Fiscal Year 1991 Budget Estimates for the General Accounting Office

Published by the Government Accountability Office on 1990-01-31.

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

                   United States General Accounting Ohm       / 10 3 / 0


For Release on      Fiscal  Year 1991Budget     Estimates       for   the
Delivery            General Accounting   Office
January 31, 1990

                   Statement   of
                   Charles A. Bowsher
                   Comptroller    General   of   the United     States
                   Before the
                   Subcommittee   on Legislative
                   Committee   on Appropriations
                   U-S. House of Representatives

GAO/T-OCG-90-1                   /
Mr. Chairman              and Members of the                         Subcommittee:

I am pleased              to be here               today          to discuss           our     fiscal          year         1991
funding           requirements.

I want to begin                 by thanking                  you Mr.          Chairman         and this
subcommittee              for      your         support          over        the years.            Without            it     we
would       not     have been able                   to achieve               many of        the    accomplishments
that    I will          outline           for      you in a moment.                      I’m    proud          of our
accomplishments.                    I am also                proud       of    the progress              we have made as
an organization                 in developing                    and rewarding               our people,                   and in
providing           them with             first          rate      equipment           and work environment.
These are all              vital          in achieving                  peak performance,                  and continued
progress           is   a high       priority                of mine.

GAO faces           many challenges                      ahead in            the work we do for                  the
Congress,           not    the      least          of which             is    the quickly           changing               world
political           situation,             and the              resulting         decisions             that     will         have
to be made by the                   Congress              and others.              Not only             with     respect            to
our defense             posture,           but       also        with        respect      to trade,
international              competitiveness,                        and a wide            range      of other               domestic
and international                   issues.

I want GAO to be there                            with      the     facts       and analyses,                  when
Congress          needs them,              and with              your        continued         support,          I’m
co#nfident          we can do just                   that.
For fiscal              year    1991 we need an increase..in                        ,,. resources         to
continue          to meet the              congressional             demand for            GAO work.             Over the
last      several         years      we have experienced                     a .Iu”/.l
                                                                                  . “I.             increase       in
this      work     load.        In fiscal        year      1989,           we received           a record         number
of     requests          from     the Congress           including            a significant               number of
statutory          requirements.                Nearly        every         piece     of major          legislation,
like      the    savings          and loan       bailout           bill,      directs         GAO to perform
oversight          reviews         and report           our       findings          and recommendations                 to
the Congress              by established            dates          or over          a defined          period      of

We have managed to handle                        this      increasing               work     load      without      any
increase         in our         staffing        by redirecting                resources             from work done
to satisfy          basic         legislative           requirements                and by implementing                 a
number of          initiatives              aimed at achieving                  efficiencies              through
streamlining              work processes            and procedures.                     However,          we have
reached         a point,          complicated           by the         no growth           Gramm-Rudman-
Hollings         environment,              where we are              stretched          to the         limits      of our
current         resources.            I am concerned                 that     an increasing               number of
congressional              committees           and members may find                       our    capacity         to
support         their      needs disappointing.

In some ways we are a victim                            of our        own     success.            Our work has
focused         on significant               national         issues         that     face       the    Congress,
and continues              to be more responsive                       to congressional                 needs than
ever before.               This     has led       to a steady                increase         in the number of
assignments           we perform              for      congressional                requesters,              Without
additional          resources,              we may need to distinguish                              more than             we do
now between           congressional                  requests            we can honor             and those              we
cannot.        In consultation                      with     appropriate             congressional
committees,           we may need to develop                             some criteria              and priorities
to accomplish              this,      if      necessary.                 I will      also      discuss           later        in
my testimony           some productivity                       enhancements                we have been working
on to help          in this          area.

Fiscal       Year 1989 Accomplishments

Fiscal      year      1989 was indeed                      a very        productive          year     for        GAO.

Early       in the year             we issued              26 Transition             reports         for     the
Congress       and the             incoming          administration.                      In a series            of
meetings       with        Committee            Chairmen               and staff          and Cabinet            members,
we found       substantial                 agreement           that       the      issues     we raised               in these
reports       were of great                 urgency          for        the nation.

Including       the        transition               reports,            in 1989 we issued                  881
audit/evaluation               reports              (mostly            to congressional              requestors),
testified       217 times             before           congressional                committees,             and issued
more that          3,800      legal         decisions              and opinions.              I would            like     to
add that       no one else                 testifies           before        congressional                 committees
more often          than     GAO except                the Department                of     Defense.             Also,        we
had 63 different               individuals                  representing             GAO     as   the primary

witness           during        those        testimonies.              I think           this     demonstrates                 the
depth        of     talent       we have at GAO, and the                          extent         of confidence                 the
various           congressional               committees            have in GAO witnesses.

