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Testimony: 

Before the Committee on Homeland Security and Governmental Affairs, 
U.S. Senate: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 9:30 a.m. EDT: 

Wednesday, March 21, 2007: 

United States Government Accountability Office: 

Supporting the Congress through Oversight, Insight, and Foresight: 

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

This testimony was amended on March 22, 2007, to correct the legend 
shown in Appendix IV. It now correctly reflects FTEs and Budget in FY 
2006 dollars. The original testimony reversed the FTE and budget 
amounts in the legend.

GAO-07-644T: 

GAO Highlights: 

Highlights of GAO-07-644T, a testimony before the Committee on Homeland 
Security and Governmental Affairs, U.S. Senate 

Why GAO Prepared This Statement: 

The Committee sought GAO’s views on the role GAO has played in 
assisting congressional oversight and the authorities and resources GAO 
needs to further improve its assistance to the Congress. 

Today’s testimony discusses some of the ways that GAO has helped “set 
the table” for this Committee, the Congress, the executive branch, and 
the nation to engage in a constructive and informed dialogue about the 
challenges and opportunities our nation is facing in the 21st century. 
It also discusses the authority and resources GAO will need to address 
the critical oversight and other needs of the Congress. 

How GAO Assists the Congress: 

GAO is a key tool for the Congress as it works to improve economy, 
efficiency, effectiveness, equity, and ethics within the federal 
government. To better meet the needs of the Congress, GAO has 
transformed itself to provide a range of key oversight, insight, and 
foresight services while “leading by example” in transforming how 
government should do business. 

GAO’s oversight work has traditionally focused on ensuring government 
entities are spending funds as intended by the Congress and complying 
with applicable laws and regulations, while guarding against fraud, 
waste, abuse, and mismanagement. For example, since the early 1990s, 
GAO has updated its list of government programs and operations across 
government that it identifies as “high risk.” It has contributed to the 
Congress enacting a series of governmentwide reforms and achieving tens 
of billions of dollars in financial benefits. Last November, GAO issued 
recommendations for oversight in the 110th Congress ranging from Iraq, 
to food safety, to the tax gap. 

GAO work also provides important insight into what programs, policies, 
and operations are working well; best practices to be shared and 
benchmarked; how agencies can improve the linkages across the silos of 
government; and how different levels of government and their 
nongovernmental partners can be better aligned to achieve important 
outcomes for the nation. For example, GAO developed a number of 
crosscutting and comprehensive reviews of the preparedness for, 
response to, and recovery from the 2005 Gulf Coast hurricanes. GAO has 
issued over 40 related reports and testimonies, and in work for this 
Committee and others GAO is examining lessons learned from past 
national emergencies and catastrophic disasters—both at home and 
abroad—that may prove useful in identifying ways to approach 
rebuilding. 

Finally, GAO’s work can provide the Congress with foresight by 
highlighting the long-term implications of today’s decisions and 
identifying key trends and emerging challenges facing our nation before 
they reach crisis proportions. As the Chief Accountability Officer of 
the United States Government, the Comptroller General continues to call 
attention to the nation’s long-term fiscal challenge and the risks it 
poses to our nation’s future. 

Continuously improving on the critical role GAO plays in supporting the 
Congress will require enhancements to GAO’s resources and authorities. 
GAO’s fiscal year 2008 budget request seeks resources to allow it to 
rebuild and enhance its workforce, knowledge capacity, employee 
programs, and infrastructure. GAO will be proposing changes to its 
authority, such as the ability to administer oaths in conducting its 
work, relief from certain mandated reviews, additional human capital 
flexibilities, and the creation of a Board of Contract Appeals at GAO. 
Finally, the Comptroller General has noted that GAO should be increased 
in size over the next 6 years to address the current and anticipated 
needs of the Congress. 

What GAO Recommends: 

This statement summarizes a comprehensive body of GAO’s published work 
in support of the Congress, much of which offered recommendations to 
address specific issues. As such, this statement makes no new 
recommendations. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?-GAO-07-644T]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Gene Dodaro at (202) 512-
5600 or dodarog@gao.gov. 

[End of section] 

Mr. Chairman, Senator Collins, and Members of the Committee: 

I appreciate the invitation to talk with you today about the important 
role that GAO plays in supporting the Congress. I believe that GAO is a 
key tool for the Congress as it works to improve economy, efficiency, 
effectiveness, equity, and ethics within the federal government. I 
would like to share with you some of the many ways that GAO has 
transformed itself to provide a range of key oversight, insight, and 
foresight services to the Congress while "leading by example" in 
transforming how government should do business. In this regard, I will 
highlight some of the ways that GAO has helped "set the table" for this 
Committee, the Congress, the executive branch, and the nation to engage 
in a constructive and informed dialogue about the challenges and 
opportunities we are all facing in the 21st century. 

As this Committee well knows, if the federal government continues on 
its current fiscal path it would gradually erode, if not suddenly 
damage, our economy, our standard of living, and ultimately even our 
domestic tranquility and our national security. To build public 
awareness of our fiscal challenges and the hard decisions that must be 
made, I have engaged in a number of actions, including participating in 
a series of town hall forums around the nation to discuss the federal 
government's current financial condition and deteriorating long-term 
fiscal outlook. These challenges are driven primarily by known long- 
term demographic trends and rising health care costs. These town hall 
forums, and related "outside the Beltway events," popularly referred to 
as the "Fiscal Wake-Up Tour," are led by the Concord Coalition and also 
include representatives from the Heritage Foundation, the Brookings 
Institution, and a range of "good government" groups. The Fiscal Wake- 
Up Tour states the facts regarding the nation's current financial 
condition and long-term fiscal outlook in a professional and 
nonpartisan manner in order to increase public awareness and hopefully 
accelerate actions by appropriate federal, state, and local officials. 

