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entitled 'Fiscal Year 2003 Budget Request: U.S. General Accounting 
Office' which was released on April 24, 2002.



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United States General Accounting Office:



GAO:



Testimony:



Before the Subcommittee on Legislative:



Committee on Appropriations:



House of Representatives:



For Release on Delivery:



Expected at 3:00 p.m. EDT On Wednesday April 24, 2002:



FISCAL YEAR 2003 BUDGET REQUEST:



U.S. General Accounting Office:



Statement of David M. Walker Comptroller General of the United States:



GAO-02-519T:



Mr. Chairman and Members of the Subcommittee:



I am pleased to appear before the Subcommittee today as the Comptroller 

General of the United States and head of the U.S. General Accounting 

Office (GAO) to report on GAO’s fiscal year 2001 performance and 

results, current challenges and future plans, and budget request for 

fiscal year 2003 to support the Congress and serve the American public.



Fiscal year 2001 was characterized by a series of unprecedented 

challenges for the federal government. After a lengthy waiting period 

to decide the results of the presidential election, the year began with 

a new administration and a new policy agenda. Within a short time, the 

leadership of the Senate changed as well. Although the year began with 

the nation at peace and with modest economic growth, by year’s end, the 

nation was at war and the economy was in recession. Fortunately, the 

war is going well and the economy seems to be improving.



Against this backdrop, GAO served the Congress and the American people 

in a variety of ways. Early in the year, we conducted an extensive 

analysis of voter access and election reform. Our work was instrumental 

in enabling the House and Senate to develop election reform proposals 

and also yielded a series of reports and recommendations upon which the 

Departments of Defense and State have pledged to act to improve their 

voting assistance programs for Americans living abroad. In addition, 

our 2001 Performance and Accountability Series and High-Risk Update 

identified close to 100 major management challenges and program risks 

at 21 federal agencies and highlighted actions needed to address these 

serious problems. The series proved useful in carrying out our 

responsibility under the Presidential Transition Act to serve as a key 

source of information for the incoming administration and members of 

the 107TH Congress. Among the issues we brought to the Congress’s 

attention was the importance of addressing the future human capital 

needs of the federal government. This high-risk issue is being 

triggered by the impending retirements of the baby boom generation, the 

knowledge and skills gap engendered in part by our changing economy, 

and the advent of new technologies. Another new issue added to the 

high-risk list is the Postal Service’s transformational efforts and 

long-term outlook.



Citizens benefited directly from GAO’s work as federal agencies and the 

Congress took a wide range of actions based on our analyses and 

recommendations. The results ranged from improving services to low- 

income children and disabled veterans, to protecting consumers from 

insurance fraud, to identifying billions of dollars in savings and 

resources that could be reallocated. In total, GAO’s efforts helped the 

Congress and government leaders to save $26.4 billion--a $69 return on 

every dollar invested in GAO. This is number one in the world for 

organizations like GAO.



Because of our past work and work in progress, we also were able to 

provide timely, rapid assistance on the issues raised by the tragic 

events of September 11. In numerous congressional hearings, GAO’s 

witnesses offered suggestions for strengthening the security of the 

nation’s airports and air traffic control system, for protecting 

critical information technology infrastructure, and for enhancing 

government’s ability to analyze and manage security risks, including 

bioterrorism. We also were able to highlight a number of safeguards 

that could be used in structuring financial assistance to the airlines, 

several of which were incorporated in the emergency $15 billion 

financial aid package that was enacted. In addition, soon after the 

release of our report recommending that the president appoint a single 

focal point within the Executive Office of the President to oversee the 

collective efforts of the many agencies involved in combating 

terrorism, the president announced the creation of the Office of 

Homeland Security. This office possesses many of the functions and 

responsibilities that we had advocated for improving interagency 

coordination.



Closer to home, 2001 was a significant year for GAO because it marked 

the 80TH anniversary of our agency and 50TH anniversary of our 

headquarters building. It also was a year marked by important changes 

designed to better position our agency for the future.



GAO’S MISSION IS TO SUPPORT THE CONGRESS in meeting its constitutional 

responsibilities and to help improve the performance and ensure the 

accountability of the federal government for the benefit of the 

American people.



GAO is an independent, professional, nonpartisan agency in the 

legislative branch that is commonly referred to as the investigative 

arm of the Congress. Created in 1921 as a result of the Budget and 

Accounting Act, we have seen our role evolve over the decades as the 

Congress expanded our statutory authority and called on us with greater 

frequency for oversight, insight, and foresight in addressing the 

growing complexity of government and our society.



Today, we examine a broad range of federal activities and programs, 

publish thousands of reports and other documents annually, and provide 

a number of other services to the Congress. We also look at national 

and international trends and challenges to anticipate their 

implications for public policy. By making recommendations to improve 

the practices and operations of government agencies, we contribute not 

only to the increased effectiveness of federal spending, but also to 

the enhancement of the taxpayers’ trust and confidence in their federal 

government.