The percentage                  of our work done as congressional                                  requests
remains           high       at over         80 percent,            essentially             unchanged            from      the
past        2 years.            The number of congressional                              assignments             started,
however , reached                    a new high           in 1989 of 1,317--up                     5 percent             from
1988 and 10 percent                      from        1987.      At any point                in    time,         we are
usually           handling           requests         from     over      200 committees               and
subcommittees                  as well        as from         over     450 members.                I think            these
are    telling            measures           of how useful             Congress           finds     our work.

As a result               of our work we contributed                          to legislative                    and
executive            actions          that      resulted         in about          $8 billion             in
measurable               financial           benefits.           I would          like      to see this               figure
higher,           and I have made monetary                          savings        a priority             for     fiscal
year        1990.

In addition               to    recommendations                that      result          in measurable
financial            benefits,           we also          catalogue         nonmonetary
accomplishments.                      The results             of some of GAO’s work produce                                many
improvements                in government                operations         and services              that        are
difficult            to quantify,              but     could        yield     large        payoffs.               Last      year
we had almost                  150 documented                instances        of nonmonetary
acoomplishments                  in service              to the public,              which        was 57 percent

higher       than        in 1988,          and 76 percent            higher        than        in 1987.          An
example         of a nonmonetary                 accomplishment               is   in the         safety        area.
Despite         the      threat         of losing      highway          funds,      one-fifth             of    the
states       had refused                to increase         their       minimum drinking                  age to 21.
After      GAO’s work validated                      the    life-saving            effects            from
increasing              the minimum drinking                  age,      all    remaining              states     and the
District         of Columbia               raised     their      minimum drinking                     age.      GAO’s
report      was directly                 cited      as a major          reason      for        these      actions.
The Department                  of Transportation              estimates           that        this     change        saved
about      1,000         lives       in one year           alone.

Highlights              of    FY 1989 Work

During       fiscal           year      1989 GAO made contributions                        that        cut     across
all     areas      of        national       importance.             The series            of    26 Transition
reports         that         we prepared         in November            1988 were designed                     to help
policymakers                 focus      on the major          policy,         management,              and program
issues     -now facing               the    government.             I would        like        to highlight             some
of these         critical            issues.
           Federal       Budgeting             and Management

The deficit            crisis         forces         federal            managers         to emphasize                 short-
term       reductions           at the expense                    of the        long-range             economic             well-
being       of the nation.                 In economic                  terms,         the    deficit          is
destroying            our ability              to promote               the     savings         that     are necessary
for       future      growth      and prosperity.                         We now have a debt                       burden       of
about       $3 trillion,              and it         is    growing            by about         a quarter              of a
trillion           dollars       a year.

A related           issue,       and one we have reported                               on often,             is     the way
social        security          and other            trust         fund       surpluses,             along         with
budgetary           and accounting               gimmicks,                mask the           real      size        of the
deficit          each year.             The fact             is    that       the deficit              excluding             trust
funds       is     larger       today     than        it      was when the Gramm-Rudman-Hollings
deficit          reduction        process            was begun in                1986.         The cost              of the
deficit          in terms        of     interest           charges            and the         resulting              lost
opportunities                to do other             things            with     that     money is             enormous.
Last       year,     we once again               recommended against                          the use of trickery
in budget           making       and set         forth            an extensive               proposal          for
restructuring                the unified             budget.              We also        reiterated                the need
for     a comprehensive                 strategy           to deal            with      the deficit.

The United           States       government               does not             currently            have the             internal
control          systems        to effectively                    operate        its     programs             and safeguard
its* assets.             We issued             our    fourth            major        report         inNovember               1989

on agencies’              implementation                 of the      Federal          Managers’             Financial
Integrity          Act.         This      act       was passed           in 1982 with             the       goal    of
improving           government            internal           controls         and accountability.
Seven years            later,          this     goal      is     largely          unmet.     For an example                   of
this      lack      of progress,               one only          has to look           at the          HUD scandal
that      came to light                this     past      year.          Other      examples           of    the    results
of poor          internal        controls            include       over       $89 billion              in uncollected
debts       or taxes         owed to the               federal       government             and over          $29
billion          in unneeded            spare        parts       in Department              of Defense

In our       latest         report,           we made or reiterated                    to the          Congress          a
number of           recommendations                  aimed at        improving             the    reporting          of
accountability               and internal               control          weaknesses          and at ensuring
that      corrective            action         is    taken.        We also          urged        the    Congress             to
hold      annual       hearings           on the        actions          of each of the                18 major
federal          agencies        with         respect        to improving             internal          controls.                 In
addition,          we reiterated                the need for               legislation            to establish                a
Chief       Financial           Officer         of the United               States,         whose
responsibilities                 would         include         development            of a long-range
financial          management             improvement             plan      for     the     government,             and the
need for          annual        preparation             and audit           of agency            financial
           Financial                 InStitUtiOnS

