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November 17, 2006:

Subject: Suggested Areas for Oversight for the 110th Congress:

Congressional Leadership:

As I publicly announced in early September, I am pleased to offer three 
sets of recommendations, based on the work of the U.S. Government 
Accountability Office (GAO), for your consideration for the agenda of 
the 110th Congress. The first suggests targets for near-term oversight; 
the second proposes policies and programs that are in need of 
fundamental reform and re-engineering; and the third lists governance 
issues that should be addressed to help ensure an economical, 
efficient, effective, ethical, and equitable federal government capable 
of responding to the various challenges and capitalizing on related 
opportunities in the 21st century. Details on each of these 
recommendations can be found in the enclosure.

As you know, GAO has three key roles to play in making a difference for 
the Congress and the American people: oversight, insight, and 
foresight. The attached lists reflect those missions and represent an 
effort to synthesize GAO's institutional knowledge and special 
expertise for the benefit of you and your colleagues in your planning 
efforts. In this regard, I believe that to be effective, congressional 
oversight needs to be constructive. For example, related hearings and 
other activities should offer opportunities for leading federal 
agencies to share best practices and facilitate governmentwide 
transformation. They should also hold people accountable for delivering 
positive results in an economical, efficient, effective, ethical, and 
equitable manner. This balanced approach is likely to help accelerate 
progress while avoiding a further erosion of the public's trust and 
confidence in government.

We at GAO stand ready to assist the 110th Congress in meeting its 
constitutional responsibilities, just as we have assisted the 109th 
Congress. For example, during fiscal year 2006, GAO witnesses testified 
at 240 hearings and provided 17 additional statements for the record. 
As you know, we are preparing updates of our Strategic Plan and High- 
Risk List for publication early in calendar year 2007. However, I also 
wanted to offer these sets of recommendations in order to give you and 
other leaders a jump-start on your planning for the next Congress.

There are two general themes that support our recommendations. First, 
we cannot afford to continue business as usual in Washington, given our 
current deficit and growing long-term fiscal challenges. Second, most 
of the federal government's current policies, programs, functions, and 
activities are based on conditions that existed decades ago, are not 
results-based, and are not well aligned with 21st century realities. 
Therefore, there is a need to engage in a fundamental review, 
reprioritization, and re-engineering of the base of government. These 
themes provided the foundation for our February 2005 report 21st 
Century Challenges: Re-examining the Base of the Federal Government 
(GAO-05-325SP).

I would be pleased to discuss these recommendations with you and other 
members of the leadership team at your earliest convenience. GAO's 
Office of Congressional Relations will be contacting your staff to 
schedule a meeting. In the meantime, I will be sharing these ideas with 
your colleagues on both sides of the aisle in both chambers.

Thank you in advance for your time and consideration.

Sincerely yours,

[Signed by]:

David M. Walker:

Comptroller General:

of the United States:

Enclosure:

List of Addressees:

The Honorable Bill Frist:
Majority Leader:
United States Senate:

The Honorable Harry Reid:
Minority Leader:
United States Senate:

The Honorable J. Dennis Hastert:
Speaker of the House of Representatives:

The Honorable John Boehner:
Majority Leader:
House of Representatives:

The Honorable Nancy Pelosi:
Minority Leader:
House of Representatives:

The Honorable Thad Cochran:
Chairman:
The Honorable Robert C. Byrd:
Ranking Minority Member:
Committee on Appropriations:
United States Senate:

The Honorable Wayne Allard:
Chairman:
The Honorable Richard J. Durbin:
Ranking Minority Member:
Subcommittee on Legislative Branch:
Committee on Appropriations:
United States Senate:

The Honorable Susan M. Collins:
Chairman:
The Honorable Joseph I. Lieberman:
Ranking Minority Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:

The Honorable Jerry Lewis:
Chairman:
The Honorable David Obey:
Ranking Minority Member:
Committee on Appropriations:
House of Representatives:

The Honorable Tom Davis:
Chairman:
The Honorable Henry A. Waxman:
Ranking Minority Member:
Committee on Government Reform:
House of Representatives:

[End of section].

Enclosure:

Targets for Near-Term Oversight:

1. Reduce the Tax Gap: Page 7: 
2. Address Governmentwide Acquisition and Contracting Issues: Page 8: 
3. Transform the Business Operations of the Department of Defense, 
Including Addressing All Related “High-Risk” Areas: Page 9: 
4. Ensure the Effective Integration and Transformation of the 
Department of Homeland Security: Page 10: 
5. Enhance Information Sharing, Accelerate Transformation, and Improve 
Oversight Related to the Nation’s Intelligence Agencies: Page 11: 
6. Enhance Border Security and Enforcement of Existing Immigration 
Laws: Page 12: 
7. Ensure the Safety and Security of All Modes of Transportation and 
the Adequacy of Related Funding Mechanisms: Page 13: 
8. Strengthen Efforts to Prevent the Proliferation of Nuclear, 
Chemical, and Biological Weapons and Their Delivery Systems (Missiles): 
Page 14: 
9. Ensure a Successful Transformation of the Nuclear Weapons Complex: 
Page 15: 
10. Enhance Computer Security and Deter Identity Theft: Page 16: 
11. Ensure a Cost Effective and Reliable 2010 Census: Page 17: 
12. Transform the Postal Service’s Business Model: Page 18: 
13. Ensure Fair Value Collection of Oil Royalties Produced from Federal 
Lands: Page 19: 
14. Ensure the Effectiveness and Coordination of U.S. International 
Counterterrorism Efforts: Page 20: 
15. Review the Effectiveness of Strategies to Ensure Workplace Safety: 
Page 21: 

Policies and Programs That Are in Need of Fundamental Reform and Re-
Engineering: 

1. Review U.S. and Coalition Efforts to Stabilize and Rebuild Iraq and 
Afghanistan: Page 22: 
2. Ensure a Strategic and Integrated Approach to Prepare for, Respond 
to, Recover, and Rebuild from Catastrophic Events: Page 23: 
3. Reform the Tax Code, Including Reviewing the Performance of Tax 
Preferences: Page 24: 
4. Reform Medicare and Medicaid to Improve Their Integrity and 
Sustainability: Page 25: 
5. Ensure the Adequacy of National Energy Supplies and Related 
Infrastructure: Page 26: 
6. Reform Immigration Policy to Ensure Equity and Economic 
Competitiveness: Page 27: 
7. Assess Overall Military Readiness, Transformation Efforts, and 
Existing Plans to Assure the Sustainability of the All-Volunteer Force: 
Page 28: 
8. Assure the Quality and Competitiveness of the U.S. Education System: 
Page 29: 
9. Strengthen Retirement Security Through Reforming Social Security, 
Increasing Pension Saving and Promoting Financial Literacy: Page 30: 
10. Examine the Costs, Benefits, and Risks of Key Environmental Issues: 
Page 31: 
11. Reform Federal Housing Programs and Related Financing and 
Regulatory Structures: Page 32: 
12. Ensure the Integrity and Equity of Existing Farm Programs: Page 33: 
13. Review Federal Efforts to Improve the Image of the United States: 
Page 34: 

Governance Issues That Should be Addressed to Help Ensure an 
Economical, Efficient, Effective, Ethical, and Equitable Federal 
Government Capable of Responding to the Various Challenges and 
Capitalizing on Related Opportunities in the 21st Century: 

1. Review the Need for Various Budget Controls and Legislative Process 
Revisions in Light of Current Deficits and Our Long-Range Fiscal 
Imbalance: Page 35: 
2. Pursue the Development of Key National Indicators: Page 36: 
3. Review the Impact and Effectiveness of Various Management Reforms 
Enacted in Recent Years (e.g., GPRA, CFO Act, FFMIA, Clinger-Cohen, 
etc.) Page 37: 
4. Review the Effectiveness of the Federal Audit and Accountability 
Community, Including the Oversight, Structure, and Division of 
Responsibility: Page 38: 
5. Modernize the Federal Government’s Organizational and Human Capital 
Models: Page 39: 
6. Re-examine the Presidential (Political) Appointment Process: Page 
40: 
7. Ensure Transparency over Executive Policies and Operations: Page 41: 
8. Monitor and Assess Corporate Financial Reporting and Related 
Standards for Public Companies Accountability: Page 42: 

Reduce the Tax Gap:

The tax gap--the difference between the amounts taxpayers pay 
voluntarily and on time and what they should pay under the law--has 
been a long-standing problem. Most recently, the Internal Revenue 
Service (IRS) estimated a gross tax gap for tax year 2001 of $345 
billion and, after enforcement efforts and late payments, a net tax gap 
of $290 billion. When some taxpayers fail to comply, the burden of 
funding the nation's commitments falls more heavily on compliant 
taxpayers. Reducing the tax gap would help improve the nation's fiscal 
stability. Based on IRS's estimate, each 1 percent reduction in the net 
tax gap would likely yield $3 billion annually. The gap can be reduced, 
though not eliminated, through a multiprong strategy of better service 
and enforcement of existing tax laws, plus legislative actions.

Key Topics Needing Congressional Oversight:

* Provide IRS with additional tools, such as enhanced withholding and 
information returns authorities for sources of income like capital 
gains on securities sales.

* Require IRS to obtain data on the extent of, and reasons for, 
noncompliance.

* Ensure that IRS leverages technology to improve efficiency and 
effectiveness in its taxpayer service and enforcement efforts.

* Examine how IRS seeks to optimize the allocation of its resources, 
including how it balances enforcement and service efforts.

* Assess whether IRS's tax-gap reduction goals are adequate and whether 
it has a data-based strategy for achieving its goals.

* Simplify the tax code and broaden the base by, for example, 
consolidating existing tax preferences (e.g., retirement).

Selected GAO Products:

Capital Gains Tax Gap: Requiring Brokers to Report Securities Cost 
Basis Would Improve Compliance if Related Challenges Are Addressed. GAO-
06-603. June 13, 2006.

Tax Gap: Making Significant Progress in Improving Tax Compliance Rests 
on Enhancing Current IRS Techniques and Adopting New Legislative 
Actions. GAO-06-453T. February 15, 2006.

Tax Compliance: Better Compliance Data and Long-term Goals Would 
Support a More Strategic IRS Approach to Reducing the Tax Gap. GAO-05- 
753. July 18, 2005.

Primary GAO Contacts:

Michael Brostek, Director, Strategic Issues, (202) 512-9110, 
brostekm@gao.gov.

James White, Director, Strategic Issues, (202) 512-9110, whitej@gao.gov.

Address Governmentwide Acquisition and Contracting Issues:

The acquisition of products and services from contractors consumes 
about a quarter of the government's discretionary spending. In fiscal 
year 2005, federal agencies spent over $388 billion on such contracts. 
The work of the government is increasingly being performed by 
contractors, including emergency and large-scale logistics operations 
such as hurricane response and recovery and the war in Iraq. Many 
agencies rely extensively on contractors to carry out their basic 
missions. At the same time, GAO's list of government high-risk areas 
includes acquisition and contract management issues that collectively 
expose hundreds of billions of taxpayer dollars to potential waste and 
misuse. The Congress should continue to monitor agencies' efforts to 
address existing problems, while facilitating a re-examination of the 
rules and regulations that govern the government-contractor 
relationship in an increasingly blended workforce.

Key Topics Needing Congressional Oversight:

* Require agencies to report on mechanisms in place to ensure that 
contractors are playing appropriate roles and that agencies have 
retained sufficient workforce capacity to monitor contractor cost, 
quality, and performance, particularly in such critical operations as 
responding to Hurricane Katrina and rebuilding Iraq.

* Assess agencies' efforts to ensure that acquisitions are performance- 
and outcome-based, with appropriate risk-sharing contracts in place.