For us, achieving our goals and objectives rests, for the most part, on 

providing professional, objective, fact-based, nonpartisan, 

nonideological, fair, and balanced information. We develop and present 

this information in a number of ways to support the Congress, including 

the following:



* evaluations of federal policies and the performance of agencies;



* oversight of government operations through financial and other 

management audits to determine whether public funds are spent 

efficiently, effectively, and in accordance with applicable laws;



* investigations to assess whether illegal or improper activities are 

occurring;



* analyses of the financing for government activities;



* constructive engagements in which we work proactively with agencies, 

when appropriate, to help guide their efforts toward positive results;



* legal opinions to determine whether agencies are in compliance with 

applicable laws and regulations;



* policy analyses to assess needed actions, develop options, and note 
the 

implications of possible actions; and:



* additional assistance to the Congress in support of its oversight and 

decisionmaking responsibilities.



GAO’S STRATEGIC PLAN FOR SERVING THE CONGRESS : Our first strategic 
plan 

for the 21ST century, covering fiscal years 2000-2005, was an important 

milestone, providing a framework for how we would support the Congress 

and the American people in the coming years. To develop this plan, we 

worked closely with committee leadership and individual members and 

their staff, as well as with agency inspectors general, our sister 

agencies, and numerous other interested organizations and parties. With 

the plan as our blueprint, we realigned GAO’s structure and resources 

to better address our long-term goals and objectives for helping the 

Congress in its legislative, oversight, and investigative roles.



We have committed to updating our strategic plan every 2 years, 

coinciding with each new Congress, to make sure our efforts remain a 

vital and accurate reflection of the important issues facing the 

Congress and the nation. The world has changed considerably since our 

last plan. Two years ago, we were at peace and the economy was growing, 

with large budget surpluses projected into the future. Today, the 

country is at war, addressing threats both within and outside our 

borders. The economic outlook, uncertain before September 11, 2001, 

continues to be very difficult to predict but seems to be improving. 

This changing environment has enormous ramifications for national 

policymaking and, consequently, for GAO. Accordingly, we have prepared 

a draft strategic plan for serving the Congress during fiscal years 

2002-2007, that we will be using to help solidify how we will support 

congressional needs. The draft is now being discussed with our 

congressional clients and being made widely available for comment to 

ensure that we meet the Congress’s needs and address the most critical 

issues.



While the overall framework of our first strategic plan is still valid, 

we propose placing greater emphasis on the following areas in 

particular to reflect the altered agenda of policymakers:



* Recognizing that the Congress and the federal government will focus 

considerable effort and resources on homeland security, we are 

proposing to increase our emphasis on overseeing the efficiency and 

effectiveness of efforts across the federal government to protect 

against and respond to various forms of terrorism.



* In light of changing public expectations and needs, as well as fiscal 

pressures, we have redefined one of our strategic goals to focus on 

helping to transform the federal government’s role to meet the 

challenges of the 21ST century--what it does and how it does business.



* Because of the emerging serious, long-term, and far-reaching fiscal, 

demographic, technological, scientific, and other trends affecting our 

society and the economy, we anticipate assisting the Congress in 

addressing the effects of these trends on program priorities and budget 

decisions in both the short and long terms.



Our draft strategic plan takes into account the forces that are likely 

to shape American society, its place in the world, and the role of the 

federal government over the next 6 years. As illustrated by the 

strategic plan framework that follows, we have identified seven themes 

that have implications for congressional decisionmaking and, therefore, 

underlie our strategic goals and objectives:



* Security and preparedness: the national and global response to 

terrorism and other threats to personal and national security;



* Globalization: the increasing interdependence of enterprises, 

economies, civil society, and national governments;



* The changing economy : the global shift to market-oriented, 
knowledge-

based economies;



* Demographics of an aging and more diverse population;



* Science and technology and the opportunities and challenges created 
by 

the rapid changes in both of these areas;



* Quality of life for the nation, communities, families, and 
individuals;



* Governance: the diverse and evolving nature of governance structures 

and tools.



In light of recent trends and in keeping with our mission and 

responsibilities, we have identified four strategic goals and related 

objectives that will guide our work to serve the Congress in fiscal 

years 2002-2007. Our four strategic goals are as follows:



* Provide timely, quality service to the Congress and the federal 

government to address current and emerging challenges to the well-being 

and financial security of the American people;



* Provide timely, quality service to the Congress and the federal 

government to respond to changing security threats and the challenges 

of global interdependence;



* Help transform the federal government’s role and how it does business 

to meet 21ST century challenges;



* Maximize the value of GAO by being a model federal agency and a 
world- 

class professional services organization.



Image 1. Discussion Draft: Serving The Congress. GAO’s Strategic Plan 
Framework.



[See PDF for image]



[End of Image}



BENEFITS RESULTING FROM GAO’S WORK:



During fiscal year 2001, GAO recorded hundreds of accomplishments 

providing financial and other benefits that were achieved based on 

actions taken by the Congress and federal agencies, and we made 

numerous other contributions that provided information or 

recommendations aiding congressional decisionmaking or informing the 

public debate to a significant extent. Our contributions to legislative 

and executive actions included:



* strengthening national security and combating terrorism;



* advancing and protecting U.S. interests abroad;



* better targeting defense spending;



* helping the Congress reduce or better target budget authority;



* ensuring public health, safety, and welfare;



* protecting the environment;



* addressing national election issues;



* safeguarding government information systems;



* highlighting management challenges and risks for the new Congress and 

administration; and:



* fostering more efficient and effective government services and 

operations.