In numerous                    testimonies,               letters,          and reports              GAO     ur,ged that
decisive               action         be taken            to address            the     failing            savings         and loan
industry.                    GAO     played         a major          role     in developing                 solutions           to the
thrift           industry             crisis,            which       were incorporated                     into      the
Financial                   Institutions             Reform,          Recovery,             and Enforcement                   Act      of
1989.            The cost             of    the      legislation              will      exceed         $250        billion,            of
which           an estimated                $139 billion               will      be taxpayer                funds       (about
$2,100           for         every      family           in the United               States).              Savings         and loans
with       more than                 $260 billion                in assets           will     have to be dealt                      with.
Questions                   remain      with        respect          to whether             regulators             and the
industry               can rise            to the         occasion.            GAO will             continue,         to
evaluate               the      industry            and its          regulation             in the months               and years

Also       of     concern             is    the government’s                   exposure             to similar             risks
under           other         programs          such as direct                 federal          loans         amounting             to
$222 billion,                      federally-guaranteed                       loans         amounting             to $550
billion,               and other            such federal               programs,             with     an overall               total
exposure               of $5 trillion.                     While       not     all      of    this         exposure           or risk
will       result             in losses,             GAO anticipates                  additional              tens      of
billions               of     dollars          in    future          losses      in these            other         federal
programs.                    In a November 1989 report                           we addressed                needed actions
in these            programs               including          improved           accounting                and financial
resorting,                   and audits             of    financial           statements             for     each of them.

Our work       in the           securities           markets            influenced          the      Congress         and
the Securities                 and Exchange           Commission             to develop              stronger
efforts      against            insider          trading.          A GAO review ‘covering
automation            of the      Chicago          futures         exchanges              may result             in these
exchanges        developing               an electronic              audit        trail       system        to focus            on
preventing            and detecting               trading         abuses.

GAO’s work has also                  influenced              federal         regulators              to improve
their      operations.              For example,              as a result                 of GAO’s work on
check      cashing,        the Department                   of the Treasury                 is working             with     3
groups      on alternative                 ways to deliver                 government             benefits.
Treasury       will       test      implementation                 of Electronic               Benefits            Services
in 1990.        When this            project          is     completed            in 1995,           Treasury
estimates        it     will      save about            $26 million               annually.


The national            security           environment             is     changing          faster         today     than
at any time            since      World      War II.              The implications                   of    recent
developments            in Eastern           Europe          and the         Soviet         Union         have yet        to
be fully       absorbed.             In this          environment,                Congress         will      be
turning      to GAO for             answers          to difficult                questions.

Among other           areas,       GAO reported               last        year     on the         scope and
expense      of the American                 military             presence         in Europe;              the
expansion       and training                of     reserve         forces;         the      planned         closure         of

military        bases;         the     cost     and status            of   major         acquisition
programs,            such as the Navy’s                   shipbuilding            program            and the B-2
Stealth        bomber;        and the operational                     and maintenance                   ‘costs         of new,
high-tech           weaponry,          such as the            B-l     bomber and the M-l                         tank.       For
example,        GAO’s report                on the Air           Force’s         $31 billion               B-l      bomber
program        stated      that        potential           enhancements            to the            aircraft             could
cost       an additional             $7.4      billion.

Our work        in manpower affordability                            identified              a potential               DOD
budget       savings       of approximately                   $250     million           through           reduced
civilian        work year            ceilings          at overseas           locations.                 GAO's review
of DOD’s Five-Year                   Defense         Program         led   to changes                in DOD’s
calculation            of growth            rates      and inflation              estimates,               and the
removal        of excess          programmed              funds.       These changes                   could        yield
over       $147 billion           in    reductions            in the program                  through            fiscal
year       1994 and billions                  of dollars            in future           DOD budgets.

           Health      Care

Health       care      consumes 11.2                percent         of our       gross        national            product
compared        with     8.6      percent           in Canada and France,                      and 6.1 percent
in the United            Kingdom.              By 1995 this             figure          is    expected            to      reach
13.4       percent      of GNP.             Not only        have past            cost        control        measures
failed,        some have made access                       to adequate            health            care    more
difficult.             An estimated             31 million            Americans              lack      health
insurance,           additional             millions        are underinsured,                       and many do not

have adequate                 access       to care.             The fact           that      the United           States
has a higher              infant          mortality            rate      than      19 other           developed
nations,         is     a reflection               of     the problem.                         .