* Require agencies with significant acquisition budgets, such as the 
Department of Defense (DOD) and the National Aeronautics and Space 
Administration (NASA), to better align requirements, budget, and 
acquisition processes to reconcile the differences between wants, 
needs, affordability, and sustainability, given current and future 
demands and resources.

* Monitor the implementation of agency action plans to address the GAO 
high-risk areas related to acquisition and contract management. These 
include contracting at DOD, the Department of Energy, and NASA, as well 
as interagency contracting practices through the General Services 
Administration and other means.

Selected GAO Products:

Highlights of a GAO Forum: Federal Acquisition Challenges and 
Opportunities in the 21st Century. GAO-07-45SP. October 6, 2006.

DOD Acquisitions: Contracting for Better Outcomes. GAO-06-800T. 
September 7, 2006.

High-Risk Series: An Update. GAO-05-207. January 2005.

Primary GAO Contact:

Katherine Schinasi, Managing Director, Acquisition and Sourcing 
Management, (202) 512-4841, schinasik@gao.gov.

Transform the Business Operations of the Department of Defense, 
Including Addressing All Related "High-Risk" Areas:

Of the 26 areas on GAO's 2005 high-risk list of federal programs or 
activities that are at risk for waste, fraud, abuse, or mismanagement, 
8 are Department of Defense (DOD) programs or operations and 6 are 
government high-risk areas for which DOD shares some responsibility. 
These high-risk areas relate to DOD's major business operations 
intended to support the warfighter, including DOD's overall management 
approach to business transformation, business systems modernization, 
financial management, the personnel security clearance process, supply 
chain management, support infrastructure management, weapon systems 
acquisition, and contract management. Billions of dollars have been 
wasted annually because of the lack of adequate transparency and 
appropriate accountability across DOD's business areas. We have 
consistently reported and testified on the need for DOD to develop an 
integrated, enterprisewide business transformation plan and establish a 
chief management official position to lead the department's overall 
business transformation efforts. To its credit, DOD has established 
management structures such as the Defense Business Systems Management 
Committee (DBSMC)--intended by DOD to be its primary transformation 
leadership and oversight mechanism--and the Business Transformation 
Agency to support the DBSMC. DOD has also established and updated its 
Business Enterprise Architecture and Enterprise Transition Plan, as 
well as a Financial Improvement and Audit Readiness Plan. To date, 
however, DOD's primary focus has been on business systems modernization.

Key Topics Needing Congressional Oversight:

* Require DOD to establish management accountability at an appropriate 
level of the organization with significant authority, experience, and 
tenure to provide sustained leadership needed to achieve successful and 
sustainable transformation.

* Require DOD to develop and implement a viable strategic plan with 
goals, objectives, key milestones, and measures to monitor and report 
on progress in transforming its key business operations.

* Evaluate DOD's progress in complying with legislative requirements to 
improve its business systems modernization and financial management 
modernization efforts.

* Require DOD to develop and implement plans to address its high-risk 
areas.

Selected GAO Products:

Defense Business Transformation: A Comprehensive Plan, Sustained 
Leadership, and Integrated Efforts at All Levels Are Needed to Maintain 
Progress. GAO-07-229T. November 16, 2006.

Business Systems Modernization: DOD Continues to Improve Institutional 
Approach, but Further Steps Needed. GAO-06-658. May 15, 2006.

High-Risk Series: An Update. GAO-05-207. January 2005.

Primary GAO Contacts:

Henry L. Hinton, Jr., Managing Director, Defense Capabilities and 
Management, (202) 512-4300, hintonh@gao.gov.

Randy Hite, Director, Information Technology, (202) 512-6256, 
hiter@gao.gov.

Ensure the Effective Integration and Transformation of the Department 
of Homeland Security:

After its creation in 2003, the Department of Homeland Security (DHS) 
had to transform 22 agencies--several with major management challenges-
-into one department. This is a high-risk endeavor because failure to 
effectively address its management challenges and program risks could 
have serious consequences for our national security. The areas GAO 
identified as at risk include planning and priority setting; 
accountability and oversight; and a broad array of management, 
programmatic, and partnering challenges.

Key Topics Needing Congressional Oversight:

* Evaluate the progress of DHS and its components in strategic 
planning, particularly whether strategic plans conform to best 
practices and link performance goals to resource requirements.

* Assess the progress of DHS in developing and integrating key 
management functions--financial, acquisition, information, and human 
capital-- across its components.

* Review the progress of DHS and its components in performing risk 
assessments--particularly in the mission areas like border and 
transportation security and critical infrastructure protection--as part 
of a risk management approach to the allocation of resources.

* Examine the progress of DHS and its components in improving 
partnering with other federal, state and local governments, and private 
entities in the fulfillment of its homeland security and non-homeland 
security missions.

Selected GAO Products:

Risk Management: Further Refinements Needed to Assess Risks and 
Prioritize Protective Measures at Ports and Other Critical 
Infrastructure. GAO-06-91. December 15, 2005.

Results-Oriented Government: Improvements to DHS's Planning Process 
Would Enhance Usefulness and Accountability. GAO-05-300. March 31, 2005.

Department of Homeland Security: A Comprehensive and Sustained Approach 
Needed to Achieve Management Integration. GAO-05-139. March 16, 2005.

Primary GAO Contacts:

Cathleen Berrick, Director, Homeland Security and Justice, (202) 512- 
3404, berrickc@gao.gov.

Bernice Steinhardt, Director, Strategic Issues, (202) 512-6543, 
steinhardtb@gao.gov.:

Enhance Information Sharing, Accelerate Transformation, and Improve 
Oversight Related to the Nation's Intelligence Agencies:

Since September 11, 2001, the nation has made some progress in fixing a 
major vulnerability--intelligence and law enforcement agencies' failure 
to "connect the dots" and share information on the terrorists. Key 
legislation, presidential directives, and several commissions have 
focused on enhancing the management of the intelligence community's 
budgets and activities and information sharing within the community and 
beyond. But progress has been slow in some key areas, including 
implementing the policies needed to govern information sharing. The 
December 2004 Intelligence Reform and Terrorism Prevention Act and 
several presidential directives established the Director of National 
Intelligence (DNI), which absorbed the functions of the previous 
Director of Central Intelligence. Following the March 2005 report of 
the President's Commission on Weapons of Mass Destruction Intelligence 
Capabilities, the DNI further created numerous offices intended to 
enhance and transform the intelligence community's functions and 
operations through a variety of initiatives throughout the intelligence 
community. These include improved central oversight of the National and 
Military Intelligence Program budgets, use of open sources, 
intelligence fusion centers, human capital policies and practices, and 
intelligence collection, analysis, and reporting. Moreover, the March 
2005 report also recommended improvements in internal and external 
oversight to make sure reform occurs. Without continued congressional 
oversight of these issues, the progress and results of the many 
requirements and initiatives will remain unclear.

Key Topics Needing Congressional Oversight:

* Assess the progress in transforming the intelligence community across 
the wide range of current initiatives.

* Review how well the National Counter Terrorism Center and the Counter 
Proliferation Center have improved the quality of intelligence and how 
it is shared within the intelligence community and beyond.

* Evaluate how well the Program Manager for the Information Sharing 
Environment responsible for implementing the policy and technological 
road map for sharing has achieved this objective.

Selected GAO Products:

Information Sharing: The Federal Government Needs to Establish Policies 
and Processes for Sharing Terrorism-Related and Sensitive but 
Unclassified Information. GAO-06-385. March 17, 2006.

High-Risk Series: An Update. GAO-05-207. January 2005:

Primary GAO Contacts:

Eileen Larence, Director, Homeland Security and Justice, (202) 512- 
6510, larencee@gao.gov.

Davi M. D'Agostino, Director, Defense Capabilities and Management, 
(202) 512-5431, dagostinod@gao.gov.

Enhance Border Security and Enforcement of Existing Immigration Laws:

The terrorist attacks of September 11, 2001, showed how weak border 
security measures and ineffective enforcement of our nation's 
immigration laws could be exploited to a tragic end. Although enhancing 
passport and visa security procedures, securing the borders and 
enforcing immigration laws have received increased funding and 
attention, millions of aliens live and work in the United States after 
entering the country illegally or overstaying the terms of a visa. This 
may present a significant national security challenge and could 
adversely affect citizens who compete with illegal aliens for jobs and 
bear immigration-related costs. The Departments of State and Homeland 
Security (DHS) have taken some steps to address these challenges, such 
as deploying additional personnel and technology overseas and at the 
borders, and using computer verification systems to detect fraudulent 
documents and reduce employment of unauthorized foreign workers. 
However, successful implementation of these steps has often been 
hampered by inadequate planning and guidance, misaligned priorities and 
resources, and outdated information technology systems. Additional 
congressional oversight can help ensure that travel document, border 
security, and immigration enforcement initiatives are yielding improved 
national and economic security for our nation's citizens.

Key Topics Needing Congressional Oversight:

* Assess DHS progress in implementing the multibillion-dollar Secure 
Border Initiative program to secure the borders.

* Assess existing enforcement of laws that prohibit the employment of 
illegal aliens.

* Require DHS to better balance its resources devoted to border 
security and enforcing immigration laws in the interior.

* Assess DHS efforts to provide high-quality and timely services to 
legal immigrants.

* Assess DHS and State Department efforts to improve passport and visa 
security procedures and in mitigating risks in the visa waiver program.

Selected GAO Products:

Border Security: US-VISIT Program faces Strategic, Operational, and 
Technological Challenges at Land Ports of Entry. GAO-07-56. November 
13, 2006.

Border Security: Stronger Actions Needed to Assess and Mitigate Risks 
of the Visa Waiver Program. GAO-06-854. June 28, 2006.

Immigration Benefits: Improvements Needed to Address Backlogs and 
Ensure Quality of Adjudications. GAO-06-20. November 21, 2005.

Immigration Enforcement: Weaknesses Hinder Employment Verification and 
Worksite Enforcement Efforts. GAO-05-813. August 31, 2005.

Overstay Tracking: A Key Component of Homeland Security and a Layered 
Defense. GAO-04-82. May 21, 2004.

Primary GAO Contacts:

Richard M. Stana, Director, Homeland Security and Justice, (202) 512- 
8816, stanar@gao.gov.

Jess T. Ford, Director, International Affairs and Trade, (202) 512- 
4268, fordj@gao.gov. :

Ensure the Safety and Security of All Modes of Transportation and the 
Adequacy of Related Funding Mechanisms:

The nation's economic vitality and the quality of life of its citizens 
depend greatly on the safety, security, and efficiency of its 
transportation infrastructure, and major challenges exist in all three 
of these areas. Safety continues to be a concern, with an average of 
over 40,000 traffic deaths, 6 commercial airline, and over 350 general 
aviation fatal crashes annually, and over 2,200 major pipeline 
accidents over a recent 10-year period. Regarding security, despite 
significant progress in securing commercial aviation, the 
Transportation Security Administration must continue to adapt to 
changing threats, while coordinating efforts with international 
partners. Nonaviation transportation modes also remain vulnerable given 
their easy accessibility and many potential targets. On efficiency, 
between 2000 and 2010, travel on roads is expected to increase by 25 
percent and freight traffic by 43 percent. Further, forecasted 
continuing growth in air traffic is straining both airport and air 
traffic control infrastructure. While addressing these challenges will 
likely require substantial resources, federal transportation trust fund 
revenues are eroding and long-term trust fund viability is questionable.

Key Topics Needing Congressional Oversight:

* Alternative mechanisms to increase revenues for infrastructure 
improvements, including user fees and alternatives to stimulate private 
investment.

* The extent to which funding allocation methods ensure the equity, 
efficiency, accountability, and performance of transportation 
investments.

* Effectiveness of federal grants, incentives, and regulation to 
improve transportation safety.

* Efforts of the federal government to find new technologies and 
solutions for increasing the safety and security of the transportation 
system.

