oversight

Fiscal Year 2013 Budget Request: U.S. Government Accountability Office

Published by the Government Accountability Office on 2012-02-07.

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

                            United States Government Accountability Office

GAO                         Testimony
                            Before the Subcommittee on Legislative
                            Branch, Committee on Appropriations,
                            House of Representatives


                            FISCAL YEAR 2013
For Release on Delivery
Expected at 9:30 a.m. EST
Tuesday, February 7, 2012

                            BUDGET REQUEST
                            U.S. Government
                            Accountability Office
                            Statement of Gene L. Dodaro
                            Comptroller General of the United States




GAO-12-455T
Mr. Chairman, Ranking Member Honda, and Members of the
Subcommittee:

I appreciate the opportunity to be here today to discuss the U.S.
Government Accountability Office’s (GAO) budget request for fiscal
year (FY) 2013. I want to thank the subcommittee for its continued
support of GAO. We very much appreciate the confidence you have
shown in our efforts to help support the Congress in carrying out its
constitutional responsibilities and to help improve government
performance and accountability for the benefit of the American people.

GAO is requesting an appropriation of $526.2 million for FY 2013 to
support a staffing level of 3,100. This funding level represents a
modest increase of 2.9 percent over FY 2012, and is 5.4 percent below
our FY 2010 level. The majority of the requested increase represents
the first step in rebuilding our staff capacity to a level that will enable
us to optimize the benefits we yield for the Congress and the nation.

We have carefully reviewed every aspect of our operations from a zero
base to identify opportunities to reduce costs without sacrificing the
quality of our work and preserving our ability to assist the Congress in
addressing the most important priorities facing the nation. However,
given that staff costs now represent about 81 percent of our budget
and the deep reductions already taken in our infrastructure programs,
reducing the size of our workforce could not be avoided. By the end of
FY 2012, for the first time in over 75 years, GAO’s staffing level will
drop below 3,000 staff, resulting in a net reduction of 11 percent in our
staff capacity, or 365 people, in only a 2-year period.

Given the current size and scope of the federal government and the
demand for our services, this staffing reduction will result in missed
opportunities for us to identify ways to save money and generate
revenue at a time when the country needs us most. I am also very
concerned about maintaining our highly skilled workforce by both
replacing departing staff and adding more highly skilled talent to
address succession planning challenges and skill gaps. The cost to
restore our staff capacity would be more than offset by billions of
dollars in savings and other efficiencies resulting from GAO’s work.

Through productive discussions with our Managers, Union, Employee
Advisory Council, Diversity Advisory Council, and our staff, GAO has
significantly reduced spending throughout the agency in areas ranging
from human resources to travel to information technology (IT) to



Page 1                                                        GAO-12-455T
                      achieve a $45 million or 8.1 percent funding reduction since FY 2010.
                      But, now we seek your support to begin a multiyear effort to rebuild our
                      workforce to ultimately achieve a target full-time equivalent (FTE) of
                      3,250. We believe this is the optimal level within the current
                      environment to most effectively serve the Congress and produce a
                      high return on the investment in GAO. It would be our goal to return to
                      this FTE staffing level in future year funding requests.

                      GAO is unique in our audit and evaluation capacity to support the
                      Congress by performing original research, providing technical
                      assistance, and conducting analyses to help the Congress make
                      informed decisions across all segments of the federal budget resulting
                      in tangible results and enhanced oversight needed to address the
                      seriousness of the government’s fiscal condition. In order for us to be
                      most effective, GAO needs to be of a size commensurate with the
                      current and emerging challenges facing the federal government and
                      the seriousness of its fiscal outlook. We are extremely limited in our
                      ability to target additional reductions without adversely impacting our
                      capacity to support the Congress in reducing costs and improving
                      government during this critical period.