In addition to the great fiscal challenge we face, the world in which 
we live and in which the federal government and the Congress operate is 
rapidly changing because of numerous borderless trends, such as 
globalization, changing security threats, societal change, and 
scientific and technological advancement. These forces are exerting 
increasing pressure on the current outmoded state of the federal 
government, presenting fundamental and difficult public policy, 
organizational, operational, and funding decisions. As such, these 
trends are driving the public, the executive branch, and the Congress 
to engage in a fundamental reexamination of the government and its 
priorities. At the center of this reexamination are basic questions 
about what the government does, how it does it, who does it, and how it 
is financed. 

Such a broad and fundamental reexamination of the federal government is 
going to test political wills, agency cultures, and oversight 
frameworks. As you know, the traditional committee structures loosely 
aligned with federal budget categories do not always lend themselves to 
addressing the many crosscutting and long-range challenges facing our 
nation. However, this Committee is uniquely positioned in the Senate to 
take the long view and reach across jurisdictional boundaries to 
confront the challenges and capitalize on related opportunities with a 
unity of spirit and of purpose. The members of this Committee--and you 
are not alone in the Congress--have recognized the importance of 
oversight in beginning to address our many 21st century challenges. 
Hearings, investigations, and special studies that come with oversight 
can help not only to reveal the underlying causes of these challenges, 
but also--importantly--help educate the American people about the 
makeup of these challenges so that the nation, and the Congress, is 
better prepared to confront them together. 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. 

GAO also seeks to help provide the insight and foresight to complement 
the oversight work we have performed for the Congress for many years. 
Our oversight work has focused on ensuring that government entities are 
spending funds for their intended purposes; and complying with 
applicable laws and regulations, and guarding against fraud, waste, 
abuse, and mismanagement. Our work also provides important insight on 
what programs, policies and questions are working well; best practices 
to be shared and benchmarked; how agencies can improve the horizontal 
linkages across the silos of government; and how different levels of 
government and their nongovernmental partners can become better aligned 
to achieve important outcomes for the nation. Finally, our work can 
provide the Congress with foresight by highlighting the long-term 
implications of today's decisions and identifying key trends and 
emerging challenges facing our nation before they reach crisis 
proportions. 

Our work increasingly brings a combination of oversight, insight, and 
foresight to bear on our nation's most pressing and important emerging 
issues. The following are two recent examples. First, in January 2007, 
we issued a report containing a series of issue papers for the Congress 
to consider in developing an oversight agenda for securing, 
stabilizing, and rebuilding Iraq.[Footnote 1] Those papers built on our 
ongoing work and the 67 Iraq-related reports and testimonies we have 
provided to the Congress since May 2003. By spanning the security, 
political, economic, and reconstruction prongs of the U.S. national 
strategy in Iraq, our work helps the Congress maximize the benefits of 
its oversight dollars by minimizing the possibility of overlap and 
duplication by any individual inspector general. Our Iraq work has 
focused on keeping the Congress current and informed on key topics of 
direct interest, such as the U.S. strategy and costs of operating in 
Iraq, training and equipping the Iraqi security forces, selected 
governance and reconstruction issues, the readiness of U.S. military 
forces, and achieving desired acquisition outcomes. 

Second, also in January of this year, we issued a new publication, 
titled Fiscal Stewardship: A Critical Challenge Facing Our Nation that 
is designed to provide the Congress and the American public, in a 
relatively brief and understandable form, selected budget and financial 
information regarding our nation's current financial condition, long- 
term fiscal outlook, and possible ways forward.[Footnote 2] In the 
years ahead, our support to the Congress will likely prove even more 
critical because of the pressures created by our nation's current and 
projected budget deficit and growing long-term fiscal imbalance. 
Indeed, as the Congress considers those fiscal pressures, it will be 
grappling with tough choices about what government does, how it does 
business, who will do the government's business, and how we should 
measure success. We strive to continue to be an invaluable tool for 
helping the Congress review, reprioritize, and revise existing 
mandatory and discretionary spending programs and tax policies. 

Although our work often entails multiple elements of oversight, 
insight, and foresight, I will use these terms as categories to 
highlight just some of the ways that GAO has helped in framing the 
challenges and opportunities facing the nation, as well as possible 
ways forward in addressing them. 

Helping the Congress through Oversight: 

GAO's work helps to facilitate holding agencies accountable for 
delivering positive results in an economical, efficient, effective, 
ethical, and equitable manner. I would like to highlight just a few of 
our recent efforts to assist the Congress in identifying and addressing 
areas for continued or additional oversight: 

Identifying pressing oversight issues for the Congress: On November 17, 
2006, I provided three sets of recommendations for consideration as 
part of the agenda of the 110th Congress.[Footnote 3] The first set of 
recommendations suggested targets for near-term oversight, such as the 
need to reduce the tax gap--the difference between the amounts 
taxpayers pay voluntarily and on time and what they should pay under 
the law. The second proposes policies and programs in need of 
fundamental reform and reengineering, such as reforming Medicare and 
Medicaid to improve their integrity and sustainability. The third 
listed various governance issues that need to be addressed, such as the 
need for various budget controls and legislative process revisions in 
light of current deficits and our long-range fiscal imbalance. The 
proposals, which synthesized GAO's institutional knowledge and special 
expertise, point to both the breadth and the depth of the issues facing 
the Congress. Appendix I provides a complete list of the 36 
recommendations in our letter. 