* The extent to which homeland security resources are being allocated 
across the entire transportation network based on a common risk-managed 
framework.

* Federal and private-sector efforts to ensure the security of surface 
transportation modes, and federal efforts in developing and enforcing 
related security requirements.

Selected GAO Products:

Aviation Safety: FAA's Safety Efforts Generally Strong but Face 
Challenges. GAO-06-1091T. September 20, 2006.

Highway Trust Fund: Overview of Highway Trust Fund Estimates. GAO-06- 
572T. April 4, 2006.

Aviation Security: Significant Management Challenges May Adversely 
Affect Implementation of the Transportation Security Administration's 
Secure Flight Program. GAO-06-374T. February 9, 2006.

Passenger Rail Security: Enhanced Federal Leadership Needed to 
Prioritize and Guide Security Efforts. GAO-05-851. September 2005.

Primary GAO Contacts:

Patricia Dalton, Managing Director, Physical Infrastructure Issues, 
(202) 512-2834, daltonp@gao.gov.

Norm Rabkin, Managing Director, Homeland Security and Justice, (202) 
512-8777, rabkinn@gao.gov.:

Strengthen Efforts to Prevent the Proliferation of Nuclear, Chemical, 
and Biological Weapons and Their Delivery Systems (Missiles):

On February 11, 2004, the President stated that "the greatest threat 
before humanity today is the possibility of secret and sudden attack 
with chemical or biological or radiological or nuclear weapons." He 
also stated that these weapons are becoming easier to acquire, build, 
hide, and transport. U.S. policy is to stop the spread of weapons of 
mass destruction (WMD) and their delivery systems, such as missiles, 
and the executive branch has initiated or expanded several activities 
to address this threat. In recognition of these threats, the Congress 
provided the Departments of Defense (DOD), Energy (DOE), and State more 
than $8 billion since 1992 to prevent the proliferation of weapons of 
mass destruction material and expertise. The U.S. has also played a 
leading role strengthening multilateral efforts to control trade in WMD 
materials. Additional congressional oversight can help assess the 
effectiveness of these activities and how U.S. resources might be 
better planned and managed to achieve nonproliferation goals. A failure 
to effectively implement nonproliferation programs could result in 
wasted resources or, at worst, a devastating WMD attack on the United 
States or its allies.

Key Topics Needing Congressional Oversight:

* Ensure that DOD, DOE, and State integrate their various 
nonproliferation programs to ensure they are efficiently addressing the 
most significant needs.

* Evaluate U.S. efforts to support and enhance nonproliferation 
activities of individual nations and multilateral regimes.

* Require DOD and State to develop management controls on Proliferation 
Security Initiative activities and a strategy to work with foreign 
governments on issues beyond the control of the United States.

Selected GAO Products:

Nonproliferation: Better Controls Needed to Plan and Manage 
Proliferation Security Initiative Activities. GAO-06-937C. September 
28, 2006.

Nuclear Nonproliferation: IAEA Has Strengthened Its Safeguards and 
Nuclear Security Programs, but Weaknesses Need to Be Addressed. GAO-06- 
93. October 7, 2005.

Weapons of Mass Destruction: Nonproliferation Programs Need Better 
Integration. GAO-05-157. January 28, 2005.

Primary GAO Contacts:

Gene Aloise, Director, Natural Resoures and Environment, (202) 512- 
6870, aloisee@gao.gov.

Joseph A. Christoff, Director, International Affairs and Trade, (202) 
512-8979, christoffj@gao.gov.:

Ensure a Successful Transformation of the Nuclear Weapons Complex:

Over the past several years, there has been a serious reevaluation of 
how the United States maintains its nuclear deterrent. The National 
Nuclear Security Administration (NNSA), a separately organized agency 
within the Department of Energy (DOE), is responsible for overseeing 
the weapons complex, which comprises three nuclear weapons design 
laboratories, four production plants, and the Nevada Test Site, at an 
annual cost of over $6 billion. Recently, NNSA offered a proposal to 
the Congress for transforming the weapons complex over the next 25 
years. NNSA's proposal calls for building a consolidated plutonium 
processing center, removing weapons-grade nuclear material from the 
laboratories, and modernizing the remaining production facilities at 
their existing locations. NNSA's preliminary analysis estimates its 
proposal will cost over $150 billion. The proposal largely depends on 
the successful design of a Reliable Replacement Warhead (RRW) to 
replace some of the existing weapons in the stockpile. Given the 
importance of the nation's nuclear deterrent, the large amount of 
funding required, and DOE's history of poor project management, it is 
vital that the Congress closely oversee NNSA's implementation of its 
proposal.

Key Topics Needing Congressional Oversight:

* Require the Department of Defense to establish clear, long-term 
requirements for the nuclear stockpile by determining the types and 
quantities of weapons needed for our nation's nuclear deterrent.

* Require NNSA to develop accurate cost estimates of its proposal, as 
well as alternative proposals, for transforming the weapons complex.

* Evaluate NNSA's proposed need, cost, and schedule for the RRW and 
compare with plans to refurbish the existing weapons in the stockpile.

* Ensure that NNSA develops a clear plan containing measurable 
milestones for its proposed transformation of the weapons complex.

Selected GAO Products:

Nuclear Weapons: Views on Proposals to Transform the Nuclear Weapons 
Complex. GAO-06-606T. April 26, 2006.

Nuclear Weapons: NNSA Needs to Refine and More Effectively Manage Its 
New Approach for Assessing and Certifying Nuclear Weapons. GAO-06-261. 
February 3, 2006.

Nuclear Security: DOE Needs to Resolve Significant Issues Before It 
Fully Meets the New Design Basis Threat. GAO-04-623. April 27, 2004.

Primary GAO Contact:

Gene Aloise, Director, Natural Resources and Environment, (202) 512- 
6870, aloisee@gao.gov.

Enhance Computer Security and Deter Identity Theft:

Over the last several years, identity theft and the need to protect 
personal information has received heightened national attention. Recent 
incidents of data theft and loss at federal agencies expose Americans 
to increased risk of identity theft and raise concern about how well 
the federal government is securing its computer systems; protecting 
sensitive information from unauthorized use, disclosure, and 
modification; and notifying the public when data breaches occur. 
Moreover, the aggregation of personal information and Social Security 
Numbers (SSN), in large corporate databases and the display of SSNs in 
public records have provided opportunities for identity thieves. Thus, 
SSNs are a valuable commodity for persons seeking to assume another 
individual's identity or to commit financial crimes. Fraudulent and 
stolen SSNs are also frequently used by noncitizens to work illegally 
in the United States. Although the Congress has passed a number of laws 
to address this issue, the continued reliance on SSNs by private and 
public-sector entities underscores the need for increased vigilance.

Key Topics Needing Congressional Oversight:

* Establish accountability measures for implementing effective 
information security programs at federal agencies, including effective 
policies and practices for detecting, responding, and reporting 
information on security incidents.

* Provide the Social Security Administration (SSA) with additional 
tools to further strengthen its processes for issuing SSNs and 
replacement cards and continue to assess options for making Social 
Security cards and other identity documents less vulnerable to 
alteration and counterfeiting.

* Enhance data sharing between SSA, other federal agencies, and the 
states to better verify information submitted by individuals seeking 
public benefits or services and require that SSA, the Department of 
Homeland Security, and the Internal Revenue Service work 
collaboratively on to deter SSN abuse and violations of immigration 
laws.

* Reduce the presence and display of SSNs in state and local public 
records.

* Re-examine current gaps in federal requirements for safeguarding SSNs 
and other personal information used by private sector companies.

Selected GAO Products:

Information Security: The Centers for Medicare & Medicaid Services 
Needs to Improve Controls Over Key Communication Network. GAO-06-750. 
August 30, 2006.

Personal Information: Key Federal Privacy Laws Do Not Require 
Information Resellers to Safeguard All Sensitive Data. GAO-06-674. June 
26, 2006.

Information Security: Leadership Needed to Address Weaknesses and 
Privacy Issues at Veterans Affairs. GAO-06-897T. June 20, 2006.

Social Security Administration: Improved Agency Coordination Needed for 
Social Security Card Enhancement Efforts. GAO-06-303. March 29, 2006.

Primary GAO Contacts:

Gregory Wilshusen, Director, Information Security Issues, (202) 512- 
6244, wilshuseng@gao.gov.

Daniel Bertoni, Acting Director, Education, Workforce, and Income 
Security Issues, (202) 512-5988, bertonid@gao.gov.:

Ensure a Cost-Effective and Reliable 2010 Census:

The 2010 Census is an estimated $11.3 billion, constitutionally 
mandated enterprise with many interdependent activities, immutable 
deadlines, and high stakes. The Census produces data used to 
reapportion the seats of the U.S. House of Representatives and to 
allocate about $200 billion yearly in federal financial assistance. To 
contain costs, the Census Bureau (Bureau) has re-engineered the 2010 
Census toward a more automated approach rather than relying as 
extensively on paper-based processes as in the past, and has deployed 
contractors to assist with these reforms. Given the size and complexity 
of the Census, new processes being introduced, and interrelated nature 
of those processes, sound risk management can promote a successful 
Census. GAO's work on Census matters over several decades has also 
shown that a shortcoming in one operation could cause other operations 
to spiral downward. For example, reduced reliability in hand-held 
mobile computing devices could imperil the success of operations to 
update key address files and follow up on nonresponses to survey forms.

Key Topics Needing Congressional Oversight:

* Ensure that the Bureau maximizes coverage and accuracy while managing 
costs.

* Oversee the overall cost of the Census, including the emergence of 
unforeseen operational and managerial challenges; and the Bureau's 
ability to identify, diagnose, and devise cost-effective solutions to 
those challenges as well as to integrate refinements and fixes for 
evaluation during the 2008 Dress Rehearsal.

* Monitor the Bureau's management of risks associated with key programs.

* Assess the reliability and utility of the Bureau's hand-held mobile 
computing devices to avoid the possibility of having to revert to the 
costly paper-based Census used in 2000 and prior years.

* Examine the Bureau's ability to effectively monitor contracts (about 
$1.9 billion of the $11.3 billion life-cycle costs will be spent on 
seven major contracts).

Selected GAO Products:

2010 Census: Redesigned Approach Holds Promise, but Census Bureau Needs 
to Annually Develop and Provide a Comprehensive Project Plan to Monitor 
Costs. GAO-06-1009T. July 27, 2006.

2010 Census: Costs and Risks Must Be Closely Monitored and Evaluated 
with Mitigation Plans in Place. GAO-06-822T. June 6, 2006.

2010 Census: Planning and Testing Activities Are Making Progress. GAO- 
06-465T. March 1, 2006.

Primary GAO Contact:

Mathew J. Scire, Acting Director, Strategic Issues, (202) 512-6794, 
sciremj@gao.gov.:

Transform the Postal Service's Business Model:

The U.S. Postal Service is under increasing financial pressure as the 
Internet, electronic bill payment, and growing competition from private 
delivery companies change the nation's communication and delivery 
sectors and negatively impact mail volumes. These changes raise 
questions about the role of the federal government in providing postal 
services and whether the Postal Service can remain a self-financing 
government provider of affordable universal postal services in the 21ST 
century. The Postal Service's business model, established when it was 
reorganized in 1970, relies upon growth in mail volume to cover the 
costs of its ever-increasing nationwide delivery network to all homes 
and businesses. This business model is increasingly outmoded as First- 
Class Mail volume declines and the changing mail mix provides less 
revenue contribution, which has put the Postal Service's financial 
viability at risk. The Service is working to cut costs, improve 
productivity, reduce its workforce, and make other changes under its 
existing authority. However, comprehensive postal reform legislation is 
needed to provide the necessary incentives and flexibilities needed for 
the Service to transition to a modernized business model so that it can 
continue providing high-quality, universal postal services.