                      GAO’s work directly contributes to improvements in a broad array of
GAO Supports          federal programs affecting Americans everywhere and remains one of
Congressional         the best investments across the federal government. With this
                      committee’s support, in FY 2011, GAO provided assistance to every
Decision-making,      standing congressional committee and about 70 percent of their
Saves Resources and   subcommittees. GAO issues hundreds of products annually in
                      response to congressional requests and mandates. Our work yielded
Helps Improve         significant results across the government, including financial benefits
Government            of $45.7 billion—a return on investment of $81 for every dollar invested
                      in GAO. Our findings and recommendations produce measurable
                      financial benefits for the federal government, enabled through the
                      actions of Congress and Executive Branch agencies, ultimately making
                      funds available to reduce government expenditures, reallocate funds to
                      more productive areas, or increase revenues.

                      We documented over 1,300 benefits resulting from our work that
                      helped to change laws, improve services to the public, and promote
                      sound management throughout government. About 32 percent of
                      these benefits were in the area of public safety and security, such as
                      homeland security and justice programs and critical technologies.




                      Page 2                                                      GAO-12-455T
Another 40 percent resulted from improvements in business processes
and management, such as improved oversight of federal oil and gas
resources and detection of fraud, waste, and abuse. 1

GAO senior officials testified 174 times before the Congress on an
array of complex issues including military and veterans disability
systems, U.S. Postal Service fiscal sustainability, defense/weapons
systems, and Medicare and Medicaid fraud, waste, and abuse. 2 Fifty-
seven of these hearings were related to high-risk areas and programs
highlighted in GAO’s biennial high-risk report. 3 GAO’s High-risk
Program calls attention to opportunities for cost savings and
improvements in federal agency and program management that offer
the potential to save billions of dollars, dramatically improve service to
the public, and strengthen confidence and trust in the performance and
accountability of the U.S. government.

In FY 2011, our work included several products mandated under the
Dodd-Frank Wall Street Reform Act on mortgages, securities markets,
financial institutions, the Federal Reserve, and consumer protection.
Our work also included many other products related to health-
insurance reform. In addition, we issued our first annual report under a
mandate identifying 81 areas of duplication, overlap, fragmentation,
cost-saving opportunities, and revenue enhancements in government
programs. One area we have emphasized as an opportunity to
generate revenue is the so-called “Tax Gap”—the amount of true tax
liability faced by taxpayers that is not paid on time—where the Internal
Revenue Service (IRS) recently updated its estimate from $290 billion
(net after late payments) to $385 billion. 4 We further identified several
potentially significant governmentwide cost-saving opportunities, such
as promoting competition for more than $500 billion in federal
contracts and applying strategic-sourcing best practices throughout the
federal procurement system.




1
  A list of selected issues on which GAO assisted the nation in fiscal year 2011 is
included as Appendix I.
2
  A list of selected issues on which GAO staff testified before Congress during fiscal
year 2011 is included as Appendix II.
3
    Our High-Risk List is included in Appendix III.
4
    IRS Releases New Tax Gap Estimates, January 6, 2012.




Page 3                                                                    GAO-12-455T
                   As the Congress and the administration debate ways to address the
                   federal government’s unsustainable long-term fiscal path, our mission
                   becomes ever more critical to help identify billions of dollars in cost-
                   saving opportunities to tighten federal budgets and identify revenue-
                   enhancement opportunities. GAO seeks both to help position the
                   government to better manage risks that could compromise the nation’s
                   security, health, and solvency, and to identify opportunities for
                   managing government resources wisely for a more sustainable future.
                   GAO will continue to provide high-quality, high-value, and independent
                   support to the Congress in ways that generate material benefits to the
                   nation.

                   GAO’s strategic plan for serving the Congress and the nation, 2010-
                   2015, highlights the broad scope of our efforts to help the institution of
                   the Congress respond to domestic and international challenges, such
                   as. 5

                   •      addressing current and emerging challenges to the well-
                          being and financial security of the American people;
                   •      responding to changing security threats and the challenges of
                          global interdependence;
                   •      helping transform the federal government to address national
                          challenges; and
                   •      maximizing the value of GAO by enabling quality, timely
                          service to the Congress and being a leading practices federal
                          agency.

