 9                                                                 GAO-12-454T
Complexity of Government   No matter what plans are made to reorganize the government, fulfilling
Reorganizations Require    the promise of these plans will depend on their effective implementation.
Clear Goals and Careful    The creation of a new organization may vary in terms of size and
                           complexity. However, building an effective organization requires
Implementation Planning    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. 19 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. 20

                           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.




                           19
                             GAO, Highlights of a GAO Forum: Mergers and Transformation: Lessons Learned for a
                           Department of Homeland Security and Other Federal Agencies, GAO-03-293SP
                           (Washington, D.C.: Nov. 14, 2002).
                           20
                             GAO, Results-Oriented Cultures: Implementation Steps to Assist Mergers and
                           Organizational Transformations, GAO-03-669 (Washington, D.C. July 2, 2003) provides
                           additional information on how to implement transformational change.




                           Page 10                                                                  GAO-12-454T
Key Practices Found in Successful Mergers and Organizational
Transformations

 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.

Source: GAO, Highlights of a GAO Forum: Mergers and Transformation: Lessons Learned for a Department of Homeland Security and
Other Federal Agencies, GAO-03-293SP (Washington, D.C.: Nov. 14, 2002).




Page 11                                                                                                     GAO-12-454T
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.




Page 12                                                         GAO-12-454T
Reorganization Authority     Given the complex challenges associated with government restructurings,
Calls For a Description of   it is important to note that S. 2129 would renew the requirement that the
Intended Performance         President submit as part of a reorganization plan a description of what it
                             intends to achieve and a plan for implementation. Specifically, the
Improvements, Estimated      President must estimate any reduction or increase in expenditures
Savings, and an              (itemized so far as practicable), and describe any improvements in
Implementation Plan          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.


Oversight of                 Congressional involvement is needed not just in the initial design of the
Implementation               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


                             Page 13                                                             GAO-12-454T
                           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.


GPRA Modernization Act     Many federal efforts, including those related to protecting food and
Provides Another Tool to   agriculture, providing homeland security, and ensuring a well trained and
Reexamine Government       educated workforce, transcend more than one agency, yet agencies face
                           a range of challenges and barriers when they attempt to work
Programs and Improve       collaboratively. Both Congress and the executive branch have recognized
Coordination               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.




                           Page 14                                                          GAO-12-454T
                        In our series of reports on the topic to date, we have identified a number
Reducing Duplication,   of areas of potential duplication, overlap, or fragmentation, as well as
Overlap, and            opportunities for agencies or Congress to consider taking action that
                        could either reduce the cost of government operations or enhance
Fragmentation Can       revenue collections for the Treasury. For example, our 2012 annual report
Improve Government      presents 51 areas where programs may be able to achieve greater
                        efficiencies or become more effective in providing government services. 21
Efficiency and          We have also continued to monitor developments in the 81 areas that we
Effectiveness           identified a year ago in the first report we issued in this series. 22 Our 2011
                        follow-up report describes the extent to which progress has been made to
                        address these areas. 23 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.


2012 Annual Report      In our 2012 annual report, we identified a total of 51 areas, including 32
Identified 51           areas of potential duplication, overlap, or fragmentation, as well as 19
Opportunity Areas       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.




                        21
                          GAO, 2012 Annual Report: Opportunities to Reduce Duplication, Overlap and
                        Fragmentation, Achieve Savings, and Enhance Revenue, GAO-12-342SP (Washington,
                        D.C.: Feb. 28, 2012).
                        22
                          GAO, Opportunities to Reduce Potential Duplication in Government Programs, Save
                        Tax Dollars, and Enhance Revenue, GAO-11-318SP (Washington, D.C.: Mar. 1, 2011).
                        23
                          GAO, Follow-up on 2011 Report: Status of Actions Taken to Reduce Duplication,
                        Overlap, and Fragmentation, Save Tax Dollars, and Enhance Revenue, GAO-12-453SP
                        (Washington, D.C.: Feb. 28, 2012).




                        Page 15                                                                 GAO-12-454T
                                          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.