Against         this      backdrop           GAO issued               a number of            products          last      year
which      address            health       care       cost      control           and access.             For example,
GAO testified                 on cutbacks             in employer             retiree         health          coverage,
reported         on financial                admission           criteria           used by some hospitals
for     organ      transplant              operations,                testified           on the difficulty
families         of children               with       chronic          illnesses           often        have in
obtaining         vital         support           services,            reported           on gaps in coverage
in many long-term                  care        insurance              policies,           and reported            on the
problems         AIDS patients                 have in obtaining                    needed services                   due to
shortages          in care         facilities                or lack        of     insurance.

GAO identified                 several         Medicare/Medicaid                    program           areas      in which
congressional              action          could        lead     to financial                benefits,           such as:
savings’of             $1.2     billion           over       3 years        by reducing               medical
education         payments             to teaching              hospitals,           potential            financial
benefits         of $500 million                   annually            from       programs         to    recover         the
cost     of Medicaid             assistance,               and potential                  financial           benefits         of
$100 million              annually           from        recovering           savings         bond assets              owned
by Medicaid             recipients             in nursing              homes.

In addition,            The National                Cancer        Institute          held         a a-day        session
in November           1989 with             more than          30 experts            from         around       the
country      providing           advice            on how cancer              treatment            studies          should
be structured.                Throughout             this      meeting,           credit          was given          to a
GAO report           entitled         Breast         Cancer:         Patient         Survival            as the       major
impetus       for     the meeting              and studies            that      will        emanate           from    it.

         Information            Resource            Management

The history           of   information               technology          management                in    the     federal
government           is wrought             with     glaring         examples          of     failure.
Automated           systems      are often            developed           late,        fail        to work as
planned,       and cost          millions--           even hundreds                of millions--more                      than
expected.            GAO’s testimony                 and reports              on the pattern                  of cost
overruns       and schedule                 delays      of eight         DOD automated                   information
systems       resulted          in    increased             oversight          of procurement                  by DOD and
the Congress.              Also,       as a result                of GAO testimonies                     and reports
on the ‘organization                  of the         Internal         Revenue Service,                     IRS
established           a Chief         Information              Officer         reporting            to the          Senior
Deputy      Commissioner              and having             responsibility                 for     information
resources           and technology                 management.           In addition,                   our work          on
Federal      Aviation           Administration’s                   (FAA) acquisition                     of    the
Advanced       Automation             System         resulted         in budget             reductions              and
system      acquisition              cost      reductions           totalling              $656.3        million.

The Social          Security          Administration,                 FAA, IRS,            and DOD each have
examples        where vast            sums have or are being                           rpent     on systems            that
fail      to perform          properly.              As a result,             taxpayers             are not
receiving        the       benefits       promised            by system            developers,            and
federal      managers              are not      getting           the programmatic                  and financial
information          they          need to make sound decisions.

Recognizing          the      scope of          the problem            GAO        held     a   symposium          this
past     year    called            “Meeting      the Government’s                      Technology         Challenge”
which     brought          leader6       from        industry,         the executive                 branch,       and
the     Congress       together          for     the      first       time        to explore          ways to
reverse      this      tradition          of     failure.             The symposium                 resulted       in
recommendations               for     successfully                implementing             new information
technology          that      will      soon be published                    as    a    GAO special            report.

         Nuclear       Waste

The federal          government           has failed                to properly           manage radioactive
waste.       Today,         we are       faced        with        radioactive            waste       and other
contamination              that,      according           to GAO’6 estimate,                     may cost         a6 much
as $65 billion              to clean           up,    and we may never                   know the         total        cost
in health        and environmental                    damage.          To modernize                 the   facilities
and bring        them into            compliance             with     environmental                 laws may cost
an additional              $45 billion.               Finally,         to dispose              of    radioactive
waste     and decontaminate                    nuclear        facilities               another       $45 billion
may be required.
This      is     a long-standing                    problem.                In over       60     reports      and
testimonies               during           the past           10 years,            GAO has focused             attention
on the Department                         of Energy’s              management of               the nation’s          nuclear
weapons facilities.                              GAO pointed             out     as recently             as November 1989
that      Energy          still           does not           know the          extent       of    contamination             at
many of          its      facilities               and,       in    fact,        is not        certain      that     it     has
identified              all       contaminated                sites.           A related          issue     which         GAO

testified              on last            year     is    the       strong        opposition          to locating
facilities              for       the permanent                 disposal           of    radioactive         wastes         and
the environmental                         safety        of    such facilities.                    Although         DOE
issued         its      first         S-year        plan        to correct              the nuclear         weapon/waste
crisis         in August              1989,        any permanent                 solution         to this      complex
problem          is years             away.