                   Since FY 2010, GAO has significantly reduced spending throughout
Actions Taken to   the agency. Our FY 2012 funding level is $45 million or 8.1 percent
Constrain Costs    below FY 2010. We streamlined costs and are operating at a reduced
                   level through staffing reductions, voluntary retirements, voluntary
                   separation incentives, and extremely limited hiring to only replace
                   critical vacancies; reducing staff retention programs, such as student
                   loan repayments and incentive awards; and reducing or deferring
                   operational costs and investments in IT, facilities, and other support
                   services. Since FY 2010, we have reduced engagement support
                   costs, such as travel and external specialized expertise by over 20



                   5
                       Our Strategic Plan Framework is included in Appendix IV.




                   Page 4                                                         GAO-12-455T
                     percent, and reduced infrastructure support costs, such as IT and
                     administrative support services by over 18 percent.

                     In addition, we are continuing to explore other opportunities to
                     enhance workforce and budget flexibilities to help reduce our
                     infrastructure costs, provide staff more flexibility and increase our
                     effectiveness and efficiency, such as streamlining our engagement-
                     management process; expanding our telework policies; reducing our
                     physical footprint both in HQ and in our field offices; exploring office-
                     sharing; expanding our video-conference capability; and attracting an
                     additional tenant in HQ to increase revenue. While we may only see
                     limited financial benefits in FY 2012, each of these initiatives provides
                     the opportunity to generate significant long-term financial benefits to
                     GAO.

                     We are also consulting continuously with congressional committees to
                     assure that our work is focused on their highest priorities. Additionally,
                     we continue to work with committees to amend or repeal statutory
                     mandates for GAO studies that have outlived their usefulness or do not
                     represent the best use of GAO’s resources given current
                     congressional priorities.

                     Our budget request seeks to partially restore funding to allow GAO to
FY 2013 Budget       1) begin a multiyear effort to rebuild our workforce by hiring to replace
Request Would Help   departing staff to enable us to optimize the benefits we yield for the
                     Congress and the nation, 2) bolster staff recruitment and retention
Restore Essential    programs, such as student loan repayments and incentive awards, and
Capacity             3) replace end-of-life technology to ensure our technology is current
                     and remains on par with other federal agencies.

                     For the first time in over 75 years, GAO’s staffing level will drop below
                     3,000 staff in FY 2012, resulting in a net reduction of 11 percent in our
                     staff capacity in only a 2-year period. Further, we project losing an
                     additional 190 people in FY 2013 based on historical trends. We also
                     have a significant number of retirement eligible senior executive staff
                     (about 40%), supervisory analysts (25%), and analysts (12%). We
                     depend on a talented and diverse, high-performing, knowledge-based
                     workforce to carry out our mission to support the Congress. This
                     reduction in staff capacity is limiting our ability to support the Congress
                     during this critical period when the unique insights that GAO provides
                     are an essential element of Congressional analysis and decision-
                     making. It is imperative that we begin to replenish our workforce to
                     both replace departing staff and add more highly skilled talent to



                     Page 5                                                         GAO-12-455T
address succession planning challenges and skill gaps. We have
been and will continue to reach out to our congressional clients to
ensure they help focus our work on the highest priority areas to obtain
the maximum benefit in this resource constrained environment.

Our FY 2013 budget request seeks to partially restore essential
funding for staff recognition and benefits programs and critical
investments eliminated or deferred due to budget constraints.
Reductions in staff recognition and benefits programs jeopardize our
ability to attract and retain staff when other organizations with whom
we compete for human resources may offer these benefits. These
tools are also essential to recognize and motivate our high-performing
workforce. Moreover, all but the most critical investments in areas
such as facilities and information technology have been eliminated.
Continued deferral of needed investments in our systems and building
will ultimately diminish our productivity and effectiveness, likely lead to
more costly repairs, and affect our ability to exchange data with other
federal entities.

We are also requesting authority to use $24.3 million in offsetting
collections from rental income and reimbursements from program and
financial audits. In addition, we estimate about $4.7 million will be
available from reimbursements of programs and financial audits to help
offset our costs.