Table 1: Duplication, Overlap, and Fragmentation Areas Identified

Mission                      Areas identified
Agriculture                  1.   Protection of Food and Agriculture: Centrally coordinated oversight is needed to ensure nine
                                  federal agencies effectively and efficiently implement the nation’s fragmented policy to defend the
                                  food and agriculture systems against potential terrorist attacks and major disasters.
Defense                      2.   Electronic Warfare: Identifying opportunities to consolidate Department of Defense airborne
                                  electronic attack programs could reduce overlap in the department’s multiple efforts to develop
                                  new capabilities and improve the department’s return on its multibillion-dollar acquisition
                                  investments.
                             3.   Unmanned Aircraft Systems: Ineffective acquisition practices and collaboration efforts in the
                                  Department of Defense unmanned aircraft systems portfolio creates overlap and the potential for
                                  duplication among a number of current programs and systems.
                             4.   Counter-Improvised Explosive Device Efforts: The Department of Defense continues to risk
                                  duplication in its multibillion-dollar counter-improvised explosive device efforts because it does not
                                  have a comprehensive database of its projects and initiatives.
                             5.   Defense Language and Culture Training: The Department of Defense needs a more integrated
                                  approach to reduce fragmentation in training approaches and overlap in the content of training
                                  products acquired by the military services and other organizations.
                             6.   Stabilization, Reconstruction, and Humanitarian Assistance Efforts: Improving the
                                  Department of Defense’s evaluations of stabilization, reconstruction, and humanitarian assistance
                                  efforts, and addressing coordination challenges with the Department of State and the U.S.
                                  Agency for International Development, could reduce overlapping efforts and result in the more
                                  efficient use of taxpayer dollars.
Economic development         7.   Support for Entrepreneurs: Overlap and fragmentation among the economic development
                                  programs that support entrepreneurial efforts require the Office of Management and Budget and
                                  other agencies to better evaluate the programs and explore opportunities for program
                                  restructuring, which may include consolidation, within and across agencies.
                             8.   Surface Freight Transportation: Fragmented federal programs and funding structures are not
                                  maximizing the efficient movement of freight.
Energy                       9.   Department of Energy Contractor Support Costs: The Department of Energy should assess
                                  whether further opportunities could be taken to streamline support functions, estimated to cost
                                  over $5 billion, at its contractor-managed laboratory and nuclear production and testing sites, in
                                  light of contractors’ historically fragmented approach to providing these functions.
                             10. Nuclear Nonproliferation: Comprehensive review needed to address strategic planning
                                 limitations and potential fragmentation and overlap concerns among programs combating nuclear
                                 smuggling overseas.




                                          Page 16                                                                          GAO-12-454T
Mission                  Areas identified
General government       11. Personnel Background Investigations: The Office of Management and Budget should take
                             action to prevent agencies from making potentially duplicative investments in electronic case
                             management and adjudication systems.
                         12. Cybersecurity Human Capital: Governmentwide initiatives to enhance the cybersecurity
                             workforce in the federal government need better structure, planning, guidance, and coordination
                             to reduce duplication.
                         13. Spectrum Management: Enhanced coordination of federal agencies’ efforts to manage radio
                             frequency spectrum and an examination of incentive mechanisms to foster more efficient
                             spectrum use may aid regulators’ attempts to jointly respond to competing demands for spectrum
                             while identifying valuable spectrum that could be auctioned for commercial use, thereby
                             generating revenues for the U.S. Treasury.
Health                   14. Health Research Funding: The National Institutes of Health, Department of Defense, and
                             Department of Veterans Affairs can improve sharing of information to help avoid the potential for
                             unnecessary duplication.
                         15. Military and Veterans Health Care: The Departments of Defense and Veterans Affairs need to
                             improve integration across care coordination and case management programs to reduce
                             duplication and better assist servicemembers, veterans, and their families.
Homeland security/Law    16. Department of Justice Grants: The Department of Justice could improve how it targets nearly
enforcement                  $3.9 billion to reduce the risk of potential unnecessary duplication across the more than 11,000
                             grant awards it makes annually.
                         17. Homeland Security Grants: The Department of Homeland Security needs better project
                             information and coordination among four overlapping grant programs.
                         18. Federal Facility Risk Assessments: Agencies are making duplicate payments for facility risk
                             assessments by completing their own assessments, while also paying the Department of
                             Homeland Security for assessments that the department is not performing.
Information technology   19. Information Technology Investment Management: The Office of Management and Budget, and
                             the Departments of Defense and Energy need to address potentially duplicative information
                             technology investments to avoid investing in unnecessary systems.
International affairs    20. Overseas Administrative Services: U.S. government agencies could lower the administrative
                             cost of their operations overseas by increasing participation in the International Cooperative
                             Administrative Support Services system and by reducing reliance on American officials overseas
                             to provide these services.
                         21. Training to Identify Fraudulent Travel Documents: Establishing a formal coordination
                             mechanism could help reduce duplicative activities among seven different entities that are
                             involved in training foreign officials to identify fraudulent travel documents.
Science and the          22. Coordination of Space System Organizations: Fragmented leadership has led to program
environment                  challenges and potential duplication in developing multibillion-dollar space systems.
                         23. Space Launch Contract Costs: Increased collaboration between the Department of Defense
                             and the National Aeronautics and Space Administration could reduce launch contracting
                             duplication.
                         24. Diesel Emissions: Fourteen grant and loan programs at the Department of Energy, Department
                             of Transportation, and the Environmental Protection Agency, and three tax expenditures fund
                             activities that have the effect of reducing mobile source diesel emissions; enhanced collaboration
                             and performance measurement could improve these fragmented and overlapping programs.
                         25. Environmental Laboratories: The Environmental Protection Agency needs to revise its overall
                             approach to managing its 37 laboratories to address potential overlap and fragmentation and
                             more fully leverage its limited resources.