GAO believes                  that        proper        oversight           is    a key element             to ensuring
that      DOE        stays        fully       committed             to the         successful            implementation
of this         plan.           Our current              and anticipated                  congressional             request
work      lobd         should         continue           GAO’s role              as a major         participant             in
such oversight.


According              to public            opinion           polls,        drug        abuse     ranks     as the most
serious         problem              facing        the United             States         today.          In 1988 the
federal         government                 devoted           $1 billion           to demand reduction                     and

more than          three        times       that      amount,         $3 billion,            to supply
reduction.             The fact            remains,         however,          that        the war on drugs                 is
not     being      won.      Only a fraction                   of     the drugs            smuggled          into        the
country         are    intercepted.

Addressing            the nation’s            drug         problem          is a costly,             long-term
commitment.              Therefore,            it     is    imperative             that     the      President            and
the Congress             fund     and emphasize                antidrug            programs          that     are
effective.             Unfortunately,                 we are hampered                    by the      absence         of good
information.               Better        information              on program              success       and measures
of program            effectiveness                 are needed         if     we are        to understand                 what
works      best       and direct            our      resources         accordingly.                  For example,               we
need better            information            about         drug      treatment            programs--their
methods,          success        rate,       and clientele.

GAO has been very                 involved            in the debate                over     antidrug          policies.
The appointment              of      the     first         Director          of    the Office          of National
Drug Control             Policy         represents           the      implementation                 of a proposal
first      made by GAO in 1979.                        In addition,                GAO’6 past          and present
work on drug             interdiction--               one of        the      largest        components              of    the
federal        antidrug         effort--           was reflected              in the        President’s
National         Drug Control              Strategy.              The strategy,              first          issued        in
September          1989,     recommended holding                       the        line     on drug
interdiction             spending,           a position             GAO      proposed        for      consideration
by the Congress              in a June 1989 report,                           in which         GAO raised
concerns         about      future          funding          on air          interdiction             programs.

On January             25,      1990,      the    President             issued      the      second _National
Drug Control              Strategy.              While      this        strategy         proposed         increased
funding         for      all     aspects         of the war on drugs                     including
interdiction,                  these      additional         funds        will      be used to complete                          and
integrate             existing          interdiction           systems.             The strategy               continued
to     recommend that                  no new systems              be initiated              and did       not
increase         spending              on interdiction              disproportionately                    to other
elements         of     the      strategy.

At present,             GAO’s work              includes       evaluations               of both         the
immediate             impacts          of the drug          crisis,         and of longer-term                       programs
with      the    potential              to alleviate           the       problem         over     time.             This

work      is    focusing           on both        the      supply        and demand side                 of the            drug
problem.              One goal          of GAO’s future                 work will          be to evaluate                   the
effectiveness                  of the Office             of National              Drug Control            Policy            in
planning,             implementing,              and coordinating                  the     Strategy’s
components.               GAO plans             to continue             to assist          the    Congress             as it
seeks      t-b make the difficult                        spending         decision6           and will              continue
investigating                  possible         options      which        may lead           to progress               in
solving         this      very         serious      problem         facing         our nation.

These are             examples          of GAO's work              in    fiscal       year       1989.         If      time
permitted,             I would          share     many      more        issues      with      you.

Impact       of Fiscal            Year 1990 Sequester

I want       to     reemphasize            that         GAO could           not      have been able                to
conduct       much of          this       work without               the        6upport        of    this
subcommittee.                Even with             that      support,            however,           we are        finding
that      a budgetary             increase             can be eroded               very      quickly.             For fiscal
year      1990,       the    current            budget       year,         we received              an approximate
$17.4      million          increase.              Out of that              increase           we have had to take
about      $5 million             as our         share       of this            year’s       Gramm-Rudman-
Hollings          sequester.              We have also               had to take               an additional                 $1.6
million       cut      as our          Share of the war on drugs.                               Lastly,           we have
had to absorb               about      $7.2        million          for     the      January         1990 federal              pay
raise.        Together            these         cuts      reduce          the    $17.4       million           increase        by
$13.8      million,          leaving            an effective               $3.6      million         increase           to
cover      mandatory           payroll           costs,        inflation,                increased            mission        work,
and necessary               facility            renovation           efforts.              Obviously,            we will
not     be able        to accomplish                   what we had planned                     to accomplish.                  We
plan      to-take         the major             impact       of the         reduction6              by extending              the
schedule          on planned            facility           renovation              efforts          and by making
some reductions                in other            areas.

Operational            Efficiencies

Following           the     comittee’s             direction              in last         year’s       bill       report,
GAO is evaluating                   the    impact         of ADP technology                     using          specific
p$rformance            criteria           for      incorporating                 microcomputers,                 local

area networks,            and mainframe                 processing          into      our    operations             to
improve       efficiency.                This    is     in concert          with      our     rolling           5-year
information           resources           management planning                   process.            Eull
integration           of the       current         plan     will       dramatically             alter       every
phase of our work                 flow      and will        yield         improvements             in the        overall
efficiency,           quality,           productivity,             and timeliness               of our work.

