oversight

Fiscal Year 1991 Budget Estimates for the General Accounting Office

Published by the Government Accountability Office on 1990-04-06.

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

                 Testimony

                                               llllllll\IIlllll
                                                  141427


For Release on   Fiscal Year 1991 Budget Estimates         for     the
Delivery         General Accounting Office
Friday,
April 6, 1990




                 Statement of
                 Charles A. Bowsher
                 Comptroller  General   of the United    States
                 Before the
                 Subcommittee on Legislative    Branch
                 Committee on Appropriations
                 United States Senate




GAO/T-OCG-90-2
                                                                 GAO Form   160 (12B7)
     .   , .
._




               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
                  Y
               confident              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 dramatic                   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       estab.lished                    dates              or      over        a defined              period         of
              time.



              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

              stream lining                   work           processes                 and          procedures.                      However,             we have

              reached           a point,                 complicated                        by      the        no growth              Gram m -Rudman-

              Hollings               environment,                       where          we are               stretched                to     the      lim its        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 stgnificant                             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


                                                                                                    2
    .
:




        assignments              we perform            for      congressional                       requestors.                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 are        developing                some criteria                      and priority               setting
        guidelines             to accomplish-this.                             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               requesters),
        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    D,efense.            Also,        we
        had 63 different                    individuals                 representing                   GAO as the            primary
          w


                                                                               3.          ’
 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
                                                                                                        I
 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

 aciomplishments                     in     service              to        the         public,                  which           was       57 percent


                                                                                 ‘4
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      De.partment                 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          majar          policy,            management,                  and        program

issues          now         facing         the      government.                     I would           like          to     highlight               some

of      these      critical                issues.




                                                                            5
.



                  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

      it”s      assets.              We issued                  our          fourth           major          report               in    November                 1989


                                                                                         6
                                                                                                                                                I




on agencies’                     implementation                    of         the         IFederal           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

inventories.



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

statements.




                                                                               7
            Financial                Institutions



In       numerous             testimonies,                       letters,                  and          reports             GAO urged                  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

ahead.



Also       of     concern                is      th’e        government’s                     exposure                  to        similar              risks

under        other            programs                 such         as direct                 federal                 loans            amounting                to

$222       billion,                 federally-guaranteed                                    loans           amounting                    to    $S50

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

riporting,                   and     audits              of      financial                  statements                      for        each       of      them.


                                                                                    8
,                                                                                                     .




    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.



               Defense



    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
     il
    expansion   and training                                  of     reserve             forces;                the         planned           closure                of


                                                                                    9
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                 aff~ordability                           identified                 a potential                    DOD

budget           savings            of         approximately                        $250          millio,n               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
i*nsurance,                 additional                 millions                 are        under             insured,               and      many          do not


                                                                                 10
                                                                                                                                                                 .
                                                  .




  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,




                                                                          11
In    addition,               The      National                 Cancer        Institute                   held          a 2-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.




                                                                         12
          .

                                                                                                                                          .



The      Social              Security             Administration,                            FAA,       IRS,      and        DOD each               have

examples              where          vast          sums         have          or      a’re    being          spent          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      dovernment;s                   Technology                Challenge”

which          brought              leaders              from         industry,               the       executive                branch,            and

the      CQngress               together.                for         the      first          ti’me      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’s          estimate,           may cost                as 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

miy      be        required.


                                                                                 13
.




    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.                     Al though              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        load          should             continue           GAO’s          role          as a major                   participant                 in

    such        oversight.



                Drugs



    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
      *



                                                                                 14
*   .   .




            more          than         three         times         that             amount,           $3 bil’lion,                        to      supy!y

            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’s           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

            cincerns              about          future            funding                  on air               interdiction                        programs.


                                                                                            15
On January                   25,l        1990,        the        President                 issued              the       second               Mational

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          to     make          the      difficult                  spending                 decisions                  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.




                                                                               16
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           support             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           reductions                by    extending                 the

schedule               on planned                     facility               renovation                      efforts            and       by making

some           reductions                in      other             areas.



Operational                     Efficiencies



Following                 the        committee’s                     direction                   in         last       year’s         bill        report,

GAO is evaluating                               the         impact           of      ADP technology                         using            specific
 J
performance    criteria                                 for        incorporating                            microcomputers,                     local


                                                                                   17       .
area         networks,             and       mainframe                  processing                  into       our      operations                   to

improve             efficiency.                    This         is      in     concert              with       our       rolling              S-year

information                    resources              management                   planning              process.                 Full

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
administrative                     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.



We are             conducting              tests          to     determine                  how contractors                         can       help

produce             efficiencies                  and      can          help          in    supporting               our         audit         and

e’valuation               work.            We now have                   contractors                     involved            in        selected


                                                                             18
            ,                                                   ,




tasks       that          previously             would         have         been       conducted           by GAO employees,

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     contractor             tasks.          Right       now we
have       about          SO 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                 work      papers,             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




                                                                      19
.




    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.

    For       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
         e

                to     remove          asbestos              from        the           building.                     Our     GAO fitness

                                                                                  20
.




              center            just        opened          and         our        ch.ild            care         facility               is         schedrlled

              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         f.orce            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.                      Cur       policy               is     to     make          available                  every

    consideration                   legally            possible                for        employees                     affected               by     these
    decisions,                including              transfer                 at     government                    expense,                 early




                                                                               21
                                                                        .



t

    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         199.1 Request



    As you            can         see,          we have          accomplished                        a great                  deal       since          our        last

    hearing.                 We aye              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

    m*icrocomputers                        needed           to     maintain               our             ability              to       respond           to       the


                                                                                    22                              t



                                                                                                 I    -
increasing                     congressional                    work          load          with        quality              work            in     a timol.y

manne I:.             Also            included             in        this         figure           is     funding                 to    maintdin                    our

program              of        asbestos            removal              and        renovation                  of      GAO’s            -facilities                       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               need’ed                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.                                 _




                                                                                  23




                           .
                          .                                 .    -




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      potential                      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

fi.scal             year          1990          the     price               level           increase           in     authorized                      travel

funds              that         the        Committee                  provided               has       been      substantially                         lost




                                                                                       24
.
    .

        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             reques,ting                    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

        past.


        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
          r)



                                                                                         2.5




                                                                                                                                                                      n     .
    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,                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 dre                    requesting              an increase                    of     $1.5

    million           to      permit           greater                 usage            of      consultants                   and       contractors                    in

    support           of      our         work.



    Our       planning              for      the       199.2 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




                                                                                    26




.    -
    time       GAO will                  host         this         international                  conference                  .sinc,e       INTOSAI

    was       organized                  in     1953’.             Most         other        major          countries              have         hosted

    this        conference..



    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      Congress.




                                                                                   27

.
Conclusion



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           o.f 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

future.



This         ends     my formal                statement,                  Mr.         Chairman.                I    am pleased              to

have         this     opportunity                    to       respond            to      your        questions.




                                                                           28