Identifying high-risk areas: We provide updates to our list of 
government programs and operations that we identify as "high-risk" at 
the start of each new Congress to help in setting congressional 
oversight agendas. These reports, which have been produced since the 
early 1990s, have brought a much-needed oversight focus to a targeted 
list of major challenges that are impeding effective government and 
costing the government billions of dollars each year. They help the 
Congress and the executive branch carry out their responsibilities 
while improving the government's performance and enhancing its 
accountability. In recent years, we have also identified several high- 
risk areas to focus on the need for broad-based transformations to 
address major economy, efficiency, effectiveness, relevance, and 
relative priority challenges. In fact, our focus on high-risk 
challenges contributed to the Congress enacting a series of 
governmentwide reforms to strengthen financial management; improve 
information technology practices; instill a more effective, credible, 
and results-oriented government; and address critical human capital 
challenges. 

Further, our high-risk program has helped sustain attention from 
members of the Congress who are responsible for oversight and from 
executive branch officials who are accountable for performance. This 
Committee has a particular interest in a number of areas on our latest 
high-risk list. For example, implementation and transformation of the 
Department of Homeland Security (DHS), protecting the federal 
government's information systems, establishing appropriate and 
effective information-sharing mechanisms to improve homeland security, 
and Department of Defense (DOD) supply chain management. In part 
because of the oversight and legislative efforts of the Congress, of 
the 47 areas that have appeared on our high-risk list since 1990, 18 
improved enough to be removed from the list. Such leadership can be 
invaluable in identifying and putting in place the kinds of change 
needed to address these often long-standing problems. 

In our recent January 2007 High-Risk Series update, we added three new 
high-risk areas; (1) financing the nation's transportation system, (2) 
ensuring the effective protection of technologies critical to U.S. 
national security interests, and (3) transforming federal oversight of 
food safety. But we also reported that progress had been made in all 
existing high-risk areas, and that progress was sufficient in two areas 
for us to remove high-risk designation: (1) U.S. Postal Service 
transformation efforts and long-term outlook, and (2) HUD single-family 
mortgage insurance and rental housing assistance programs. This 
Committee has provided valuable leadership to efforts to gain needed 
improvements in high-risk areas. In this regard, and, as one example, I 
want to acknowledge the key commitment and contribution of this 
Committee in passing postal reform legislation last December. This 
action was one of the primary reasons we felt that we could take the 
Postal Service's transformation and long-term outlook off of our high- 
risk list in January. As I have been testifying on the need for 
comprehensive postal reform since 2001, I believe that the recently 
passed legislation will provide opportunities to build a sound 
foundation for modernizing the Postal Service, reassessing the service 
standards required by the American people, and ensuring continued 
affordable universal postal services for the future. Our work related 
to areas we have designated as high-risk has also had a financial 
impact. In fiscal year 2006 alone, actions by both the Congress and the 
executive branch in response to GAO's recommendations resulted in 
approximately $22 billion in financial benefits. Appendix II lists the 
current high-risk areas. 

Identifying systemic federal financial management challenges: As I 
testified yesterday, for the 10th consecutive year, GAO was unable to 
express an opinion on the federal government's financial statements due 
to the government's inability to demonstrate the reliability of 
significant portions of the financial statements.[Footnote 4] Federal 
agencies will need to overcome three major impediments to our ability 
to render an opinion on the federal government's financial statements: 
(1) resolving serious weaknesses in DOD's business operations, 
including pervasive, complex, long-standing, and deeply rooted 
financial management weaknesses; (2) adequately accounting for and 
reconciling intragovernmental activity and balances; and (3) developing 
adequate systems, controls, and procedures to ensure that the 
consolidated financial statements are consistent with the underlying 
audited agency financial statement, balanced, and in conformity with 
generally accepted accounting principles. In testimony earlier this 
month,[Footnote 5] I outlined the principal challenges and ideas on how 
to move forward to fully realizing world-class financial management in 
the federal government. Additionally, I have suggested to the Congress 
that it may be time to consider further revisions to the current 
federal financial reporting model. Such an effort could address the 
kind of information that is most relevant and useful for a sovereign 
nation; the role of the balance sheet in federal government reporting; 
the reporting of items that are unique to the federal government, such 
as social insurance commitments and the power to tax; and the need for 
additional fiscal sustainability, intergenerational equity and 
performance reporting. 

Addressing governmentwide acquisition and contracting issues: 
Acquisition issues are heavily represented on GAO's list of government 
high-risk areas,[Footnote 6] and in the 21st century, the government 
needs to reexamine and evaluate both its strategic and tactical 
approaches to acquisition and contracting matters. GAO has played an 
important role in describing the current state of government 
contracting, identifying the challenges agencies face, and recommending 
specific steps agencies should take to improve their acquisition and 
contracting outcomes. I hosted a forum in July 2006 that brought 
together experts in the acquisition community from inside and outside 
the government to share their insights on challenges and opportunities 
for improving federal acquisition outcomes in an environment of 
increasing reliance on contractors and severe fiscal 
constraint.[Footnote 7] The observations from that forum help frame 
many of the federal acquisition workforce challenges that the 
government is going to have to wrestle with. In addition, the Congress 
has assigned GAO the responsibility for adjudicating protests of agency 
procurement decisions. Our bid protest decisions address specific 
allegations raised by unsuccessful offerors challenging particular 
procurement actions as contrary to procurement laws and regulations. In 
carrying out this role, GAO is instrumental not only in resolving the 
specific cases at hand, but also helping to focus attention on how 
various initiatives by both the Congress and the executive branch are 
being implemented in practice, and we provide Congress with assurance 
of enhanced transparency, performance and accountability in the federal 
procurement system. 