If GAO’s funding is reduced below the requested level, additional
reductions in our staffing level would be inevitable which would
adversely affect our ability to 1) produce results that can help deal with
the federal government’s fiscal challenges and 2) provide timely,
insightful analysis on congressional priorities and challenges facing the
nation. As a knowledge-based organization, about 81 percent of
GAO’s budget is spent on staff compensation and benefits, a slight
increase from the previous year as a result of the deep reductions
made in agency operations and infrastructure. We are extremely
limited in our ability to target additional reductions in infrastructure-
support costs beyond what has already been taken in order to meet
the basic operations of the agency.




Page 6                                                         GAO-12-455T
                        In regard to our internal operations, in FY 2011 we received a clean
Positive Results from   opinion on our system of quality control for both our financial and
External                performance audits from an external peer review conducted by a team
                        of auditors from our counterparts at national audit institutions, and
Organizations           received an unqualified opinion on our financial statements from
                        independent auditors. The Association of Government Accountants
                        awarded us its Certificate of Excellence in Accountability Reporting for
                        our FY 2010 Performance and Accountability Report. We also
                        received a “Best-in-Class” award for a concise, well-written, and highly
                        readable Summary of GAO’s Performance and Financial Information
                        for FY 2010.

                        GAO was also once again recognized as one of the Best Places to
                        Work. The annual survey conducted by the Partnership for Public
                        Service identified GAO as number three in its rankings for all large
                        organizations across the entire federal government. Washingtonian
                        magazine selected GAO as one of the Best Places to Work in the
                        private and public sectors in Washington, D.C., in its annual rankings.

                        FY 2011 was a very active and challenging time for GAO. We
Concluding Remarks      succeeded at performing our mission, responding to mandates, and
                        accomplishing many of our goals while managing budget constraints.
                        We could not have achieved this level of performance without the
                        outstanding efforts of our professional, diverse, and multidisciplinary
                        staff. We also maintained our productive working relationship with the
                        employees’ union, GAO Employees Organization, International
                        Federation of Professional and Technical Engineers, Local 1921, and
                        began implementing our first master collective bargaining agreement.
                        In addition, we are also working closely with the Employee Advisory
                        Council and the Diversity Advisory Council on a range of issues.

                        FYs 2012 and 2013 bring more challenges with responsibilities to
                        further assess and report on government programs and financial
                        regulatory reform efforts, among many other pressing issues. Our
                        budget request has been carefully developed to represent the level of
                        resources we need to continue effectively serving the important needs
                        of the Congress by providing quality products in a timely fashion and to
                        identify high opportunity areas for both eliminating waste as well as
                        enhancing revenue across the federal government.

                        I believe that you will find our budget request fiscally responsible and
                        essential to ensure that we can maintain our capacity to assist the
                        Congress and produce results for the American people. We remain



                        Page 7                                                        GAO-12-455T
committed to providing accurate, objective, nonpartisan, and
constructive information to the Congress to help it conduct effective
oversight and fulfill its constitutional responsibilities.

Mr. Chairman, Ranking Member Honda, Members of the
Subcommittee, this concludes my prepared statement. I appreciate, as
always, your careful consideration of our submission and look forward
to discussing our proposal with you.




Page 8                                                       GAO-12-455T
Appendix I: How GAO Assisted the Nation,
Fiscal Year 2011