Use of modern technology                        by GAO continues                to be one of               my    highest
priorities.              Reflecting             the priority              I have assigned                to this
area,      we remain        on target            with      our     goal     of procuring                4,300
microcomputers            by 1991.              We also         have a pilot           project           evaluating
network       or shared           resource         technology           which        involves           two major
divisions        and one region.                   In 1991 this             project         will        include        an
evaluation        of printing               and production                technology.              I have
recently       appointed           Kevin        Boland,         one of my key senior                     executives
from our       line      divisions,             to head up the              effort       to improve              end
user    support        and information                  resource        management.                In the
adminigtrative            area,          we are       continuing           to integrate             our     systems
at the National             Finance          Center        (NFC).          To date      we have converted
to the NFC our payroll,                      personnel,            and supply          systems.             This       year
the property           system       will        be converted,              and next         year     time        and
attendence        will      be converted.

The committee            also      asked us to conduct                     tests      to determine               how
contractors           can help           produce        efficiencies           and also            can help         in
supporting        our audit              and evaluation             work.          We now have

contractors            involved            in selected                  data       collection            and data
analysis        tasks        that     previously                   would        have been conducted                     by GAO
employees           in the development                        of     selected           GAO     work products,                  but
which       do not      involve            any inherent                  governmental                 functions         or
judgements.             We plan            to evaluate                  the     results         by comparing              the
quality,        cost,        and timeliness                     of      reports         that     include          contractor
products        versus         our    other            products.                Right      now we have about                     50
different           tasks      scheduled               for      contracting,               and later             in    1990 we
will       be reporting             on how they                 turned          out     and our          recommendations
for       how to proceed             in this            area.

In recognition               of     the     central             role      of each employee                     in achieving
operational           efficiencies,                    we have an active                       program         designed          to
elicit,       study,         and implement                    ideas       from        staff      throughout             the
organization            to     improve            the        efficiency             and effectiveness                   of GAO’s
work.        This     Operations                 Improvement              Program             (OIP)      provides         for     the
recognition           and reward                 of    individuals                 who submit            beneficial
suggestions           that        result          in further              operational                 efficiencies.
Examples        of projects                tested            in 1989 that               show significant
potential           include:          use of computerized                             workpapers,                enhancing
the use of graphics                   in GAO products                         to    improve       message delivery,
freeing       staff         from     routine            questionnaire                   survey         tasks      through         the
use of       contract          services,               and savings                 in mailing            costs        through
the use of bulk                mailing.                In 1990,           all       divisions            and offices             are
developing           OIP plans             for        experimenting                 with       ways to         improve


product         development            and processing.                    Our belief           is     that     through
concerted           GAO-wide attention                     we can realize             some notable               changes
in an area            that     concerns          all       of us.

In order         to achieve            peak performance                   from      our human resources,                        we
have embarked                on a concerted                effort        to make sure we manage our
people        well.          This     is particularly                   important       since         76 percent            of
our     financial            resources          support        our people.              Our human resource
goals     were the            focus     of      this       year’s        GAO management               conference.
We want         to hire        the best          staff,         train      them well,           give         them
challenging            work,        provide        first        rate      equipment        and work
environments,                reward     those          who excel,          and treat           everyone          fairly.
We have already                made substantial                     progress        in each of these                  areas.
        example :
         Our Campus Executive                      Program           and other        recruiting              efforts
         are producing                top notch            applicants          and new hires.
         Our Training               Institute           is becoming            a model         for     the     rest        of
         the     federal        government.
         The work we are doing,                         as I discussed               earlier         when I
         summarized            our accomplishments,                       is   I think         some of the most
         challenging            work      the      federal           government         has to offer.
         I also        discussed          earlier           our efforts             to provide          needed ADP
         equipment,            an important                resource.           Ownership             of the GAO
         building            now gives          us direct            control        of our work environment
         and,       as you know, we have begun a major                                  renovation             program
         to     remove asbestos                 from       the building.                Our GAO fitness

          center        just      opened and our                    child         care     facility          is    scheduled
          to open this              summer.
          Rewarding             those     who excel                has become a reality                     this         past
          year     with         implementation                  of a performance                  system          for
          evaluator             and evaluator-related                         positions.              Pay for
          performance             bonuses            last       year       ranged        from     $700 to $4,000.
          With     this         change,         we can now tie                    performance          to     rewards               in a
          very     meaningful             way.
          Part     of treating                 people          fairly       means recognizing                     the
          opportunities                 that     a diverse                work     force      presents,            and how
          best     to manage such a work                            force.          We are making                 “managing
          people”         an important                 skill        for      our managers             to master.