Investing in GAO's forensic investigation capabilities: This committee 
actively encouraged and supported the creation within GAO of the 
additional capacity provided by our new Forensic Audits and Special 
Investigations (FSI) team in May 2005. This unit integrates the 
strengths of GAO's investigative, forensic audit, the FraudNet hotline, 
and analyst staff. Since its creation, FSI has performed audits and 
investigations for numerous congressional committees focused on fraud, 
waste, and abuse and homeland and national security issues. 
Specifically, for this Committee and the Permanent Subcommittee on 
Investigations, FSI has delivered testimonies highlighting billions of 
dollars of delinquent federal taxes owed by government contractors, 
over $1 billion of potentially fraudulent and improper hurricane 
Katrina and Rita individual assistance payments, tens of millions of 
dollars of waste associated with misuse of premium class travel at the 
State Department, and millions more of waste related to improper use of 
government aircraft at the National Aeronautics and Space 
Administration. FSI also testified that it was able to smuggle 
radioactive materials across the northern and southern borders using 
counterfeit documents. Recently, FSI hired a senior-level expert in 
procurement fraud, waste, and abuse, giving it the capability to do 
targeted work in this area. In fact, the first FSI work in this area is 
being performed at the request of this Committee and relates to 
allegations of fraud, waste, and abuse by contractors involved in 
recovery work following hurricanes Katrina and Rita. 

Helping the Congress through Insight: 

GAO's work helps to identify programs, policies, and practices that are 
working well, and opportunities to improve their linkages across 
agencies, across all levels of government, and with nongovernmental 
partners in order to achieve positive national outcomes. The following 
are a few examples of our recent efforts to assist the Congress with 
such insight: 

Providing a comprehensive framework for congressional oversight of 
hurricanes Katrina and Rita: We developed a number of crosscutting and 
comprehensive reviews of aspects of the preparedness for, response to, 
and recovery from the 2005 Gulf Coast hurricanes. In the immediate 
aftermath of the storms, staff drawn from across the agency spent time 
in the hardest hit areas of Louisiana, Mississippi, Alabama, and Texas, 
collecting information from government officials at the federal, state, 
and local levels as well as from private organizations assisting with 
this emergency management effort. We examined how federal funds were 
used during and after the disaster and identified the rescue, relief, 
and rebuilding processes that worked well and not so well throughout 
the effort. We issued over 40 related reports and testimonies to date, 
focusing on, among other issues, minimizing fraud, waste, and abuse in 
disaster assistance; rebuilding the New Orleans hospital care system; 
and developing the capabilities needed to respond to and recover from 
future catastrophic disasters. Building on this work, we continue to 
support your Committee and others through a range of audit and 
evaluation engagements to examine federal programs that provide 
rebuilding assistance to the Gulf Coast, including the federal 
government's contribution to the rebuilding effort and the role it 
might play over the long term. We are examining lessons learned from 
past national emergencies and catastrophic disasters--both at home and 
abroad--that may prove useful in identifying ways to approach 
rebuilding. 

Recommending improved management structures for enhancing performance 
and ensuring accountability: We have identified a chief operating 
officer (COO)/chief management officer (CMO) position as one approach 
for building the necessary leadership and management structure that 
could be used to help to elevate, integrate, and institutionalize 
responsibility for key functional management initiatives, and provide 
the continuing, focused attention essential to successfully completing 
multiyear, high-risk, business transformations.[Footnote 8] Such a COO/ 
CMO position could be useful in selected agencies with significant 
transformation and integration challenges, such as DOD, DHS, and the 
Office of the Director of National Intelligence (ODNI), and would 
improve accountability within those agencies and to the Congress for 
outstanding business challenges. In that regard, I was pleased to see 
that an amendment creating a Deputy Secretary for Management position 
at DHS was recently accepted by the Senate as part of the proposed 
Improving America's Security Act of 2007, and that a similar position 
would be established in DOD with other legislation recently introduced 
in the Senate. As you know, in 2005, we reported that as currently 
structured, the roles and responsibilities of the DHS Under Secretary 
for Management contained some of the characteristics of a COO/CMO, but 
we suggested that the Congress should consider whether a revised 
organizational arrangement is needed at DHS to fully capture the roles 
and responsibilities of a COO/CMO position.[Footnote 9] While I believe 
that a COO/CMO position is highly desirable within DHS and ODNI, I 
believe it is essential for a successful business transformation effort 
within DOD. 

Developing a framework for human capital reform: In recent years, many 
federal agencies, including DOD, DHS, and GAO, have achieved various 
legislative flexibilities in the human capital area. Others are seeking 
such authorities, and a risk exists that the system relating to civil 
servants will fragment over time. In order to help prevent such a 
fragmentation and guide human capital reform efforts, we have proposed 
that there should be a governmentwide framework. A forum that I hosted 
in 2004 outlined a set of principles, criteria, and processes that 
establish boundaries and checks while also allowing needed flexibility 
to manage agency workforces. To help build on this framework, we have 
provided information on the statutory human capital authorities that 
the Congress has already provided to numerous federal agencies. Given 
that there is widespread recognition that a "one size fits all" 
approach to human capital management is not appropriate for the 
challenges and demands government faces, we have proposed a phased 
approach to reform--a "show me" test--that requires agencies to 
demonstrate institutional readiness before they are allowed to 
implement major human capital reforms. That is, each agency should 
demonstrate that it has met certain conditions before it is authorized 
to undertake significant human capital reforms, such as linking pay to 
performance. The Congress used this approach in the establishment of a 
new performance management system for the Senior Executive Service 
(SES), which required agencies' systems to be certified before allowing 
a higher pay range for SES members. Using a governmentwide framework to 
advance needed human capital reform should be beneficial as the federal 
government continues to transform how it classifies, compensates, 
develops, and motivates its employees to achieve maximum results within 
available resources and existing authorities. 