Key Topics Needing Congressional Oversight:

* Ensure that the Postal Service maintains services consistent with its 
standards as it implements changes to reduce costs related to providing 
postal services.

* Assess the Postal Service's changes to its mail processing and 
transportation networks to ensure that they are reasonable, 
transparent, and coordinated with affected stakeholders, and that they 
achieve intended cost savings and efficiencies.

* Adopt flexible, performance-oriented, and market-based compensation 
systems for postal employees.

Selected GAO Products:

U.S. Postal Service: Delivery Performance Standards, Measurement, and 
Reporting Need Improvement. GAO-06-733. July 27, 2006.

U.S. Postal Service: Despite Recent Progress, Postal Reform Legislation 
Is Still Needed. GAO-05-453T. April 14, 2005.

U.S. Postal Service: The Service's Strategy for Realigning Its Mail 
Processing Infrastructure Lacks Clarity, Criteria, and Accountability. 
GAO-05-261. April 8, 2005.

Primary GAO Contact:

Katherine Siggerud, Director, Physical Infrastructure Issues, (202) 512-
2834, siggerudk@gao.gov.

Ensure Fair Value Collection of Oil Royalties Produced from Federal 
Lands:

The United States consumes over 21 million barrels of oil per day, and 
about 40 percent of this is produced in the United States. About 35 
percent of the oil and 26 percent of the natural gas produced in the 
United States come from federal and Native American lands. Companies 
that lease these lands pay royalties to the Department of the 
Interior's Minerals and Management Service (MMS). MMS collected about 
$8 billion in royalty payments in fiscal year 2005--an 8 percent 
increase over 2001, far below the 90 percent increase in oil and 30 
percent in gas prices between 2001 and 2005, raising questions about 
whether these royalties reflect the full value these companies should 
pay.

A number of royalty relief collection provisions have been designed to 
assist the oil and gas industry in exploring and producing energy. 
These have included reducing the amount of royalties paid to the U.S. 
government and states, particularly in the drilling of deep waters in 
the Gulf of Mexico. According to MMS preliminary estimates, these 
royalty relief provisions could result in up to $60 billion in foregone 
revenues on oil and gas production over the next 25 years. Additional 
oversight would help ensure that the calculation and collection of 
royalties yield the maximum possible revenue based on fair market value.

Key Topics Needing Congressional Oversight:

* Assess the reliability of data on oil production volume, price, and 
royalty rates.

* Determine the financial impacts of royalty relief on Federal lands 
and waters.

* Determine the extent to which royalty provisions reflect changing 
market conditions.

Selected GAO Products:

Royalty Revenues: Total Revenues Have Not Increased at the Same Pace as 
Rising Oil and Natural Gas Prices due to Decreasing Production Sold. 
GAO-06-786R. June 21, 2006.

Motor Fuels: Understanding the Factors That Influence the Retail Price 
of Gasoline. GAO-05-525SP. May 2, 2005.

Energy Markets: Mergers and Other Factors that Affect the U.S. Refining 
Industry. GAO-04-982T. July 15, 2004.

Primary GAO Contact:

Robert A. Robinson, Managing Director, Natural Resources and 
Environment, (202) 512-3841, robinsonr@gao.gov.

Ensure the Effectiveness and Coordination of U.S. International 
Counterterrorism Efforts:

After the events of September 11, 2001, combating terrorism became a 
central focus of the U.S. national security policy. The 9/11 Commission 
made numerous recommendations and the Congress passed several acts 
(including the Intelligence Reform and Terrorism Prevention Act of 
2004) focused on U.S. efforts to combat terrorism overseas. In 
response, the U.S. took several steps to respond to potential terrorist-
related threats to the homeland and U.S. interests abroad such as 
increasing and realigning resources devoted to this effort and taking 
steps to revise diplomatic, military, intelligence, and law enforcement 
priorities at home and abroad. As such, the Congress has an important 
role to play in overseeing the implementation of these recommendations 
and in assessing the effectiveness and coordination of U.S. diplomatic, 
military, intelligence, and law enforcement efforts to combat terrorism 
abroad.

Key Topics Needing Congressional Oversight:

* Evaluate the management and effectiveness of U.S. programs designed 
to train and equip foreign countries to prevent, combat, and respond to 
terrorism.

* Assess U.S. efforts to protect overseas personnel, facilities, and 
interest from terrorist attack.

* Assess the effectiveness and coordination of U.S. international 
programs focused on combating and preventing the growth of terrorism.

Selected GAO Products:

Foreign Assistance: Recent Improvements Made, but USAID Should Do More 
to Help Ensure Aid Is Not Provided for Terrorist Activities in West 
Bank and Gaza GAO-06-1062R. September 29, 2006.

Terrorist Financing: Agencies Can Improve Efforts to Deliver 
Counterterrorism-Financing Training and Technical Assistance Abroad. 
GAO-06-632T. April 06, 2006.

Overseas Security: State Department Has Not Fully Implemented Key 
Measures to Protect U.S. Officials from Terrorist Attacks Outside of 
Embassies. GAO-05-688T. May 10, 2005.

Primary GAO Contacts:

Jacquelyn Williams-Bridgers, Managing Director, International Affairs 
and Trade,

(202) 512-3101, williamsbridgersj@gao.gov.

Charles Michael Johnson, Acting Director, International Affairs and 
Trade, (202) 512-7331, johnsoncm@gao.gov.

Review the Effectiveness of Strategies to Ensure Workplace Safety:

Regulations and activities designed to provide protections for workers 
may need to be revised to reflect dramatic changes in the demographics 
of the national workforce and changes in the nature of work itself. For 
example, traditional work arrangements are giving way to alternatives 
such as temporary employment, blended workforces, and teleworking. 
Industries such as meatpacking have had large increases in the number 
of immigrant workers, and membership in organized labor has declined. 
The federal government has greater dependencies on a total multi-sector 
workforce. In addition to these changing conditions, some industries, 
such as underground coal mining, face inherent long-term challenges 
that threaten the safety and health of workers. Now more than ever, it 
is important to find the right balance between ensuring the safety and 
health of workers and employers' needs to increase productivity in an 
increasingly competitive global environment.

Key Topics Needing Congressional Oversight:

* Determine how well the Department of Labor's Occupational Safety and 
Health Administration's (OSHA's) enforcement program has adapted to 
changes in the workforce, including demographic changes, work 
arrangements, and the use of new technology.

* Assess the effectiveness of OSHA's recent efforts to provide 
assistance to employers in improving the safety and health of workers 
through compliance assistance programs, such as the Voluntary 
Protection Program and alliances with employers.

* Examine the impact of recent efforts by the Department of Labor's 
Mine Safety and Health Administration (MSHA) to protect the safety and 
health of mine workers, particularly those who work in underground coal 
mines.

* Assess the preparedness of federal agencies to protect their 
employees in emergencies, such as a pandemic, while relying on a multi-
sector workforce to perform its essential operations and return to 
normal operations.

Selected GAO Products:

Workplace Safety and Health: Safety in the Meat and Poultry Industry, 
while Improving, Could Be Further Strengthened. GAO-05-96. January 12, 
2005.

Workplace Safety and Health: OSHA's Voluntary Compliance Strategies 
Show Promising Results, but Should Be Fully Evaluated before They Are 
Expanded. GAO-04-378. March 19, 2004.

Mine Safety: MSHA Devotes Substantial Effort to Ensuring the Safety and 
Health of Coal Mines, but Its Programs Could Be Strengthened. GAO-03- 
945. September 5, 2003.

Primary GAO Contacts:

Cynthia Fagnoni, Managing Director, Education Workforce and Income 
Security Issues, (202) 512-7202, fagnoni@gao.gov.

Daniel Bertoni, Director, Education Workforce and Income Security 
Issues, (202) 512-5988, bertonid@gao.gov.

Review U.S. and Coalition Efforts to Stabilize and Rebuild Iraq and 
Afghanistan:

The Congress has provided the Department of Defense and other federal 
agencies more than $320 billion to stabilize and rebuild Iraq and 
Afghanistan between fiscal years 2001 and 2006. Guiding U.S. efforts in 
Iraq are the National Strategy for Victory in Iraq, along with the 
Joint Campaign Plan issued by the U.S.-led Multinational Force-Iraq and 
the U.S. embassy in Baghdad. The overall strategy calls for integrated 
political, economic, and security measures to stabilize and rebuild the 
country. After 3 years of effort, the security situation in Iraq 
continues to deteriorate, Iraqi security forces have limited 
capabilities and divided loyalties, the central government has limited 
ability to govern the country, and reconstruction lags. In Afghanistan, 
the NATO-led International Security Assistance Force has recently 
expanded its mission and assumed some security responsibilities from 
U.S. military forces in the country. This transition is occurring as 
security conditions deteriorate and undermine efforts to rebuild 
Afghanistan, the Taliban is becoming resurgent in some areas, and drug 
trafficking is dramatically increasing.

Key Topics Needing Congressional Oversight:

* Re-examine the strategies, campaign plans, and programs for 
stabilizing Iraq and Afghanistan, including changing missions of 
international forces in each country.

* Assess progress in achieving the political, economic, and security 
conditions required for stabilizing Iraq and Afghanistan. Assess:

* Trends in the security situation nationwide and in key cities,

* Readiness and logistics capabilities of security forces,

* Capabilities of local and national government institutions,

* Progress in rebuilding the economy and key sectors, and:

* Status of basing arrangements in Iraq.

* Identify current and future U.S. costs for efforts in Iraq and 
Afghanistan.

Selected GAO Products:

Afghanistan Drug Control: Despite Improved Efforts, Deteriorating 
Security Threatens Success of U.S. Goals. GAO-07-78. November 2006.

Stabilizing Iraq: An Assessment of the Security Situation. GAO-06- 
1094T. September 11, 2006.

Global War on Terrorism: Observations on Funding, Costs, and Future 
Commitments. GAO-06-885T. July 18, 2006.

Rebuilding Iraq: More Comprehensive National Strategy Needed to Help 
Achieve U.S. Goals. GAO-06-788. July 11, 2006.

Rebuilding Iraq: Governance, Security, Reconstruction, and Financing 
Challenges. GAO-06-697T. April 25, 2006.

Primary GAO Contacts:

Joseph A. Christoff, Director, International Affairs and Trade, (202) 
512-8979, christoffj@gao.gov.

William Solis, Director, Defense Capabilities and Management, (202) 512-
8365, solisw@gao.gov.

David Gootnick, Director, International Affairs and Trade, (202) 512- 
3149, gootnickd@gao.gov.:

Ensure a Strategic and Integrated Approach to Prepare for, Respond to, 
Recover, and Rebuild from Catastrophic Events:

Recent events--notably Hurricane Katrina and the threat of an influenza 
pandemic--have illustrated the importance of ensuring a strategic and 
integrated approach to catastrophic disaster management. Disaster 
preparation and response that is well planned and coordinated can save 
lives and mitigate damage, and an effectively functioning insurance 
market can substantially reduce the government's exposure to 
postcatastrophe payouts. Managing risk is also a key component of GAO's 
model for managing risk provides a tool to assist the Congress, 
Department of Homeland Security, and other key players in preparing for 
and responding to such events. Lessons learned from past national 
emergencies provide an opportunity for the Congress to look at actions 
that could mitigate the effects of potential catastrophic events. 
Similarly, the Congress could also consider how the federal government 
can work with other nations, other levels of government, and nonprofit 
and private-sector organizations, such as the Red Cross and private 
insurers, to help ensure the nation is well prepared and recovers 
effectively. Given the billions of dollars dedicated to preparing for, 
responding to, and recovering/rebuilding from catastrophic disasters, 
congressional oversight is critical.

Key Topics Needing Congressional Oversight:

* Ensure that leadership, roles, responsibilities, and authorities are 
clear, well communicated, and understood and the capacity of the nation 
to prepare for, respond to, and recover/rebuild from catastrophic 
events is effectively assessed and exercised.