                                     Page 17                                                                        GAO-12-454T
Mission                     Areas identified
                            26. Green Building: To evaluate the potential for overlap or fragmentation among federal green
                                building initiatives, the Department of Housing and Urban Development, the Department of
                                Energy, and the Environmental Protection Agency should lead other federal agencies in
                                collaborating on assessing their investments in more than 90 initiatives to foster green building in
                                the nonfederal sector.
Social services             27. Social Security Benefit Coordination: Benefit offsets for related programs help reduce the
                                potential for overlapping payments but pose administrative challenges.
                            28. Housing Assistance: 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.
Training, employment, and   29. Early Learning and Child Care: The Departments of Education and Health and Human Services
education                       should extend their coordination efforts to other federal agencies with early learning and child
                                care programs to mitigate the effects of program fragmentation, simplify children’s access to
                                these services, collect the data necessary to coordinate operation of these programs, and identify
                                and minimize any unwarranted overlap and potential duplication.
                            30. Employment for People with Disabilities: Better coordination among 50 programs in nine
                                federal agencies that support employment for people with disabilities could help mitigate program
                                fragmentation and overlap, and reduce the potential for duplication or other inefficiencies.
                            31. Science, Technology, Engineering, and Mathematics Education: Strategic planning is needed
                                to better manage overlapping programs across multiple agencies.
                            32. Financial Literacy: Overlap among financial literacy activities makes coordination and
                                clarification of roles and responsibilities essential, and suggests potential benefits of
                                consolidation.
                                         Source: GAO-12-342SP.



                                         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




                                         Page 18                                                                         GAO-12-454T
    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



    Page 19                                                           GAO-12-454T
    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


    Page 20                                                            GAO-12-454T
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. 24

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


24
 GAO, Rural Housing: Options for Optimizing the Federal Role in Rural Housing
Development, GAO/RCED-00-241 (Washington, D.C.: Sept. 15, 2000).




Page 21                                                                  GAO-12-454T
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


Page 22                                                           GAO-12-454T
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. 25 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


25
  See GAO, Government Performance and Accountability: Tax Expenditures Represent a
Substantial Federal Commitment and Need to Be Reexamined, GAO-05-690
(Washington, D.C.: Sept. 23, 2005) and GAO-11-318SP.




Page 23                                                                GAO-12-454T
    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 26 and
    case management 27 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


    26
      According to the National Coalition on Care Coordination, care coordination is a client-
    centered, assessment-based interdisciplinary approach to integrating health care and
    social support services in which an individual’s needs and preferences are assessed, a
    comprehensive care plan is developed, and services are managed and monitored by an
    identified care coordinator.
    27
      According to the Case Management Society of America, case management is defined
    as a collaborative process of assessment, planning, facilitation, and advocacy for options
    and services to meet an individual’s health needs through communication and available
    resources to promote quality, cost-effective outcomes.




    Page 24                                                                        GAO-12-454T
implemented separately by each of the military services, most of which
have implemented the RCP within their existing wounded warrior
programs. 28

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


28
  The Navy, Air Force, and Marine Corps have all implemented the RCP within their
existing wounded warrior programs. The Army and the U.S. Special Operations Command
provide services that meet the requirements of the RCP, although they did not specifically
implement this program.




Page 25                                                                      GAO-12-454T
    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. 29 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




    29
     GAO, DOD and VA Health Care: Action Needed to Strengthen Integration across Care
    Coordination and Case Management Programs, GAO-12-129T (Washington, D.C.:
    Oct. 6, 2011).




    Page 26                                                                GAO-12-454T
and DOE. 30 These investments account for about $1.2 billion in IT
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.

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



30
 GAO, Information Technology: Departments of Defense and Energy Need to Address
Potentially Duplicative Investments, GAO-12-241 (Washington, D.C.: Feb. 17, 2012).




Page 27                                                                  GAO-12-454T
    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. 31 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. 32

    We also identified actions FEMA could take to identify and mitigate any
    unnecessary duplication in these programs, such as collecting more


    31
     GAO, Homeland Security: DHS Needs Better Project Information and Coordination
    among Four Overlapping Grant Programs, GAO-12-303 (Washington, D.C.:
    Feb. 28, 2012).
    32
      Department of Homeland Security Office of Inspector General, Efficacy of DHS Grant
    Programs, OIG-1069 (Washington, D.C.: Mar. 22, 2010).




    Page 28                                                                    GAO-12-454T
    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. 33 We found
    that strategic planning is needed to better manage overlapping programs
    across multiple agencies.