Key national indicators initiative: A set of key and outcome-based 
national indicators can help to assess the overall position and 
progress of our nation in key areas, frame strategic issues, support 
more informed policy choices, and enhance accountability. A cooperative 
initiative to develop a key national indicator system emerged after we, 
in cooperation with the National Academies, convened a forum in 
February 2003.[Footnote 10] This initiative is attempting to develop a 
key national indicator system for the United States.[Footnote 11] In 
response to congressional interest in building upon lessons learned 
from other efforts both around the country and worldwide, we reported 
in November 2004 on the current state of the practice of developing 
comprehensive key indicator systems, identifying design features and 
organizational options for such a system in the United States. We have 
also helped increase international understanding and use of indicator 
systems, such as through my participation in the Organisation for 
Economic Co-operation and Development's (OECD) First World Forum on Key 
Indicators in 2004 and through my upcoming participation in OECD's 
Second World Forum, Measuring and Fostering the Progress of Societies, 
in June 2007. As development of a U.S. key national indicator system 
progresses, we expect to continue to be involved, building upon prior 
efforts and in response to congressional interests. Finally, in my view 
such a key national indicator system is needed, and the Congress should 
strongly consider a public/private partnership in order to help it 
become a reality. 

Helping the Congress through Foresight: 

Our products and assistance to the Congress also focus on a wide range 
of emerging needs and identify and address governance issues that must 
be addressed to respond to a broad range of 21st Century challenges and 
opportunities. I would like to highlight just a few of our recent 
efforts to assist the Congress with foresight. 

Increasing public understanding of the long-term fiscal challenge: 
Since 1992, we have published long-term fiscal simulations in response 
to a bipartisan request from members of the Congress who were concerned 
about the long-term effects of our nation's fiscal policy. Our current 
simulations continue to show ever-larger deficits resulting in a 
federal debt burden that ultimately spirals out of control.[Footnote 
12] As the Chief Accountability Officer of the United States 
Government, I continue to call attention to our long-term fiscal 
challenge and the risks it poses to our nation's future. I mentioned 
earlier my participation with the Concord Coalition, the Brookings 
Institution, and the Heritage Foundation in the Fiscal Wake-Up Tour. In 
our experience, having these people, with quite different policy views 
on how to address our long-range imbalance, agree on the nature, scale, 
and importance of the issue--and on the need to sit down and work 
together on a bipartisan basis and start making tough choices now-- 
resonates with the audiences. I have long believed that the American 
people can accept difficult decisions as long as they understand why 
such steps are necessary. The Fiscal Wake-Up Tour has received the 
active support and involvement of community leaders, local colleges and 
universities, the media, the business community, and both former and 
current members of the Congress. We have coordinated town hall meetings 
in 20 states to date with more planned in the future. 

Improving transparency in connection with financial, fiscal, budget, 
and selected legislative matters: Washington often suffers from both 
myopia and tunnel vision. This can be especially true in the budget 
debate in which we focus on one program at a time and the deficit for a 
single year or possibly the costs over 5 years without asking about the 
bigger picture and whether the long term is getting better or worse. 
Since at its heart the budget challenge is a debate about the 
allocation of limited resources, the budget process can and should play 
a key role in helping to address our long-term fiscal challenge and the 
broader challenge of modernizing government for the 21st century. We 
are helping to increase the understanding of and focus on the long term 
in our policy and budget debates. To that end, I have outlined a number 
of ideas in a draft legislative proposal that we refer to as TAB-- 
Transparency in Accounting and Budgeting. I have been sharing it with 
selected Members of Congress and others interested in this issue. The 
proposal would serve to: 

* increase transparency in financial and budget reporting as well as in 
the budget and legislative processes to highlight our long-term fiscal 
challenges; 

* require publication of a summary annual report and periodic fiscal 
sustainability reports; and: 

* require GAO to report annually on selected financial, fiscal, and 
reporting matters. 

I am hopeful that this committee will embrace this proposal and work 
with other interested members of Congress toward enactment of 
legislation advancing these important goals. 

Identifying 21st century challenges: In February 2005 we issued a 
report titled 21st Century Challenges: Reexamining the Base of the 
Federal Government,[Footnote 13] in which we identified challenges our 
government--and nation--face. The report laid out the case for change 
and identified a range of challenges and opportunities. It also 
presented more than 200 illustrative questions that need to be asked 
and answered. These questions look across major areas of the budget and 
federal operations, including discretionary and mandatory spending and 
tax policies and programs. Questions raised specific issues, such as 
how intelligence and information on threats can be shared with other 
levels of government, yet be held secure, and whether our current 
federal income-based tax system is adequate, equitable, competitive, 
sustainable, and administrable in an increasingly global economy. I am 
very pleased to see that this important report, among other things, is 
being used by various congressional committees as they consider which 
areas of government need particular attention and reconsideration. 

Continuing to apply a strategic framework to GAO's work: We will be 
issuing products soon to help communicate the strategic framework we 
are using to guide all of our work, in support of the 110th Congress 
and in light of the challenges the nation faces. Specifically, we will 
soon issue an update of our strategic plan, which describes our goals 
and strategies for serving the Congress for fiscal years 2007 through 
2012. The broad goals and objectives of our plan have not altered 
dramatically since our last plan, but events such as the continuing war 
in Iraq and recent natural disasters account for modifications in 
emphasis. Appendix III provides a draft summary of GAO's strategic plan 
framework for serving the Congress (2007-2012). To assist policymakers 
and managers, we are also issuing separately a part of the strategic 
plan that contains detailed descriptions of the key themes and issues 
framing our strategic plan and their implications for governance. Those 
themes are listed in the text box below. We will also be issuing a 
report that brings together in one place the many strategic tools and 
approaches that we have identified or proposed that the Congress and 
others can use to help set priorities and move forward in addressing 
the government's challenges. 