* Determine the extent to which relevant federal and state 
organizations consider risk-based factors when making management and 
resource decisions relating to catastrophic events.

* Identify and track the types and amount of federal assistance 
provided for addressing catastrophic events and develop metrics to 
inform congressional oversight.

* Examine the availability of private insurance for catastrophes and 
identify ways that the National Flood Insurance Program can improve the 
sufficiency of its financial resources and funding mechanism, mitigate 
repetitive losses, increase compliance with mandatory purchase 
requirements, and expedite the Federal Emergency Management Agency's 
flood map modernization efforts.

Selected GAO Products:

Influenza Pandemic: DOD Has Taken Important Actions to Prepare, but 
Accountability, Funding, and Communications Need to Be Clearer and 
Focused Departmentwide. GAO-06-1042. September 21, 2006.

Catastrophic Disasters: Enhanced Leadership, Capabilities, and 
Accountability Controls Will Improve the Effectiveness of the Nation's 
Preparedness, Response, and Recovery System. GAO-06-618. September 6, 
2006.

Primary GAO Contacts:

Stan Czerwinski, Director, (202) 512-6806, czerwinskis@gao.gov (Gulf 
Coast rebuilding).

William O. Jenkins, Director, (202) 512-8757, jenkinswo@gao.gov 
(disaster preparedness and response).

Bernice Steinhardt, Director, (202) 512-6543, steinhardtb@gao.gov 
(pandemic influenza).

Orice M. Williams, Director, (202) 512-8678, williamso@gao.gov 
(insurance issues).

Reform the Tax Code, Including Reviewing the Performance of Tax 
Preferences:

Our complex income tax system causes individuals and businesses to 
change behaviors in ways that reduce economic efficiency and thereby 
taxpayers' well-being. The system fails to follow some common 
principles for good tax systems, such as raising sufficient revenue 
over time to fund current and future expected national expenditures. 
Further, a large, persistent annual gap--caused, in part, by the 
complexity of the tax code--exists between the taxes that should be and 
are paid. Additionally, since 1974, credits, deductions, and other tax 
preferences, statutorily defined as tax expenditures, more than doubled 
in number and the sum of their revenue loss estimates tripled in real 
terms to about $775 billion in 2005. These tax expenditures add to the 
tax system's complexity and cause tax rates to be higher than they 
otherwise would be to raise a given amount of revenue. Given our 
current and projected fiscal imbalance, we must re-examine federal 
spending and tax policies, including tax expenditures, to ensure that 
they achieve their purposes; appropriately balance economic impacts, 
equity, transparency, simplicity, and administrability; and fit the 
needs of the 21st century.

Key Topics Needing Congressional Oversight:

² Consider establishing a credible, capable, and bipartisan commission 
to examine options for a combination of selected entitlement, 
transformation, and tax reform issues.

* Simplify the tax code by eliminating, consolidating, or simplifying 
tax expenditures, thereby broadening the tax base and possibly lowering 
tax rates.

² Ensure that the Office of Management and Budget develops guidance on 
incorporating tax expenditures in agency strategic plans, annual 
performance plans, and performance and accountability reports and 
ensures performance reviews of tax expenditures are conducted.

² Increase, to the extent consistent with other objectives, tax system 
neutrality related to economic decisions, such as whether, where, when 
and how to work, save and invest.

Selected GAO Products:

Business Tax Reform: Simplification and Increased Uniformity of 
Taxation Would Yield Benefits. GAO-06-1113T. September 20, 2006.

Individual Income Tax Policy: Streamlining, Simplification, and 
Additional Reforms are Desirable. GAO-06-1028T. August 3, 2006.

Government Performance and Accountability: Tax Expenditures Represent a 
Substantial Federal Commitment and Need to Be Reexamined. GAO-05-690. 
September 23, 2005.

Primary GAO Contact:

James White, Director, Strategic Issues, (202) 512-9110, whitej@gao.gov.

Reform Medicare and Medicaid to Improve Their Integrity and 
Sustainability:

Absent reform, Medicare's and Medicaid's long-term fiscal 
sustainability for supporting health care for elderly, disabled, and 
low-income Americans is in jeopardy. In 2006, Medicare spending is 
estimated to be 3.2 percent of Gross Domestic Product; it is expected 
to increase to 7.3 percent by 2035. With about 42 million beneficiaries 
and $330 billion in 2005 spending, and the addition of a new 
prescription drug benefit in 2006, the program's size and complexity 
make it vulnerable to improper payments and inefficient payment 
systems. Medicaid, the federal-state program that covers acute health 
and long-term care services for about 56 million low-income Americans, 
is also at risk of increased and inappropriate federal spending. 
Medicaid consists of more than 50 distinct "state" programs; joint 
federal/state expenditures for fiscal year 2004 are estimated to be 
$298 billion, and federal expenditures are projected to double in a 
decade. By law, the federal government pays from 50 percent to 83 
percent of each state's reported Medicaid expenditures.

Key Topics Needing Congressional Oversight:

* Modernize Medicare payment policies to reward quality and efficiency 
and foster fiscal discipline while preserving access to care.

* Assess the Centers for Medicare & Medicaid Services' (CMS) managerial 
oversight of Medicare, including efforts to ensure program integrity 
and provide information to assist beneficiaries in making choices about 
the prescription drug benefit.

* Reform Medicaid to curtail states' use of financing schemes to 
inappropriately obtain federal matching funds by limiting Medicaid 
payments to government facilities to the costs of providing services.

* Ensure that initiatives to restructure Medicaid eligibility and 
benefits are consistent with the administration's goal of budget 
neutrality for the federal government.

* Assess CMS's efforts to improve financial management oversight of 
Medicaid.

Selected GAO Products:

Medicare Integrity Program: Agency Approach for Allocating Funds Should 
Be Revised. GAO-06-813. September 6, 2006.

Medicare Physician Payments: Trends in Service Utilization, Spending, 
and Fees Prompt Consideration of Alternative Payment Approaches. GAO- 
06-1008T. July 25, 2006.

Medicaid Financial Management: Steps Taken to Improve Federal Oversight 
but Other Actions Needed to Sustain Efforts. GAO-06-705. June 22, 2006.

Medicare: Communications to Beneficiaries on the Prescription Drug 
Benefit Could Be Improved. GAO-06-654. May 3, 2006.

Medicaid: States' Efforts to Maximize Federal Reimbursements Highlight 
Need for Improved Federal Oversight. GAO-05-836T. June 28, 2005.

Long-Term Care Financing: Growing Demand and Cost of Services Are 
Straining Federal and State Budgets. GAO-05-564T. April 27, 2005.

Primary GAO Contacts:

Marjorie Kanof, Managing Director, Health Care, (202) 512-5055, 
kanofm@gao.gov.

Kathryn G. Allen, Director, Health Care, (202) 512-7059, allenk@gao.gov.

Bruce Steinwald, Director, Health Care, (202) 512-7681, 
steinwalda@gao.gov.

Ensure the Adequacy of National Energy Supplies and Related 
Infrastructure:

The energy systems that have made America prosperous are showing 
increasing signs of strain and instability, and the consequences of our 
energy choices on the natural environment and national security are 
becoming more apparent. U.S. demand for energy and our dependence on 
oil in recent decades have begun to outpace supply. As a result, the 
country has witnessed rising energy imports (oil about 60 percent) and 
exposure to unstable international energy markets (e.g., Venezuela), 
rapid price increase, and volatility in natural gas markets and 
reliability problems in others, such as gasoline price spikes and the 
recent Northeast blackout that left millions in the dark. Additional 
federal government leadership and oversight of the nation's energy 
systems would help ensure that they continue to meet the nation's needs 
in the 21st century.

Looking forward, the country faces many difficult choices with regard 
to its energy future. The Energy Information Administration estimates 
that, based on current trends, U.S. energy demand could increase by 
about another 30 percent over the next 20 years (with imports of 
natural gas potentially increasing by 140 percent). Meeting this rising 
demand could require significant investments into infrastructure such 
as power plants, transmission lines, refineries, and other key 
equipment and technologies. However, U.S. energy policy is largely 
determined by markets that reflect a chorus of individual market 
choices--decisions by policymakers, consumers, producers, and sellers 
of energy technologies--and these choices will shape how much energy is 
needed and how it is supplied. Therefore, federal oversight of our 
energy systems and markets, through examination of policies, regulatory 
rules, incentives, and investment decisions will be fundamental to 
determining what changes are needed and whether solutions are realized.

Key Topics Needing Congressional Oversight:

* Evaluate the risks, benefits, and implications for national security 
of investments that deepen our ties to international energy markets 
(e.g. overseas refineries, oil imports).

* Examine the Nuclear Regulatory Commission's licensing process for new 
power plants.

* Examine the implications of the Department of Energy's R&D portfolio.

* Assess development of evolving renewable energy markets.

* Evaluate programs that encourage energy efficiency and reduced energy 
demand.

Selected GAO Products:

Natural Gas: Factors Affecting Prices and Potential Impacts on 
Consumers. GAO-06-420T. February 13, 2006.

Electricity Restructuring: Key Challenges Remain. GAO-06-237. November 
15, 2005.

Motor Fuels: Understanding the Factors That Influence the Retail Price 
of Gasoline. GAO-05-525SP. May 2, 2005.

Meeting Energy Demand in the 21st Century: Many Challenges and Key 
Questions. GAO-05-414T. March 16, 2005.

Primary GAO Contact:

Robert A. Robinson, Managing Director, Natural Resources and 
Environment, (202) 512-3841, robinsonr@gao.gov.

Reform Immigration Policy to Ensure Equity and Economic Competitiveness:

Our current immigration system is difficult to enforce and does not 
serve the national interest. While opportunities to legally immigrate 
to the United States are limited, ineffective border security and 
immigration enforcement measures have resulted in millions of aliens 
entering the country to find employment and remaining here illegally. 
The lack of effective enforcement coupled with the lack of management 
controls has led to a substantial reliance on unauthorized and mainly 
unskilled foreign workers in many industries. Moreover, it created an 
underground population which could exacerbate security concerns and 
tensions between citizens and illegal aliens. The Departments of 
Homeland Security (DHS) and Labor also have done little to anticipate 
global economic forces or match the needs of the domestic labor market 
with legal alien skills. Remaining competitive in the global economy 
will require the U.S. to attract higher skilled immigrants and their 
families and provide legal avenues for workers to temporarily meet 
unskilled labor needs. The Congress will need to ensure that any 
immigration reform proposal is structured within a reliable enforcement 
framework that promotes system integrity and the interests of 
employers, workers, and humanitarian needs.

Key Topics Needing Congressional Oversight:

* Assess DHS's capacity to control the borders and enforce immigration 
laws within the country.

* Ascertain the lessons learned from prior immigration reform 
experiences about the need for enforcement, management controls, and 
social integration.

* Determine DHS's capacity to adjudicate naturalization and work 
authorization requests from aliens currently residing in the U.S.

Selected GAO Products:

Foreign Workers: Information on Selected Countries' Experiences. GAO- 
06-1055. September 8, 2006.

H-1B Visa Program: Labor Could Improve Its Oversight and Increase 
Information Sharing with Homeland Security. GAO-06-720. June 22, 2006.

Immigration Benefits: Improvements Needed to Address Backlogs and 
Ensure Quality of Adjudications. GAO-06-20. November 21, 2005.

Primary GAO Contacts:

Richard M. Stana, Director, Homeland Security and Justice, (202) 512- 
8816, stanar@gao.gov.

Sigurd R. Nilsen, Director, Education, Workforce, and Income Security 
Issues, (202) 512-7003, nilsens@gao.gov.