Our recently issued performance and accountability report and a compact 

highlights version of it combine an assessment of our accomplishments 

in fiscal year 2001 with our plans for continued progress through 

fiscal year 2003. The following is a sampling of GAO’s fiscal year 2001 

accomplishments.



Financial Benefits Exceeding $26 Billion:



For fiscal year 2001, GAO’s findings and recommendations to improve 

government operations and reduce costs contributed to legislative and 

executive actions that yielded over $26.4 billion in measurable 

financial benefits. We achieve financial benefits when our findings and 

recommendations are used to make government services more efficient, 

improve the budgeting and spending of tax dollars, or strengthen the 

management of federal resources. As illustrated in the following 

graphic, the financial benefits achieved in fiscal year 2001 exceeded 

our $23 billion target for the year, as well as last year’s results of 

$23.2 billion. These financial benefits are equivalent to about $69 for 

every $1 that was appropriated to GAO for fiscal year 2001.



Image 2: Financial Benefits Resulting from GAO’s Work.



[See PDF for image]



[End of Image]



As described below, our work on military base realignments and 

closures, restructuring the defense acquisition workforce, and 

recapturing unexpended balances in a major federal housing program, for 

instance, together yielded more than $12 billion of the year’s 

financial benefits.



* Contributing to the Military Base Closure and Realignment Process: 
GAO 

has issued a number of reports since 1979 documenting excess 

infrastructure within the Department of Defense and supporting the need 

for a base closure and realignment process. After the Congress’s 

authorization of such a process, GAO was legislatively required to 

provide the Congress with a series of reports and testimonies 

validating Defense’s implementation. GAO monitored and assessed all 

phases of the decisionmaking process, including executive-level 

sessions, for compliance with congressional requirements. In addition, 

GAO provided staff to each commission established to recommend base 

closures and realignments for rounds held in 1991, 1993, and 1995. The 

staff helped shape the commissions’ decisions through analysis of 

issues associated with closing or realigning specific installations. 

GAO estimated $6 billion in net savings in fiscal years 1999 and 2000 

for the three base closure rounds.



* Cutting the Cost of Defense’s Acquisition Infrastructure: In a series 

of reports and comments on legislation for the House National Security 

Committee beginning in the mid-1990s, GAO examined numerous facets of 

the Department of Defense’s acquisition infrastructure, of which its 

acquisition workforce is a major component. GAO’s primary messages were 

that acquisition infrastructure reductions had not kept pace with 

reductions in other areas of Defense’s operations and that the 

acquisition workforce needed to be consistently defined to effect 

appropriate reductions. Consequently, Defense redefined the workforce 

and the Congress directed the department to develop specific plans for 

reducing its acquisition workforce. These workforce reductions totaled 

$3.32 billion and freed the funds for other high-priority items.



* Recapturing Unexpended Balances in a Federal Housing and Urban 

Development Program: GAO reviewed the unexpended balances in the 

Department of Housing and Urban Development’s Section 8 program, in 

which the department contracts with property owners to provide housing 

for low-income families. GAO recommended that the department revise the 

procedures used to review unexpended balances and ensure that excess 

balances were recaptured from this program. Subsequently, the 

department recaptured nearly $3 billion of unexpended balances from 

prior years’ budgets. According to the department’s officials, the 

savings directly resulted from their implementation of GAO’s 

recommendation.



Nearly 800 Actions Improving Government Agencies’ Management or 

Performance:



Not all actions on GAO’s findings and recommendations produce 

measurable financial benefits. As illustrated below, in fiscal year 

2001, we recorded 799 actions that the Congress or executive agencies 

had taken based on our recommendations to improve the government’s 

accountability, operations, or services. Our audit and evaluation 

products issued in fiscal year 2001 contained over 1,560 new 

recommendations targeting improvements in the economy, efficiency, and 

effectiveness of federal operations and programs that could yield 

significant financial and other benefits in the future. At the end of 

the year, 79 percent of the recommendations we made 4 years ago had 

been implemented. We use a 4-year interval because our historical data 

show that agencies often need this time to complete action on our 

recommendations.



Image 3: GAO’s Work Improving Government Operations and Services.



[See PDF for image]



[End of Image]



The actions reported for fiscal year 2001 include actions to combat 

terrorism, strengthen public safety and consumer protection, improve 

computer security controls, and establish more effective and efficient 

government operations. Following are a few examples of GAO’s work that 

led to improvements in government management and performance:



* Improving Department of Defense antiterrorism efforts : At the 
request 

of the House Special Oversight Panel on Terrorism, GAO reviewed the 

Department of Defense’s antiterrorism efforts at domestic 

installations. GAO identified shortcomings that needed to be addressed 

to provide installation commanders with the necessary information to 

effectively manage the risk of a terrorist attack and develop an 

effective antiterrorism program. The department agreed with GAO’s 

findings and has begun implementing all of the GAO-recommended 

corrective actions. GAO also worked with the department to update and 

improve antiterrorism standards and the secure communication 

capabilities between some navy facilities. This work provided a 

foundation for developing a risk management approach that can be 

applied to other government operations. GAO presented information about 

this management approach to various congressional committees and other 

organizations.