Themes from GAO's Strategic Plan 2007-2012: 

* Changing security threats; 
* Sustainability concerns; 
* Economic growth and competitiveness; 
* Global interdependency; 
* Societal change; 
* Quality of Life; 
* Science and technology. 

Congressional Support to Enhance GAO's Effectiveness: 

Continuously improving on the critical role we play in supporting the 
Congress will require modest enhancements to GAO's resources and 
authorities that I proposed in our fiscal year 2008 budget request and 
discussed in my Senate appropriations hearing.[Footnote 14] Our fiscal 
year 2008 budget request seeks the resources necessary to allow us to 
rebuild and enhance our workforce, knowledge capacity, employee 
programs, and critical infrastructure. These items are necessary to 
ensure that we can continue to provide congressional clients with 
timely, objective, and reliable information on how well government 
programs and policies are working and, when needed, recommendations for 
improvement. In the years ahead, our support to the Congress will 
likely prove even more critical because of the pressures created by our 
nation's current and projected budget deficit and growing long-term 
fiscal imbalance. GAO is an invaluable tool for helping the Congress 
review, reprioritize, and revise existing mandatory and discretionary 
spending programs and tax policies. 

Shortly after I was appointed Comptroller General in November 1998, I 
determined that the agency should undertake a major transformation 
effort. As a result, led by myself and many others, GAO has become a 
more results-oriented, partnerial, and client-focused organization. 
With your support, we have made strategic investments; realigned the 
organization; streamlined our business processes; modernized our 
performance classification, compensation, and reward systems; enhanced 
our ability to attract, retain, and reward top talent; enhanced the 
technology and infrastructure supporting our staff and systems; and 
made other key investments. These transformational efforts have allowed 
us to model best practices, lead by example, and provide significant 
support for congressional hearings, while achieving record results and 
very high client satisfaction ratings and high employee feedback 
ratings without significant increases in funding. In fact, despite 
record results, GAO's budget has declined by 3 percent in purchasing 
power from 2003 to 2007, as shown in appendix IV. 

Transformational change and innovation is by definition challenging and 
controversial, but at the same time is essential for progress. Our 
fiscal year 2008 budget request includes funds to regain the momentum 
needed to achieve our key goals. Specifically, our fiscal year 2008 
budget request will allow us to: 

* address supply and demand imbalances in responding to congressional 
requests for studies in areas such as health care, disaster assistance, 
homeland security, the global war on terrorism, energy and natural 
resources, and forensic auditing; 

* address our increasing bid protest workload; 

* be more competitive in the labor markets where we compete for talent; 

* address critical human capital components, such as knowledge capacity 
building, succession planning, and staff skills and competencies; 

* enhance employee recruitment, retention, and development programs; 

* restore program funding levels and regain our purchasing power; 

* undertake critical initiatives necessary to continuously reengineer 
processes aimed at increasing our productivity and effectiveness and 
addressing identified management challenges; and: 

* pursue deferred and pending critical structural and infrastructure 
maintenance and improvements. 

In my recent testimony, I noted that we would be seeking to increase 
GAO's staffing level from 3,159 up to 3,750 over the next 6 years in 
order to address critical needs including supply and demand imbalances, 
high-risk areas, 21st century challenges questions, technology 
assessments, and other areas in need of fundamental reform. 
Furthermore, we plan to establish a presence in Iraq beginning later 
this fiscal year to provide additional oversight of issues deemed 
important to the Congress, subject to receiving support from the State 
Department and approval of our supplemental budget request. 

In addition to providing the resources we need to support the Congress, 
we will also be seeking enactment of a set of statutory provisions that 
would enhance our ability to provide the Congress the information and 
analysis it needs to discharge its constitutional responsibilities. 
Among other things, we will seek to modernize authority for the 
Comptroller General and his/her authorized representatives to 
administer oaths in performance of the work of the office. To keep the 
Congress apprised of difficulties we have interviewing agency personnel 
and obtaining agency views on matters related to ongoing mission work, 
we will suggest new reporting requirements. When agencies or other 
entities fail to respond to requests by the Comptroller General to have 
personnel provide information under oath, make personnel available for 
interviews, or provide written answers to questions, the Comptroller 
General would report to the Congress as soon as practicable and also 
include such information in the annual report to the Congress. These 
reporting requirements would be a supplement to existing GAO statutory 
authorities. 

GAO has authority to audit and access the records of elements of the 
Intelligence Community. Nevertheless, over the years, the Justice 
Department has questioned our authority in the area. In that regard, 
the Congress is considering S.82, The Intelligence Community Audit Act 
of 2007, sponsored by Senators Akaka and Lautenberg. S.82 would 
reaffirm GAO's existing statutory authority to audit and evaluate 
financial transactions, programs, and activities of the Intelligence 
Community. The success of the Intelligence Community is obviously of 
enormous importance to the nation, and it commands significant budget 
resources. I believe that there are many areas in which GAO can support 
the intelligence committees in their oversight roles and, by extension, 
the Congress and the Intelligence Community. For example, we could 
review human capital management, including pay for performance systems; 
information technology architectures and systems; acquisition and 
contract management; information-sharing processes, procedures, and 
results; and Intelligence Community transformation efforts, metrics, 
and progress. I would add that while GAO personnel with appropriate 
clearances and accesses have responsibly reviewed programs that deal 
with technical sources and methods of intelligence collection, I am 
confident that there are very few cases in which our review of systems, 
processes, and their applications would require access to sensitive 
intelligence sources and methods or names of individuals. 