Assess Overall Military Readiness, Transformation Efforts, and Existing 
Plans to Assure the Sustainability of the All-Volunteer Force:

To adapt to the new security environment, the Department of Defense 
(DOD) is embarking on an effort to transform its warfighting 
capabilities while maintaining near-term readiness of its all-volunteer 
force to sustain ongoing operations in support of the global war on 
terrorism. Since September 11, 2001, U.S. forces, both active duty and 
reserves, continue to experience a high pace of operations, requiring 
many units and personnel to redeploy for second and third tours and, in 
some cases, to remain for extended tours. Given the duration and 
intensity of current operations, DOD faces challenges in maintaining 
readiness levels and sustaining deployments, particularly with respect 
to repairing and replacing equipment, and providing units and personnel 
with specialized skills, such as military police and civil affairs. 
Amid these commitments, DOD and the military services are embarked on 
an effort to transform military capabilities, including acquiring next- 
generation weaponry. For example, the Army is restructuring its entire 
operational force from large Cold War-era divisions to smaller, more 
agile, brigade-based forces. In addition, the services are undertaking 
expensive and complex efforts, such as the Army's Future Combat System, 
the Air Force's Joint Strike Fighter, and the Navy's advanced-design 
ships and submarines. At the same time, personnel costs are climbing 
dramatically, with compensation costs growing nearly 30 percent, 
inflation-adjusted, between fiscal years 2000 and 2004. Given the 
competing demands and fiscal realities facing the military and the 
nation, we have consistently reported on the need for DOD to 
realistically assess needs and develop affordable investment plans.

Key Topics Needing Congressional Oversight:

* Require DOD to assess the readiness impacts of operational demands, 
and realistic and affordable plans and funding requirements to address 
these impacts.

* Require DOD to develop an affordable investment strategy that strikes 
a balance between maintaining near-term readiness and addressing future 
needs.

* Re-examine recruitment, retention, and compensation systems to 
determine whether changes are needed to assure the sustainability of 
the all volunteer force.

Selected GAO Products:

Defense Management: Additional Actions Needed to Enhance DOD's Risk- 
Based Approach for Making Resource Decisions. GAO-06-13. November 2006.

Defense Logistics: Preliminary Observations on Equipment Reset 
Challenges and Issues for the Army and Marine Corps. GAO-06-604T. March 
2006.

Military Personnel: DOD Needs to Improve the Transparency and Reassess 
the Reasonableness, Appropriateness, Affordability, and Sustainability 
of Its Military Compensation System. GAO-05-798. July 2005.

Primary GAO Contacts:

Butch Hinton, Managing Director, Defense Capabilities and Management, 
(202) 512-9619, hintonh@gao.gov.

Katherine Schinasi, Managing Director, Acquisition and Sourcing 
Management, (202) 512-4841, schinasik@gao.gov.:

Assure the Quality and Competitiveness of the U.S. Education System:

In the coming years, the United States will continue to face increased 
economic competition from countries around the world. The shift to a 
global economy and technological advances, and the changing population 
demographics are converging, challenging existing federal approaches to 
ensuring an educated citizenry that can effectively compete in a world 
economy. To compete in a knowledge-based economy, our educational 
systems must equip children with the appropriate skills to meet high 
standards and provide the means for an increasingly diverse citizenry 
to pursue new skills and enhance existing ones. Yet, large achievement 
gaps between school-age students of different backgrounds persist, and 
many of the federal government's higher education policy tools, 
designed decades ago, may not be as well suited for an increasingly 
diverse population. Moreover, the United States has long been one of 
the most desired higher education destinations for international 
students, and these students fill important skill gaps in the domestic 
workforce after they graduate. However, international student 
enrollment has slowed in recent years, and stricter U.S. student visa 
policies may be making it more difficult for students who want to study 
here. Against this backdrop, other countries are improving their 
educational capacities and have implemented coordinated national 
strategies to recruit students worldwide.

Key Topics Needing Congressional Oversight:

* Assess the impact of efforts to close achievement gaps among 
disadvantaged populations in K-16+ education.

* Assess the effectiveness of education programs in meeting the needs 
of the 21st century workforce.

* Assess the efficiency and effectiveness of programs designed to 
promote access to and affordability of postsecondary education.

* Assure a proper balance between immigration policies--such as work 
and student visa programs to address the nation's need for people with 
skills, particularly math and science--and the nation's homeland 
security requirements.

Selected GAO Products:

No Child Left Behind Act: Assistance from Education Could Help States 
Better Measure Progress of Students with Limited English Proficiency. 
GAO-06-815. July 26, 2006.

No Child Left Behind Act: States Face Challenges Measuring Academic 
Growth That Education's Initiatives May Help Address. GAO-06-661. July 
17, 2006.

Higher Education: Science, Technology, Engineering, and Mathematics 
Trends and the Role of Federal Programs. GAO-06-702T. May 3, 2006.

Student Aid And Postsecondary Tax Preferences: Limited Research Exists 
on Effectiveness of Tools to Assist Students and Families through Title 
IV Student Aid and Tax Preferences. GAO-05-684. July 29, 2005.

Primary GAO Contacts:

Cornelia Ashby, Director, Education, Workforce and Income Security 
Issues, (202) 512-8403, ashbyc@gao.gov.

George Scott, Director, Education, Workforce and Income Security 
Issues, (202) 512-5932, scottg@gao.gov.

Strengthen Retirement Security Through Reforming Social Security, 
Increasing Pension Saving and Promoting Financial Literacy:

The future fiscal imbalances in the Social Security program and the 
increased insecurity of other traditional sources of retirement income 
suggest the need for public policies that restore fiscal solvency and 
stability to Social Security and assure the security of employer 
pension promises. Also, the rise of self-directed saving plans such as 
401(k)s and IRAs suggests the need for policies to better inform 
Americans about their retirement prospects and how to improve them. 
Americans must learn not only the importance of accumulating adequate 
retirement savings and understanding the retirement benefits their 
employers may offer, but also how to invest such assets wisely, to 
preserve them for the future, and, ultimately, to husband them 
effectively in retirement; failure to do so could result in additional 
calls for federal income support. Yet many Americans, especially those 
with less education and lower incomes, lack a basic understanding of 
how to manage money and make wise financial decisions. Many do not save 
adequately for retirement or preserve the savings they accumulate; 
those who do save do not always make good investment choices; and 
Americans may not have the information needed to manage their savings 
prudently during retirement.

Key Topics Needing Congressional Oversight:

* Take actions to restore fiscal solvency and sustainability to the 
Social Security programs.

* Monitor the effectiveness of recent pension legislation designed to 
strengthen plan funding and reduce reliance on the federal pension 
insurance program.

* Examine adequacy of 401(k) balances and other forms of self-directed 
saving.

* Improve federal agencies' efforts to inform American workers about 
the importance of saving, the amounts that will be necessary for an 
adequate retirement, and the importance of annuitizing retirement 
balances.

* Evaluate and improve federal agencies' coordinated leadership of 
financial literacy initiatives to enhance such programs' effectiveness.

* Identify and estimate the cost of ways of evaluating financial 
literacy programs to determine if they promote positive behavioral 
change.

Selected GAO Products:

Baby Boom Generation: Retirement of Baby Boomers Is Unlikely to 
Precipitate Dramatic Decline in Market Returns, but Broader Risks 
Threaten Retirement Security. GAO-06-718. July 28, 2006.

Social Security Reform: Early Action Would Be Prudent. GAO-05-397T. 
March 9, 2005.

Highlights of a GAO Forum: The Federal Government's Role in Improving 
Financial Literacy. GAO-05-93SP. November 15, 2004.

Pension Benefit Guaranty Corporation: Single-Employer Pension Insurance 
Program Faces Significant Long-Term Risks. GAO-04-90. October 29, 2003.

Primary GAO Contacts:

Cynthia Fagnoni, Managing Director, Education, Workforce and Income 
Security Issues, (202) 512-7202, fagnonic@gao.gov.

Richard Hillman, Managing Director, Financial Markets and Community 
Investment, (202) 512-9073, hillmanr@gao.gov.

Examine the Costs, Benefits, and Risks of Key Environmental Issues:

One of the greatest challenges confronting the new Congress will be the 
conflict between the nation's social and economic goals and the 
recognized need to assure the long-term sustainability of it's natural 
resources and the environment. The United States has enacted a broad 
array of environmental laws and regulations to protect human health and 
the environment, but given the gravity of the issues, oversight of 
their implementation has been limited. Thoughtful policymaking on these 
issues has been impeded by (1) gaps in the knowledge of environmental 
stressors and their effects on ecological conditions and human health, 
(2) limited information on the economic benefits of environmental 
protection, and (3) reluctance to act without more complete 
information. GAO has consistently reported on the lack of quality 
information needed to understand the state of the nation's environment, 
the extent of compliance by the regulated community, and the need to 
consider the full costs and benefits associated with alternative 
regulatory and management strategies in policymaking. Without this kind 
of information, the nation's environmental policy and priorities will 
continue to be driven by anecdote and perception, rather than fact.

Key Topics Needing Congressional Oversight:

* Assess implementation of laws and compliance, as well as 
opportunities for enhancing the cost-effectiveness and efficiency of 
environmental programs.

* Identify information needed to better assess the state of the 
environment, emerging problems, and social and economic impacts of 
environmental programs.

* Prioritize activities to fill knowledge gaps and strengthen the 
information needed for assessing existing and emerging environmental 
risks, as well as evaluating the costs and benefits of alternative 
approaches to achieving environmental outcomes.

* Determine whether changes to statutes and regulations could help 
ensure that the nation's environmental, social, and economic goals are 
being achieved in a balanced and sustainable manner.

Selected GAO Products:

* Clean Air Act: Observations on EPA's Cost-Benefit Analysis of Its 
Mercury Control Options. GAO-05-252. February 28, 2005.

* Environmental Indicators: Better Coordination Needed to Develop 
Environmental Indicator Sets That Inform Decisions. GAO-05-52. November 
17, 2004.

* Watershed Management: Better Coordination of Data Collection Efforts 
Needed to Support Key Decisions. GAO-04-382. June 7, 2004.

* Environmental Information: EPA Needs Better Information to Manage 
Risks and Measure Results. GAO-01-97T. October 3, 2000.

* Primary GAO Contact:

John Stephenson, Director, Natural Resources and Environment, (202) 512-
6225, stephensonj@gao.gov.

Reform Federal Housing Programs and Related Financing and Regulatory 
Structures:

The federal government promotes homeownership and rental housing for 
lower-income households through various housing finance programs, 
incentives, and requirements. The federal agencies and government- 
sponsored enterprises (GSE) responsible for advancing national housing 
goals have faced a number of challenges in recent years. First, the 
Federal Housing Administration's (FHA) single-family mortgage insurance 
programs have experienced higher-than-expected insurance claims and a 
sharp decline in participation due partly to the wide availability of 
subprime mortgage products. These factors have prompted proposals to 
modernize and broaden the customer base for FHA's programs. Second, 
risk management and accounting deficiencies at the GSEs have called 
into question the effectiveness of the regulatory structure for these 
entities. Legislation on reforming the structure has been intensely 
debated. Third, the rising cost of rental housing assistance programs 
and large backlog of public housing capital needs have made it 
increasingly difficult to keep rental units affordable and available to 
lower-income households. Recent reform efforts have focused on giving 
state and local program administrators the flexibilities and incentives 
to operate the programs more efficiently and leverage private financing 
for capital improvements.

Key Topics Needing Congressional Oversight:

* Evaluate potential changes to the GSE regulatory framework and 
determine how new regulatory authorities and responsibilities would 
help in GSE oversight.

* Assess how proposed FHA reforms are likely to affect the agency's 
role in the mortgage market and the extent to which FHA has the risk 
management capabilities necessary to implement the reforms.

* Assess federal agencies' efforts to ensure that federally assisted 
rental housing is effectively managed, remains in good physical and 
financial condition and, to the extent practicable, remains available 
for lower-income households.