    In January 2012, we reported that 173 of the 209 (83 percent) STEM
    education programs administered by 13 federal agencies overlapped to
    some degree with at least 1 other program in that they offered similar
    services to target groups—such as K-12 students, postsecondary
    students, K-12 teachers, and college faculty and staff—to achieve similar
    objectives. 34 These overlapping programs largely resulted from federal
    efforts to both create and expand programs across many agencies in an
    effort to improve STEM education and increase the number of students
    going into related fields. Overlapping programs can lead to individuals
    and institutions being eligible for similar services in similar STEM fields


    33
     Pub. L. No. 111-358, § 101, 124 Stat. 3982, 3984 (2011).
    34
      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).




    Page 29                                                                 GAO-12-454T
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


Page 30                                                          GAO-12-454T
    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,



    Page 31                                                           GAO-12-454T
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. 35 DOD has taken some
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


35
 GAO, Global Positioning System: Significant Challenges in Sustaining and Upgrading
Widely Used Capabilities, GAO-09-325 (Washington, D.C.: Apr. 30, 2009).




Page 32                                                                  GAO-12-454T
    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. 36 We recommended that the Office of the Under
    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


    36
      GAO, Military Training: Additional Actions Needed to Improve Planning and
    Coordination of Army and Marine Corps Language and Culture Training, GAO-11-456
    (Washington, D.C.: May 26, 2011).




    Page 33                                                                GAO-12-454T
    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



    Page 34                                                            GAO-12-454T
million from federal agencies for risk assessments and other security
services in fiscal year 2011. 37 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. 38 We found that
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.



37
  GAO, Homeland Security: The Federal Protective Service Faces Several Challenges
That Hamper Its Ability to Protect Federal Facilities, GAO-08-683 (Washington, D.C.: June
11, 2008).
38
  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).




Page 35                                                                     GAO-12-454T
                                         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).

Table 2: Cost-Saving or Revenue-Enhancing Opportunities Identified

Mission                     Areas identified
Defense                     33. Air Force Food Service: The Air Force has opportunities to achieve millions of dollars in
                                cost savings annually by reviewing and renegotiating food service contracts, where
                                appropriate, to better align with the needs of installations.
                            34. Defense Headquarters: The Department of Defense should review and identify further
                                opportunities for consolidating or reducing the size of headquarters organizations.
                            35. Defense Real Property: Ensuring the receipt of fair market value for leasing underused
                                real property and monitoring administrative costs could help the military services’
                                enhanced use lease programs realize intended financial benefits.
                            36. Military Health Care Costs: To help achieve significant projected cost savings and
                                other performance goals, DOD needs to complete, implement, and monitor detailed
                                plans for each of its approved health care initiatives.
                            37. Overseas Defense Posture: The Department of Defense could reduce costs of its
                                Pacific region presence by developing comprehensive cost information and re-examining
                                alternatives to planned initiatives.
                            38. Navy’s Information Technology Enterprise Network: Better informed decisions are
                                needed to ensure a more cost-effective acquisition approach for the Navy’s Next
                                Generation Enterprise Network.
Economic development        39. Auto Recovery Office: Unless the Secretary of Labor can demonstrate how the Auto
                                Recovery Office has uniquely assisted auto communities, Congress may wish to
                                consider prohibiting the Department of Labor from spending any of its appropriations on
                                the Auto Recovery Office and instead require that the department direct the funds to
                                other federal programs that provide funding directly to affected communities.
Energy                      40. Excess Uranium Inventories: Marketing the Department of Energy’s excess uranium
                                could provide billions in revenue for the government.
General government          41. General Services Administration Schedules Contracts Fee Rates: Re-evaluating fee
                                rates on the General Services Administration’s Multiple Award Schedules contracts could
                                result in significant cost savings governmentwide.
                            42. U.S. Currency: Legislation replacing the $1 note with a $1 coin would provide a
                                significant financial benefit to the government over time.
                            43. Federal User Fees: 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.
                            44. Internal Revenue Service Enforcement Efforts: Enhancing the Internal Revenue
                                Service’s enforcement and service capabilities can help reduce the gap between taxes
                                owed and paid by collecting billions in tax revenue and facilitating voluntary compliance.