In regard to GAO's human capital flexibilities, among other provisions, 
we are proposing a flexibility that allows us to better approximate 
market rates for certain professional positions by increasing our 
maximum pay for other than the SES and Senior Level from GS-15, step 
10, to Executive Level III. This authority has already been granted to 
selected other federal agencies, including DOD. Additionally, under our 
revised and contemporary merit pay system, certain portions of an 
employee's merit increase, below applicable market-based pay caps, are 
not permanent. Since this may affect an employee's high three for 
retirement purposes, another key provision of the bill would enable 
these nonpermanent payments to be included in the retirement 
calculation for all GAO employees, except senior executives and senior- 
level personnel. 

We are also seeking enactment of legislation to establish a Board of 
Contract Appeals at GAO to adjudicate contract claims involving 
contracts awarded by legislative branch agencies. GAO has performed 
this function on an ad hoc basis over the years for appeals of claims 
from decisions of the Architect of the Capitol on contracts that it 
awards. Recently we have agreed to handle claims arising under 
Government Printing Office contracts. The legislative proposal would 
promote efficiency and predictability in the resolution of contractor 
and agency claims by consolidating such work in an established and 
experienced adjudicative component of GAO, and would permit GAO to 
recover its costs of providing such adjudicative services from 
legislative branch users of such services. 

Finally, we have identified a number of legislative mandates that are 
either no longer meeting the purposes intended or should be performed 
by an entity other than GAO. We are working with the cognizant entities 
and the appropriate authorization and oversight committees to discuss 
the potential impact of legislative relief for these issues. 

I appreciate your support for our efforts to provide the best 
professional products and services to the Congress. GAO, of course, is 
not alone in helping the Congress. For example, the inspectors general 
of the various agencies and departments are essential partners in 
carrying out congressional oversight. In addition, the Congressional 
Research Service and Congressional Budget Office have important roles 
to play. However, GAO is uniquely positioned to provide the Congress 
with the timely, objective, reliable, and original research information 
it needs to discharge its constitutional responsibilities, especially 
in connection with oversight matters. We look forward to continuing to 
work with you on near-term oversight, fundamental review of the base of 
government, and approaches to this century's governance challenges and 
opportunities. 

This concludes my prepared statement. I would be happy to respond to 
any questions the members of the Committee may have. 

[End of section] 

Appendix I: GAO's Suggested Areas for Oversight for the 110th Congress: 

Targets for Near-Term Oversight. 

1. Reduce the Tax Gap. 

2. Address Governmentwide Acquisition and Contracting Issues. 

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

4. Ensure the Effective Integration and Transformation of the 
Department of Homeland Security. 

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

6. Enhance Border Security and Enforcement of Existing Immigration 
Laws. 

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

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

9. Ensure a Successful Transformation of the Nuclear Weapons Complex. 

10. Enhance Computer Security and Deter Identity Theft. 

11. Ensure a Cost-Effective and Reliable 2010 Census. 

12. Transform the Postal Service's Business Model. 

13. Ensure Fair Value Collection of Oil Royalties Produced from Federal 
Lands. 

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

15. Review the Effectiveness of Strategies to Ensure Workplace Safety. 

Policies and Programs That Are in Need of Fundamental Reform and 
Reengineering. 

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

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

3. Reform the Tax Code, Including Reviewing the Performance of Tax 
Preferences. 

4. Reform Medicare and Medicaid to Improve Their Integrity and 
Sustainability. 

5. Ensure the Adequacy of National Energy Supplies and Related 
Infrastructure. 

6. Reform Immigration Policy to Ensure Equity and Economic 
Competitiveness. 

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

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

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

10. Examine the Costs, Benefits, and Risks of Key Environmental Issues. 

11. Reform Federal Housing Programs and Related Financing and 
Regulatory Structures. 

12. Ensure the Integrity and Equity of Existing Farm Programs. 

13. Review Federal Efforts to Improve the Image of the United States. 

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. 

2. Pursue the Development of Key National Indicators. 

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

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

5. Modernize the Federal Government's Organizational and Human Capital 
Models. 

6. Reexamine the Presidential (Political) Appointment Process. 

7. Ensure Transparency over Executive Policies and Operations. 

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

Source: GAO, Suggested Areas for Oversight for the 110th Congress, GAO- 
07-235R (Washington, D.C.: Nov. 17, 2006). 

[End of table] 

[End of section] 

Appendix II: GAO's 2007 High-Risk List: 

2007 High-Risk Areas. 

Addressing Challenges In Broad-Based Transformations. 

* Strategic Human Capital Management[A]. 

* Managing Federal Real Property[A]. 

* Protecting the Federal Government's Information Systems and the 
Nation's Critical Infrastructures. 

* Implementing and Transforming the Department of Homeland Security. 

* Establishing Appropriate And Effective Information-Sharing Mechanisms 
to Improve Homeland Security. 

* DOD Approach to Business Transformation[A]. 

- DOD Business Systems Modernization. 

- DOD Personnel Security Clearance Program. 

- DOD Support Infrastructure Management. 

- DOD Financial Management. 

- DOD Supply Chain Management. 

- DOD Weapon Systems Acquisition. 

* FAA Air Traffic Control Modernization. 

* Financing the Nation's Transportation System[A] (New). 

* Ensuring the Effective Protection of Technologies Critical to U.S. 
National Security Interests[A] (New). 