* Strengthening nuclear nonproliferation and safety efforts : 
Preventing 

the spread of weapons of mass destruction and ensuring the safety of 

Soviet- designed reactors are important national security concerns. 

GAO’s work in this area continues to have major impacts, including the 

implementation of GAO’s recommendations designed to strengthen the 

Department of Energy’s program to secure nuclear materials in Russia 

and sustain the improvements. In addition, Energy has implemented GAO’s 

recommendations to fund only those safety projects that directly 

improve the operation of Soviet-designed reactors and to focus its 

Nuclear Cities Initiative funding on only those projects designed to 

employ Russian weapons scientists. These changes will result in better 

targeting of limited resources by eliminating projects that did not 

meet mission goals.



* Improving food safety : Over the years, public awareness of foodborne 

illness outbreaks has heightened concerns about the effectiveness of 

the federal system for ensuring the safety of the nation’s food supply. 

GAO has served as an honest broker of information on the shortcomings 

of the federal food safety system. In particular, GAO’s work has been 

used extensively in congressional deliberations and by federal program 

mangers to improve the food safety system. For example, GAO’s work on 

seafood safety identified several important weaknesses that compromised 

the overall effectiveness of the Food and Drug Administration’s newly 

implemented science-based system for seafood. In response, the agency 

made improvements in 2001 to the science-based system. GAO’s work 

identifying shortcomings in shellfish safety was instrumental in the 

2001 adoption of the first national plan to reduce pathogenic bacteria 

in oysters.



* Creating a focal point for combating terrorism: GAO identified 

fragmentation among federal efforts to combat terrorism, as several key 

interagency functions were spread across various agencies and sometimes 

overlapped. During the summer of 2001, GAO recommended that the 

president appoint a single focal point within the Executive Office of 

the President to oversee the collective efforts of the many agencies 

involved. Soon after the release of GAO’s September 2001 report, the 

president announced the creation of the Office of Homeland Security 

within the Executive Office of the President. The executive order 

establishing the office provided it with many of the functions and 

responsibilities that GAO had advocated for improving interagency 

coordination.



Over 150 Testimonies Contributing to Public Debate on National Issues:



GAO officials were called to testify 151 times before committees of the 

House and Senate in fiscal year 2001, as illustrated in the following 

graphic. In addition, we provided nine statements for the record. Our 

number of appearances for fiscal year 2001 was lower than for previous 

years because external factors such as the extended presidential 

transition, a new Congress and administration both beginning work, and 

the unprecedented mid-session shift in control of the Senate reduced 

the number of congressional hearings and, therefore, occasions for GAO 

to testify. Nonetheless, we testified on a broad range of subjects, 

including combating terrorism, energy prices, the federal budget, and 

September 11 issues.



Image 4: GAO Appearances at Congressional Hearings.



[See PDF for image]



[End of Image]



MAXIMIZING GAO’S EFFECTIVENESS, RESPONSIVENESS, AND VALUE:



In addition to the financial and other benefits resulting from our work 

over the past year, we continued to make great progress toward 

achieving our fourth strategic goal of maximizing the value of GAO by 

being a model organization for the federal government. We strive to 

ensure that GAO’s operations reflect the highest standards. As 

discussed in the following sections, we expanded congressional outreach 

efforts to ensure our responsiveness to client needs. We also 

implemented numerous human capital initiatives following best 

practices, to ensure that GAO has the appropriate mix of staff and 

skills needed to address issues of interest to the Congress. In other 

areas, such as information technology, financial management, and 

security and safety, our operations also reflect prevailing best 

practices. Following are some examples of the key efforts we have taken 

to strengthen GAO and maximize our productivity.



Cultivating and Fostering Effective Congressional and Agency Relations:



In fiscal year 2001, we continued our efforts to strengthen 

relationships and improve communications with our congressional 

clients, federal agencies, and other key stakeholders. For example, we 

implemented a set of congressional protocols--policies and procedures-

-to guide our interactions with and ensure our accountability to the 

Congress. In addition, we drafted similar protocols to guide our 

interactions with federal agencies, foreign ministries and governments, 

and international organizations, and we plan to pilot the federal 

agencies and international protocols in fiscal year 2002.



We also began efforts to revamp our communications strategy to better 

meet the needs of our clients. In fiscal year 2001, we developed a new 

reporting product line entitled Highlights-- a one-page summary that 

provides the key findings and recommendations from a GAO engagement. We 

plan to examine other means during fiscal year 2002 to better 

communicate the results of our work.



During fiscal year 2001, we also expanded and improved access to GAO 

information for our congressional clients and other stakeholders. We 

implemented a Web-accessible active assignment list for congressional 

clients, established a transition Web site to assist the new 

administration in learning about GAO’s work and to facilitate key 

contacts, enhanced the search capability for GAO products on our 

external Web site, and expanded electronic access to GAO reports issued 

since 1985.