                                         Page 36                                                                        GAO-12-454T
Mission                 Areas identified
Health                  45. Medicare Advantage Payment: The Centers for Medicare and Medicaid Services 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.
                        46. Medicare and Medicaid Fraud Detection Systems: The Centers for Medicare and
                            Medicaid Services 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.
Homeland security/Law   47. Border Security: Delaying proposed investments for future acquisitions of border
enforcement                 surveillance technology until the Department of Homeland Security better defines and
                            measures benefits and estimates life-cycle costs could help ensure the most effective
                            use of future program funding.
                        48. Passenger Aviation Security Fees: Options for adjusting the passenger aviation
                            security fee could further offset billions of dollars in civil aviation security costs.
                        49. Immigration Inspection Fee: The air passenger immigration inspection user fee should
                            be reviewed and adjusted to fully recover the cost of the air passenger immigration
                            inspection activities conducted by Department of Homeland Security’s U.S. Immigration
                            and Customs Enforcement and U.S. Customs and Border Protection rather than using
                            general fund appropriations.
International affairs   50. Iraq Security Funding: When considering new funding requests to train and equip Iraqi
                            security forces, Congress should consider the government of Iraq’s financial resources,
                            which afford it the ability to contribute more toward the cost of Iraq’s security.
Social services         51. Domestic Disaster Assistance: The Federal Emergency Management Agency could
                            reduce the costs to the federal government related to major disasters declared by the
                            President by updating the principal indicator on which disaster funding decisions are
                            based and better measuring a state’s capacity to respond without federal assistance.
                                     Source: GAO-12-342SP.



                                     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



                                     Page 37                                                                           GAO-12-454T
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. 39
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.



39
 GAO, Defense Management: Actions Needed to Improve Management of Air Force’s
Food Transformation Initiative, GAO-11-676 (Washington, D.C.: July 26, 2011).




Page 38                                                             GAO-12-454T
•   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. 40 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


    40
      GAO, Information Technology: Better Informed Decision Making Needed on Navy’s Next
    Generation Enterprise Network Acquisition, GAO-11-150 (Washington, D.C.: Mar. 11,
    2011).




    Page 39                                                                 GAO-12-454T
    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 41 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. 42 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.



    41
      DOD’s fiscal year 2012 budget of $52.7 billion for its Unified Medical Budget includes
    $32.5 billion for the Defense Health Program, $8.3 billion for military personnel, $1.1 billion
    for military construction, and $10.8 billion for the Medicare Eligible Retiree Health Care
    Fund. The total excludes overseas contingency operations funds and other transfers.
    42
      DOD, Quadrennial Defense Review Report, February 2010.




    Page 40                                                                          GAO-12-454T
    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. 43 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


    43
      Defense Health Board, Task Force on the Future of Military Health Care (December
    2007).




    Page 41                                                                   GAO-12-454T
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. 44

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. 45 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



44
  See GAO, Nuclear Material: DOE Has Several Potential Options for Dealing with
Depleted Uranium Tails, Each of Which Could Benefit the Government, GAO-08-606R
(Washington, D.C.: Mar. 31, 2008); Nuclear Material: Several Potential Options for
Dealing with DOE’s Depleted Uranium Tails Could Benefit the Government, GAO-08-613T
(Washington, D.C.: Apr. 3, 2008); and Nuclear Material: DOE’s Depleted Uranium Tails
Could Be a Source of Revenue for the Government, GAO-11-752T (Washington, D.C.:
June 13, 2011).
45
 GAO, Excess Uranium Inventories: Clarifying DOE’s Disposition Options Could Help
Avoid Further Legal Violations, GAO-11-846 (Washington, D.C.: Sept. 26, 2011).




Page 42                                                                  GAO-12-454T
    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.




    Page 43                                                           GAO-12-454T
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. 46 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



46
 GAO, Fraud Detection Systems: Centers for Medicare and Medicaid Services Needs to
Ensure More Widespread Use, GAO-11-475 (Washington, D.C.: June 30, 2011).




Page 44                                                                GAO-12-454T
    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.




    Page 45                                                          GAO-12-454T
    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. 47 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. 48 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



    47
      GAO, Medicare Advantage: CMS Should Improve the Accuracy of Risk Score
    Adjustments for Diagnostic Coding Practices, GAO-12-51 (Washington, D.C.:
    Jan. 12, 2012).
    48
     Pub. L. No. 101-576 (1990).




    Page 46                                                                GAO-12-454T
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. 49 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.



49
  GAO, Federal User Fees: Key Aspects of International Air Passenger Inspection Fees
Should Be Addressed Regardless of Whether Fees Are Consolidated, GAO-07-1131
(Washington, D.C.: Sept. 24, 2007).




Page 47                                                                   GAO-12-454T
    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.




    Page 48                                                            GAO-12-454T
Status of Actions Taken to   In our 2011 annual report, we suggested a wide range of actions for
Address the Areas            Congress and the executive branch to consider such as developing
Identified in 2011 Annual    strategies to better coordinate fragmented efforts, implementing executive
                             initiatives to improve oversight and evaluation of overlapping programs,
Report                       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; 50 99 (or 56 percent) were partially
                             addressed; 54 (or 31 percent) were not addressed. We applied the
                             following criteria in making these assessments.




                             50
                               In one instance, the legislative action needed required Congress to consider several
                             options, including allowing a tax credit to expire. Thus, because Congress did not renew
                             the provision, the action was considered addressed.