* Transforming Federal Oversight of Food Safety[A] (New). 

Managing Federal Contracting More Effectively. 

* DOD Contract Management. 

* DOE Contract Management. 

* NASA Contract Management. 

* Management of Interagency Contracting. 

Assessing the Efficiency and Effectiveness of Tax Law Administration. 

* Enforcement of Tax Laws[A]. 

* IRS Business Systems Modernization. 

Modernizing and Safeguarding Insurance and Benefit Programs. 

* Modernizing Federal Disability Programs[A]. 

* Pension Benefit Guaranty Corporation Single-Employer Pension 
Insurance Program. 

* Medicare Program[A]. 

* Medicaid Program[A]. 

* National Flood Insurance Program[A]. 

Source: GAO. 

[A] Legislation is likely to be necessary, as a supplement to actions 
by the executive branch, in order to effectively address this high-risk 
area. 

[End of table] 

[End of section] 

Appendix III: Serving the Congress--GAO's Strategic Plan Framework: 

Draft: 

Serving the Congress and the Nation: GAO's Strategic Plan Framework: 

Mission: 

GAO exists 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. 

Themes: 

* Changing Security Threats; 

* Sustainability Concerns; 

* Economic Growth and competitiveness; 

* Global interdependency; 

* Societal Change; 

* Quality of Life; 

* Science and Technology; 

Goals and Objectives: 

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 related to. 

* Health care needs and financing; 

* Education and protection of children; 

* Work opportunities and worker protection; 

* Retirement income security; 

* Effective system of justice; 

* Viable communities; 

* Natural resources use and environmental protection; 

* Physical infrastructure; 

Provide Timely, Quality Service to the Congress and the Federal 
Government to. 

Respond to Changing Security Threats and the Challenges of Global 
Interdependence involving. 

* Emerging threats; 

* Military capabilities and readiness; 

* Advancement of U.S. interests; 

* Global market forces; 

Help Transform the Federal Government Government's Role and How It Does 
Business to Meet 21st Century Challenges by assessing. 

* Roles in achieving federal objectives; 

* Government transformation; 

* Key management challenges and program risks; 

* Fiscal position and financing of the government: 

Maximize the Value of GAO by Being a Model Federal Agency and a World- 
Class Professional Services Organization in the areas of. 

* Client and customer satisfaction; 

* Strategic leadership; 

* Institutional knowledge and experience; 

* Process improvement; 

* Employer of choice: 

Core Values: 

* Accountability; 

* Integrity; 

* Reliability; 

Fiscal years 2007-2012. 

Source: GAO. 

[End of figure] 

[End of section] 

Appendix IV: Budget Authority in Fiscal Year 2006 Dollars and Full-Time 
Equivalent Usage, Fiscal Years 1992 - 2007: 

[See PDF for Image/Chart] 

Source: GAO. 

[End of figure] 

FOOTNOTES 

[1] GAO, Securing, Stabilizing, and Rebuilding Iraq: Key Issues for 
Congressional Oversight, GAO-07-308SP (Washington, D.C.: Jan. 9, 2007). 

[2] GAO, Fiscal Stewardship: A Critical Challenge Facing Our Nation, 
GAO-07-362SP (Washington, D.C.: Jan. 31, 2007). 

[3] GAO, Suggested Areas for Oversight for the 110th Congress, GAO-07-
235R (Washington, D.C.: Nov. 17, 2006). 

[4] GAO, Fiscal Year 2006 U.S. Government Financial Statements: 
Sustained Improvement in Federal Financial Management Is Crucial to 
Addressing Our Nation's Accountability and Fiscal Stewardship 
Challenges, GAO-07-607T (Washington, D.C.: Mar. 20, 2007). 

[5] GAO, Federal Financial Management: Critical Accountability and 
Fiscal Stewardship Challenges Facing Our Nation, GAO-07-542T 
(Washington, D.C.: Mar. 1, 2007). 

[6] GAO's 2007 high-risk list included contract management at DOD, the 
Department of Energy, the National Aeronautics and Space 
Administration, and management of interagency contracting. 

[7] GAO, Highlights of a GAO Forum: Federal Acquisition Challenges and 
Opportunities in the 21st Century, GAO-07-45SP (Washington, D.C.: Oct. 
6, 2006). 

[8] GAO, Highlights of a GAO Roundtable: The Chief Operating Officer 
Concept: A Potential Strategy to Address Federal Governance Challenges, 
GAO-03-192SP (Washington, D.C.: Oct. 4, 2002). 

[9] GAO, Department of Homeland Security: A Comprehensive and Sustained 
Approach Needed to Achieve Management Integration, GAO-05-139 
(Washington, D.C.: Mar. 16, 2005). 

[10] GAO, Informing Our Nation: Improving How to Understand and Assess 
the USA's Position and Progress, GAO-05-1 (Washington, D.C.: Nov. 10, 
2004). 

[11] GAO, Forum on Key National Indicators: Assessing the Nation's 
Position and Progress, GAO-03-672SP (Washington, D.C.: May 2003). 

[12] Additional information about the GAO model, its assumptions, data, 
and charts can be found at Hyperlink, 
http://www.gao.gov/special.pubs/longterm/. For a summary of our most 
recent results, see The Nation's Long-Term Fiscal Outlook: January 2007 
Update, GAO-07-510R (February 2007). 

[13] GAO, 21st Century Challenges: Reexamining the Base of the Federal 
Government, GAO-05-325SP (Washington, D.C.: February 2005). 

[14] GAO, Fiscal Year 2008 Budget Request: U.S. Government 
Accountability Office, GAO-07-547T (Washington, D.C.: Mar. 16, 2007). 

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