Selected GAO Products:

Rental Housing Assistance: Policy Decisions and Market Factors Explain 
Changes in the Costs of the Section 8 Programs. GAO-06-405. April 28, 
2006.

Mortgage Financing: Additional Action Needed to Manage Risks of FHA- 
Insured Loans with Down Payment Assistance. GAO-06-24. November 9, 2005.

Housing Government-Sponsored Enterprises: A New Oversight Structure Is 
Needed. GAO-05-576T. April 21, 2005.

Primary GAO Contact:

William Shear, Director, Financial Markets and Community Investment, 
(202) 512-4325, shearw@gao.gov.:

Ensure the Integrity and Equity of Existing Farm Programs:

The federal government spends more than $25 billion each year on 
subsidies and disaster and conservation payments for farmers. The 
largest farming entities--10 percent of the recipients--collect about 
70 percent of the benefits. While the United States farm sector 
continues to provide the American people with ample quantities of low 
cost food, our work has shown that the U.S. Department of Agriculture's 
(USDA) enforcement of support program rules is not always effective. 
For example, we have found that each year, thousands of producers 
falsely collect crop insurance payments, and individuals with limited 
involvement in farming have qualified for payments and evaded payment 
limits. USDA support programs may also have unintended consequences, 
including incentives for producers to grow crops on land prone to 
drought or erosion. The Congressional Budget Office estimated that 
eliminating support for marginal lands could save $1.4 billion. Without 
better oversight to ensure that farm program funds are spent as 
economically, efficiently, and effectively as possible, there is little 
assurance that they benefit the agricultural sector as intended or 
protect rural areas from land degradation and diminished water quality.

Key Topics Needing Congressional Oversight:

* Increase the monitoring of the compliance provisions in the farm bill.

* Strengthen internal controls in the federal crop insurance program to 
weed out fraud, waste, and abuse.

* Eliminate loopholes in the agriculture subsidy programs that allow 
recipients to avoid payment limitations and annually collect millions 
of dollars in payments.

* Assess financial incentives for producers to convert native rangeland 
to produce crops, resulting in increased program costs and lost 
environmental benefits.

Selected GAO Products:

Conservation Security Program: Despite Cost Controls, Improved USDA 
Management Is Needed to Ensure Proper Payments and Reduce Duplication 
with Other Programs. GAO-06-312. April 28, 2006.

Crop Insurance: Actions Needed to Reduce Program's Vulnerability to 
Fraud, Waste, and Abuse. GAO-05-528. September 30, 2005.

Farm Program Payments: USDA Needs to Strengthen Regulations and 
Oversight to Better Ensure Recipients Do Not Circumvent Payment 
Limitations. GAO-04-407. April 30, 2004.

Agricultural Conservation: USDA Needs to Better Ensure Protection of 
Highly Erodible Cropland and Wetlands. GAO-03-418. April 21, 2003.

Primary GAO Contact:

Lisa Shames, Acting Director, Natural Resources and Environment, (202) 
512-2649, shamesl@gao.gov.

Review Federal Efforts to Improve the Image of the United States:

The U.S. government has failed to implement a strategic, coordinated 
approach to counter increasingly negative foreign public opinion. U.S. 
strategic communication efforts, led by the State Department and 
supported by U.S. Agency for International Development, the 
Broadcasting Board of Governors, and the Department of Defense, support 
a number of national security interests, including countering terrorism 
and promoting democracy. Of particular interest and concern is the 
growing consensus that the United States is engaged in a "war of ideas" 
with extremists that must be countered with "soft power" assets, 
strategies, and programs. Failure to win this war of ideas will 
jeopardize the ability of the United States to limit the growth of 
terrorist networks and their operational effectiveness.

Key Topics Needing Congressional Oversight:

* Monitor State Department efforts to develop a comprehensive strategic 
communication plan--integrated with other U.S. departments and 
agencies--with clear goals and strategies for improving overseas public 
opinion of the United States.

* Assess State Department efforts to develop country-level public 
diplomacy and communications plans, particularly in nations that are 
considered key in the global war on terror.

* Examine the extent to which the State Department has the 
organizational structure and human resources necessary to carry out its 
public diplomacy and strategic communication goals.

* Assess the implementation of the Department of Defense's 2006 
Quadrennial Strategic Communication Execution Roadmap, which is 
intended to institutionalize a strategic communications process to 
improve the department's ability to fight the global war on terrorism.

* Assess the Broadcasting Board of Governor's actions to document the 
audience reach of Radio Sawa and the Alhurra satellite television 
network--the United States' two primary vehicles for communicating with 
mass audiences in the Muslim world.

Selected GAO Products:

U.S. International Broadcasting: Management of Middle East Broadcasting 
Services Could Be Improved. GAO-06-762. August 4, 2006.

U.S. Public Diplomacy: State Department Efforts to Engage Muslim 
Audiences Lack Certain Communication Elements and Face Significant 
Challenges. GAO-05-323. May 3, 2006.

Primary GAO Contact:

Jess T. Ford, Director, International Affairs and Trade, (202) 512- 
4268, fordj@gao.gov.

Review the Need for Various Budget Controls and Legislative Process 
Revisions in Light of Current Deficits and Our Long-Range Fiscal 
Imbalance:

Fiscal policy is on an unsustainable path. GAO's long-term simulations 
show that absent a change in policy, the nation faces escalating 
deficits and debt. This outlook is largely driven by health care costs 
and demographics. Failure to grapple with these challenges will result 
in a government unable to respond to any new challenges and a crushing 
fiscal burden for future generations.

The budget controls that restrained expansion of the deficit have 
expired without being replaced. Future budget controls and enforcement 
mechanisms and legislative processes will need to move beyond the 
previous regimes to facilitate difficult choices and attention to the 
long term.

Key Topics Needing Congressional Attention:

* Reimpose caps on discretionary spending.

* Under caps, consider special rules for well-defined "emergency" 
designations.

* Consider whether there should be an explicit allocation between 
investment and consumption within discretionary spending.

* Reintroduce pay-as-you-go (PAYGO) requirements--on both the spending 
and revenue side of the ledger--and examine ways of moving from "do no 
harm" to facilitating a change in direction.

* Consider budget triggers that would signal the need for action when 
there is significant growth in mandatory programs.

* Require estimates of long-term cost implications of major policy 
proposals (tax and spending) before they are acted upon.

* Require information on tax expenditures--cost implications, 
performance goals, etc. (See the suggested oversight issue on "Reform 
the Tax Code, Including Reviewing the Performance of Tax Preferences" 
p.24).

* Review the use of supplementals and earmarks in order to determine 
needed reforms.

* Consider biennial budgeting and other broader reforms.

Selected GAO Products:

The Nation's Long-Term Fiscal Outlook: September 2006 Update. GAO-06- 
1077R. September 15, 2006.

Budget Process: Better Transparency, Controls, Triggers, and Default 
Mechanisms Would Help to Address Our Large and Growing Long-Term Fiscal 
Challenge. GAO-06-761T. May 25, 2006.

Mandatory Spending: Using Budget Triggers to Constrain Growth. GAO-06- 
276. January 31, 2006.

Budget Process: Long-Term Focus Is Critical. GAO-04-585T. March 23, 
2004.

Primary GAO Contact:

Susan J. Irving, Director for Federal Budget Analysis, Strategic 
Issues, (202) 512-8288, irvings@gao.gov.:

Pursue the Development of Key National Indicators:

As the pace of change accelerates, the nation is faced with new and 
more complex challenges, including globalization, emerging scientific 
and technological changes, public health, and environmental issues. One 
tool to help address these challenges is the development of key 
national indicators to measure progress toward national outcomes, 
assess conditions and trends, and help communicate complex issues. Some 
other countries have key national indicator systems, but not the United 
States.

Congressional attention is needed. The Key National Indicators 
Initiative, under the auspices of the National Academies, has begun 
efforts to develop a national indicator system to inform strategic 
planning, enhance performance and accountability reporting, inform 
congressional oversight and decision making, facilitate oversight, and 
stimulate greater citizen engagement. GAO's work has pointed to the 
need for a governmentwide strategic plan, supported by key national 
indicators to assess performance, position, and progress. A 
governmentwide strategic plan could provide an additional tool for re- 
examining existing programs and proposing new programs. GAO has also 
called for a governmentwide performance report linked to key indicators 
to articulate the government's accomplishments. A key national 
indicator system for the United States, however, cannot be fully 
developed without the interest and critical attention that 
congressional involvement provides.

Key Topics Needing Congressional Oversight:

* Encourage awareness and education through public hearings. The 
Congress could take a leadership role in highlighting the need for a 
U.S. national indicator system.

* Strengthen partnerships to enhance the dissemination of quality 
information, including engaging with citizens and local indicator 
systems in congressional districts across the country to ensure that 
proposals for the State of the USA system are configured to effectively 
and efficiently meet national information needs.

* Focus attention on the role and contributions of the federal 
statistical system in providing key data and assessing areas where 
improvements are needed.

* Examine the possible role of a public-private partnership to further 
develop and operate a system of key national indicators.

Selected GAO Products:

Environmental Indicators: Better Coordination Is Needed to Develop 
Environmental Indicator Sets That Inform Decisions. GAO-05-52. November 
17, 2004.

Informing Our Nation: Improving How to Understand and Assess the USA's 
Position and Progress. GAO-05-1. November 10, 2004.

Primary GAO Contact:

Bernice Steinhardt, Director, Strategic Issues, (202) 512-6543, 
steinhardtb@gao.gov.

Review the Impact and Effectiveness of Various Management Reforms 
Enacted in Recent Years (e.g., GPRA, CFO Act, FFMIA, Clinger-Cohen, 
etc.)

The Congress and the executive branch have implemented a statutory 
framework to improve the performance and accountability of the 
executive branch and to enhance executive branch and congressional 
decision making. This framework includes as its key elements: results- 
oriented management reforms, especially the Government Performance and 
Results Act (GPRA); financial management reforms, including the Chief 
Financial Officers (CFO) Act, the Federal Financial Management 
Improvement Act (FFMIA), and other related legislation; and information 
technology reforms, such as the Clinger-Cohen Act.

As a result of this framework, there has been substantial progress in 
establishing the basic infrastructure needed to create high-performing 
organizations across the federal government. However, agencies are 
still in the early stages of using this statutory framework to 
transform their organizational cultures, inform their decision making, 
improve their performance, and strengthen their accountability. 
Sustained congressional attention has been and will continue to be a 
critical factor to ensuring achievement of various management reforms, 
such as the goals and objectives of key legislative reforms.

Key Topics Needing Congressional Oversight:

* Examine the progress federal agencies are making in integrating these 
reforms to drive a broader transformation of their cultures to be more 
results-oriented, high performing organizations.

* Oversee federal agency efforts to implement modern financial 
management systems that routinely produce information that is timely, 
useful, and reliable for decision-making.

* Review agencies' delivery of information technology to improve 
mission performance by determining whether major provisions of the 
Clinger- Cohen Act are being effectively addressed (e.g., capital 
planning and investment control processes, enterprise architecture, 
information technology leadership and human capital).

Selected GAO Products:

Enterprise Architecture: Leadership Remains Key to Establishing and 
Leveraging Architectures for Organizational Transformation. GAO-06- 
831. August 14, 2006.

CFO Act of 1990: Driving the Transformation of Federal Financial 
Management. GAO-06-242T. November 17, 2005.

Results-Oriented Government: GPRA Has Established a Solid Foundation 
for Achieving Greater Results. GAO-04-38. March 10, 2004.