                             Page 49                                                                      GAO-12-454T
For legislative branch actions:

•   “addressed,” means relevant legislation is enacted and addresses all
    aspects of the action needed; 51

•   “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,




51
  In situations where the action we identified as needed suggested that Congress should
let a provision expire, we classified it as “addressed” if Congress permitted such expiration
to happen.




Page 50                                                                         GAO-12-454T
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.




Page 51                                                         GAO-12-454T
Appendix I: Overall Progress Made in
                                          Appendix I: Overall Progress Made in
                                          Each of the 81 Areas Identified in GAO’s 2011
                                          Annual Report


Each of the 81 Areas Identified in GAO’s 2011
Annual Report
                                          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 1 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.

Table 3: Overall Progress Made in Each of the GAO Identified Areas of Potential Duplication, Overlap, and Fragmentation, as
of February 10, 2012

Mission                     Areas identified                                                                           Assessment
Agriculture                 1.   Fragmented food safety system has caused inconsistent oversight, ineffective
                                 coordination, and inefficient use of resources                                            ◐
Defense                     2.   Realigning DOD’s military medical command structures and consolidating
                                 common functions could increase efficiency and result in projected savings ranging
                                 from $281 million to $460 million annually                                                ◐
                            3.   Opportunities exist for consolidation and increased efficiencies to maximize
                                 response to warfighter urgent needs                                                       ◐
                            4.   Opportunities exist to avoid unnecessary redundancies and improve the
                                 coordination of counter-improvised explosive device efforts                               ◐
                            5.   Opportunities exist to avoid unnecessary redundancies and maximize the efficient
                                 use of intelligence, surveillance, and reconnaissance capabilities                        ◐
                            6.   A departmentwide acquisition strategy could reduce DOD’s risk of costly duplication
                                 in purchasing Tactical Wheeled Vehicles                                                   ◐
                            7.   Improved joint oversight of DOD’s prepositioning programs for equipment and
                                 supplies may reduce unnecessary duplication                                               ◐
                            8.   DOD’s business systems modernization: opportunities exist for optimizing
                                 business operations and systems                                                           ◐
Economic development        9.   The efficiency and effectiveness of fragmented economic development programs
                                 are unclear                                                                               ◐
                            10. The federal approach to surface transportation is fragmented, lacks clear goals,
                                and is not accountable for results                                                         ◐

                                          1
                                           GAO, Opportunities to Reduce Potential Duplication in Government Programs, Save Tax
                                          Dollars, and Enhance Revenue, GAO-11-318SP (Washington, D.C.: Mar. 1, 2011).




                                          Page 52                                                                       GAO-12-454T
                                       Appendix I: Overall Progress Made in
                                       Each of the 81 Areas Identified in GAO’s 2011
                                       Annual Report




Mission                  Areas identified                                                                              Assessment
                         11. Fragmented federal efforts to meet water needs in the U.S.-Mexico border region
                             have resulted in an administrative burden, redundant activities, and an overall
                             inefficient use of resources                                                                 ○
Energy                   12. Resolving conflicting requirements could more effectively achieve federal fleet
                             energy goals                                                                                 ○
                         13. Addressing duplicative federal efforts directed at increasing domestic ethanol
                             production could reduce revenue losses by more than $5.7 billion annually                    ●
General government       14. Enterprise architectures: key mechanisms for identifying potential overlap and
                             duplication                                                                                  ◐
                         15. Consolidating federal data centers provides opportunity to improve government
                             efficiency                                                                                   ◐
                         16. Collecting improved data on interagency contracting to minimize duplication could
                             help the government leverage its vast buying power                                           ◐
                         17. Periodic reviews could help identify ineffective tax expenditures and redundancies
                             in related tax and spending programs, potentially reducing revenue losses by billions
                             of dollars
                                                                                                                          ○
Health                   18. Opportunities exist for DOD and VA to jointly modernize their electronic health
                             record systems                                                                               ◐
                         19. VA and DOD need to control drug costs and increase joint contracting wherever it
                             is cost-effective                                                                            ◐
                         20. The Department of Health and Human Services needs an overall strategy to better
                             integrate nationwide public health information systems                                       ○
Homeland security/ Law
enforcement
                         21. Strategic oversight mechanisms could help integrate fragmented interagency efforts
                             to defend against biological threats                                                         ◐
                         22. DHS oversight could help eliminate potential duplicating efforts of interagency
                             forums in securing the northern border                                                       ○
                         23. The Department of Justice plans actions to reduce overlap in explosives
                             investigations, but monitoring is needed to ensure successful implementation                 ●
                         24. The Transportation Security Administration’s (TSA) security assessments on
                             commercial trucking companies overlap with those of another agency, but efforts are
                             under way to address the overlap
                                                                                                                          ◐
                         25. DHS could streamline mechanisms for sharing security-related information with
                             public transit agencies to help address overlapping information                              ◐
                         26. FEMA needs to improve its oversight of grants and establish a framework for
                             assessing capabilities to identify gaps and prioritize investments                           ◐
International affairs    27. Lack of information sharing could create the potential for duplication of efforts
                             between U.S. agencies involved in development efforts in Afghanistan                         ◐
                         28. Despite restructuring, overlapping roles and functions still exist at the Department of
                             State’s Arms Control and Nonproliferation Bureaus                                            ●
Social services          29. Actions needed to reduce administrative overlap among domestic food assistance
                             programs                                                                                     ○
                         30. Better coordination of federal homelessness programs may minimize fragmentation
                             and overlap                                                                                  ◐