We also worked with the Office of Management and Budget (OMB) and 

Cabinet-level officials to assist in the congressional and presidential 

transitions and to provide new legislators and officials with 

information about the challenges facing them. These and other 

constructive engagement efforts are helping focus increased attention 

on major management challenges and high-risk issues, leading to good 

government. For example, the president’s recently issued management 

agenda for reforming the federal government mirrors many of the 

management challenges and program risks that GAO reported on in its 

2001 Performance and Accountability Series and High-Risk Update , 

including a governmentwide initiative to focus on strategic management 

of human capital. We also continue our efforts to work across 

boundaries and encourage knowledge sharing by networking through 

various boards and panels, including the Comptroller General’s Advisory 

Board, the Educators’ Advisory Board, the Accountability Advisory 

Board, and other global and domestic accountability organizations.



We continued to look for more efficient ways to obtain systematic 

feedback from congressional members and key staff. In fiscal year 2001, 

we developed a Web-based process to more effectively collect feedback 

from congressional clients on our reports and products. This new 

system, which we plan to pilot in fiscal year 2002 and implement in 

fiscal year 2003, uses E-mail and a Web site to obtain client feedback 

on (1) product timeliness and (2) communications and professional 

conduct during an engagement for a sample of recently issued products.



In addition to working with accountability agencies and organizations 

in the United States, we continued to work with our counterparts in 

other countries and with international organizations to strengthen 

accountability around the world. We are working with the International 

Organization of Supreme Audit Institutions to help combat government-

related corruption around the world. For example, we plan to support a 

multilateral training effort with Russia, other former Eastern bloc 

countries, and selected South and Latin American countries on audit 

standards, policies, and methodologies. In addition, we are working to 

provide bilateral technical assistance with the Russian Chamber of 

Accounts to collaboratively undertake a joint audit of the program to 

dispose of Russia’s chemical weapons.



Implementing a Model Strategic and Annual Planning and Reporting 

Process:



GAO’s strategic plan continues to be a model for aligning our 

organization and resources, and for ensuring that we remain responsive 

to the needs of the Congress. Our strategic planning process provides 

for updates every 2 years with each new Congress, ongoing analysis of 

emerging conditions and trends, extensive consultation with 

congressional clients and outside experts, and assessments of internal 

capacities and needs. In addition, the plan has become the basis for 

allocating resources and managing organizational performance.



Our strategic plan also has helped serve as a model in providing 

clearer accountability to the Congress and the American people. In 

fiscal year 2001, we published our first Performance and Accountability 

Report, combining information on performance in achieving the plan’s 

goals and objectives with financial information on the costs of 

achieving results. The report also included GAO’s performance plan for 

fiscal year 2002, linking planned activities and performance with the 

resources requested in our annual appropriation.



Aligning Human Capital Policies and Practices to Support GAO’s Mission:



Over the past 3 years, we have made great progress toward addressing a 

number of human capital issues that GAO was facing when I arrived at 

the beginning of fiscal year 1999. At the time, our workforce was 

sparse at the entry level. We faced major succession-planning issues 

with a significant percentage of our senior managers and evaluator- and 

related workforce becoming eligible to retire by the end of fiscal year 

2004. The development and training of our senior executives in key 

competencies, such as leadership, communications, project supervision 

and conflict resolution, had been at drastically reduced levels since 

1993. In addition, new technical skills were unavailable in needed 

quantities within the agency, especially actuarial and information 

technology skills, to effectively assist the Congress in meeting its 

oversight responsibilities.



We have confronted these issues through a number of strategically 

planned human capital initiatives that have begun to yield results. For 

example, we have:



* intensified our recruiting efforts targeted at the entry level and 

areas requiring specialized skills and expertise,



* enhanced our recruitment and college relations programs,



* implemented our early-out authority, recently acquired through GAO’s 

human capital legislation,



* enhanced our training programs,



* revamped and modernized the performance appraisal system for 
analysts,



* enhanced performance rewards and employment incentives to attract and 

retain high quality staff with specialized skills,



* implemented a succession-planning program,



* conducted an agencywide assessment and inventory of our workforce’s 

knowledge and skills,



*established an office of opportunity and inclusiveness, whose head 

reports directly to the Comptroller General, to oversee GAO’s efforts 

to foster a work environment that ensures that all members of its 

diverse workforce are treated fairly and their differences are 

respected, and:



* completed an organizational realignment and resource reallocation.



As illustrated in the following graphic, by the end of fiscal year 

2002, we will almost double the proportion of our workforce at the 

entry-level (Band I) as compared with fiscal year 1999. Also, the 

proportion of our workforce at the mid-level (Band II) will have 

decreased by about 9 percent. In addition, we are steadily increasing 

the proportion of our staff performing direct mission work.



Image 6: GAO’s Human Capital Profile.