Primary GAO Contact:

J. Christopher Mihm, Managing Director, Strategic Issues, (202) 512- 
6806, mihmj@gao.gov.

Review the Effectiveness of the Federal Audit and Accountability 
Community, Including the Oversight, Structure, and Division of 
Responsibility:

Current national and global issues and a challenging fiscal outlook 
make the oversight role of government auditors especially important to 
help ensure that public functions are carried out efficiently, 
economically, effectively, ethically, and legally and to limit exposure 
to fraud, waste, mismanagement, and abuse. The current federal audit 
oversight structure includes GAO, 62 statutory inspector general (IG) 
offices, and about 6,000 CPA firms that annually perform more than 
34,000 audits of entities receiving federal funding (single audits). 
While the Single Audit Act has provided oversight of more than $300 
billion in annual federal grants, questions have been raised about the 
usefulness and effectiveness of oversight for federal funds. Given the 
current challenges, government auditing must be focused and coordinated 
in order to provide the most effective oversight of federal programs 
and funds. Finally, there are numerous federally established entities 
receiving significant federal funding that lack statutory requirements 
for accountability oversight and should be included in the federal 
audit oversight structure.

Key Topics Needing Congressional Oversight:

* Require GAO and the IGs to evaluate the current structure and 
division of responsibilities to develop reform proposals to achieve 
more effective audit oversight of federal programs and funding in the 
21ST century.

* Establish a governmentwide accountability council to establish 
priorities and develop strategies to address federal accountability 
issues among GAO, the Office of Management and Budget, the President's 
Council on Integrity and Efficiency and the Executive Council on 
Integrity and Efficiency, and other oversight organizations.

* Review the Single Audit Act and propose reforms to ensure continuing 
effective oversight of the more than $300 billion in annual federal 
grants awarded to nonfederal entities to meet the needs for oversight 
of federally funded programs.

* Schedule a series of oversight hearings to deliberate GAO's and the 
IGs federal audit reform proposals and the council's priorities and 
strategies.

Selected GAO Products:

Highlights of the Comptroller General's Panel on Federal Oversight and 
the Inspectors General. GAO-06-931SP. September 11, 2006.

Inspectors General: Office Consolidation and Related Issues. GAO-02- 
575. August 15, 2002.

Single Audit: Single Audit Act Effectiveness Issues. GAO-02-877T. June 
26, 2002.

Primary GAO Contact:

Jeanette M. Franzel, Director, Financial Management and Assurance, 
(202) 512-9471, franzelj@gao.gov.

Modernize the Federal Government's Organizational and Human Capital 
Models:

The federal government is faced with new and more complex economic, 
demographic, social, technological, security, and other challenges that 
it alone cannot address. In fact, achieving meaningful national results 
and outcomes increasingly requires the coordinated efforts of various 
federal agencies, other governments both internationally and as well as 
at the state and local levels, nongovernment organizations, for-profit 
and not-for-profit contractors, the private sector, and others. To 
respond to current and emerging demands, federal agencies must become 
more partnership-based, results-oriented, integrated, and externally 
focused. In that regard, strategic human capital management must be the 
centerpiece of any serious change management and transformation effort. 
Yet, as amply shown by GAO's long-standing work on human capital 
issues--including the designation of strategic human capital management 
as a governmentwide high-risk area--federal agencies do not 
consistently have the modern, effective, economical, and efficient 
human capital programs, policies, and procedures they need to respond 
to current and emerging governance challenges.

Key Topics Needing Congressional Oversight:

* Require the Office of Management and Budget to develop an executive 
branch annual performance plan--as already mandated by the Government 
Performance and Results Act--and issue annual summary reports of the 
financial results and performance outcomes of the federal government.

* Authorize agencies to implement market-based and performance-oriented 
compensation reform, based on a "show me" test; that is, an agency may 
not implement new authorities until it has demonstrated it has in place 
a modern, effective, and credible performance management system with 
adequate safeguards.

* Ensure that agencies' strategic workforce plans and accompanying 
succession plans incorporate the critical transformation and governance 
challenges each agency faces and do not merely seem to replicate a 
status quo that is outmoded, ineffective, and not sustainable in the 
future.

* Review the efforts at the Departments of Defense and Homeland 
Security to ensure that they effectively implement their new human 
capital systems.

Selected GAO Products:

Human Capital: Principles, Criteria, and Processes for Governmentwide 
Federal Human:

Capital Reform. GAO-05-69SP. December 1, 2004.

Human Capital: Key Principles for Effective Strategic Workforce 
Planning. GAO-04-39. December 11, 2003.

Highlights of a GAO Forum: Mergers and Transformation: Lessons Learned 
for a:

Department of Homeland Security and Other Federal Agencies. GAO-03- 
293SP. November 14, 2002.

Primary GAO Contact:

J. Christopher Mihm, Managing Director, Strategic Issues, (202) 512- 
6806, mihmj@gao.gov.

Re-examine the Presidential (Political) Appointment Process:

The presidential (political) appointment process does not distinguish 
among the different types of responsibilities inherent in the appointed 
positions. Further, the positions generally do not require any 
particular set of qualifications, even though the appointees may be 
responsible for non-policy related functions. In addition, some federal 
agencies, particularly those agencies with political appointees in 
positions with operational and management responsibilities may benefit 
from term appointments. For example, there is proposed legislation to 
implement deputy secretaries for management/chief management officer 
(CMO) positions at the Departments of Defense and Homeland Security. If 
put in place, these CMOs would be at an Executive Level II position in 
these agencies and would have term appointments and statutory 
qualifications.

Key Topics Needing Congressional Oversight:

* Examine whether Presidential (political) appointees can be 
categorized by the differences in their roles and responsibilities, 
such as by the following categories:

* Appointees that have responsibility for various policy issues;

* Appointees that have leadership responsibility for various 
operational and management matters; and:

* Appointees that require an appropriate degree of professional 
competence, objectivity, and independence (e.g., judges, the 
comptroller general, inspectors general).

* Review which appointee positions should be Presidentially-Appointed- 
Senate Confirmed (PAS) versus Presidentially-Appointed (PA). (For 
example, those appointees that have policy leadership responsibility 
should be PAS, while many of those with operational and management 
responsibility could be PA, with an appropriate advance appointment 
congressional notification requirement).

* Assess appropriate qualifications for selected positions (including 
the possibility of establishing specific statutory qualifications 
criteria for certain categories of appointees).

* Review the use of tenures and term appointments (i.e. for Inspectors 
General and selected Executive Level II positions in federal agencies).

* Examine a variety of compensation schemes, given the different roles 
noted above.

Selected GAO Products:

Highlights of the Comptroller General's Panel on Federal Oversight and 
the Inspectors General. GAO-06-931SP. September 11, 2006.

Human Capital: Trends in Executive and Judicial Pay. GAO-06-708. June 
21, 2006.

Highlights of a GAO Roundtable: The Chief Operating Officer Concept: A 
Potential Strategy to Address Federal Governance Challenges. GAO-03- 
192SP. October 4, 2002.

Primary GAO Contact:

J. Christopher Mihm, Managing Director, Strategic Issues, (202) 512- 
6806, mihmj@gao.gov.

Ensure Transparency over Executive Policies and Operations:

A fundamental principle of democratic government is that its policies 
and operations be reasonably transparent to the press and the public 
and subject to effective oversight to ensure they are achieving the 
will of the Congress and American people. Key oversight and 
transparency mechanisms include requests from the Congress, GAO, and 
the Offices of Inspectors General (IG) for information from executive 
agencies that demonstrates how well policies and operations are 
achieving agencies' missions and using taxpayer dollars. In addition, 
similar information is sought by members of the press and public 
through the Freedom of Information Act (FOIA). Executive agencies, in 
turn, are responsible for ensuring that they respond to requests for 
information in a manner consistent with national security interests. To 
achieve this balance, agencies may determine that the information 
requested must be classified, or designated as sensitive but 
unclassified. The tradeoff, however, is that the Congress, GAO, and IGs 
may be restricted in the further dissemination of this information and 
the public may be denied timely access. Thus, agencies' processes for 
deciding how to respond to such requests for information and whether to 
restrict it are critical to transparency and oversight. From time to 
time, agencies' processes have come under scrutiny because they appear 
to limit timely access and interfere with legislative oversight.

Key Topics Needing Congressional Oversight:

* Compare and contrast how agencies respond to requests from the 
Congress, GAO, IGs, and the public under FOIA, for information on 
agency policies and operations.

* Determine how responsive agencies have been to these requests.

* Review how agencies determine that the response involves information 
that needs to be classified or designated as sensitive but 
unclassified, and determine the impact this had on agencies' ability to 
respond.

Selected GAO Products:

Managing Sensitive Information: DOJ Needs a More Complete Staffing 
Strategy for Managing Classified Information and a Set of Internal 
Controls for Other Sensitive Information. GAO-07-83. October 22, 2006.

Managing Sensitive Information: Actions Needed to Ensure Recent Changes 
in DOE Oversight Do Not Weaken an Effective Classification System. GAO- 
06-785. June 30, 2006.

Managing Sensitive Information: DOD Can More Effectively Reduce the 
Risk of Classification Errors. GAO-06-706. June 30, 2006.

Managing Sensitive Information: Departments of Energy and Defense 
Policies and Oversight Could Be Improved. GAO-06-369. March 7, 2006.

Primary GAO Contact:

Eileen Larence, Director, Homeland Security and Justice, (202) 512- 
6510, larencee@gao.gov.

Monitor and Assess Corporate Financial Reporting and Related Standards 
for Public Companies Accountability:

Investor confidence in reliable financial reporting is at the core of 
the effective functioning of the capital markets. The significant 
corporate failures that occurred due to corporate mismanagement and 
fraud caused a loss of investor confidence and resulted in the Congress 
passing the Sarbanes-Oxley Act of 2002, to reform corporate financial 
reporting and auditing. The act has improved the quality of auditing 
and the quality of corporate financial reporting and related internal 
controls. Many larger companies experienced challenges and high costs 
associated with implementing the internal control requirements of the 
act. As smaller public companies, about 60 percent of total public 
companies, begin to implement these requirements it is crucial that the 
Securities and Exchange Commission (SEC) and the Public Company 
Accounting Oversight Board (PCAOB) resolve implementation issues in 
order to achieve effective reforms. In addition, as financial markets 
continue to globalize, the U.S. and international accounting standard 
setters must work to improve relevance, usefulness, consistency, and 
efficiency of financial reporting. Finally, the accounting and auditing 
profession needs to develop well-defined objectives and business 
practices that are widely shared and accepted so that reliable and 
useful financial reporting and auditor assurance can be accomplished in 
an effective and efficient manner.

Key Topics Needing Congressional Oversight:

* Require SEC and PCAOB to assess the Sarbanes-Oxley Act's internal 
control-related guidance and standards to determine their sufficiency 
and how management and auditors can achieve economical and effective 
implementation.

* Require periodic SEC assessment of progress on improving the 
usefulness, effectiveness, and efficiency of financial reporting, 
including related internal control requirements, as well as 
identification of current and emerging issues that could impact 
financial reporting, accountability, and investor confidence.

* Require GAO assessment of the progress of the accounting and auditing 
standard setters and regulators in addressing issues impacting 
efficiency and effectiveness of corporate financial reporting, internal 
control, and auditing.

Selected GAO products:

Financial Restatements: Update of Public Company Trends, Market 
Impacts, and Regulatory Enforcement Activities. GAO-06-678. July 24, 
2006.

Sarbanes-Oxley Act: Consideration of Key Principles Needed in 
Addressing Implementation for Smaller Public Companies. GAO-06-361. 
April 13, 2006.

Public Accounting Firms: Required Study on the Potential Effects of 
Mandatory Audit Firm Rotation. GAO-04-216. November 21, 2003.

Public Accounting Firms: Mandated Study on Consolidation and 
Competition. GAO-03-864. July 30, 2003.

Primary GAO contact:

Jeanette M. Franzel, Director, Financial Management and Assurance, 
(202) 512-9471, franzelj@gao.gov.

[End of section].

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