It   is    important             to note         that          we have been active                    in     seeking             and
implementing              ways to meet our human resources                                      needs        to make our
operations          more efficient                     and to enable                GAO to work more
effectively,              so as to maximize                        the     return        on the       resources                we
receive          from     the     Congress.                 Recently,             we decided          to close             a
number of our              regional             suboffices.                 These closings                 will         result
in greater          flexibility                 in     staffing            jobs,     in enhanced              training              and
career      paths         for     staff         that        will         be in larger           offices,           and in
better       job    supervision.                     Our policy              is    to make available                     every
consideration              legally             possible            for     employees          affected            by these
decisions,          including              transfer             at government               expense,          early

retirement          for      those      who are eligible                    and so desire,                and
assisting         in locating            alternative               employment           for      the people            who
choose      not     to transfer            to another              geographic           location.

Fiscal      Year 1991 Request

As you can see,                  we have accomplished                     a great       deal       since        our     last
hearing.          We are anxious                to maintain               the momentum and continue                            to
provide      high         quality       services         to the           Congress.             To permit            us to
do this      we are          requesting             $427,248,000             to fund          5,200       average
positions         in 1991,           and authority                to use $5.9           million           in    funds
paid     to GAO by Labor’s                 Bureau        of Labor            Statistics            and Treasury’s
Financial         Management Service                   for        their      share      of costs            as tenants
in the GAO building.

This     represents              a $69,151,000           increase            over      the      fiscal         year     1990
appropriation              for      salaries         and expenses,              less       the     sequestration,
and a $351,000               increase          in    funding         from     the      special           account.
Over half         the      increase        from       fiscal         year     1990 ($35.0                million)        will
go to mandatory                  pay increases           and related             costs,          and to         inflation
in costs      for         existing       levels        of      service.          We need this                  amount
just     to maintain              our existing           level        of capability.

Another      $28.5         million       is needed to provide                        the      staff,        services
and equipment              such as consultant                     and expert           services,            travel,         and
mkrocomputers                needed to maintain                    our ability             to    respond            to the

increasing            congressional               work     load      with        quality          work     in a timely
manner .          Also      included          in this       figure          is     funding         to maintain            our
program       of asbestos                removal        and renovation                  of GAO’sfacilities                      to
handle       those        technological                advancements              that      will     further          enhance
our effectiveness                      and efficiency.

The remaining               $6 million            is needed to fund                     the     costs      associated
with      100 additional                 average        positions.           The additional                   positions
will      bring       the      total      GAO staffing             closer          to a level            at which         we
can provide              the    kind       of coverage           of government                  programs        needed by
the Congress.

Of the       100 average                positions,         35 will          help        us identify            and report
mismanagement,                 fraud,       and abuse         in     federal            programs         such as those
uncovered          at HUD.              Another        35 will       help        us examine             the    effect          on
U.S.      interests            stemming        from      the profound,                  recent      changes          in the
worldwide          political,             military,         and economic                 structure.             The
remaining          30 will         be split            between       coverage            of domestic            banking
and securities                 issues,       and health            and safety              issues        such as
nuclear       waste         disposal,          health       care      costs,            and the         nation’s         air
traffic       control           system.           It    should       be noted            that      we have not            had
any meaningful                 increase        in staff          resources              since      1985,       yet      our
workload          has increased               substantially.

I would           like      to expand             somewhat on our plans                       in the
mismanagement,                 fraud,            and abuse area.                   We have identified                  14
areas         to date         that         we think        have very              high     potintial          for     this
kind         of activity.                  Examples        include          excess         inventory          managed by
the Department                 of Defense,                management of Superfund                         contractors
by EPA, Medicare                     fraud        and abuse,            the       Student         Loan Insurance
Fund,         the       Pension       Benefit         Guaranty            Corporation’s                 management           of
Title         IV of        the Employee              Retirement             Income         Security         Act,      disposal
of      failed          Savings       and Loans and their                         assets      by the Resolution
Trust         Corporation,                 and uncollected                receivables              of    IRS.       Our plan
is      to    focus,        in conjunction                 with        agency       managers            and inspectors
general,             on the         root     causes        of longstanding                  weaknesses,             develop
approaches                to solving             them,     monitor          agency         corrective             actions,
and recommend any legislative                                 action          necessary            to ensure          that
corrective                actions          are    taken.

Other         priorities             for     which        funding         increases           are needed             include
travel;           training,           ADP equipment,                   facility           renovation,
consultants                and contractors,                  and a new digital                     telephone          system.