[See PDF for image]



[End of Image]



We also have taken steps to better link compensation, 

performance, and results in achieving our strategic plan and goals for 

serving the Congress. In fiscal year 2001, we developed a new 

performance appraisal system for our analyst and specialist staff that 

links performance to established competencies and results; this system 

is being implemented in fiscal year 2002. We also have begun creating 

similar performance systems for our attorneys and mission support 

staff. Also during fiscal year 2002, we plan to assess our pay systems 

and structures to identify ways to increase the percentage of our 

staff’s compensation that is tied more directly to performance and 

results. Currently, levels of annual compensation increases are 

automatic, as is required by law.



Developing Efficient and Responsive Business Processes:



We completed a number of major initiatives in fiscal year 2001 directed 

at enhancing our business operations and processes. For example, we 

implemented a major organizational realignment to increase our ability 

to achieve the goals and objectives of our strategic plan. The 

realignment provides for a clearer and more transparent delineation of 

responsibilities for achieving our strategic goals and meeting the 

needs of the Congress. We also centralized certain administrative 

support services to more efficiently provide human capital, budget and 

financial management, information systems desk-side support, and other 

services to agency staff. The centralization will allow us to devote 

more resources to GAO’s mission work and to obtain economies of scale 

by providing central and shared services.



To facilitate our staff’s efforts in conducting engagements, we 

developed a comprehensive desktop tool--an Electronic Assistance Guide 

for Leading Engagements (EAGLE) æ that provides immediate access to 

GAO’s most current policies and procedures and eliminates the need to 

print and distribute documents. We also developed a new engagement 

database to track congressional requests, monitor their status, and 

provide information on engagement reviews and results. In addition, we 

are reviewing our job management processes to identify opportunities 

for improvement based on best practices of other organizations.



Building an Integrated and Reliable Information Technology 

Infrastructure:



Information technology is critical to our productivity, success, and 

viability. As such, we have been working on a number of initiatives to 

guide and protect our investments in information technology. In fiscal 

year 2001, we:



* completed a comprehensive review of our information technology;



* made substantial progress in implementing an enterprise architecture 

program--a blueprint for operational and technological change;



* expanded information systems security efforts to protect our 

information assets;



* developed an information technology investment process guide to 
ensure 

that our investments are clearly linked to and support our strategic 

objectives and business plans;



* prepared an information technology plan for fiscal years 2001-2004 
that 

identifies major initiatives and investments that directly support our 

strategic plan; and:



* rechartered and reestablished our Information Technology Investment 

Committee to provide high-level vision, review, and approval of program 

initiatives to transition from the current technological environment to 

the target one.



We also undertook a wide range of other efforts during fiscal year 2001 

to improve efficiency by providing new enabling technology to staff and 

improving access to GAO resources from any place at any time. These 

efforts have included piloting notebook computers; expanding the 

availability of cellular phones to GAO’s senior management; and testing 

new, emerging technologies such as personal digital assistants and 

video broadcasts to the desktop. In addition, we upgraded remote access 

capability, improving the speed and reliability of dial-up connections 

to GAO’s information technology facilities; completed communications 

upgrades to the field to provide high-speed, reliable connectivity to 

the GAO network; replaced aging videoconferencing equipment with 

current technology; and began planning communications upgrades to 

support evolving video technologies.



FISCAL YEAR 2002 PLANS AND FUTURE CHALLENGES:



During fiscal year 2002, we will continue focusing our work on issues 

of national importance facing the Congress, including homeland and 

national security, Social Security solvency, education, economic 

development, Medicare reform, international affairs, government 

management reforms, and government computer security. Other issues 

about which we will contribute to the national debate include the 

concerns emanating from the sudden collapse of Enron and other 

corporate failures: the determination of what systemic reforms are 

needed regarding accounting and auditing issues, regulatory and 

oversight matters, pensions, executive pay issues, and corporate 

governance.



We also will be working with congressional budget committees and others 

on reviewing, reassessing, and reprioritizing what the federal 

government is doing in light of the nation’s long-range fiscal 

challenges. This effort will involve raising key questions about 

government programs, tax incentives, regulations, and policies from the 

perspective of what works and what does not, as well as examining 

selected budget and performance reporting issues. Under a recent 

mandate, we have begun pilot testing several approaches for providing 

technology assessment assistance to the Congress. In addition, as noted 

earlier, we plan to issue two new sets of protocols governing our 

relations with executive branch departments and agencies, and with 

international organizations.



Internally, we must continue our efforts and initiatives to address 

human capital and information technology challenges at GAO. While we 

have made good progress in addressing many of these issues, we continue 

to view them as significant challenges. We also are reassessing our 

security and safety issues, in light of the far-reaching effects of the 

September 11 terrorist attacks.



After a decade of downsizing and curtailed investments in human 

capital, it became increasingly clear that GAO needed new human capital 

strategies if we were to meet the current and emerging needs of the 

Congress and the nation’s citizens. The initiatives we have in progress 

or plan to begin in the coming months should build on the progress we 

have made during the past 2 years, yielding further improvements in how 

we recruit, develop, evaluate, compensate, and retain our staff. We 

will continue to develop a human capital strategic plan that both 

supports our strategic goals and ensures that diversity, skills, 

leadership, and retention issues are addressed.