                                       Page 53                                                                          GAO-12-454T
                                         Appendix I: Overall Progress Made in
                                         Each of the 81 Areas Identified in GAO’s 2011
                                         Annual Report




Mission                    Areas identified                                                                                Assessment
                           31. Further steps needed to improve cost-effectiveness and enhance services for
                               transportation-disadvantaged persons                                                              ◐
Training, employment,
and education
                           32. Multiple employment and training programs: providing information on collocating
                               services and consolidating administrative structures could promote efficiencies                   ◐
                           33. Teacher quality: proliferation of programs complicates federal efforts to invest
                               dollars effectively                                                                               ◐
                           34. Fragmentation of financial literacy efforts makes coordination essential
                                                                                                                                 ◐
                                         Legend:
                                         ● = Addressed, meaning all actions needed in that area were addressed.
                                         ◐ = Partially addressed, meaning at least one action needed in that area showed some progress
                                         toward implementation, but not all actions were addressed.
                                         ○ = Not addressed, meaning none of the actions needed in that area were addressed.
                                         Source: GAO analysis.



                                         As noted above, table 4 presents GAO’s assessment of the overall
                                         progress made in addressing the 47 cost-saving and revenue-enhancing
                                         areas.

Table 4: Overall Progress Made to Address GAO-Identified Cost-Saving and Revenue-Enhancing Areas, as of
February 10, 2012

Mission                    Areas identified                                                                                Assessment
Agriculture                35. Reducing some farm program payments could result in savings from $800 million
                               over 10 years to up to $5 billion annually                                                       ○
Defense                    36. DOD should assess costs and benefits of overseas military presence options
                               before committing to costly personnel realignments and construction plans, thereby
                               possibly saving billions of dollars                                                              ◐
                           37. Total compensation approach is needed to manage significant growth in military
                               personnel costs                                                                                  ◐
                           38. Employing best management practices could help DOD save money on its weapon
                               systems acquisition programs                                                                     ◐
                           39. More efficient management could limit future costs of DOD’s spare parts inventory
                                                                                                                                ◐
                           40. More comprehensive and complete cost data can help DOD improve the cost-
                               effectiveness of sustaining weapon systems                                                       ◐
                           41. Improved corrosion prevention and control practices could help DOD avoid billions
                               in unnecessary costs over time                                                                   ◐
Economic development       42. Revising the essential air service program could improve efficiency
                                                                                                                                ◐
                           43. Improved design and management of the universal service fund as it expands to
                               support broadband could help avoid cost increases for consumers                                  ◐
                           44. The Corps of Engineers should provide Congress with project-level information on
                               unobligated balances                                                                             ◐

                                         Page 54                                                                              GAO-12-454T
                                   Appendix I: Overall Progress Made in
                                   Each of the 81 Areas Identified in GAO’s 2011
                                   Annual Report