In the           travel       area we need to                 restore             funds     for     our managers              to
properly             supervise             work    that      is being             done in         the    field.        In
fiscal           year      1990 the price                 level        increase           in authorized             travel
funds         that        the Committee              provided           has been substantially                        lost

due to the          sequestration.                As a result,                   we are       losing       some of our
ability       to give         jobs     closer        field      supervision                 by our managers                and
recognize          that     some productivity                  may be sacrificed.

We have also              been enhancing             training         in technical                  areas,         such as
in the       information             resource        management area                      and for      our
executive          education          program,         to improve                our ability           to conduct
complex       analyses,              Increases         in this        area         total       $417,000            above
the     1990 level          of $2.7       million.

In the ADP area              we are       requesting            a total            increase          of $7 million
above the          1990 level          of $18 million.                 GAO         is      at a point             where
significant          increases          in    funding          for    ADP are necessary                      if     we are
to continue          to     support       the     technology           that              has already         been
introduced          into      the agency          and if        we are            to continue           to introduce
other      efficiency-enhancing                   technology.                    The bulk       of the            increase
will      go to supporting              the      three       levels         of processing               involved           in
mission       work which          I discussed             earlier:               microcomputers,                  shared
resource       architecture,              and mainframe               computing.                This       capability
will      permit     us to do things               we have not                   been able          to do in the

For building              renovation         we are       requesting               an increase             of about
$10 million          above the          1990 level             of $15.5            million.            The increase
will      permit     us to continue               to     remove asbestos                    from     our


                                                                            I,      ‘I
headquarters            building            and to make other                       modifications.                      As
regions       and audit            sites         are     required             to move,             these        offices             are
being      upgraded           as well.

As   I discussed              earlier,            in    response            to a request                  from       this
committee,        we are now conducting                              tests         where we contract                        for
selected        kinds         of tasks           in     support         of our audit                    and evaluation
work.        We anticipate                such contracts                    will     enhance              our       efficiency
and complement                our ongoing               emphasis            on using             consultants                and
other      experts       in audit              and evaluation                  work        that          is highly
technical.           We are         requesting                 an increase             of        $1.5        million         to
permit       greater          usage of consultants                          and contractors                     in support                of
our work.

Our planning            for      the      1992 tri-annual                    conference                 of    the
International            Organization                   of Supreme Audit                    Institutions
(INTOSAI)        continues,               and we are at a point                            where we need a
contract        to help          us prepare              for     hosting            this         tri-annual             meeting.
Our current          estimate             is     that     this         conference                will        cost      in the
range      of $3.7       million           due in part                 to the need to provide                               five-
language        translations               for         the delegates                and other                unique
logistical        requirements                   of     an international                    conference                 including
security        services.                Fiscal         year     1991 costs                for      INTOSAI will                  be
about      $400,000,           and much of this                      will      support            a governing                board
meeting       hosted          by GAO in October                      1991.           This         will        be the         first

time      GAO will           host      this     international                        conference          since      INTOSAI
was organized                in 1953.           Host          other            major     countries         have hosted
this      conference.

At the      committee’s                direction,              during            the past         year,     GAO      has
continued           its      joint      efforts             with         the Architect              of    the Capitol                and
heads of       legislative                  agencies           to        identify         and meet common
telecommunications                     needs.              Current             plans     call     for     the     acquisition
of more cost               effective           long         distance             voice      communications.                     In
this      regard,          we are       scheduled              to start                conversion         to a commercial
long      distance           carrier          in February                 1990.          We are also             coordinating
with      the Architect                of the         Capitol             on the         acquisition             of a local
digital       telephone              system          for      the Washington,                    D.C.     area.           We have
submitted           a detailed              statement               of our           technical          requirements             to
the Architect                of the         Capitol           for        his     review         and approval.
Funding       for         this   project          in        fiscal            year      1991 will         require          an
estimated           increase           of     $5.3         million             to acquire         the     new digital
telephone           system.            Although             this         is     a significant             one-time          cost,
we foresee           substantial               improvement                     in cost      management            as well            as
significant               improvements               in our          ability            to do our work              for     the


I want GAO to continue               to address           the   tough      issues      facing    our
country      and the Congress             with     quality      products,         delivered      in a
timely      fashion.       Our record            of accomplishments,              I believe,      speaks
to the      return     on investment,             both    monetary       and nonmonetary,          that
we are      capable      of delivering.             Such a return           requires       continued
investment       however.          Our most important              asset     is     our people     and
that      is where     continued         investment          is paramount.
The support          provided      to GAO by this             subcommittee          in the past        has
been excellent,           and it     has allowed             us to make significant
progress.        I hope we can continue                   to have your        support         in the

This      ends my formal        statement,          Mr.      Chairman.       I am pleased         to
have this       opportunity         to    respond        to your     questions.