As with human capital, information technology investments at GAO 

declined significantly during the mid- to late 1990s as a result of 

mandated spending reductions. Consequently, information technology 

became a management challenge as we entered the 21ST century. We have 

made progress in building an integrated and reliable information 

technology infrastructure that supports the achievement of our goals 

and objectives, but we must sustain these efforts and begin others to 

ensure that we can continue to provide quality, timely, efficient, and 

effective services to the Congress and the public. Our information 

technology plan for fiscal years 2001 through 2004 is providing a 

foundation for initiatives and investments, and we are expanding and 

accelerating our efforts to protect our agency’s information assets.



The safety and security of GAO’s people, information, and assets are 

necessarily a top priority. In the aftermath of the September 11 

terrorist attacks and the subsequent anthrax incidents, we designated 

safety and security a management challenge for our agency. We are 

conducting threat assessments and a comprehensive evaluation of 

security that we plan to complete this year. Guided by these 

assessments, we will develop an implementation plan to strengthen 

security and safety within GAO. We also plan to review and update our 

emergency preparedness and response plan and to develop a continuity of 

operations plan so that we are prepared for, can respond to, and will 

recover from any major threat or crisis.



GAO’S FY 2003 BUDGET REQUEST TO SUPPORT THE CONGRESS:



To support the Congress as outlined in our strategic plan and continue 

our efforts to strengthen and maximize the productivity of GAO, we have 

requested a budget of $458 million for fiscal year 2003. This funding 

level will allow us to maintain current operations; continue 

initiatives to enhance our human capital and supporting business 

processes; ensure the safety and security of our staff, information, 

and other resources; and support our authorized level of 3,269 full-

time equivalent (FTE) personnel.



Almost 80 percent of our request is for employee compensation and 

benefits. The next largest proportion of the budget--about $50 million-

-is for contract services supporting both GAO’s mission work and 

administrative operations, including information technology, training, 

and building maintenance and operations services. About $12 million is 

for travel and transportation, critical components to accomplishing 

GAO’s mission to follow the federal dollar and ensuring the quality of 

our work. The remaining funds are for office equipment and space 

rentals; telephone, videoconferencing, and data communications 

services; and other operating expenses, including supplies and 

materials, printing and reproduction, and furniture and equipment.



During fiscal year 2003, we plan to increase our investments in 

maximizing the productivity of our workforce by continuing to address 

two key management challenges: human capital and information 

technology. On the human capital front, we will target increased 

resources to continue initiatives begun in fiscal year 2000 to address 

skill gaps, maximize staff productivity, and increase staff 

effectiveness; update our training curriculum to address organizational 

and technical needs; and train new staff. We also will continue to 

focus our hiring efforts in fiscal year 2003 on recruiting talented 

entry-level staff. In addition, to ensure our ability to attract, 

retain, and reward high-quality staff, we plan to devote additional 

resources to our employee benefits and training programs. For example, 

we will continue investments in our student loan repayment program, 

which we are planning to begin offering in fiscal year 2002, and mass 

transit subsidy benefits to enhance our recruitment and retention 

incentives. In addition, major efforts are underway to implement our 

new performance appraisal system for our analyst staff and to develop 

new performance systems for our legal and mission support staff.



On the information technology front, we plan to continue initiatives 

designed to increase employees’ productivity, facilitate knowledge-

sharing, maximize the use of technology, and enhance employee tools 

available at the desktop. We also will devote resources to 

reengineering the information technology systems that support job 

management processes, such as our engagement tracking system, and to 

implementing tools that will ensure a secure network operating 

environment.



Finally, we will make the investments necessary to enhance the safety 

and security of our people, information, facilities, and other assets.



Following are additional details supporting the funding increase we 

have requested for fiscal year 2003 to cover mandatory and 

uncontrollable costs and a few modest, but important, program changes.



Mandatory and Uncontrollable Costs:



We are requesting $19,935,000 to cover mandatory pay and benefits costs 

resulting primarily from federal cost-of-living and locality pay 

adjustments, annualization of prior year salary increases, increased 

participation in the Federal Employees Retirement System, and an 

increase in the estimated number of retirees. Also included are funds 

needed to cover performance- based promotions and merit pay increases. 

Most of these increases are automatic, as required by current law. We 

plan to review our pay systems and structures during fiscal year 2002 

to identify ways to increase the percentage of our employees’ 

compensation that is tied directly to performance contributions and 

results.



We also are requesting $2,090,000 for uncontrollable inflationary 

increases in travel and per diem, lodging, postage, printing, supplies, 

contracts, and other essential mission support services, based on OMB’s 

2-percent inflation index and other factors.



Program Changes:



A net increase of $3,832,000 is being requested to fund essential 

agency programs. This increase includes an overall reduction of 

$168,000 in ongoing or recurring programs and a one-time, nonrecurring 

request for $4 million to fund critical security and safety 

enhancements, as illustrated in the following table and accompanying 

narrative.



Table 1. Requested Program Changes (dollars in thousands):



Recruitment, retention, and recognition benefits:



Recurring: Budget category; Education loan reimbursement; $810; FY 

2003 change: [Empty].