Mission              Areas identified                                                                             Assessment
Energy               45. Improved management of federal oil and gas resources could result in
                         approximately $1.8 billion over 10 years
                                                                  a
                                                                                                                     ◐
General government   46. Efforts to address governmentwide improper payments could result in significant
                         cost savings                                                                                ◐
                     47. Promoting competition for the over $500 billion in federal contracts could
                         potentially save billions of dollars over time                                              ◐
                     48. Applying strategic sourcing best practices throughout the federal procurement
                         system could saves billions of dollars annually                                             ◐
                     49. Adherence to new guidance on award fee contracts could improve agencies’ use
                         of award fees to produce savings                                                            ◐
                     50. Agencies could realize cost savings of at least $3 billion by continued disposal of
                         unneeded federal real property                                                              ◐
                     51. Improved cost analyses used for making federal facility ownership and leasing
                         decisions could save tens of millions of dollars                                            ◐
                     52. OMB’s IT Dashboard reportedly has already resulted in $3 billion in savings and
                         can further help identify opportunities to invest more efficiently in information
                         technology                                                                                  ◐
                     53. Increasing electronic filing of individual income tax returns could reduce IRS’s
                         processing costs and increase revenues by hundreds of millions of dollars                   ◐
                     54. Using return on investment information to better target IRS enforcement could
                         reduce the tax gap; for example, a 1 percent reduction would increase tax revenues
                         by $3.8 billion
                                        b                                                                            ◐
                     55. Better management of tax debt collection may resolve cases faster with lower IRS
                         costs and increase debt collected                                                           ◐
                     56. Broadening IRS’s authority to correct simple tax return errors could facilitate
                         correct tax payments and help IRS avoid costly, burdensome audits                           ○
                     57. Enhancing mortgage interest information reporting could improve tax compliance
                                                                                                                     ○
                     58. More information on the types and uses of canceled debt could help IRS limit
                         revenue losses of forgiven mortgage debt                                                    ◐
                     59. Better information and outreach could help increase revenues by tens or hundreds
                         of millions of dollars annually by addressing overstated real estate tax deductions         ◐
                     60. Revisions to content and use of Form 1098-T could help IRS enforce higher
                         education requirements and increase revenues                                                ◐
                     61. Many options could improve the tax compliance of sole proprietors and begin to
                         reduce their $68 billion portion of the tax gap                                             ○
                     62. IRS could find additional businesses not filing tax returns by using third-party
                         data, which show such businesses have billions of dollars in sales                          ◐
                     63. Congress and IRS can help S corporations and their shareholders be more tax
                         compliant, potentially increasing tax revenues by hundreds of millions of dollars
                         each year                                                                                   ◐
                     64. IRS needs an agencywide approach for addressing tax evasion among the at least 1
                         million networks of businesses and related entities                                         ◐
                     65. Opportunities exist to improve the targeting of the $6 billion research tax credit and
                         reduce forgone revenue                                                                      ○

                                   Page 55                                                                         GAO-12-454T
                                       Appendix I: Overall Progress Made in
                                       Each of the 81 Areas Identified in GAO’s 2011
                                       Annual Report




Mission                  Areas identified                                                                                   Assessment
                         66. Converting the new markets tax credit to a grant program may increase program
                             efficiency and significantly reduce the $3.8 billion 5-year revenue cost of the
                             program                                                                                             ○
                         67. Limiting the tax-exempt status of certain governmental bonds could yield revenue

                         68. Adjusting civil tax penalties for inflation potentially could increase revenues by tens
                                                                                                                                 ○
                             of millions of dollars per year, not counting any revenues that may result from
                             maintaining the penalties’ deterrent effect                                                         ◐
                         69. IRS may be able to systematically identify nonresident aliens reporting unallowed
                             tax deductions or credits                                                                           ●
                         70. Tracking undisbursed balances in expired grant accounts could facilitate the
                             reallocation of scarce resources or the return of funding to the Treasury                           ○
Health                   71. Preventing billions in Medicaid improper payments requires sustained attention
                             and action by CMS                                                                                   ◐
                         72. Federal oversight over Medicaid supplemental payments needs improvement,
                             which could lead to substantial cost savings                                                        ○
                         73. Better targeting of Medicare’s claims review could reduce improper payments
                                                                                                                                 ◐
                         74. Potential savings in Medicare’s payment for health care
                                                                                                                                 ◐
Homeland security/ Law
enforcement
                         75. DHS’s management of acquisitions could be strengthened to reduce cost
                             overruns and schedule and performance shortfalls                                                    ◐
                         76. Improvements in managing research and development could help reduce
                             inefficiencies and costs for homeland security                                                      ◐
                         77. Validation of TSA’s behavior-based screening program is needed to justify
                             funding or expansion                                                                                ◐
                         78. More efficient baggage screening systems could result in about $470 million in
                             reduced TSA personnel costs over the next 5 years                                                   ◐
                         79. Clarifying availability of certain customs fee collections could produce a one-time
                             savings of $640 million                                                                             ◐
Income security          80. Social Security needs data on pensions from noncovered earnings to better
                             enforce offsets and ensure benefit fairness, estimated to result in $2.4-$2.9 billion
                             savings over 10 years                                                                               ○
International affairs    81. Congress could pursue several options to improve collection of antidumping and
                             countervailing duties                                                                               ○
                                       Legend:
                                       ● = Addressed, meaning all actions needed in that area were addressed.
                                       ◐ = Partially addressed, meaning at least one action needed in that area showed some progress
                                       toward implementation, but not all actions were addressed.
                                       ○ = Not addressed, meaning none of the actions needed in that area were addressed.
                                       Source: GAO analysis.
                                       a
                                        The Department of the Interior, Bureau of Land Management, updated the anticipated revenues from
                                       $1.75 billion to $1.8 billion in its fiscal year 2012 budget justification.
                                       b
                                        The net tax gap was updated in 2012 and estimated to be $385 billion for the 2006 tax year. Thus, a
                                       1 percent reduction would increase tax revenues by $3.8 billion.




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                                       Page 56                                                                               GAO-12-454T
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