Goal 1: Address Current and Emerging Challenges to the Well-Being and Financial Security of the American People
• Identified savings of $3.7 billion by reducing unneeded payments to Medicare Advantage plans
• Identified the need for the Department of Health and Human Services to finalize guidance on how
   antivirals would be used during a pandemic
• Identified opportunities for cost savings and reduced risk to the government in a series of reports on
   undefinitized contracts, use of blanket purchase agreements where discounts were not sought, and cost
   reimbursement contracts
• Improved consistency and compatibility of health care-associated infection data
• Led the Social Security Administration to improve oversight of its Ticket-to-Work program
• Identified opportunities to enhance investigation of online child pornography
• Recommended ways to strengthen the Federal Reserve’s management of emergency assistance to
   stabilize financial markets
• Developed a series of assessments of emerging technologies with important implications for the nation
• Found regulatory weaknesses in EPA’s water-based lead testing and treatment program
• Informed improvements in air passenger rights to compensation for mishandled baggage
Goal 2: Respond to Changing Security Threats and the Challenges of Global Interdependence
• Encouraged enhanced desktop computer security to protect sensitive information, which 22 federal
   agencies implemented
• Identified progress and remaining work to implement homeland security missions at DHS ten years after
   9/11
• Led DHS to scale back the flawed advanced radiation detector program—avoiding costs of $1.2 billion
• Identified challenges and recommended improvements in DOD’s expanding cybersecurity mission
• Surfaced potential costs and risks of contract transition during drawdown from Iraq, resulting in benefits
   of $77.5 million
• Led DOD to restructure the Joint Strike Fighter program—DOD’s most costly and ambitious acquisition
• Improved monitoring and evaluation of State, Labor, and USAID projects to combat human trafficking
Goal 3: Help Transform the Federal Government to Address National Challenges
• Provided timely information on the debt limit and budget controls to help address the long-term fiscal
   challenge
• Helped eliminate the Advanced Earned Income Tax Credit, avoiding $569 million in costs
• Suggested that the Congress extend the statute of limitations for examinations involving offshore
   financial activity
• Recommended that OMB establish realistic milestones for full implementation of the infrastructure
   needed to best use the electronic authentication capabilities of personal identify verification cards
• Identified 227,700 tax delinquents receiving federal benefits to explore ways to increase collection of
   unpaid taxes
• Found ways to incorporate required data into Centers for Medicare & Medicaid systems to better detect
   improper payments
• Issued updated government auditing standards to reflect recent developments in the accountability
   profession
• Recommended improvements to planning and implementation of federal data center consolidation at 24
   federal agencies
Source: GAO.



                                         Page 9                                                    GAO-12-455T
Appendix II: Selected Testimony Topics,
Fiscal Year 2011




              Page 10                GAO-12-455T
Appendix III: GAO’s 2011 High-Risk List



  Strengthening the Foundation for Efficiency and Effectiveness
  • Management of Federal Oil and Gas Resources (New)
  • Modernizing the Outdated U.S. Financial Regulatory System
  • Restructuring the U.S. Postal Service to Achieve Sustainable Financial Viability
  • Funding the Nation’s Surface Transportation System
  • Strategic Human Capital Management
  • Managing Federal Real Property

  Transforming DOD Program Management
  • DOD Approach to Business Transformation
  • DOD Business Systems Modernization
  • DOD Support Infrastructure Management
  • DOD Financial Management
  • DOD Supply Chain Management
  • DOD Weapon Systems Acquisition

  Ensuring Public Safety and Security
  • Implementing and Transforming the Department of Homeland Security
  • Establishing Effective Mechanisms for Sharing and Managing Terrorism-Related Information to Protect the
    Homeland
  • Protecting the Federal Government’s Information Systems and the Nation’s Cyber Critical Infrastructures
  • Ensuring the Effective Protection of Technologies Critical to U.S. National Security Interests
  • Revamping Federal Oversight of Food Safety
  • Protecting Public Health through Enhanced Oversight of Medical Products
  • Transforming EPA’s Process for Assessing and Controlling Toxic Chemicals

  Managing Federal Contracting More Effectively
  • DOD Contract Management
  • DOE’s Contract Management for the National Nuclear Security Administration and Office of Environmental
    Management
  • NASA Acquisition Management
  • Management of Interagency Contracting

  Assessing the Efficiency and Effectiveness of Tax Law Administration
  • Enforcement of Tax Laws
  • IRS Business Systems Modernization

  Modernizing and Safeguarding Insurance and Benefit Programs
  • Improving and Modernizing Federal Disability Programs
  • Pension Benefit Guaranty Corporation Insurance Programs
  • Medicare Program
  • Medicaid Program
  • National Flood Insurance Program




                                    Page 11                                                       GAO-12-455T
Appendix IV: GAO’s Strategic Plan
Framework




              Page 12               GAO-12-455T
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