Recurring: Budget category; Transit subsidy; 335; FY 2003 change: 

[Empty].



Recurring: Budget category; Performance-based rewards and recognition; 

114; FY 2003 change: [Empty].



Subtotal; Budget category; [Empty]; FY 2003 change: $1,259.



Recurring: Budget category; Training; [Empty]; FY 2003 change: 434.



Recurring: Budget category; Printing and publishing services; [Empty]; 

FY 2003 change: (360).



Recurring: Budget category; Contract services; [Empty]; FY 2003 change: 

(2,000).



Recurring: Budget category; Offsetting collections; [Empty]; FY 2003 

change: 499.



Subtotal; Budget category; [Empty]; FY 2003 change: $ (168).



Non-recurring: Budget category; Security and safety enhancements;

[Empty]; FY 2003 change: $4,000.



Net program changes; Budget category; [Empty]; FY 2003 change: $3,832.



[End of table]



Recruitment, retention, and performance recognition benefits : 

$1,259,000 is requested to maintain and expand current recruitment, 

retention, and performance-based recognition programs to levels 

comparable to those of the executive branch and to help ensure our 

ability to attract, retain, and recognize high-caliber staff. This 

requested increase includes:



* $810,000 to fund the second year of benefits under our education loan 

repayment program, which increases total funding for the program to 

$1.2 million. This funding level will allow GAO to meet current program 

commitments, offer benefits to new recruits, and provide more retention 

benefits to current staff in critical skills areas.



* $335,000 to fund the annualized cost of benefits under the transit 

subsidy program, which was increased from $65 to $100 a month during 

fiscal year 2002, and to extend the program to new hires. This increase 

will raise the program’s funding level to $1.5 million.



* $114,000 for performance-based reward and recognition programs to 

ensure comparability with public- and private-sector entities. This 

represent a 4-percent increase in these programs, commensurate with the 

average mandatory compensation increases, and will raise the program 

funding level to $2.7 million, which is less than 1 percent of our 

total compensation costs.



Training: We are requesting $434,000 to implement a new core training 

curriculum and expand essential training opportunities to staff at all 

levels to ensure staff competency in skill areas critical to achieving 

our strategic plan.



Printing and publishing services : During fiscal year 2002, we will be 

implementing changes in the distribution and retention of GAO reports 

and products. We estimate savings in fiscal year 2003 of $360,000 in 

printing, publishing, and related costs and plan to use these savings 

to offset other program needs.



Contract services : During fiscal year 2002, we will be contracting for 

expertise not readily available within the agency to respond to 

congressional requests related to security and terrorism issues, assess 

our internal security and information technology requirements, and 

conduct a congressionally mandated technology assessment pilot. As 

these contract requirements are nonrecurring, we plan to reduce 

contract services in fiscal year 2003 by $2 million and to use these 

savings to offset other program needs.



Security and safety enhancements: We are seeking nonrecurring funds of 

$4 million in fiscal year 2003 to implement critical security and 

safety enhancements identified through assessments conducted of our 

security and potential threats following the September 11 attacks and 

subsequent anthrax incidents. This funding will enable us to implement 

some of the recommendations made in these assessments, such as 

enhancing our building access and perimeter security, expanding 

protection against chemical and biological intrusions, and increasing 

the number of background checks and security clearances for GAO and 

contractor staff. Implementing these measures will help ensure that we 

are prepared for, can respond to, and will reduce our vulnerability to 

major threats or crises in the future.



Offsetting collections: We are requesting authority to increase the 

use of revenue we receive from rental income and audit work from 

$2,501,000 to $3,000,000, to continue renovation of the GAO building.



Finally, if a legislative proposal from the administration to transfer 

accountability for retirement costs is enacted, we are also requesting 

budget authority of $21,283,000 to cover our related costs for fiscal 

year 2003. The president has proposed a governmentwide initiative to 

transfer accountability for accruing retirement and post-retirement 

health benefits costs from the Office of Personnel Management to 

individual agencies. This initiative represents a shift in the 

accounting treatment of these costs, which are presently a component of 

mandatory costs and in the future will be included in discretionary 

budget authority. Implementation of this proposal is contingent upon 

enactment by the Congress of authorizing language submitted by the 

administration.



CONCLUDING REMARKS:



As a result of the support and resources that we have received from 

this Subcommittee and the Congress over the past several years, we have 

been able to make a difference in government, not only in terms of the 

financial benefits and improvements in federal programs and operations 

that have resulted from our work, but also in strengthening and 

increasing the productivity of GAO, and making a real difference for 

our country and its citizens. Our budget request for fiscal year 2003 

is modest, but it is essential to sustaining our current operations, 

continuing key human capital and information technology initiatives, 

and ensuring the safety and security of our most valuable resource--our 

people. We seek your continued support so that we will be able to 

effectively and efficiently conduct our work on behalf of the Congress 

and the American people.



As the Comptroller General of the United States on GAO’s 80TH 

anniversary, I take great pride in the many years of service GAO has 

provided the Congress and the nation. Building on this legacy, we at 

GAO look forward to continuing to help the Congress and the nation meet 

the current and emerging challenges of the 21st century.